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052295 EDA Official File Copy CITY OF NEW HOPE EDA AGENDA EDA Regular Meeting//8 May 22, 1995 President Edward J. Erickson Commissioner W. Peter Enck Commissioner Pat La Vine Norby Commissioner Gerald Otten Commissioner Terri Wehling 1. Call to Order 2. Roll Call 3. Approval of Minutes of May 8, 1995, and May 15, 1995 4. Resolution Authorizing Mortgage to 7700 Partnership, L.L.P. for Property at 7700 42nd Avenue North (Improvement Project No. 539) 5. Resolution Approving Submission of the Minnesota City Participation Program (MCPP) Application to the Minnesota Housing Finance Agency (MHFA) 6. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH HENNEPIN COUNTY, MINNESOTA 55428 Approved EDA Minutes May 8, 1995 Meeting //7 CALL TO ORDER President Erickson called the meeting of the Economic Development Authority to order at 8:20 p.m. ROLL CALL Present: Erickson, Enck, Otten, Norby, Wehling Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald, Bellefuil APPROVE MINUTES Motion was made by Commissioner Otten, seconded by Commissioner Wehling, to approve the EDA minutes of April 24, 1995. Voting in favor: Erickson, Enck, Otten Norby; Abstained: Wehling; Absent: None. Motion carried. IMP. PROJECT 505 President Erickson introduced for discussion Item 4, Resolution Approving Item4 Change Order for Construction Contract for 7901-7909 51st Avenue North (Improvement Project No. 505). EDA RESOLUTION Commissioner Enck introduced the following resolution and moved its 95-06 adoption: "RESOLUTION APPROVING CHANGE ORDER FOR CONSTRUCTION CONTRACT FOR 7901-7909 51ST AVENUE NORTH (IMPROVEMENT PROJECT NO. 505)". The motion for the adoption of the foregoing resolution was seconded by Commissioner Wehling, and upon vote being taken thereof, the following voted in favor thereof: Erickson, Enck, Otten, Wehling; Abstained: Norby; and the following voted against the same: None; Absent None; whereupon the resolution was declared duly I~assed and adooted, signed by the president which was attested to by the executive director. IMP. PROJ. NO. 537 President Erickson introdUced for discussion Item 5, Motion Approving Item 5 Letter of Agreement Between City of New Hope and Key Group Advertising, Inc. for Shop New Hope Promotion (Improvement Project No. 537). Mr. Donahue, City Manager, indicated that the EDA unofficially committed approximately $32,000 in EDA funds to support the "Shop New Hope" promotion. The agreement calls for a payment of $49,485. He stated to date the business community has sponsored $15,750. Commissioner Wehling reported that there are 67 star retailers contributing $25 each, 8 gold star @ $500 or @ $750, and there are 6 gold plus ~ $1,500. She indicated there has been a very positive response from the business community. She commented that the promotion should result in a stronger retail community, improved communications between ciW and commercial businesses, and an increased public awareness of local businesses. The EDA discussed the ways to measure the promotion's success and its effect on the commercial and retail community. New Hope EDA May 8, 1995 Page 1 It was noted that the retailers will track their sales during the promotion and there will be a follow-up communication with retailers after the promotion. Commissioner Wehling also noted that prospective tenants may be drawn to the City due to this type of pro-active approach undertaken by the City. Mr. Donahue suggested that if a community-wide survey is conducted it should include a structured questionnaire distributed only to the business community to establish quantitative data relating to their perceptions, sales, and their opinion on the value of the program. MOTION Motion was made by Commissioner Otten, seconded by Commissioner Item 5 Enck, to approv® the letter of agreement between City of New Hope and Key Group Advertising, Inc. Voting in favor: All. Motion carried. OTHER BUSINESS Mr. Donahue noted part of the Shop New Hope campaign was to improve the downtown image.. He illustrated "Neighborly New Hope" sketches for banners to be displayed from the light poles along 42nd Avenue. He commented that the cost for 28 poles would be approximately $12- 15,000. The banners last between 5 to 10 years. He stated the cost includes the necessary hardware from which other seasonal banners could be attached. Mr. Donahue noted the short time frame if the EDA is favorable to the banner concept and wishes to have the banners in place prior to the kick- off of the Shop New Hope campaign on June 14. Commissioner Wehling emphasized that banners provide identity and help build community togetherness. The EDA directed staff to obtain quotes for the light pole banners. ADJOURNMENT Motion was made by Commissioner Enck, seconded by Commissioner Otten, to adjourn the meeting. All present voted in favor. The New Hope EDA adjourned at 8:35 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA May 8, 1995 Page 2 CITY OF NEW HOPE 4401 XYLON AVENUE NORTH HENNEPIN COUNTY, MINNESOTA 55428 Approved EDA Minutes May 15, 1995 Special Meeting #1 CALL TO ORDER President Erickson called the special meeting of the Economic Development Authority to order at 8:21 p.m. ROLL CALL Present: Erickson, Enck, Otten, Norby, Wehling IMP. PROJECT 539 President Erickson introduced for discussion Item 11.1, Universal Color Item 11.1 GAP Loan, 7700 42nd Avenue North, Improvement Project No. 539. Mr. Dan Donahue, City Manager, distributed the report prepared by Springsted Inc. on their review of Universal Color's request for financial assistance. Mr. Paul Anderson, President of Universal Color, Inc., was recognized. President Erickson emphasized the importance of obtaining a financial guarantee for the City's investment. The EDA approved a loan for $140,000 at a rate of 8% with a 15-year amortization period and a balloon at the end of year 10. The loan approval was contingent upon both owners carrying $140,000 life insurance policies and the City taking 3rd position on the mortgage. Universal Color agreed to provide an annual $2,000 maximum retail cost donation for in- kind services to the City. Mr. Donahue stated the City Attorney will prepare the appropriate loan agreement. ADJOURNMENT Motion was made by Commissioner Wehling, seconded by Commissioner Enck, to adjourn the meeting. All present voted in favor. The New Hope EDA adjourned at 9:01 p.m. Respectfully submitted, Valerie Leone City Clerk ~ I EDA  REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section City Manager EDA Kirk McDonald Item No. By: Management Assistant By: 4 RESOLUTION AUTHORIZING MORTGAG[E TO 7700 PARTNERSHIP, L.L.P. FOR PROPERTY AT 7700 42ND AVENUE NORTH (IMPROVEMENT PROJECT NO. 539) At the May 15th EDA meeting, the EDA approved a gap financing loan to Universal Color, Inc. at a rate of 8% with a 15-year amortization period and a balloon at the end of year 10 for acquisition of/improvements to the Kuppenheimer building at 7700 42nd Avenue North. The loan approval was contingent upon both owners carrying $140,000 life insurance policies and the City taking 3rd position on the mortgage. Universal Color also agreed to provide an annual $2,000 maximum retail cost donation for in-kind services to the City. The City Attorney has prepared the enclosed loan documents containing the above conditions and the enclosed resolution approves the loan. Staff recommends approval of the resolution. Review: Administration: Finance: I I RFA-O01 ~ CORRICK & SONDP,~L, P.A. STEVEN A. SONDRALL ATTORNEYS AT LAW MICHAEL R. LAFL. EUR MARTIN P, MALECHA Edinburgh Execut/ve Office Plaza W.UAM C. SrHA~T 8525 Edinbrook Crossing Suite #203 Brooklyn Park, Minnesota 55443 TEL£PHONE IS~2) ~2S-~S?~ May 18, 1995 Daniel J. Donahue Executive Director Economic Development in and for the City of New Hope 4401Xy]on Avenue North New Hope, MN 55428 RE: Loan to 7700 Partnership, L.L.P. City Project No. 539 Our File No: 99.11138 Dear Dan: Enclosed you will find a Resolution authorizing a loan of $140,000.00 to 7700 Partnership, L.L.P., a Minnesota limited liability partnership consisting of Paul C. Anderson and Michael E. Diederichs. The documentation attached to the Resolution includes the following: 1. Mortgage Note. This promissory note calls for an interest rate of 8% with the loan amortized over 15 years and a balloon payment in 10 years. 2. Mortgage, Security Agreement and Fixture Financing Statement. This document will be recorded against the property to secure the promissory note. As you are aware, this Mortgage will be third in line behind a mortgage to Marquette Bank, N.A. and a mortgage to the Small Business Administration. 3. Assignment of Leases and Rents. In the event of failure by 7700 Partnership, L.L.P. to make payments under the Mortgage, the EDA can "intercept" the rents due the Partnership by its tenant, Universal Color, Inc. Again, this legal right will likely be third in line behind the Bank and the SBA. Mr. Daniel J. Donahue May 18, 1995 Page 2 4. Guaranty. This document is a personal guaranty signed by Paul C. Anderson and Michael E. Diederichs, and also signed by Universal Color, Inc. This Guaranty runs for the life of the loan. 5. Security Agreement. This Security Agreement gives the EDA a right to all of the equipment and other personal property of Universal Color, Inc. as security for Universal Color's obligations under the Guaranty. Under certain circumstances, this document will authorize the EDA to sell the equipment and other personal property of Universal Color, Inc. to satisfy its obligations to the EDA under the Guaranty. Again, Marquette Bank and the SBA will be ahead of the EDA with respect to this collateral. If the enclosed meets with EDA approval, the Resolution with attached Exhibits should be passed at the meeting on May 22nd. Please contact me with any questions. Sincerely, Martin P. Malecha s3t2 Enclosures cc: Kirk McDonald (w/eric) Valerie Leone (w/eric) Steven A. Sondrall, City Attorney EDA RESOLUTION NO. 95- RESOLUTION AUTHORIZING MORTGAGE TO 7700 PARTNERSHIP, L.L.P. FOR PROPERTY AT 7700 42ND AVENUE NORTH IMPROVEMENT PROJECT 539 WHEREAS, 7700 Partnership, L.L.P. ("Partnership") is a Minnesota limited liability partnership formed by Paul C. Anderson and Michael E. Diederichs ("Partners") and WHEREAS, the Partnership is attempting to purchase certain improved real estate at 7700 42nd Avenue North in the City of New Hope ("Property"), and together with the Partners plans to renovate the Property and move its photo processing business to the Property (the "Project", also designated by the City of New Hope as Improvement Project 539), and WHEREAS, financing for the purchase and improvement of the Property by the Partnership and the Partners will include a first mortgage to Marquette Bank, N.A. and a second mortgage from the Small Business Administration, combined with equity from the Partners of approximately $75,600.00, and WHEREAS, in order for the purchase and improvement of the property to go forward, the Partnership and Partners need an additional $140,000.00, and WHEREAS, the Property is located within a redevelopment district established pursuant to Redevelopment Plan 85-2, Redevelopment Project 85-2, the administration of which is governed by the EDA, and WHEREAS, the Project will result in improvement to the existing structure and the expected addition of five new full-time employment positions at the Property, and WHEREAS, the Project will eliminate the possibility of a vacant building at 7700 42nd Avenue North and within the Redevelopment area, and WHEREAS, completing the Project will allow Autohaus at 7675 42nd Avenue North, also within the Redevelopment area, to complete the improvements to property at 7675 42nd Avenue North, and WHEREAS, the completion of the Project will be in the best interests of the City and the Redevelopment District and its people and will further the general plan of economic development, and WHEREAS, the Partnership is requesting a loan of $140,000.00 from the EBA, and WHEREAS, such a loan is authorized by Minn. Stat. §469.090 to 469.108, and WHEREAS, the loan shall accure interest at a rate of eight (8%) percent per annum based on a 15 year amortization period and a final balloon after 10 years, and WHEREAS, the loan will be secured by life insurance on a declining term balance on the lives of Paul C. Anderson and Michael E. Diederichs, each life insurance policy in the amount of the loan balance, and WHEREAS, the loan will be further secured by a Third Mortgage upon the Property plus an Assignment of Leases and Rents, as well as a Guaranty by Universal Color, Irc. and Paul C. Anderson and Michael E. Diederichs personally, with the guaranty of Universal Color, Inc. secured by a security interest in favor of the EDA in all of its equipment, and WHEREAS, other terms and conditions of the loan are as set forth in the Mortgage, Security Agreement and Fixture Financing Statement attached hereto as Exhibit A, the Promissory Note attached hereto as Exhibit B, the Assignment of Rents and Leases attached hereto as Exhibit C, the Guaranty attached hereto as Exhibit D, and the Security Agreement attached hereto as Exhibit E, and WHEREAS, as a further condition of the loan, Universal Color, Inc. will provide an annual $2,000.00 maximum retail cost donation of photo development of services to the City for the life of the loan. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: 1. That all of the foregoing recitals are incorporated herein by reference. 