2000 05 04 /t GENDA
ECONOMIC DE VEL OPMENT /1UTHORITY
THURSDAY, MAY 4, 2000, 7:00 P.M.
CHANHASSEN CITY HALL, 690 CITY CENTER DRIVE
CALL TO ORDER
1. Presentation by Ron Batty regarding "2000 Legislative Update."
2. Consider Options Regarding the Summons and Complaint Regarding the Foreclosure
Action by Heritage National Bank vs. Chan Ventures, LLC (Chart Bowl, property mvneO.
ADJOURNMENT
_/
CITYOF
CH HASSEN
690 Ci~, Center Ddve. PO Box I47
Chanhasse,. Mimmota 55317
Phone 612937.1900
General Fax 612.937.5739
E, gi, eeri,g Fax 612.93Z9152
Public SafiO, Fax 612934.2524
~[Ob toww. d. &anhassen. m,. us
MEMORANDUM
TO:
FROM:
Economic Development Authority
Todd Gerhardt, Asst. City Manager
DATE: April 27, 2000
SUB J:
2000 Legislative Process Update
Staff has asked Ron Batty, attomey with Kennedy & Graven to update the
Economic Development Authority on the 2000 Legislative Process. Specifically,
"The Grant Pool for 2000", proposed changes in TIF laws, and update us on our
proposed General Legislation, clarify the length of EcOnomic TIF Districts.
g:Xadmin\tg\20001egislativeprocessupdatememo.doc
The Gt¥ o£ Chanhassen. A ~'owine commu,it¥ with clean lakes, atta[it~, schools, a chamd, e downtown, thrivine businesses, a,d beautZtl aarks. A creat olace to live. work, a,d olay.
CITYOF
CHAN EN
690 Gty Center D,qve, PO Box 147
Chanhamn, Minnesota 55317
Phone 612.937. I900
General Fa.v 612.937.5739
£ngineering lax 612.93Z9152
Public Safety Fa.,: 612.934.2524
Web www. ci. chanhassen, mn. us
MEMORANDUM
TO:
FROM:
'DATE:
SUBJ:
Economic Development Authority
Todd Gerhardt, Assistant City Manager
April 27, 2000
Foreclosure on the Chanhassen Bowl
On Monday, April 24th, the EDA was served notice of a Summons and
Complaint by Heritage National Bank against ChanVentures and other
defendants. The purpose of the complaint is foreclosure on the mortgage that
ChanVentures, LLC has on the Chanhassen Bowl property.
Staff has asked Roger Knutson to write a summary, of options available to the
EDA regarding the potential foreclosure and its effects on the EDA (e.g. EDA's
note against the property, taxes, special assessments, delinquent sewer and
water, etc.). Once staff receives Roger's opinion, we will deliver it to members.
Roger will also be present at our meeting on Thursday night to answer any
questions you may have regarding this issue.
ATTACHMENTS
1. Summons and Complaint
g:\admin\tg\chan bowl tbreclosure.doc
The City of Chanhassen. A growing community with dean lakes, quality schools, a cha,ning downtown, thriving businesses, and beautiful parks. A great place to live, work, and play.
KNUTSON, FLYNN, DEANS & OLSEN
PAUL W. HETLAND
(1934-1992)
THOMAS S. DEANS
PATRICK .]. FLYNN
GLORIA BLAINE OLSEN
STEPHEN M. KNUTSON
MICHAEL J. FLYNN
(1960-1998)
MARIE C. SKINNER
PROFESSIONAL ASSOCIATION
1155 CENTRE POINTE DRIVE, SUITE 10
MENDOTA HEIGHTS, MINNESOTA 55120
TELEPHONE: (651) 222-2811 FAX: (651) 225-0600
April 21, 2000
MAGGIE R. WALLNER
SUSAN E. TORGERSON
JOHN J. O'DONNELL
GREGORY S. MADSEN
CHARLES E. LONG
MICHELLE D. KENNEY
TIMOTHY R. PALMATIER
DANlELJ. S. BECKER
JENNIFER K. ANDERSON
To: All Parties on Attached Service List
RE: Heritage National Bank v. Chan Ventures, LLC et al
Dear Sir/Madam:
Enclosed herewith and served upon you please find the Summons and Complaint for Foreclosure
by Action in the above-referenced matter.
Very truly yours,
e tdck j.
PJF:mcb
Enclosures
Heritage National Bank
V.
Chan Ventures, LLC; Daniel F. Dahlin; Mary S.
Dahlin; Geraldine P. Baden; Otto Associates
Engineers and Land Surveyors, Inc.;
Korsunsky Krank Erickson Architects, Inc.;
Economic Development Authority in and for the
City of Chanhassen; and Chanhassen Bowl, Inc.
Service List
Chan Ventures, LLC.
581 West 78th Street
Chanhassen, Minnesota 55317
Daniel F. Dahlin and Mary S. Dahlin
1889 Fairmont Avenue
St. Paul, Minnesota 55105
Geraldine D. Baden
Carver County, Minnesota
Otto Associates Engineers and Land Surveyors, Inc.
9 West Division Street
Buffalo, Minnesota 55313
Korsunsky Krank Erickson Architects, Inc.
300 First Avenue North
Minneapolis, Minnesota 55401
Economic Development Authority
in and for the City of Chanhassen
690 City Center Drive
Chanhassen, Minnesota 55317
Chanhassen Bowl, Inc.
581 West 78th Street
Chanhassen, Minnesota 55317
STATE OF MINNESOTA
COUNTY OF CARVER
Heritage National Bank,
Plaintiff,
DISTRICT COURT
FIRST JUDICIAL DISTRICT
Case Type: Other
(Mortgage Foreclosure by Action)
Court File No.
Chan Ventures, LLC; Daniel F. Dahlin; Mary S.
Dahlin; Geraldine P. Baden; Otto Associates
Engineers and Land Surveyors, Inc.;
Korsunsky Krank Erickson Architects, Inc.;
Economic Development Authority in and for the
City of Chanhassen; and Chanhassen Bowl, Inc.,
Defendants.
THE STATE OF MINNESOTA TO THE ABOVE-NAMED DEFENDANT:
YOU ARE HEREBY SUMMONED AND REQUIRED to serve on Plaintiff's attorney an
Answer to the Complaint which is herewith served upon you, within twenty (20) days after
service of this Summons upon you, exclusive of the day of service. If you fail to do so, judgment
by default will be taken against you for the relief demanded in the Complaint.
YOU ARE HEREBY NOTIFIED that this action is brought for the purpose of foreclosing
a mortgage executed by and between Chan Ventures, LLC, a Minnesota limited liability
company, as mortgagor, to the Heritage National Bank, a national banking corporation, as
mortgagee, dated the 28th day of August, 1997, and filed for record in the office of the County
Recorder in and for the County of Carver, State of Minnesota, on the 1 lth day of September,
1997, and recorded as Document No. 215686. Said mortgage encumbers real property located in
vs. SUMMONS
the County of Carver, State of Minnesota, and legally described as follows, to-wit:
Lot Two (2), Block One (1), Chanhassen Mall, according to the
plat thereof now on file and of record in the Office of the County
Recorder, Carver County, Minnesota
Dated: April 20, 2000
KNUTSON, FLYNN, DEANS & OLSEN
By /s/ Patrick J. Fl'mn
Patrick J. Flynn, Atty. Reg. #3051X
Jennifer K. Anderson, Atty. Reg. No. 253789
1155 Centre Pointe Drive, Suite 10
Mendota Heights, MN 55120
Telephone: 651/222-2811
Attorneys for Plaintiff
Heritage National Bank
STATE OF MINNESOTA
COUNTY OF CARVER
Heritage National Bank,
Plaintiff,
VS.
DISTRICT COURT
FIRST JUDICIAL DISTRICT
Case Type: Other
(Mortgage Foreclosure by Action)
Court File No. C ?-' OO0/'L/~,~3
COMPLAINT FOR
FORECLOSURE BY ACTION
Chan Ventures, LLC; Daniel F. Dahlin; Mary S.
Dahlin; Geraldine P. Baden; Otto Associates
Engineers and Land Surveyors, Inc.;
Korsunsky Krank Erickson Architects, Inc.;
Economic Development Authority in and for the
City of Chanhassen; and Chanhassen Bowl, Inc.,
Defendants.
COMES NOW the Plaintiff, as and for its cause of action against the Defendants above
named, and states and alleges as follows:
1. That Plaintiff, Heritage National Bank, is a national banking corporation, with its
principal place of business located at 2700 Seventh Avenue East, North St. Paul, Ramsey
County, Minnesota 55109.
2. That Defendant Chan Ventures, LLC., is a Minnesota limited liability company,
~vith its principal place of business located at 581 West 78th Street, Chanhassen, Carver County,
Minnesota 55317.
3. That Defendants Daniel F. Dahlin and Mary S. Dahlin, husband and wife, are
individuals residing at 1889 Fairmont Avenue, St. Paul, Ramsey County, Minnesota 55105.
4. That Defendant Geraldine D. Baden is an individual believed to be residing in
Carver County, Minnesota.
5. That Defendant Otto Associates Engineers and Land Surveyors, Inc., is a
Minnesota Corporation with its principal place of business located at 9 West Division Street,
Buffalo, Wright County, Minnesota 55313.
6. That Defendant Korsunsky Krank Erickson Architects, Inc., is a Minnesota
Corporation with its principal place of business located at 300 First Avenue North, Minneapolis,
Hennepin County, Minnesota 55401.
7. That Defendant Economic Development Authority in and for the City of
Chanhassen is a municipality with its principal place of business located at 690 City Center
Drive, Chanhassen, Carver County, Minnesota 55317.
8. That Defendant Chanhassen Bowl, Inc., is a Minnesota Corporation with its
principal place of business located at 581 West 78th Street, Chanhassen, Carver County,
Minnesota 55317.
9. That on or about the 28th day of August, 1997, Defendant Chan Ventures, LLC
executed a Promissory Note to Plaintiff in the amount of Five Hundred Thousand and No/100ths
($500,000.00) Dollars. A true and correct copy of said Note is attached hereto as Exhibit A and
incorporated herein by reference.
10. Said Note is secured by a Mortgage on real property located in the County of
Carver, State of Minnesota, and legally described as follows, to-wit:
Lot Two (2), Block One (1), Chanhassen Mall, according to the
plat thereof now on file and of record in the Office of the County
Recorder, Carver County, Minnesota
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Said Mortgage is dated the 28th day of August, 1997, filed for record in the office of the
County Recorder in and for the County of Carver, State of Minnesota, on the 1 lth day of
September, 1997, and recorded as Document No. 215686, made by Chan Ventures, LLC, a
Minnesota limited liability company, mortgagor, to Heritage National Bank, a national banking
corporation, mortgagee, to secure $500,000.00. A true and correct copy of said Mortgage is
attached hereto as Exhibit B and incorporated herein by reference.
11. Said Note is also secured by a Guaranty dated August 28, 1997, whereby
Defendants, Daniel F. and Mary S. Dahlin, unconditionally and absolutely guaranteed to Heritage
National Bank the payment and performance of Defendant, Chan Ventures, LLC, under the Note
in the original principal amount of $500,000.00: A true and correct copy of said Guaranty is
attached hereto as Exhibit C and incorporated herein by reference.
12. Said Note is also secured by an Assignment of Rents and Leases dated August 28,
1997, filed for record filed for record in the office of the County Recorder in and for the County
of Carver, State of Minnesota, on'the 1 lth day of September, 1997, and recorded as Document
No. 215687, made by Chan Ventures, LLC, a Minnesota limited liability company, mortgagor, to
Heritage National Bank, a national banking corporation, mortgagee, to secure $500,000.00. A
true and correct copy of said Assignment of Rents and Leases is attached hereto as Exhibit D and
incorporated herein by reference.
13. Said Note is also secured by a Fixture Financing Statement dated August 28,
1997, filed for record filed for record in the office of the County Recorder in and for the County
of Carver, State of Minnesota, on the 1 l th day of September, 1997, and recorded as Document
No. 215688, made by Chan Ventures, LLC, a Minnesota limited liability company, mortgagor, to
-3-
Heritage National Bank, a national banking corporation, mortgagee, covering all fixtures and all
rights to rental payment or other income, rents, profits or other payments from the
aforementioned real property. A true and correct copy of said Fixture Financing Statement is
attached hereto as Exhibit E and incorporated herein by reference.
