6.0. HRSR 04-11-2005 - Laserfiche WebLink

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PARTICIPATION AND SUBORDINATION AGREEMENT THIS AGREEMENT is made as of , 2005,by and between the Economic Development Authority for the City of Elk River, a public body corporate and politic, or its assigns (the"Purchaser"), and The Bank of Elk River,Minnesota banking corporation(the "Seller"). The Seller has provided, inter alia, a loan in the amount of$977,500.00 (hereafter the "Loan") to Badger Ventures, LLC, a Minnesota limited liability company(hereafter the "Borrower"). The Loan was memorialized in a Loan Agreement dated July 8, 2004,Note A and Mortgage A in the amount of$877,500.00, and Note B and Mortgage B in the amount of $100,000.00. Mortgage A secures performance under Note A, and Mortgage B secures performance under Note B. The Seller desires to sell and the Purchaser desires to purchase an interest in Note B as set forth in this Agreement. In consideration of the foregoing and the mutual agreements set forth herein,the Seller and the Purchaser agree as follows: 1. The Seller hereby sells and the Purchaser hereby purchases, without recourse to the Seller, a 100%participation in Note B, in exchange for$100,000.00. Purchaser shall have the benefit of subordinate security as stated in Mortgage B. Seller retains all rights under Note A and Mortgage A. • 2. In this Agreement, "Collections"means all payments received by the Seller on account of the Loan, including without limitation payments to the Seller by the Borrower or any guarantor,payments received by the Seller by means of setoff, and net proceeds of any security received by the Seller. The Seller shall receive all Collections of principal, interest and other charges, fees and expenses on the Loan. Notwithstanding paragraph 4 hereof, all Collections by Seller under an Assignment of Tax Rebates shall be remitted to the Purchaser promptly. 3. Purchaser has purchased Note B and is entitled to the secondary and subordinate Mortgage B as security. Purchaser shall also be entitled to the benefit of the Guaranties, Assignments of Rent and other security devices (other than Mortgage A),but Purchaser's interests and rights shall always be second and subordinate to Seller's interests and rights. Purchaser agrees not to exercise or enforce these interests or rights against any entity or person liable for payment of the indebtedness,unless and until all indebtedness owing to Seller under the Loan Agreement,Note A, and Mortgage A shall be been fully paid. 4. Other than tax rebates, at the Seller's discretion, any proceeds other than tax rebates, received by the Seller on account of the Loan or any such other extension of credit after the occurrence of an Event of Default, and any proceeds received by the Seller from any such •