2. That the loan to 7700 Partnership, L.L.P. in the amount of $140,000.00 as detailed above is hereby approved, conditioned upon the execution of the appropriate documents attached hereto as Exhibits A, B, C, D and E by 7700 Partnership, L.L.P. and other designated entities and further conditioned upon the execution of any other supporting documents required by the attorneys for EDA. 3. The loan is further conditioned upon the agreement by Color Lab, Inc. to provide the City of New Hope with an annual $2,000.00 retail cost donation of photo development services for the life of the loan. 4. That the President and Executive Director are authorized and directed to sign the Mortgage and other loan documents attached hereto as Exhibits A, B, C, D and E and are futher authorized and directed to sign any additional documents required to complete the loan. Adopted by the Economic Development Authority in and for the City of New Hope this day of , 1995. Edw. J. Erickson, Chairman Attest: Daniel J. Donahue, Executive Director MORTGAGE NOTE $140,000.OO , Minnesota , 1995 FOR VALUE RECEIVED, the undersigned, 7700 PARTNERSHIP, L.L.P., a Minnesota limited liability partnership (hereinafter "Borrower"), promises to pay to the order of ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE ("Lender"), (Lender and any holder of this Note from time to time are each hereafter sometimes referred to as "Holder") at its business address, 4401 Xylon Avenue North, New Hope, Minnesota 55428, or at such other place as may be designated in writing by the holder hereof, the principal sum of One Hundred Forty Thousand Dollars ($140,000.00); together with interest thereon at the rate of eight (8%) percent per annum from the date hereof, computed on the unpaid principal balance from time to time, in 120 monthly installments as follows: monthly installments of $1,337.91 with the first payment due one month after the date of this Note and all subsequent payments due on the same date of each succeeding month until the last installment, when any remaining principal balance and all accrued interest shall be paid in full. The last installment shall be a balloon payment. All payments received hereunder shall be applied first to the payment of interest and then to reduction of principal. This Note may be prepaid in full or in part at any time without penalty. 1 EXHIBIT A If any installment is paid more than fifteen (15) days after the due date thereof, the Borrower shall pay a late charge of 4% of the installment to cover the expenses of collection. This Note is secured by a Mortgage, Security Agreement and Fixture Financing Statement of even date herewith ("Mortgage") upon real property situated in Hennepin County, Minnesota. All of the terms and conditions contained id the Mortgage which are to be kept and performed by Borrower are hereby made a part of this Note and to the same extent and with the same force and effect as if they were fully set forth herein; and Borrower covenants and agrees to keep and perform them, or cause them to be kept and pe-rformed, strictly in accordance with their terms. Time is of the essence hereof. In the event of a default in the payment of any principal or interest due hereunder or in the payment or performance of anything by Borrower to be paid or performed under any of the terms and conditions in this Note or in the Mortgage, the Holder at its option and without further notice, demand or presentment for payment to Borrower or others, may declare immediately due and payable the unpaid principal balance and interest accrued thereon, together with any reasonable attorneys' fees incurred by Holder in collecting or enforcing payment thereof, whether suit be brought or not, and all other sums due by Borrower hereunder or under the Mortgage anything herein or in the Mortgage to the contrary notwithstanding, and payment thereof may be enforced and recovered in whole in or in part at any time by one or more of the remedies provided to Holder in this Note or in the Mortgage. The remedies of Holder as provided herein and in the Mortgage shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of Holder, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. Borrower waives presentment for payment, demand, notice of demand, notice of nonpayment or dishonor, protest and notice of protest of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note. Holder shall not be deemed by any act of omission or commission to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Holder, and then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. All agreements herein are expressly limited so that in no contingency or event whatsoever shall the amount paid or agreed to 3 be paid to the Holder for the use, forbearance or detention of the money to be advanced hereunder exceed the highest lawful rate permissible under applicable usury laws. If from any circumstances whatsoever fulfillment of any provision hereof at the time performance of such provisions shall be due, shall involve transcending the limit of validity prescribed by law which a court of competent jurisdiction may deem applicable hereto, then the obligation to be fulfilled shall be reduced to the limit of such validity and if from any circumstance the Holder shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the unpaid principal balance due hereunder and not to the payment of interest'. This instrument shall be governed by and construed according to the laws of the State of Minnesota. IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly executed this Note the day and year first above written. 7700 PARTNERSHIP, L.L.P., a Minnesota limited liability partnership By. Its'General Partner By. Its General Partner c:\ w p51 \cnh\7700. MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT THIS MORTGAGE is made this day of , 1995, between 7700 PARTNERSHIP, L.L.P., a Minnesota limited liability partnership ("Mortgagor"), and ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR CITY OF NEW HOPE with a business address at 4401 Xylon Avenue North, New Hope, MN 55428 ("Mortgagee"). WITNESSETH: WHEREAS, Mortgagor is justly indebted to Mortgagee in the principal sum of One Hundred Forty Thousand Dollars ($140,000.00), with interest thereon, until paid, pursuant to which Mortgagor has executed a Mortgage Note of even date herewith ("Note"), payable to the order of Mortgagee at its office aforesaid, or at such other place as the holder thereof may designate in writing, said principal sum being payable as set forth in the Note with interest at the rate set forth therein, to which Note reference fs hereby made; NOW, THEREFORE, THIS MORTGAGE WITNESSETH: That Mortgagor, in consideration of the premises and for the purpose of securing (1) payment of said indebtedness as in the Note provided, (2) payment of all other monies secured hereby, and (3) the performance of all the covenants, conditions, stipulations and agreements herein contained, does by these presents grant, bargain, sell and convey to Mortgagee, its successors and assigns, forever, the premises described in paragraphs A through D hereof and to hold all said property ("Mortgage Premises"), together with the possession and right of possession thereof, unto Mortgagee, its successors and assigns forever. A. REAL PROPERTY The "Real Property" conveyed hereby shall include the real estate and premises located in Hennepin County, Minnesota, described as follows: See Exhibit A attached, Together with all buildings, structures and improvements now standing, or at any time hereafter constructed or placed upon the above described real property, or any part thereof, including all 1 EXHIBIT B rights, privileges, interests, easements, tenements, hereditaments and appurtenances thereto; and Together with all machinery, apparatus, equipment, fittings and fixtures of every kind and nature whatsoever, affixed, attached or annexed to the premises and used in connection with the operation of the premises now owned or hereafter acquired by Mortgagor and the proceeds thereof ("Fixtures"), and all of the right, title and interest of Mortgagor in and for any Fixtures which may be subject to any security agreement superior to the lien of this Mortgage, Security Agreement and Fixture Financing Statement ("Mortgage"). It is understood and agreed that the aforesaid Fixtures are part of the premises and appropriated to the use of the premises and, regardless of the manner in which they may or may not be attached, affixed 'or annexed to the premises, shall for purposes of this Mortgage be deemed conclusively to be Fixtures and therefore a part of the real estate conveyed in this Mortgage. B. PERSONAL PROPERTY Mortgagor, in and for the same consideration, also by these presents grants to Mortgagee, it successors and assigns, a security interest in and to all personal property now owned or hereafter acquired by Mortgagor and used in connection with the construction, operation and maintenance of the Improvements on said Mortgage Premises, including, but not limited to, all building materials, furniture, furnishings, appliances, equipment, insurance proceeds, plans and specifications, surveys, drawings and other personal property now or hereafter owned by Mortgagor, or in which Mortgagor now or hereafter has an interest, and all inventory of Mortgagor on the premises and the proceeds thereof. C. RENTS, LEASES AND PROF[TS As further security for payment of the indebtedness and performance of the obligations, covenants and agreements secured hereby, Mortgagor hereby transfers, sets over and assigns to Mortgagee all leases, rents, issues and profits of the premises from time to time accruing, whether under leases or tenancies, now existing or hereafter created. D. JUDGMENTS AND AWARDS As further security for the payment of the indebtedness and performance of the obligations, covenants and agreements secured hereby, Mortgagor hereby transfers, sets over and assigns to Mortgagee all judgments, awards of damages and settlements hereafter made resulting from condemnation proceedings, or the 2 taking of the Mortgage Premises or any part thereof under the power of eminent domain, or for any damage (whether caused by such taking or otherwise) to the Mortgage Premises or the improvements and fixtures thereon or any part thereof, or to any rights appurtenant thereto, including any award for change of grade of streets. ARTICLE I GENERAL COVENANTS, AGREEMENTS AND WARRANTIES Section 1.1 Right and Authority to Mortgage. Mortgagor represents, warrants and covenants that it is the owner in fee simple of the Mortgage Premises; that it has good right and lawful authority to mortgage and pledge the same as provided for herein; that the Mortgage Premises are free from all liens and encumbrances, except those permitted encumbrances specifically set forth in Exhibit "B" attached and hereby made a part hereof ("Permitted Encumbrances"); that Mortgagee shall quietly enjoy and possess the same; that Mortgagor will warrant and defend the title to the Mortgage Premises against all claims and demands of others; that all buildings and improvements now or hereafter located on the Mortgage Premises are, or will be, located entirely within the boundaries of the Mortgage Premises. Section 1.2 Payment of Indebtedness. Mortgagor will promptly and fully pay each and every installment of principal and interest on the Note; Mortgagor will pay promptly all other sums secured hereby when the same shall become due and payable; and Mortgagor shall perform and observe all of the covenants, terms and provisions contained herein, and those contained in the Note and in any other instrument given as security for payment of the debt secured hereby. Mortgagor will also promptly and fully pay each installment of principal and interest on the promissory notes secured by those mortgages set forth on Exhibit B attached hereto, and will perform all other agreements and covenants to be performed by it under those mortgages set forth on said Exhibit B. Section 1.3 Maintenance and Repair of the Mortgage Premises. Mortgagor agrees that it will keep and maintain the Mortgage Premises in good condition and repair and that it shall not commit waste or misuse. Mortgagor further agrees to comply with all laws, ordinances, regulations, restrictions and covenants affecting the Mortgage Premises and their use and will promptly repair or restore any buildings, improvements or structures now or hereafter located on the Mortgage Premises which may become damaged or destroyed. Mortgagor agrees that it will not remove or demolish any building or structure now or hereafter erected on the Mortgage Premises. Section 1.4 Payment of Prior Liens and Encumbrances. Mortgagor agrees to pay promptly all operating costs and expenses of the Mortgage Premises; to keep the Mortgage Premises free from mechanics' or materialmen's liens and any other lien not specifically subordinated to the lien of this Mortgage; to keep the Mortgage Premises free from levy, execution or attachment; to pay immediately all indebtedness which may be secured by mortgage, lien or charge on the Mortgage Premises that is superior to or equal to the lien of this Mortgage, except indebtedness secured by those Mortgages listed on the attached Exhibit B; and, at Mortgagee's request, to give Mortgagee satisfactory evidence of such payment and discharge. Section 1.5 Payment of Taxes, Assessments and Charges. Mortgagor will pay when the same is due and before any penalty attaches, all taxes, assessments, water charges, sewer charges, and other fees, taxes, charges and assessments of every kind and nature whatsoever assessed or charged against or constituting a lien on the Mortgage Premises or any interest therein or upon the indebtedness secured hereby ("Taxes and Assessments") and