14. Said Note is also secured by a Pledge Agreement and Escrow Agreement dated
August 28, 1997, whereby Defendant, Chan Ventures, LLC, pledged certain collateral to secure
the payment and performance of Defendant, Chan Ventures, LLC, under the Note in the original
principal amount of $500,000.00. A true and correct copy of said Pledge Agreement and Escrow
Agreement are attached hereto as Exhibits F and G and incorporated herein by reference. The
present balance, pursuant to the Pledge Agreement and Escrow Agreement is approximately
$91,500.00.
15.
Defendant, Chan Ventures, LLC is the record owner claiming an interest in the
aforementioned real property.
16. That the Note and _.,Mortgage executed by Defendant, Chan Ventures, LLC, herein
provides that if default should be made in the payment of said principal sum of money, or any
installment thereon, at the time and in the manner in said Note specified for the payment thereof,.
or if default should be made in any of the other terms or conditions of the mortgage, it should be
lawful for the mortgagee to declare the whole sum secured by said mortgage immediately due
and payable, and to properly enforce the payment thereof in like manner, as if the same had
become due and payable by the terms of said Note.
-4-
17. That the terms and conditions of the Mortgage and Note are in default and
properly accelerated by the Plaintiff due to breaches of the mortgage and promissory note,
specifically as follows:
Monthly payments in the sum of $6,654.21 are delinquent for
March 1, 2000 and April 1, 2000 for a total delinquency of
$13,308.42 plus late charges.
18. That the terms and conditions of the Mortgage and Note further are in default and
properly accelerated by the Plaintiff due to breaches of the mortgage and promissory note,
specifically as follows:
Monthly payments in the sum of $6,654.21 due for December 1,
1998, January 1, 1999, February 1, 1999, March 1, 1999,
September 1, 1999, October 1, 1999 November 1,199 and
December 1, 1999 were not paid and were advanced from
additional security depleting the security guaranteed pursuant to the
Escrow Agreement attached as Exhibit G.
19. That the terms and conditions of the Mortgage and Note further are in default and
properly accelerated by the Plaintiff due to breaches of the mortgage and promissory note,
specifically as follows:
The real estate taxes for parcel No. 25-1950020 are in arrears in the
amount of $39,399.00 for 1997, $72,870.00 for 1998 and
$63,998.00 for 1999. The foregoing amounts do not include
accrued interest and penalties. In addition, the real estate taxes for
parcel No. 25-19500021 are in arrears in the amount of $6,805.00
for 1997, $12,744.00 for 1998 and $11,418.00 for 1999. The
foregoing amounts do not include accrued interest and penalty.
20. That because of the default, Plaintiff, by virtue of the acceleration clause
contained in said Note and Mortgage, does hereby elect and declare the total of principal and
-5-
interest due and payable immediately. The present outstanding balance on the mortgage is the
sum o f $430,330.40, which includes interest through April 14, 2000.
21. That said Mortgage further provides that, in the event of default, Plaintiff may
cause the property to be sold at public auction and apply the proceeds at sale against the debt as
herein above described.
22. That said Mortgage further provides that in the event of foreclosure, Defendant,
Chan Ventures, LLC, shall pay Plaintiff's reasonable attorney fees incurred therein, which fees
Plaintiff has and will incur.
23. The mortgage of the Plaintiff is a secured first lien upon said real property and
paramount to all liens and encumbrances.
24. That Defendant Geraldine Baden may have a claim or interest in the premises by
virtue of a Mortgage, dated August 29, 1997, filed for record in the office of the County Recorder
in and for the County of Carver, State of Minnesota, on the 27th day of May, 1998, andrecorded
as Document No. 227877, made by Chan Ventures, LLC, a Limited Liability Company to
Geraldine D. Baden, in the principal amount of $86,464.71. The interest of Defendant Geraldine
Baden is subject to and inferior to the mortgage of Plaintiff as herein described.
25. That Defendant Otto Associates Engineers and Land Surveyors, Inc. may have a
claim or interest in the premises by virtue of a Mechanics Lien, dated December 17, 1998, filed
for record in the office of the County Recorder in and for the County of Carver, State of
Minnesota, on the 23rd day of December, 1998, and recorded as Document No. 240682, against
Chanhassen Properties, LLC and Chan Ventures, LLC in the amount of $2,972.00. The interest
-6-
of Defendant Otto Associates Engineers and Land Surveyors, Inc. is subject to and inferior to the
mortgage of Plaintiff as herein described.
26. That Defendant Korsunsky Erickson Architects, Inc. may have a claim or interest
in the premises by virtue of a Mechanics Lien, dated December 21, 1999, filed for record in the
office of the County Recorder in and for the County of Carver, State of Minnesota, on the 21st
day of December, 1999, and recorded as Document No. 262237, against Chanhassen Properties,
LLC and Chan Ventures, LLC and Bloomberg'Companies, Inc., in the amount of $16,819.07.
The interest of Defendant Korsunsky Erickson Architects, Inc. is subject to and inferior to the
mortgage of Plaintiff as herein described.
27. That Defendant Economic Development Authority in and for the City of
Chm~hassen may have a claim or interest in the premises by virtue of a Mortgage, dated August
28, 1997, filed for record in the office of the County Recorder in and for the County of Carver,
State of Minnesota, on the 11th day of September, 1997, and recorded as Document No'. 215689,
made by Chan Ventures, LLC, a Limited Liability Company to Economic Development
Authority in and for the City of Chanhassen in the principal amount of $134,102.05. The interest
of Defendant Economic Development Authority in and for the City of Chanhassen is subject to
and inferior to the mortgage of Plaintiff as herein described.
28. That Defendant Chanhassen Bowl, Inc. may have a claim or interest in the
premises as a tenant under an unrecorded lease. The interest of Defendant Chanhassen Bowl,
Inc. is subject to and inferior to the mortgage of Plaintiff has herein described pursuant to a
Subordination, Non-disturbance and Attornment Agreement dated August 28, 1997 between
Plaintiff and Defendants Chan Ventures, LLC and Chanhassen Bowl, Inc.
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29. That Plaintiff has duly notified Defendants of the default and made demand for
good payment.
30. That no other action or proceeding at law or equity has been had for the collection
of the debts secured by said Note or Mortgage or any part thereof.
WHEREFORE, Plaintiff demands judgment and decree of this Court as follows:
1. Adjudging that there is due to Plaintiff from Defendant, Chan Ventures, LLC., the
sums set forth herein, together with interest as provided in the Note, costs, disbursements, and
attorney fees, and such other and further sums as may now be, or hereafter become payable to
Plaintiff pursuant to the Note and Mortgage.
2. Adjudging that the Pledge Agreement and Escrow Agreement funds in escrow
with the Plaintiff be applied to said indebtedness.
3. Adjudging and directing a sale of the mortgaged premises, including the personal
property referred to in the Fixture Financing Statement and Escrow Agreement, described herein
as provided by law, and the application of the proceeds of such sale, after deducting the costs
thereof, to the payment of the amount adjudged to be due with interest, costs and disbursements
of this action, including attorney fees, and directing the Sheriff of Carver County to proceed to
sell the said premises according to the provisions of law relating to the sale of real and personal
property on execution, and thereafter to make a report to the Court.
4. Adjudging and awarding to Plaintiff all rents, leases, fixtures, profits or other
payments from the real property to which Plaintiff is entitled pursuant to the security agreements
referenced herein.
-8-
5. Declaring that the interests of Defendants, Geraldine P. Baden; Otto Associates
Engineers and Land Surveyors, Inc.; Korsunsky Krank Erickson Architects, Inc.; Economic
Development Authority in and for the City of Chanhassen; and Chanhassen Bowl, Inc., be
adjudged and decreed inferior to Plaintiff's lien thereon and that said Defendants and all persons
claiming under or through them be foreclosed and barred from any right, title or interest in the
premises, except the fight to redeem within the period fixed by statute therefore.
6. Awarding judgment and execution against Defendants Chan Ventures, LLC,
Daniel F. Dahlin and Mary S. Dahlin for any deficiency.
7. For such other and further relief as the Court may deem just and equitable.
Dated: April 20, 2000 KNUTSON, FLYNN, DEANS & OLSEN
By /s/ Patrick J. Flynn
Patrick J. Flyrm, Atty. Reg. #3051X
Jennifer K. Anderson, Atty. Reg. No. 253789
1155 Centre Pointe Drive, Suite 10
Mendota Heights, MN 55120
Telephone: 651/222-2811
Attorneys for Plaintiff
Heritage National Bank
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ACKNOWLEDGMENT
The undersigned hereby acknowledges as required by Minn. Stat. § 549.21, Subd. 1, that
costs, disbursements, and reasonable attorney and witness fees may be awarded in certain
circumstances pursuant to Minn. Stat. §549.21, Subd. 2, to the party against whom the
allegations in this pleading are asserted. .
Dated: April 20, 2000
KNUTSON, FLYNN, DEANS & OLSEN
By /s/ Patrick J. Flvrm
Patrick J. Flynn, Atty. Reg. #3051X
Jennifer K. Anderson, Atty. Reg. No. 253789
1155 Centre Pointe Drive, Suite 10
Mendota Heights, MN 55120
Telephone: 651/222-2811
Attorneys for Plaintiff
Heritage National Bank .
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EXHIBIT A
PROMIgSORY NOTE
SUS 500,000.O0
North St. Paul, Minnesot/t
August 28, 1997
FOR VALUE RECEIVED the undersigned promises to pay to the order of Heritage
National Bank, a national banking corporation ("Bank"), at its office in North St. Paul,
Minnesota or at such other place as may be designated by the holder hereof, the sum of Five
Hundred Thousand and 00/100 Dollars ($500,000.00) payable in U.S. dollars or so much thereof
has been advanced and remair[~ unpaid at maturity, together with interest on the unpaid principal
balance hereof from the date hereof at the rate of ten percent (10%) per annum until this Note
is fully paid. Interest shall be calculated on the basis of actual number of days elapsed and a
360-day year.
Principal and accrued interest shall be payable in monthly installments of principal and
interest in the amount of Six Thousand Six Hundred Fifty-four and 21/100 Dollars ($6,654.21)
each commencing on the 1st day of October, 1997, and shall continuing on the same day of each
month thereafter until September 1, 2002, when the entire remaining balance due hereunder shall
be due and payable in full.
Payments shall be applied first to advances which are neither principal nor interest, if
any, then to accrued interest and the balance to principal.
The undersigned may prepay in whole or in part without premium or penalty but any
prepayment shall be accompanied by the payment of all accrued but unpaid interest on the
amount thereof.
The maker and any co-makers, an indorser hereof or any other party hereto or any
guarantor hereof (collectively "Obligor") and each of them: (i) waive(s) presentment, demand,
notice of demand, protest, notice of protest and notice of nonpayment and any other notice
required to be given under the law to Obligor, in connection with the delivery, acceptance,
performance, default or enforcement of this Note, or any indorsement or guaranty of this Note
or of any document or immanent evidencing any security for payment of this Note; (ii)
consent(s) to any and all delays, extensions, renewals or other modifications of this Note or
waivers of any term hereof or release or discharge by Bank of Obligor or release, substitution
or exchange of any security for the payment hereof or the failure to act on' the part of Bank or
any indulgence shown by Bank, from time to time and in one or more instances (without notice
to or further assent from Obligor) and agree(s) that no such action, failure to act or failure to
exercise any right or remedy, on the part of the Bank shall in any way affect or impair the
obligations of Obligor to be consUmed as a waiver by Bank of, or otherwise affect, any of
Bank's fights under this Note, under any indorsement or guaranty of this Note or under any
document or instrument evidencing any security for payment of this Note; and (iii) (jointly and
severally, if more than one) after an Event of Default, as hereafter def'med agree(s) to pay, on
demand, all costs and expenses of collection of this Note or of any indorsement or any guaranty
hereof and/or the enfomement of Bank's fights with respect to, or the administration,.
supervision, preservation, protection of, or realization upon, any property securing payment
hereof, including reasonable attorney's fees.
