HomeMy WebLinkAbout[04c] Revolving Loan Fund - Prego Properties
4(c)
Council Agenda Item
MEETING DATE:
May 4, 2015
AGENDA ITEM:Requested Action:
Revolving Loan Fund: Authorize the Mayor
and Administrator to execute the Revolving Loan Fund Documents between the City of St. Joseph and
Prego Properties, LLC for the renovations to property located at 25 MN Street West in the amount of $
35,000 and to approve a façade grant in the amount of $ 1,000.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION:
PREVIOUS COUNCIL ACTION:
BACKGROUND INFORMATION:
The EDA reviewed a loan request from Engholms and a
recommendation from the EDA Loan Review Committee. The EDA recommends the City Council
approve a loan in the amount of $35,000 to Prego Properties for façade improvements at 25 Minnesota
Street West. Property improvements will assist in retaining jobs at the mixed commercial property.
BFA Grant: Jeff/Stacie Engholm (d.b.a. Prego Properties).
The EDA approved a $1,000 matching BFA grant for Jeff/Stacie Engholm’s property at 25 Minnesota
Street West. Property improvements proposed include: repairing and painting the sidewalk level façade;
adding a new deck and railing to the upper level; installation of new balcony door and fluted surround;
reconstruction of roof overhang; new soffit and fascia; new soffit lighting; external window treatments on
the upper level; decorative cover for attic ventilation; and, new signage.
The final disbursement of funds will be contingent upon the EDA approving the transfers needed to fully
fund the proposal.
BUDGET/FISCAL IMPACT:
$ 1,000 from the revolving loan fund
$ 35,000 Loan, payable over 15 years
ATTACHMENTS:
Request for Council action
Loan Document
Development Information
REQUESTED COUNCIL ACTION:
Authorize the Mayor and Administrator to execute the
Revolving Loan Fund Documents between the City of St. Joseph and Prego Properties, LLC for the
renovations to property located at 25 MN Street West in the amount of $ 35,000 and to approve a façade
grant in the amount of $ 1,000.
THIS PAGE INTENTIONALLY LEFT BLANK
AGREEMENT FOR LOAN
OF THE
ST. JOSEPH REVOLVING LOAN FUND
THIS AGREEMENT is made and entered into as the _____ day of May, 2015, by and between
the City of St. Joseph, hereinafter called "City," and Prego Properties, LLC a Minnesota limited liability
company, "Developer," and Stacie Marie Engholm and Jeffrey Randolph Engholm, personally, hereinafter
referred to collectively as “Guarantors”.
RECITALS
WITNESSETH:
WHEREAS, the Developer have applied to the City of St. Joseph for a $35,000.00 loan from the
City’s Revolving Loan Fund; and
WHEREAS, the City has approved a low-interest loan to Developer in the amount of $35,000.00
conditioned on Developer meeting certain obligations as set out in this agreement;
NOW, THEREFORE, it is agreed by and between the parties hereto as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. DEFINITIONS. In this Agreement, unless a different meaning clearly appear from
the context:
1. CITY means the City of St. Joseph.
2. SECURITY means a personal guaranty from Guarantors and a second mortgage against the
Development Property.
3. DEVELOPER shall mean Prego Properties, LLC, a Minnesota limited liability company.
4. DEVELOPMENT PROPERTY means the real property located at 25 Minnesota Street West, City
of St. Joseph, Stearns County, Minnesota, legally described as:
Lot 9 and the East 2’ of Lot 8, Block 9, TOWNSITE OF ST. JOSEPH, according to the
plat thereof on file and of record in the Office of the Stearns County Recorder.
5. GUARANTOR shall mean Stacie Marie Engholm and Jeffrey Randolph Engholm.
6. INITIAL DISBURSEMENT DATE means the date of the first disbursement of any Loan Proceeds
by the City to the Developer.
7. PROJECT shall mean the repair and painting of sidewalk level façade, addition of balcony, railing
and new door with fluted surround to the upper level, reconstruction of roof overhang, new soffit
and fascia, new soffit lighting, external window treatments on the upper level, decorative cover for
attic ventilation and new signage on the Development Property.
Prego Properties, LLC | Loan Agreement 1
ARTICLE 2
FINANCING FOR PROJECTS
SECTION 2.1. PROJECT FINANCING. The Developer represent that it needs the funds in order
to implement the Project, and that it seeks a low interest loan from the City to implement the Project.
SECTION 2.2. DEVELOPER'S EQUITY AND OTHER FINANCING. The Developer shall commit
$3,000 in personal equity and other financing to be used for the completion of the Development Project.
.
SECTION 2.3, RLF LOAN The City has created a special fund called the Revolving Loan Fund
(RLF), which will provide $35,000.00 in financing for the project.
ARTICLE 3
LOAN TERMS AND CONDITIONS
SECTION 3.1. BASIC LOAN TERMS. The principal amount of the loan by the City to the
Developer shall be in the amount of $35,000.00. The loan shall bear interest at rates shown in Section 5.4
below and shall be repaid according to the promissory note, attached hereto as Exhibit B and
incorporated by this reference.
SECTION 3.2. PREPAYMENT. Prepayment of the entire loan balance may occur at any time
during the loan without penalty.
SECTION 3.3. ASSIGNMENT. Neither Developer nor Guarantors shall assign their rights or
interests or any part therein or their rights or interests in this Loan Agreement, or any part thereof.
SECTION 3.4. SECURITY. The Developer shall provide the following security for the loan: a
second mortgage interest in the Development Property in the form of Exhibit A; the Guarantors shall
provide a personal guaranty in the form of Exhibit C. The Developer and Guarantors acknowledge and
agree that the security are given for good and adequate consideration for this Loan as the Developer and
Guarantors are the majority holders of interest in the Development and the availability of the loan to the
Developer, which is the subject of this Agreement, is of direct personal benefit to the Developer and
Guarantors.
ARTICLE 4
DEFAULT
SECTION 4.1. DEFAULT. The Developer shall be in default under this Contract upon the
happening of any of the following events:
(a) the Developer fails to pay when due any amount payable on the Loan and such
nonpayment is not remedied within ten (10) business days after written notice thereof to
the Developer by the City;
(b) the Developer is in breach of any material obligation or agreement under this Agreement,
the Mortgage or the Promissory Note (Exhibit B) (other than nonpayment of any amount
payable on the Loan) and remains in breach for thirty (30) business days after written
notice thereof to the Developer by the City; provided, however, that if such breach shall
be incapable of being reasonably cured within such thirty (30) business days after notice,
and if the Developer commences and diligently prosecutes the appropriate steps to cure
Prego Properties, LLC | Loan Agreement 2
such breach, no default shall exist so long as the Developer is proceeding to cure such
breach;
(c) if any material covenant, warranty, or representation of the Developer shall prove to be
untrue in any material respect, provided such covenant, warranty or representation of the
Developer remains untrue in any material respect for thirty (30) business days after
written notice thereof to the Developer by the City; provided, however, that if such untruth
shall be incapable of being reasonably corrected within such thirty (30) business days
after notice, and if the Developer commences and diligently prosecutes the appropriate
steps to correct such untruth, no default shall exist so long as the Developer is so
proceeding to correct such untruth;
(d) the Developer, on or after the Initial Disbursement Date, fail to pay its debts as they
become due, makes an assignment for the benefit of its creditors, admits in writing its
inability to pay its debts as they become due, files a petition under any chapter of the
Federal Bankruptcy Code or any similar law, state or federal, now or hereafter existing,
becomes "insolvent" as that term is generally defined under the Federal Bankruptcy
Code, files an answer admitting insolvency or inability to pay its debts as they become
due in any involuntary bankruptcy case commenced against it, or fails to obtain a
dismissal of such case within sixty (60) days after its commencement or convert the case
from one chapter of the Federal Bankruptcy Code to another chapter, or be the subject of
an order for relief in such bankruptcy case, or be adjudged a bankrupt or insolvent, or has
a custodian, trustee, or receiver appointed for it, or has any court take jurisdiction of its
property, or any part thereof, in any proceeding for the purpose of reorganization,
arrangement, dissolution, or liquidation, and such custodian, trustee, or receiver is not
discharged, or such jurisdiction is not relinquished, vacated, or stayed within sixty (60)
days of the appointment;
(e) a final judgment is entered against the Developer that the City reasonably deems will
have a material, adverse impact on the Developer’s ability to comply with the Developer’s
obligations under this Agreement;
(f) the Developer merges or consolidates with any other entity without the prior written
approval of the City, which consent the City will not unreasonably withhold;
(g) there is a loss, theft, substantial damage, or destruction of all or any part of the Collateral
that is not remedied to the City's satisfaction within sixty (60) business days after written
notice thereof by the City to the Developer.