will upon demand furnish to Mortgagee proof of payment of any such Taxes and Assessments. Section 1.6 Protection of Security. Mortgagor agrees to promptly notify Mortgagee of and to appear in and defend any suit, action or proceeding that may affect the value of the Mortgage Premises, the indebtedness secured hereby or the rights or interest of Mortgagee hereunder, including, but not limited to, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankruptcy or decedent. Mortgagee may elect to appear in or defend any such action or proceeding and may disburse such sums and take such action as is necessary to protect Mortgagee's interest including, but not limited to, entry upon the Mortgage Premises to make repairs. Mortgagor agrees to indemnify and reimburse Mortgagee for any and all loss, damage, expense or cost, including reasonable attorneys' fees, arising out of or incurred in connection with any suit, action or proceeding. Section 1.7 Insurance. (a) So long as the Indebtedness remains unpaid, the Mortgagor shall, at its own cost, maintain with insurers of recognized responsibility acceptable to the Mortgagee, insurance coverage on its physical assets and against other business risks in such amounts and of such types as are customarily carried by entities similar in size and nature, and in the event of acquisition of additional property, real or personal, or of incurrence of additional risks of any nature, increase such insurance coverage in such manner and to such extent as prudent business judgment and present practice would dictate; and in the case of all policies covering property mortgaged or pledged to Lender or property in which Lender shall have a security interest of any kind whatsoever, other than those policies protecting against casualty liabilities to strangers, all such insurance policies shall provide that the loss payable thereunder shall be payable to the Borrower and Lender as their respective interests may appear, all said coverage to be shown on an Acord 25 Certificate of Insurance. Insurance coverage shall specifically include hazard and fire insurance on any improvements insuring against loss by fire, hazards included in the term "extended coverage", loss by vandalism or malicious mischief, and such other hazards, casualties and contingencies as may be required by the Mortgagee, on the basis of replacement cost without a co-insurance clause, in an amount sufficient to prevent the Mortgagor from becoming a co-insurer or any loss thereunder and at least equal to the sum of the unpaid balance of the Indebtedness'and all amounts secured by any senior mortgage or other lien which exists from time to time against the Mortgaged Property (to which the Mortgagee does not necessarily consent) or such additional amounts and for such periods as may be_required by the Mortgagee. The Mortgagor shall pay all premiums on insurance required hereunder by making payment directly to the insurer. The Mortgagee shall have the right to hold the policies and renewals thereof, and the Mortgagor shall promptly furnish to the Mortgagee all such policies, renewals thereof, renewal notices and all paid-premium receipts received by it. All policies of insurance and any and all refunds of unearned premiums are hereby assigned to the Mortgagee as additional security for the payment of the Indebtedness secured hereby. In the event of foreclosure of this Mortgage, all right, title and interest of the Mortgagor in and to any insurance policies then in force shall pass to the purchaser at the foreclosure sale. (b) The policies of all such insurance shall have loss payable provisions in favor of and in form acceptable to the Mortgagee, shall provide for at least thirty (30) days prior to written notices of cancellation, termination or modification thereof to the Mortgagee, shall permit Mortgagee to make premium payments to prevent cancellation, and shall provide that no act or negligence of the Mortgagor or of any occupant of the Mortgaged Property, and no occupancy or use of the Mortgaged Property for purposes more hazardous than permitted by the terms of the policy, will affect the validity or enforceability of such insurance as against Mortgagee. In the event of loss under such insurance the Mortgagor shall give prompt notice to the insurance carrier and the Mortgagee; Mortgagor shall duly make proof of loss, and shall immediately furnish to Mortgagee a copy of such proof of loss. The Mortgagee is authorized and empowered to collect and receive all insurance proceeds, and if no Event of Default has occurred under this Mortgage, it will apply such proceeds to the restoration of the Property and make disbursements thereof accordingly. Any insurance proceeds not so applied shall be applied to the payment of the Indebtedness. ARTICLE I! UNIFORM COMMERCIAL CODE Section 2.1 Security Agreement. It is agreed by the parties that this Mortgage shall constitute a security agreement as defined in the Uniform Commercial Code ("Code"), and Mortgagor hereby grants to Mortgagee a security interest within the meaning of the Code in favor of Mortgagee on all personal property, rents, issues, profits, leases, proceeds thereof, judgments and awards ("Collateral") that are included in the Mortgage Premises. Section 2.2 Fixture Filing. It is intended that this Mortgage shall be effective as a financing statement filed as a fixture filing from the date of its filing in the real estate records of the county where the Mortgage Premises are located with respect to those items of Collateral described in this Mortgage that are, or are to become, Fixtures related to the real estate mortgaged herein. The name of the record owner of said real estate is the Mortgagor set forth in page one of this Mortgage. Information concerning the security interest created by this instrument may be obtained from Mortgagee, as secured party, at its address as set forth on page one of this Mortgage. This document covers goods which are or are to become Fixtures. Section 2.3 Representation and Agreements. Mortgagor warrants to Mortgagee as follows: (a) Mortgagor is or, will be (in the case of property not yet acquired) the true and 1,awful owner of Collateral mentioned in any financing statement, subject to no liens, charges, security interests or encumbrances other than the lien hereof, and the liens previously disclosed by written notice to Mortgagee; (b) The Collateral is to be used by Mortgagor solely for business purposes, being installed upon the Mortgage Premises for Mortgagor's own use or as the equipment and furnishings leased or furnished by Mortgagor, as landlord, to tenants of the Mortgage Premises; (c) The Collateral will be kept at the buildings comprised on the Mortgage Premises and will not be removed therefrom without the consent of Mortgagee, and the same may be affixed to any such building but will not be affixed to any other real estate; (d) Unless stated otherwise in this Mortgage and except for the interest of those mortgagees set forth in the attached Exhibit B, the only persons having any interest in the Col lateral are Mortgagor, Mortgagee and the tenants (whose interests, if any, are subordinate to the rights of Mortgagee) and no financing statement covering any such property and any proceeds thereof is on file in any public office except as set forth herein; (e) The remedies of Mortgagee hereunder are cumulative and separate, and the exercise of any one or more of the remedies provided for herein or under the Code shall not be construed as a waiver of any of the other rights of Mortgagee, including having such Collateral deemed a part of the realty of any foreclosure; (f) If notice to any party of the intended disposition of the Collateral is required by law in a particular instance, such notice shall be deemed commercially reasonable if given at least ten (10) days prior to such intended disposition and may be given by mail at the address herein specified, either separately or as a part of the notice given to foreclose the real property or may be given by private notice if such parties are known to Mortgagee; (g) The filing of a financing statement pursuant to the Code shall never impair the stated intention of this Mortgage that all equipment, personal property and Fixtures comprising the Collateral are, and at all times and for all purposes and all proceedings, both legal or equitable, shall be regarded as part of the Mortgage Premises hereunder, regardless of whether such item is physically attached to the real property or any such item is referred to or reflected in a financing statement; (h) Mortgagor will, on demand, furnish all financing st atements that may from time to time be required by Mortgagee to establish and perfect the priority of Mortgagee's security interest in such Collateral; and (i) Mortgagor shall give advance written notice of any proposed change in Mort gagor's name, identity or structure and will execute and deliver to Mortgagee prior to or concurrently with such change all additional financing statements that Mortgagee may requi re to establish and perfect the priority of Mort gages' s security interest, ARTICLE III EVENTS OF DEFAULT Section 3.1 Default. It shall be an "Event of Default" under this Mortgage if: (a) Mortgagor shall fail to pay when due any pnincipal, interest or any other amount due hereunder or under the Note, whether at the stated maturity date or on a date fixed for the payment of any installment or otherwise or shall fail to comply with the provisions of Section 1.2 hereof; (b) Mortgagor shall default under, fail to comply with or fail to perform any of the terms, conditions or covenants of the Note, this Mortgage, or any other instrument securing the Note; (c) Mortgagor shall fail to pay when due any other indebtedness secured hereby; (d) Any representation or warranty made by or on behalf of Mortgagor in connection with the application for and/or closing of the loan evidenced by the Note proves to have been false or misleading in any material respect; (e) Mortgagor shall default in the performance of any obligation contained in any documents evidencing any other indebtedness owed to Mortgagee or relating thereto; (f) Mortgagor shall sell, transfer, convey or further encumber the Mortgage Premises; 8 (g) A custodianship, trusteeship, receivership or assignment for the benefit of creditors shall be imposed upon Mortgagor or the Mortgage Premises (or a substantial part thereof) or shall be filed by or against Mortgagor or any other person or petitioner for debtor's relief under any state or federal bankruptcy, reorganization or insolvency and the same shall not be discharged within a period of sixty (60) days; (h) Mortgagor or any maker, guarantor or surety of the Note shall be adjudicated incompetent or die and satisfactory provisions are not made for the substitution of the liability of said party's estate for the repayment of the indebtedness secured hereby; or (i) Mortgagor shall allow to lapse a term life insurance policy on the lives of each of Paul C. Anderson and Michael E. Diederichs in the face amount of $140,000.00 for each policy wherein Mortgagee is named as beneficiary. Said life insurance policy has been provided as additional security for the payment of the Mortgage Note. (j) There is any change in the partnership structure of Mortgagor, whether voluntary or involuntary. Section 3.2 Mortgagee's Right to Foreclose. If an Event of Default shall occur, Mortgagee may immediately and without further notice to Mortgagor declare the entire unpaid principal balance of the Note, together with all other indebtedness secured hereto, to be immediately due and payable, and, thereupon, all of such unpaid principal balance of the Note, together with all accrued interest thereon and all other indebtedness secured hereby, shall be and become immediately due and payable, and Mortgagor hereby authorizes and fully empowers Mortgagee to foreclose this Mortgage by judicial proceedings or by advertisement with full authority to sell the Mortgage Premises and convey the same to the purchaser in fee simple, all in accordance with and in the manner prescribed by law; and out of the proceeds arising from the sale in foreclosure, to retain the principal and interest due on the Note and the indebtedness secured hereby, together with all sums of money as Mortgagee shall have expended or advanced pursuant to this Mortgage or pursuant to statute together with interest thereon as herein provided and all costs and expenses of such foreclosure, including lawful attorneys' fees; the balance after payment of all said sums, if any, to be paid to the persons entitled thereto by law. 9 Section 3.3 Receiver. If an Event of Default shall occur, Mortgagee shall be entitled, as a matter of right, without notice and without giving bond and without regard to the solvency or insolvency of Mortgagor, or waste of the Mortgage Premises or adequacy of the security of the Mortgage Premises for the indebtedness secured hereby, to apply for the appointment of a receiver in accordance with law, who shall collect the rents and all other income of any kind, manage the Mortgage Premises so as to prevent waste, execute leases within or beyond the period of receivership, pay all expenses for normal maintenance of the Mortgage Premises, perform the terms of this Mortgage and apply the rents, issues and profits in the following order: (a) Payment of the fees of-said receiver; (b) Application of any tenants' security deposits as required by Minn. Stat. §504.20, if applicable; (c) Payment when due of prior or current-real estate taxes or special assessments with respect to the Mortgage Premises; (d) Payment of periodic escrow payments for such taxes or special assessments, if required by this Mortgage or those mortgages listed on Exhibit B attached hereto; (e) Payment when due of the premiums for insurance of the type required by this Mortgage, or if required by this Mortgage or those mortgages listed on said Exhibit B, payment of the periodic escrow for the payment of said insurance premiums; (f) Keeping of the covenants required of lessor or licensor pursuant to Minn. Stat. §504.18, Subd. 1, if applicable; and (g) As provided in the Assignment of Leases and Rents executed by Mortgagor as further security for the indebtedness secured hereby (whether included in this Mortgage or separate instrument), including, but not limited to, applying the same to the cost and expenses of receivership, including attorneys' fees, to the repayment of the indebtedness secured hereby and to the operation, maintenance, upkeep and repair of the Mortgage Premises, including payment of taxes on the Mortgage Premises and payment of premiums of insurance on the Mortgage Premises. Mortgagor does hereby irrevocably consent to such appointment of receiver. 