The holder of this note may without notice declare this Note immediately due and payable
for the entire unpaid principal plus accrued interest upon the occurrence of any of the following
events (which shall constitute an Event of Default): (i) any default in the payment of this Note;
(ii) any default under the terms or conditions of any document securing this Note, (iii) the failure
to pay or perform any obligations, liabilities or indebtedness of any Obligor to Bank, whether
under this Note or any other agreement, note or instrument now or hereafter existing, (as and
when due whether at maturity or by acceleration and no prior demand therefor by Bank being
necessary) (collectively "Obligations"); (iv) a proceeding being fried or commenced against any
Obligor for dissolution or liquidation, or any Obligor voluntarily or involuntarily terminating or
dissolving or. being terminated or dissolved, (v) insolvency of, business failure of, the
appointment of a custodian, trustee, liquidator or receiver for or for any of the property of, or
an assignment for the benefit of creditors by or the filing of a petition under bankruptcy,
insolvency or debtor's relief law, or for any readjustment of indebtedness, composition or
extension by or against any Obligor; (vi) Bank determining that any representation or warranty
made by any Obligor to Bank is, or was, untrue or materially misleading, or (vii) Bank shall in
good faith believe that the prospect of due and punctual payment of any or all of the Obligations
is impaired.
The undersigned agrees to pay a late charge fee of 5 % of the payment amount for any
payment received by Bank more than 10 days after the date due.
The undersigned agrees to pay all costs of collection, including reasonable attorneys'
fees, in the event of a default under this Note.
This Note is secured by a Mortgage and Assignment of Rents and Personal Guarantees
of even date.
This Note is issued in and subject to the laws of the State of Minnesota. The undersigned
hereby consent(s) to the personal jurisdiction of the state and federal courts located in the State
of Minnesota in connection with any controversy rehted to this Note or the Mortgage or other
document given as security, waives any objection as to venue in any such courts, and agrees that
service of process may be made upon the undersigned by mailing a copy of the summons to the
undersigned; and in any action hereunder the undersigned waives the right to demand a trial by
jury.
Failure at any time to exercise any of the aforesaid options or any other rights of Bank
hereunder shall not constitute a waiver thereof, nor shall it be a bar to exercise of any of the
aforesaid options or rights at a later date.
2
In the event any one or more of the provisions of thi.q Note shall for any reason be held
to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that.
any one or more of the provisions of this Note operate or would prospectively operate to
invalidate this Note, then and in either of those events, such provision or provisions only shall
be deemed null and void and shall not affect any other provisions of this Note and the remaining
provisions of this Note shall remain operative and in full force and effect and shall in no way
be affected, prejudiced or disturbed thereby.
Its Chief Manager
41120 I
EXHIBIT B
Document4-~: ~,~ ~¢:~¢:
STATE OF MINNESOTA
CARVER COUNTY RECORDER
(Abstract Department)
Riling Fee: Copy Fee:
Ch6ckNo: / G07
Cart W. Hffnson ,Jr., C~unty Recorci~r
/
MORTGAGE ASSIG~ OF RENTS
AND SECURITY AGR F, EM'ENT
Heritage National Bank.
(Mortgagee)
Chan Ventures, r J C
(Mortgagor)
Amount: $500,000.00
Date: August 28, 1997
The maximum principal indebtedness secured
by this mortgage is $500,000.00.
THIS INSTR~ WAS DRAFTED BY:
Leonard, O'Brien,
Wilford, Spencer and Gale, Ltd.
800 Norwest Center
55 East Fifth Street
St. Paul, Minnesota 55101
(612) 227-9505
CCA & T
448-5570
TABLE OF CONTENTS
2. S JRANC ................ . .......
3. TITLE ............................................... 4
4. APPLICATION OF PAY'iWENTS .............................. 4
5. CItARGES; LIENS ....................................... 4
6. ItAZARD INSURANCE ............. , ...................... 4
7. PRESERVATION AND MAINTENANCE OF PROPERTY; LEAS'IZ, HOLDS. . 5
8. PROTECTION OF MORTGAGEE'S SECURITY ................... 5
9. INSPECTION ............................... ~ .......... 6
10. CONDEMNATION ....................................... 6
11. TRANSFER OF TITE PROPERTY ............................. 6
12. ACCELERATION; ~I")IF._,S .............................. 6
13. GRANT OF SECURITY INTERF_3T ........................... 7
14. ASSIG~ OF RENTS; APPO~ OF RECEIVER; MORTGAGEE IN
POSSESSION .......................................... 7
15. SUBROGATION ........................................ 8
16. PARTIAL ]/N'VAI JDITY ................................... 9
17. RELEASE .................................. ' ........... 9
18. FINANCIAL STATEM-ENTS ................................ 9
19. MORTGAGOR NOT RELEAS'IZ, D ............................. 9
20. FORBEAR,MN'CE BY MORTGAGEE NOT A WAIVER .............. 10
21. REMEDIF_3 CUMUI.,ATIVE ................................ 10
22. SUCCESSORS AND ASSIGNS BOUND; JOL--NT AND SEVERAL LIABII,ITY;
CAPTION'S ........................................... 10
23. NOTICE ............................................. 10
24. GOVERNING I.,AW; SEVERABIIJTY ........................ '.10
25. MORTGAGOR'S COPY .................................. 10
26. FIXII,IRE FILING ...................................... 11
27. WAIVER OF HOMESTEAD ................................ 11
28. HAZARDOUS MATERIALS ................................ 11
EXttlRIT "A" ............................... -. ......... 13
EXHIBIT "B" ......................................... 14
2
MORTGAGE ASSIGNMENT OF RENTS
AND SECURITY AG~
RECITALS
THIS INDENTURE is made this 2$th day of August, 1997, between Chart Ventures,
I_LC, a Minnesota limited liability company (herein "Mort~gor"), and Heritage National Bank,
a national banking corporation (herein "Mortgagee").
wFtqV~REAS, Mortgagor is indebted to Mort~gee in the principal sum of Five Hundred
Thousand and 00/100 Dollars ($500,000'.00), which indebtedness is evidenced by Mortgagor's
Note dated August 28, 1997, in the original principal amount of Five Hundred Thousand and
00/1130 Dollars ($500,000.00) (the "Note").
TO SECURE to Mortgagee the repayment of the indebtedness evidenced by the Note,
and all extensions, renewals and modifications with interest thereon, the payment of all other
sums, with interest thereon, advanced in accordance herewith to protect the security of this
Mortgage, and the performance of the covenants and agreements of Mortgagor herein contained,
Mortgagor does hereby grant and convey to Mortgagee, with power of sale, the following
described property located in the County of Carver, State of Minnesota:
See attached Exhibit "A".
TO HAVE AND TO HOLD THE SAME, together with all the improvements now or
hereafter erected on the property, and all easements, rights, appurtenances, rents,' royalties,
mineral, oil and gas rights and profits, water, water rights, and water stock, and all f'mures now
or hereafter attached to the property, all of which, including replacements covered by this
Mortgage, and all of the foregoing together with said property (or the leasehold estate if this
Mortgage is on a leasehold) are herein referred to as the "Property".
Mortgagor covenants that it is lawfully seized of the estate hereby conveyed and has the
right to grant and convey the Property; that the Propen'y is unencumbered except as shown on
Exhibit "B"; that the Mortgagee, its successors and assigns shall quietly enjoy and possess the
same; and that Mortgagor will warrant and defend generally the rifle to the Property against all
claims and demands.
PROVIDED, NEVERTWELF. SS, That if the Mortgagor shall well and truly pay or
cause to be paid to Mortgagee, its successors and assigns, as and when due, the principal and
interest on the Note, according to the terms and conditions of that certain Promissory Note of
even date herewith, the provisions of which are incorporated herein by reference, and provided,
that if the Mortgagor shall fully perform all conditions and covenants of this Mortgage, then this
indenture shall be null and void, otherwise to remain in full force and effect.
Mortgagor and Mortgagee covenant and agree as follows:
1. PAYMF. NT OF INDEBTEDNESS. Mortgagor shall promptly paY when due the
indebtedness secured by this Mortgage, including without limitation, the Note.
3
2. FUNDS FOR TAXES AND INSURANCE. Subject to applicable law or to
written waiver by Mortgagee, if any, Mortgagor shall pay to Mortgagee on the day monthly-
installments of principal and interest are payabIe under the Note, until the Note is paid in full
a sum (herein "Funds") equal to one-twelfth of the yearly taxes and assessments which may
attain priority over this Mortgage, and ground rents on the Propexty, if any, plus one-twelfth of
yearly premium installments for hazard insurance, (herein ~Escrow Items"), ali as reasonably
eatimated initially and from time to time by Mortgagee on the basis of assessments, bills and
reasonable estimates thereof. No earnings or interest shall be payable to the Mortgagor on the
Funds. Such Funds shall not be, nor deemed to be, trust funds, and the Mortgagee shall have
the right to hold the Funds in any manner Mortgagee elects and may commingle the Funds with
other moneys held by the Mortgagee. The Funds are pledged as additional security for the sums
secured by this Mortgage.
If the amount of the Fund held by Mortgagee, together with the future monthly
installments of Funds payable prior to the due dates of the Escrow Items, shall exceed the
amount required to pay the Escrow Items as they fall due, such excess shall be, at Mortgagor's
option, either promptly repaid to Mortgagor or credited to Mortgagor on monthly installments
of Funds. If the amount of the Funds held by Mortgagee shall not be sufficient to pay the
Escrow Items as they fall due, Mortgagor shall pay to Mortgagee any amount necessary to make
up the deficiency within 30 days from the date notice is mailed by Mortgagee to Mortgagor
requesting payment thereof.
Upon payment in full of all sums secured by this Mortgage, Mortgagee shall promptly
refund to Mortgagor any Funds held by Mortgagee. If under paragraph I 1 hereof the Property
is sold or the Property is otherwise acquired by Mortgagee, Mortgagee shall apply, no later than
immediately prior to the sale of the Property or its acquisition by Mortgagee, any Funds held
by Mortgagee at the time of application as a credit against the sums secured by this Mortgage.
3. TITI.E. Mortgagor warrants that it is lawfully seized of' the estate hereby
conveyed and has the right to grant and convey the Property; that the Property is unencumbered
except as shown on Exhibit "B~; that the Mortgage, its successors and assigns shall quietly
enjoy and possess the same; and that Mortgagor will warrant and defend generally the title to
the Property against all claims and demands. The covenants and warranties made in this section
shall survive the foreclosure of this Mortgage.
4. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise,
any payments received by Mortgagee under the Note shall be applied by Mortgagee first in
payment of amounts which are neither principal nor interest, then to interest payable on the
Note, then to principal of the Note. At such time as the Note secured hereby has been paid in
full according to the terms, this Mortgage and all other instruments securing the Note shall be
released as provided in paragraph 16 hereof.
5. CItARGES; I.IENS. Mortgagor shall pay all taxes, assessments and other
charges, fines and impositions attributable to the Property which may attain a priority over this
4
Mortgage, and leasehold payments or ground rents, if any, in the manner provided under
paragraph 2 hereof or, if not paid in such manner, by Mortgagor making payment, when due,
directly to the payee thereof. Mortgagor shall promptly furnish to Mortgagee all notices of
mounts due under this paragraph, and in the event Mortgagor shall make payment directly,
Mortgagor shall promptly furnish to Mortgagee receipts evidencing such payments. Mortgagor
shall promptly discharge any lien which has priority over this Mortgage; provided, that
Mortgagor shall not be ~luired to discharge any such lien so long as Mortgagor shall agree in
writing to the payment of the obligation secured by such lien in a manner acceptable to
Mortgagee, or shall in good faith contest such lien by, or defend enforcement of such lien in,
legal proceedings which operate to prevent the enforcement of the lien of forfeiture of the
Property or any part thereof.
6. ItAZARD INSURANCE. Mortgagor shall keep the improvements now existing
or hereafter erected on the Property insured against loss by fire, hazards included within the
term "extended coverage~, and such other hazards as Mortgagee may require and in such
amounts and for such periods as Mortgagee may require from time to time; provided, that
Mortgagee shall not require that' the amount of such coverage exceed that amount of coverage
required to pay the sums secured by this Mortgage.
The insurance canSer providing the insurance shall be chosen by Mortgagor subject to
approval by Mortgagee; provided, that such approval shall not be unreasonably withheld. All
premiums on insurance policies shall be paid by Mortgagor making payment, when due, directly
to the insurance carrier. Mortgagor shall promptly deliver to Mortgagee such policies or
certificates and all receipts evidencing payment of the premium thereof.
All insurance policies and renewals thereof shall be in form acceptable to Mortgagee and
shall include a standard mortgagee clause in favor of, and in form acceptable to Mortgagee.