(h) Guarantors are served with a notice of default regarding the first mortgage on the
Development Property under which Guarantors are the named vendee.
SECTION 4.2. REMEDIES UPON DEFAULT.
(a) In the event of a default and the failure to cure it in the time allotted therefore, the City
shall have the right at its option and without demand or notice, to declare all or any part of
the loan including but not limited to declaring the promissory note immediately due and
payable, pursing payment under the personal guaranty and/or foreclosing the mortgage;
and in addition to the rights and remedies granted hereby, the City may exercise all of the
rights and remedies of the City under the Uniform Commercial Code or any applicable
law.
(b) All of City’s rights and remedies shall be cumulative and may be exercised individually or
concurrently. An election to pursue any particular remedy shall not exclude the City’s
right to pursue another remedy, until such time as the City is made whole. No course of
Prego Properties, LLC | Loan Agreement 3
dealing between the City and the Developer and/or Guarantors or any failure or delay by
the City in exercising any right or remedy hereunder, shall operate as a waiver of any of
the City’s rights or remedies. No single or partial exercise of any right or remedy shall
operate as a waiver or preclude the exercise of other rights or remedies.
ARTICLE 5
LOAN DISBURSEMENT PROVISIONS
SECTION 5.1. DISBURSEMENT OF LOAN FUNDS. Loan disbursements not to exceed the
amount of $35,000.00 shall be for the Project. The loan funds shall be disbursed to Developer upon the
signed execution of this agreement, the Promissory Note and Mortgage, and the execution of the
personal guaranty of Stacie Marie Engholm and Jeffrey Randolph Engholm individually in the form
attached hereto as Exhibit C, in accordance with this agreement.
SECTION 5.2. PROJECT TIME FRAME (SCHEDULE). The Developer shall complete the Project
by December 31, 2015 unless an extension of the project time frame is approved by the City.
SECTION 5.3. LOAN TERMS. The term of the Loan shall be fifteen (15) years, commencing as of
the Initial Disbursement Date. The Loan shall bear interest at a rate of Three percent (3%) per annum
and interest shall commence to accrue as of the Initial Disbursement Date.
SECTION 5.4. LOAN REPAYMENTS SCHEDULE. Payments of principal and interest shall
commence on the fifteenth day of the month immediately following the Initial Disbursement Date, and
shall continue on the fifteenth day of each and every month thereafter until paid in full. Such payments
shall fully amortize the Loan over fifteen (15) years; provided, however, the entire remaining unpaid
balance of principal and interest shall be due and payable in full on the first day of the one hundred
th
eightieth (180) month following the Initial Disbursement Date.
SECTION 5.5. ADVERSE CHANGE. If there has been any adverse material change in the
Developer’ financial conditions, organization, operations, or its ability to repay the project financing, the
City may withhold disbursement of funds until such time as the City receives such financial information
and assurances acceptable to the City that Developer will be able to repay the loan.
ARTICLE 6
PROVISION OF EVIDENTIARY MATERIAL REQUIREMENT
SECTION 6.1. The Developer must provide the City with necessary documentation that the RLF
loan proceeds have been used for the items and purposes stated in the RLF application.
ARTICLE 7
NONDISCRIMINATION
SECTION 7.1. NONDISCRIMINATION. The provisions of Minnesota Statutes, Section 181.59,
which relate to civil rights and discrimination, shall be considered a part of this Agreement as though
wholly set forth herein.
ARTICLE 8
Prego Properties, LLC | Loan Agreement 4
DEVELOPER’S ACKNOWLEDGEMENTS, REPRESENTATIONS, AND WARRANTS
SECTION 8.1. ACKNOWLEDGEMENTS. The Developer acknowledges that the City is loaning its
funds from its Revolving Loan Fund.
The Developer further acknowledge that the Developer have made certain representations and
statements as to those activities of the Project to be carried out and completed by the Developer.
The Developer acknowledges that nothing contained in this Agreement, nor any act of the City
shall be deemed or construed to create any relationship of third-party beneficiary, principal and agent,
limited or general partnership, or joint venture.
SECTION 8.2 REPRESENTATIONS AND WARRANTIES. Developer warrants and represents, in
connection with the Loan hereunder and for the benefit of the City, that:
(a) The Developer acknowledges that the City, in selecting the Developer as recipient of
revolving loan funds, relied in material part upon the assured completion of the Project to
be carried out by the Developer, and the Developer assures the City that said Project will
be carried out by the Developer.
(b) The Developer warrants that to the best of its knowledge, it has obtained all federal,
state, and local governmental approvals, reviews, and permits required by law to be
obtained in connection with the Project.
(c) The Developer warrants that it shall keep and maintain books, records and other
documents relating directly to the receipt and disbursements of revolving loan proceeds
and that any duly authorized representative of the City shall, at all reasonable times, have
access to and the right to inspect, copy, audit, and examine all such books, records and
other documents of the Developer necessary to determine compliance with this
agreement until the conclusion of all issues arising out of this loan.
(d) The Developer warrants that it has fully complied with all applicable state and federal
laws pertaining to its business and will continue said compliance throughout the terms of
this Agreement. If at any time notice of noncompliance is received by the Developer, it
agrees to take any action to comply with the State and Federal law in question.
(e) The Developer warrants that the $35,000.00 loan, which is the subject of this agreement,
is necessary for the successful completion of the improvements to the Development
Property.
(f) The Developer warrants that the Developer is the owner of the Development Property,
free of all security interests, liens and encumbrances other than the first mortgage in
favor of Sentry Bank, and that Developer shall not permit any security interest, lien or
encumbrance, to attach to Development Property without the prior written consent of the
City; and shall defend the Development Property against the claims and demands of all
persons and entities other than the City, and shall promptly pay all taxes, assessments
and other government charges upon or against the Development Property.
Prego Properties, LLC | Loan Agreement 5
ARTICLE 9
OTHER SPECIAL CONDITIONS
SECTION 9.1. WORKERS COMPENSATION INSURANCE. Developer has obtained worker’s
compensation insurance as required by Minnesota Law.
SECTION 9.2. PAYMENT OF CITY’S COSTS. Developer shall pay reasonable attorneys fees
incurred in preparing all documentation related to this loan and all other costs incurred by the City in
processing this loan request.
SECTION 9.3. BUSINESS WITH THE STATE OF MINNESOTA/STATE TAX LAWS. The
Developer is required by Minnesota Law to provide its Minnesota tax identification number if it does
business with the State of Minnesota. This information may be used in the enforcement of Federal and
State tax laws. Supplying these numbers could result in an action to require the Developer to file State
tax returns and pay delinquent State tax liabilities. This Agreement will not be approved unless these
numbers are provided. These numbers will be available to Federal and State tax authorities and State
personnel involved in the payment of State obligations.
Prego Properties, LLC:
Minnesota Tax ID: 1434253-2
Federal Employer ID: 64-0954526
SECTION 9.4. EFFECT ON OTHER AGREEMENTS. Nothing in this Agreement shall be
construed to modify any term of any other agreement to which the City and the Developer are parties.
SECTION 9.5. RELEASE AND INDEMNIFICATION COVENANTS. Except for any breach of the
representations and warranties of the City or the negligence or other wrongful act or omission of the
following named parties, the Developer agrees to protect and defend the City and the governing body
members, officers, agents, servants, and employees thereof, now and forever, and further agrees to hold
the aforesaid harmless from any claim, demand, suit, action, or other proceeding whatsoever by any
person or entity whatsoever arising or purportedly arising from the Project and the Developer's activities
on the Development Property.
SECTION 9.6. MODIFICATIONS. This Agreement may be modified solely through written
amendments hereto executed by the Developer and the City.
SECTION 9.7. NOTICES AND DEMANDS. Any notice, demand, or other communication under
this Agreement by either party to the other shall be sufficiently given or delivered only if it is dispatched by
registered or certified mail, postage prepaid, return receipt requested, or delivered personally:
(a) as to the City: City of St. Joseph EDA
ATTN: Judy Weyrens, City Administrator
25 College Avenue North, PO Box 668
St. Joseph, MN 56374
(b) as to the Developer: Prego Properties, LLC
ATTN: Jeffrey Randolph Engholm
19 West Minnesota Street
P.O. Box 386
St. Joseph, MN 56374
or at such other address with respect to any party as that party may, from time to time, designate in
writing and forward to the others as provided in this Section 9.7.