10 Section 3.4 Rights Under the Uniform Commercial Code. In addition to the rights available to a mortgagee of real property, Mortgagee shall have all rights, remedies and recourse available to a secured party under the Code, including the right to proceed under the provisions of the Code governing default, as to any personal property which may be included in the Mortgage Premises or which may be deemed non-realty in a foreclosure of this Mortgage or to proceeds of such personal property. Section 3.5 Right to Discontinue Proceedings. In the event Mortgagee shall have proceeded to invoke any right, remedy or recourse permitted under this Mortgage and shall thereafter elect to discontinue or abandon the same for any reason, Mortgagee shall have the unqualified right to do so and in such event Mortgagor and Mortgagee shall be restored to their former positions with respect to the indebtedness secured hereby. This Mortgage of the Mortgage Premises and all the rights, remedies and recourse of Mortgagee shall then continue as if the same had not been invoked. Section 3.6 AcknowledQment of Waiver of Hearing Before Sale. Mortgagor understands and agrees that upon the occurrence of an Event of Default under the terms of this Mortgage, Mortgagee has the right, inter alia, to foreclose this Mortgage by advertisement pursuant to Minn. Stat. Chapter 580, as hereafter amended, or pursuant to any similar or replacement statute hereafter enacted; that if Mortgagee elects to foreclose by advertisement, it may cause the Mortgage Premises, or any part thereof, to be sold at public auction; that notice of such sale must be published for six (6) successive weeks at ]east once a week in a newspaper of general circulation and that no personal notice is required to be served upon Mortgagor. Mortgagor further understands that upon the occurrence of such Event of Default, Mortgagee may also elect its rights under the Code and take possession of the Personal Property and dispose of the same by sale or otherwise in one or more parcels provided that at least ten. (10) days' prior notice of such disposition must be given, all as provided for by the Code, as hereafter amended or by any similar or replacement statute hereafter enacted. Mortgagor further understands that under the Constitution of the United States and the Constitution of the State of Minnesota it may have the right to notice and hearing before the Mortgage Premises may be sold and that the procedure for foreclosure by advertisement described above does not insure that notice will be given to Mortgagor and neither of said procedures for foreclosure by advertisement nor the Code requires any hearing or other judicial proceeding. MORTGAGOR HEREBY RELINQUISHES, WAIVES AND GIVES UP ANY CONSTITUTIONAL RIGHTS IT MAY HAVE TO NOTICE AND HEARING BEFORE SALE OF THE MORTGAGE PREMISES AND EXPRESSLY 11 CONSENTS AND AGREES THAT THE MORTGAGE PREMISES MAY BE FORECLOSED BY ADVERTISEMENT AND THAT THE PERSONAL PROPERTY MAY BE DISPOSED OF PURSUANT TO UNIFORM COMMERCIAL CODE, ALL AS DESCRIBED ABOVE. MORTGAGOR ACKNOWLEDGES THAT IT IS REPRESENTED BY LEGAL COUNSEL; THAT BEFORE SIGNING THIS DOCUMENT, THIS PARAGRAPH AND MORTGAGOR'S CONSTITUTIONAL RIGHTS WERE FULLY EXPLAINED BY SUCH COUNSEL AND THAT MORTGAGOR UNDERSTANDS THE NATURE AND EXTENT OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF SUCH WAIVER. ARTICLE IV OTHER PROVISIONS Section 4.1 All Notices. All notices provided for herein shall be in writing and shall be deemed to have been given when delivered personally or when deposited in the United States mail, registered or certified, return receipt requested, postage prepaid, addressed as follows, or otherwise as the respective parties hereto may give notice in writing from time to time, to-wit: If to Mortgagor: 7700 Partnership, L.L.P. If to Mortgagee: Economic Development Authority in and for City of New Hope 4401Xylon Avenue North New Hope, MN 55428 Section 4.2 Choice of Law. The loan secured by this Mortgage is intended by the parties to be a Minnesota loan, and this Mortgage is made and executed under the laws of the State of Minnesota and is intended to be governed by the laws of that state, without giving effect to those provisions of law relating to choice of law. Section 4.3 Successors and Assigns. This Mortgage and each and every covenant, agreement or other provision herein contained shall be binding upon Mortgagor and its heirs and assigns and shall inure to the benefit of Mortgagee and its successors and assigns. Section 4.4 Severability. The unenforceability or invalidity of any provisions hereof shall not render any other provision or provisions herein contained unenforceable or invalid. 12 Section 4.5 Captions and Headings. The captions and hearings of the various sections of this Mortgage are for convenience only and are not to be construed to confine or limit in any way the scope or intent of the provisions hereof. Whenever the contents require or permit, the singular shall include the plural, and the plural shall include the singular, and the masculine, feminine and neuter genders shall be freely interchangeable. Section 4.6 Release of Mortgage. When all indebtedness secured hereby has been paid, this Mortgage and all assignments herein contained shall be void and this Mortgage shall be released by Mortgagee at the cost and expense of Mortgagor; otherwise, it shall remain in full force and effect. Section 4.7 Hazardous Materials. Mortgagor covenants, represents and warrants to Mortgagee, its successors and assigns, that during the Mortgagor's ownership of the Property, the operation of said Property has not violated and is not currently violating any federal, state or local law, regulation, ordinance or requirement governing Hazardous Materials; that the Property is not listed in the United States Environmenta. 1 Protection Agency's National Priorities List of Hazardous Waste Sites nor any other list, schedule, log, inventory or record of Hazardous Materials or hazardous waste sites, whether maintained by the United States Government or any state or local agency, and that the building improvements do not contain any formaldehyde, urea or asbestos, except as may have been disclosed in writing to the Mortgagee by the Mortgagor at the time of execution and delivery of this Mortgage. The Mortgagor agrees to indemnify and reimburse the Mortgagee, its successors and assigns, for any breach of these representations and warranties and from any loss, damage, expense or cost arising out of or incurred by Mortgagee which is the result of a breach of, misstatement of or misrepresentation of the above covenants, representations and warranties, together with all attorneys' fees incurred in connection with the defense of any action against the Mortgagee arising out of the above. These covenants, representations and warranties shall be deemed continuing covenants, representations and warranties for the benefit of the Mortgagee, including any purchaser at a mortgage foreclosure sale, any transferee of the title of the Mortgagee or any subsequent purchaser at a foreclosure sale, and any subsequent owner of the Property and shall survive any foreclosure of the Mortgage and any acquisition of title by Mortgagee or anyone claiming through or under the Mortgage as the title of the Mortgagee. The amount of all such indemnified loss, damage, expense or cost, shall bear interest thereon at the rate of interest in effect on the Note and shall become so much additional 13 indebtedness, secured by this Mortgage and shall become immediately due and payable in full on demand of the Mortgagee, its successors and assigns. Said indemnity shall only apply in connection with the conditions which were in existence, in whole or in part, prior to the date on which Mortgagee acquires possession and title to the Property and shall not apply in connection with liability of the Mortgagee due to action taken by it or its assigns while it was Mortgagee. Section 4.8 Entire Agreement. The Note, this Mortgage, the Guaranty and all other instruments securing the Note ("Loan Documents") contain the entire agreement between Mortgagor and Mortgagee relating to or connected with the loan to Mortgagor secured hereby. Any other agreements relating to or connected with the loan secured hereby not expressly set forth in the Loan Documents are null and void and superseded in their entirety by the provisions of the Loan Documents. IN TESTIMONY WHEREOF, Mortgagor has caused these presents to be executed as of the date first above written. 7700 PARTNERSHIP, L.L.P., a Minnesota limited liability partnership By Its General Partner By Its General Partner STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 1995, by and , the general partners of 7700 Partnership, L.L.P., a limited liability partnership under the laws of Minnesota, on behalf of said limited liability partnership. Notary Public 14 THIS DOCUMENT WAS DRAFTED BY: CORRICK & SONDRALL, A PARTNERSHIP OF PROFESSIONAL CORPORATIONS Attorneys at Law 8525 Edinbrook Crossing, #203 Brooklyn Park, MN 55443 (612) 425-5671 c: \ ~ p51 \cnh\ucl. mtg 15 EXHIBIT A That part of Tract A lying South of a line drawn at right angles to the West line of said Tract A from a point thereon 200 feet North from the Southwest corner of Tract A except the West 125 feet thereof; and Tract B. Registered Land Survey No. 1282, Files of Registrar of Titles, County of Hennepin. All in Hennepin County, Minnesota. EXHIBIT B Permitted Encumbrances 1. First Mortgage to Marquette Bank, N.A., a national banking association. 2. A Mortgage to the U.S. Small Business Administration under its Section 504 Program. ASSIGNMENT OF LEASES AND RENTS THIS AGREEMENT is made this day of , 1995, by 7700 PARTNERSHIP, L.L.P., a Minnesota limited liability partnership, party of the first part, its successors and assigns (the "Borrower") to the ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, party of the second part, its successors and assigns (the "Lender"). WHEREAS, Borrower has this day executed to the Lender a Loan Note in the principal sum of One Hundred Forty Thousand and No/lO0 Dollars ($140,000.00); and WHEREAS, as further security for the payment of the p-rincipal balance and interest coming due on said Note and the full and complete performance of the covenants, agreements and promises contained in the Note, Borrower wishes to assign to Lender all of Borrower's right, title and interest in the Lease(s) hereinafter described; NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Borrower, Borrower hereby grants, transfers and assigns to Lender: 1. All of the Borrower's interest in and to the "Leases". The term "Leases" as used in this Assignment shall be deemed to include any and all of the leases now or hereafter placed during the term of this Assignment upon the land (the "Land") and the EXHIBIT C improvements (the "Improvements") (the Land and the Improvements, hereinafter collectively, the "Project") covered by that certain Mortgage, Security Agreement and Fixture Financing Statement (the "Mortgage") of even date herewith executed by the Borrower to the Lender, the Land being more fully described in Exhibit "I" attached hereto and made a part hereof. 