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cp12-18-85 c• MEMORA.NDU.?i, DATE• Decem'Da-li� 13. 19Z,5 TO: Mayor & City Council FROM: Gary D. Plotz, City Administrator! SUBJECT: Special City Council Meeting — — — — — — — — — — — -- Mayor Stearns has called a special City Council meetini, fc.- 11-cd_iesd;IV, • December 18, 1985 at 5:15 P.I. in City Hall. The following two items will be acted upon: /Ms f 1. Conditional Use Permit for Jerry Ross to T;L-ild An, Engine House (Going to Planning 2. Final Approval On The Industrial Revenci�,-; Erickson oil Prod,-,.Cts (December 31, 198-' (612) 587.5151 I T Y OF HUTCHINSON ✓ASHING TON AVENUE WEST 'HINSON, MINN. 55350 MEM0RANDU14 DATE: December 18, 1985 TO: Hutchinson City Council FROM: Hutchinson Planning Commission SUBJECT: Conditional Use Permit as requested by Dakota Rail Incorporated Pursuant to Section 6.05, C5, of Zoning Ordinance No. 464, the Hutchinson Planning Commission is hereby submitting its findings of fact and recom- mendation with respect to the aforementioned request for a conditional use permit. HISTORY On December 4, 1985, Dakota Rail, Inc. submitted an application for a conditional use permit to allow the construction of a 130' by 24' pole type building for the purpose of storing diesel locomotives on property located at Erie Street and 2nd Ave. S.E. A public hearing was held at the regular meeting of the Planning Commission on Tuesday, December 17, 1985, at which time Mrs. Delores Brunner, leasee of a salt warehouse located on the property, stated her concern for fire safety. FINDINGS OF FACT 1. The required application was submitted and the appropriate fee paid. 2. Notices were mailed to the surrounding property owners as well as published in the Hutchinson Leader on December 5, 1985. 3. The proposal is in conformance with the requirements of a conditional use permit, and is required because the property is in an IC -1 zone. RECOMMENDATION It is the recommendation of the Planning Commission that the concept be approved, with the stipulation that more information be provided for the City Council prior to their consideration, and contingent upon the applicant providing a survey showing existing and proposed building sites on the property prior to a building permit being issued. Respectfully submitted, Roland Ebent, Chairman Hutchinson Planning Commisson RESOLUTION NO. 8172 RESOLUTION GRANTING CONDITIONAL USE PERMIT UNDER SECTION 6.07, OF ZONING ORDINANCE NO. 464 TO ALLOW TAE CONSTRUCTION OF 130' BY 24' DIESEL HOUSE ON PROPERTY LOCATED "IN AN IC -1 ZONE BE IT RESOLVED BY THE -CITY COUNCIL OF THE CITY OF HUTCHINSON, MINNESOTA: FINDINGS 1. Dakota Rail, Inc., has made application to the City Council for a Conditional Use Permit under Section 8.12 of Zoning Ordinance No. 464 to allow the construction of a 130' by 24' Diesel House on property located on Erie Street and Second Ave. S.E., which is located in an IC -1 zone, with the following legal description: Lots 3, 4; and 5 of Block 17, South Half, City of Hutchinson 2. The City Council has considered the recommendation of the Planning Commission and the effect of the proposed use on the health, safety, and welfare of the occupants of the surrounding lands, existing and anticipated traffic conditions, and the effect on values of properties in the surrounding area and the effect of the use on the Comprehensive Plan. 3. The Council has determined that the proposed use will not be detri- • mental to the health, safety, or general welfare of the community nor will it cause serious traffic congestion nor hazards, nor will it seriously depreciate surrounding property values, and the proposed use is in harmony with the gener- al purpose and intent of the Zoning Ordinance and the Comprehensive Plan. CONCLUSION The application for a Conditional Use Permit for the purpose designated is granted based upon the findings set forth above, contingent upon applicant submitting survey showing location of existing and proposed buildings prior to the issuance of a building permit. Adopted by the City Council this 18th day of December, 1985. Attest: Robert H. Stearns Mayor Gary' D. -P1otz • City Clerk • C7 Chairman Ebent opened the hearing at 7:35 p.m. with the reading of publication #3494 as published in the Hutchinson Leader on Thursday, December 5, 1985. The request is for 'a variance to allow the construction of a 30' by 50' addition to an existing residence, 15' from the sideyard property. line. After discussion, Mr. Torgerson made a motion to closed the hearing. Seconded by Mrs. Young, the motion carried unanimously and the hearing was closed at 7:38 p.rp. Mr. Er.i,ckson made a,motion to recommend to City Council approval of the variance as requested. Seconded by Mr. Hwang, the motion carried unanimously. (c) CONSIDERATION OF CONDITIONAL 'USE PERMIT AS SUBMITTED BY DAKOTA RAIL, INC. Chairman Ebent opened the hearing at. ,7:38 p.m, with the re�oing of: publication #3495 as published in the Hutchinson- Leader on Thursday, December 5, 1985. The request is - for,-,a- .conditional permit to allow the construction of a 103' by 24' pole type building for the purpose of storing diesel„ locomotives on property located at Erie St. and Second Ave. S.E., which is located in an IC -1 zone. City Administrator Plotz explained that in the winter months., a. diesel locomotive must be housed in a heated building oaf mist 'be, left running. Putting the locomotive: in a- buildingJs uch•l;ess. expensive and cuts down on the disturbance (noise, odor to the neighboring residents. He noted that the Building Official,wants the applicant,a 4`, Planning Commission to be aware of the fact ghat a surverr shgwiag the location of existing buildings and the proposed bu,i, 0- ings..mus�t. be submitted prior to the issuance of a building permit. This is necessary because of the close proximity of other buildings and the distance between the buildings determines what type of wall construction is required to meet the fire code. Mr. Michael Ross, representing Dakota Rail, .Inc,,, was ;pres.ent „,to explain their proposal. He stated that the bui1ding-.wou Td. house- two locomotives, with littl.e extra room. ,He ,further- .state¢,Athat basically the building is used for storage, but that there would be some maintenance work done. inside, the bui- lding. They,.ha-ve, a - similar building at a location in South Dakota, of which he will bring pictures for the Council to review. Mrs. Delores Brunner, 968 located on the property, safety. They store salt Hayden, leasee of the the warehouse stated that their major concern was fire in the warehouse. Mr. Ancher Nelsen, 900 Hassan St. South, stated that they were temporarily leasing a building for the locomotives and were negotiating to get that time extended. If so, they,rould be able to look at other sites. However, if 'tfieir lease ":fie - not - -.extended they would prefer to build at the site as proposed.,,,,.- Discussion followed. It was the consensus of the Planning Commission that they approve the concept of the proposal; however, they felt that they would like more specific information about the diesel house and the operation of such. Rather than hold the request up, however, they would approve the concept and requested that Mr. Ross bring in more specific information before the Council took final action on the request. Mr. Erickson made a motion to close the hearing. Seconded by Mr. Torgerson, the motion carried unanimously and the hearing was closed at 8:05 p.m. Mr. Torgerson made a motion to recommend to City Council appproval of the concept, with the stipulation that Dakota. Rail provide more detailed information to the City Council before they take action on the request, and with the contingency that a survey showing the location of existing buildings and the proposed building be submitted before the building permit is issued. Seconded by Mrs. Young, the motion carried unanimously. (d) CONTINUATION OF REZONING HEARING FOR ASSEMBLY OF GOD CHURCH Chairman Ebent continued the hearing on the rezoning request submitted by the Assembly of God Church at 8:10 p.m. He stated that they have withdrawn the request. Mr:-- Torgerson made a motion to close the hearing at 8 :10 p.m. Seconded by Mr. Hwang, the motion carried unanimously. 4. OLD BUSINESS , (-a.)'- ',REVIEW, OF PRELIMINARY PLAT OF HELLAND'S SEVENTH ADDITION Chairman'Ebent explained that the plat had been referred back to the Planning Commission as some required data had not been provided previously. City Administrator Plotz stated that he had requested a Certificate of Approval by the Director of Engineering stating that the preliminary plat meets all requirements of the Subdivision Ordinance. The,Certificate was submitted by Director Priebe. City Administrator Plotz also noted that contour lines had been added to the plat maps as required. Mrs. Young made a motion to recommend to City Council approval of the plat as presented. Seconded by Mr. Hwang, the motion carried unanimously. (b) DISCUSSION OF UTILITIES' COMMENTS ON NEW PLATS Director Priebe explained that proposed plats have been submitted to the Hutchinson Utilities Commission, Crow River Cable T.V., and the Hutchinson Telephone company with a request that they make comments and return them to the Director prior to consideration by the Planning Commission. The Hutchinson Utilities Commission did 3 %%P ENGINEERING INC. �� �bHER E , ENGINEERING CONSULTANTS. LAND SURVEYING 6 /,wu�' ``0 /0 1 C_ C, 827 PAISLEY LANE MINNEAPOLIS. MINNESOTA 5"22 612- 645-0069 12 -10 -85 �6 g910�� 'st 1 �rcij j "'t) s8s .i p CY) `N ZZZ��o 9Z5Zt�2� Mr. Gary Plotz, Administrator City of Hutchinson Hutchinson, Minnesota 55350 ne: Industrial Spur Tracks Construction Hutchinson, MN. < Dear Nit. P1otz: n In reference to our verbl.l discussion this date while at gineering Conference at Hutchinson, I would ,appreaiate copy of Council action ensginC Gopher II neerin ' Inc. as Er ineer and Consultant } t for the above track construction proposals. originally advised by 'phone per your previous request i" it is my intent that I would be designated as Engineer to prepare ,Plans _& Specifications for bidding and contract purpose as,-wel, t� C ` t as Construction Engineer responsible for en gin su ervs sion,. of t con rac or's performance. 6 As discussed todai, I feel that a contractor should be-able to be engaged that could normally perform construction of the Industrial. Connection Track in a 3 week period and construction of Farmers Elevator Spur " in a 1 week period after grading is completed by the City and sub - ballast . installed weather conditions perti.tting. Nay normal engineering fee is as follows: 835/hr- with a minimum of 4 hours with no penalty for O.T.- Daily rate. Per Diem zoom $24 Board $12 Auto & Ydleage w10 /da. Additional Engineer as required $15 /hr. +.Board & Room. As you know I am proceding on preparation of the Contract Specifications so as not to further delay the bidding process and I would appreciate prompt notificat _ _�n of approval of the above engineering- services and terms. ;9-;ak P. . •'� _ �/ Ciro f ` f"� ����'�'� 0 UN '7TUIREA5, puu1 iC. nrhland hug srruPil the Till, wr11 as a member of the :Cihraru 13nard for the Vast six and one-half (L- -1/2) uearB ana fhe Hnnoinu And RrdrueloVmrnt Authoritu for fhr rust right (3) urars and four (4) mnnths; T113.TEREA5, T'uul !C. Ari:land has arrurd faifhfullu and diliurnflu uiuinu of his time and talrnfs tnmard the rnrirhmrnf of the Tritu, NTT THIREITOFE, I3£ 3e F,15 tVEI) VU rill C 33IJ CCOUNC3C OT THE T3 ,1T THAT, drrp appreciation is hrrrhu rx #rrssrd to 11aul C. Arkland for his afnrrmrntinnrj3 seruirrs and the gratitudr of !'utrhinsnn and the ritizrno thereof is hrrehu expressrd. Aanutrd hu the (fifu Lounril this lfIth Bail of Drrrmkrr, 1ny5. 0j'aru D. 271otr Li to Llerk 3'.nhrrt H. Sfrarns Ciuun r 509N r� 40 Draft 12/16/85 FINAL NOTE RESOLUTION CITY OF HUTCHINSON $500,000 COMMERCIAL DEVELOPMENT REVENUE NOTE OF 1985 (ERICKSON OIL PRODUCTS, INC. PROJECT) ADOPTED: December 17, 1985 NOTE RESOLUTION (This Table of Contents is not a part of this . Resolution, but is included for convenience only) TABLE OF CONTENTS SIGNATURES............. ............................... 14 Page ARTICLE ONE - DEFINITIONS, LEGAL AUTHORIZATION AND FINDINGS ..... ............................... 1 Section 1 -1. Definitions ...................... 1 Section 1 -2. Legal Authorization .............. 3 Section 1 -3. Findings ......................... 3 Section 1 -4. Authorization and Ratification of Project ....................... 4 ARTICLE, TWO - NOTE .... ............................... 6 Section 2 -1. Authorized Amount and Form ofNote .......................... 6 Section 2 -2. The Note ......................... 6 Section 2 -3. Execution ........................ 6 Section 2 -4. Delivery of Note ................. 6 Section 2 -5. Disposition of Note Proceeds..... 7 Section 2 -6. Registration of Transfer......... 7 Section 2 -7. Mutilated, Lost or Destroyed • Note ... ......................... 8 Section 2 -8. Ownership of Note ................ 8 Section 2 -9. Limitation on Vote Transfers..... 9 ARTICLE THREE - GENERAL COVENANTS ..................... 10 Section 3 -1. Payment of Principal and Interest. 10 Section 3 -2. Performance of and Authority for Covenants ..................... 10 Section 3 -3. Enforcement and Performance of Covenants......................... 10 Section 3 -4. Nature of Security ................ 11 Section 3 -5. Preservation of Tax Exempt Status of the Note ................ 11 ARTICLE FOUR - MISCELLANEOUS .......................... 13 Section 4 -1. Severability ...................... 13 Section 4 -2. Authentication of Transcript...... 13 Section 4 -3. Registration of Resolution........ 13 Section 4 -4. Authorization to Execute Agreements........................ 13 SIGNATURES............. ............................... 14 • • 0 NOTE RESOLUTION BE IT RESOLVED by the City Council of the City of Hutchinson, Minnesota, as follows: ARTICLE ONE DEFINITIONS, LEGAL AUTHORIZATION AND FINDINGS 1 -1. Definitions. The terms used herein, unless the context hereof shall require otherwise shall have the following meanings, and any other terms defined in the Loan Agreement shall have the same meanings when used herein as assigned to them in the Loan Agreement unless the context or use thereof indicates another or different meaning or intent. Act: the Minnesota Municipal Industrial Development -Act, Minnesota Statutes, Chapter 474, as amended; Bond Counsel: the firm of Briggs and Morgan, Professional Association, of St. Paul and Minneapolis, Minnesota, and any opinion of Bond Counsel shall be a written opinion signed by such Counsel; Borrower: Erickson Oil Products, Inc., a Wisconsin corporation, its successors, assigns, and any surviving, resulting or transferee business entity which may assume its obligations under the Loan Agreement; City: the City of Hutchinson, Minnesota, its successors and assigns; Construction Loan Agreement: the agreement to be executed by the City, the Borrower and the Lender, relating to the disbursement and payment of Project Costs for the construction and installation of the Improvements; Improvements: the structures and other improvements, including any tangible personal property, to be constructed or installed by the Borrower on the Land in accordance with the Plans and Specifications; Land: the real property and any other easements and rights described in Exhibit A attached to the Loan Agreement; Lender: Citizens Bank & Trust Co., Hutchinson, Minnesota, . its successors and assigns; Loan Agreement: the agreement to be executed by the City and the Borrower, providing for the issuance of the Note and the loan of the proceeds thereof to the Borrower, including any amendments or supplements thereto made in accordance with its provisions; Mortgage: the Mortgage, Security Agreement and Fixture Financing Statement to be executed by the Borrower, as mortgagor, to the Lender, as mortgagee, securing payment of the Note and interest thereon; Note: the $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project), to be issued by the City pursuant to this Resolution and the Loan Agreement; Note Register: the records kept by the City Clerk to provide for the registration of transfer of ownership of the Note; Plans and Specifications: the plans and specifications for the construction and installation of the Improvements on the Land, together with such modifications thereof and additions thereto as are reasonably determined by the Borrower to be necessary or desirable for the completion of the Improvements and are approved by the Lender; Pledge Agreement: the agreement to be executed by the City and the Lender pledging and assigning the Loan Agreement to the Lender; Principal Balance: so much of the principal sum on the Note as has been advanced from time to time and remains unpaid at any time; Project: the Land and Improvements as they may at any time exist; Project Costs: the total of all "Construction Costs" and "Loan and Carrying Charges," as those terms are defined in the Loan Agreement; Resolution: this Resolution of the City adopted December 17, 1985, together with any supplement or amendment thereto. All references in this instrument to designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as originally executed. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Resolution as a whole not to any particular Article, Section or subdivision. 1 -2. Legal Authorization. The City is a political subdivision of the State of Minnesota and is authorized under the Act to initiate the revenue producing project herein referred to, and to issue'and sell the Note for the purpose, in the manner and upon the terms and conditions set forth in the Act and in this Resolution. 1 -3. Findings. The City Council has heretofore determined, and does hereby determine, as follows: (1) The City is authorized by the Act to enter into a Loan Agreement for the public purposes expressed in the Act; • (2) The City has made the necessary arrangements with the Borrower for the establishment within the City of a Project consisting of certain property all as more fully described in the Loan Agreement and which will be of the character and accomplish the purposes provided by the Act, and the City has by this Resolution authorized the Project and execution of the Loan Agreement, the Pledge Agreement, the Note and the Construction Loan Agreement, which documents specify the terms and conditions of the acquisition and financing of the Improvements to be included in the Project; • (3) in authorizing the Project the City's purpose is, and in its judgment the effect thereof will be, to promote the public welfare by: the attraction, encouragement and development of economically sound industry and commerce so as 3 to prevent, so far as possible, the emergence of blighted and marginal lands and areas of chronic unemployment; the develop- ment of revenue - producing enterprises to use the available • resources of the community, in order to retain the benefit of the community's existing investment in educational and public service facilities; the halting of the movement of talented, educated personnel of all ages to other areas thus preserving the economic and human resources needed as a base for providing governmental services and facilities; the provision of acces- sible employment opportunities for residents in the area; the expansion of an adequate tax base to finance the cost of governmental services, including educational services for the school district serving the community in which the Project is situated; (4) the amount estimated to be necessary to partially finance the Project Costs, including the costs and estimated costs permitted by Section 474.05 of the Act, will require the issuance of the Note in the principal amount of $500,000 as hereinafter provided; (5) it is desirable, feasible and consistent with the objects and purposes of the Act to issue the Note, for the purpose of partially financing the Improvements to be included in the Project; (6) the Note and the interest accruing thereon do not constitute an indebtedness of the City within the meaning of • any constitutional or statutory limitation and do not constitute or give rise to a pecuniary liability or a charge against the general credit or taxing powers of the City and neither the full faith and credit nor the taxing powers of the City is pledged for the payment of the Note or interest thereon; and (7) The Note is an industrial development bond within the meaning of Section 103(b) of the Internal Revenue Code and is to be issued within the exemption provided under subparagraph (A) of Section 103(b)(6) of the Code with respect to an issue of $1,000,000 or less; provided that nothing herein shall prevent the City from hereafter qualifying the Note under a different exemption if, and to the extent, such exemption is permitted by law and consistent with the objects and purposes of the Project. 1 -4. Authorization and Ratification of Project. The City has heretofore and does hereby authorize the Borrower, in accordance with the provisions of Section 474.03(7) of the Act and subject to the terms and conditions L] n set forth in the Construction Loan Agreement, to provide for the construction and installation of the Improvements to be included in the Project pursuant to the Plans and Speci- 46 by such means as shall be available to the Borrower and in the manner determined by the Borrower, and without advertisement for bids as may be required for the construction and acquisition of municipal facilities; and the City hereby ratifies, affirms, and approves all actions heretofore taken by the Borrower consistent with and in anticipation of such authority and in compliance with the Plans and Specifications. • • ARTICLE TWO NOTE 2 -1. Authorized Amount and Form of Note. The Note issued pursuant to this Resolution shall be in substantially the form set forth on Exhibit A, with such appropriate variations, omissions and insertions as are permitted or required by this Resolution, and in accordance with the further provisions hereof; and the total principal amount of the Note that may be outstanding hereunder is expressly limited to $500,000 unless a duplicate Note is issued pursuant to Section 2 -7. 2 -2. The Note. The Note shall be dated as of the date of delivery, shall be payable at the times and in the manner, shall bear interest at the rate, and shall be subject to such other terms and conditions as are set forth therein. 2 -3. Execution. The Note shall be executed on behalf of the City by the signatures of its Mayor and Administrator and shall be sealed with the seal of the City. In case any officer whose signature shall appear on the Note shall cease to be such • officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if had remained in office until delivery. In the event of the absence or disability of the Mayor or the Administrator such officers of the City as, in the opinion of the City Attorney, may act in their behalf, shall without further act or authorization of the City Council execute and deliver the Note. 2 -4. Delivery of Note. Before delivery of the Note there shall be filed with the Lender (except to the extent waived by the Lender) the following items: (1) an executed copy of each of the following documents: (A) the Loan Agreement; (B) the Pledge Agreement; M (C) the Mortgage; 16 (D) the Construction Loan Agreement; (E) a Cost Certificate signed by the Borrower certifying the use of the proceeds of the Note. (2) an opinion of Counsel for the Borrower as prescribed by Bond Counsel; (3) the opinion of Bond Counsel as to the validity and tax exempt status of the Note; (4) such other documents and opinions as Bond Counsel may reasonably require for purposes of rendering its opinion required in subsection (3) above or that the Lender may reasonably require for the closing. 2 -5. Disposition of Note Proceeds. (1) There is hereby established with the Lender a Construction Fund to be held by the Lender as a separate account of the City as provided in the Construction Loan Agreement. Upon delivery of the Note to Lender, the proceeds of the Note shall be credited to the Construction Fund held by the Lender on behalf of the City, at which time the entire principal amount of the Note shall be deemed advanced, and the . Lender shall, on behalf of the City, disburse funds from the Construction Fund for payment of Project Costs upon receipt of such supporting documentation as the Lender may deem reasonably necessary, including compliance with the provisions of the Construction Loan Agreement. The Lender or Borrower shall provide the City with a full accounting of all funds disbursed for Project Costs. (2) Any surplus in the Construction Fund shall be applied towards the prepayment of the Note as provided in the Construction Loan Agreement and shall not be invested to produce a yield greater than the yield on the Note, as required by Internal Revenue Service Revenue Procedure 79 -5, Revenue Procedure 81 -22 and 26 CFR 601.201 (and any subsequent amendments, modifications or replacements thereof) ; provided that, if the Lender receives an opinion of Bond Counsel that the exemption from federal incane taxation of interest on the Notes will not be jeopardized, the surplus funds may be invested at a yield greater than the yield on the Note. 7 n 2 -6. Registration of Transfer. The City will cause to be kept at the office of the . Clerk- Treasurer a Note Register in which, subject to such reasonable regulations as it may prescribe, the City shall provide for the registration of transfers of ownership of the Note. The Note shall be initially registered in the name of the Lender and shall be transferable upon the Note Register by the Lender in person or by its agent duly authorized in writing, upon surrender of the Note together with a written instrument of transfer satisfactory to the Clerk- Treasurer, duly executed by the Lender or its duly authorized agent. The following form of assignment shall be sufficient for said purpose. For value received hereby sells, assigns and transfers unto the within Note of the City of Hutchinson, Minnesota, and does hereby irrevocably constitute and appoint attorney to transfer said Note on the books of said City with full power of substitution in the premises. The undersigned certifies that the transfer be made in accordance with the provisions of Section 2 -9 of the Resolution authorizing the issuance of the Note. • Dated: Registered Owner Upon such transfer the Administrator shall note the date of registration and the name and address of the new Lender in the Note Register and in the registration blank appearing on the Note. 2 -7. Mutilated, Lost or Destroyed Note. In case any Note issued hereunder shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and delivered, a new Note of like outstanding principal amount, number and tenor in exchange and substitution for and upon cancellation of such mutilated Note, or in lieu of and in substitution for such Note destroyed or lost, upon the Lender's paying the reasonable expenses and charges of the City in connection therewith, and in the case of a Note destroyed or lost, the filing with the City of evidence satisfactory to the City with indemnity 46 satisfactory to it. If the mutilated, destroyed or lost Note has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Note prior to payment. • 2 -8. Ownership of Note. The City may deem and treat the person in whose name the Note is last registered in the Note Register and by notation on the Note whether or not such Note shall be overdue, as the absolute owner of such Note for the purpose of receiving payment of or on account of the Principal Balance, redemption price or interest and for all other purposes whatsoever, and the City shall not be affected by any notice to the contrary. 