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FORGIVABLE LOAN PROGRAM <br /> LOAN AGREEMENT <br /> THIS LOAN AGREEMENT ("Agreement") is made effective as of August , <br /> 2013 (the "Closing Date"), by and between PREFERRED POWDER COATING, LLC, a <br /> Minnesota limited liability company ("Borrower"), and the ECONOMIC <br /> DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a public body <br /> corporate and politic of the State of Minnesota ("Lender"). <br /> RECITALS <br /> A. Borrower has applied to Lender for a term loan on the Loan Property (as <br /> hereinafter defined) under Lender's "Forgivable Loan Program" in the principal amount <br /> of Two Hundred Thousand and No/100s Dollars ($200,000.00) (the "Loan"). <br /> B. Lender is willing to make the Loan to Borrower, subject to all of the terms <br /> and conditions of this Agreement. <br /> C. Contemporaneously with the execution hereof, Borrower is executing and <br /> delivering to Lender the following security documents: <br /> (i) A Promissory Note ("Note") effective as of the date herewith made <br /> by Borrower and payable to the order of Lender, in the original principal amount <br /> of$200,000.00; <br /> (ii) A Security Agreement securing the Note ("Security Agreement"). <br /> The Security Agreement is of even date herewith, is executed by Borrower, as <br /> debtor, in favor of Lender, as secured party, and provides a security interest in <br /> certain equipment to be purchased using the proceeds of the Loan (the <br /> "Equipment"); <br /> (iii) The personal guaranties of Dan Bosshart, Vice President of <br /> Borrower and Lloyd Peterson, President of Borrower (collectively, the "Personal <br /> Guaranties"); <br /> (iv) An entity guaranty (the "Entity Guaranty") of Preferred Real <br /> Estate Holdings, LLC (the "Entity Guarantor"); and <br /> (v) A Mortgage and Assignment of Rents and Security Agreement and <br /> Fixture Financing Statement securing the Entity Guaranty ("Mortgage"). The <br /> Mortgage is of even date herewith, is executed by Borrower, as mortgagor, in <br /> favor of Lender, as mortgagee, and covers property therein described situated in <br /> Sherburne County, Minnesota(the "Loan Property") as well as a security interest <br /> in the Equipment. <br />