2. All rents, income, receipts and revenue arising from the Lease(s) and all renewals and extensions thereof. The Lease(s) and all rents, income, issues, benefits, proceeds and revenues assigned hereby are hereinafter sometimes collectively referred to as "Collateral" I. THIS ASSIGNMENT is made for the purpose of providing additional security for the Note, and shall secure: A, The payment of the principal sum, interest and any Other indebtedness evidenced by the Note (as said Note may hereafter be extended, renewed and modified) of even date herewith executed by Borrower, payable to the Lender in the original principal sum of One Hundred Forty Thousand and No/lO0 Dollars ($140,000.00) and secured by the Mortgage. B. The payment of all other sums with interest thereon being due and payable to the Lender under the provisions of this Assignment or of the Note, the Mortgage, or any other instruments evidencing, securing, or concerning the Note (hereinafter the Note, the Mortgage, this Assignment and said other instruments are sometimes collectively referred to as the "Loan Documents"). C. The performance and discharge of each and every obligation, covenant and agreement of the Borrower contained in the Loan Documents. THE BORROWER COVENANTS with the Lender (i) to observe and perform all the obligations imposed upon the lessors under any Lease(s) and not to do or permit to be done anything to impair the Lender's security (ii) not to collect any of the rent, revenue, or income arising or accruing under any Lease(s) or from the Project materially in advance of the time when the same shall become due; (iii) except for an assignment subject to the terms of this Assignment, not to execute any other assignments of lessors' interest in any Lease(s) or assignments of rents arising or accruing from the Lease(s) or from the Project; (iv) not to subordinate the Lease(s) to any encumbrances or to permit, consent or agree to such subordination without the Lender's prior written consent; (v) not to materially alter, modify or change the terms of any Lease(s) or give any consent or exercise any option required or permitted by such terms without the prior written consent of the Lender; (vi) not to cancel or terminate any Lease(s) or to accept a surrender thereof or to convey, transfer, suffer or permit a conveyance or transfer of the Project or portion thereof or of any interest therein so as to effect, directly or indirectly, proximately or remotely, a termination or diminution of the obligations of, lessees thereunder; (vii) not to alter, modify or 3 change the terms of any guaranty of any Lease(s) or cancel or terminate such guaranty without the prior written consent of the Lender; (viii) at the Lender's request to execute and deliver ail such further assurances and assignments in the Project as the Lender shall from time to time reasonably require, including without limitation assignments of leases not yet executed; (ix) to keep any Lease(s) free from any liens, encumbrances or security interests whatsoever and (x) to maintain any Lease(s) in full force and effect, to enforce all Lease(s) in accordance with their terms, to appear in and defend any action or proceeding arising under or in any manner connected with any of the Collateral and to give prompt written notice to the Lender of any claim of material default under any Lease(s) together with a true and complete copy of any such claims. III. THIS ASSIGNMENT is made on the following terms, covenants and conditions: 1. So long as (a) there shall exist no default by the Borrower in the timely payment of the indebtedness secured by the Mortgage or in the performance of any other obligation, covenant or agreement set forth in the Loan Documents or in the Lease(s) to be performed by the Borrower, (b) none of the statements, representations or warranties made or furnished to the Lender by or on behalf of the Borrower with respect to the Loan Documents be untrue or incomplete in any material respect as of the date made and (c) the Project is not subject to garnishment, levy, attachment or lien, then in such event the Borrower shall have the right to collect at the time'of, but not prior to, the date provided for the payment thereof, all rents, income, receipts, revenue and proceeds arising under all Lease(s) or from the Project described therein and to retain, use and enjoy the same. 2. Upon or at any time after default in the timely payment of the indebtedness secured by the Mortgage or default in the performance of any obligation, covenant or agreement set forth in the Loan Documents or any Lease(s), or if any of the statements, representations or warranties made or furnished to the Lender by or on behalf of the Borrower with respect to the Loan Documents be untrue or incomplete in any material respect as of the date made, or if the Project is subjected to garnishment, levy, attachment or lien,.then in any such event the Lender, without in any way waiving such default, may at its option without notice and without regard to the adequacy of the security for the indebtedness secured by the Mortgage, either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, take possession of the Project or any portion thereof, have, hold, manage, lease and operate the same on such terms and for such period of time as the Lender may deem appropriate and, either with or without taking possession of the Project in its own name, demand, sue for or otherwise collect and receive all rents, revenue and income of the Project, including those past due and unpaid with full power to make from time to time all alterations, renovations, repairs or replacements thereto or thereof as may seem proper to 5 the Lender and to apply such rents, income and profits to the fo]lowing items in the following order of priority: (a) to payment of all reasonable fees of the receiver, if any, approved by the court; (b) to the repayment when due of all tenant security deposits, if any, with interest thereon, pursuant to the provisions of Minnesota Statutes §504.20; (c) to payment of all delinquent or current real estate taxes and special assessments payable with respect to the Project, or if the Mortgage requires periodic escrow payments for such taxes and assessments, to the escrow payments then due; (d) to payment of all premiums then due for the insurance required by the provisions of the Mortgage, or if the Mortgage requires periodic escrow payments for such premiums, to the escrow payments then due; (e) to payment of expenses incurred for normal maintenance of the Project; and (f) to payment of the indebtedness secured by the Mortgage, together with ail costs and attorneys' fees, in such order or priority as to any of the items mentioned in this paragraph as the Lender in its sole discretion may determine, any statute, law, custom or use to the contrary notwithstanding. The exercise by the Lender of the options granted it in this paragraph and the collection of the rents, income and profits and the application thereof as herein provided shall not be considered a waiver of any default of the Borrower under the Loan Bocuments. 3. The Lender shall not be liable for any loss sustained by the Borrower resulting from the Lender's failure to let the Project after default or from any other act or omission of the Lender in managing the Project after default un]ess such loss is caused by 6 the willful misconduct and bad faith of the Lender. The Lender shall not be obligated to perform or discharge any obligation, duty or liability under any Lease(s) or under or by reason of this Assignment and the Borrower shall, and does hereby agree to, indemnify the Lender for, and to hold the Lender harmless from, any and all liability, loss or damage which may or might be incurred under any Lease(s) or under or by reason of this Assignment and from any and all claims and demands whatsoever which may be asserted against the Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in any Lease(s). Should the Lender incur any such liability under any Lease(s) or under or by reason of this Assignment or in defense of any such claims or demands, the amount thereof, including costs, expenses and reasonable attorneys' fees, shall be secured hereby and by the Mortgage, and the Borrower shall reimburse the Lender for such amounts immediately upon demand, It is further understood that this Assignment shall not operate to place responsibility upon the Lender either for the oontrol, care, management or repair of the Project or for the carrying out of any of the terms and conditions of any Lease(s); neither shall this Assignment operate to make the Lender responsible or liable for any waste committed on the Project by the tenants or any other parties, or for any dangerous or defective condition of the Project, or for any negligence in the management, upkeep, repair or control of the Project resulting in 7 loss or injury or death to any tenant, licensee, employee or stranger. 4. Upon payment in full of the indebtedness secured by the Mortgage, this Agreement shall become and be void and of no effect, but the affidavit, certificate, letter or statement of any officer, agent or attorney of the Lender showing any part of the indebtedness to remain unpaid shall be and constitute conclusive evidence of the validity, effectiveness and continuing force of this Assignment and any person may, and is hereby authorized to, rely thereon. The Borrower hereby authorizes and directs any lessees named in any Lease(s) or any other or future lessee or occupant of the Project, upon receipt from the Lender of written notice to the effect that the Lender is then the holder of the Note and the Mortgage and that a default exists thereunder or under the Assignment, to pay over to the Lender all rents, revenues and income arising or accruing under any Lease(s) or from the Project and to continue so to do until otherwise notified by the Lender. 5. The Lender may take or release other security for the payment of said indebtedness, may release any party primarily or secondarily liable therefor and may apply any other security held by the Lender to the satisfaction of such indebtedness without prejudice to any of the Lender's rights under this Assignment. 6. Nothing contained in this Assignment and no act done or omitted by the Lender pursuant to the powers and rights granted to the Lender hereunder shall be deemed to be a waiver by the Lender of the Lender's rights and remedies under the Loan Documents. This 8 Assignment is made and accepted without prejudice to any of the rights and remedies possessed by the Lender under the terms thereof. The right of the Lender to collect said indebtedness and to enforce any other security held by the Lender may be exercised by the Lender either prior to, simultaneously with, or subsequent to any action taken by the Lender hereunder. 7. In case of any conflict between the terms of this Assignment and the terms of the Mortgage, the terms of this Assignment shall prevail, but whenever possible, the provisions hereof shall be deemed supplemental to and not in derogation of the provisions of the Mortgage. 8. Neither this Assignment nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver', discharge or termination is sought. 9. Whenever the singular or plural number, or the masculine, feminine or neuter gender is used herein, it shall equally include the other. 10. This Assignment shall be governed by and interpreted in accordance with the laws of the State of Minnesota. 11. Time is of the essence in this Assignment. THIS ASSIGNMENT, together with the covenants and warranties herein contained, shall inure to the benefit of the Lender and any subsequent holder of the Note and the Mortgage and shall be binding upon the Borrower and the Borrower's successors and assigns and any subsequent owner of the Project. IN WITNESS WHEREOF, the Borrower has caused this Assignment to be duly executed as of the day and year first above written. 7700 PARTNERSHIP, L.L.P., a Minnesota limited liability partnership By Its General Partner By Its General Partner STATE OF MINNESOTA ) ) SS. COUNTY OF ) On this day of , 1995, before me, a Notary Public within and for said County, personally appeared and , to me personally known, who being each by me duly sworn, did say that they are both partners of 7700 PARTNERSHIP, L.L.P., a Minnesota limited liability partnership, named as Borrower in the foregoing instrument; and said individuals acknowledge said instrument to be the free act and deed of said limited liability partnership. Notary Public THIS INSTRUMENT DRAFTED BY: CORRICK & SONDRALL, P.A. 8525 Edinbrook Crossing, Suite 203 Brooklyn Park, MN 55443 (612) 425-5671 c:\ wp51\cnh\7700.l&r 10. GUARANTY (InCluding Subordination) , Minnesota THIS GUARANTY, made and entered into this day of , 1995, by PAUL C. ANDERSON, MICHAEL E. DIEDERICHS, and UNIVERSAL COLOR, INC., a Minnesota corporation (hereinafter collectively referred to as the "Guarantors"), to the ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, (hereinafter referred to as the "Lender"). RECITALS' A. Paul C. Anderson and Michael E. Diederichs are the partners of 7700 Partnership, L.L.P., a Minnesota limited liability partnership (hereinafter referred to as the "Debtor"), which is the owner of certain real estate located in the County of Hennepin, State of Minnesota, (hereinafter referred to as the "Premises"). B. Universal Color, Inc. is a corporation in which a controlling interest is owned by Paul C. Anderson and Michael E. Diederichs. C. The Debtor and the Lender agree that the Lender will make a mortgage loan ("Loan") to the Debtor in the principal amount of One Hundred Forty Thousand and No/lO0 Dollars ($140,000.00) which Loan is evidenced by a Loan Note of even date herewith from the Debtor to the Lender (hereinafter referred to as the "Note") to be disbursed pursuant to a Loan Agreement of even date. D. To secure payment of the Note, the Debtor has executed and delivered to the Lender a Mortgage, Security Agreement and Fixture Financing Statement of even date herewith (hereinafter referred to as the "Mortgage"), and an Assignment of Leases and Rents of even date herewith (hereinafter referred to as the "Assignment of Leases"), covering the Premises. E. In order to induce the Lender to make the Loan and accept the Note, the Mortgage and Assignment of Leases and as additional security for the Loan and all monies to be advanced under the Note, the Mortgage and the Assignment of Leases, and performance of all obligations specified in the Loan Agreement, the Guarantors have agreed to give this Guaranty. NOW, THEREFORE, in consideration of the premises, the Guarantors hereby, jointly and severally, covenant and agree with the Lender as follows: EXHIBIT D 1. The Note, the Mortgage, the Assignment of Leases and Loan Agreement are hereby made a part of this Guaranty by reference thereto with the same force and effect as if fully set forth herein (said documents are sometimes hereafter referred to collectively as the "Loan Documents"). 