2 -9. Limitation on Note Transfers. The Note has been issued without registration under state or other securities laws, pursuant to an exemption for such issuance; and accordingly the Note may not be assigned or transferred in whole or part, nor may a participation interest in the Note be given pursuant to any participation agreement, except in accordance with an applicable exemption from such registration requirements. G] ARTICLE THREE GENERAL COVENANTS 0 3 -1. Payment of Principal and Interest. The City covenants that it will promptly pay or cause to be paid the principal of and interest on the Note at the place, on the dates, solely from the source and in the manner provided herein and in the Note. The principal and interest are payable solely from and secured by revenues and proceeds derived from the Loan Agreement, the Pledge Agreement, the Mortgage and the Construction Loan Agreement which revenues and proceeds are hereby specifically pledged to the payment thereof in the manner and to the extent specified in the Note, the Loan Agreement, the Pledge Agreement, the Mortgage and the Construction Loan Agreement; and nothing in the Note or in this Resolution shall be considered as assigning, pledging or otherwise encumbering any other funds or assets of the City. 3 -2. Performance of and Authority for Covenants. The City covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Resolution, in the Note executed, authenticated and delivered hereunder and in all proceedings of the City Council pertaining thereto; that it is duly authorized under the Constitution and laws of the State of Minnesota including particularly and without limitation the Act, to issue the Note authorized hereby, pledge the revenues and assign the Loan Agreement in the manner and to the extent set forth in this Resolution, the Note, the Loan Agreement and the Pledge Agreement; that all action on its part for the issuance of the Note and for the execution and delivery thereof has been duly and effectively taken; and that the Note in the hands of the Lender is and will be a valid and enforceable special limited obligation of the City according to the terms thereof. 3 -3. Enforcement and Performance of Covenants. The City agrees to enforce all covenants and obligations of the Borrower under the Loan Agreement and Construction Loan Agreement, upon request of the Lender and being indemnified to the satisfaction of the Authority for all expenses and claims arising therefrom, and to perform all covenants and other provisions pertaining to the City contained in the Note, the Loan Agreement and the Construction Loan Agreement and subject to Section 3 -4. W1 3 -4. Nature of Security. Notwithstanding anything contained in the Note, the Mortgage, the Loan Agreement, the Pledge Agreement or any other document referred to in Section 2 -4 to the contrary, under the provisions of the Act the Note may not be payable from or be a charge upon any funds of the City other than the revenues and proceeds pledged to the payment thereof, nor shall the City be subject to any liability thereon, nor shall the Note otherwise contribute or give rise to a pecuniary liability of the City or, to the extent permitted by law, any of the City's officers, employees and agents. No holder of the Note shall ever have the right to compel any exercise of the taxing power of the City to pay the Note or the interest thereon, or to enforce payment thereof against any property of the City other than the revenues pledged under the Pledge Agreement; and the Note shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City; and the Note shall not constitute a debt of the City within the meaning of any constitutional or statutory limitation; but nothing in the Act impairs the rights of the Lender to enforce the covenants made for the security thereof as provided in this Resolution, the Loan Agreement, the Pledge Agreement, the Mortgage, the Construction Loan Agreement and in the Act, and by authority of the Act the City has made the covenants and agreements herein for the benefit of the Lender; provided that in any event, the agreement of the City to perform or enforce the covenants and • other provisions contained in the Note, the Loan Agreement, the Pledge Agreement and the Construction Loan Agreement shall be subject at all times to the availability of revenues under the Loan Agreement sufficient to pay all costs of such performance or the enforcement thereof, and the City shall not be subject to any personal or pecuniary liability thereon. • 3 -5. Preservation of Tax Exempt Status of the Note. (1) In order to preserve the tax exempt status of the Note, the City covenants that it shall take such actions as are required and within their reasonable control to prevent the interest on the Note from becoming taxable for federal income tax purposes for the owners thereof (other than any owner who is a "substantial user" or "related person" thereto" within the meaning of Section 103(b) of the Code) including but not limited to taking all actions required of it under Section 103(c)(6) of the Code. To this end, the City shall: 11 (A) cause the Borrower to maintain records identifying all "gross proceeds" attributable to the Note, the yield at which such gross proceeds are invested, any arbitrage profit derived therefrom, and any earnings derived from the investment of such arbitrage profit; (B) cause the Borrower to make and maintain on file all annual determinations of the amount, if any, of excess arbitrage required to be rebated to the United States (C) cause the Borrower to rebate to the United States at least once every five years the amount, if any, which is required to be rebated to the United States, including the last installment which shall be made no later than 30 days after the day on which the Note is paid in full; (D) cause the Borrower to not invest "gross proceeds" in any acquired nonpurpose obligations so as to deflect arbitrage otherwise payable to the United States as a "prohibited payment" to a third party; (E) cause the Borrower to refrain from investing any "gross proceeds" allocable to the Note in acquired nonpurpose obligations at a yield in excess of the yield on the Note to the extent such gross proceeds exceed in any calendar year more than 150% of the debt service requirements for the Note in that calendar year; and (F) cause the Borrower to retain on file all records • of the annual determination of the rebate amount until six (6) years after the retirement of the Note; (2) The City hereby represents and covenants that any fees received by it in connection with the issuance of the Note shall be spent as quickly as practicable and until spent shall not be invested in acquired nonpurpose obligations the yield on which exceeds the yield on the Note. r� LJ 12 ARTICLE FOUR 0 MISCELLANEOUS 4 -1. Severability. If any provision of this Resolution shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule or public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Resolution contained shall not affect the remaining portions of this Resolution or any part thereof. 4 -2. Authentication of Transcript. The officers of the City are directed to furnish to Bond Counsel certified copies of this Resolution and all documents referred to herein, and affidavits or certificates as to all other matters which are reasonably necessary to evidence • the validity of the Note. All such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute recitals of the City as to the correctness of all statements contained therein. 4 -3. Registration of Resolution. The Administrator is authorized and directed to cause a copy of this Resolution to be filed with the County Auditor of McLeod County, and to obtain from said County Auditor a certificate that the Note as a bond of the City has been duly entered upon his bond register. 4 -4. Authorization to Execute Agreements. The forms of the proposed Loan Agreement, the Pledge Agreement and the Construction Loan Agreement and are hereby approved in substantially the form heretofore presented to the City Council, together with such additional details therein as may be necessary and appropriate and such modifications 13 thereof, deletions therefrom and additions thereto as may be necessary and appropriate and approved by Bond Counsel prior to the execution of the documents, and the Mayor and Administrator of the City are authorized to execute the Loan Agreement, the Pledge Agreement and the Construction Loan Agreement in the name of and on behalf of the City and such other documents as Bond Counsel consider appropriate in connection with the issuance of the Note. In the event of the absence or disability of the Mayor or the Administrator such officers of the City as, in the opinion of the City Attorney, may act in their behalf, shall without further act or authorization of the City Council do all things and execute all instruments and documents required to be done or executed by such absent or disabled officers. The execution of any instrument by the appropriate officer or officers of the City herein authorized shall be conclusive evidence of the approval of such documents in accordance with the terms hereof. Adopted: December 17, 1985 Attest: Administrator Mayor of the City of Hutchinson 14 • 5 09 N EXHIBIT A UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF MCLEOD CITY OF HUTCHINSON Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) R -1 $500,000 FOR VALUE RECEIVED the CITY OF HUTCHINSON, McLeod County, Minnesota (the "City ") hereby promises to pay to Citizens Bank & Trust Co. , in Hutchinson, Minnesota, its successors or registered assigns (the "Lender "), from the source and in the manner hereinafter provided, the principal sum of FIVE HUNDRED THOUSAND AND N01100 DOLLARS ($500,000), or so much thereof as remains unpaid from time to time (the "Principal Balance "), with interest thereon at the rates set • forth in paragraph 1(a) hereof (the "Tax Exempt Rates ") or at such higher rate as hereinafter provided in paragraph 1(c) hereof (the "Taxable Rates "), in any coin or currency which at the time or times of payment is legal tender for the payment of public or private debts in the United States of America, in accordance with the terms hereinafter set forth. 1. This Note shall bear interest and be payable as follows: (a) (i ) Interest shall accrue on the Principal Balance of this Note: (A) from and after the date hereof to and including the first Call Date (as hereinafter defined) at a Tax Exempt Rate equal to eight and one - quarter percent (8 1/4 %) per annum, and (B) from and after each Call Date (commencing with the first Call Date) to and including the earlier of the next succeeding Call Date or the Final Maturity Date (as hereinafter defined) at a Tax Exempt Rate equal to the Adjusted Rate (as hereinafter defined) determined as of the Call Date which begins each such interest accrual period; provided, however, that if a Rate Adjustment Event (as hereinafter defined) shall occur, the Tax Exempt Rate in effect on the date on which such Rate Adjustment Event occurs and the Tax Exempt Rates which would otherwise be in effect from time to time thereafter shall be increased to that percentage of the applicable Tax Exempt Rates specified in clauses (A) or (B) above, as the case may be, determined in accordance with the following formula: (C) from and after the Call Date to and including the Final Maturity Date (as hereinafter defined) at a Tax - Exempt Rate equal to the Adjusted Rate (as hereinafter defined) detennined as of the Call Date which begins such interest accrual period; provided, however, that if a Rate Adjustment Event (as hereinafter defined) shall occur, the Tax - Exempt Rate in effect on the date on which such Rate Adjustment Event occurs and the Tax - Exempt Rates which would otherwise be in effect from time to time thereafter shall be increased to that percentage of the applicable Tax - Exempt Rates specified in clauses (A), (B) or (C) above, as the case may be, determined in accordance with the following formula: Ra = [(Rb - (Nb x Tb)) x (1 - Ta)] + (Na x Ta) 1 -Tb where: Ra = the increased Tax - Exempt Rate resulting fran the Rate Adjustment Event; Rb = the Tax - Exempt Rate which would otherwise have been in effect if such Rate Adjustment Event had not occurred; Tb = the Maximum Marginal Tax Rate (as hereinafter defined) as in effect immediately prior to the occurrence of the Rate Adjustment Event; Ta = the Maximum Marginal Tax Rate as in effect after the occurrence of the Rate Adjustment Event; A 2 • • 1� Nb = the Nondeductible Percentage (as hereinafter defined) as in effect immediately prior to the 46 occurrence of the Rate Adjustment Event; Na = the Nondeductible Percentage as in effect after the occurrence of the Rate Adjustment Event; and If a subsequent Rate Adjustment Event shall occur, the Tax Exempt Rates then in effect and thereafter to be in effect (as adjusted on account of the previous Rate Adjustment Event) shall be readjusted in accordance with the foregoing formula. (ii) Interest only shall be payable on February 1, 1986, and on the first day of each month thereafter to and including August 1, 1986. (b) (i) Commencing September 1, 1986, and continuing on the first day of each month thereafter to and including November 1, 2000, this Note shall be payable in equal monthly installments of principal and interest the amount of each of which shall be determined by the Holder on the basis of an assumed 15 -year amortization with interest from September 1, 1986, at the Tax Exempt Rate then in effect, provided that the amount of such monthly installments shall be adjusted effective as of the first day of the month following the Call Date and as of the • first day of the month following the date of any Rate Adjustment Event based on amortization of the then principal balance over the remainder of the original assumed 15 -year amortization period with interest at the Tax Exempt Rate in effect immediately following such Call Date or immediately following such Rate Adjustment Event, as the case may be. • (ii) The entire unpaid principal balance of this Note, together with all accrued but unpaid interest thereon, and all other indebtedness due hereunder, shall be due and payable on December 1, 2000 (the "Final Maturity Date ") . (c) In the event that the Holder receives a Notice of Taxability (as hereinafter defined) or interest on this Note shall became subject to federal income taxation pursuant to a Determination of Taxability (as hereinafter defined), the interest rate specified in paragraph 1(a) hereof shall be increased, retroactively effective from and after the Date of Taxability (as hereinafter defined) A 3 to a Taxable Rate equal to two percent ( 2 %) per annum in excess of the Base Rate (as hereinafter defined) as such _ rate shall change from time to time; provided, however, • that in no event shall the Taxable Rate be less than the Tax Exempt Rate which would otherwise be applicable. The City shall immediately upon demand pay to the holder and to each prior holder affected by such Notice of Taxability or Determination of Taxability an amount equal to the amount by which the interest accrued retroactively at the Taxable Rate from the Date of Taxability to the date of payment exceeds the amount of interest actually accrued and paid to the holder of any such prior holder during said period. Such obligation of the City shall survive the payment in full of the principal amount of this Note. Thereafter (unless the holder shall require prepayment of the Note pursuant to paragraph 8(b) hereof), all monthly installments of interest or of principal and interest shall be based on the Taxable Rate. (d) As used herein, the following terms have the following meanings: "Adjusted Rate" means, as of any Call Date of reference, a rate per annum equal to 80% of the Base Rate in effect as of such Call Date; "Base Rate" means the rate of interest publicly • announced by the Lender frcm time to time as its Base Rate; "Borrower" means Erickson Oil Products, Inc., a Wisconsin corporation; "Call Date" means Janaury 1, 1990 ( the "first Call Date ") and Janaury 1, 1995 (the "second Call Date "); "Code" means the Internal Revenue Code of 1954, as amended; "Date of Taxability" shall have the meaning ascribed to such term in Section 4.07 of the Loan Agreement; "Determination of Taxability" shall have the meaning ascribed to such term in Section 4.07 of the Loan Agreement; "Loan Agreement" means the Loan Agreement, dated the date hereof, between the City and the Borrower; • A 4 "Maximum Marginal Tax Rate" means the maximum marginal rate of taxation imposed on the taxable income of corporations under the Code as applicable to the Lender (said maximum marginal rate being 46% as of the date hereof); "Nondeductible Percentage" means that portion (expressed as a percentage of the interest paid or payable with respect to indebtedness incurred or continued to purchase or carry Tax Exempt Obligations which is not deductible by the Lender for federal corporate income tax purposes (said nondeductible percentage being 20% as of the date hereof). As used in the foregoing definition, the term "Tax- Exempt Obligations" means obligations the interest on which is exempt from federal income taxes; "Notice of Taxability" shall have the meaning ascribed to such term in Section 4.07 of the Loan Agreement; "Rate Adjustment Event" means either (a) a decrease in the Maximum Marginal Tax Rate, which event shall be deemed to have occurred on the effective date of such decrease, or (b) an increase in the Nondeductible Percentage, which event shall be deemed to have occurred on the effective date of such increase. • 2. In any event, the payments hereunder shall be sufficient to pay all principal and interest due, as such principal and interest becomes due, and to pay any premium or service charge, at maturity, upon redemption, or otherwise. Interest shall be computed on the basis of a 365 day year, but charged for the actual number of days elapsed. 3. If the Lender should not receive on the first day of any month all of the principal and interest then due on the Note, and if the City should continue to be in arrears through the tenth (10th) day of such month, then, in addition to all other sums due hereunder, the Lender shall be entitled to receive on the eleventh (11th) day of such month a service charge equal to two percent (2 %) of the delinquent principal and interest. 4. Principal and interest and premium or service charge due hereunder shall be payable at the principal office of the Lender, or at such other place as the Lender may designate in writing. 0 A5 5. This Note is issued by the City to provide funds for a project, as defined in Section 474.02, Subdivision la, Minnesota Statutes, consisting of the construction of a convenience store and gas station facility, pursuant to the Loan Agreement and this Note is further issued pursuant to and in full compliance with the Constitution and laws of the State of Minnesota, particularly Chapter 474, Minnesota Statutes, and pursuant to a resolution of the City Council duly adopted on December 17, 1985 (the "Resolution ") . 6. This Note is secured by a Pledge Agreement of even date herewith by the City to the Lender (the "Pledge Agreement ") and a Mortgage, Security Agreement and Fixture Financing Statement, of even date herewith between the Borrower, as mortgagor, and the Lender as mortgagee (the "Mortgage ") . The proceeds of the Note shall be advanced by the Lender into the Construction Fund created pursuant to the Construction Loan Agreement of even date herewith among the City, the Lender and the Borrower and disbursement from the Construction Fund shall be subject to the terms and conditions of the Construction Loan Agreement. 7. The City, for itself, its successors and assigns, hereby waives demand, presentment, protest and notice of dishonor; and to the extent permitted by law, the Lender may extend interest and /or principal of or any service charge or premium due on this Note, including the Final Maturity Date, or • release any part or parts of the property and interest subject to the Mortgage or to any other security document from the same, all without notice to or consent of any party liable hereon or thereon and without releasing any such party from such liability and whether or not as a result thereof the interest on the Note is no longer exempt from the Federal income tax. In no event, however, may the Final Maturity Date be extended beyond thirty ( 30) years from the date hereof . 8. This Note is subject to prepayment without premium as follows: (a) Prepayment in whole or in part at the option of the Borrower, on the first day of any month upon at least thirty (30) days' written notice to the Lender (or such shorter period of notice as may be acceptable to the Lender). (b) Prepayment in whole, at the option of the Lender, on any date following a Determination of Taxability upon at least thirty (30) days' written notice to the Borrower (or such shorter period of notice as may be acceptable to the Borrower). A 6 (c) Prepayment in whole, at the option of the Lender, on any date upon the occurrence of certain "Events of Default" as defined in the Loan Agreement, Construction Loan Agreement or the Mortgage. (d) Prepayment in whole or in part, at the option of the Borrower, upon the occurrence of certain events of damage, destruction or condemnation as provided in the Mortgage. (e) Prepayment in whole, at the option of the Lender, on any Call Date upon at least sixty (60) days' written notice to the Borrower and the City (or such shorter period of notice as the Borrower may approve). To effect any such prepayment, the City shall pay or cause to be paid to the Lender an amount equal to the principal amount being so prepaid and accrued interest on this Note to the date of such prepayment. Any partial prepayments shall be applied in inverse order of principal installments payable under paragraph 1(b) hereof. 9. As provided in the Resolution and subject to certain limitations set forth therein, this Note is only transferable upon the books of the City at the office of the Clerk- Treasurer, by the Lender in person or by his agent duly authorized in writing, at the Lender's expense, upon surrender hereof together with a written instrument of transfer • satisfactory to the Clerk- Treasurer, duly executed by the Lender or his duly authorized agent. Upon such transfer the Clerk - Treasurer will note the date of registration and the name and address of the new registered Lender in the registration blank appearing below. The City may deem and treat the person in whose name the Note is last registered upon the books of the City with such registration noted on the Note, as the absolute owner hereof, whether or not overdue, for the purpose of receiving payment of or on the account, of the Principal Balance or interest and for all other purposes, and all such payments so made to the Lender or upon his order shall be valid and effective to satisfy and discharge the liability upon the Note to the extent of the sum or sums so paid, and the City shall not be affected by any notice to the contrary. 10. All of the agreements, conditions, covenants, provisions and stipulations contained in the Resolution, the Mortgage, the Loan Agreement, the Pledge Agreement and the Construction Loan Agreement are hereby made a part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. A 7 11. This Note and interest thereon and any service charge or premium due hereunder are payable solely from the revenues and proceeds derived from the Loan Agreement and the Mortgage, and do not constitute a debt of the City within the meaning of any constitutional or statutory limitation, are not payable from or a charge upon any funds other than the revenues and proceeds pledged to the payment thereof, and do not give rise to a pecuniary liability of the City or, to the extent permitted by law, of any of its officers, agents or employees, and no holder of this Note shall ever have the right to compel any exercise of the taxing power of the City to pay this Note or the interest thereon, or to enforce payment thereof against any property of the City, and this Note does not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City, and the agreement of the City to perform or cause the performance of the covenants and other provisions herein referred to shall be subject at all times to the availability of revenues or other funds furnished for such purpose in accordance with the Loan Agreement, sufficient to pay all costs of such performance or the enforcement thereof. 12. It is agreed that time is of the essence of this Note. If an Event of Default (as that term is defined in the Mortgage, the Construction Loan Agreement or the Loan Agreement) occurs, then the Lender shall have the right and option to declare, the Principal Balance and accrued interest thereon, immediately due and payable, whereupon the same, plus . any premiums or service charges, shall be due and payable, but solely from sums made available under the Loan Agreement, the Construction Loan Agreement, and the Mortgage. Failure to exercise such option at any time shall not constitute a waiver of the right to exercise the same at any subsequent time. 13. The remedies of the Lender, as provided herein and in the Mortgage, the Loan Agreement, the Pledge Agreement and the Construction Loan Agreement, are not exclusive and shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Lender, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof. 14. The Lender shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by the Lender and, then only to the extent specifically set forth in the writing. