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<br />LOAN AGREEMENT <br />(Forgivable Loan Program) <br /> <br />THIS LOAN AGREEMENT (“Agreement”) is made effective as of October __, 2016 <br />(the “Closing Date”), by and between APEX EMBROIDERY DESIGN, INC., a Minnesota <br />corporation (“Borrower”), and the ECONOMIC DEVELOPMENT AUTHORITY OF THE <br />CITY OF ELK RIVER, a public body corporate and politic of the State of Minnesota <br />(“Lender”). <br /> <br />RECITALS <br /> <br />A. Borrower has applied to Lender for a Forgivable Loan Program loan for <br />Borrower’s acquisition of land and construction and equipping of a new manufacturing facility <br />th <br />located on certain real property at 9775 158 Circle, NW, Elk River, Minnesota 55330 (the <br />“Loan Property”) in the principal amount of $200,000.00. <br /> <br />B. Lender is willing to make such loan to Borrower in the principal amount of <br />$200,000.00 (the “Loan”), subject to all of the terms and conditions of this Agreement. <br /> <br />C. Contemporaneously with the execution hereof, Borrower is delivering to Lender <br />the following security documents: <br /> <br />(i) A Promissory Note (“Note”) effective as of the date herewith made by <br />Borrower and payable to the order of Lender, in the original principal amount of <br />$200,000.00. <br /> <br />(ii) A Security Agreement securing the Note (“Security Agreement”). The <br />Security Agreement is of even date herewith, is executed by Borrower, as debtor, in <br />favor of Lender, as secured party, and provides a second position security interest in <br />certain equipment to be purchased using the proceeds of the Loan (the “Equipment”); <br /> <br />(iii) The personal guaranty of Brian Hill, President of Borrower (the “Personal <br />Guaranty”); <br /> <br />(iv) Mortgage and Assignment of Rents and Security Agreement and Fixture <br />Financing Statement securing the Entity Guaranty (“Mortgage”). The Mortgage is of <br />even date herewith, is executed by Borrower, as mortgagor, in favor of Lender, as <br />mortgagee, and covers the Loan Property as well as a security interest in certain other <br />property described therein; and <br /> <br />(v) An entity guaranty (the “Entity Guaranty”) of SBH Properties, LLC (the <br />“Entity Guarantor”). <br /> <br />NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, it is <br />hereby agreed as follows: <br /> <br />487521v2 EL185-45 <br />