2. The Guarantors hereby, jointly and severally, unconditionally and absolutely, guarantee to Lender the due and prompt payment, and not just the collectibility, of the principal and interest and late charges and all other indebtedness, if any, on the Note, when due, whether at maturity, pursuant to mandatory or optional prepayments, by acceleration or otherwise all at the times and places and at the rates described in, and otherwise according to the tenor of the Note, the Mortgage and the Assignment of Leases. 3. The Guarantors further hereby jointly and severally, unconditionally and absolutely guarantee to Lender the due and prompt performance by the Debtor of all duties, agreements and obligations of the Debtor contained in the Note, the Mor,tgage, the Assignment of Leases, and Loan Agreement respectively, and the due and prompt payment of all costs incurred, including attorneys' fees, in enforcing the payment and performance of the Note, the Mortgage, the Assignment of Leases, Loan Agreement and this Guaranty (the payment and performance of the items set forth in Paragraphs 2 and 3 of this Guaranty being hereinafter collectively referred to as the "Indebtedness Guaranteed"). 4. The Guarantors hereby agree that the Lender may from time to time without notice to or consent of the Guarantors and upon such terms and conditions as the Lender may deem advisable without affecting this Guaranty (a) re]ease any maker, surety or other person liable for payment of all or any part of the Indebtedness Guaranteed; (b) make any agreement extending or otherwise altering the time for or the terms of payment of all or any part of the Indebtedness Guaranteed; (c) modify, waive, compromise, release, subordinate, resort to, exercise or refrain from exercisin9 any right the Lender may have hereunder, under the Note or any other Loan Document given for the Indebtedness Guaranteed; (d) accept additional security or guarantees of any kind; (e) endorse, transfer or assign the Note, and other Loan Documents to any other party; (f) accept from Debtor or any other party partial payment or payments on account of the Indebtedness Guaranteed; (g) from time to time hereafter further loan monies or give or extend credit to or for the benefit of the Debtor; (h) release, settle or compromise any claim of the Lender against the Debtor, or against any other person, firm or corporation whose obligation is held by the Lender as collateral security for the Indebtedness Guaranteed. 5. The Guarantors hereby unconditionally and absolutely waive (a) any obligation on the part of the Lender to protect, secure or insure any of the security given for the payment of the Indebtedness Guaranteed; (c) any of the security given for the payment of the Note; (d) notice of acceptance of this Guaranty by the Lender; (e) notice of presentment, demand for payment, notice of nonperformance, protest, notices of protest and notices of dishonor, notice of nonpayment or partial payment; (f) notice of any defaults under the Note or in the performance of any of the covenants and agreements contained therein or in any other Loan Document given as security for the Note; (g) any limitation or exculpation of liability on the part of the Debtor whether contained in the Note or otherwise; (h) the transfer or sale by the Debtor or the diminution in value thereof of any security given for the Indebtedness Guaranteed; (i)' any failure, neglect or omission on the part of the Lender to realize or protect the Indebtedness Guaranteed or any security given therefor; (j) any right to insist that the Lender prosecute collection of the Note or resort to any instrument or security given to secure the Indebtedness Guaranteed or to proceed against the Debtor or against any other guarantor or surety prior to enforcing this Guaranty; provided, however, at its sole discretion the Lender may either in a separate action or an action pursuant to this Guaranty pursue its remedies against the Debtor or any other guarantor or surety, without affecting its rights under this Guaranty; (k) notice to the Guarantors of the existence of or the extending to the Debtor of the Indebtedness Guaranteed, (1) any order, method or manner of application of any payments on the Indebtedness 'Secured hereby; or (m) any right to insist Lender disburse the full principal amount of the Note to Debtor or the order, method, manner or amounts disbursed under the Note. 6. Without limiting the generality of the foregoing, the Guarantors will not assert against the Lender any defense of waiver, release, discharge in bankruptcy, statute of limitations, res judicata, statute of frauds, anti-deficiency statute, fraud, ultra vires acts, usury, illegality or unenforceability which may be available to the Debtor in respect of the Note or any other Loan Document, or any setoff available against the Lender to the Debtor whether or not on account of a related transaction, and the Guarantors expressly agree that they shall be and remain liable for any deficiency remaining after foreclosure of any mortgage or security interest securing the Note, notwithstanding provisions of law that may prevent the Lender from enforcing such deficiency against the Debtor. The liability of the Guarantors shall not be affected or impaired by any voluntary or involuntary dissolution, sale or other disposition of all or substantially all the assets, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar event or proceeding affecting the Debtor or any of its assets and that upon the institution of any of the above actions, at the Lender's sole discretion and without notice thereof or demand therefor, the Guarantors' obligations shal] become due and payable and enforceable against the Guarantors, whether or not the Indebtedness Guaranteed is then due and payment. The Guarantors further agree that no act or thing, except for payment in full, which but for this provision might or could in law or in equity act as a release of the liabilities of the Guarantors hereunder shall in any way affect or impair this Guaranty and the Guarantors agree that this shall be a continuing, absolute and unconditional Guaranty and shall be in full force and effect until the Indebtedness Guaranteed has been paid in full. 7. The Guarantors agree that all indebtedness, liability or liabilities now or at any time or times hereafter owing by Debtor to the Guarantors are hereby subordinated to the Indebtedness Guaranteed and any payment of indebtedness of the Debtor to the Guarantors, if the Lender so requests, shall be received by the Guarantors as trustee for the Lender on account of the Indebtedness Guaranteed. The Guarantors agree that the payment of any amount or amounts by the Guarantors pursuant to this Guaranty shall not in any way entitle the Guarantors whether at law, in equity or otherwise to any right to participate in any security held by the Lender for the payment of the Indebtedness Guaranteed, any right to direct the application or disposition of any such security or any right to direct the enforcement of any such security. Performance by the Guarantors under this Guaranty shall not entitle the Guarantors to be subrogated to any of the Indebtedness Guaranteed or to any security therefor, unless and until the full amount of the Indebtedness Guaranteed has been fully paid. 8. The Guarantors agree this Guaranty is executed in order to induce the Lender to make and disburse the Loan and with the intent that it be relied upon by the Lender in making and disbursing the Loan. Disbursement of any part of the Loan without any further action or notice, shall constitute conclusive evidence of the reliance hereon bY the Lender. This Guaranty shall run with the Note and other Loan Documents and without the need for any further assignment of this Guaranty to any subsequent holder of the Note or the need for any notice to the Guarantors thereof. Upon endorsement or assignment of the Note to any subsequent holder, said subsequent holder of the Note may enforce this Guaranty as if said holder had been originally named as Lender hereunder. 9. The Guarantors consent to be sued in any jurisdiction in which the Debtor may be sued as well as the Guarantors' principal place of business and residence and in the State where this Guaranty is executed. 10. No right or remedy herein conferred upon or reserved to the Lender is intended to be exclusive of any other available remedy or remedies but each and every remedy shall be cumulative and shall be in addition to every other remedy given under this Guaranty' or now or hereafter existing at law or in equity. No waiver, amendment, release or modification of this Guaranty shall be established by conduct, custom or course of dealing, but only by an instrument in writing duly executed by the Lender. 11. This Guaranty is delivered in and made in and shall in all respects be construed pursuant to the laws of the State of Minnesota. 12. This Guaranty, and each and every part hereof, shall be binding upon the Guarantors and upon their heirs, administrators, representatives, executors, successors and assigns and shall inure to the benefit of each and every future holder of the Note, including the heirs, administrators, representatives, executors, successors and assigns of the Lender. 13. The promises and agreements herein shall be construed to be and are hereby declared to be joint and several in each and every particular and shall be fully binding upo~ and enforceable against any or all of such parties or persons, and neither the death nor release of any person or party to this Guaranty shall affect or release the joint and several liability of any other person or party. IN WITNESS WHEREOF, the Guarantors have executed this Guaranty as of the day and year first above written. Paul C. Anderson Michael E. Diederichs UNIVERSAL COLOR, INC., a Minnesota corporation By Its By Its STATE OF MINNESOTA ) )ss COUNTY OF ) The foregoing instrument was acknowledged before me this day of , 1995, by Paul C. Anderson. Notary Public STATE OF MINNESOTA ) )ss COUNTY OF ) The foregoing instrument was acknowledged before me this__ day of , 1995, by Michael E. Diederichs. Notary Public STATE OF MINNESOTA ) )ss COUNTY OF ) The foregoing instrument was acknowledged before me this __ day of , 1995, by and , the and of Universal Color, Inc., a Minnesota corporation, on behalf of said corporation. Notary Public THIS INSTRUMENT DRAFTED BY: CORRICK & SONDRALL, P.A. 8525 Edinbrook Crossing, Suite 203 Brooklyn Park, MN 55443 (612) 425-5671 c:\wp51\cnh\ucl, gua 6 SECURITY AGREEMENT UNIVERSAL COLOR, INC., a Minnesota corporation, whOse address is (hereinafter called "Debtor") does hereby grant unto the ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, whose address is 4401Xylon Avenue North, New Hope, MN 55428 (hereinafter called "Secured Party"), a security interest in the following described property (hereinafter called "Collateral")- 1 Collateral. a) All equipment of Debtor, whether now owned or hereafter acquired located or to be located at the Premises legally described on Exhibit I, including, but not limited to, all present and future machinery, vehicles, furniture, fixtures, manufacturing equipment, shop equipment, office and record keeping equipment, parts and tools, and goods described in any equipment schedule or list herewith or hereafter furnished to Secured Party by Debtor (but no such schedule or list need be furnished in order for the security interest granted herein to be valid as to all of Debtor's equipment). b) To the extent the same relates directly or indirectly to the property described on Exhibit I, each and every right of Debtor for the payment of money, whether such right to payment now exists or hereafter arises, whether such right to payment arises out of a sale, lease or other disposition of goods or other property by Debtor, out of a rendering of services by Debtor, out of a loan by Debtor, out of the overpayment of taxes or other liabilities of Debtor, or otherwise arises under any contract or agreement, whether such right to payment is or is not already earned by performance, and howsoever such right to payment may be evidenced, together with all other rights and interests (including all liens and security interests) which Debtor may at any time have by law or agreement against any account debtor or other obligor obligated to make any such payment or against any of the property of such account debtor or other obligor; all including, but not limited to, all present and future debt instruments, chattel paper, accounts, loans and obligations receivable and tax refunds. 