Mortgagee shall have the right to hold the policies and renewals thereof, and Mort~or shall
promptly furnish to Mortgagee all renewal notices and all receipts of paid premiums. In the
event of loss, Mortgagor shall give prompt notice to the insurance carrier and Mortgagee.
Mortgagee may make proof of loss if not made promptly by Mortgagor, upon 15 days notice
to Mortgagor by Mortgagee.
Unless Mortgagee and Mortgagor othenvise agree in writing, insurance proceeds shall
be applied to restoration or repair of the Property ~maged provided such restoration or repair
is economically feasible and the security of this Mortgage is not thereby impaired. If such
restoration or repair is not economically feasible or if the security of this Mortgage would be
impaired, the insurance proceeds shall be applied to the sums secured by this Mortgage with the
excess, if any, paid to Mortgagor. If the Property is abandoned by Mortgagor, or if Mortgagor
fails to respond to Mortgagee within 30 days from the date notice is mailed by Mortgagee to
Mortgagor that the insurance carder offers to settle a claim for insurance benefits, Motlgagee
is authorized to collect and apply the insurance proceeds at Mortgagee's option either to
restoration or repair of the Property or to the sums secured by this Mortgage.
Unless Mortgagee and Mortgagor otherwise agree in writing, any such application of
proceeds to principal shall not extend or postpone the due date of the monthly installments due-
under the Note or change the amount of such installments, ff under paragraph I 1 hereof the
Property is acquired by Mortgagee, all right, rifle and interest of Mortgagor in and to any
insurance policies and in and to the proceeds thereof resulting from damage to the Property prior
to the sale or acquisition shall pass to Mortgagee to the extent of the sums secured by this
Mortgage immediately prior to such sale or acquisition.
7. PRESERVATION AND MAINTENANCE OF PROPERTY;
Mortgagor shall keep the Property in good repair and condition and shall not COmmit or permit
waste or permit impairment or deterioration of the Property and shall comply with the provisions
of any lease if this Mortgage is on a leasehold and do no act which would unduly impair or
depreciate the value of the property or security.
8. PROTECTION OF MORTGAGEE'S SECURITY. If Mortgagor fails to
perform the covenants and agreements contained in this Mortgage, or if any action or proceeding
is commenced which materially affects Mortgagee's interest in the Property, including, but not
limited to, eminent domain, insolvency, code enforcement, or arrangements or proceedings
involving a bankrupt or decedent, then Mortgagee at Mortgagee's option, with notice to
Mortgagor, may make such appearances, disburse such sums and take such action as is necessary
to protect Mortgagee's interest, including, but not limited to, disbursement of reasonable
attorney's fees and entry upon the Property to make repairs. Any amounts disbursed by
Mortgagee pursuant to this paragraph 7, with interest thereon, shall become additional
indebtedness of Mortgagor secured by this Mortgage. Unless Mortgagor and Mortgagee agree
to other terms of payment, such amounts shall be payable upon notice from Mortgagee to
Mortgagor requesting payment thereof, and shall bear interest from the date of disbursement at
the rate payable from time to time on outstanding principal under the Note unless payment of
interest at such rate would be contrary to applicable law, in which event such amounts shall bear
interest at the highest rate permissible under applicable law. Nothing contained in this paragraph
8 shall require Mortgagee to incur any expense or take any action hereunder.
9. INSPECTION. Mortgagee may make or cause to be made reasonable entries
upon and inspections of the Property, provided that Mortgagee shall give Mortgagor notice prior
to any such inspection specifying reasonable cause therefor related to Mortgagee's interest in the
Property.
10. CONDEMNATION. The proceeds of any award or claim for damages, direct
or consequential, in connection with any condemnation or other talcing of the Property, or part
thereof, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to
Mortgagee. If the Property is abandoned by Mortgagor, or if, after notice by Mortgagee to
Mortgagor that the condemnor offers to make an award or settle a claim for damages, Mortgagor
fails to respond to Mortgagee within 30 days after the date such notice is mailed, Mortgagee is
authorized to collect and apply the proceeds, after deducting all reasonable COsts and expenses
incurred by the Mortgagee in the collection thereof, at Mortgagee's sole option, either to
restoration or repair of the Property or to the sums secured by this Mortgage or be released to
the Mortgagor. Unless Mortgagee and Mortgagor otherwise agree in writing, any such.
application of proceeds to principal shall not extend or postpone the due date of the monthly
installments due under the Note or change the mount of such installments.
11. TRANSFER OF ~ PROPERTY. Should mortgagor sell, convey, transfer,
dispose of or further encumber said Property, .or any part thcreof, or any interest therein, or
a~ee so to do, without the written consent of Mortgagee being first obtained, then Mortgagee
shall have the right, at its option, to declare all sums secured hereby forthwith due and payable.
12. ACClV. lJERATION; REM¥,DIES: That in the event of default in making any
monthly payment provided for herein or in the Note secured hereby, or in the event of a breach
of any other stipulation, agreement, condition, and covenant of this Mortgage, then in any such
case, the Mortgagee may at its option, declare all sums then owing by the Mortgagor
immediately due and payable without notice; and the Mortgagor hereby authorizes and empowers
the Mortgagee to sell the mortgaged premises as a whole or in parcels at public auction and
convey the same to the purchaser in fee simple, and in any such proceeding the Mortgagor
agTees to pay all reasonable charges, including maximum attorneys' fees, prescribed by statute,
and out of the moneys arising from such sale, retain all sums secured hereby, together with all
legal costs and charges for such sale, and the maximum attorneys' fees.permitted by law, and
to pay the balance, if any, to the Mortgagor; or the Mor,.gagee may enforce payment of such
sums as are declared due by foreclosure of this Mortgage through the usual judicial proceedings.
If Mortgagee invokes the power of sale, Mortgagee shall cause a copy of a notice of sale to be
served upon the person, if any, in possession of the Property and also by certified mai/to
Mortgagor. Mortgagee shall publish a notice of sale and the Propen'y shall be sold at public
auction in the manner prescribed by applicable law. Morto~agee or Mortgagee's designee may
purchase the Property at any sale. The proceeds of the sale shall be applied in the following
order: (a) to all costs and expenses of the sale, including, but not limited to, attorney's fees and
costs of title evidence, Co) to all sums secured by this Mortgage; and (c) the excess, if any, to
the person or persons legally entitled thereto.
13. GRANT OF SECURITY INTERF3T. As additional security hereunder,
Mortgagor hereby grants Mortgagee a security interest in all fixtures, including, but not limited
to, all engines, boilers, elevators, machinery, heating apparatus, electrical equipment, air
conditioning equipment, water and gas fixtures, stoves, refrigerators, caxpetlng, shades, awnings,
screens, storm sashes, blinds, and equipment that may now or hereafter be located on the
mortgaged premises of whatsoever type or nature whether now owned or hereafter acquired by
Mortgagor and all rights to rental payments or other income, rents, profits or other payments
from the Property, including all replacements, repairs, and substitutions thereto and proceeds
thereof. Mortgagor hereby covenants and agrees that upon the occurrence of an event of default
hereunder, Mortgagee may, in addition to any other remedy provided for herein or which it may
have at law or equity, exercise all rights granted to it under the Minnesota Uniform Commercial
Code, Minnesota Statutes, Chapter 336. The filing of this mortgage shall constitute the filing
7
of a financing statement in the office wherein it is fried, and a carbon, photograph, or other
reproduction of this document may also be ~ed as a financing statement.
14. ASSIGNMI*.NT OF RENTS; APPO~ OF RECEIVER;
MORTGAGEI*. IN POSSESSION. As additional security hereunder, Mortgagor hereby assigns
all rents and profits due or to become due with respect to the mortgaged premises, whether
before or after foreclosure or during any redemption period after sheriff's foreclosure sale, as
additional security for the repayment of the Note provided, however, that Mortgagor shall, prior
to acceleration, have the right to collect and retain such rents and profits as they become due and
payable, and Mortgagor hereby further agrees that Mortgagee shall have the power pursuant to
this Assignment of Rents irrevocably to manage, control, and lease the mortgaged premises.
Upon the occurrence of an event of default hereunder, abandonment of the property and without
regard to waste, adequacy of the security, or solvency of the Mortgagor, Mortgagee may, at its
option, either:
(a) Apply to the Minnesota district court for the county wherein the property
mortgaged hereunder is located for the appointment of a receiver under Minnesota
Statutes, Chapter 559.17, it being understood and agreed that Mortgagee shall be
entitled to the appointment of a receiver upon a showing that an event of default
has occurred under the terms of this Mortgage Assignment of Rents and Security
Agreement, or an abandonment of the property. A receiver so appointed shall
apply all rents and profits collected f'mt as provided in Minnesota Statutes,
Section 576.01, Subdivision 2, and thereafter shall apply the rents to the payment
of the following items in the order indicated; first to the payment of principal and
interest on any prior mortgages; second to the payment of any other prior liens
or encumbrances; and third to the payment of principal and interest on the Note;
or,
(b) Collect all rents and profits from the occupiers of the mortgaged premises
upon the filing by the Mortgagee, in the office of the County Recorder (or the
office of the Registrar of Titles in the case of registered property) in which the
Property is located of a notice of the occurrence of any event of default in the
terms and conditions of this Mortgage Assignment of Rents and Security
Agreement or abandonment of the Property and the service of said notice of
default upon the occupiers of the mortgaged premises. Mortgagee shall frrst
apply all rents and profits so collected in the same manner as is provided in
subparagraph (a) above, where the rents are collected pursuant to the appointment
of a receiver. In the event Mortgagee shall exercise its rights under this
sub-paragraph (b), it shall not be deemed to be a mortgagee-in-possession-of the
mortgaged premises.
15. SUBROGATION. Any of the proceeds of the Note utilized to take up
outstanding liens against all or any part of the Property have been advanced by Mortgagee at
Mortgagor's request and upon Mortgagor's representation that such amounts are due and are
8
secured by valid liens against the Property. Mortgagee shall be subrogated to any and all rights,
superior rifles, liens and equities owned or claimed by any owner or holder of any outstanding.
liens and debts, however remote, regardless of whether said liens or debts are acquired by
Mortgagee by assignment or are released by the holder thereof upon payment.
16. PARTIAL INVAI,IDITY. In the event any portion of the sums intended to be
secured by this Mortgage cannot be lawfully secured hereby, payments in reduction of such sums
shall be applied f~rst to those portions not secured hereby. In the event that any applicable law
limiting the amount of interest or other charges permitted to be collected is interpreted so that
any charge provided for in this Mortgage or in the Note, whether considered separately or
together with other charges that are considered a part of this Mortgage and Note transaction,
violates such law by reason of the acceleration of the indebtedness secured hereby, or for any
other reason, such charge is hereby reduced to the extent necessary to eliminate such violation.
The amounts of such interest or other charges previously paid to Mortgagee in excess of the
amounts permitted by applicable law shall be applied by Mortgagee to reduce the principal of
the indebtedness evidenced by the Note, or, at Mortgagee's option, be refunded.
17. I~EI.EASE. Upon payment of all sums secured by this Mortgage, Mortgagee
shall discharge this Mortgage without charge to Mortgagor. Mortgagor shall pay ail costs of
recordation, if any.
18. FINANCIAL STATEMENTS. The Mortgagor will keep and maintain, at all
times, full, true and accurate books of the accounts in sufficient detail to reflect correctly the
results of the operation of the mortgaged Property, which books and records shall be open to
inspection by the Mortgagee or its representative during ordinary business hours. The
Mortgagor will furnish to the Mortgagee within 90 days after the end of its fnscal year, a
statement of income and expenses for such fiscal year and a balance sheet as of the end of such
fiscal year, such documents to be in reasonable detail and in form and content satisfactory to the
Mortgagee and to reflect the results of the operation of the buildings and improvements operated
or situated upon the Property for such fiscal year and prepared in accordance with generally
accepted accounting principles. If the Mortgagor fails to provide such statements for itself, the
Mortgagee shall have the right to audit the Mortgagor's books and records at the Mortgagor's
expense.
19. MORTGAGOR NOT RELEASED. Extension of the time for payment or
modification of amortization of the sums secured by this Mortgage granted by Mortgagee to any
successor in interest of Mortgagor shall not operate to release, in any manner, the liability of
the original Mortgagor and Mortgagor's successors in interest. Mortgagee shall not be required
to commence proceedings against such successor or refuse to extend time for payment or
otherwise modify amortization of the sums secured by this Mortgage by reason of any demand
made by the original Mortgagor and Mortgagor's successors in interest.