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. W-11 15. This Note has been issued without registration under state or federal or other securities laws, pursuant to an exemption for such issuance; and accordingly the Note may not 46 be assigned or transferred in whole or part, nor may a partici- pation interest in the Note be given pursuant to any participation agreement, except in accordance with an applicable exemption from such registration requirements. IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts and things required to exist, happen and be performed precedent to or in the issuance of this Note do exist, have happened and have been performed in regular and due form as required by law. IN WITNESS WHEREOF, the City has caused this Note to be duly executed in its name by the manual signatures of the Mayor and Administrator and has caused the corporate seal to be affixed hereto, and has caused this Note to be dated December 1985. • (SEAL) 0 CITY OF HUTCHINSON, MINNESOTA By Mayor By Administrator A 9 PROVISIONS AS TO REGISTRATION The ownership of the unpaid Principal Balance of this Note and the interest accruing thereon is registered on the books of the City of Hutchinson in the name of the holder last noted below. Date of Registration December , 1985 Name and address Registered Owner Citizens Bank & Trust Co. 102 Main Street South Hutchinson, MN 55350 A 10 Signature of Clerk- Treasurer r� U 0 • LAW OFFICES BRIGGS AND MORGAN PROFESSIONAL ASSOCIATION 2200 FIRST NATIONAL BANK BUILDING SAINT PAUL, MINNESOTA 55101 TELEPHONE (612) 201 -1215 TELECOPIER (612) 222 -4071 INCLUDING THE FORMER FIRM OF LEVITT, PALMER, BOWEN, ROTMAN & SHARE EXPRESS MAIL Mr. Gary D. Plotz Mr. James Schaefer Mr. T. A. Burich Mr. Gary D. Vander Vorst Gentlemen: December 11, 1985 E RECEIVED Ile r J Re: City of Hutchinson - $500,000 Commercial Development Revenue Note (Erickson Oil Products, Inc. Project) Enclosed for your review and comment in connection with the above transaction are first drafts of the closing certificates and forms of opinions. The City of Hutchinson will consider adoption of the final resolution at its last meeting in December. Therefore I need your comments as promptly as possible on all of the documents. TJH /ks Enc. 2200 FIRST NATIONAL BANK BUILDING SAINT PAUL, MINNESOTA 55101 (612) 291 -1215 Ver truly yours, 1 ta 6z-- Trudy J. Halla 2400 I D S CENTER MINNEAPOLIS, MINNESOTA 55402 (612) 339 -0601 502I Mr. Richard Nadeau Loan and Contract Officer Minnesota Energy and Economic Development Authority 9th Floor American Center Building 150 East Kellogg Boulevard St. Paul, Minnesota 55101 • RE: City of Hutchinson - $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) • Dear Mr. Nadeau: Enclosed in connection with the above referenced bond issue is a copy of the Notice of Issue, which your office has requested. Please acknowledge receipt by executing the enclosed copy of this letter and return it in the enclosed self- addressed, stamped envelope. Please do not hesitate to give me a call if there are any questions. Very truly yours, Trudy J. Halla Enclosures • 502I City of Hutchinson 10 $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) CERTIFICATION OF THE CITY OF HUTCHINSON, MINNESOTA The undersigned, Mayor and Administrator of the City of Hutchinson, Minnesota, a political subdivision of the State of Minnesota (the "City "), acting for the City do hereby certify and declare as follows: I. The officials of the City and their terms of office are as follows: Name Office Ex iration of Term Robert H. Stearns Mayor December 31, 1985 Gary D. Plotz City Administrator Appointed. Mike Carls Councilman December 31, 1985 Pat Mikulecky Councilman December 31, 1987 • John Milnar Councilman December 31, 1985 Marlin Torgerson Councilman December 31, 1987 2. A preliminary resolution was duly adopted at a regular meeting of the City on November 12, 1985, and has not been rescinded, modified or amended in any respect. 3. The resolution (the "Resolution ") relating to the issuance of the $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) (the "Note ") was adopted at a regular meeting of the City on December 17, 1985, is in full force and effect as of the date hereof, and has not been rescinded, modified or amended in any respect. 4. To the best of our knowledge since the date of adoption of the Resolution, there has not been any change with respect to any of the findings of the City expressed in Section 1 -3 of the Resolution. 5. The Mayor and Administrator have duly executed on behalf of the City the Note, the Construction Loan Agreement, the Loan Agreement and the Pledge Agreement described in the Resolution. • 6. The City has authorized by all necessary action the execution, delivery and due performance of the Note, the Construction Loan Agreement, the Loan Agreement and the Pledge Agreement, and any and all such other agreements and documents as may be required to be executed and delivered by the City in order to carry out, give effect to and consummate the transaction contemplated by the Construction Loan Agreement, the Note, the Loan Agreement, the Pledge Agreement and the Resolution. 7. There is no litigation of any nature now pending, or to our knowledge, threatened seeking to restrain or enjoin the issuance, sale, execution or delivery of the Note, or any of the documents described in the Resolution, or questioning the authority or proceedings pursuant to which the Note is being issued, the validity of the Note or any provision made for the payment thereof, or the power of the City to assist in financing the Project as defined in the Loan Agreement. 8. Neither the existence of the City nor the rights of the present officials of the City to their respective offices is being contested and no authority or proceeding for the issuance of the Note or the execution and delivery of the Pledge Agreement, the Loan Agreement, or the Construction Loan Agreement have been modified, repealed, revoked or rescinded. 9. Pursuant to the provisions of the Loan Agreement • and the Construction Loan Agreement, Citizens Bank & Trust Co. (the "Lender ") is hereby requested to disburse the proceeds received from the sale of the Note to the Lender directly to Erickson Oil Products, Inc., a Wisconsin corporation (the "Borrower "). 10. With respect to the federal arbitrage require- ments set forth in Section 103(c) of the Internal Revenue Code of 1954, as amended (the "Code "), and the regulations promulgated thereunder, and in reliance upon the representations made by the Borrower in a Certification of Borrower delivered this day by the Borrower, we hereby certify and reasonably expect that the following has occurred or will occur with respect to the Note: (a) The Note was delivered on the date of this Certificate. (b) Pursuant to the terms of the Loan Agreement and the Construction Loan Agreement the Improvements to be financed from the proceeds of the Note are to be acquired, constructed and installed by the Borrower or its designee, and • the proceeds of the Note are to be advanced under the Construction Loan Agreement by the Lender during acquisition, construction and installation of the Project upon the order or certificate of the Borrower and only for the purpose of paying directly or reimbursing the Borrower for the payment of Project Costs theretofore incurred. Accordingly there is no opportunity to invest any proceeds of the Note for the benefit of the Borrower or the City before such proceeds are spent. (c) The Borrower has incurred or will incur within six months hereof a substantial binding obligation to acquire, construct and install the Project in the form of construction contracts the aggregate amounts payable under which are estimated to be not less than 2 1/2% of the principal face amount of the Note. (d) Acquisition, construction and installation of the Project has proceeded and will proceed with due diligence to completion. Completion is expected to occur on or about . (e) At least 85% of the "spendable proceeds" of the Note will be expended for the Project Costs within three years hereof. The term "spendable proceeds" is understood to mean "original proceeds" (net amounts, after payment of all expenses of issuing the Note, received by the City as a result of the sale of the Note), less the amounts, if any, of any such proceeds expended within the three year period for the payment of the debt service on such Note to the holder thereof. (f) Debt service payments to became due under the Note are made directly by the Borrower to the Lender, and accordingly no "sinking fund" is established for the Note. .7 (g) No cash or securities are pledged either _ directly or indirectly by the Borrower to the . payment of or as security for the Note, nor is there any fund of cash or securities which the Borrower has otherwise set aside and expects to invest or maintain at a yield greater than the yeild on the Note for the purpose of paying debt service on the Note. The City is not aware of any facts or circumstances that would cause it to question the accuracy of the foregoing repre- sentations and on the basis thereof, it is not expected that the proceeds of the Note will be used in a manner that would cause the Note to be an arbitrage bond under Section 103(c) of the Code, and the regulations prescribed under that section, and to the best of our knowledge and belief, there are no facts, estimates or circumstances other than those mentioned above that would materially change the conclusion that it is not expected that the proceeds of the Note will be used in a manner that would cause the Note to be an arbitrage bond under Section 103(c) of the Code, and regulations prescribed under that section; and the undersigned have not been notified nor do they have any knowledge to indicate that the City has been listed or is proposed to be listed by the Internal Revenue Service as a City whose arbitrage certificates may not be relied upon. • The statements in this paragraph 10 are made pursuant to Sections 1.103 -13, 1.103 -14, and 1.103 -15 of the Income Tax Regulations under the Code, and the undersigned Mayor and Administrator are the officers of the City charged by the Resolution with the responsibility of issuing the Note. 11. Any capitalized terms not defined herein shall have the meaning given them in the Loan Agreement or Resolution. IN WITNESS WHEREOF, the undersigned have hereunto set their signatures and the official seal of the City this - - -- day of December, 1985. CITY OF HUTCHINSON, MINNESOTA By- --------------- - - - -- Its Mayor By- ------ - - - - -- Its Administrator (SEAL) • 502I City of Hutchinson 46 $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) CERTIFICATION OF THE BORROWER We, certify and declare that we acting and _ the date hereof, of Erickso corporation organized under (the "Borrower ") and that: _ and do hereby are the duly chosen, qualified and respectively, as of a Oil Products, Inc., a Wisconsin the laws of the State of Wisconsin 1. This Certificate relates to the issuance and sale of a $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) (the "Note "), being issued by the City of Hutchinson (the "City "). The proceeds of the Note are being used to finance a "Project ", as defined under a Loan Agreement dated December 1985, between the City and the Borrower (the "Loan Agreement ") and the City's interest in the Loan Agreement has been assigned to Citizens Bank & Trust Co., in Hutchinson, Minnesota (the "Lender ") pursuant to a Pledge Agreement dated December _, 1985 (the "Pledge Agreement "). The Note is secured by a Mortgage, • Security Agreement and Fixture Financing Statement dated December _, 1985, between the Borrower, as mortgagor, and the Lender, as mortgagee (the "Mortgage "). The disbursement of the Note proceeds is to be supervised by the Lender pursuant to a Construction Loan Agreement dated December - f 1985, between the City, the Borrower and the Lender (the onstruction Loan Agreement "). 2. The Loan Agreement, the Mortgage .ate -Rem# s` and the Construction Loan Agreement have been duly signed, acknowledged and delivered by the undersigned on behalf of the Borrower. 3. The execution and delivery of the Loan Agreement, the Mortgage and Construction Loan Agreement and the carrying out of the terms thereof do not and will not result in violation of any provision of or in a default under the Articles of Incorporation and By -laws of the Borrower or any indenture, mortgage, deed of trust, indebtedness, or other agreement, to which the Borrower is a party or by which it or its property is bound or result in the creation of a lien or encumbrance upon its property in Wisconsin and Minnesota, and 0 do not and will not conflict with any present order, rule or regulation applicable to the Borrower of any court or of any Federal or State regulatory body or administrative agency or other governmental agency having jurisdiction over the Borrower. 4. There is no litigation pending or, to the best of the Borrower's knowledge, threatened affecting the right nor in any way questioning the execution or validity of the Loan Agreement, Mortgage and the Construction Loan Agreement or the issuance of the Note. 5. The Borrower is a corporation validly existing and in good standing under the laws of the State of Wisconsin. A copy of the Articles of Incorporation and By -laws of the Borrower is attached hereto as Exhibit A and is a full, true and correct copy thereof, and such Articles of Incorporation and By -laws have not been further amended, nor has any action been taken by the Board of Directors of the Borrower for the purpose of effecting any further amendment or modification thereof. Copies of certificates of good standing in Wisconsin and Minnesota for the Borrower are attached hereto as Exhibit B, and there has been no change in the good standing of the Borrower in Wisconsin or Minnesota as of the date of said certificates, and no proceedings have commenced for the dissolution or liquidation of the Borrower. A copy of the • Resolution of the Borrower authorizing the execution and delivery of the Loan Agreement, Mortgage and Construction Loan Agreement is attached hereto as Exhibit C and such resolution has not been modified, amended or rescinded since the date of its adoption. 6. With respect to the federal arbitrage re- quirements set forth in Section 103(c) of the Code, and the regulations pranulgated thereunder (the "Regulations "), and as substantiation for the City to assure that the Note will not be deemed an arbitrage bond under said Section 103(c) and Regulations, we hereby certify and reasonably expect that the following will occur with respect to the Note: (a) The Note was delivered on the date of this Certificate and the proceeds thereof are expected to be used as follows: 9 Construction Costs $ Equipment Costs $ Commitment Fees $ Capitalized Interest $ Legal Fees $ Architect and Engineer $ TOTAL $ (b) Pursuant to the terms of the Loan Agreement and the Construction Loan Agreement, the Project to be financed from the proceeds of the Note are to be acquired, constructed and installed by the Borrower or its designee, and the proceeds of the Note are to be advanced under the Construction Loan Agreement by the Lender during acquisition, construction and installation of the Improvements upon the order or certificate of the Borrower and only for the purpose of paying directly or reimbursing for the payment of "Project Costs ", as defined in the Loan Agreement, theretofore incurred. Accordingly there is no opportunity to invest any proceeds of the Note for the benefit of the Borrower or the City before such proceeds are spent. • (c) The Borrower has incurred or will incur within six months hereof a substantial binding obligation to acquire, construct and install the Improvements in the form of construction contracts the aggregate amounts payable under which are estimated to be not less than 2 1/2% of the principal face amount of the Note. (d) Acquisition, construction and installation of the Project has proceeded and will proceed with due diligence to completion. Completion is expected to occur on or about (e) At least 85% of the "spendable proceeds" of the Note will be expended for the Project Costs, as defined in the Loan Agreement, within three years hereof. The term "spendable proceeds" is understood to mean "original proceeds" (net amounts, after payment of all expenses of issuing the Note, received by the City as a result of the sale of the Note), less the amounts, if any, of any such proceeds expended within the three year period for the payment of the debt service on such Note to the holder thereof. (f) Debt service payments to be came due under the Note are made directly by the Borrower to the Lender, and accordingly no "sinking fund" is established for the Note. (g) No cash or securities are pledged either directly or indirectly by the Borrower to the payment of or security for the Note, nor is there any fund of cash or securities which the Borrower has otherwise set aside and expects to invest or maintain at a yield greater than the yield on the Note for the purpose of paying debt service on the Note. The Borrower is not aware of any facts or circumstances that would cause it to question the accuracy of the foregoing representations and on the basis thereof, it is not expected that the proceeds of the Note will be used in a manner that would cause the Note to be an arbitrage bond under Section 103(c) of the Code, and the proposed regulations proscribed under that section, and to the best of our knowledge and belief, there are no facts, estimates or circumstances other than that mentioned above that would materially change the conclusion that it is not expected that the proceeds of the Note will be used in a manner that would cause the Note to be an arbitrage bond under Section 103(c) of the Code, and regulations proscribed under that section. • 8. The representations of the Borrower set forth in the Loan Agreement are reaf finned as true and correct in all respects. 9. "Substantially all" of the proceeds of the Note will be used for the acquisition, construction, reconstruction, or improvement of land or property of a character subject to the allowance for depreciation within the meaning of Section 103(b)(6) of the Code. 10. This Certificate is made to induce the sale and delivery of the Note, and the statements herein are deemed representations of the Borrower as to the facts recited therein. 11. The I.R.S. Form 8038 attached hereto as Exhibit D is true and correct in all respects. 12. Any capitalized terms not defined herein shall have the meanings given them in the Loan Agreement or 46 Resolution. IN WITNESS WHEREOF, we have hereunto set our hands this day of December, 1985. (SEAL) .7 is ERICKSON OIL PRODUCTS, INC. By Its By Its Exhibit A - Articles of Incorporation Exhibit B - Certificates of Good Standing - Wisconsin and Minnesota Exhibit C - Resolution Exhibit D - IRS 8038 • 502I City of Hutchinson 4) $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) CERTIFICATION OF LENDER I, , do hereby certify and declare that I am the duly chosen qualified and acting , as of the date hereof, of Citizens Bank & Trust Co., in Hutchinson, Minnesota, a Minnesota banking corporation (the "Lender "). In connection with the execution and delivery of the following related documents, all of which are dated as of December A, 1985, unless otherwise indicated: a Loan Agreement between the City of Hutchinson, Minnesota (the "City ") and Erickson Oil Products, Inc., a Wisconsin corporation (the "Borrower ") (the "Loan Agreement "), a Mortgage, Security Agreement and Fixture Financing Statement from the Borrower, as mortgagor, to the Lender, as mortgagee (the "Mortgage "), a Pledge Agreement from the City to the Lender (the "Pledge Agreement "), a $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) issued by the City (the "Note "), a Construction Loan Agreement between the City, the Borrower and the Lender (the "Construction Loan Agreement") and a Resolution • adopted on December 17, 1985, by the City Council providing for the issuance and sale of the Note (the "Resolution "), and the instruments and documents required pursuant to the terms of the Loan Agreement and the Resolution, I certify that: (1) I have received the Note from the City. (2 ) The Lender is a Minnesota banking corporation organized and existing under the laws of the United States of America and validly existing and qualified to do business in the State of Minnesota with adequate power to enter into and perform or accept, as the case may be, the Note, the Mortgage, the Construction Loan Agreement and the Pledge Agreement and has authority to purchase the Note and execute, accept and /or perform any other instruments and documents required to be executed by the Lender in connection with the loan. (3) The Construction Loan Agreement has been duly and validly authorized, executed and delivered by the Lender and assuming due authorization, execution and delivery thereof by the other parties thereto, constitutes a valid, legal and binding agreement enforceable in accordance with its terms, LJ except as the same may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting creditors' rights generally. The Note and the Mortgage have been duly and validly received and accepted by the Lender. (4) No approval or prior review by any state or federal banking agency or other governmental agency having jurisdiction over the Lender is required with respect to the Lender entering into or performing the Construction Loan Agreement and purchasing the Note. (5 ) The consummation of the transaction contemplated by the Loan Agreement, the Note, the Mortgage, the Construction Loan Agreement and the Pledge Agreement and the fulfillment of the terms thereof will not conflict with any present order, rule or regulation applicable to the Lender of any court or of any federal or state banking agency or other governmental agency having jurisdiction over the Lender. (6) The Lender represents in order to induce the City to enter into this transaction: (a) In entering into this transaction it has relied solely upon credit investigations and due diligence reviews conducted by itself and/or its own advisors. • (b) It has been offered copies of or full access to all Note documents and all records, reports, financial statements and other information concerning the Borrower and pertinent to the source of payment for the Note to which a reasonable investor would attach significance in making investment decisions. (c) It is sufficiently knowledgeable and experienced in financial and business matters, including the purchase and ownership of municipal and other tax exempt obligations and the business operation of the Borrower, to be able to evaluate the risks and merits of the investment represented by the purchase of the Note and it is aware of the intended use of the proceeds of the Note and the risks involved therein. (d) It understands that the Note is not secured by any pledge of any moneys received or to be received fran taxation by the State of • Minnesota or any political subdivision or taxing district thereof including, without implied limitation, the City, and that the Vote will never represent or constitute a general obligation, debt or bonded indebtedness of the City, the State of Minnesota or any political subdivision thereof and that no right will exist to have taxes levied by the City, the State of Minnesota or any political subdivision thereof for the payment of principal and interest on the Note. (e) It has been informed that the Note (i) is not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any State, or under federal securities laws or regulations, (ii) will not be listed on any stock or other securities exchange, (iii) will carry no rating from any rating service and (iv) is not likely to be readily marketable. (f) It will not offer, sell or otherwise dispose of all or any part of or interest in the Note, except (i) in full good faith compliance with all securities registration, broker - antifraud and other provisions of the applicable State and Federal laws and (ii) with full and • accurate disclosure of all material facts to the prospective purchaser(s) or transferee(s) . IN WITNESS WHEREOF, I hereunto set my hand this day of December, 1985. CITIZENS BANK & TRUST CO. By Its • 502I 46 INDEX CITY OF HUTCHINSON, MINNESOTA $500,000 COMMERCIAL DEVELOPMENT REVENUE (VOTE OF 1985 (ERICKSON OIL PRODUCTS, INC. PROJECT) PART I BASIC AUTHORIZATIONS 1. Preliminary Resolution 2. Application to and Approval of the Department of Energy and Economic Development 3. Final Note Resolution PART II BAS 4. 5. 6. 7. 8. 9. 