Prego Properties, LLC | Loan Agreement 6
SECTION 9.8. CONFLICT OF INTERESTS; REPRESENTATIVES NOT INDIVIDUALLY LIABLE.
No officer or employee of the City may acquire any financial interest, direct or indirect, in this Agreement,
the Project or in any contract related to the Project. No officer, agent, or employee of the City shall be
personally liable to the Developer or any successor in interest in the event of any default or breach by the
City or for any amount that may become due to the Developer or on any obligation or term of this
Agreement.
SECTION 9.9. BINDING EFFECT. The covenants and agreements in this Agreement shall bind
and benefit the heirs, executors, administrators, successors, and assigns of the parties to this Agreement.
SECTION 9.10. TITLES OF ARTICLES AND SECTIONS. Any titles of the several parts, Articles,
and Sections of this Agreement are inserted only for convenience of reference and shall be disregarded
in construing or interpreting any of its provisions.
SECTION 9.11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute one and the same instrument.
SECTION 9.12. CHOICE OF LAW AND VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the state of Minnesota without regard to its conflict of laws
provisions. Any disputes, controversies, or claims arising out of this Agreement shall be heard in the state
or federal courts of Minnesota, and all parties to this Agreement waive any objection to the jurisdiction of
these courts, whether based on convenience or otherwise.
SECTION 9.13. WAIVER. The failure or delay of any party to take any action or assert any right
or remedy, or the partial exercise by any party of any right or remedy shall not be deemed to be a waiver
of such action, right, or remedy if the circumstances creating such action, right, or remedy continue or
repeat.
SECTION 9.14. ENTIRE AGREEMENT. This Agreement, with the exhibits hereto, constitutes the
entire agreement between the parties pertaining to its subject matter and it supersedes all prior
contemporaneous agreements, representations, and understandings of the parties pertaining to the
subject matter of this Agreement.
SECTION 9.15. SEPARABILITY. Wherever possible, each provision of this Agreement and each
related document shall be interpreted so that it is valid under applicable law. If any provision of this
Agreement or any related document is to any extent found invalid by a court or other governmental entity
of competent jurisdiction, that provision shall be ineffective only to the extent of such invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Agreement or any other
related document.
SECTION 9.16. IMMUNITY. Nothing in this Agreement shall be construed as a waiver by the
City of any immunities, defenses, or other limitations on liability to which the City is entitled by law,
including but not limited to the maximum monetary limits on liability established by Minnesota Statutes,
Chapter 466.
Prego Properties, LLC | Loan Agreement 7
IN WITNESS WHEREOF, the City, Developer and Guarantors have caused this Agreement to be
duly executed in their names and on their behalf as of the date first above written.
THE CITY OF ST. JOSEPH
_____________________________
Richard Schultz, Mayor
______________________________
Judy Weyrens, City Administrator
PREGO PROPERTIES, LLC
______________________________
By: Jeffrey Randolph Engholm
Its: President
JEFFREY RANDOLPH ENGHOLM,
individually
______________________________
By: Jeffrey Randolph Engholm
STACIE MARIE ENGHOLM
, individually
______________________________
By: Stacie Marie Engholm
State of Minnesota )
) s.s.
County of Stearns )
The foregoing instrument was acknowledged before me this ______ day of May, 2015 by Richard Schultz
as Mayor and Judy Weyrens, as City Administrator of the City of St. Joseph.
_________________________________
Notary Public
Prego Properties, LLC | Loan Agreement 8
State of Minnesota )
) s.s.
County of Stearns )
The foregoing instrument was acknowledged before me this _______ day of May, 2015 by Jeffrey
Randolph Engholm, as President of Prego Properties, LLC, a Minnesota limited liability company.
_________________________________
Notary Public
State of Minnesota )
) s.s.
County of Stearns )
The foregoing instrument was acknowledged before me this _______ day of May, 2015 by Jeffrey
Randolph Engholm, individually.
_________________________________
Notary Public
State of Minnesota )
) s.s.
County of Stearns )
The foregoing instrument was acknowledged before me this _______ day of May, 2015 by Stacie Marie
Engholm, individually.
_________________________________
Notary Public
Prego Properties, LLC | Loan Agreement 9
EXHIBIT A
_____________________________________________________________________
MORTGAGE
Date: May ___, 2015
Prego Properties, LLC, a Minnesota limited liability company ("Mortgagor"), hereby
MORTGAGES AND WARRANTS unto the City of St. Joseph, a Minnesota public body
corporate and politic, ("Mortgagee"), in consideration of the sum of Thirty Five Thousand and
NO/100 Dollars ($35,000.00) and other sufficient consideration, receipt of which is hereby
acknowledged, the following described real estate situated in Stearns County, Minnesota to-wit:
Lot 9 and the East 2’ of Lot 8, Block 9, TOWNSITE OF ST. JOSEPH, according
to the plat thereof on file and of record in the Office of the Stearns County
Recorder.
together with all easements, hereditaments, and appurtenances thereunto now or hereafter
belonging or in any way appertaining, all building and other structures now or hereafter situated
thereon, all fixtures now or hereafter affixed thereto and the rents, issues and profits thereof (all
of which is hereinafter referred to as the "Mortgaged Property").
The foregoing shall secure the payment, promptly when due, of:
1. A certain promissory note ("Note") dated May ____, 2015, in the principal
sum of Thirty Five Thousand and No/100 Dollars ($35,000.00), made by Prego
Properties, LLC, to the order of the Mortgagee, bearing interest on said principal sum at
the rate or rates set out therein and payable as provided therein.
2. All Advances made by the Mortgagee for the account of the Mortgagor
hereunder, together with interest as provided in this Mortgage;
3. Any and all attorneys' fees and costs incurred in the collection of the
indebtedness secured hereby;
4. All indebtedness (including interest and attorneys' fees and costs of
collection) now or hereafter owing by Prego Properties, LLC, to the Mortgagee (but this
provision shall not be deemed to obligate the Mortgagee to advance additional sums to
Prego Properties, LLC);
10
5. The faithful performance by Prego Properties, LLC, of all covenants and
obligations undertaken by them in the Note, and by the Mortgagor in any other security
instrument which may be given by Mortgagor to the Mortgagee from time to time as
additional security for the indebtedness evidenced by the Note. All of the foregoing
instruments (including when the context requires, the Note and Mortgage) are
collectively referred to herein as the "Loan Documents."
ARTICLE I
MORTGAGOR'S COVENANTS AND WARRANTIES
Mortgagor hereby covenants, warrants and agrees as follows:
1.01 Payment of Note. Prego Properties, LLC will pay the principal and interest and all
other sums coming due with respect to the Note, this Mortgage or any of the Loan Documents
at the time and place and in the manner specified in and according to the terms thereof.
1.02. Title. Mortgagor warrants that they have good and marketable title to an
indefeasible fee simple estate in the Mortgaged Property and that this Mortgage shall constitute
a second mortgage/lien interest in the Mortgaged Property; that Mortgagor has full power and
authority to mortgage the Mortgaged Property in the manner and form herein done; that this
Mortgage is and shall remain a valid and enforceable lien on the Mortgaged Property; that the
Mortgagor will preserve its title and interest in and to the Mortgaged Property and shall forever
warrant and defend the same and will warrant and defend the validity and priority of the lien of
the Mortgagee thereon forever against all claims and demands of all persons whomsoever.
1.03 Maintenance and Repair. Mortgagor shall, at its cost and expense, keep the
Mortgaged Property in good operating condition and repair and shall not commit or permit any
waste thereof. Mortgagor shall make all repairs, replacements, renewals, additions and
improvements and shall restore promptly and in a good, workmanlike manner any part of the
Mortgaged Property which may be damaged or destroyed and pay when due all costs incurred
therefor. The Mortgagor shall not remove or demolish any of the Mortgaged Property, or
materially alter the Mortgaged Property without the prior written consent of the Mortgagee,
which consent shall not be unreasonably withheld. The Mortgagor shall permit the Mortgagee
or its agents the opportunity to inspect the Mortgaged Property, including the interior of any
structures, at any reasonable time.
1.04. Compliance with Laws. The Mortgagor shall comply with all laws, ordinances,
regulations, covenants, conditions, restrictions, agreements and easements affecting the
Mortgaged Property or the operation thereof and shall pay all fees and charges of any kind in
connection therewith.
1.05. Insurance.
(a) The Mortgagor shall provide, maintain and keep in force a policy of
commercial liability insurance on the Mortgaged Property insuring against liability for
personal injury or death or damage or destruction of personal property in an amount no
less than $1,000,000.00.