20. FORBEARANCE BY MORTGAGEE NOT A WAIVER. Any forbearance by
Mortgagee in exercising any fight or remedy hereunder, or otherwise afforded by applicable law,
shall not be a waiver of or preclude the exercise of any such right or remedy. The procurement
of insurance or the payment of taxes or other liens or charges by Mortgagee shall not be a~
waiver of Mortgagee's right to accelerate the maturity of the indebtedness secured by this
Mortgage..
21. REMEDIES CUMULATIVE. All remedies provided in this Mortgage are
distinct and cumulative to any other right or remedy under this Mortgage or afforded by law or
equity, and may be exercised concurrently, independently or successively.
22. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL
LIABILITY; CAPTIONS. The covenants and a~,m'eements herein contained shall bind, and the
rights hereunder shall inure to, the respective successors and assigns of Mortgagee and
Mortgagor. All covenants and agreements of Mort~gor shall be joint and several. The captions
and headings of the paragraphs of this Mortgage are for convenience only and are not to be used
to interpret or define the provisions hereof.
23. NOTICE. Except for any notice required under applicable law m be given in
another manner, (a) any notice to Mortgagor provided for in this Mortgage shall be given by
mailing such notice by fin'st class mail addressed to Mortgagor at the address set forth in
Paragraph 25 or at such other address as Mortgagor may designate by notice to Mortgagee as
provided herein, and Co) any notice to Mort~gee shall be given by certified mail, remm receipt
requested, to Mortgagee's address stated herein or to such other address as Mortgagee may
designate by notice to Mortgagor as provided herein. Any notice provided for in this Mortgage
shall be deemed to have been given to Mort~gor or Mortgagee when given in the manner
designated herein.
24. GOVERNING LAW; SEVERABIIJTY. This Mortgage shall be governed by
the law of the jurisdiction in which the Property is located. In the event that any provision or
clause of this Mortgage or the Note conflicts with applicable law, such conflict shall not affect
other provisions of this Mortgage or the Note which can be given effect without the conflicting
provision, and to this end the provisions of the Mortgage and the Note are declared to be
severable.
25. MORTGAGOR'S COPY. Mortgagor shall be furnished a conformed copy of
the Note and of this Mortgage at the time of execution.
26. FIXTLrRE FII.ING. From the date of its recording, this 'Mortgage shall be
effective as a financing statement fried as a f'~xture filing with respect to all goods constituting
part of the Property (as more particularly described in paragraph 12 of this Mortgage) which are
or are to become fixtures related to the real estate described herein. For this purpose, the
following information is set forth:
10
(a) Debtor.
Chart Ventures, LLC
581 - 78th Street
Cbanhassen, Minnesota 55317
Tax I.D. No. 41-1845877
(b) Secured Party:
Heritage Bank
2700 Seventh Avenue East
North St. Paul, Minnesota 55109
ATTENTION: Commercial Loan Dept.
(c) This document covers goods which are or are to become fixtures.
(d)
above.
The name of the record owner of the mortgaged property is the Debtor described
27. WAIVER OF HOMF~TEAD. Mortgagor hereby waives all fights of homestead
exemption in the property.
28. HAZARDOUS MATERIALS. Mort~gor covenants, represents and warrants
to Mortgagee, its successors and assigns, (i) that it has not used or permitted and will not use
or permit the Property to be used, whether directly or through contractors, agents or tenants,
and to the best of Mortgagor's knowledge and except as disclosed to Mortgagee in writing; the
Property has not at any time been used 'for the generating, transporting, treating, storage,
manufacture, emission of, or disposal of any dangerous, toxic or hazardous pollutants, chemicals
wastes or substances as defined in the Federal Comprehensive Environmental_ Response
Compensation and Liability Act of 1980 CCERCLA"), or the Federal Resource Conservation
and Recovery Act of 1976 CRCRA"), or the Minnesota Environmental Response and Liability
Act, Minn. Stat. Ch. l15A CMERLA"), or any other federal, state or local environmental laws,
statutes, regulations, requirements and ordinances ("Hazardous Materials"); (ii) that there have
been no investigations or reports involving Mort~gor or the Property by any governmental
authority which in any way pertain to Hazardous Materials (iii) that the operation of the Property
has not violated and is not currently violating any federal, state or local law, regulation,
ordinance or requirement governing Hazardous Materials; (iv) that the Property h not listed in
the United States Environmental 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 (v) that the Improvements will 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 assi~s, 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.
11
These covenants, representations and warranties shall be deemed continuing covenants,
representations and warranties for the benefit of the .Mortgagee, and any successors and assigns.
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 this Mortgage and any acquisition
of rifle by Mortgagee or anyone claiming through or under this Mortgage as the title of
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
indebtedness secured by this Mortgage and shall become immediately due and payable in full
on demand of the Mortgagee, its successors and assigns.
IN WITN~S WWEREOF, Mortgagor has executed this Mortgage the day and year first
above written.
Its Chief Manager
STATE OF MINN~OTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me this 28th day of August, 1997
by,~,/.~../2A//~, the Chief Manager of Chart Ventures, LLC, a Minnesota limited liability
company, on behalf of the company.
Notary Public ~"
41122 1
EXHIBIT "A"
(Legal Description)
Lot Two (2), Block One (1), Chanhassen Mail, according to the plat thereof now on f'fle
and of record in the Office of the County Recorder, Carver County, Minnesota
13
o
o
PERM~TT~D ENtRAnCES
Terms and Conditions of Declaration of Covenants, Conditions, Restrictions and
Easements and Party Wall Agreements dated May 1, 1985, fried May 13, 1985 as
Document No. 71070, Office of the County Recorder, Carver County, Minnesota and
as amended by Amended Declaration of Covenants, Conditions, Restrictions and
Easements an Party Wall agreement dated June 26, 1985, fried July 3, 1985 as Document
No. 71988, Office of the county Recorder, Carver County, Minnesota and as further
amended by Document Nos. 110474, 110475, 110476, 110477 and 110478, Office of the
County Recorder, Carver County, Minnesota.
Easement for driveway, parking and roadway purposes as created in Document Nos.
71070, Office.of the County Recorder, Carver County, Minnesota and 71988 Office of
the County Recorder, Carver County, Minnesota.
Easement for transmission of electric energy over a 10 foot strip of land as granted to
Northern States Power Company by instrument dated january 3, 1968, fried January 3,
1968 as Document No. 03185, Office of the County Recorder, Carver County,
Minnesota.
Easement for road purposes, together with the terms and conditions contained therein,
as created in Easement Aga'eement executed by Frontier Development Corporation to
Community Investment Enterprise, Inc. dated June 11, 1970, fried June 12, 1970, as
Document No. 09295, Office of the County Recorder, Carver County, Minnesota.
Easement for public right-of-way, street and utility purposes as granted to the City of
Chanhassen by instrument dated August 26, 1976, fried August 30, 1976, as Document
No. 30098, Office of the County Recorder, Carver County, Minnesota.
: EXHIBIT C
GUARANTY
IN CONSIDERATION of and in order to induce Heritage National Bank, a United States
corporation (the "Lender"), to extend credit or other financial accommodations to Chart
Ventures, LLC, a Minnesota limited liability company (the "Borrower"), and as evidenced by
those certain Promissory Notes of even date (the 'Notes") herewith executed by the Borrower
in the total original principal amount of $500,000.00 payable to the order of the Lender (herein
referred to as the "Loan"), the undersigned (the "Guarantor~) hereby:
I. Unconditionally and absolutely guarantees to the Lender:
(a) The full and prompt payment, when due, whether at the maturity date specified
therein or theretofore upon acceleration of maturity pursuant to the provisions thereof,
principal and interest, and late charges, if any, on the Loan, and any and ali renewals
thereof including notes taken in substitution therefor; and,
(b) The payment and performance by the Borrower of its obligations under and pursuant
to the Loan and any and all documents related thereto;
(The Notes and such other liability, indebtedness and obligations herein collectively referred to
as the "Obligations"); together with the full and prompt payment of any and ali costs and
expenses of and incidental to the collection of the Obligations for the enforcement of this
Guaranty, including, without limitation, attorneys' fees.
2. Agrees that the Lender may demand payment from the Guarantor of any installment (or
portion thereof) of principal or interest on the Loan, when due, and the Guarantor shall
immediately pay the same to the Lender, and the Lender may demand payment or performance
of any or all of the Obligations, when such payment or performance is due or required and the
Guarantor shall mediately pay or perform the same, whether or not the Lender has
commenced repossession of, or foreclosure of any security interest, mortgage or other lien in,
any or al/collateral securing the Loan, or otherwise exercised its rights and remedies hereunder
or under the Loan, the documents related thereto or applicable law.
3. Waives (i) presentment, demand, notice of non-payment, protest and notice of protest and
dishonor on the Obligations; (ii) notice of acceptance of this Guaranty by the Lender;, and, (iii)
notice of the creation or incurrence of the Obligations by the Borrower.
4. Agrees that the Lender may from time to time, without notice to the Guarantor, which notice
is hereby waived by the Guarantor, extend, modify, or renew or compromise the Obligations,
in whole or in part, without releasing, extinguishing or affecting in any manner whatsoever the
liability of the Guarantor hereunder, the foregoing acts being hereby consented to by the
Guarantor.
5. Agrees that the Lender shall not be required to first resort for payment to the Borrower or
any other person, corporation or entity, or their properties or estates, or any other right or.
remedy whatsoever, prior to enforcing this Guaranty.
6. Agrees that this Guaranty shall be construed as a continuing, absolute, and unconditional
guaranty without regard to (i) the validity, regularity or enforceability of the Obligations or the
disaff~ce thereof in any insolvency or b;mkruptcy proceeding relating to the Borrower, or
(ii) any event or any conduct or action of the Borrower or the Lender or any other party which
might otherwise constitute a legal or equitable discharge of a surety or guarantor but for this
provision.
7. Agrees that this Guaranty shall remain in full force and effect and be binding upon the
Guarantor until the Obligations are paid in full.
8. Agrees that the Lender is expressly authorized to forward or deliver any or all collateral and
security which may at any time be placed with it by the Borrower, the Guarantor or any other
person, directly to the Borrower for collection and remittance or for credit, or to ~ollect the
same in any other manner and to renew, extend, compromise, exchange, release, surrender or
modify the installments of, any or all of such collateral and security with or without
consideration and without notice to the Guarantor and without in any manner affecting the
absolute liability of the Guarantor hereunder. Further that the liability of the Guarantor
hereunder shall not be affected or impaired by the failure, neglect or omission on the part of the
Lender to re,qli?e upon the Obligations, or upon any collateral or security therefor, nor by the
taking by the Lender of any other guaranty or guaranties to secure the Obligations or any other
indebtedness of the Borrower to the Lender, nor by the taking by the Lender of collateral or
security of any kind nor by any act or failure to act whatsoever which, but for this provision,
might or could in law or in equity act to release or reduce the Guarantor's liability hereunder.
9. Agrees that so long as any portion of the Obligations are due and owing or to become due
and owing by the Borrower to the Lender, the Guarantor shall not, without the prior written
consent of the Lender, collect or seek to collect from the Borrower the claim, if any, by
subrogation or otherwise, acquired by the Guarantor through payment of any part or all of the
Obligations.
10. Agrees that the liability of the Guarantor hereunder shall not be affected or impaired by the
existence or creation from time to time, with or without notice to the Guarantor, which notice
is hereby waived, of indebtedness from the Borrower to the Lender in addition to the
indebtedness evidenced by the Notes. The creation or existence of such additional indebtedness
is hereby consented to by the Guarantor.
11. Agrees that the possession of this instrument of guaranty by the Lender shall be conclusive
evidence of due execution and delivery hereof by the Guarantor.
12. Agrees that this Guaranty shall be binding upon the legal representatives, succeasors and
assigns of the Gttarantor, and shall inure to the benefit of the Lender and its successors, assigns
and legal representatives. That, notwithstanding the foregoing, the Guarantor shall have no right
to assign or otherwise transfer its rights and obligations under this Guaranty to any third party
without the prior written consent of the Lender and that any such assignment or tnmsfer shall
not release or affect the liability of the Guarantor hereunder in any manner whatsoever.
