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LOAN AGREEMENT <br />(Forgivable Loan Program) <br />THIS LOAN AGREEMENT ("Agreement") is made effective as of October _, 2016 (the <br />"Closing Date"), by and between SBH PROPERTIES, LLC, a Minnesota limited liability <br />company ("Borrower"), and the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY <br />OF ELK RIVER, a public body corporate and politic of the State of Minnesota ("Lender"). <br />RECITALS <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 />located on certain real property at 9775 158th Circle, NW, Elk River, Minnesota 55330 (the <br />"Loan Property") in the principal amount of $200,000.00. <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 />C. Contemporaneously with the execution hereof, Borrower is delivering to Lender <br />the following security documents: <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 />(ii) The personal guaranty of Brian Hill, President of Borrower (the "Personal <br />Guaranty"); <br />(iii) Mortgage and Assignment of Rents and Security Agreement and Fixture <br />Financing Statement securing the Note ("Mortgage"). The Mortgage is of even date <br />herewith, is executed by Borrower, as mortgagor, in favor of Lender, as mortgagee, and <br />covers the Loan Property as well as a security interest in certain other property described <br />therein; and <br />(iv) An entity guaranty (the "Entity Guaranty") of Apex Design & <br />Embroidery, Inc. (the "Entity Guarantor"). <br />NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, it is <br />hereby agreed as follows: <br />1. Amount and Purpose of Loan. Borrower agrees to take and Lender agrees to <br />make a loan in the principal amount of Two Hundred Thousand and No/100s Dollars <br />($200,000.00) (the "Loan") to be advanced in a single disbursement as hereinafter provided, the <br />Loan will be evidenced by the Note and secured by the Personal Guaranty, the Mortgage, the <br />Entity Guaranty and any other security document required under this Agreement. The Loan <br />