If the Mortgagor shall fail to provide insurance and evidence thereof as required
hereby, the Mortgagee may obtain it at the Mortgagor's cost and expense. Any amounts
paid by the Mortgagee for any such policy shall be treated as an Advance.
11
1.06. Condemnation. The Mortgagor, immediately upon obtaining knowledge of the
institution of any proceeding for the taking of the Mortgaged Property or any portion thereof
under the power of eminent domain, shall notify the Mortgagee of the pendency thereof. The
Mortgagee may, at its option, appear in and prosecute, in its own name, any action or
proceeding, or make any compromise or settlement in connection with such proceeding, and the
Mortgagor hereby appoints the Mortgagee as its true and lawful attorney for such purposes,
such power being coupled with an interest. After deducting therefore all of its expenses,
including attorneys' fees, the Mortgagee may elect, in its sole discretion and notwithstanding the
fact that the security given hereby may not be impaired by a partial condemnation, to apply any
part or all of the proceeds of the award, in such order as the Mortgagee may determine, in
reduction of the indebtedness secured hereby whether due or not. Any application of all or a
portion of the proceeds of any such award to the indebtedness shall not cure or waive any
default hereunder or invalidate any act done pursuant to any notice of default. Mortgagor
agrees to execute such further assignments of any compensation, award, damages, right of
action and proceeds as the Mortgagee may require.
1.07. Liens and Encumbrances. The Mortgagor shall pay when due all obligations,
claims or demands which, if unpaid might result in, or permit the creation of any lien or
encumbrance on the Mortgaged Property including without limitation, all claims of mechanics,
materialmen, laborers or others for work or labor performed or materials or supplies furnished in
connection with any work upon the Mortgaged Property.
Notwithstanding the foregoing, the Mortgagor shall have the right to contest in good faith
the validity of any such claim, provided the Mortgagor shall first deposit with the Mortgagee a
bond or other security satisfactory to the Mortgagee in such amounts as the Mortgagee shall
reasonably require, but not more than one and one-half (1 1/2) times the amount of the claim
plus costs, expenses (including attorneys' fees) and interest or, in lieu thereof, shall provide a
lien release bond and provided further that the Mortgagor shall thereafter diligently proceed to
cause such lien to be removed and discharged. If the Mortgagor shall fail to discharge any such
lien or provide such bond or other security, then, in addition to any other right or remedy of the
Mortgagee, the Mortgagee may, but shall not be obligated to, discharge the same, either by
paying the amount claimed to be due or by procuring the discharge of such lien by depositing in
court a bond for the amount claimed or otherwise giving security for such claim in such manner
as is or may be prescribed by law. Any such amount so expended by the Mortgagee shall be
treated as an Advance under Section 1.13.
1.08. Taxes, Assessments and Utility Charges. The Mortgagor shall pay before any
penalty for nonpayment attaches, all property taxes and assessments, water charges, sewer
service charges and all other charges against the Mortgaged Property. The Mortgagor shall
deliver to the Mortgagee copies of all official receipts showing payment of all real and personal
property taxes and assessments levied against the Mortgaged Property within thirty (30) days of
the date on which taxes and assessments were due. The Mortgagor shall furnish the
Mortgagee other such official receipts evidencing payment thereof within thirty (30) days of a
written request therefore from the Mortgagee.
1.09. Indemnification. The Mortgagor shall defend any suit, action or proceeding that
might in any way, in the reasonable judgment of the Mortgagee, affect the value of or title to the
Mortgaged Property or the rights and powers of the Mortgagee with respect thereto;
PROVIDED, HOWEVER, that without the prior written consent of the Mortgagee, the
Mortgagors shall have no power to settle, compromise or confess any judgment or claim which
may affect the Mortgagee and the lien granted hereby. Mortgagor shall, at all times, indemnify,
defend and hold harmless (and on demand reimburse the Mortgagee) for any and all loss,
12
damage, expense or cost, including costs of attorneys' fees, arising out of or incurred in
connection with any such suit. The amount of such expenditures shall be secured by this
Mortgage, shall accrue interest at the Rate in the Note and shall be due and payable on
demand.
1.10. Sale or Encumbrance Prohibited. Mortgagor specifically acknowledges that in
order to induce the Mortgagee to make the loan secured hereby, the Mortgagor agrees that if
the Mortgaged Property or any part thereof or any interest therein, or if the beneficial interest of
Mortgagor or any part thereof shall be sold, assigned, transferred, conveyed, pledged,
mortgaged or encumbered (or should the Mortgagor enter into a contract to do any of the
foregoing) , or if otherwise alienated by the Mortgagor, or by any person or other entity having
any power of direction over or having any part of the beneficial interest of Mortgagor, voluntarily
or involuntarily or by operation of law, unless herein permitted, without the written consent of the
Mortgagee, then Mortgagee, at its option, may declare the Note and all other obligations
hereunder to be immediately due and payable. Except as otherwise specifically provided
herein, any change in the legal or equitable ownership (including, without limitation, the
beneficial interest, any partnership interest or any shares of the stock in Mortgagor) of the
Mortgaged Property, whether or not of record, shall be deemed a transfer of interest in the
Mortgaged Property. The transfer of an interest in the Mortgaged Property or in the beneficial
interest may materially alter and reduce the Mortgagee's security for the indebtedness secured
hereby.
1.11. Replacements and Substitutions. All right, title and interests of the Mortgagor in
and to all extensions, improvements, betterments, renewals, substitutes and replacements of
the Mortgaged Property hereafter acquired by the Mortgagor or constructed, assembled or
placed by the Mortgagor on the Mortgaged Property, immediately upon such acquisition or
construction, without any further conveyance or assignment by the Mortgagor, shall become
subject to the lien of this Mortgage as fully and completely and with the same effect and with the
same priority as the lien of this Mortgage has with respect to all other property secured
hereunder.
1.12. Security Agreement. This Mortgage shall also constitute a security agreement as
that term is defined in Article 9 of the Uniform Commercial Code with respect to all of those
portions of the Mortgaged Property which constitute personal property or fixtures governed by
Article 9 of the Uniform Commercial Code. The Mortgagor hereby agrees to execute and
deliver on demand and hereby irrevocably constitutes and appoints the Mortgagee as its
attorney-in-fact to execute, deliver and, if appropriate, file with the appropriate filing officer or
office such financing statements or other instruments as the Mortgagee may request or require
in order to perfect its lien or security interest.
1.13. Advances. If the Mortgagor shall fail to perform any of the covenants herein
contained or contained in any other Loan Document, the Mortgagee may, but without obligation
to do so, pay any and all amounts necessary to cause the same to be performed on behalf of
Mortgagor and all sums so expended by the Mortgagee, including, but not limited to payment of
taxes, insurance premiums, lien payments, assessments or other expenses to preserve, protect
or operate the Mortgaged Property or any part thereof (or the lien of this Mortgage) in
connection with any foreclosure, receivership or otherwise, shall be secured by the lien of this
Mortgage. Each such payment is collectively referred to in this Mortgage as an "Advance." The
Mortgagor shall repay the Mortgagee on demand for each Advance and the amount of each
Advance shall accrue interest at the Rate in the Note, from the date of each advance until paid
to the Mortgagee. Nothing herein contained shall prevent any such failure to perform on the part
of the Mortgagor from constituting an Event of Default as defined herein.
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1.14. Time. Mortgagor agrees that time is of the essence hereof in connection with all
of the obligations of the Mortgagor herein, in the Note and in the other Loan Documents.
1.15. Estoppel Certificates. The Mortgagor within ten (10) days after written request
therefore, shall furnish to the Mortgagee a duly acknowledged written statement setting forth the
amount of the debt secured by this Mortgage and stating that either no setoffs or defenses exist
against the mortgage debt, or, if such setoff of defenses are alleged to exist, the nature thereof.
1.16. Compliance with Covenants. The Mortgagor warrants that it is not in violation of
any covenant, condition or restriction regarding the ownership, use or occupancy of the
Mortgaged Property and that the use of the Mortgaged Property by the Mortgagor does not
constitute a violation of any such covenant, condition or restriction. If the Mortgagor shall fail to
perform any obligations set forth in any covenant, condition or restriction, the Mortgagee may,
but shall not be obligated to do so, pay any and all amounts necessary to cause the same to be
performed on behalf of the Mortgagor, and all sums so expended by the Mortgagee shall be
secured by the lien of this Mortgage and shall be an Advance under the terms hereof.