13. Agrees that the Guarantor may be joined in any action or proceeding commenced against the
Borrower in connection with or based upon the Obligations and recovery may be had against the
Guarantor in any such action or proceeding or in any independent action or proceeding against
the Guarantor should the Borrower fail to duly and punctually pay any of the principal of or
interest on the Obligations without any requirement that the Lender first assert, prosecute or
exhaust any remedy or claim against the Borrower.
14. Agrees that upon the occurrence at any time of an Event of Default (as defined in the Notes)
and during the continuance thereof, the Lender shall have the right to set off any and all amounts
due hereunder by the Guarantor to the Lender against any indebtedness or obliga{ion of the
Lender to the Guarantor.
15. Agrees that the Guarantor shall be liable to the Lender for any deficiency remaining after
foreclosure of any mortgage or any security interest granted by the Borrower, the Guarantor or
any third party to the Lender to secure repayment of the Obligations and the subsequent sale by
the Lender of the property subject thereto to a third party (whether at a foreclosure sale or at
a sale thereafter by the Lender in the event the Lender purchases said property, at the fo. recloSure
sale) notwithstanding any provision of applicable law which may prevent the Lender from
obtaining a deficiency judgment against, or otherwise collecting a deficiency from, the
Borrower, including without limi ,.tation, Minnesota Statutes, Section 582.30.
16. Notwithstanding any payment or payments made by the Guarantor hereunder or any setoff
or application of funds of the Guarantor by the Lender, the Guarantor shall not be entitled to be
subrogated to any of the rights of the Lender against the Borrower or any other gnaxantor Or any
collateral security or guarantee or right of offset held by the Lender for the payment of the
Obligations, nor shall the Guarantor seek or be entitled to seek any contribution or
reimbursement from the Borrower or any other guarantor in respect of payments made by the
Guarantor hereunder, until ali amounts owing to the Lender by the Borrower on account of the
Obligations are irrevocably paid in full. If any amount shall be paid to the Guarantor on account
of such subrogation rights at any time when all of the Obligations shall not have been
irrevocably paid in full, such amount shall be held by the Guarantor in trust for the Lender,
segregated from other funds of the Guarantor and shall, forthwith upon receipt by the Guarantor,
be turned over to the Lender in the exact form received by the Guarantor (duly endorsed by the
Guarantor to the Lender if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Lender may determine. Notwithstanding any of the foregoing,
to the extent
(a)
any fight of subrogation which the Guarantor may have pursuant to this Guaranty
or otherwise; or,
CO)
any fight of reimbursement or contribution or similar fight against the Borrower,
any property of the Borrower or any other guarantor of any of the Obligations
would result in the Guarantor being a ~creditor" of the Borrower within the meaning of Section
547 of Title 11 of the United States Bankruptcy Code az now in effect or hereafter amended, or
any comparable provision of any successor statute, the Guarantor hereby irrevocably waives such
fight of subrogation, reimbursement or contribution.
17. Agrees that this Guaranty shall be deemed a contract made under and pursuant to the laws
of the State of Minnesota and shall be governed by and construed under the laws of such state.
That, wherever possible, each provision of this Guaranty shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of such provision or
the remaining provisions of this Guaranty.
18. Agrees that no failure on the part of the Lender to exercise, and no delay in exercising, any
fight or.remedy hereunder shall operate as or constitute a waiver thereof, nor shall any single
or partial exercise of any fight or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other fight or remedy granted hereby :or by any related document
or by law.
19. Waives any and all claims against 'the Lender and defenses to performance and payment
hereunder relating in any way, directly or indirectly, to the performance of the Lender's
obligations or exercise of any of its rights under the Notes and the documents related thereto.
20. Warrants and represents to the Lender as follows:
(a) Enforceability.. This Guaranty constitutes the legal, valid and binding obligation of
the Guarantor enforceable in acco~ce with its terms (subject, as to enforceability, to
limitations resulting from bankruptcy, insolvency or other similar laws affecting
creditors' fights generally).
Co) Litigation. Them is no action, suit or proceeding pending or, to the knowledge of the
Guarantor, threatened against or affecting the Guarantor which, if adversely determined,
would have a material adverse effect on the condition (fmanciai or otherwise), properties
or assets of the Guarantor, or which would question the validity of this Guaranty or any
instrument, document or other agreement rehted hereto or required hereby,, or impair
the ability of the Guarantor to perform its obligations hereunder or thereunder.
(c) Default.. The Guarantor is not in default of a material provision under any material
agreement, instrument, decree or order to which it is a party or by which it or its
property is bound or affected.
(d) Consents. No consent, approval, order or authorization of, Or registration, declaration
or filing with, or notice to, any governmental authority or any third party is required in
connection with the execution and delivery of this Guaranty or any of the agreements or
instruments herein mentioned to which the Guarantor is a party or the carrying out or
performance of any of the transactions required or contemplated hereby or thereby or,
if required, such consent, approval, order or authorization has been obtained or such
registration, declaration or filing has been accomplished or such notice has been given
prior to the date hereof.
(e) Taxes. The Guarantor has filed all tax returns required to be filed and has paid all
taxes shown thereon to be due, including interest and penalties, which are not being
contested in good faith and by appropriate proceedings and it has no information or
knowledge of any objections to or claims for additional taxes in respect of federal income
or excess profits tax returns for prior years.
2 I. Agrees that the liability of the Guarantor and any other guarantor of the Obligations shall
be joint and several.
22. Agrees that the Guarantor will directly or indirectly benefit by the making of the loans
evidenced by the Notes and that the Lender has agreed to make such loans in reliance upon this
Guaranty.
23. Agrees that if, at any time, al/or any pan of any payment previously applied by the Lender
to any of the Obligations must be returned by the Lender for any reason, whether by court
order, administrative order or settlement, the Guarantor shall remain liable for the full amount
returned as if said amount had never been received by the Lender, notwithstanding any term of
this Guaranty or the cancellation or return of any notes or other agreement evidencing the
Obligations.
24. Agrees to provide to Lender anntml f'mancial statements and tax returns in a form and
content reasonably satisfactory to Lender. Such tax re. tums shall be provided within 30 days
after f'fling and at such time financial statements shall be provided.
Daniel F. Dahlin
STATE OF MINNESOTA )
)ss
COUNTY OF ~ )
was acknowledged before me this (~day of
^__The foregoing instrument Dablin~~~.ahlin~_
.~,~(?1/~,.~ , 1997 by Daniel F.
"'/-..~ 1 (~.~/' ~,~k~. /
41126_I
EXHIBIT D
Document No:
('-"TATE OF MINNESOTA
CARVER COUNTY RECORDER
(Abstract Department)
o
Riling Fee: Copy Fee:
Check No: Z~¢~? Cash~
;ad W;a~Jr., Coun~ R~orOor
ASSIGNMlV, NT OF RENTS AND LEASES
Chart Ventures,
(ASSIGNO~t)
Heritage National Bank
(ASSIGNEE)
Date: August 28, 1997
ADDRESS OF ASSIGNYtF.:
2700 Seventh Avenue East
No. St. Paul, Minnesota 55109
ADDRESS OF ASSIGNOR:
581 - 78th Street
Chanhassen, Minnesota 55317
THIS INSTRUMI~.NT WAS DRAi:rrRD BY:
Leonard, O'Brien,
Wilford, Spencer and Gale, Ltd. _(!AW)
800 Norwest Center
55 East Fifth Street
St. Paul, Minnesota 55101
(612) 227-9505
CCA & T
448-5570
ASSIGNM'~,NT OF RENTS AND LEASES
THIS ASSIGNMENT OF RENTS AND I.F. ASES, (the "Agreement")'dated as of the 28th day
of August, 1997, is given by Chart Ventures, II.C, a Minnesota limited liability company (the
"Borrower"), to Heritage National Bank, (the ':Lender"), its successors and assigns,
WITNESSETH:
WI:W. RF. AS, Borrower has executed a Promissory Note of even date payable to the Lender in
the principal amount of $500,000.00 (the "Note"); and
~EAS, to secure payment of the Notes, the Borrower has executed and delivered to the
Lender a Mortgage Assignment of Rents and Security Agreement, of even date herewith (the
"Mortgage"), covering .inter alia_ real estate situated in the County of Carver, State of Minnesota,
described in Exhibit A attached hereto and hereby made a part hereof and the improvements located
thereon and certain fmtures, equipment and personal property owned by the Borrower now or hereafter
located thereon (the "Mortgaged Premises");
WlCrl*.~, the Lender, as a further condition to its loan, has required .the execution of this
Agreement;
NOW, TI:W~REFORE, in consideration of the premises, the Borrower does hereby grant,
transfer and assign to the Lender all of the right, title and interest of the Borrower in and to ali existing
leases, ff any, and any future leases covering all or any part of the Mortgaged Premises, together with
any and-all security deposits made thereunder and ali extensions, modifications and renewals, if any,
thereof and any guaranties of the lessees' obligations under any thereof (ali existing leases and any
future leases, together with al1 such extensions, modifications, renewals and guaranties are herein called
the "Leases"). In addition to the foregoing, the Borrower does further hereby grant, transfer and assign
to the Lender all of the rents, income, issues and profits (the "Rents"), now or hereafter accruing or
owing from the Leases or otherwise as a result of any use, possession or occupancy of the Mortgaged
Premises or any part thereof, whether accruing before or after foreclosure of the Mortgage or during
the period of redemption therefrom. All of said Leases and Rents are being hereby granted, transferred
and assigned for the purpose of securing (collectively referred to as the "Obligations Secured Hereby"):
thereof);
payment of all indebtedness evidenced by the Notes (including any extensions or renewals
(2) payment of all other sums, with interest thereon, becoming due and payable to the Lender
pursuant to the covenants and agreements contained herein and in the Notes and Mortgage; and
(3) performance and discharge of each and every obligation, covenant and agreement of the
Borrower contained herein and in the Notes and Mortgage.
2
AND TO PROTECT THE SECURrrY OF THIS ASSIGNMENT, THE BORROWER AGR~I~S:
I. Performance of Leases. To faithfully abide by, perform and discharge each and every
obligation, covenant and agreement under any and ail Leases to be performed by the lessor thereunder;
to observe and comply with all provisions of law applicable to the operation and ownership of the
Mortgaged Premises, including but not limited to ali applicable provisions of Section 504.20, Minnesota
Statues, with 'respect to any security deposits received by the Borrower, and all covenants and
obligations required of the Borrower by the provisions of Section 504.18, subdivision 1, Minnesota
Statutes; to enforce or secure the performance of each and every obligation, covenant, condition and
agreement of said Leases by the tenants thereunder to be performed; not to anticipate the Rents or
reduce the amount of the Rents or other payments under the Leases, and not to waive, excuse, condone
or in any manner release or discharge the tenants thereunder of or from the obligations, covenants,
conditions and agreements by said tenants to be performed, including the obligation to pay the rental
called for under the Leases in the manner and at the place and time specified therein; not to materially
amend or modify the Leases without the Lender's prior written consent, which consent shall not
unreasonably be withheld, and not to terminate the Leases, exercise any options which could lead to
such termination or accept a surrender thereof except by reason of the expiration of the stated terms of
the Leases.
2. Protect Security. At the Borrower's sole cost and expense, to appear in and defend any
action or proceeding arising under, growing out of or in any manner connected with the Leases or the
obligations, duties or liabilities of the Borrower and tenants thereunder, and to pay all costs and
expenses of the Lender, including attorneys' fees in a reasonable sum, in any such action or proceeding
in which the Lender may appear. The Borrower represents and warrants that the Borrower is now and
will be the absolute owner of the Leases and the Rents with full fight and title to assign the same; that,
except for this Agreement, there is no outstanding assignment or pledge of the Leases or of the Rents.
3. Present Assignment. This A~m'eement shall constitute an actual and present assignment,
provided that the Borrower shall have the fight to collect all of the Rents and to retain, use and enjoy
the same unless and until an Event of Default shall occur under the Mortgage or any other instrument
now or hereafter securing the Notes or the Obligations Secured Hereby.