10. • • IC AGREEMENTS Form of Note Loan Agreement Pledge Agreement Mortgage, Security Agreement and Fixture Financing Statement Construction Loan Agreement Form of Note Financing Statements a. City as Debtor b. Borrower as Debtor PART III CLOSING CERTIFICATES 11. County Auditor's Certificate as to Registration 12. Certification of the City 13. Certification of the Borrower 14. Certification of the Lender 15. Project Closing Statement 16. I.R.S. Informational Statement (Form 8038) PART IV OPINIONS 17. Opinion of Counsel for the City 18. Opinion of Counsel for the Borrower 19. Opinion of Bond Counsel PART V MISCELLANEOUS DOCUMENTS 20. Title Insurance Policy 21. Survey 22. UCC Searches 5021 [Opinion of Bond Counsel] City of Hutchinson 37 Washington Ave. W. Hutchinson, MN 55350 Citizens Bank & Trust Co. 102 Main St. So. Hutchinson, MN 55350 Erickson Oil Products, Inc. 1231 Industrial Road Hudson, WI 54016 Re: City of Hutchinson $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) Gentlemen: We have acted as Bond Counsel in connection with the . issuance and sale by the City of Hutchinson, Minnesota (the "City ") , of its Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) (the "Note "), dated of even date herewith, in the maximum principal amount of $500,000. Both principal and interest are payable at the principal office of the registered holder, or at such other address as the holder may designate in writing. In this connection, we have examined various documents we considered necessary as the basis for this opinion, including the following documents dated on or about the date of the Note, unless otherwise specified: a Loan Agreement (the "Loan Agreement "), between the City and Erickson Oil Products, Inc., a Wisconsin corporation (the "Borrower ") a Mortgage, Security Agreement and Fixture Financing Statement between the Borrower, as mortgagor, and Citizens Bank & Trust Co., in Hutchinson, Minnesota (the "Lender"), as mortgagee, a Pledge Agreement from the City to the Lender (the "Pledge Agreement ") , a Construction Loan Agreement between the Borrower, the Lender and the City (the "Construction Loan Agreement "), a preliminary resolution adopted by the City on November 12, 1985, and a final Note Resolution adopted by the CJ City on December 17, 1985, authorizing the issuance of the Note (the "Resolution ") and certain proceedings of the City taken in connection with the authorization of these and other documents and the executed Note. Based upon such examinations, and assuming the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such documents, and the accuracy of the statements of fact contained in such documents, and based upon present Minnesota and federal laws, regulations, rulings and decisions, it is our opinion that: (1) the City is duly organized and is validly existing as a political subdivision of the State of Minnesota under applicable laws of the State of Minnesota; (2) the Loan Agreement, the Pledge Agreement and the Construction Loan Agreement have been duly and validly executed and delivered by the City, and, assuming due authorization and execution by the other parties thereto, are valid instruments legally binding on the parties thereto and legally enforceable in accordance with their terms except to the extent limited by general principles of equity and by bankruptcy, insolvency, reorganization, moratorium or other laws of teneral application relating to or affecting enforcement of creditors' rights and subject to the valid exercise of the sovereign police powers of the State of Minnesota and of the constitutional powers of the United States of America and except to the extent that enforceability of the indemnification provisions in the Loan Agreement are limited by state and federal securities laws; (3) the proceedings show lawful authority for issuance of the Note under the Resolution and under the provisions of the Constitution and laws of the State of Minnesota now in force, including the Municipal Industrial Development Act, Minnesota Statutes, Chapter 474, as amended; • 40 (4) the Note has been duly and validly executed and delivered by the City and is a valid and binding special obligation of the City payable in accordance with its terms except to the extent qualified by general principles of equity and by bankruptcy, insolvency, reorganization, moratorium or other laws of general application relating to or affecting enforcement of creditors' rights and subject to the valid exercise of the sovereign police powers of the State of Minnesota and of the constitutional powers of the United States of America; (5) the Note is not a general obligation or indebtedness of the City within the meaning of any constitutional or statutory limitation, and does not constitute or give rise to a pecuniary liability of the City or charge against its general credit or taxing powers, but is payable solely from revenues pledged and assigned to the payment thereof, pursuant to the Loan Agreement; and (6) as of the date of issuance, the Note is not an arbitrage bond, within the meaning of Section 103(c) of the Internal Revenue Code of 1954, as amended (the "Code "), is exempt from all taxation as property by the State of Minnesota, its subdivisions and municipalities, bears interest not includible in gross income of the owner for the purpose of computing any tax imposed by the provisions of Minnesota Statutes, Chapter 290, other than Minnesota corporate franchise taxes and bank excise taxes measured by income, and bears interest exempt from Federal income taxation under Section 103(a)(1) of the Code pursuant to the "small issue " exemption provided in Section 103(b)(6)(A) of the Code, provided that no opinion is expressed as to the exemption from Federal incane taxation or fran any tax imposed by the provisions of Minnesota Statutes, Chapter 290, for any period during which the owner of the interest on the Note is a "substantial user" of the facility financed by the Note or a "related person" as those terms are used in Section 103(b) of the Code. 0 In rendering the foregoing opinion we have relied upon the opinions of even date herewith of counsel for the Borrower, and James Schaefer, Esq., counsel for the City as to those matters with respect to which their opinions are rendered. Very truly yours, Professional Association 17j 40 502I [Opinion of Borrower's Counsel] [Dated as of Closings City of Hutchinson 37 Washington Ave. W. Hutchinson, MN 55350 Citizens Bank & Trust Co. 102 Main St. So. Hutchinson, MN 55350 Briggs and Morgan, P .A. 2200 West First National Bank Building St. Paul, MN 55101 Re: City of Hutchinson $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) Gentlemen: We have acted as counsel for Erickson Oil Products, Inc., a Wisconsin corporation (the "Borrower ") in connection with the execution and delivery of the following related documents, all of which are dated of even date herewith, unless otherwise specified: a Loan Agreement between the City of Hutchinson, Minnesota (the "City ") and the Borrower (the "Loan Agreement "), a Mortgage, Security Agreement and Fixture Financing Statement between the Borrower, as mortgagor, and Citizens Bank & Trust Co., in Hutchinson, Minnesota (the "Lender "), as mortgagee (the "Mortgage "), a Pledge Agreement from the City to the Lender (the "Pledge Agreement "), a $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) issued by the City (the "Note "), a Construction Loan Agreement between the City, the Borrower and the Lender (the "Construction Loan Agreement ") and an authorizing resolution of the City adopted on December 17, 1985 (the "Resolution "). • Based upon a reasonable investigation of the facts, including examination of the foregoing documents, as well as the Articles of Incorporation, By -Laws and Minute Books of the Borrower, Certificates of Good Standing for the Borrower for the State of Minnesota and Wisconsin and such other documents as we have deemed necessary as a basis for the opinion hereinafter expressed, we are of the opinion that: 1. The Borrower is a corporation legally organized and validly existing under the laws of the State of Wisconsin, with adequate power to enter into and perform the Loan Agreement, the Mortgage and the Construction Loan Agreement, respectively, and has authority to execute all other instruments and documents required to be executed by the Borrower in connection with the Loan Agreement and Resolution. 2. The Loan Agreement, the Construction Loan Agreement and the Mortgage have been duly and validly authorized, executed and delivered by the Borrower and assuming due authorization, execution and delivery thereof by the other parties thereto, constitute valid, legal and binding agreements of the Borrower enforceable in accordance with their terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws relating to or affecting creditors' rights generally. 3. To the best of our knowledge, no approval or prior rview is required from any public regulatory body with respect to the Borrower entering into or performing the Loan Agreement, the Construction Loan Agreement and the Mortgage except for such review and approval as has already occurred as of the date of this opinion. 4. To the best of our knowledge, the consummation of the transaction contemplated by the Loan Agreement, the Construction Loan Agree- ment and the Mortgage and the fulfillment of the terms thereof will not conflict with any present order, rule or regulation applicable to the Borrower of any court or any federal or state regulatory body or administrative agency or other governmental agency having jurisdiction over the Borrower. 5. The entering into and performance of the Loan Agreement, the Construction Loan Agreement and the Mortgage (subject to any written waivers or consents secured by the Borrower in connection therewith and filed with and approved by the Lender) have not and will not result in any breach of, or constitute a default under the Articles of Incorporation of the Borrower, or any outstanding indenture, mortgage, deed of trust, bank loan or credit agreement or other instruments to which the Borrower is a party or by which it is bound or result in the creation of a lien or encumbrance upon its property other than by such documents. 6. There is no litigation pending or, to the best of our knowledge, threatened in any way questioning the execution or validity of any of the instruments and documents executed by the Borrower in connection with the transaction con- templated by the Loan Agreement and the Resolution, or questioning the validity of the issuance of the Note pursuant to the Resolution; and there are no other legal or governmental proceedings pending or to the best of our knowledge, threatened or contemplated by governmental authorities or others, by which the • Borrower is or may be bound or to which any property of the Borrower is or may be bound or to which any property of the Borrower is or may be subject, which, if determined adversely to the Borrower would individually or in the aggregate have a material adverse effect on the financial position or results of operations of the Borrower. 7. To the best of our knowledge, the representations made by the Borrower in the Loan Agreement and in the Certificate of the Borrower dated as of the date of this opinion are true and correct in all respects. We hereby consent to the use of our name and reference to our firm and our opinion in the opinion of Briggs and Morgan, Professional Association, of even date herewith. Very truly yours, • 502I 4) [Opinion of City Attorney] [Dated as of Closing] Citizens Bank & Trust Co. 102 Main St. So. Hutchinson, MN 55350 Erickson Oil Products, Inc. 1231 Industrial Road Hudson, WI 54016 Briggs and Morgan, P.A. 2200 West First National Bank Building St. Paul, MN 55101 Re: City of Hutchinson - $500,000 Commercial Development Revenue Note of 19885 (Erickson Oil Products, Inc. Project) • Gentlemen: We have acted as City Attorney for the City of Hutchinson, Minnesota (the "City ") in connection with the execution and delivery, of the following documents, all of which are dated of even date herewith, unless otherwise indicated: a Loan Agreement between the City and Erickson Oil Products, Inc., a Wisconsin corporation (the "Borrower ") (the "Loan Agreement), a Pledge Agreement from the City to Citizens Bank & Trust Co. in Hutchinson, Minnesota (the "Lender ") (the "Pledge Agreement "), a $500,000 Commerical Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) issued by the City (the "Note "), a Construction Loan Agreement between the City, the Lender and the Borrower (the "Construction Loan Agreement ") , a resolution adopted by the City on November 12, 1985, (the "Preliminary Resolution "), and a Resolution adopted by the City on November 12, 1985, providing for the issuance and sale of the Note (the "Authorizing Resolution "), and the instruments and documents required pursuant to the terms of the Loan Agreement and Authorizing Resolution. • Based upon a reasonable investigation of the facts including examination of the foregoing documents as well as such other documents as we have deemed necessary as a basis for the opinion hereafter expressed, we are of the opinion that: (1) The City is a municipal corporation and political subdivision of the State of Minnesota, duly organized and existing under the Constitution and laws of the State of Minnesota; (2 ) All proceedings and actions taken by the City by and through its governing body and its Mayor and City Administrator in connection with the issuance and sale of the Note and the execution and delivery of the Loan Agreement, the Pledge Agreement, the Construction Loan Agreement and other applicable documents set forth in the transcript prepared in connection with the issuance of the Note, were duly conducted and adopted in accordance with applicable procedural requirements imposed by law and as represented in said documents, and the officials of the City named in such documents executed the same as indicated therein and were duly elected or appointed and qualified to serve as such officers on the date of such execution; (3) The adoption of the Preliminary • Resolution and Authorizing Resolution, and the execution and delivery of the Note, the Loan Agreement, the Pledge Agreement, the Construction Loan Agreement and any other agreements contemplated thereby will not violate any existing law relating to any conflict of interest or other matters pertaining to the interest or qualifications of the members of the City's governing body or its officers. We hereby consent to the use of our name and reference to our firm and our opinion in the opinion of Briggs and Morgan, Professional Association, of even date herewith. Very truly yours, City Attorney, City of Hutchinson n LJ 509N Draft 12/9/85 • LOAN AGREEMENT BETWEEN CITY OF HUTCHINSON, MINNESOTA, AND ERICKSON OIL PRODUCTS, INC. i Dated as of December, 1985 V� • The interest of the City of Hutchinson, Minnesota, in this Loan Agreement has been pledged and assigned to Citizens Bank & Trust Co., pursuant to a Pledge Agreement of even date herewith. This instrument was drafted by: BRIGGS AND MORGAN Professional Association 2200 First National Bank Building Saint Paul, Minnesota 55101 r � U TABLE OF CONTENTS (Not a Part of the Loan Agreement) Page ARTICLE 1 - DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION ........................ 1 Section 1.01. Definitions ...................... 1 Section 1.02. Exhibit .......................... 4 Section 1.03. Rules of Interpretation.......... 4 ARTICLE 2 - REPRESENTATIONS .......................... 6 Section 2.01. Representations by the City...... 6 Section 2.02. Representations by the Borrower.. 7 ARTICLE 3 - THE LOAN ................................. 13 Section 3.01. Amount and Source of Loan........ 13 Section 3.02. Repayment ........................ 13 Section 3.03. Borrower's Obligations Uncondi- tional........................... 13 Section 3.04. Borrower's Remedies .............. 13 ARTICLE 4 - BORROWER'S COVENANTS ..................... 14 Section 4.01. Financial Statements ............. 14 Section 4.02. Indemnity ........................ 14 Section 4.03. Continuing Existence and Qualification .................... 15 Section 4.04. Reports to Governmental Agencies. 15 Section 4.05. Security for the Loan............ 15 Section 4.06. Construction of Improvements..... 16 Section 4.07. Preservation of Tax Exemption.... 16 Section 4.08. Lease or Sale of Project......... 19 Section 4.09. Project Operation and Maintenance Expense.......................... 19 ARTICLE 5 - PREPAYMENT OPTIONS ....................... 20 Section 5.01. Prepayment ...................... 20 Section 5.02. Partial Payment ................. 20 ARTICLE 6 - EVENTS OF DEFAULT AND REMEDIES........... 21 Section 6.01. Events of Default ................ 21 Section 6.02. City's Remedies .................. 22 Section 6.03. Disposition of Funds ............. 23 • • Page Section 6.04. Manner of Exercise ............... 23 Section 6.05. Attorneys' Fees and Expenses..... 23 Section 6.06. Effect of Waiver ................. 23 ARTICLE 7 - GENERAL ... ............................... 24 Section 7.01. Notices .......................... 24 Section 7.02. Binding Effect ................... 24 Section 7.03. Severability ..................... 24 Section 7.04. Amendments, Changes and Modifications .................... 24 Section 7.05. Execution Counterparts........... 25 Section 7.06. Limitation of City's Liability... 25 Section 7.07. City's Attorneys Fees and Costs.. 25 Section 7.08. Release .......................... 26 Section 7.09. Assignment by City and Survivorship of Obligations...... 26 Section 7.10. Required Approvals ............... 27 Section 7.11. Termination Upon Retirement ofNote .......................... 27 SIGNATURES ............ ............................... 27/28 EXHIBIT • THIS LOAN AGREEMENT dated as of December , 1985, between the City of Hutchinson, a political subdivision in the State of Minnesota, called herein the City, and Erickson Oil Products, Inc., a Wisconsin corporation, called herein the Borrower, WITNESSETH that the City and the Borrower each in consideration of the representations, covenants and agreements of the other as set forth herein, mutually represent, covenant and agree as follows: ARTICLE 1 DEFINITIONS, EXHIBITS AND RULES OF INTERPRETATION Section 1.01. Definitions. In this Agreement the following terms have the following respective meanings unless the context hereof clearly requires otherwise: Act: the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Chapter 474, as amended; Agreement: this Agreement between the City and the Borrower as the same may from time to time be amended or supplemented as herein provided; Bond Counsel: the firm of Briggs and Morgan, Professional Association, of Saint Paul and Minneapolis, Minnesota, and any opinion of Bond Counsel shall be a written opinion signed by such Bond Counsel; Borrower: Erickson Oil Products, Inc., a Wisconsin corporation, its successors and assigns, and any surviving, resulting or transferee business entity which may assume its obligations in accordance with the provisions of this Agreement; City: the City of Hutchinson, Minnesota, its successors and assigns; Code: the Internal Revenue Code of 1954, as amended and the temporary, final or proposed regulations promulgated thereunder; • • Construction Costs: all direct costs authorized by the Act and paid or incurred by the Borrower to construct and complete the Improvements, including, but not limited to, site preparation costs, architectural fees, engineering fees, contractor's fees, and all costs of labor, material and services; Construction Loan Agreement: the agreement, of even date herewith, among the City, the Borrower and the Lender, relating to construction of the Improvements and payment of the Project Costs, Counsel: an attorney designated by or acceptable to the Lender, duly admitted to practice law before the highest court of any state; an attorney for the Borrower or the City may be eligible for appointment as Counsel; Date of Taxability: this term shall have the meaning ascribed to it in Section 4.07(2) hereof; Determination of Taxability: this term shall have the meaning ascribed to it in Section 4.07(2) hereof; Equipment: any and all machinery, equipment, furniture and other tangible personal property purchased or to be purchased by the Borrower with the proceeds of the Loan; • Event of Default: any of the events described in Section 6.01 hereof; IDBs: "industrial development bonds," within the meaning of Section 103(b) of the Code; Improvements: the structures and other improvements, including any Equipment, to be constructed or installed by the Borrower on the Land in accordance with the Plans and Specifications; Land: the real property and any other easements and rights described in Exhibit A; Lender: Citizens Bank & Trust Co., in Hutchinson, its successors and assigns; 2 Loan: the loan of Note proceeds from the City to the Borrower described in Section 3.01 of this Agreement; Loan and Carrying Charges: all loan and carrying charges paid or incurred by the Borrower in the acquisition and construction of the Improvements and issuances of the Note and as authorized by the Act, including, but not limited to, commitment fees to the Lender, brokerage or finder's fees, construction period interest charges, service fees, accounting fees, attorney fees (including attorneys for the City, Lender, and Bond Counsel), administrative fees, fiscal consultant's fees, contractor's fees, developer's fees, inspection fees, title insurance fees and charges, recording fees, registration taxes, real estate taxes, special assessments, insurance premiums and utility charges; Mortgage: the Mortgage, Security Agreement and Fixture Financing Statement of even date herewith, between the Borrower, as mortgagor, and the Lender, as mortgagee; New Ulm Notes the $372,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) to be issued by the City of New Ulm; Note: the $500,000 Commercial Development Revenue Note of 1985 Erickson Oil Products, Inc. Project) to be issued by the City pursuant to the Resolution; Plans and Specifications: the plans and specifications for the construction and installation of the Improvements, together with such modifications thereof and additions thereto as are reasonably determined by the Borrower to be necessary or desirable for the completion of the Improvements and are approved by the Lender; Pledge Agreement: the pledge agreement of even date herewith between the City and the Lender pledging and assigning the City's interest in the Loan Agreement to the Lender to the extent provided therein; Principal Balance: so much of the principal sum on the Note as has been advanced from time to time and remains unpaid; Project: the Land and the Improvements as they may at any time exist; 3 1] • • Project Costs: the total of all Construction Costs and Loan and Carrying Charges; Resolution: the resolution of the City, adopted December 17, 1985, authorizing the issuance of the Note; Test - Period Beneficiary: except as provided in regulations, any person who was an owner or a principal user of the Project at any time during the three (3) year period beginning on the later of (i) the date on which the Projects placed in service, or (ii) the date of the issuance of the Note, treating all persons who are related to each other within the meaning of Section 103(b)(6)(C) of the Code as one person, all within the meaning of Sections 103(b)(15)(D) and (E) of the Code; and Working Capital Expense: any Project Costs which the Internal Revenue Service treats as "working capital" under Section 103(b) of the Internal Revenue Code. Section 1.02. Exhibit. Attached hereto as Exhibit A and incorporated herein by reference is a legal description of the Land. Section 1.03. Rules of Interpretation. (1) This Agreement shall be interpreted in accordance • with and governed by the laws of the State of Minnesota. (2) The words "herein" and "hereof" and words of similar import, without reference to any particular section or subdivi- sion, refer to this Agreement as a whole rather than to any particular section or subdivision hereof. • (3) References herein to any particular section or sub- division hereof are to the section or subdivision of this in- strument as originally executed. (4) Where the Borrower is permitted or required to do or accomplish any act or thing hereunder, the Borrower may cause the same to be done or accomplished with the same force and effect as if done or accomplished by the Borrower. (5) The Table of Contents and titles of articles and sections herein are for convenience only and are not a part of this Agreement. M (6) Unless the context hereof clearly requires otherwise, the singular shall include the plural and vice versa and the masculine shall include the feminine and vice versa. (7) Articles, sections, subsections and clauses mentioned by number only are those so numbered which are contained in this Agreement. 0 • 5 ARTICLE 2 REPRESENTATIONS • Section 2.01. Representations by the City. The City makes the following representations as the basis for its covenants herein: (1) In authorizing the Project the City's purpose is, and in its judgment the effect thereof will be, to promote the public welfare by: the attraction, encouragement and development of economically sound industry and commerce so as to prevent, so far as possible, the emergence of blighted and marginal lands and areas of chronic_ unemployment; the development of revenue - producing enterprises to use the available resources of the community, in order to retain the benefit of the community's existing investment in educational and public service facilities; the halting of the movement of talented, educated personnel of mature age to other areas thus preserving the economic and human resources needed as a base for providing governmental services and facilities; the provision of accessible employment opportunities for residents in the area; the expansion of an adequate tax base to finance the increase in the amount and cost of governmental services, including educational services for the school district serving the community in which the Project is situated. • (2) The Project has been approved by the Energy and Economic Development Authority of the State of Minnesota as tending to further the purposes and policies of the Act. (3) The issuance and sale of the Note, the execution and delivery of this Agreement, the Pledge Agreement and the Construction Loan Agreement, and the performance of all covenants and agreements of the City contained in this Agree- ment, the Note, the Pledge Agreement and the Construction Loan Agreement, and of all other acts and things required under the Constitution and laws of the State of Minnesota to make this Agreement, the Pledge Agreement and the Construction Loan Agreement and Note valid and binding obligations of the City in accordance with their terms, are authorized by the Act and have been duly authorized by resolutions of the governing body of the City adopted at meetings thereof duly called and held on November 12, 1985 and December 17, 1985, by the affirmative vote of not less than a majority of its members; R (4) Pursuant to the Resolution, the City has authorized and directed the Lender to disburse the proceeds of the Note directly to the Borrower and such other parties as may be entitled to payment for Project Costs, upon receipt of such supporting documentation as the Lender may deem reasonably necessary, including compliance with all conditions set forth in the Construction Loan Agreement; (5) No public official of the City has either a direct or indirect financial interest in this Agreement nor will any public official either directly or indirectly benefit financially from this Agreement within the meaning of Minnesota Statutes, Sections 412.311 and 471.87; (6) The aggregate amount of the Note, when added to (i) the aggregate amount of private activity bonds (as such term is defined in Section 103(n)(7) of the Code) previously issued by the City during calendar year 1985 and (ii) the portion, if any, of such private activity bond limit for calendar year 1985 which the City elected to carry forward to a future year, does not exceed the City's private activity bond limit for the calendar year 1985. Section 2.02. Representations by the Borrower. The Borrower makes the following representations as the basis for its covenants herein: (1) The Borrower is a corporation duly incorporated under . the laws of the State of Wisconsin, is in good standing and duly authorized to conduct its business in the State of Minnesota and all other states where its activities require such authorization, has power to enter into this Agreement, the Construction Loan Agreement and the Mortgage, to use the Project for the purpose set forth in this Agreement and by proper corporate action has authorized the execution and delivery of this Agreement, the Construction Loan Agreement and the Mortgage. (2) The execution and delivery of this Agreement, the Construction Loan Agreement and the Mortgage, the consummation of the transactions contemplated thereby, and the fulfillment of the terms and conditions thereof do not and will not conflict with or result in a breach of any of the terms or 0 7 conditions of the Borrower's articles of incorporation, its bylaws, any restriction or any agreement or instrument to which the