ARTICLE II
DEFAULT
2.01. Events of Default. The occurrence of any one or more of the following shall be
deemed to be an event of default (an "Event of Default") hereunder:
a. Failure by Mortgagor to pay in full on or before the Maturity Date, as that
term is defined in the Note, all amounts due and payable under the Note, this Mortgage
and each and every Loan Document. It is expressly agreed that such failure shall
constitute an Event of Default without any requirement that any notice of such failure be
given.
b. Failure by Mortgagor to make any monthly payment when due in
accordance with the terms of the Note or this Mortgage.
c. Occurrence of a non-monetary default under the terms of the Note, this
Mortgage, any Loan Document or any other document executed in connection herewith.
d. If any warranty, representation or disclosure made by the Mortgagor to
the Mortgagee proves to be materially false or misleading on the date on which it was
made, whether or not the warranty, representation or disclosure appears in this
Mortgage, or any Loan Document or any document or information provided to the
Mortgagee to be used in determining whether or not to make the loan evidenced by the
Note.
e. Institution of foreclosure or other proceedings to enforce any mortgage
lien, security interest, judgment lien or any other lien or encumbrances of any kind upon
the Mortgaged Property or any portion thereof.
f. Should the Mortgagor:
(i) file a petition in voluntary bankruptcy or for reorganization pursuant to
Chapters 7, 11 or 13 of the United States Bankruptcy Code or any similar law,
14
state or federal, whether now or hereafter existing (hereinafter referred to as
"Bankruptcy Proceeding"); or
(ii) file any answer admitting insolvency or inability to pay its debts; or
(iii) fail to obtain a vacation or stay of any involuntary Bankruptcy
Proceeding within the forty-five (45) day period from the date of filing specified in
the Note; or
(iv) be adjudicated a bankrupt or declared insolvent in any Bankruptcy
Proceeding; or
(v) have a trustee or receiver appointed to take possession of its
property, or major part thereof, in any involuntary proceeding for the purpose of
reorganization, arrangement, liquidation if such trustee or receiver shall not be
discharged or if jurisdiction shall not be relinquished, vacated or stayed, on
appeal or otherwise, within sixty (60) days; or
(vi) make an assignment for benefit of its creditors; or
(vii) admit in writing its inability to pay its debts generally as they
become due.
g. Voluntary or involuntary termination or suspension of the business of the
Mortgagor or the attachment or seizure of a substantial part of the Mortgagor’s assets or
any portion of the Mortgaged Property.
h. Any other event which under the Note, this Mortgage or other Loan
Document constitutes a default or gives the Mortgagee the right to accelerate the
maturity of the indebtedness.
ARTICLE III
REMEDIES
Upon the occurrence of any Event of Default, if not cured within the time, if any,
permitted in the Note, Mortgagee shall have the following rights and remedies:
3.01. Acceleration of Maturity. Mortgagee may declare the entire balance of the Note
then outstanding and all other obligations of the Mortgagor hereunder to be immediately due
and payable and upon such declaration the principal of the Note and accrued and unpaid
interest and all other amounts to be paid under the Note, this Mortgage or any other Loan
Document shall become immediately due and payable, anything in the Note, this Mortgage or
the Loan Documents to the contrary notwithstanding.
3.02. Judicial Remedies. The Mortgagee may, commence an action to foreclose this
Mortgage in any court of competent jurisdiction or to sell the Property at public auction and
convey the same to the Mortgagee in fee simple in accordance with the statute, and out of the
monies arising from such sale to retain all sums secured thereby, with interest and all legal
costs and charges of such foreclosure and the maximum attorneys' fees permitted by law, which
costs, charges, and fees Mortgagor agrees to pay and to enforce any of the covenants and
agreements contained herein and to take such steps to protect and enforce its rights hereunder
by specific performance, an action for damages, or for the enforcement of any other appropriate
15
legal or equitable remedy available to mortgagees generally. In such event, it is agreed that in
such foreclosure action, the Mortgagee shall be entitled to the appointment, ex parte and
without notice of a receiver to take possession of the real estate and to receive and collect the
income, rents, issues and profits thereof and to lease the same if it is not then under lease.
Such receiver may enter into and upon all or any part of the Mortgaged Property and
may exclude the Mortgagor, its agents and servants wholly therefrom and may use, operate,
manage and control the Mortgaged Property and conduct the business thereof, either personally
or by managers and agents. The receiver may from time to time maintain and restore the
Mortgaged Property, or any part thereof, may insure the same, may make all necessary or
proper repairs, renewals or replacements and such alterations, betterments and improvements
as it may deem advisable. The receiver shall have right to manage and operate the Mortgaged
Property and to carry on the business thereof and to exercise all rights and powers with respect
thereto as it shall deem proper.
The foregoing remedies shall be in addition to all other remedies available to the
Mortgagee, at law or in equity. Failure of the Mortgagee to exercise any remedy available to it
in the event of a default shall not be deemed a waiver of any repeated or continued default.
3.03. Remedies Cumulative. No remedy conferred upon the Mortgagee hereunder is
intended to be exclusive of any other remedy herein or by law provided, but each shall be
cumulative and be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity. No delay or omission by the Mortgagee to exercise any right or
power accruing upon any Event of Default shall impair any right or power or shall be construed
to be a waiver of any Event of Default or any acquiescence therein; and every power and
remedy given by this Mortgage to the Mortgagee may be exercised from time to time as often as
may be deemed expedient by the Mortgagee. If there exists additional security for the
performance of the obligations secured hereby, the holder of the Note, at its sole option, and
without limiting or affecting any of the rights or remedies hereunder, may exercise any of the
rights and remedies to which it may be entitled hereunder either concurrently with whatever
rights it may have in connection with such other security or in such order as it may determine.
ARTICLE IV
MISCELLANEOUS
4.01. Non-Waiver. By accepting payment of any sums secured hereby after its due
date or late performance of any obligation secured hereby, Mortgagee shall not waive its right
against any person obligated directly or indirectly hereunder or on any indebtedness hereby
secured, either to require prompt payment when due of all other sums so secured or to declare
a default for failure to make payment except as to such payment accepted by the Mortgagee.
No exercise of any right or remedy by the Mortgagee hereunder shall constitute a waiver of any
other right or remedy herein contained or provided by law.
No delay or omission by the Mortgagee in the exercise of any right or remedy accruing
hereunder or arising otherwise shall impair any such right or remedy or be construed to be a
waiver of any default or acquiescence therein.
Receipts of rents of any other monies pursuant to the terms of this Mortgage or any
other of the Loan Documents shall not constitute a waiver of the Mortgagee's right of
foreclosure in the event of a default.
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4.02. Release, Extension or Modification. Without affecting the liability of any other
person liable for any indebtedness referred to herein, and without affecting the lien or priority of
the Mortgage on any property not released, the Mortgagee may, without notice, release any
person so liable, extend the maturity or modify the terms of the Note, this Mortgage or any Loan
Document, or grant other indulgences, or release or re-convey at any time all or any part of the
Mortgaged Property; or take or release any other security; or make compositions or other
arrangements with debtors. Mortgagee may also accept additional security, either concurrently
herewith or hereafter, and sell the same or otherwise realize thereon, either before, concurrently
with or after sale hereunder.
4.03. Protection of Security. Should the Mortgagor fail to make any payment or to
perform any covenant as herein provided, Mortgagee may, but shall not be required to: (i) make
or do the same in such manner and to such extent as the Mortgagee may deem necessary to
protect the security hereof and is authorized to enter upon the Mortgaged Property for such
purposes; (ii) commence, appear in and defend any action or proceeding purporting to affect the
security hereof or the rights or powers of the Mortgagee; or (iii) pay, purchase, contest or
compromise any encumbrance, charge or lien which in the judgment of the Mortgagee is prior or
superior hereto and, in exercising any such power, incur any liability and expend whatever
amounts in its sole discretion it may deem necessary therefore, including reasonable attorneys'
fees. Any expenditures in connection therewith shall be deemed an Advance and shall
constitute part of the indebtedness secured by this Mortgage.
4.04. Construction. The headings of each article, section or paragraph are for
information and convenience only and do not limit or construe the contents of any provision
hereof.
4.05. Severability. If any term of this Mortgage or the application thereof to any person
or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this
Mortgage or the application of such term to persons or circumstances other than those to which
it is invalid or unenforceable, shall not be affected and each term of this Mortgage shall be valid
and enforceable to the fullest extent.
4.06. Successors in Interest. This Mortgage is for the benefit of and binding upon the
parties hereto, their heirs, executors, administrators, successors and assigns.
4.07. Modifications. This Mortgage may not be amended, modified or changed nor shall
any claim of waiver of any provision hereof be effective except only by instrument in writing and
signed by the party against whom enforcement thereof is sought.