4. Remedies. Upon or at any time after the occurrence of an event of default, as defined
in the Notes or the Mortgage, or upon any default by the Borrower under any of the Leases, the Lender
may, at its option, without notice:
(a) in the name, place and stead of the Borrower (i) enter upon, manage and operate the
Mortgaged Premises or retain the services of an independent contractor to manage and operate the same,
(ii) make, enforce, modify and accept surrender of the Leases, (iii) obtain or evict tenants, collect, sue
for, fix or modify rentals and enforce all rights of the Borrower under the Leases, and (iv) perform any
and all other acts that may be necessary or proper to protect the security of this Agreement, or
(b) apply for, and the Borrower hereby consents to, the appointment of a receiver of the
Mortgaged Premises, whether or not proceedings for the foreclosure of the Mortgage have been
3
commenced, and if such proceedings have been commenced, whether or not a foreclosure sale has
occurred.
The exercise of any of the foregoing rights or remedies shall not cure or waive any default under the
Mortgage or Note, or invalidate any act done by virtue of such default.
5. Application of Rents. All Rents collected by the Lender, or by a receiver, shall be held
and applied in the following order:. (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, with interest
thereon, pursuant to the provisions of Section 504.20, Minnesota Statutes, if applicable; (c) to payment
of al/ delinquent or current real estate taxes and special assessments payable with respect to the
Mortgaged Premises, or if the Mortgage requires periodic escrow payments for such taxes and
assessments, to the escrow payments then due; (d) to payment of ali premiums then due for 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 Mort~ged Premises. Any Rents remaining after application of the above items shall
be applied to the Obligations Secured Hereby in such order of application as Lender may elect. In the
event of that a foreclosure of the Mortgage shall have occurred, then:
(a) If the Assignee is the purchaser at the foreclosure sale, the Rents shall be paid to
the Assignee to be applied to the extent of any deficiency remaining after the sale, the balance to be
retained by the Assignee, and if the Mortgaged Premises be redeemed by the Assignor or any other
party entitled to redeem, to be applied as a credk against the redemption price with any remaining
excess Rents to be paid to the Assignor, provided, if the Mortgaged Premises not be redeemed, any
remaining excess Rents to belong to the Assignee, whether or not a deficiency exists;
Co) If the Assignee is not the purchaser at the foreclosure sale, the Rents shall be paid
to the Assignee to be applied first, to the extent of any deficiency remaining after the sale, the balnnce
to be retained by the purchaser, and if the Mortgaged Premises be redeemed by the Assignor or any
other party entitled to redeem, to be applied as a credit against the redemption price with any remaining
excess Rents to be paid to the Assignor, provided, if the Mortgaged Premises not be redeemed any
remaining excess rents shall 'be paid fist, to the purchaser at the foreclosure sale in an amount equal to
the interest accrued upon the sale price pursuant to Minn. Stat. §580.23 or §581.10, then to the
Assignee to the extent of any deficiency remaining unpaid and the remainder to the purchaser.
The rights and powers of the Lender under this Agreement, and the application of the
Rents pursuant to this para~raph (5), shall continue and remain in full force and effect both before and
after commencement of any action or proceeding to foreclose the Mortgage, after the foreclosure sale
of the Mortgaged Premises in connection with the foreclosure of the Mortgage, and until expiration of
the period of redemption from any such foreclosure sale, whether or not any deficiency from the unpaid
balance of the Obligations Secured Hereby exists after such foreclosure sale.
6. No Liability for Lender. The Lender shall not be obligated to perform or discharge nor
does it hereby undertake to perform or discharge any obligation, duty or liability under the Leases.
4
· t
This Agreement shall not operate to phce responsib/lity for the control, care, management or repair of
the Mortgaged Premises upon the Lender nor for the carrying out of any of the terms and conditions
of the Leases; and this Agreement shall not operate to make the Lender responsible or lhble for any
waste committed on the Mortgaged Premises by the tenants or any other party, or for any dangerous
or defective condition of the Mortgaged Premises, or for any negligence in the management, upkeep,
repair or control of the Mortgaged Premises resulting in loss or injury or death to any tenant, licensee,
employee or stranger.
7. Borrower To Hold Lender Harmless. The Borrower shall and hereby agrees to indemnify
and to hold the Lender harmless of and from any and ali liability, loss or damage which it may or might
incur under the Leases or under or by reason of this Agreement and of and from any and all claims and
demands whatsoever which may be asserted against it by reason of any alleged 'obligations or
undertaking on its part to perform or discharge any of the terms, covenants or agreements contained
in the leases, except such liabilities, losses or damages resulting from the negligence of the Lender or
its employees or agents. Should the Lender incur any such liability, loss or damage under any Lease
or under or by reason of this Agreement, or in the defense of any such claims or demands, the amount
thereof, including costs, expenses and reasonable attorneys' fees, shall be secured hereby and the
Borrower shall reimburse the Lender therefor immediately upon demand, and upon the failure of the
Borrower so to do, the Lender may declare all Obligations Secured Hereby immediately due and
payable upon fifteen (15) days notice to Borrower.
8. Specific Assi_~unent of Leases. The Borrower covenants and agrees promPtly upon
request of the Lender to transfer and assig-n to the Lender any specific Leases of all or any part of the
Mortgaged Premises upon the same terms and conditions as are herein contained. Further, at the
request of Lender, the Borrower agrees to deposit in escrow with Lender any security deposits given
by tenants, which shall be held by Lender without interest, unless interest thereon is required by law
to be paid to such tenants, and .s, hall be applied in accordance with the terms of the respective Leases.
9. Remedies Not Exclusive. This Agreement shall in no way operate to prevent the Lender
from pursuing any remedy which it now has or hereafter may have under the terms or conditions of the
Mortgage or Note or any other instrument securing the same, or by law, but shall be deemed an
additional remedy and shall be cumulative with the remedies granted therein.
10. Authorization to Tenants. Subject to paragraph 3 hereof, the tenants under each of the
Leases axe hereby irrevocably authorized and directed to recogaize the claims of the Lender, or its
assigns, hereunder without investigating the reason for any action taken by the Lender, or the valid!ty
or the amount of indebtedness owing to the Lender, or the existence of any event of default in the Notes
or Mortgage, or under or by reason of this Agreement, or the application of the Rents to be made by
the Lender. The Borrower hereby irrevocably directs and authorizes each tenant to pay to the Lender
all sums due under its Lease and consents and directs that said sums shall be paid to Lender without
the necessity for a judicial determination that a default has occurred hereunder or under the Notes or
Mortgage or that the Lender is entitled to exercise its rights hereunder. To the extent such sums are
paid to the Lender, the Borrower agrees that the tenant shall have no further liability to the Borrower
for the same. The sole signature of the Lender shall be sufficient for the exercise of any rights under
this Agreement, and the sole receipt of the Lender for any sums received shall be a sufficient discharge
and release therefor to any such tenant or occupant of the Mortgaged Premises. The Borrower-hereby
agrees to execute all notices or other documents reasonably requested by the Lender to carry out the
intent of the foregoing.
11. Lender Attorney-in-Fact. The Borrower hereby irrevocably appoints the Lender and its
successors and assigns as its agent and attorney-in-fact of the Borrower to execute and deliver.during
the term of this Assignment (and upon fifteen (15) days prior notice to Borrower) such further
instruments as the Lender may deem necessary to make this Assignment and any further assignment
effective.
12. Notices. All notices, demands or other communications which are required or permitted
to be given or served by either party hereunder shall be deemed given when deposited in the United
States mail, registered or certified mail, postage pm-paid, addressed as follows:
If to the Borrower:
Chan Ventures, LLC
581 - 78th Street
Chanhassen, Minnesota 55517
Tax ID No. 41-1845877
- If to the Lender:
Heritage Bank
2700 Seventh Avenue Fast
No. St. Paul, Minnesota 55109
Att-n: Commercial Loan Dept.
Such addresses may be changed from time to time by either Party by at least ten (10) days' prior notice
to the other party. .~-
13. Successors and Assigns. This Agreement and each and every covenant, agreement and
other provision hereof shall be binding upon the Borrower and its successors and assigns, including
without limitation each and every from time to time record owner of the Mortgaged Premises or any
other person having an interest therein, and shall inure to the benefit of the Lender and its successors
and assigns.
14. Governing Law. This Agreement is made and executed in the State of Minnesota and
shall be governed by the laws of such State with respect to procedures and remedies available to the
Lender in the event of a default. It is the intention of the parties hereto that this Agreement shall confer
upon the Lender the fullest rights, remedies and benefits available pursuant to Minnesota Statutes,
Sections 576.01 and 559.17, and any laws supplementary or amendatory thereto.
15. Severabili~. The unenforceability or invalidity of any provision hereof shall not render
any other provision or provisions herein contained unenforceable or invalid.
16. No Mortgagee in poSsession. Nothing herein contained, and no action taken pursuant
to this Agreement, shall be construed as constituting the Lender as a "Mortgagee in Possessiom"
17. Bankruptcy .Award. Anything to the contrary herein notwithstanding, Borrower hereby
assigns to Lender any award made hereafter to it in any court procedure involving any of the lessees
in bankruptcy, insolvency or reorganization proceedings in any state or federal court and any and all
payments made by lessees in lieu of rent. Borrower hereby appoints Lender as its irrevocable
attorney-in-fact to appear in any action and/or collect any such award or payment.
18.
Recitals. The recitals set forth above are made a part hereof.
19. Definitions. Unless a contrary meaning is clearly expressed, terms used herein shall have
the same meaning as in the Mortgage.
1N WITNESS WI:rF,~F, the Borrower has caused this Agreement to be duly executed as of
the date first above written.
Its Chief Manager
STATE OF MINNESOTA )
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me this Z~f day of August, 1997, by
~,'~ ? ~, /~,~,///7 .., the ChiefManager of Chan Ventures, LLC, a Minnesota limited liability
company on beha)f'of the company.
THIS INSTRUMENT WAS DRAFTED BY:
T.F. ONARD, O'BRIEN,
WU.FORD, SPENCER AND GALE, LTD.
800 Norwest Center
55 East Fifth Street
St. Paul, Minnesota 55101
(612) 227~9505 (LAW)
Notary Public
41124 1
7
(Legal Description)
Lot Two (2), Block One (1), Chanhassen Mall, according to the plat thereof now on file
and of record in the Office of the County Recorder, Carver County, Minnesota
FIXTURE FINANCING STATEMENT
EXHIBIT E
Document No:
STATE OF MINNESOTA
CARVER COUNTY RECORDER
(Abstract Department)
Fi,ling Fee:
Check No' //-'~, gO 2 Cash '
/
Cad ~ Han~n~., Coun~ R~o~er
//
STATE OF MINNESOTA
UCC FIXTURE FINANCING STATEMENT
This statement is present for filing in Real Estate records under
Minnesota Statutes Chapter 336.9-401 subdivision I, paragraph
This fixture financing statement is made this 28th day of August, 1997.
DEBTOR: Chan Ventures, LLC, 581 - 78th Street, Chanhassen, bfinnesota
55317, Tax I.D. No. 41-1845877.
SECURED PARTY: Heritage National Bank, 2700 Seventh Avenue East, No. St. Paul, Minnesota 55109.
This F'txture Financing Statement Covers The Following Yrxture{s):
All f'~tures, including, but not limited to, all engines, boilers, elevators, machinery, heating apparatus, electrical equipment,
air conditioning equipment, water and gas fixtures, stoves, refrigerators, carpeting, shades, awnings, screens, storm sashes,
blinds, and equipment that may now or hereafter be located on the mortgaged premises of whatsoever type or nature whether
now owned or hereafter acquired by Debtor, including all replacements, repairs, and substitutions thereto and proceeds
thereof.
All rights to rental payments or other income, rents, profits or other payments from the real property.
..... on land lying and being in the County of Carver and State of Mirmesota, described as follows, to-wit:
See attached Exhibit "A".
Known as 531 - 78th Street, Chanh~sen, Minnesota 55317
CCA & T
448-5570
Record owner of above described real estate if other than debtors: N/A
STATE OF MINNESOTA )
)ss.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me thi~ 28th day of August, 1997 ~..,~/~ / ,/~, ~/?~ the Chief
Manager of Chan Ventures, LLC, a NFmnesota limited Hability company,on behalf of the company.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
Leonard, O'Brien,
Wilford, Spencer and Gale, Ltd. (LAW)
800 Norwest Center
55 East 5th Street
St. Paul, MN 55101
(612) 227-9505
4tZ30_~
EXItrllllT "A"
(Legal Description)
Lot Two (2), Block One (1), Chanhassen Mai1, according to the plat thereof now on file
and of record in the Office of the County Recorder, Carver County, Minnesota
13
EXHIBIT F
PLEDGE AGREEMENT
St. Paul, Minnesota
August 28, 1997
In order to induce Heritage National Bank ("Bank") to make loans (including any loan
by renewal or extension) or other financial accommodations to the Pledgor at the request of the
Pledgor, or to forbear in the exercise of its rights agaimt the Pledgor under existing credit
arrangements, and in consideration thereof and in consideration of other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned
hereby agrees as follows:
1. Definitions
When used herein the terms set forth below will be defined as follows:
(a)
The Bank's address is as follows: 2700 Seventh Avenue East, No. St. Paul,
Minnesota 55109.