Borrower or any of its partners is now a party or by which • it is bound or to which any property of the Borrower or any of its partners is subject, and do not and will not constitute a default under any of the foregoing or a violation of any order, decree, statute, rule or regulation of any court or of any state or federal regulatory body having jurisdiction over the Borrower or its properties, including the Project, and do not and will not result in the creation or imposition of any lien, charge or encumbrance of any nature upon any of the property or assets of the Borrower or any of its partners contrary to the terms of any instrument or agreement to which the Borrower is a party or by which it is bound. (3) The design and plan of the Project comprises real and personal property useful in connection with operation of a revenue - producing enterprise as contemplated by Section 474.02, subdivision la of the Act and the Project does not include any property to be sold or affixed to or consumed in the production of property for sale nor does it include any housing facility to be rented or used as a permanent residence. (4) Subject to the other provisions of this Agreement, it is presently intended and reasonably expected that any Equipment will be permanently located and exclusively used on the Land and that the Borrower will operate the Improvements • throughout the term of this Agreement in the normal conduct of the Borrower's business. • (5) There is public access to the Project; and, as of the date hereof, the use of the Project as designed and proposed to be operated complies, in all material respects, with all presently applicable development, pollution control, water conservation and other laws, regulations, rules and ordinances of the Federal Government and the State of Minnesota and the respective agencies thereof and the political subdivisions in which the Project is located. The Borrower has obtained all necessary and material approvals of and licenses, permits, consents and franchises from federal, state, county, municipal or other governmental authorities having jurisdiction over the Project to acquire, construct, install, and operate the Project and to enter into, execute and perform its obligations under this Agreement and the Mortgage; and no violation of any local, ordinance, laws, regulation or requirement exists with respect to the Land. (6) The proceeds of the Note, together with any other funds to be contributed to the Project by the Borrower or otherwise in accordance with this Agreement, will be sufficient to pay the cost of acquiring and completing the Project in a manner suitable for use as a convenience store /gasoline outlet, and all costs and expenses incidental thereto, and the proceeds of the Note will be used only for the purposes contemplated hereby and allowable as Project Costs under the Act. (7) The Note is to be issued within the exemption pro- vided under Section 103(b)(6)(A) of the Internal Revenue Code with respect to issues of $1,000,000 or less; provided that nothing herein shall prevent the City from qualifying the Note under a different exemption if, and to the extent such exemption is permitted by law "substantially all" of the proceeds of the Note will be used for the acquisition, construction, reconstruction or improvement of land or property of a character subject to the allowance for depreciation within the meaning of Section 103(b)(6) of the Code; (8) Comparable private financing for the Project was not found by the Borrower to be reasonably available, and the Project would not have been undertaken but for the availability of the financing herein authorized. (9) A major inducement to the Borrower to acquire and construct the Project was the source of financing provided under the Act and the assurance the Borrower received from the • City that such financing would be made available to the Borrower; and any Project Costs heretofore incurred by the Borrower for which the Borrower shall hereafter seek reimbursement from Note proceeds, were incurred in anticipation of reimbursement from the proceeds of revenue obligations of the City if such proceeds should become available on terms acceptable to the Borrower; and the Borrower investigated the possibility of such financing prior to incurring such Project Costs; and the Borrower did not commence acquisition or construction of the Project prior to November 12, 1985, the date on which the City gave preliminary approval of the Project and the financing thereof in whole or part through revenue obligations. • 9 (10) The entire Cost of the Project is estimated to be at least equal to the face amount of the Note, but the Borrower acknowledges that the City has made no warranty or represen- tation, either express or implied, that the amount of Note proceeds available to pay such Costs will be sufficient for such purpose or that the Project will be suitable to the Borrower's needs. (11) The Borrower is not in the trade or business of selling properties such as the Project and is acquiring the Project for investment purposes only or otherwise for use by the Borrower in its trade or business, and therefore the Borrower has no intention now or in the foreseeable future to voluntarily sell, surrender or otherwise transfer, in whole or part, its interest in the Project. (12) Neither the Borrower nor any other "principal user" of the Project nor any "related person" to the Borrower or to such other "principal user" is a "principal user" of "facilities ", not constituting any part of the Project, located in the municipal boundaries of the City, or located in an adjacent municipality and "integrated" with the Project, and financed in whole or in part by an issue of IDBs, all within the meaning of Section 103(b) of the Code. (13) In addition to the other obligations have been 103(b) of the Code which are . time as the Note pursuant to substantially the same rate are payable in whole or part with the Note any common or debt service thereon. Note and the New Ulm Note, no or will be issued under Section sold at substantially the same a common plan of marketing and at of interest as the Note and which by the Borrower or otherwise have pooled security for the payment of (14) There are no actions, suits, or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any property of the Borrower in any court or before any federal, state, municipal or other governmental agency, which, if decided adversely to the Borrower would have a material adverse effect upon the Borrower or upon the business or properties of the Borrower; and the Borrower is not in default with respect to any order of any court or governmental agency. 10 (15) The Borrower is not in default in the payment of the principal of or interest on any indebtedness for borrowed money nor in default under any instrument or agreement under and subject to which any indebtedness for borrowed money has been issued. (16) The Borrower has filed all federal and state income tax returns which, to the knowledge of the officers of the Borrower, are required to be filed and has paid all taxes shown on said returns and all assessments and governmental charges received by the Borrower to the extent that they have become due. (17) The Borrower has not paid, nor is it aware of the payment of, any bribe, gift, gratuity, or direct or indirect contribution to any political campaign, to or for any public official of the City or State, in consideration for allocating to the Note the City's or state's private activity bond limit, within the meaning of Section 103(n) of the Code; no public official of the City has either a direct or indirect financial interest in this Agreement nor will any public official either directly or indirectly benefit financially from this Agreement within the meaning of Minnesota Statutes, Section 412.311 and 471.87. (18) The Borrower has approved the terms and conditions of the Note. (29) No portion of the Note proceeds will be used to • acquire (a) property to be sold or to be affixed to or consumed in the production of property for sale, (b) property to be leased to the government of the United States of America or to any department, agency or instrumentality of the government of the United States of America, (c) any housing facility to be rented or used as a permanent residence, within the meaning of Section 474.01, Subdivision 1(d) of the Act, or or 103(b)(4)(A) of the Code or (d) any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard and ice - skating), racquet sports facility (including any handball or racquetball court), hot tub facility, suntan facility or racetrack, and in no event will more than 25% of the proceeds of the Note, including interest thereon, be used to provide a facility the primary purpose of which is either retail food and beverage services, automobile sales or service, or the provision of recreation or entertainment, all within the meaning of Section 103(b)(6)(0) of the Internal Revenue Code. • 11 • (20) The maturity of the Note does not exceed 120% of the average reasonably expected economic life of the Project within the meaning of Section 103(b)(14) of the Internal Revenue Code. 12 ARTICLE 3 THE LOAN Section 3.01. Amount and Source of Loan. The City has authorized the issuance of the Note in the principal amount of $500,000 to provide funds to the Borrower for its use in the acquisition and construction of the Project. The City agrees to lend the Borrower, upon the terms and conditions set forth herein, the proceeds received from the Note by causing such sums to be disbursed in accordance with the Resolution and the Construction Loan .Agreement and upon receipt of the supporting documentation required therein and such other supporting documentation as the Lender may deem reasonably necessary. Section 3.02. Repayment. Subject to the prepayment provisions set forth in Sections 5.01 and 5.02 and in the Note, the Borrower agrees to repay the Loan by making all payments of principal interest and any premium, penalty or charge that are required to be made by the City under the Note at the times and in the amounts provided therein. All payments shall be made directly to the Lender at its principal office for the account of the City. Section 3.03. Borrower's Obligations Unconditional. All payments required of the Borrower hereunder shall be paid without notice or demand and without setoff, counterclaim, abatement, deduction or defense. The Borrower will not suspend or discontinue any payments, and will perform and observe all of its other agreements in this Agreement, and, except as expressly permitted herein, will not terminate this Agreement for any cause, including but not limited to any acts or cir- cumstances that may constitute failure of consideration, de- struction or damage to the Project, eviction by paramount title, commercial frustration of purpose, bankruptcy or insolvency of the City or the Lender, change in the tax or other laws or administrative rulings or actions of the United States of America or of the State of Minnesota or any political subdivision thereof, or failure of the City to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement. contained City from Agreement. Section 3.04. Borrower's Remedies. Nothing in this Article shall be construed to release the the performance of any of its agreements in this 13 • 0 ARTICLE 4 BORROWER'S COVENANTS . Section 4.01. Financial Statements. The Borrower will cause to be prepared annual financial statements of the Borrower (including a balance sheet, statement of income and statement of changes in financial position) in accordance with generally accepted accounting principles, and, within 120 days of the close of each fiscal year, will furnish a copy to the Lender. Section 4.02. Indemnity. The Borrower will, to the extent permitted by law, pay, and will protect, indemnify and save the City, its officers, agents and employees harmless from and against all liabilities, losses, damages, costs, expenses (including attorneys' fees and expenses), causes of action, suits, claims, demands and judgments of any nature arising from: (1) any injury to or death of any person or damage to property in or upon the Project or growing out of or connected with the use, non -use, condition or occupancy of the Project or a part thereof; (2) violation of any agreement or condition of this Agreement, except by the City; • (3) violation of any contract, agreement or restriction by the Borrower relating to the Project; • (4) violation of any law, ordinance or regulation affecting the Project or a part thereof or the ownership, occupancy or use thereof, or arising out of this Agreement, the Note or the transactions contemplated thereby, including any requirements imposed on the Lender as a financial institution or any disclosure or registration requirements imposed by any federal or state securities law; and (5) any statement or information relating to the expendi- ture of the proceeds of the Note contained in any certificate or similar document furnished by the Borrower to the City which, at the time made, is misleading, untrue or incorrect in any material respect. 14 Section 4.03. Continuing Existence and Qualifi- cation. The Borrower is and throughout the term of this Agreement will remain duly qualified to do business as a corporation duly incorporated under the laws of the State of Wisconsin, will maintain its corporate existence, will not dissolve or otherwise dispose of all or substantially all of its assets, and will not consolidate with or merge into another business entity or permit any other business entity to consoli- date with or merge into it unless the consent of the Lender is first secured. At least thirty days before any merger, consoli- dation or transfer of assets becomes effective, the Borrower shall (to the extent permitted by law) give the City and the Lender written notice of the proposed transaction. Every surviving, resulting or transferee business entity shall be bound by all of the covenants and agreements of the Borrower herein with respect to any further consolidation, merger, sale or transfer and, if other than the Borrower, shall execute an appropriate instrument assuming all obligations of the Borrower under this Agreement, the Construction Loan Agreement and the Mortgage and shall deliver that instrument to the Lender. Section 4.04. Reports to Governmental Agencies. The Borrower will furnish to agencies of the State of Minnesota, including but not limited to the Commissioner of Energy and Economic Development, such periodic reports or statements as are required under the Act, including the employment information required under Section 474.01, Subdivision 11 of . the Act, or as they may otherwise reasonably require of the City or the Borrower throughout the term of this Agreement in connection with the transaction contemplated herein. Copies of such reports will be provided to the City and the Lender. Section 4.05. Securit� foor the Loan. As additional security for the Lender, and to induce the City to issue and deliver the Note, the Borrower agrees to execute and deliver the Construction Loan Agreement and the Mortgage to the Lender and agrees to meet all its obligations under the Mortgage which document shall remain in effect until all payments required hereunder have been made; and the Borrower will cause to be recorded and filed the Mortgage, the Pledge Agreement and such other documents requested by Counsel, in such places and in such manner as Counsel deems necessary or desirable to perfect or protect the security interest of the Lender in and to the Project and other collateral referred to in said documents. • 15 Section 4.06. Construction of Improvements. The Borrower will cause the Improvements to be constructed with due diligence in accordance with the Plans and Specifications and the provisions of the Construction Loan Agreement. Section 4.07. Preservation of Tax Exemption. The Borrower covenants and agrees that: (1) In order to assure that the interest on the Note shall at all times be free from federal income taxation, the Borrower agrees that it will: (A) fulfill all conditions specified in Section 103(b)(6)(A) of the Code, and applicable federal income tax regulations, to qualify the Note as a $1,000,000 "small issue" thereunder; (B) not (or permit to be used) the Project or use or invest (or permit to be used or invested) the proceeds of the Note or any other sums treated as "bond proceeds" under Section 103(c) of the Code and applicable Federal income tax regulations in such a manner as to cause the Note to be classified an "arbitrage bond" or a "federally guaranteed obligation" under Section 103(c) or 103(h), respectively, of the Code; (C) not cause any Working Capital Expenses to exceed 10% of the "net proceeds" of the Note in violation of the • requirement in Section 103(b) of the Code and the applicable Federal income tax regulations that substantially all of the proceeds of the Note be used for the acquisition or improvement of land or depreciable property; (D) Neither the Borrower nor any other person who is or will be entitled to occupy more than ten percent (10 %) of the Project measured by value or who is or will be a "principal user" of the Project as that term is used in Section 103(b) of the Code, including Section 103(b)(6)(I) and (L) of the Code, has either (a) both (i) guaranteed, arranged, participated in, or assisted with the issuance or paid any portion of the cost of issuance of any obligations the proceeds of which are to be used to finance or refinance any facilities (other than the Project) financed or to be financed in whole or part from the proceeds of any IDBs within the meaning of Section 103(b)(2) 16 of the Code issued or sold within three (3) months before or after issuance of, and commonly secured in whole or in part with, the Note (the "Note Financed Facilities "), and (ii) provided any property or any franchise, trademark or tradename within the meaning of Section 1253 of the Code, which is to be used in connection with such Note Financed Facilities, or (b) acquired a proprietary interest in or otherwise become entitled to occupy more than ten percent (10 %) (measured by value), or in any other way become a principal user, of such Note Financed Facilities; nor shall the Borrower, nor any other such "principal user" of the Project, or any "related person" thereto, permit such conditions to occur in the future without first filing with the Lender an opinion of Bond Counsel that such conditions will not impair the tax exempt status of the Note. Accordingly, neither the Borrower nor any other such "principal user" of the Project nor any "related person" to the Borrower or such other "principal user" the Project is or will without such prior Bond Counsel opinion, be a "principal user" of any Note Financed Facilities, other than the Project, within the meaning of Section 103(b)(6)(K) and (L) of the Code. (E) The Borrower on behalf of the City shall pay to the United States, as a rebate, an amount equal to the sum of (i) the excess of (I) the aggregate amount earned on all nonpurpose obligatio s : bh '- r•e } *tri h>>tahl P to an -e�rrother than investments attributable to an excess described in this clause), over (II) the amount which would have been earned if all nonpurpose obligations were invested at • a rate equal to the yield on the Note, plus (ii) any income attributable to the excess described in clause (i), at the times and in the amounts required by Section 103(c)(6)(E) of the Code, all within the meaning of Section 103(c)(6) of the Code. The Borrower or Lender shall maintain records of the interest rate borne by the Note and the investment of any "gross proceeds" in adequate detail to enable the Borrower to calculate the amount of any rebate required to be made to the United States. (F) not otherwise use Note proceeds, or take or fail to take any action, the effect of which would be to impair the exemption of interest on the Note from federal income taxation. i 17 (2) For the purpose of this Section, a "Determination of Taxability" shall mean the issuance of a statutory notice of deficiency by the Internal Revenue Service, or a ruling of the National Office or any District Office of the Internal Revenue Service, or a final decision of a court of competent jurisdiction, or a change in any applicable federal statute, which holds or provides in effect that the interest payable on the Note is includible in the gross income of the Lender or any other holder or prior holder of the Note for federal income tax purposes, except on account of the Note being held by a "substantial user" of the Project or "related person" thereto within the meaning of Section 103(b) of the Internal Revenue Code, whether or not the period, if any, for contest or appeal of such action, ruling or decision by the Borrower or Lender or any other interested party has expired without any such contest or appeal having been properly instituted by the Lender, the Borrower or any other interested party. The expenses of any such contest shall be paid by the party initiating the contest, and neither the Lender nor the Borrower shall be required to contest or appeal any Determination of Taxability. The "Date of Taxability" shall mean that point in time, as specified in the determination, ruling, order, or decision, that the interest payable on the Note becomes includible in the gross income of the Lender or any other holder or prior holder of the Note, as the case may be, for federal income tax purposes. (3) A "Notice of Taxability" shall mean receipt by the City, the Borrower, the Lender or any other holder of the Note • of notice of the actual issuance of a statutory notice of deficiency or the actual or proposed issuance of a ruling of the National Office or any District Office of the Internal Revenue Service (if the transaction contemplated in the ruling request is actually consummated), or of the actual or proposed commencement of a court proceeding or other action, or of the final enactment of a change in any applicable federal statute, the effect of which notice of deficiency, ruling, proceeding, action or statutory change is or would be a Determination of Taxability. As soon as practicable after receiving, a Notice of Taxability, but in any event before the right reeving a Notice, the Borrower, the Lender, or any other holder or prior holder of the Note, excluding only such person itself, in writing of the receipt of such Notice of Taxability, but neither the City nor the Lender will be liable to the Borrower for damages or othewise in the event of failure to give such notice. • In (4) The person receiving such Notice of Taxability shall, to the extent practicable, permit the Borrower to contest, litigate or appeal the same, or to participate fully in such person's contest, litigation or appeal of the same, at its sole expense. In the event any such contest, litigation or appeal is undertaken, the increased interest provided in the Note shall, nevertheless, be payable to the holder of the Note and shall be held by such holder in escrow pending final disposition of such contest, litigation, or appeal, provided that the Borrower shall indemnify and hold harmless the holder and each prior holder from any and all penalties, interest and other liabilities which they may incur on account of such contest, litigation or appeal. Section 4.08. Lease or Sale of Project. The Borrower shall not lease, sell, convey or otherwise transfer the Project in whole or part, without first securing the written consent of the Lender; provided that in no event shall such lease, transfer, assignment or sale be permitted if the effect thereof would be to cause the Note to be deemed issued in violation of the requirement under Section 103(b)(6) of the Internal Revenue Code, and the income tax regulations promulgated thereunder that substantially all of the net proceeds of the Note be used for the acquisition or improvement of land or depreciable property, or under Section 474.02, Subdivision id, of the Act that no portion of the Project to be financed from Note proceeds be acquired in whole or part for sale, nor shall any such transaction be permitted if the effect • thereof would otherwise be to impair the validity or the tax exempt status of the Note, nor shall any such transaction release the Borrower of any of its obligations under this Agreement, unless the assignee- transferee is a surviving, resulting or transferee entity as permitted under Section 4.03 hereof. The Borrower shall promptly notify the City of any such sale, transfer, assignment or lease. Section 4.09. Project Operation and Maintenance Expenses. The Borrower shall pay all expenses of the operation and maintenance of the Project including, but without limitation, adequate insurance thereon and insurance against all liability for injury to persons or property arising from the operation thereof, and all taxes and special assessments levied upon or with respect to the Project and payable during the term of this Loan Agreement, all in conformance with the provisions of the Mortgage; and the Borrower shall, to the extent practicable, exercise its best efforts to target any employment opportunities created by the Project to qualified individuals who are unemployed or economically disadvantaged as contemplated in Section 474.01, Subsection 11 of the Act. 0 19 • 9 ARTICLE 5 PREPAYMENT OF LOAN Section 5.01. option prepay the Loan, amount of the Principal under the conditions pr, prepaid by the Borrower by the City. Prepayment. The Borrower may at its in whole or part, by prepaying a like Balance of the Note in the manner and Dvided in the Note and the Loan shall be if the Note is required to be prepaid Section 5.02. Partial Prepayment. If the Loan is prepaid hereunder only in part, the Lender shall apply any prepayment first against accrued interest due under the Note, and then against the Principal Balance due under the Note; and the Borrower shall continue to pay in full the monthly payments due under the Note until the entire Principal Balance and accrued interest due on the Note and any other charges or premiums due hereunder or under the Note have been paid. 20 ARTICLE 6 EVENTS OF DEFAULT AND REMEDIES Section 6.01. Events of Default. Any one or more of the following events is an Event of Default under this Agreement: (1) If the Borrower shall fail to make any payments required under this Agreement on or before the date that the payment is due. (2) If the Borrower shall fail to observe and perform any other covenant, condition or agreement on its part under this Agreement for a period of thirty (30) days after written notice, specifying such default and requesting that it be remedied, given to the Borrower by the City or the Lender, unless the Lender shall agree in writing to an extension of such time prior to its expiration, or for such longer period as may be reasonably necessary to remedy such default provided