4.08. Attorneys' Fees and Other Costs. In the event that this Mortgage is placed in the
hands of an attorney for collection or if suit is brought to enforce the Note, this Mortgage or any
Loan Documents, or in the event it becomes necessary to protect the security for the
indebtedness evidenced hereby, or in the event the Mortgagee may be made party to any
litigation because of the existence of the indebtedness evidenced by this Note, this Mortgage or
because of the existence of the Note or the Loan Documents, the Mortgagee shall be entitled to
receive its costs and reasonable attorneys' fees, both before and after judgment and whether or
not suit be filed. Said costs and attorneys' fees shall include, without limitation, costs and
attorneys' fees incurred in any appeal and in any proceedings under any present or future
federal bankruptcy act or state receivership act, and the costs of any environmental
assessments required by Mortgagee. The Mortgagor shall be obligated to pay all such costs
and fees.
17
4.09. Conflict. If the terms of any other Loan Document except the Note shall be in
conflict with this Mortgage, then this Mortgage shall govern to the extent of the conflict. If the
terms of this Mortgage shall be in conflict with the Note, then the Note shall govern to the extent
of the conflict.
4.10. Notices. All notices to be given pursuant to this Mortgage shall be sufficient if
given by personal service, by guaranteed overnight delivery service, or certified first class mail,
to the addresses of the parties described below or to such other address as party may request
in writing from time to time. Any time period provided in the giving of any notice hereunder shall
commence upon the date of personal service, the date after delivery to the guaranteed
overnight delivery service, or two (2) days after any notices are deposited, postage prepaid, in
the U.S. mail, certified mail.
Mortgagor's Address: Prego Properties, LLC
ATTN: Jeffrey Randolph Engholm
19 West Minnesota Street
P.O. Box 386
St. Joseph, MN 56374
Mortgagee’s Address: City of St. Joseph EDA
ATTN: Judy Weyrens, City Administrator
25 College Avenue North, PO Box 668
St. Joseph, MN 56374
4.11. Late Charges. As set forth and defined in the Note, there shall be due the
Mortgagee a late charge of five percent (5%) of the amount of any payment which is received by
the Mortgagee so as to incur a late charge and all such late charges are secured hereby.
4.12. Prepayment. In accordance with the terms of the Note, there are no prepayment
fees.
4.13. Environmental Matters. Mortgagor shall not install, use, generate, store or
dispose of in or about the Premises any hazardous substance, toxic chemical, pollutant or other
material regulated by the Comprehensive Environmental Response, Compensation and Liability
Act of 1985 or the Minnesota Environmental Response and Liability Act or any similar law or
regulation, including without limitation any material containing asbestos or PCB (collectively
"Hazardous Materials") without Mortgagee’s written approval of each Hazardous Material.
Mortgagee shall not unreasonably withhold its approval of use by Mortgagor of immaterial
quantities of Hazardous Materials customarily used in business operations so long as Mortgagor
uses such Hazardous Materials in accordance with applicable laws. Mortgagor shall indemnify,
defend and hold Mortgagee harmless from and against any claim, damage or expense arising
out of Mortgagor’s installation, use, generation, storage, or disposal of any Hazardous Materials,
regardless of whether Mortgagee has approved the activity.
18
4.14. No Partnership or Joint Venture. Mortgagor acknowledges and agrees that in no
event shall Mortgagee be deemed to be a partner or joint venturer with Mortgagor. Without
limitation of the foregoing, Mortgagee shall not be deemed to be such a partner or joint venturer
on account of its becoming a mortgagee in possession or exercising any rights pursuant to this
Mortgage or pursuant to any other instrument or document securing any portion of the
indebtedness secured hereby or on account of receiving any release fee for partial releases of
this Mortgage, or otherwise. Mortgagor further agrees to indemnify and hold the Mortgagee
harmless from and against all loss, expense, or damage resulting from any construction or
finding of a partnership or joint venture and from any action taken as a result thereof or pursuant
thereto.
IN WITNESS WHEREOF, the parties have executed this Mortgage Agreement this
_____ day of May, 2015.
PREGO PROPERTIES, LLC
______________________________
By: Jeffrey Randolph Engholm
Its: President
THECITY OF ST. JOSEPH
_______________________________
Richard Schultz, Mayor
______________________________
Judy Weyrens, City Administrator
State of Minnesota )
) s.s.
County of Stearns )
The foregoing instrument was acknowledged before me this _______ day of May, 2015 by
Jeffrey Randolph Engholm, as President of Prego Properties, LLC, a Minnesota limited liability
company, on behalf of said company.
_________________________________
Notary Public
State of Minnesota )
St. Joseph Food Cooperative, Prego Properties, LLC | Exhibit A: 1
) s.s.
County of Stearns )
The foregoing instrument was acknowledged before me this ______ day of May, 2015 by
Richard Schultz and Judy Weyrens, the Mayor and City Administrator of the City of St. Joseph, a
Minnesota public body corporate and politic, on behalf of said public body.
_________________________________
Notary Public
TAX STATEMENTS FOR THE REAL
PROPERTY DESCRIBED IN THIS
INSTRUMENT SHOULD BE SENT TO:
Prego Properties, LLC
ATTN: Jeffrey Randolph Engholm
19 West Minnesota Street
P.O. Box 386
St. Joseph, MN 56374
THIS INSTRUMENT WAS DRAFTED BY: When Recorded Return To:
Susan M. Kadlec – 0290385 The Economic Development Authority of the
Jovanovich, Kadlec & Athmann, P.A. City of St. Joseph
1010 W St. Germain, Suite 420 Attn: Judy Weyrens
St. Cloud, Minnesota 56301 25 College Avenue North, PO Box 668
Telephone: (320) 230-0203 St. Joseph, MN 56374
St. Joseph Food Cooperative, Prego Properties, LLC | Exhibit A: 1
EXHIBIT B
PROMISSORY NOTE
U.S. $35,000.00 May ____, 2015
St. Joseph, Minnesota
A. BORROWER’S PROMISE TO PAY
For value received, the undersigned (the “Borrower”) promises to pay to the order of City of St.
Joseph (“Lender”), at its office at the City Administrator’s Office, 25 College Avenue North, St.
Joseph, Minnesota 56374, or at any other place designated at any time in writing by the holder of
this Note, in lawful money of the United States of America, the principal sum of thirty-five
thousand dollars ($35,000.00) together with interest at a rate of three percent (3.00%) per annum.
B. PAYMENTS
Borrower shall pay Lender $241.70 per month, beginning July 15, 2015 and continuing thereafter
until June 15, 2030, when all principal and accrued interest shall be paid in full. If any payment is
not paid when due or within ten (10) days thereafter, the Borrower shall pay Lender on demand a
late charge equal to five percent (5%) of the unpaid overdue amount.
C. DISBURSEMENTS
The holder of the Promissory Note will disburse to the Borrower $35,000.00 upon the signed
execution of this agreement, the Mortgage and the Personal Guaranty of Stacie Marie Engholm
and Jeffrey Randolph Engholm individually and in accordance with the AGREEMENT FOR LOAN
OF THE ST. JOSEPH REVOLVING LOAN FUND.
D. BORROWER’S RIGHT TO PREPAY
The Borrower, may, at any time, or from time to time, prepay the amount of principal interest
outstanding in whole or part, without penalty or premium. Any such prepayment shall be applied
to payment of accrued interest first and then to the outstanding principal. Accrued interest shall
accumulate at the rate of three percent (3.00%) per annum.
E. RIGHT TO INSPECT BOOKS, RECORDS, AND REPORTS
Lender and/or agent shall have the right to inspect Borrower’s books and records as it deems
necessary to ensure compliance with the terms of this Note.