1 EXHIBIT E' c) A11 general intangibles of Debtor, whether now owned or hereafter acquired, including, but not limited to, applications for patents, patents, copyrights, trademarks, trade secrets, goodwill, trade names, customer lists, permits and franchises, and the right to use Debtor's name to the extent they relate to the property described on Exhibit I. d) All substitutions and replacements for and products of any of the foregoing property not constituting consumer goods and together with proceeds of any and all of the foregoing property and, in case of all tangible collateral, together with all accessions and, except in the case of consumer goods, together with: (i) all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to or used in connection with any such goods, and (ii) all warehouse receipts, bills of lading and other documents of title now or hereafter covering such goods. To secure prompt payment to Secured Party at the address stated above or such other place as designated of a Guaranty dated , 1995, executed by UNIVERSAL COLOR, INC., a Minnesota corporation, to Secured Party to guranty a Promissory Note dated , 1995, in the sum of One Hundred Forty Thousand and No/lO0 Dollars ($140,000.00) executed by 7700 Partnership, L.L.P., a Minnesota limited liability partnership (hereinafter "Partnership") with intereSt as provided therein, and any and all extensions and renewals thereof, and any and all future advances made by Secured Party to Partnership at Secured Party's option, together with all other liabilities of Partnership to Secured Party (primarily, secondarily, direct, contingent, sole, joint, or several) due or which may be hereafter contracted or acquired and the performance by Debtor of all of the terms and 2 conditions of this Security Agreement (hereinafter referred to as ("Obligations"). DEBTOR WARRANTS, REPRESENTS AND AGREES THAT: 1. Debtor is the owner of the Collateral, or will be the owner of the Collateral to be acquired after the date hereof, free of all liens, encumbrances and security interests except the ecurity interest hereby created, and except any other security interests as of this date held by Secured Party, and has authority to execute this Agreement. 2. Any and all accounts receivable which are Collateral are genuine and enforceable, and there are no offsets, counterclaims, or defenses to any of them. 3. Debtor's inventory, books, records, contract rights and other property above specified relating to the Collateral are or will be kept at , and Debtor will not, without the prior written consent of Secured Party, remove or permit the same to be removed from the location or locations set forth above. 4. Debtor will keep the Collateral insured at all times against loss by fire and/or other hazards concerning which, in the Judgment of the Secured Party, insurance protection is reasonably necessary, in a company or companies satisfactory to the Secured Party and in amounts sufficient to protect Secured Party against loss or damage to said Collateral and will pay the premiums therefor; that such policy or policies of insurance will be delivered to and held by the Secured Party, together with loss payable clauses in favor of the Secured Party as its interest may appear, in form satisfactory to the Secured Party; and Secured Party may act as attorney for Debtor in obtaining, adjusting, settling and cancelling such insurance and endorsing any drafts. 5. No financing statement covering the Collateral, or any part thereof, is on file in any public office, except in favor of Secured 'Party. 6. Debtor will at any time or times hereafter execute such financing statements and other instruments and perform such acts as the Secured Party may request to establish and maintain a valid security interest in the Collateral, and will pay all costs of filing and recording. 7. Until Secured Party shall notify Debtor of the revocation of such power and authority, Debtor will, at is own expense, endeavor to collect, as and when due, any accounts which are Collateral, including the taking of such action with respect to such collection or the repossession of the goods as Debtor may deem advisable or as Secured Party may reasonably request. Debtor will forthwith deliver all proceeds of such collections and all repossessed or returned goods to Secured Party at its request; provided Debtor will, on demand, pay to Secured Party the full unpaid contract price of repossessed goods or the invoice value of returned goods. 4 8. Debtor will not compromise any accounts which are Collateral without the prior written consent of Secured Party. 9. Debtor will at all times keep accurate and complete records of the Collateral and permit Secured Party to inspect same and the Collateral at all reasonable times. Debtor will, upon request of Secured Party, furnish to Secured Party such reports and statements as Secured Party may request with respect to the Col lateral. 10. If accounts receivable are Collateral, Secured Party may .notify account debtors of Secured Party's security interest, and that payment of all sums due or to become due shall be paid directly to Secured Party, and upon request of Secured Party, Debtor will notify account debtors of such security interest. Secured Party shall have the power to demand, receive and sue for all moneys or other proceeds due from said accounts, to endorse the name of Debtor on all commercial paper given in payment or part payment thereof, and to settle, adjust or compromise any claims or disputes as to said accounts. 11. Debtor will keep and maintain the Collateral in 9ood order and repair and will not sell, encumber, offer to sell, transfer, lease or otherwise dispose of the Collateral other than in the ordinary course of its business without the written consent of Secured Party. 12. Until default Debtor may retain possession of the Col lateral. 5 13. Debtor shall be in default under this agreement upon the happening of any of the following events: a) Nonpayment, when due, or any amount payable on any of the Obligations or failure to observe or perform any term hereof; b) If any covenant, warranty or representation shall prove to be untrue in any material respect; c) Any Debtor becomes insolvent or unable to pay debts as they mature or makes an assignment for the benefit of creditors, or any proceeding is instituted by or against any Debtor alleging that such Debtor is insolvent or unable to pay debts as they mature; d) Entry of any Judgment against any Debtor; e) Dissolution, merger or consolidation, or transfer of a substantial part of the property of any Debtor which is a corporation or partnership; f) If Secured Party deems itself insecure for any reason; or g) Default under the terms of any loan agreement or other security instrument of even date. 14. In the event of a default: a) Secured Party shall have the right, at its option and without demand or notice, to declare all or any part of the Obligations immediately due and payable; b) Secured Party may exercise, in addition to the rights and remedies granted hereby, all of the rights and remedies of a Secured Party under the Uniform Commercial Code or any other applicable law; c) Secured Party may effect all necessary insurance, pay the premiums thereon, and may pay any taxes, liens and encumbrances on the Collateral, and any such payments made by Secured Party with interest at the highest legal rate allowed by law shall be a part of the Obligations; d) Debtor agrees to make the Collateral available to the Secured Party at a place or places acceptable to the Secured Party; and e) Debtor agrees to pay all costs and expenses of Secured Party, including reasonable attorneys' fees, in the collection of any of the Obligations or the enforcement of aris of Secured Party's riqhts. 15. If any notification of intended disposition of any of the Collateral is required by law, such notification shall be deemed reasonable and properly given if mailed at least ten (10) days before such disposition, postage prepaid, addressed to the Debtor at the address shown herein. 16. Waiver of any default hereunder by Secured Party shall not be a waiver of any other default or of a same default on a later occasion. No delay or failure by Secured Party to e×ercise any right or remedy shall be a waiver of such right or remedy and no single or partial exercise by Secured Parts of any right or remedy shall preclude other or further exercise thereof or the exercise of any other right or remedy at any other time. 17. This agreement and all rights and obligations hereunder, including matters of construction, validity and performance, shall be governed by the laws of Minnesota. If any part of this contract shall be adjudged invalid, the remainder shall not thereby be invalidated. 18. If more than one party shall sign this Security Agreement, the term "Debtor" shall mean all such parties and each of them and all such parties shall be jointly and severally obligated hereunder. All rights of Secured Party shall inure to the benefit of the Secured Party's successors and assigns, and all obligations of Debtor shall bind Debtor's heirs, executors, administrators, successors and assigns. 19. This Security Agreement contains the entire agreement between the parties, and no oral agreements shall be binding. Dated: , 1995. SECURED PARTY: DEBTOR: ECONOMIC DEVELOPMENT AUTHORITY UNIVERSAL COLOR, INC., IN AND FOR THE CITY OF NEW HOPE a Minnesota corporation By By Its President Its By By Its Executive Director Its 8 EXHIBIT I TO FINANCING STATEMENT UNIVERSAL COLOR, INC., a Minnesota corporation All of the following items of personal property of the Debtor to the extent, and only to the extent that they relate to, are used in, or located upon the real property lying and being in the County of Hennepin, State of Minnesota,- legally described as: a) All equipment of Debtor, whether now owned or hereafter acquired, including, but not limited to, all present and future machinery, vehicles, furni'(ure, fixtures, manufacturing equipment, shop equipment, office and record keeping equipment, parts and tools, and goods described in any equipment schedule or list herewith or hereafter furnished to Secured Party by Debtor (but no such schedule or list need be furnished in order for the security interest granted herein to be valid as to all of Debtor's equipment). b) All inventory of the Debtor, whether now owned or hereafter acquired and wherever located. c) Each and every right of Debtor for the payment of money, whether such right to payment now exists or hereafter arises, whether such right to payment arises out of a sale, lease or other disposition of goods or other property by Debtor, out of a renderirg of services by Debtor, out of a loan by Debtor, out of the overpayment of taxes or other liabilities of Debtor, or otherwise arises under any contract or agreement, whether such right to payment is or is not already earned by performance, and howsoever such right to payment may be evidenced, together with all other rights and interests (including all liens and security interests) which Debtor may at any time have by law or agreement against any 9 account debtor or other obligor obligated to make any such payment or against any of the property of such account debtor or other obligor; all including, but not limited to, all present and future debt instruments, chattel paper, accounts, loans and obligations receivable and tax refunds. d) All general intangibles of Debtor, whether now owned or hereafter acquired, including, but not limited to, applications for patents, patents, copyrights, trademarks, trade secrets, goodwill, trade names, customer lists, permits and franchises, and the right to use Debtor's name. e) All substitutions and replacements for and products of any of the foregoing property not constituting consumer goods and together with proceeds of 'and all of the foregoing property and, in case of all tangible collateral, together with all accessions and, except in the case of consumer goods, together with: (i) all accessories, attachments, parts, equipment and repairs now or hereafter attached or affixed to or used in connection with any such goods, and (ii) all warehouse receipts, bills of lading and other documents of title now or hereafter covering such goods. c:\ wp51\cnh\uc~.sa 10 CORRICK ~[ SONDRALL, P.A. STEVEN A. SONDRALL ATTORNEYS AT LAW LEGALAS$1$TANT$ MICHAEL R. LAFLEUR~ Ed/nburgh Execut/ve' Office Plaza LAVON.E E. KES~ W.U^M c. ST.^~T 8525 Edinbrook Crossing Suite #203 Brook]y~ Park, Mhmesota 55443 TELEPHONE (612) 425.S671 FAX (612) 425-5867 (REVISED RESOLUIION- EDA IIB4. 4). May 19, 1995 Daniel d. Donahue Executive Director' Economic Development in and for the' City o'f New Hope 4401Xyton Avenue North New Hope, MN 55428 RE: Loan to 7700 Partnership, L.L.P. City Project No. 539 OUr File No: 99.11138 Dear Dan: Enclosed you will find a revised: Resolution authorizing a loan of $140,000 O0 to 7700 Partnership, L L.P., a Minnesota limited liability partnership consisting of Paul C. Anderson and Michael E. Diederichs. The documentation attached to the Resolution includes the following: 1. Mort:gage; Note. Th!i:s pro,missory note call. s for interest rate of 8~ with the loan'amortized over 15 years and a balloon payment in 10 years, 2. Mortgage, Security Agreement and Fixture Financing Statement. This document will be recorded against the property to secure the mortgage note. As you are aware, this Mortgage will be third in line behind: a mortgage to Marquette Bank, N.A. and a mortgage to the Small Business Administration. 3. Assignment of Leases and Rents. In the event of failure by 7700 Partnership, L.L.P. to make payments under the Mortgage, the EDA can "intercept" the rents due the Partnership by its tenant, Universal Color, Inc. Again, this legal right will likely be third in line behind the Bank and the SBA. Mr. D~ni. eld, Don,~hue May 19, 1995 Page 2 4. Guaranty. This document is a personal guaranty signed by Paul C. Anderson and Michael E. Diederichs, and also signed by Universal Color, Inc. This Guaranty runs for the life of the loan. If the enclosed meets with EDA approval, the Resolution with attached Exhibits should be passed at the meeting on May 22nd. Please contact me with any questions. Sincerely, Martin P. Malbch'a' s3f2 Enclosures cc: Kirk McDonald Valerie Leone (w/enc~z_~" Steven A, Sondrall, City Attorney' EDA RESOLUTI~ON NO. 95- RESOLUTION AUTHORIZING MORTGAGE TO 7700 PARTNERSHIP, L.L.P. FOR PROPERTY AT 7700 42ND AVENUE NORTH IMPROVEMENT PROJECT 539 WHEREAS, 7700 Partnership, L.L.P. ("Partnership") is a Minnesota l:imited Ii.ability partnership formed by Paul O. Anderso:n~ and Micha:et E. Diederichs ("Partners") and WHEREAS, the Partnership is attempting to purchase certain imp:roved rea:] e. state &t 770.0 42nd ~venue Nort. h in the City o[ New.; Hope ("Property"), and together with the Partners plans to renovate the Property and move its photo processing business to the Property (collectively the "Project", also designated by the City of New Hope as [mprovement Project 539), and WHEREAS, finan:c~ng for the: purchase: and improvemeht' of: the. Property by the Partnership and the Partners will include a first mortgage, to Uarq.Ue~te Bank, N.A. and a second' mor'tgage from the;. Small Business Administration, combined with equity from the Partners of approximately $75,600.00, and WHEREAS, in order for the purchase and improvement of the property to go forward, the Partnership and Partners need an additional $140,000.00, and WHEREAS, the Property is located with:in a redeve]op, ment distr'ict estabt'ished~ pursu~nt', to Redev'eTopmen. t! Plan 815!