that the Borrower is proceeding with reasonable diligence to remedy the same. (3) If the Borrower shall file a petition in bankruptcy or for reorganization or for an arrangement pursuant to any present or future federal bankruptcy act or under any similar federal or state law, shall consent to the entry of an order for relief pursuant to any present or future federal bankruptcy • act or unde any similar federal or state law, or shall make an assignment for the benefit of its creditors or shall admit in writing its inability to pay its debts generally as they become due, or if a petition or answer proposing the entry of an order for relief of the Borrower under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be filed in any court and such petition or answer shall not be discharged or denied within 90 days after the filing thereof, or a receiver, trustee or liquidator of the Borrower or of all or substantially all of the assets of the Borrower or of the Project shall be appointed in any proceeding brought against the Borrower and shall not be discharged within 90 days after such appintment or if the Borrower shall consent to or acquiesce in such appointment, or if the estate or interest of the Borrower in the Project or a part thereof shall be levied upon or attached in any proceeding and such process shall not be vacated or discharged within 60 days after such levy or attachment. n LJ 21 (4) If the articles of incorporation of the Borrower shall expire or be annulled; or if the Borrower shall be dissolved or liquidated (other than when a new entity assumes the obligations of the Borrower under the conditions permitting such action contained in Section 4.03. (5) If any representation or warranty made by the Borrower herein, or by an officer or representative of the Borrower in any document or certificate furnished the Lender or the City in connection herewith or therewith or pursuant hereto or thereto, shall prove at any time to be, in any material respect, incorrect or misleading as of the date made. (6) If the Borrower shall default or fail to perform any covenant, condition or agreement on its part under the Mortgage, the Construction Loan Agreement, or any other security document securing the Note, and such failure continues beyond the period set forth in such documents during which the Borrower may cure the default. (7) If foreclosure proceedings are commenced by any third party with respect to any mortgage or other lien or security interest on the Project or any other collateral described in the Mortgage. Section 6.02. City's Remedies. Whenever any Event of Default referred to in Section 6.01 hereof shall have happened and be subsisting, any one or more of the following . remedial steps to the extent permitted by law may be taken by the City with the prior written consent of the Lender or by the Lender itself: • (1) The City, upon written direction of the Lender, or the Lender may declare all installments of the Loan (being an amount equal to that necessary to pay in full the Principal Balance plus accrued interest thereon of the Note assuming acceleration of the Note under the terms thereof and to pay all other indebtedness thereunder) to be immediately due and payable, whereupon the same shall become immediately due and payable by the Borrower; and 22 (2) The City, upon written direction of the Lender (except as otherwise provided in Section 7.09 herein), or the Lender (in either case at no expense to the City) may take whatever action at law or in equity may appear necessary or appropriate to collect the amounts then due and thereafter to become due under this Agreement, or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Agreement. Section 6.03. Disposition of Funds. Notwithstanding anything to the contrary contained in this Agreement, any amounts collected pursuant to action taken under Section 6.02 hereof, except for any amounts collected solely for the benefit of the City under any of the provisions set forth in Section 7.09, shall, after deducting all expenses incurred in collecting the same, be applied as a prepayment of the Note in accordance with Section 5.01. Section 6.04. Manner of Exercise. No remedy herein conferred upon or reserved to the City is intended to be exclu- sive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be • deemed expedient. In order to entitle the City or the Lender to exercise any remedy reserved to either of them in this Article, it shall not be necessary to give any notice, other than such notice as may be herein expressly required. Section 6.05. Attorneys' Fees and Expenses. In the event the Borrower should default under any of the provisions of this Agreement and the City or the Lender should employ attorneys or incur other expenses for the collection of amounts due hereunder or the enforcement of performance of any obli- gation or agreement on the part of the Borrower, the Borrower will on demand pay to the City or the Lender the reasonable fee of such attorneys and such other expenses so incurred. Section 6.06. Effect of Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. • 23 9 ARTICLE 7 GENERAL Section 7.01. Notices. All notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when mailed by certified or registered mail, postage prepaid, with proper address as indicated below. The City, the Borrower and the Lender may, by written notice given by each to the others, designate any address or addresses to which notices, certificates or other communications to them shall be sent when required as contemplated by this Agreement. Until otherwise provided by the respective parties, all notices, certificates and communications to each of them shall be addressed as follows: To the City: City of Hutchinson 37 Washington Ave. W. Hutchinson, MN 55350 Attn: City Administrator To the Borrower: Erickson Oil Products, Inc. 1231 Industrial Road Hudson, WI 54016 Attn: To the Lender: Citizens Bank & Trust Co. 102 Main St. So. Hutchinson, MST 55350 Attn: President Section 7.02. Binding Effect. This Agreement shall inure to the benefit of and shall be binding upon the City and the Borrower and their respective successors and assigns. Section 7.03. Severability. In the event any pro- vision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 7.04. Amendments, Changes and Modifications. Except as otherwise provided in this Agreement or in the Resolu- tion, subsequent to the initial issuance of the Note and before the Note is satisfied and discharged in accordance with its terms, this Agreement may not be effectively amended, changed, modified, altered, or terminated without the written consent of the Lender. 24 Section 7.05. Execution Counterparts. This Agree- ment may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.06. Limitation of City's Liability. It is understood and agreed by the Borrower and the Lender that no covenant of the City herein shall give rise to a pecuniary liability of the City or a charge against its general credit, or taxing powers. It is further understood and agreed by the Borrower and the Lender that the City shall incur no pecuniary liability hereunder, and shall not be liable for any expenses related hereto, including administrative expenses and fees and disbursements of the City's attorney, Bond Counsel and fiscal consultant retained in connection therewith, all of which expenses the Borrower agrees to pay. Section 7.07 City's Attorneys Fees and Costs. If, notwithstanding the provisions of Section 7.06 hereof, the City incurs any expense, or suffers any losses, claims or damages, or incurs any liabilities in connection with the transaction contemplated by this Agreement, the Borrower will indemnify and hold harmless the City from the same and will reimburse the City for any legal or other expenses incurred by the City in relation thereto. The Borrower shall also reimburse the City for all other costs and expenses, including without limitation attorneys' fees, paid or incurred by the City in connection with (i) the discussion, negotiation, preparation, approval, . execution and delivery of this Agreement, the Note, the Pledge Agreement, the Construction Loan Agreement and the documents and instruments related hereto or thereto; (ii) any amendments or modifications hereto or to the Note, the Pledge Agreement, the Construction Loan Agreement and any document, instrument or agreement related hereto or thereto, and the discussion, negotiation, preparation, approval, execution and delivery of any and all documents necessary or desirable to effect such amendments or modifications; and (iii) the enforcement by the City during the term hereof or thereafter of any of the rights or remedies of the City hereunder or under the Note, the Pledge Agreement, the Construction Loan Agreement or any document, instrument or agreement related hereto or thereto, including, without limitation, costs and expenses of collection in the Event of Default, whether or not suit is filed with respect thereto. r� U 25 Section 7.08 Release. The Borrower hereby acknowledges and agrees that the City shall not be liable to the Borrower, and hereby releases and discharges the City from is any liability, for any and all losses, costs, expenses (including attorneys' fees), damages, judgments, claims and causes of action, paid, incurred or sustained by the Borrower as a result of or relating to any action, or failure or refusal to act, on the part of the Lender with respect to this Agreement or the documents and transactions related hereto or contemplated hereby, including, without limitation, the exercise by the Lender of any of its rights or remedies pursuant to Article 6, the Note, the Pledge Agreement, the Guaranty, the Mortgage, the Construction Loan Agreement or any collateral security documents. 0 Section 7.09. Assignment by City and Survivorship of Obligations. The City may assign its rights under this Agreement and any related documents to the Lender to secure payment of the principal of and interest and premium, if any, on the Note, but any such assignment shall not operate to limit or otherwise affect the following provisions hereof to the extent that they run to the City from the Borrower to which extent they shall survive any such assignment: Section 2.02 Section 3.03 Section 4.02 Section 4.04 Section 4.07 Section 6.02 Section 6.05 Section 7.06 Section 7.07 Section 7.08 Upon any such assignment, the provisions immediately above Tanning to the City from the Borrower for the City's benefit shall run jointly and severally to the City and the Lender (if appropriate), provided that the City shall have the right to enforce any retained rights without the approval of the Lender but only if the Lender is not enforcing such rights in a manner to protect the City or is otherwise taking action with respect thereto that brings adverse consequences to the City. The obligations of the Borrower running to the the City for the purpose of preserving the tax exempt status of the Note or otherwise for the City's benefit under the foregoing Sections shall survive repayment of the vote and interest thereon. 26 Section 7.10 Required Approvals. Consents and approvals required by this Agreement to be obtained from the Borrower,the City or the Lender shall be in writing and shall not be unreasonably withheld or delayed. Section 7.11 Termination Upon Retirement of Note. At any time when no principal balance on the Note remains outstanding, and arrangements satisfactory to the Lender and the City have been made for the discharge of all other accrued liabilities, if any, under this Loan Agreement, this Loan Agreement shall terminate, except as otherwise expressly provided in Section 7.09 or otherwise herein. IN WITNESS WHEREOF, the City and the Borrower have caused this Agreement to be executed in their respective names all as of the date first above written. (SEAL) CITY OF HUTCHINSON, MINNESOTA By Mayor By City Administrator 27 :1 fe (SEAL) ERICKSON OIL PRODUCTS, INC. By Its By Its Loan Agreement dated as of December , 1985, between the City of Hutchinson and Erickson Oil Products, Inc. EXHIBIT A LEGAL DESCRIPTION • 509N Draft 12/9/85 • PLEDGE AGREEMENT This Pledge Agreement is made as of the day of December, 1985 between the CITY OF HUTCHINSON, MINNESOTA, a political subdivision of the State of Minnesota (the "City ") and CITIZENS BANK & TRUST CO., a Minnesota banking corporation (the "Lender "). Recitals WHEREAS, Erickson Oil Products, Inc., a Wisconsin corporation (the "Borrower ") and the City have entered into a Loan Agreement (the "Loan Agreement ") of even date herewith, pursuant to which the City will lend to the Borrower the net proceeds of the $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) (the "Note "), dated as of the date hereof, issued pursuant to the Minnesota Municipal Industrial Development Act, Chapter 474, Minnesota Statutes, as amended (the "Act "), and WHEREAS, the Note is to be payable from and secured by the loan repayments to be made by the Borrower under the Loan Agreement; and the Lender, as a condition to the purchase • of the Note, has required the execution of this Pledge Agree- ment. NOW THEREFORE, as an inducement to the Lender to purchase the Note, and in consideration of the promises and other good and valuable consideration, the receipt and sufficiency whereof is hereby acknowledged, the parties hereby agree as follows: 1. In order to secure the due and punctual payment of the Note and all other sums due the Lender under the Loan Agreement, the City does hereby pledge and assign to the Lender all of the City's right, title and interest in and to the Loan Agreement, subject to the City's rights under the provisions of Section 7.09 thereof. 2. The City hereby represents and warrants to the Lender that the City's right, title and interest in the Loan Agreement is free and clear of any lien, security interest or other encumbrance other than that arising under this Pledge Agreement. 3. The City hereby authorizes the Lender to exercise, whether or not a default exists under the Note or an Event of Default has occurred under the Loan Agreement, either • in the City's name or the Lender's name, any and all rights or remedies available to the City under the Loan Agreement. The City agrees, on request of the Lender, to execute and deliver to the Lender such other documents or instruments as shall be deemed necessary or appropriate by the Lender at any time to confirm or perfect the security interest hereby granted. The City hereby appoints the Lender its attorney -in -fact to execute on behalf of the City, and in its name, any and all such assignments, financing statements or other documents or instruments which the Lender may deem necessary or appropriate to perfect, protect or enforce the security interest hereby granted. 4. The City will not: (a) exercise or attempt to exercise any remedies under the Loan Agreement except as permitted by Sections 6.02 and 7.09 of the Loan Agreement, or terminate, modify or accept a surrender of the same, or by affirmative act, consent to the creation or existence of any security interest or other lien in the Loan Agreement to secure payment of any other indebtedness; or (b) receive or collect or permit the receipt • or collection of any payments, receipts, rentals, profits or other moneys under the Loan Agreement (except as allowed under Section 7.09 thereof) or assign, transfer or hypothecate (other than to the Lender hereunder) any or the same then due or to accrue in the future. 5. The City expressly covenants and agrees that the Lender shall be entitled to receive all payments under the Loan Agreement (except any payments due the City under Section 7.09 thereof), and hereby authorizes and directs the Borrower to make such payments directly to the Lender. The Lender covenants and agrees that all payments received by the Lender pursuant to the Loan Agreement shall be applied to the payment of principal and interest on the Note. 6. If an Event of Default (as defined in the Loan Agreement) shall occur and be continuing, the Lender may exercise any one or more or all, and in any order, of the • E remedies hereinafter set forth, it being expressly understood that no remedy herein conferred is intended to be exclusive of • any other remedy or remedies; but each and every remedy shall be cumulative and shall be in addition to every other remedy given herein or now or hereafter existing at law or in equity or by statute: (a) The Lender may, without prior notice of any kind declare the principal of and interest accrued on the Note immediately due and payable. (b) The Lender may exercise any rights and remedies and options of a secured party under the Uniform Commercial Code as adopted in the State of Minnesota and any and all rights available to it under. the Loan Agreement, Construction Loan Agreement and Mortgage securing payment of the Note. 7. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all the covenants, promises and agreements in this Pledge Agreement contained by or on behalf of the City or the Lender shall bind and inure to the benefit of the respective successors and assigns of such parties whether so expressed or not. • 8. The unenforceability or invalidity of any provision or provisions of this Pledge Agreement shall not render any other provision or provisions herein contained unenforceable or invalid. 9. This Pledge Agreement shall in all respects be construed in accordance with and governed by the laws of the State of Minnesota. This Pledge Agreement may not be amended or modified except in writing signed by the City and the Lender. 10. This Pledge Agreement may be executed, acknowledged and delivered in any number of counterparts and each of such counterparts shall constitute an original but all of which together shall constitute one agreement. 11. The terms used in this Pledge Agreement which are defined in the Loan Agreement shall have the meanings specified therein, unless the context of this Pledge Agreement otherwise requires, or unless such terms are otherwise defined herein. 3 12. No obligation of the City hereunder shall constitute or give rise to a pecuniary liability of the City or a charge against its general credit or taxing powers, but shall • be payable solely out of the proceeds and the revenues derived under the Loan Agreement. IN WITNESS WHEREOF, the City and the Lender have caused this Pledge Agreement to be duly executed as of the day and year first above written. (SEAL) CITY OF HUTCHINSON, MINNESOTA By Mayor By City Clerk - Administrator rd • • CITIZENS BANK & TRUST CO. M Its Pledge Agreement between the City of Hutchinson, Minnesota, and Citizens Bank & Trust Co., dated as of December , 1985. • 563N Draft 12/9/85 CONSTRUCTION LOAN AGREEMENT THIS AGREEMENT, made this day of December, 1985, by and among Erickson Oil Products, Inc., a Wisconsin corporation (the "Borrower "), Citizens Bank & Trust Co., a Minnesota banking corporation (the "Lender "), and the CITY OF HUTCHINSON, Minnesota (the "City "), WITNESSETH: WHEREAS, the Borrower has requested the City to issue and the Lender to purchase a certain $500,000 Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) (the "Note "), the proceeds of which are to be used for the purpose of acquiring and constructing and equipping certain • Improvements (as defined in the Loan Agreement) to the Land and for paying certain other costs incident thereto; and WHEREAS, the City has agreed to issue the Note upon the terms and conditions set forth in that certain final Note Resolution adopted December 17, 1985 by the City (the "Resolution ") and in that certain Loan Agreement of even date herewith between the City and the Borrower (the "Loan Agree- ment") which Loan Agreement has been pledged to the Lender pursuant to the terms of that certain Pledge Agreement of even date herewith between the City and the Lender (the "Pledge Agreement "); and WHEREAS, the Lender is willing to make such loan on the terms hereof; and WHEREAS, in reliance upon the representations and warranties contained herein and on the various certificates and documents delivered herewith or to be delivered by the Borrower and the City, the Lender has agreed to purchase the Mote (as defined in the Loan Agreement) from the City and to advance the proceeds thereof upon the terms and conditions herein set forth: 1. Definitions. For purposes of this Agreement, all capitalized terms shall have the meanings assigned to them in the Loan Agreement except the following terms which shall have the following meanings: 1.1 Agreement: this Construction Loan Agreement; • 1.2 Architect: ; 1.3 Completion Date: 1.4 Contractor: 1.5 Title: 2. Documents Delivered Herewith: Prior to or contemporaneously with the execution of this Agreement, the Borrower has delivered to the Lender executed copies of the following documents and /or instruments of even date herewith, unless otherwise noted: 0 ►a 2.1 The Note. 2.2 The Loan Agreement. 2.3 The Pledge Agreement. 2.4 The Mortgage. 2.5 Financing Statements sufficient to create and fully perfect a first lien security interest in all of the personal property of the Borrower purchased from the proceeds of the Note, which property is more fully set forth in the Mortgage (the "Financing Statements "). 2.6 The Resolution. 2.7 Commitment for Mortgagee's Policy of Title Insurance in the amount of $500,000 issued by Title, by which Title commits to issue a mortgagee's policy of title insurance that: (a) Specifically insures that the Mortgage is a • first lien upon the Land and Improvements subject only to :7 encumbrances set forth on Exhibit A to the Mortgage: (b) Insures that the proposed Improvements and use of the Project do not violate any zoning or other use restrictions covering the Land; (c) Waives the following standard exceptions and insures over (i) facts which would be disclosed by a comprehensive survey of the premises, (ii) rights and claims of parties in possession, and (iii) mechanic's, contractor's or materialmen's liens and lien claims; and 3 (d) Includes a Form 100 endorsement. 2.8 Current UCC Secured Transactions Search and Federal Tax Lien Search with the Minnesota Secretary of State. 2.9 Survey prepared by a registered land surveyor containing a legal description conforming to the legal description contained in the Commitment for Mortgagee's Policy of Title Insurance and the Mortgage, detailing all easements, encroachments, and utility rights of way upon the Land, showing the location of adjoining public streets so as to affirmatively show rights of ingress and egress to and from the Land, and indicating that the location of the Improvements will be within the boundary lines of the Land. 2.10 Copies of the Plans and Specifications prepared and certified by the Architect governing the construction of the . Improvements. 2.11 Copy of executed AIA Standard Form of Agreement Between Owner and Contractor dated , 198- 2.12 Copy of executed AIA Standard Form of Agreement Between Owner and Architect dated 198- 2.13 Executed copies of all the prime contracts and subcontracts covering the work necessary to complete the Improvements as shown on the Construction Statement (as described below). 4 2.14 A sworn Construction Statement signed by the Borrower • and the Contractor which: (a) Lists all costs of the construction of the Improvements; (b) Shows the funds available to the Borrower are sufficient to assure completion of construction of the Improvements upon the Land; and (c) Includes specimen signatures of those persons authorized to sign pay orders on behalf of the Borrower. 2.15 Evidence of "builder's risk" insurance coverage on the Land and the Improvements in a form and with a company or companies satisfactory to the Lender in an amount not less than • the full replacement cost of the Improvements. :7 2.16 Certificate (Construction Industry Cooperative Committee of Minnesota Form C1CC 701) of comprehensive general liability insurance and worker's compensation insurance, including employer's liability and "all states" endorsement in a form and amount satisfactory to the Lender. 2.17 A policy of flood insurance naming the Lender as an additional insured, covering the Project in the maximum amount available, or proof satisfactory to the Lender that the Project is not located within a designated flood plain. 5 2.18 Copies of all building permits, licenses, and approvals required to be obtained prior to commencing is construction of the Improvements. 2.19 Certificate of the Architect stating that all utility services necessary for the Improvements and the operation thereof for their intended purpose are available at the boundaries of the Land, including water, drainage, storm and sanitary sewer, electric, gas and telephone facilities. 2.20 Secretary's Certificate of Resolutions of Board of Directors of the Borrower: (a) Authorizing the borrowing by the Borrower of $500,000 pursuant to the terms hereof. (b) Authorizing the execution and delivery or delivery by an officer or officers of the Borrower of this • Agreement, the Mortgage, the Loan Agreement and any and all other documents or instruments required to be executed and delivered or delivered in connection herewith; and (c) Identifying the officer or officers having authority to execute and deliver or deliver this .Agreement, the Mortgage, the Loan Agreement and any and all other documents or instruments required to be executed and delivered or delivered in connection herewith. • M U :7 2.21 Certificates of Good Standing of the Borrower of recent date issued by Secretaries of State of Wisconsin and Minnesota. 2.22 Opinion of legal counsel for the Borrower in form and substance satisfactory to the Lender and Bond Counsel. 2.23 Opinion of Briggs & Morgan, Professional Association, to the effect that the City has duly authorized the Note and that the interest thereon is exempt from Federal and State income taxation except when held by a "substantial user" and "related person" of the Project. 2.24 Letter from the Minnesota Energy and Economic Development Authority approving the municipal financing of the Improvements. 2.25 Appraisal of the Project prepared by a MAI Appraiser. 2.26 Current Financial Statements of the Borrower. 2.27 Payment to the Lender in the amount of $2,500 to pay for the Lender's commitment fee. 3. Borrower's Representations, Warranties and Covenants. In order to induce the City and the Lender to enter into this Agreement, the Borrower hereby represents and warrants that: 7 3.1 The Borrower is the owner of the Land in fee simple, and of all personal property described in the Mortgage and in the Financing Statements delivered herewith and has no knowledge of any unrecorded claims, liens, and encumbrances against the Land or such personal property. 3.2 It has not, nor has any agent, employee or contractor, on its behalf, begun any actual visible improvement upon the Land within the meaning of Minnesota Statutes Chapter 514. Construction of the Improvements has not commenced. 