F. BORROWER’S DEFAULT
Upon the occurrence of any of the following events, the holder of this Note may, at its option,
upon ten (10) days’ written notice to the Borrower, declare this Note in default and to be
immediately due and payable:
1. The Borrower fails to pay when due any amount payable on the Loan and such
nonpayment is not remedied within ten (10) business days after written notice thereof to
the Borrower by the Lender;
2. The Borrower is in breach of any material obligation or agreement under this Agreement
(other than nonpayment of any amount payable on the Loan) and remains in breach in
any material obligation for thirty (30) business days after written notice thereof to the
Borrower by the Lender; provided, however, that if such breach shall be incapable of
being reasonably cured within such thirty (30) business days after notice, and if the
Prego Properties, LLC | Exhibit C: 1
Borrower commences and diligently prosecutes the appropriate steps to cure such
breach, no default shall exist so long as the Borrower is proceeding to cure such breach;
3. If any material covenant, warranty, or representation of the Borrower shall prove to be
untrue in any material respect, provided such covenant, warranty or representation of the
Borrower remains untrue in any material respect for thirty (30) business days after written
notice thereof to the Borrower by the Lender; provided, however, that if such untruth shall
be incapable of being reasonably corrected within such thirty (30) business days after
notice, and if the Borrower commences and diligently prosecutes the appropriate steps to
correct such untruth, no default shall exist so long as the Borrower is so proceeding to
correct such untruth;
4. A final judgment is entered against the Borrower that the Lender reasonably deems will
have a material, adverse impact on the Borrower's ability to comply with the Borrower’s
obligations under this Agreement;
5. The Borrower merges or consolidates with any other entity without the prior written
approval of the Lender, which consent the Lender will not unreasonably withhold;
6. There is a loss, theft, substantial damage, or destruction of all or any part of the Collateral
that is not remedied to the Lender's satisfaction within sixty (60) business days after
written notice thereof by the Lender to the Borrower.
This note shall also become automatically due and payable without notice or demand:
1. If the Borrower is dissolved; or
2. If a petition is filed by or against the Borrower under the United States Bankruptcy Code.
G. PAYMENT OF NOTE HOLDER’S COSTS AND EXPENSES
Borrower agrees to pay all costs of collection, including attorneys’ fees, in the event this Note is
not paid when due.
H. GIVING OF NOTICES
Any notice that must be given to the Borrower under this Note will be given by and effective upon
delivering it or mailing it by first-class mail, postage prepaid, to the undersigned at 19 West
Minnesota Street, P.O. Box 386, St. Joseph, Minnesota 56374 or at such other address as the
Borrower may designate by notice to the holder of this Note.
I. WAIVERS
Presentment or other demand for payment, notice of dishonor, and protest are hereby waived by
the Borrower.
J. GOVERNING LAW
This Note shall be governed by the substantive laws of the State of Minnesota.
PREGO PROPERTIES, LLC
______________________________
By: Jeffrey Randolph Engholm
Its: President
Prego Properties, LLC | Exhibit C: 2
EXHIBIT C
PERSONAL GUARANTY
Stacie Marie Engholm
And
Jeffrey Randolph Engolm
PERSONAL GUARANTY
WHEREAS
, pursuant to that certain Loan Agreement to be dated May __, 2015 between Prego
Properties, LLC, a Minnesota limited liability company (“Borrower”) and the City of St. Joseph, Minnesota,
a Minnesota Municipal corporation (“Lender”), Lender has agreed to loan to Borrower the sum of Thirty
Five Thousand Dollars ($35,0000) (the “Loan”); and
WHEREAS
, simultaneously with the execution of the Loan Agreement, the Borrower has issued
to Lender its Promissory Note in the original principal amount of $35,0000; and
WHEREAS
, the Lender’s willingness to enter into the Loan Agreement and make such Loan to
Borrower is conditioned upon the personal guaranty as to the payment of all indebtedness and obligations
under the Loan Agreement, Promissory Note and related Loan Documents by Jeffery Randolph Engholm
an individual residing in Minnesota, (“Guarantor”) and Stacie Marie Engholm an individual residing in
Minnesota, (“Guarantor”).
NOW, THEREFORE
, Guarantor agrees as follows:
1. In order to induce Lender to enter into the Loan Agreement with and make the Loan to
Borrower, Guarantor does hereby absolutely and unconditionally guaranty to Lender the
payment, and not merely the collection, of all indebtedness and obligations of whatever
nature of Borrower to Lender under the Loan Agreement, Note and Loan Documents, as and
when the same shall in any manner be or become due according to the terms and conditions
provided therein (the “Indebtedness”).
2. Without limiting the generality of the foregoing, the Guarantor agrees that he/she will pay the
full amount of the Loan Amount, Basic Interest, Default Interest, fees or any other charges
under the Loan Agreement, Note and Loan Documents, now or hereafter due, as and when
the same shall in any manner be or become due according to the terms and conditions
provided therein.
3. The Guarantor hereby waives (a) notice of acceptance of this Guaranty by Lender; (b) the
creation of Indebtedness of Borrower to Lender; (c) demand, notice of dishonor, presentment
for payment, protest and notice of protest and of non-performance on all of said
Indebtedness; and (d) if said Indebtedness is renewed, or if the time for payment thereof be
extended (to which Guarantor hereby consents) either with or without notice to Guarantor,
Guarantor unconditionally guarantees the payment of such Indebtedness at the time fixed for
the payment thereof in and by any such renewal or extension.
4. Guarantor further waives all rights, by statute or otherwise, to require Lender to proceed in
the first instance against the Borrower, and hereby expressly agrees that in any right of action
Prego Properties, LLC | Exhibit C: 3
which shall accrue to Lender by reason of the Indebtedness, Lender may, at its sole option,
proceed: (a) against either or both Guarantors together with Borrower; or (b) against either or
both Guarantors only, without having first commenced any action against or having obtained
any judgment against Borrower; it being specifically agreed that Lender is in no way required
to exercise diligence to enforce its rights against the Borrower or against any other person,
firm or limited liability company, as may be applicable, with respect to the Indebtedness.
5. The undersigned further acknowledges and agrees with the Lender that:
A. No act or thing need occur to establish the liability of the undersigned hereunder, and
no act or thing except full payment and discharge of indebtedness under the
promissory note (the “Indebtedness”) shall in any way exonerate the undersigned or
modify, reduce, limit or release the liability of the undersigned hereunder.
B. If any of the undersigned shall die, or shall be or become insolvent (however
defined), then the Lender shall have the right to declare immediately due and
payable, and the undersigned will forthwith pay to the Lender, the full amount of all
Indebtedness, whether due and payable or unmatured. If any of the undersigned
voluntarily commences or there is commenced involuntarily against the undersigned
a case under the United States Bankruptcy Code, the full amount of all Indebtedness,
whether due and payable or unmatured, shall be immediately due and payable
without demand or notice thereof.
C. The undersigned will pay or reimburse the Lender for all costs and expenses
(including reasonable attorneys' fees and legal expenses) incurred by the Lender in
connection with the protection, defense or enforcement of this guaranty, whether or
not suit is commenced, which attorneys' fees and legal expenses shall include, but
not be limited to, any attorneys' fees and legal expenses incurred in connection with
any appeal of a lower court's judgment or order.
D. The obligations of Guarantors under this guaranty are joint and several.
E. If any payment applied by the Lender to Indebtedness is thereafter set aside,
recovered, rescinded or required to be returned for any reason (including, without
limitation, the bankruptcy, insolvency or reorganization of Borrower or any other
obligor), the Indebtedness to which such payment was applied shall for the purposes
of this guaranty be deemed to have continued in existence, notwithstanding such
application, and this guaranty shall be enforceable as to such Indebtedness as fully
as if such application had never been made.
F. The undersigned acknowledges and agrees that the Lender (a) has not made any
representations or warranties with respect to, (b) does not assume any responsibility
to the undersigned for, and (c) has no duty to provide information to the undersigned
regarding, the enforceability of any of the Indebtedness or the financial condition of
the Borrower or any guarantor. The undersigned has independently determined the
creditworthiness of the Borrower and the enforceability of the Indebtedness and until
the Indebtedness is paid in full will independently and without reliance on the Lender
continue to make such determinations.
G. This guaranty shall be binding upon the undersigned and the heirs, representatives,
successors and assigns of the undersigned and shall inure to the benefit of the
Prego Properties, LLC | Exhibit C: 4
Lender and its participants, successors and assigns. Any invalidity or unenforceability
of any provision or application of this guaranty shall not affect other lawful provisions
and application hereof, and to this end the provisions of this guaranty are declared to
be severable. This guaranty may not be waived, modified, amended, terminated,
released or otherwise changed except by a writing signed by the undersigned and
the Lender. This guaranty shall be governed by the substantive laws (other than the
law of conflicts) of the State of Minnesota. The undersigned waive(s) notice of the
Lender's acceptance hereof.
BE IT FURTHER RESOLVED,
Guarantor hereby:
EXPRESSLY WAIVE(S) ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY RIGHTS (a) UNDER THIS GUARANTY OR UNDER ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY
IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR (b) ARISING FROM ANY
RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY, AND AGREE(S) THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
THE UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL OF THE PROVISIONS OF
THIS AGREEMENT AND AGREES TO ITS TERMS.
IN WITNESS WHEREOF, this guaranty has been duly executed by the undersigned this _____ day of
May, 2015.