-2, Redev.elopment Project 85-2, the administration of which is governed by the EDA, and WHEREAS, the Project will result in improvement to the existing structure and the expected addition of five new full-time employment posi't:ions a.t the Property, and WHEREAS, the Project will eliminate the possibility of' a vacant building at 7700 42nd Avenue North and within the Redevelopment area, and WHEREAS, completing the Project will allow Autohaus at 7675 42nd Avenue North, ~l:so wi;thiln the RedeveloPment area, to complete the improvements to property at 7675 42nd Avenue North, and WHEREAS, the completion of the Project will be in the best interests of the City and the Redevelopment District and its people and will further the genera] plan of economic development, and WHEREAS, the Partnership is requesting a loan of $140,000.00 from the EDA, and WHEREAS, such a loan is authorized by Minn. Stat. §469.090 to 469.108 and Minn. Stat. §469.192, and WHEREAS, the loan shaT1: accure interest at' a rate of eight (8%) percent per annum based on a 15 year amortization period and a final balloon after 10 years, and WHEREAS, the loan will be secured by life insurance on a declining term balance on. the l iYes of Paul C. Anderson and Michael E. Diederichs, each life insurance policy in the amount of' the ~oan balance,, add WHEREAS, the loan will be further secured by a Third. blo.rtgage upon the Property plus an Assignment of Leases and Rents, as well as a Guaranty by Universal Color, Inc. and by Paul C. Anderson and Michael E. Diederichs personally, and WHEREAS, other terms and conditions of the loan are as set forth in the Mortgage, Security Agreement and Fixture Financing Statement attached hereto as Exhibit A, the Promissory Note attached hereto: as E×hibit B, the Assignment of Rents and Leases attached hereto as Exhibit C, and the Guaranty attached hereto as Exhibit D, and WHEREAS, as a further condition of the loan, Universal Color, Inc. will provide an annual $2,000.00 maximum retail cost donation of photo development of services to the City for the life of the loan. NOW, THEREFORE, BE IT RESOLVED by the Economi~c Development Authority in and for the City of New Hope as follows: 1. That all of the foregoing recitals are incorporated herein by reference. 2. That the loan to 7700 Pantnership, L.L.P. in the amount of $140,000.00 as detailed above is hereby approved, conditioned upon the execution of the appropriate documents attached hereto as Exhibits A, B, C and D by 7700 Partnership, L.L.P. and other designated entities and further conditioned upon the execution of any other sup:porting documents required by the attorneys for E'DA. The loan is further conditioned upon the agreement by Color Lab, Inc. to provide the City of New Hope with an annual $2,000.00' retail cost donation of photo development services for the life of the loan. That the President and Executive Director are authorized and directed to sign the Mortgage and other Toan documents attached hereto as Exhibits A, B, C and D and are futher authorized and directed to sign any additional documents required to complete the loan. Adopted by the Economic Development Authority in and for the City af~New~HopJ'e~,th&s day o¢ ~ 1995¥ Edw. J. Erickson, President Attest: Daniel J. Donahue, Executive Director EDA  REQUF~T FOR ACTION Originating Department Approved for Agenda Agenda Section City Manager EDA 795 Sarah Bellefuil Item No. By: Administrative Analyst By: 5 RESOLUTION APPROVING SUBMISSIO~ OF THE MINNESOTA CITY PARTICIPATION PROGRAM (MCPP) APPLICATION TO THE' MINNESOTA HOUSING FINANCE AGENCY (MHFA) The MCPP is a program through the MHFA in which the MHFA is able to sell mortgage revenue bonds on behalf of participating cities to meet locally-identified housing needs. The proceeds from the bonds provide below-market interest rate mortgage loans for low and moderate income first-time homebuyers. This resource is available to cities throughout the state. This year the local housing pool for mortgage revenue bonds is estimated to be around $43 million. The final determination of the total amount of program funds available to each participating city will be made by the MHFA as determined by a per capita distribution method. In 1994, the City received $849,000 MCPP allocation and $630,000 of those funds were used in first-time homebuyer loans. In 1995, the MCPP program term is six months. During the first four months, participating cities have exclusive use of their individual allotment. During the f'mal two months, the individual allotments will go into a statewide pool that will be available to all MCPP participating cities. This allows cities with higher demands to access funds that were not used during the preceding four month period. The program term will begin shortly after the bond sale which should occur during the summer of 1995. In order for persons to apply for money through this program they must: a) be a first-time homebuyer; b) occupy the home within 60 days of mortgage closing; c) meet certain household income requirements ($40,800 or less - for a family of four); d) and purchase an existing home or build new for $95,000 or less. MOTION BY /~/~t/~~ SECOND BY ~ Review: Administration: Finance: RFA-O01 ~ Request for Action 2 5-22-95 The fee for participating in the program is $20 for each $100,000 in allotment provided. Also, an application deposit of 1% of the allocation amoum specified in the agreement is needed. The 1% deposit is refunded within a month of the closing of the bond sale. In order to participate in the MCPP, cities must arrange with local lenders to originate mortgage loans under the program. These lenders will be required to enter into a contract with the MHFA as to program and loan origination requirements. Each city applying for the MCPP must have at least one lender. The application is due by Friday, June 8, 1995. The application packet from the MHFA is enclosed. Staff recommends approval of the resolution. EDA RESOLUTION NO. 94- RESOLUTION APPROVING SUBMISSION OF THE MINNESOTA CITY PARTICIPATION PROGRAM (MCPP) APPLICATION TO THE MINNESOTA HOUSING FINANCE AGENCY (MHFA) WHEREAS, the City of New Hope, through their Housing Action Plan, promotes the purchase of homes in New Hope to modest income first-time homebuyers, avoiding concentrating such housing in a single area; and WHEREAS, the City of New Hope, through their Housing Action Plan, wishes to maintain a high quality residential environment through rehabilitation or where necessary, redevelopment of substandard units; and NOW, THEREFORE, BE IT RESOLVED that the Economic Development Authority in and for the City of New Hope approves the submittal of the application for funding to the Minnesota Housing Finance Agency for inclusion in the Minnesota City Participation Program. Adopted by the Economic Development Authority in and for the City of New Hope, this 23rd day of May, 1995. President Attest: Executive Director APPLICATION FOR FUNDING MINNESOTA HOUSING FINANCE AGENCY 1995 MINNESOTA CITY PARTICIPATION (MCPP) (SEVEN-COUNTY T~IN CITIES METROPOLITAN AREA (Anoka, Carver, Dakota, Hennepi~ Ra~sey, $c~ott or Washington co, unties) The following is an Application for Funding under MHFA's Minnesota City Participation Program. As opposed to providing an application blank, this request is provided in the form of an outline which includes areas and questions that must be addressed by the applicant. This has been done to accommodate the variety of word processing systems that may be used to respond to this offering. Entities responding to the MCPP should carefully follow the format in the outline and type both each area or question for which information is requested as well as a response, addressing, each question in sufficient detail. Review the attached cover letter for details on program restrictions before completing this application. Final determination of the total amount of program funds available and individual allotments will be made by MHFA in compliance with a per capita distribution method specified in statute. Any questions may be directed to Gene Aho in MHFA's Homeownership Opportunity Division at 297-3129 or by dialing 1-800-657-3802 if you ~re located in Greater Minnesota. Applications must be delivered to MHFA offices between 8:00 a.m., June 1 and 4:30 p.m., June 8, 1995 for funding consideration under this program phase. (a) Name and address of your organization. (b) Name and phone number of your contact person. (c) Type of organization (City Department, Port Authority, HRA, or EDA). (d) Amount of funds requested, and the estimated number of loans to be provided. If preferred, state "maximum allow&ble" (by population formula). (e) If desired, specify the minimum .sized allocation you will accept for your 1995 program. If the new per capita allocation formula does not provide this level, MHFA will cancel your application. (f) Information on any unused Mortgage Revenue Bond (MRB) or Mortgage Credit Certificate (MCC) resources still available in your community (non-MHFA). Cities must designate at least one lender who will take mortgage applications and process loans for your program. Attach a letter from each lender confirming their willingness to participate in your program. Additional lenders may not be added later in the program term, unless approved by MHFA for extenuating circumstances. (e.g.: To replace lenders that have dropped ou0. Describe or attach a copy of the "Housing Plan" developed for your community. At a minimum, each plan must contain the following information: (a) A description of your city's principal housing needs. (b) The data sources or methods used to determine the described needs. (c) The Specific plan developed to meet your identified housing needs, inctuding the resources to be accessed, and the methods used to carry out the plan. (d) Description of any target areas tO be addressed in the plan. (e) How the plan will be implemented and the administrative capacity of your city to do so. Note: If you have already completed a Housing Plan in accordance with Minnesota Statutes, Section 462C.03 within the past 12 months, you may attach a copy in lieu of the above requirement. Housing Plans developed over '12 months ago are also acceptable, provided that the information contained therein is still valid, and the plan is updated with appropriate attachments and comments. Describe your first-time homebuyer program proposal, including the following information: (a) How your program fits into your comprehensive housing plan. (b) Borrower income limits. (See the attached cover letter for limitations.) (c) Home purchase price limits. (See the attached cover letter for limitations.) (d) Targeting of specific population ~roups, if any (e.g., minorities, handicapped, business employees, etc.). (e) Targeting of area or housing stock, if any (e.g., rehab areas, new construction developments, etc.). (f) Any optional program enhancements such as subsidy funds, waived fees, use of tax-forfeit properties, etc. (g) Any proposed schedule for release of funds (whether immediate, delayed, or on a proportional/divided basis). Describe why you feel there is sufficient demand in your market to use the MCPP funds requested in this application. Indicate the data sources used to project MCPP-1-TC 3/1/o~4 demand, such as real estate sales over the past year; Realtor, builder or lender information; indicators of a housing shortage; and recent area business/economic expansion. Newly constructed homes may only be financed with funds under the MCPP if one of the three following criteria is met. If your program involve, s new construction, indicate which category (a, b or c, below) will be incorporated into your program, and include appropriate details on area, type of structure, or affordability initiative as is applicable. (a) New construction located in a qualified redevelopment area. Include a brief description and/or map defining the boundaries of your city's redevelopment area. * (b) New construction to replace a structurally substandard structure or structures. (c) New construction which will be developed under one or more of the "affordability initiatives" allowed under administrative rules (see Attachment 1). · ~Redevelopment area~ means a compact and contiguous area within which 70% of the parcels are developed (buildings, streets, utilities, etc.), and where more than 25% of the buildings are structurally substandard to a degree requiring substantial renovation or clearance. / Provide authorized signature(s) from the organization placing this application, including printed or typewritten name, title and phone number. MCPP-1-TC