(b)
Pledgor is Chart Ventures, LLC, a Minnesota limited liability company.
which has a business address of 58I -78th Street, Chanhassen, Minnesota
55317.
(c)
"Obligations" means all indebtedness, obligations and liabilities of the
Pledgor to Bank of every kind and description, absolute or contingent, due
or become due, whether for payment or performance, now. existing or
hereafter arising, regardless of how the same arise, or by what instrument,
a~eement' or book account they may be evidenced, or whether evidenced
by any instrument, agreement or book account; including without limitation,
all loans (including any loan by renewal or extension), all indebtedness, all
undertakings to take or refrain from taking any action, indebtedness,
liabilities or obligations owing by the Pledgor to others which Bank may
have obtained by purchase, negotiation, discount, assignment or otherwise,
and all interest, taxes, fees, charges, expenses and attorneys fees chargeable
to the undersigned or incurred by Bank in connection with any transaction
between the undersigned and Bank.
(d) "Collateral" means the following property:
SEE ATTACHED EXHIBIT "A"
And all other property described in any schedule annexed hereto, together
with any other property delivered to Bank hereunder and ali additions
thereto and substitutions therefor and all cash, proceeds thereof.
(e)
"Event of Default" means:
(i)
(ii)
(iii)
any default with respect to payment for performance of any of the
Obligations; or
insolvency of the Pledgor; or
a creditors committee is appointed for the business of the Pledgor;
or
(iv)
the Pledgor makes an assignment for the benefit of creditors or
petition in bankruptcy or for reorganization or to affect a pledge or
arrangement with creditors is ~ed by or against the Pledgor; or
(v) the Pledgor applies for or permits the appointment of a receiver.
(vi)
any of the above actions or proceedings whatsoever are commenced
by or against any of the Pledgor; or
(vii) a proceeding is fried or commenced by or against any of the Pledgor
for dissolution or liquidation; or
(viii) the Pledgor dies (if an individUal) or voluntarily or involuntarily
terminates or dissolves or is terminated or dissolved; or
(ix) Bank reasonably deems itself insecure.
Pledee of Collateral
To secure the payment and performance of the Obligations, the Pledgor hereby
pledges, assigns and transfers and delivers to Bank and grants to Bank a continuing
security interest in and to all of the Collateral.
Representations and Warranties
Pledgor hereby covenants, represents and warrants as follows:
(a)
That Pledgor is the absolute owner and holder of the Collateral, free and
clear of all liens and encumbrances other than this Agreement; that Pledgor
has the fight under applicable law to enter into this Agreement and make
the assignment and grant the security interest set forth in this Agreement;
that the Pledgor shall not convey or attempt to convey any interest in the
Collateral or the income or distribution derived therefrom; and that the
Pledgor shall warrant and defend its interest in the Collateral and income
or distributions derived therefrom against all adverse claims, whether now
existing or hereafter arising.
(b)
The Pledgor a~ees to reimburse Bank, on demand, for any amounts paid
or advanced by Bank for the purpose of preserving the Collateral or any
part thereof and/or any liabilities or expenses incurred by Bank as the
transferee or holder of the Collateral.
General Covenants
Bank shall be under no duty to:
(i)
Collect or protect the Collateral or any proceeds thereof or give any notice
with respect thereto;
(ii)
Preserve the rights of any of the Pledgor with respect to the Collateral
against prior parties;
(iii)
Preserve rights against any parties to any instrument or chattel paper which
may be a part of the Collateral;
(iv) Sell or otherwise realize upon the Collateral; or
(v) Seek payment from any particular source.
Without limiting the generality the foregoing Bank shall not be obligated to take
any action in connection with any conversion, call, redemption, retirement or any
other event relating to any of the Collateral.
After payment of part of Obligations, the Bank, may at its option, retain all or any
portion of the Collateral as security for any remaining Obligations and retain this
Agreement as evidence of its security. The Pledgor agrees to reimburse Bank, on
demand, for any amounts paid or advanced by Bank for the purpose of preserving
the Collateral or any part thereof and/or any liabilities or expenses incurred by
Bank as the transferee or holder of the Collateral. Bank shall exercise reasonable
care in the custody and preservation of the Collateral to the extent required by
applicable statutes and use its best efforts to take such action as the undersigned
may reasonably request in writing but the failure to do any such action not be
deemed a failure to exercise reasonable care.
If the Collateral shall at any time or from time to time become unsatisfactory to
Bank the Pledgor shall upon demand, pledge, assign, transfer and deposit with
Bank and grant to Bank a continuing security interest in and to and such additional
property satisfactory to Bank as Bank may request.
Rights and Remedies
Bank shall have, by Way of example and not by limitation, the rights and remedies of
subparagraph (a) of this paragraph at ali times upon or after the occurrence of an event of
default and shall have all the rights and remedies enumerated herein after the occurrence
of an event a default.
(a) Bank may at its option and without notice:
(i)
transfer into its name or the name of its nominee all or any part of
the Collateral including stocks, bonds and other securities;
(ii)
Demand, sue for, collect and receive all interest, dividends,
including liquidating dividends, and other proceeds thereof, and hold
the same as security for payment of obligations or, if cash proceeds,
apply the same for payment thereof;
(iii)
Notify any person obligated on any of the Collateral of the security
interest of the Bank therein and request such person to make
payment directly to Bank;
(iv)
Demand sue for, collect or make any settlement or compromise
Bank deems desirable with respect to any of the Collateral.
If the event of default shall occur, then or at any time thereafter, while such
event of default shall continue, Bank may declare all Obligations to be due
and payable regardless of the terms for the purposes of this agreement
without nbtice, protest, presentment or demand, all of which are hereby
expressly waived by the Pledgor. At or after such time Bank 'shall have in
addition to any other rights and remedies contained in this Agreement and
any other agreements, guarantees, notes, instruments and documents
heretofore, now or at any time or times hereafter executed by the Pledgor
and delivered to Bank, all of the rights and remedies of a pledge, under
law, including without limitation ali of the rights and remedies of the
secured party under the Uniform Commercial Code in force in the State of
Minnesota as of the date hereof, all of which rights and remedies shall be
cumulative and non-exclusive to the extent permitted by law.
6. General
(a)
Each reference herein to Bank shall be deemed to include is successors and
assigns and each reference to Pledgor and any pronouns referring thereto
or used herein shall be construed in the masculine, feminine or neuter,
singular or plural as the context may require and shall be deemed to include
Co)
(c)
(d)
(e)
(f)
the heirs, administrators, legal representatives, successors and assigns of the
undersigned all of whom shall be bound by the provisions hereof.
No delay on the part of Bank in exemising any rights hereunder or failure
to exercise the same shall operate as a waiver of such rights; nor notice to
or the same demand on any of the undersigned shall be deemed to be a
waiver of any obligations of any of the undersigned or of the right of Bank
to take other or further action without notice or demand as provided herein.
In any event no modification or waiver of the provisions hereof shall be
effective unless in writing and signed by Bank nor shall any waiver be
applicable except on the specific instance or matter for which is given.
The undersigned hereby certifies and covenants that all acts, conditions and
things required to be done and performed and to have happened precedent
to the creation and issuance of this agreement and to constitute the valid and
legally binding obligation of the undersigned in accordance with its terms,
have been done and performed and have happened in due and strict
compliance with applicable laws.
This Agreement is and shall be deemed to be a contract entered into and
made pursuant to the laws of the United States of America except that
where state law shall be deemed to apPly, then the laws of the state of
Minnesota shall apply; in the event that the Bank brings any action
hereunder in any Court of record in the state of Minnesota or the federal
government the undersigned consents and confers personal jurisdiction over
the undersigned by such court or courts and agency that service of process
may be made upon undersigned by mailing a copy of the Summons to
undersigned in the matter specified in paragraph 6(g) hereof; and in any
action hereunder the undersigned waives the right to demand a trial by jury.
Wherever possible, each provision of this Agreement shall be interpreted
in such a manner as to be effective and valid under applicable law. Should
any portion of this Agreement be declared invalid for any reason in any
jurisdiction, such declaration shall have no effect upon the remaining
portions of this Agreement, furthermore, the entirety of this Agreement
shall continue in full force and effect in all jurisdictions and said remaining
portions of this Agreement shall continue in full force and effect in the
subject jurisdiction as if this Agreement had been executed with the invalid
portions thereof deleted.
The section headings herein are included for convenience only and shall not
be deemed a part of this Agreement.
Dated:
(g)
Any notice given by the undersigned shall be effective only upon actual
receipt by an officer of the Bank at Bank's address; any notice Bank may
elect to give hereunder shall be deemed to be given if deposited in the
United States Mail, return receipt requested postage prepaid and addressed
to the undersigned at borrower's address.
7. Grant of Power of Attorney
Pledgor hereby constitutes and appoints Bank as its tree and lawful attorney-in-fact
with power~of-attorney and with full power of substitution, as if Pledgor were to
do the same, to sign and endorse Pledgor's name upon any instnmaent or chattel
paper, letter of direction, or other insmmaent in Pledgor's name as agent and
attorney-in-fact, and to title such documents or agreements as agent and attorney-
in-fact as shall be necessary to protect, preserve and realize upon any Collateral to
be applied in a manner consistent with the terms of this Agreement. Said power-
of-attorney shall be deemed coupled with an interest and shall not be revocable
until such time as all obligations have been paid to Bank in full. Bank shall
not exercise this power-of-attorney until the occurrence of an event of default under
this Agreement.
August ,2,c'~, 1997'
CHAN VENTLrRES, LLC
By . ~-
Its C~ief Manager
41932 1
6
EXI:IlltlT A
Heritage Bank Certificate of Deposit No. 162974 to Chan Ventures, LLC.
Heritage Bank Certificate of Deposit No. 163074 to Chart Ventures, LLC.
7
ESCROW AGREEMENT
EXHIBIT G
THIS AGREEMENT made as of August ~,, I997, by and between Chan Ventures,
LLC, a Minnesota limited liability company ("Borrower"), and Heritage National Bank, a
national banking corporation, (the "Lender").
RECITAL
The Lender has agreed make a' loan (the "Loan") to Borrower in the principal mount
of $500,000.00 bearing interest and payable in accordance with the provisions of a Promissory
Note dated August 28, 1997 ("Note"), which is secured by a Mortgage (the "Mortgage") on real
property owned by Borrower located in Carver County, Minnesota (the "Property"), legally
described as follows:
See attached Extfibit "A"
and certain other Loan Instruments.
To induce Lender to make the Loan, Borrower has agreed to provide an escrow account
for the benefit of the Lender.
NOW, TH2EREFORE, incorporating the recitals of facts above, and to induce Lender
to make the Loan to Borrower, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, Borrower agrees as follows:
1. RESERVE ACCOUNT. Borrower a~ees to deposit $36,000.00 into a reserve
fund ("Reserve Funds"). The Reserve Funds shall be available to Lender, at its sole discretion,
for the making of monthly payments due upon the Loan.
Such Reserve Funds shall not be, nor deemed to. be, trust funds, and the Lender shall
have the right to hold the Funds in any manner Lender elects and may commingle the Funds
with other moneys held by the Lender. The Funds are pledged as additional security for the
sums secured by the Mortgage.
Upon payment in full of all sums secured by the Mortgage, Lender shall promptly refund
to Borrower any Reserve Funds held by Lender. In the event of a foreclosure sale of the
Property or the Property is otherwise acquired by Lender, Lender shall apply, no later than
immediately prior to the foreclosure sale of the Property or its acquisition by Lender, any
Reserve Funds held by Lender at the time of application as a credit against the sums secured by
this Mortgage.
IN WITNESS WHEREOF, the parties have signed this agreement the date and.year first
above written.
HERITAGE NATIONAL BANK
CHAN VENTURES, LLC
By '~'~~"~'~/~'~./~--'
Its Chief Manager
44916_1