3.3 No Event of Default, as defined in Section 7 hereof, has occurred and is continuing as of the date hereof and no event has occurred and is continuing which would be an Event of Default hereunder were it not for any grace period specified herein or which would become an Event of Default if notice • thereof were given to the Lender. 3.4 All utility services necessary for the construction of the Improvements and the operation thereof for their intended purpose are available at the boundaries of the Land, including water, storm and sanitary sewer, drainage, gas, electric and telephone facilities. 3.5 All financial statements heretofore delivered to the Lender, are true and correct in all respects, have been prepared in accordance with generally accepted accounting principles, and fairly present the respective financial conditions of the subjects thereof as of the respective dates thereof; no materially adverse change has occurred in the • financial conditions reflected therein since the respective dates thereof, and no additional borrowings have been made by the Borrower since the date thereof other than the borrowing contemplated hereby or borrowings previously approved in writing by the Lender. 4. Commitment, Representations and Covenants of the Lender and Agreement to Borrow. 4.1 Subject to the terms and conditions hereof and of the Note, Loan Agreement, Mortgage and other documents delivered herewith, the Lender agrees to loan the City and the City agrees to borrow from the Lender Five Hundred Thousand Dollars ($500,000) to be repaid in accordance with the terms and conditions of the Note. The Lender shall disburse the proceeds • of the Note upon sale and delivery of the 'tote as set forth in Section 5 below. Pursuant to the Loan Agreement and Section 474.03(7), Minnesota Statutes, the City has authorized the Borrower to provide directly for the construction and installation of the Improvements in such manner as determined by the Borrower and hereby authorizes the Lender to disburse the proceeds of the Note directly to or for the order of the Borrower for the payment of Project Costs in accordance with Section 5. 01 5. Advances and Disbursements. 5.1 Upon delivery of the Note to the Lender, the Lender • shall, on behalf of the City, disburse funds thereunder, for payment of Project Costs as hereinafter provided. 5.2 The Borrower agrees to invest the sum of $ toward the cost of acquiring the Land and constructing the Improvements prior to the presentation of any draw requests for advances under the Note. 5.3 In order to draw funds, the Borrower shall submit to the Lender and Title, no more often than monthly, written draw requests and construction cost certifications, signed by the Borrower and the Contractor, specifying the use to which the proceeds of the draw will be put and certifying such amounts to be currently payable (excluding withholdings) for costs incurred in connection with the construction of the Improvements for which such draw request is made. The draw request shall be supported by the Borrower certification to the effect that: (a) The construction work to be paid for has been completed in a workman like manner in accordance with the Plans and Specifications; (b) Materials are in place or are being stored on the Land and work has been completed on the Improvements which have in the aggregate a value equal to the total of • 10 the proceeds of the Note which have been and are to be disbursed with the requested draw; (c) The funds remaining undisbursed, less interest payments due to completion of the Improvements on the Note, are sufficient to fully complete the Improvements in accordance with the Plans and Specifications and the Construction Cost Statement; and (d) The work is progressing in a timely manner. Each draw request shall also be accompanied by a waiver of mechanic's lien and /or materialmen's lien executed by each contractor to whom payment is to be made out of the proceeds of the requested disbursement covering liens for all work done and material or equipment supplied up to a date which is not earlier than the date of the preceding relevant draw request. • The final draw request shall be accompanied by an appraisal of • the Project in form and substance satisfactory to the Lender. Within five (5) business days from receipt of such draw request and certifications, the Lender shall disburse to Title amounts certified by the Borrower to be currently payable provided that the Lender shall have the right, at its option, to refuse to make advances should it determine that an Event of Default has occurred as defined in Section 7 hereof. 11 5.3 Title shall disburse all funds advanced to it in accordance with this Agreement; provided, however, if Title shall, in its opinion, be unable to perform its obligations hereunder, Title shall have the right to refuse to disburse said advance. In the event Title shall fail to disburse any advance within five (5) business days after the date of advance by the Lender, Title shall return said advance to the Lender and it shall cease to bear interest under the Note. 5.4 Title shall not disburse any disbursement hereunder if there have been any changes in the status of title as set forth in the mortgagee's policy of title insurance which have not been consented to in writing by the Lender. Title shall in any event promptly notify the Lender of any change in the status of title to the Land or Improvements. • 5.5 If interest has accrued on the Note and is unpaid or if fees or any of the principal balance of the Note are payable to the Lender or the City, the Lender shall be, and hereby is, authorized to disburse to itself or the City, the total amount of such accrued interest and fees (whether or not a draw request has been submitted by the Borrower) and the same shall be deemed to be disbursed under the Note in the same manner and with the same effect as if disbursed under the provisions of this Section 5, it being understood and agreed that the Lender • 12 may make such disbursements to itself or the City for accrued interest and fees notwithstanding the fact that the total amount of interest and fees paid to the Lender exceeds the amount set forth therefor on the Construction Cost Statement delivered herewith. 5.6 The form of draw request, mechanic's lien waivers, certificates and any and all other instruments or documents required to be delivered in connection with a disbursement hereunder shall be in form and substance satisfactory to the Lender and Title. 5.7 Notwithstanding anything contained in this paragraph 5 in no event shall any Note proceeds be used to pay any costs not authorized to be paid from the proceeds of such Note under Minnesota Statutes, Chapter 474 or to pay any Working Capital • Expenses in excess of $ in the aggregate. 5.8 The Borrower shall account to the City for all disbursements of loan proceeds made under this Agreement upon the request of the City. All sums advanced and disbursed hereunder shall be advanced or disbursed, as the case may be, under and secured by the Pledge Agreement, the Mortgage and any other related documents. 13 6. Affirmative Covenants by the Borrower. To further induce the Lender to make the requested loan, the Borrower hereby covenants and agrees that it will: 6.1 Erect and complete in a good workmanlike manner the Improvements in accordance with the Plans and Specifications and the Construction Timetable and in any event, complete the Improvements on or before the Completion Date. 6.2 At all times, insure the Project in the manner set forth herein, and from time to time, upon the Lender's request, furnish it evidence of such coverage in form satisfactory to the Lender and its counsel. 6.3 Promptly pay and discharge all taxes, assessments and other governmental charges imposed upon it or upon its income and profits or upon the Land, and any and all claims for labor, • material or supplies or rental charges or charges of any other kind which, if unpaid, might by law become a lien or charge upon the Land, provided, however, that the Borrower shall not be required to pay any such tax, assessment, charge or claim so long as the validity thereof shall be contested in good faith, by appropriate proceedings and the Borrower shall have set aside on its books adequate reserves therefor. 6.4 Maintain all of its properties in good repair, working order and condition and from time to time make or cause all to be made all needful renewals, replacements and repairs so • that at all times the Borrower's business can be conducted efficiently. 6.5 If at any time prior to completion of the Improve- ments, the amount remaining to be disbursed under the Note appears to the Lender to be insufficient to pay for completion of the Improvements, deposit with the Lender within ten (10) days after the demand therefor, the amount of money which the Lender, in its discretion, determines is needed to cover such insufficiency. 6.6 Prior to the final disbursement hereunder, provide the Lender with the Architect's certificate of completion certifying that the Improvements have been completed in accordance with the Plans and Specifications; and upon • completion, provide the Lender with a certificate of occupancy of the City, and /or other evidence satisfactory to the Lender indicating that the Improvements and their intended use comply with all applicable zoning, building and other governmental laws and requirements. 6.7 Construct the Improvements within the boundary lines of the Land and in compliance with all zoning, building codes, and regulations. r� U 15 6.8 Construct the Improvements at a cost not to exceed the amounts set forth in the Construction Cost Statement. 7. Events of Default and Effect Thereof: 7.1 If the Borrower fails to complete the Improvements on or before the Completion Date; or 7.2 If at any time prior to full completion of, and payment for, the Improvements, the amount in the Construction Fund becomes, in the Lender's opinion, insufficient for said purpose, and the Borrower does not deposit with the Lender funds in the amount of the insufficiency pursuant to paragraph 6.5 hereof within ten (10) days after the Lender makes demand therefor; or 7.3 If the Borrower fails to duly and punctually perform the covenants contained herein, or in any document executed or • delivered hereunder and such failure to perform continues for a period of ten (10) days after the Lender gives notice to the Borrower of such default; or 7.4 If any financial statement, certificate, represen- tation, or warranty furnished pursuant to or made under this Agreement proves to be materially false as of the date thereof or any representation made herein is untrue when made or becomes untrue with the passage of time; or 0 IV 7.5 If the Borrower fails to pay any installment of principal or interest pursuant to the Loan Agreement when such installment becomes due, or, if the Borrower otherwise defaults under the terms of the Mortgage, the Loan Agreement or any other documents delivered herewith or executed pursuant to this Agreement; then, in any such event, an "Event of Default" shall be deemed to have occurred and the Lender may, at its option (in addition to the Lender's rights under the Note, the Mortgage, the Loan Agreement or any other documents executed and delivered herewith or pursuant hereto), take any one or more of the following actions: (a) terminate the Lender's obligation to disburse any further sums under the Note pursuant hereto; • (b) declare the amount of the Note plus interest thereon to be immediately due and payable and demand payment in full of the then principal balance plus accrued interest owing on the Note; (c) enter the Land and the Improvements to complete same and use the funds remaining undisbursed under the Note, together with such other sums as may, in the Lender's discretion be necessary, to pay for remaining 17 costs of such completion, and in such event Borrower shall be responsible for all amounts outstanding on the Note together with all additional amounts advanced by the Lender to pay for remaining costs of such completion; (d) disburse any sums remaining undisbursed under the Note to itself first towards payment of any premiums or service charges, then accrued interest owing on the Note and then the principal balance of the Note. 8. Miscellaneous 8.1 The Borrower agrees, whether or not the transaction hereby contemplated is consummated, to pay the fees, expenses and disbursements of the City, the City's legal counsel, Bond Counsel and all of Lender's out -of- pocket expenses, including attorneys' fees, recording fees, mortgage registration taxes, • and all title insurance charges, including title insurance, examination, disbursement and commitment fees and premiums incurred in connection with the transaction which is the subject of this Agreement. 8.2 All representations and warranties contained herein or made in writing by or on behalf of the Borrower in connection with the transactions contemplated hereby shall survive the execution and delivery of this Agreement and the disbursements hereunder. All statements contained in any 18 certificate or other instrument delivered by or on behalf of the Borrower pursuant thereto or in connection with the transactions contemplated hereby shall constitute representations and warranties by the Borrower. 8.3 The City agrees that it shall be bound by each and every one of the terms and conditions herein applicable to it, but it is agreed by the parties hereto that neither the City, nor to the extent permitted by law, its officers, employees and agents shall be subject to any personal or pecuniary liability thereon. 8.4 It is expressly - understood and agreed that neither the Lender nor the City assumes any liability or responsibility for the satisfactory completion of the Improvements, nor for the adequacy of funds deposited with or disbursed by either of • them pursuant hereto to complete the Improvements, nor for inspections during construction, nor for any other acts on the part of the Borrower or the contractors to be performed in the installation and construction of the Improvements. 8.5 This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto ex- cept that the Borrower's rights hereunder are not assignable. 8.6 No amendment, change, or modification of this Agree- ment shall be valid unless the same be in writing and signed by all of the parties hereto, and no waiver by Lender of any S breach or default by Borrower of any of its obligations, agreements or covenants under this Agreement shall be deemed to be a waiver of any subsequent breach of the same, or any other obligation, agreement or covenant, nor shall any forebearance by Lender to seek or enforce a remedy for such breach be deemed a waiver of its rights and remedies with respect to such breach. Any waiver, amendment, change or modification of any covenants, requirements, duties or conditions of this Agreement to be performed by any person or entity other than Lender, included herein for the benefit of Lender, shall be binding on Title and shall not relieve title from any of its obligations to provide insurance and make disbursements as set forth herein. 8.7 This Agreement may be executed simultaneously in two • or more counterparts, each of which shall be an original, but all of which shall constitute one agreement. 8.8 This Agreement shall be governed by, interpreted, and construed in accordance with the laws of the State of Minnesota. 8.9 This Agreement shall remain effective so long as there are any sums remaining outstanding on the Vote. 8.10 This Agreement from and after the date hereof super- cedes and has merged into it all prior oral and written agreements on the same subjects by or between some or all of the parties hereto with the effect that this Agreement shall control the subject matter covered herein. r� U 20 U 8.11 Any notices required or contemplated hereunder shall be effective upon the placing thereof in the United States mails, certified mail, return receipt requested, postage pre- paid, and addressed as follows: If to the Borrower: If to the Lender: If to the City: Erickson Oil Products, Inc. 1231 Industrial Road Hudson, WI 54016 Attn: Citizens Bank & Trust Co. 102 Main St. So. Hutchinson, MN 55350 Attn: President City of Hutchinson 37 Washington Ave. W. Hutchinson, MN 55350 Attn: City Administrator IN WITNESS WHEREOF, the parties hereto have caused this Construction Loan Agreement to be executed the date and year first above written. (SEAL) ERICKSON OIL PRODUCTS, INC. By s By Its 21 CITIZENS BANK & TRUST CO. By Its • Construction Loan Agreement dated as of December _, 1985, among the City of Hutchinson, Erickson Oil Products, Inc., and Citizens Bank & Trust Co. • 22 • 0 CITY OF HUTCHINSON, MINNESOTA By Mayor By City Clerk- Administrator (SEAL) Construction Loan Agreement dated as of December 1 1985, among the City of Hutchinson, Erickson Oil Products, Inc., and Citizens Bank & Trust Co. 23 process the proceeds of the loan contempla Construction Loan Agreement in accordance said Agreement. By hereby agrees to ted by the foregoing with the terms of • Construction Loan Agreement dated as of December 1 1985, among the City of Hutchinson, Erickson Oil Products, Inc., and Citizens Bank & Trust Co. • 24 563N Draft 12/9/85 MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT BETWEEN ERICKSON OIL PRODUCTS, INC. AS MORTGAGOR WED CITIZENS BANK & TRUST CO. AS MORTGAGEE Dated: December , 1985 This instrument was drafted by: BRIGGS AND MORGAN Professional Association 2200 First National Bank Building Saint Paul, Minnesota 55101 TABLE OF CONTENTS (Not a Part of This Mortgage) Page PARTIES, RECITALS, GRANTING CLAUSES 1 ARTICLE I - COVENANTS OF THE MORTGAGOR 5 Section 1.01. Payment of Utility Charges, Taxes and Assessments 5 Section 1.02. Liens 6 Section 1.03. Care of Property 6 Section 1.04. Right of the Mortgagee to Enter_ 6 Section 1.05. Subrogation 7, Section 1.06. Right of the Mortgagee to Perform 7 Section 1.07. Limited Assumption 7 Section 1.08. Construction Loan Agreement and Loan Agreement 8 Section 1.09. Miscellaneous Rights of the ?Mortgagee 8 Section 1.10. Assignment of Rents 8 Section 1.11. Further Assurances 9 Section 1.12. Expenses 9 Section 1.13. Books and Records, Financial Statements 10 Section 1.14. Final Maturity Date 10 ARTICLE II - INSURANCE, CONDEMNATION, USE OF PROCEEDS 11 Section 2.01. Insurance 11 Section 2.02. Condemnation 11 Section 2.03. :Mortgagor to Repair, Replace, Rebuild or Restore 12 Section 2.04. Use of Proceeds to Prepay Loan and Note 13 ARTICLE III - DEFAULT 14 Section 3.01. Event of Default Defined 14 Section 3.02. Remedies 14 Section 3.03. Purchase of Mortgaged Property 15 Section 3.04. _ Appointment of Receiver 15 Section 3.05. Proceeds 15 Section 3.06. Proceedings Discontinued 16 ARTICLE IV - MISCELLANEOUS 17 Section 4.01. No Implied Waiver 17 Section 4.02. Remedies Cumulative 17 • 9 • Section 4.03. Section 4.04. Section 4.05. Section 4.06. SIGNATURES ACKNOWLEDGMENT • • Successors Notices Headings _ Indemnity and Assigns Page 17 17 17 17 18 19 MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT • THIS MORTGAGE, SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT, (the "Mortgage ") dated as of the day of December, 1985, made and given by Erickson Oil Products, Inc. (the "Mortgagor ") a corporation, organized under the laws of the State of Wisconsin to Citizens Bank & Trust Co., a Minnesota banking corporation (the "Mortgagee "). WITNESSETH: WHEREAS, the City of Hutchinson, Minnesota, a political subdivision of the State of Minnesota (the "City "), will issue to the Mortgagee, under and pursuant to Minnesota Statutes, Chapter 474, as amended (the "Act "), its Commercial Development Revenue Note of 1985 (Erickson Oil Products, Inc. Project) (the "Note "), dated as of the date hereof, in the principal amount of $500,000, with a final maturity date of December 1, 2000, and bearing interest and maturing as provided therein; and WHEREAS, the City will loan the proceeds of the Note to the Mortgagor pursuant to a Loan Agreement dated as of the date hereof, between the City and the Mortgagor (the "Loan Agreement ") for the purpose of financing the construction and • equipping of a convenience store and gas station facility (the "Project ") and the Loan Agreement has been assigned to the Mortgagee by the City; and WHEREAS, pursuant to the Loan Agreement, the Mortgagor has covenanted, among other things, to make loan repayments sufficient to pay amortized installments of principal and interest on the Note when due; and WHEREAS, the total principal amount of the Note shall be disbursed pursuant to the terms of a Construction Loan Agreement dated as of the date hereof, by and between the City, the Mortgagor and the Mortgagee (the "Construction Loan Agreement "); WHEREAS, the City and the Mortgagee have required, as a condition for the issuance of the Note by the City and for the purchase and acceptance of the Note by the Mortgagee, that the Mortgagor secure the Note by this Mortgage. NOW, THEREFORE, THIS MORTGAGE FURTHER WITNESSETH, that in consideration of the aggregate sum of $500,000 made available to the Mortgagor by the Mortgagee through the purchase of the Note and other good and lawful consideration, the receipt and sufficiency of which is hereby acknowledged, and to secure, and as security for the payment of the principal of and interest on the Note by the City and Mortgagor to the Mortgagee and the performance and observance by the Mortgagor of all of the other covenants, agreements, representations, warranties and conditions herein or contained in the Loan Agreement, the Note, and the Construction Loan Agreement, the Mortgagor does hereby grant, bargain, sell, convey, assign, transfer, pledge, set over and confirm and grant a lien and security interest unto the Mortgagee, its successors and assigns, forever, the tract of land (hereinafter sometimes called the "Land "), lying and being in the County of and State of Minnesota, described in Exhibit A attached hereto and made a part hereof, Together with (i) all of the buildings, structures and other improvements now standing or at any time hereafter constructed or placed upon the Land; (ii) all lighting, heating, ventilating, air - conditioning, sprinkling and plumbing fixtures, water and power systems, engines and machinery, boilers, furnaces, oil burners, elevators and motors, communication systems, dynamos, transformers, electrical equipment and all other fixtures of every description located • in or on, or used, or intended to be used in connection with the Land or any building now or hereafter located thereon (excluding, however, fixtures owned by tenants occupying space in any building now or hereafter located on the Land); (iii) all hereditaments, easements, appurtenances, riparian rights, rents, issues, profits, insurance proceeds, condemnation awards, mineral rights and water rights now or hereafter belonging or in any way pertaining to the Land or to any building now or hereafter located thereon and all the estates, rights and interests of the Mortgagor in the Land; (iv) all building materials, furniture, furnishings, maintenance equipment and all other personal property now or hereafter located in, or on, or used, or intended to be used in connection with the Land or any building now or hereafter located thereon and all replacements and additions thereto financed from the proceeds of the Note; and (v) all proceeds of all of the foregoing (all of the foregoing, together with the Land, are hereinafter referred to as the "Mortgaged Property "); and the filing of this Mortgage shall constitute the filing of a financing statement in the office wherein it is filed and a carbon, photographic or other reproduction of this document may also be filed as a financing statement: • 2 Name and Address of Debtor and Record Owner of the Mortgaged Property: Names and Addresses of Secured Party: Erickson Oil Products, Inc. 1231 Industrial Road Hudson, WI 54016 Citizens Bank & Trust Co. 102 Main St. So. Hutchinson, MN 55350 Description of the Types (or items) of property covered by this financing statement: See above Description of real estate to which all or a part of the collateral is attached or upon which it is located: See Exhibit "A" attached hereto. Some of the above described collateral is or is to become fixtures upon the real estate described on Exhibit "A ", and this financing statement is to be filed for record in the public real estate records. TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee forever. PROVIDED, NEVERTHELESS, that if the Mortgagor, by making all payments required of it under the Loan Agreement hereinafter referred to, shall cause and permit to be paid the principal sum of Five Hundred Thousand Dollars ($500,000), with interest at the rate set forth in the Note on the unpaid principal balance, as computed in accordance with the terms and conditions of the Note, and any other sums due and owing under the Note, and shall also pay or cause to be paid all other sums, with interest thereon, as may be advanced by the Mortgagee in accordance with this Mortgage either to protect the lien of this Mortgage, or by way of additional loan or for any other purpose, and shall also keep and perform all and singular the covenants herein, in the Construction Loan Agree- ment and the Loan Agreement, required on the part of the Mortgagor to be kept and performed, then this Mortgage shall be null and void, in which event the Mortgagee will execute and deliver to the Mortgagor in form suitable for recording a full satisfaction of this Mortgage; otherwise this Mortgage shall remain in full force and effect. 