_________________________________
Jeffrey Randolph Engholm
_________________________________
Stacie Marie Engholm
Subscribed and sworn to before me this ____ day of May, 2015 by Jeffrey Randolph Engholm and Stacie
Marie Engholm.
______________________________
Notary Public
Prego Properties, LLC | Exhibit C: 5
DATE: April 9, 2015
MEMO TO: Economic Development Authority
Administrator
Judy Weyrens FROM: Cynthia Smith-Strack Municipal Development Group
Mayor RE: RLF Request: Jeff and Stacie Engholm (Prego Properties)
Rick Schultz
Background:
Councilors In 2002 the EDA/City established a Revolving Loan Fund (RLF)after a grant from the Minnesota
Matt Killam Investment Fund was secured in conjunction with the construction of the Fabral (formerly
Bob Loso VicWest)facility.The RLF has an unaudited balance as of April 1,2015 of approximately$42,000.
Renee Symanietz
Dale Wick The EDA has received an application for the RLF Program from Jeff and Stacie Engholm (Prego
Properties). Following receipt of the loan application and as set forth in the EDA's RLF policy, a
EDA loan review subcommittee met to review the application.
Doug Danielson
Larry Hosch The Engholm's have one other loan with the EDA which will be paid off by the close of 2015. All
Gary Osberg loan and interest payments were made on time and in full. In addition, the Minnesota Street
Rick Schultz Market has a small commercial loan through the EDA RLF. That loan is secured by equipment.
Dale Wick Payments on that loan have always been made on time and in full.
The request is for a principal of$37,000 at a rate of three(3) percent for 15 years. Proceeds will
be used to enhance the façade at 25 Minnesota Street West. The building consists of lease
commercial space and homestead residential on upper level. Minnesota Street Market, Closet to
Closet, and the Naan Bakery are retail lessees.The building is fully occupied.The façade project
will enhance the value of the lease space and thereby assist in retaining local jobs.
Improvements proposed include:
• Repairing and painting the sidewalk level façade
• Adding a new deck and railing to the upper level,
• Installation of new balcony door and fluted surround
• Reconstruction of roof overhang
• New soffit and fascia,
• New soffit lighting
• External window treatments on the upper level
• Decorative cover for attic ventilation
• New signage
Proposed security is a secondary position on the real estate with a personal guarantee. An
appraisal completed in 2013 and consultation with the holder of the primary loan on the real
property verifies there is adequate building equity to provide security for the proposed loan.
The Applicant has submitted, and the loan review committee has reviewed the following:
• Application
• Personal financial statements
• A letter of support following review by the Primary Lender.
3/
• Proof of real estate taxes paid.
• Proof of utility bills paid.
• Building/project plans.
• Quotes from contractors/vendors
The loan review committee recommends approval of a$35,000 loan at a rate of three percent for
a term of 15 years.
Please find a copy of the RLF application attached for your information. Jeff Engholm will be
attending the EDA meeting to discuss the loan application as will Robert McCoy project designer.
Eligible Loan Activities
1. Loan funds may be used for acquisition of land and/or buildings(s), rehabilitation of
building(s), reconstruction, new construction, site improvements, utilities or
infrastructure, and purchase of industrial equipment in connection with starting a new
business or expanding an existing business.
2. Land and building must be privately owned, taxable property and proposed for
commercial and/or industrial activities.
3. If building(s)are being purchased or rehabilitated with funds from the Revolving Loan
Fund any/all building code violations must be remedied. The project must comply with
the St. Joseph City Code including standards relating to land use.
4. Revolving loan fund assistance can be for no more than one-half of the cost of the
project, unless the project is valued at under$50,000 as is the case with this project.
Ineligible activities include the operation or expansion of a casino, sports facility when
the principal tenant is a professional sports team, housing projects and operating
expenses.
The proposed project meets the eligibility guidelines.
Approval criteria for RLF applications are as follows:
1. A gap in project financing is demonstrated.
2. The business must locate, remodel or expand within the corporate limits of the City of
St.Joseph.
3. The project will result in the creation or retention of existing jobs.
4. The project will result in an increase in tax base.
5. The project can demonstrate that the investment of public dollars induces private funds.
6. The project can demonstrate an excessive public infrastructure or improvement cost
beyond the means of the affected community and private participants in the project.
7. The project provides higher wage levels to the community or will add value to current
workforce skills;
8. Assistance is necessary to create new or retain existing businesses.
9. Job/wage goals must be consistent with the City of St. Joseph Business Subsidy policy.
It is noted the project is exempt from the City of St. Joseph Business Subsidy Policy due to the
value of the project being less than the statutory exemption of$150,000.
ACTION
If the EDA finds the proposed RLF request appropriate, a motion to recommend the Council
approve the loan and authorize/direct the preparation of loan documents is in order.
32--
APPLICATION FOR REVOLVING LOAN FUND
CITY OF ST.JOSEPH,MINNESOTA
Applicant: Prego Properties, LLC
Address: PO BOX 386
city: St Joseph Stets: MN zip Cede: 56374
Contact Person(s): Jeff Engholm
Contact Email: jeffengholm@gmail.com
B usiness Phone: 763-607-3338 Home: GII:
Name of Business: Prego Properties, LLC
P rincipal(s)of Business: Jeff Engholm, Stacie Engholm
Stab m 011111111.111 Fed ID or S.S.I:Oarlialfill
Business is a: Proprietorship
Partnership
x Corporation Date of Incorporation
Type of Business: Retail, Bakery, and Grocery Cooperative
Present location: 256W Minnesota St
X Owned Rented Sq.ft.of present building: 4500
Proposed Location(if different from above):
Owned Rented Sq.ft.of present building:
Type of project:
Construction/New Business ExpandinglExis ing Business
Equipmerlt/Machinery/Fixture X Remodel/CommerciaVRetalllnd.
Other:
('.Nv of St .Inasnh—Ravnhiinn I non FA Nil Prnnram AnnlinMie+n mans 1
33
Describe Project:
A refurbishment of the storefront of the old Loso building, including
fixing up the existing awning, including new lighting and soffits,
the addition of a balcony based on historical photographs, and
new and improved signage for the renting businesses.
Estimated Prosect Costs: Proposed Financing:
Land: $ filent Terms/Intarest Amami
Site improvement $ Bank
Construction/Rehab: $38,000 Equity
Machinery/Equip.:$ Other-describe BFA GRANT $1,000
Bldg.: $ City 3%/I s'r WAO°
Other(Specify): $
TOTAL: $+' .1 ' M TOTAL: $38,0002IMNSW.
Describe of collateral available to secure ban,including market value and prior liens:
Equity in building at 27 W Minnesota Street
Purpose of loan:
To cover the costs of the refurbishment and new signage.
f:Ih,of Rr .Inas+nh_R,wnluinn I non Fund Omnrom Annlirafinn Penia 9
Amount requested: $37,000
Terns requested: $3% interest
Present number of full-time employees: 5
Anticipated jobs created or retained within twelve(12)months of project completion:
Total#of Annual Anticipated Hiring
Position Name Jobs HrsJJob Date
(Use additional sheets if necessary)
If redevelopment estimate markt value of the subject parcels)prior to project and
estimated market value following project completion.
EMV Present
EMV Post Project Completion:
Attach and include the following H requested:
A. Written Business Plan
• Description of Business
• Ownership
• Date established
• Products/Services
• Management
• Future plans
B. Financial statements for the past two(2)years
C. Financial projects for three(3)years
D. Resume of all principals
E. Personal financial statements of proprietor, partners,guarantors
F. Letter of commitment for applicant pledging to complete during the proposed project
duration
G. Letter of commitment from other sources of financing,stating terms and conditions of
their participation in project
H. Written quotes from contractors and vendors for all cost estimates listed above
I. Site plan for new constriction
('iiv of St .inea►h—Ravnhdnn I non Find Prnn nrn Anniirotinn Pone 1
J. Authorization for release of information
K. Other:
L. Other.
M. Fee: (1%of amount of loan request)
Attach an explanation if any answer to the following is yes:
1. Have you or any officer or owner of your company ever been involved in bankruptcy or
insolvency proceedings?
Yes X No
2. Are you or any officer or owner of you business involved in any pending lawsuits or
judgments?
Yes X No
3. Does your business have any subsidiaries or affiliates?(INCLUDE: financial statements with
explanations as requested)
Yes X N
4. Do you buy from,sell to,or use the services of any concern in which someone in your
company itself has a significant financial Interest?
Yes X No
rev of Ct .Inaonh—Rovnhdnn I rswn Fs Ind Prnnram Annlirsfinn Pans d
36
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