3 • • • The Mortgagor represents, warrants and covenants to and with the Mortgagee that it is lawfully seized of the Mort- gaged Property in fee simple and has the right and lawful authority to mortgage the same as provided herein; that the Mortgaged Property is free from all liens and encumbrances except as otherwise approved by the Mortgagee; that all buildings, structures and other improvements now or hereafter located on the Land are, or will be, located entirely within the boundaries of the Land; and that the Mortgagor will warrant and defend the title to the Mortgaged Property against all claims and demands whatsoever not specifically excepted herein. The Mortgagor further represents, warrants and covenants that the Note, the Loan Agreement, Construction Loan Agreement and this Mortgage have been validly executed and delivered and are valid and enforceable obligations of the parties thereto in accordance with the terms thereof and hereof; and that this Mortgage does not, nor do the Note, Loan Agreement or Construction Loan Agreement, nor does the performance or observance by the Mortgagor of any of the covenants, agreements or matters or things in this Mortgage, the Construction Loan Agreement and the Loan Agreement provided for, contravene or result in the violation of or default under any covenant in any indenture or agreement affecting the Mortgagor or the Mortgaged Property. M ARTICLE I COVENANTS OF THE MORTGAGOR • The Mortgagor further covenants and agrees as follows: Section 1.01. Payment of Utility Charges, Taxes and Assessments. Mortgagor shall, before any penalty attaches thereto, pay or cause to be paid all charges made for electricity, gas, heat, water, or sewer furnished or used in connection with the Mortgaged Property, and all taxes, assessments, levies and encumbrances of every nature heretofore or hereafter assessed against the Mortgaged Property and upon demand will furnish the Mortgagee receipted bills evidencing such payment. If demanded by the Mortgagee to secure the pay- ment of the taxes and assessments referred to herein and the premiums on the insurance referred to herein, the Mortgagor will deposit with the Mortgagee on the first day of each and every month a sum which, in the estimation of the Mortgagee, shall be equal to one - twelfth of the annual taxes, assessments and insurance premiums; said deposits to be held by the Mortgagee, free of interest, and free of any liens or claims on the part of creditors of the Mortgagor and as part of the security of the Mortgagee, and to be used by the Mortgagee to pay current taxes and assessments and insurance premiums on the Mortgaged Property as the same accrue and are payable. Said • deposits shall not be, nor be deemed to be, trust funds but may be commingled with the general funds of the Mortgagee. If said deposits are insufficient to pay the taxes and assessments and insurance premiums in full as the same become payable, the Mortgagor will deposit with the Mortgagee such additional sum or sums as may be required in order for the Mortgagee to pay such taxes and assessments and insurance premiums in full. Upon the happening of an Event of Default hereunder, the Mortgagee may, at its option, apply any money in the fund resulting from said deposits to the payment of the indebtedness secured hereby in such manner as it may elect. Nothing in this section shall require the payment or discharge of any obligation imposed upon the Mortgagor so long as the Mortgagor shall in good faith and at its own expense contest the same or the validity thereof by appropriate legal proceeding which shall operate to prevent the collection thereof or other realization thereon and the sale or forfeiture of the Mortgaged Property or any part thereof to satisfy the same; provided that during such contest the Mortgagor shall, at • 61 the option of the Mortgagee, provide security satisfactory to the Mortgagee, assuring the discharge of the Mortgagor's obli- gation under said section and of any additional charge, penalty or expense arising from or incurred as a result of such contest; and provided further, that if at any time payment of any obligation imposed upon the Mortgagor by said section shall become necessary to prevent the delivery of a tax deed conveying the Mortgaged Property or any portion thereof because of nonpayment, then Mortgagor shall pay the same in sufficient time to prevent the delivery of such tax deed. Section 1.02. Liens. Except for liens and encum- brances listed on Exhibit A hereto or consented to in writing by the Mortgagee, the Mortgagor will keep the Mortgaged Property free from all liens and encumbrances of every nature heretofore or hereafter arising which might or could be prior to or equal to the security interest of this Mortgage; and upon written demand of the Mortgagee, the Mortgagor will pay and procure the release of any such lien or encumbrance. Section 1.03. Care of Property. The Mortgagor will take good care of the Mortgaged Property, and will maintain the same in good repair and condition, ordinary depreciation ex- cepted, and will commit or permit no waste and will not construct any new buildings, structures or other improvements on the Land nor add to or alter the design or structural character of any building, structure or other improvement now • or hereafter erected upon the Land without the prior written consent of the Mortgagee, which consent shall not be unreasonably withheld or delayed, and will not remove or permit removal of any buildings, structures or other improvements or fixtures of any kind from the Land nor do any act that would impair or lessen the value of the Mortgaged Property. The Mortgagor will promptly comply with all present and future laws, ordinances, rules and regulations of any governmental authority affecting the Mortgaged Property. • Section 1.04. Right of the Mortgagee to Enter. The Mortgagor will permit the Mortgagee and its agents to enter and to authorize others to enter upon any or all of the Mortgaged Property, at any time and from time to time, to inspect the same, to perform or observe any covenants, conditions, or terms which the Mortgagor shall fail to perform, meet or comply with, or for any other purpose in connection with the protection or preservation of the Mortgagee's security, without thereby be- coming liable to the Mortgagor or any person in possession under the Mortgagor. L Section 1.05. Subrogation. If any prior lien is paid from the proceeds of the Note secured by this Mortgage, the Mortgagee shall be subrogated to the rights of the holder of such prior lien as fully as if such lien has been assigned to the Mortgagee. Section 1.06. Right of the Mortgagee to Perform. If the Mortgagor fails to pay all and singular any taxes, assess- ments or other similar charges heretofore or hereafter assessed against the Mortgaged Property or fails to obtain the release of any lien or encumbrance (other than those listed in Exhibit A hereto or otherwise consented to by the Mortgagee) of any nature heretofore or hereafter arising upon the Mortgaged Prop- erty or fails to perform any other covenants and agreements con- tained in this Mortgage or if any action or proceeding is com- menced which adversely affects or questions the title to or possession of the Mortgaged Property or the interest of the Mortgagor or Mortgagee therein, then the Mortgagee, at the Mortgagee's option, without notice to the Mortgagor, may per- form such covenants and agreements, investigate and defend against such action or proceeding, and take such other action as the Mortgagee deems necessary to protect the Mortgagee's interest. Any amounts disbursed by the Mortgagee pursuant to this section, including court costs and expenses and attorney's fees, with interest thereon, shall become additional indebted- ness of the Mortgagor and shall be secured by this Mortgage. Such amount shall be payable upon notice from the Mortgagee to • the Mortgagor requesting payment thereof, and shall bear interest from the date of disbursement at the rate of 2% per annum in excess of the Base Rate (as defined in the Note). Nothing contained in this paragraph shall require the Mortgagee to incur any expense or to do any act hereunder. Section 1.07. Limited Assumption. The Mortgagor shall not sell, assign, lease, convey, mortgage or otherwise encumber the legal or equitable title or both legal and equitable title to all or any portion of the Mortgaged Property without the written consent of the Mortgagee. So long as the Note is outstanding, no sale, assignment, lease, conveyance, mortgage or other encumbrance shall be made which impairs the validity of the Note or the exemption of the interest payable thereon from federal income taxation. • 7 Section 1.08. Construction Loan Agreement and Loan Agreement. The Mortgagor shall promptly and faithfully observe all of the terms and provisions of the Construction Loan Agreement and the Loan Agreement binding upon it and will not permit any Event of Default (as defined therein) to occur thereunder. Section 1.09. Miscellaneous Rights of the Mortgagee. The Mortgagee may at any time and from time to time, without notice, release any person liable for payment of any indebted- ness secured hereby, extend the time as permitted by law or agree to alter the terms of payment of any of the indebtedness, accept additional security of any kind, release any property securing the indebtedness, consent to the making of any plat or map of the Land or the creation of any easement thereon or any covenants restricting use or occupancy thereof, or alter or amend the terms of this Mortgage in any way. No such release, modification, addition or change shall affect the liability of any person other than the person so released for payment of any indebtedness secured hereby, nor affect the priority and first lien status of this Mortgage upon any property not released. Section 1.10. Assignment of Rents. The Mortgagor hereby bargains, sells, assigns and sets over to the Mortgagee all rents, issues and profits of the Mortgaged Property, which, whether before or after foreclosure or during the period of redemption shall accrue and be owing for the use and occupation • of the Mortgaged Property or of any part thereof; provided, how- ever, that until an Event of Default as hereinafter defined shall have occurred, the Mortgagee hereby authorizes the Mortgagor to receive all such rents, issues and profits. For the purpose aforesaid the Mortgagor does hereby constitute and appoint the Mortgagee its attorney in fact, irrevocably in its name, to receive, collect and receipt for all sums due or owing for such use and occupation, as the same may accrue. For the purpose aforesaid, upon the occurrence of an Event of Default the Mortgagee may enter and take possession of the Mortgaged Property and manage and operate the same and take any action which, in the Mortgagee's judgment, is necessary or proper to conserve the value of the Mortgaged Property. The right to enter and take possession of the Mortgaged Property, to manage, operate and conserve the same, and to collect the rents, issues and profits thereof, shall be in addition to all other rights • 0 or remedies of the Mortgagee hereunder or afforded by law, and may be exercised concurrently therewith or independently thereof. The expense (including any receiver's fees, attorney's • fees, costs and agent's compensation) incurred pursuant to the powers herein contained shall be secured hereby, shall be payable by the Mortgagor upon demand and shall bear interest from the date incurred at the rate of 2% per annum in excess of the Base Rate (as defined in the Mote). The Mortgagee shall not be liable to account to the Mortgagor for any action taken pursuant hereto other than to account for any rents actually received by the Mortgagee. Section 1.11. Further Assurances. At any time, and from time to time, upon request by the Mortgagee, the Mortgagor will make, execute and deliver or cause to be made, executed and delivered, to the Mortgagee, any and all other further. instruments, certificates and other documents as may, in the opinion of the Mortgagee, be necessary or desirable in order to effectuate, complete, or perfect or to continue and preserve the obligations of the Mortgagor under the Loan Agreement and the estate and security interest granted by this Mortgage. Upon any failure by the Mortgagor so to do, the Mortgagee may make, execute and record any and all such instruments, certificates and documents for and in the name of the Mortgagor and the Mortgagor hereby irrevocably appoints the Mortgagee the agent and attorney in fact of the Mortgagor so to do. Section 1.12. Expenses. The Mortgagor will pay or • reimburse the Mortgagee for all reasonable attorney's fees, costs and expenses incurred by the Mortgagee in any proceedings involving the estate of a decedent or an insolvent, or in any action, legal proceeding or dispute of any kind in which the Mortgagee is made a party, or appears as party plaintiff or defendant, affecting the indebtedness secured hereby, this Mortgage or the interest created herein, or the Mortgaged Property, including but not limited to the exercise of the power of sale set forth in this Mortgage, any condemnation action involving the Mortgaged Property, or collection of insurance proceeds or any action to protect the security hereof; and any such amounts paid by the Mortgagee shall be added to the indebtedness secured by this Mortgage. • 9 • Section 1.13. Books and Records, Financial Statements. The Mortgagor shall keep and maintain full, true and accurate books of accounts adequate to reflect correctly the results of the operation of the Mortgaged Property, which books and the records relating thereto shall be open to inspection by the Mortgagee or its representative during ordinary business hours. The Mortgagor shall furnish to the Mortgagee within one hundred twenty (120) days after the end of each fiscal year of the Mortgagor, a balance sheet and a statement of income and expenses, all in reasonable detail, in form and content satisfactory to the Mortgagee and prepared in accordance with generally accepted accounting principles, reflecting all of Mortgagor's assets and liabilities as of the last day of such fiscal year and the results of the Mortgagor's operations for such fiscal year. Section 1.14. Final Maturity Date. The Mortgagor shall, at the request of the Mortgagee, amend the Mortgage to reflect any change in the final maturity date of the debt secured by the Mortgage as set forth in the Mortgage if such date is either accelerated or extended as provided in the Note. However, in no case may the final maturity date be extended beyond thirty years from the date of the Note. 10 ARTICLE II INSURANCE, CONDEMNATION, USE OF PROCEEDS Section 2.01. Insurance. The Mortgagor shall keep the buildings, structures, fixtures and other improvements now existing or hereafter erected on the Land insured against loss by fire, vandalism and malicious mischief, perils of extended coverage, and such other hazards, casualties and contingencies as may be reasonably specified by the Mortgagee. All insurance shall be carried in companies approved by the Mortgagee and the policies and renewals thereof shall (i) contain a waiver of defense based on coinsurance, (ii) be constantly assigned and pledged to and held by the Mortgagee as additional security for the indebtedness secured by this Mortgage, (iii) have attached thereto loss - payable clauses in favor of and in form acceptable to the Mortgagee, and (iv) shall provide that Mortgagee shall receive thirty (30) days notice in advance of cancellation or substantial modification of the policy. In default thereof, the Mortgagee may effect such insurance and the amount paid therefor shall become immediately due and payable with interest at the rate of 2% per annum in excess of the Rase Rate (as defined in the Note) and shall be secured by this Mortgage. In event of loss the Mortgagor will give immediate notice by mail to the Mortgagee, who may make proof of loss if not made promptly by the Mortgagor. The Mortgagor hereby authorizes the Mortgagee to settle and compromise all claims on such policies • and hereby authorizes and directs each insurance company concerned to make payment for any such loss directly to the Mortgagee instead of to the Mortgagor and the Mortgagee jointly. In event of foreclosure of this Mortgage, all right, title and interest of the Mortgagor in and to any property insurance policies then in force shall pass to the purchaser at the foreclosure sale. The Mortgagor shall also maintain insurance against all liability for injury to persons or property arising from the operation of the Mortgaged Property; and the Mortgagee shall be named as insured. Section 2.02. Condemnation. The Mortgagor shall give the Mortgagee immediate notice of the actual or threatened commencement of any proceedings under condemnation or eminent domain affecting all or any part of the Mortgaged Property or any easement therein or appurtenance thereof. If all or any part of the Mortgaged Property is damaged, taken or acquired, either temporarily or permanently, in any condemnation proceeding, or by exercise of the right of eminent domain, the amount of any award or other payment for such taking, acquisition or damages made in consideration thereof, to the 11 extent of the full amount of the remaining unpaid indebtedness secured by this instrument, is hereby assigned to the Mortgagee, who is empowered to collect and receive the same and to give proper receipts therefor in the name of the Mortgagor and the same shall be paid forthwith to the Mortgagee, to be held and applied as set forth in Section 2.03 hereof. Section 2.03. Mortgagor to Repair, Replace, Rebuild or Restore. If any principal amount of the Note is outstanding when all or any part of the Mortgaged Property is taken by emi- nent domain, or destroyed or damaged, unless the Mortgagor ex- ercises its right to prepay all or a portion of the Note pursuant to Section 2.04 hereof: (1) The Mortgagor shall proceed promptly, subject to the provisions of subsection (2), to replace, repair, rebuild and restore the Mortgaged Property to substantially the same condi- tion as existed before the taking or event causing the damage or destruction, with such changes, alterations and modifica- tions (including substitution or addition of other property) as may be desired by the Mortgagor, and approved by the Mortgagee, and will be suitable for continued operation of the Mortgaged Property for the business purposes of the Mortgagor. (2) All proceeds of any condemnation award or property insurance claim shall be paid directly to the Mortgagee. Subject to the option of Section 2.04 hereof, the Mortgagee shall apply the proceeds, less such sum, if any, required for • payment of all expenses incurred in collecting the same, ( "Net Proceeds "), to payment of the costs of repair, replacement, rebuilding or restoration of the Mortgaged Property upon compliance with such construction and disbursement terms as the Mortgagee may deem reasonably necessary, including deposit with the Mortgagee of such funds of the Mortgagor as may be required to insure payment of all costs of rebuilding and restoration. If such deposit is not made when requested by the Mortgagee, or if any other Event of Default should occur while the Mortgagee is retaining the Net Proceeds, the Mortgagee, on behalf of the City, may apply said Net Proceeds on the indebtedness of the Mortgagor under the Loan Agreement and the balance of Net Proceeds remaining after payment of all costs of any repair, rebuilding, replacement or restoration of the Mortgaged Property shall be applied against the unpaid principal balance of the Note. 12 (3) The Mortgagor shall not, by reason of the payment of any costs of repair, rebuilding, replacement or restoration, be entitled to any reimbursement from the City or any abatement or • diminution of the amounts payable under Article 3 of the Loan Agreement. Section 2.04. Use of Proceeds to Prepay Loan and Note. In the event the Mortgagor does not elect to rebuild and restore the Mortgaged Property pursuant to Section 2.03, the Mortgagor may elect to apply the Net Proceeds of any property insurance or condemnation award without penalty against the outstanding principal balance due under the Note, which prepayment shall be applied by the Mortgagee against the outstanding principal balance of the Note as provided therein. Any excess remaining after such application shall be returned to the Mortgagor. If the Net Proceeds are insufficient to pay the Note and accrued interest in full the Mortgagor shall pay such additional amounts as shall be necessary to pay such amounts in full. C] 0 13 ARTICLE III DEFAULT Section 3.01. Event of Default Defined. An Event of Default under the Loan Agreement shall constitute an Event of Default hereunder. Section 3.02. Remedies. Subject to the provisions of Section 3.07, upon the occurrence of an Event of Default or at any time thereafter until such Event of Default is cured to the satisfaction of the Mortgagee, the Mortgagee may, at its option, exercise any and all of the following rights and remedies (and any other rights and remedies available to it including, without limitation, the rights and remedies provided to the City under Section 6.02 of the Loan Agreement): (1) The Mortgagee may, without notice to the Mortgagor or City, declare immediately due and payable all indebtedness secured by this Mortgage, the same shall thereupon be immedi- ately due and payable (subject to the limited liability of the City on the Note as set forth therein), and (2) The Mortgagee may foreclose this Mortgage by action or advertisement, and the Mortgagor hereby authorizes the Mort- gagee to do so, power being herein expressly granted to sell the Mortgaged Property at public auction without any prior • hearing or notice thereof and to convey the same to the purchaser, in fee simple, pursuant to the statutes of Minnesota in such case made and provided and, out of the proceeds arising from such sale, to pay all indebtedness secured hereby with interest, and all legal costs and charges of such foreclosure and the maximum attorney's fees permitted by law, which costs, charges and fees the Mortgagor herein agrees to pay; and (3) The Mortgagee may exercise any of the remedies made available under the Uniform Commercial Code. In the event of a sale under the Mortgage, whether by virtue of judicial proceedings or otherwise, the Mortgaged Property may, at the option of the Mortgagee, be sold as one parcel and as an entirety or in such parcels, manner and order as the Mortgagee in its sole discretion may elect. 14 Section 3.03. Purchase of Mortgaged Property. In case of any sale of the Mortgaged Property pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Mortgage, the Mortgagee, its successors and assigns, may become the purchaser, and for the purpose of making settlement for or payment of the purchase price, shall be entitled to turn in and use the Note and any claims for interest matured and unpaid thereon, together with additions to the mortgage debt, if any, accrued in order that there may be credited as paid on the purchase price the sum then due under the Note, including principal and interest thereof, and any accrued additions to the mortgage debt. Section 3.04. Appointment of Receiver. After the happening of any Event of Default and during its continuance or upon the commencement of any proceedings to foreclose this Mortgage or to enforce the specific performance hereof or in aid thereof or upon the commencement of any other judicial proceeding to enforce any right of the Mortgagee, the Mortgagee shall be entitled, as a matter of right, if it shall so elect, without the giving of notice to any other party and without regard to the adequacy or inadequacy of any security for the mortgage indebtedness, forthwith either before or after declaring the unpaid principal of the Note to be due and payable, to the appointment of a receiver or receivers. Section 3.05. Proceeds. The purchase money proceeds • and avails of any sale of the Mortgaged Property or any part thereof, and the proceeds and avails of any other remedy hereunder, shall be paid to and applied as follows: (a) First, to the payment of costs and expenses of foreclosure and of such sale and of all proper expenses (including maximum attorney's fees permitted by law), liability and advances incurred or made hereunder by the Mortgagee, and of all taxes, assessments or liens superior to the lien of this Mortgage. (b) Second, to the payment to the Mortgagee of the amount then owing or unpaid under the Note and this Mortgage for principal and interest and in case any such proceeds shall be insufficient to pay the whole amount so due, then first to final payments of principal and then to the payment of interest thereon; and • 15 • (c) Third, to the payment of any excess to the Mortgagor, its successors and assigns, or to whomsoever may be lawfully entitled to receive the same. Section 3.06. Proceedings Discontinued. In case the Mortgagee shall have proceeded to enforce any right under this Mortgage by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case the Mortgagor and Mortgagee shall be restored to their former positions and rights hereunder with respect to the property subject to the lien hereof. 16 ARTICLE IV MISCELLANEOUS Section 4.01. No Implied Waiver. Any delay by the Mortgagee in exercising or any failure by the Mortgagee to exercise any right or remedy hereunder, or afforded by law, shall not be a waiver of or preclude the exercise of any right or remedy hereunder, whether on such occasion or any future occasion. Section 4.02. Remedies Cumulative. Each remedy of the Mortgagee is distinct and cumulative to each other right or remedy under this Mortgage or afforded by law and may be exercised concurrently or independently. Section 4.03. Successors and Assigns. The covenants and agreements herein contained shall bind, and the rights here- under shall inure to, the respective successors and assigns of the Mortgagor and the Mortgagee, including among the Mortgagor's assigns any purchasers or transferees of the Mortgaged Property. Section 4.04. Notices. Any notice, request, demand or other communication pe-r-mi-t-t-e-d or required hereunder shall be in writing and shall be deemed duly given if deposited in the United States mails, first class postage prepaid and addressed • as follows: If to the Mortgagor: Erickson Oil Products, Inc. 1231 Industrial Road Hudson, WI 54016 Attn : If to the Mortgagee: Citizens Bank & Trust Co. 102 Main St. So. Hutchinson, MN 55350 Attn: President or at such other address as either party shall notify the other of as aforesaid. Section 4.05. Headings. The headings of the sections contained herein are for convenience only and are not to be construed to be a part of or limit or affect the terms hereof. Section 4.06. Indemnity. The Mortgagor shall indemnify Mortgagee and save the Mortgagee harmless from all costs and expenses, including reasonable attorneys' fees, 17 incurred by Mortgagee in any proceedings or disputes of any kind in which the Mortgagee is made a party, or appears, and which affects the indebtedness secured hereby, this Mortgage, the interest created herein, or the Mortgaged Property. Proceedings and disputes shall include, but shall not be limited to, exercise of the power of sale provided for in Section 3.02(2), condemnation action involving the land and any action to protect the security provided for herein. Any amounts paid by the Mortgagee, for which the Mortgagee is entitled to indemnity, may, at the Mortgagee's option, be added to the indebtedness secured by this Mortgage. IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to be duly executed as of the day and year first above written. • [SEAL] LJ ERICKSON OIL PRODUCTS, INC. By By Its Its STATE OF MINNESOTA ) SS COUNTY OF ) The foregoing instrument was acknowledged before me this day of December, 1985, by the , and , the , of Erickson Oil Products, a Wisconsin corporation, on behalf of said corporation. Notary Public [Notarial Stamp] Wel • • EXHIBIT A Legal Description I* •