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3. As security for Owner's obligation to repay the Installment Loan and accrued interest thereon, and
<br />the cost, including reasonable attorney's fees, of collecting the same, and subject to the terms and
<br />conditions of this Mortgage, Owner hereby grants, and HRA shall and hereby does have, a statutory
<br />mortgage on the Property in accordance with Minnesota Statutes, Section 507.15.
<br />4. The Owner covenants with the HRA the following statutory covenants;
<br />a. To warrant the title to the Property; subject to permitted encumbrances as set forth in
<br />Exhibit C.
<br />b. To pay the indebtedness as herein provided.
<br />c. To pay all taxes.
<br />d. That the Property shall be kept in repair and no waste shall be committed.
<br />e. That the whole of the principal sum shall become due after default, in the payment of any
<br />installment of principal or interest, or of any tax, or in the performance of any other
<br />covenant, at the option of the HRA.
<br />f. To pay principal and interest on prior mortgages.
<br />5. If default be made in any payment or covenant herein, the HRA shall have the statutory power of
<br />sale, and on foreclosure may retain statutory costs and attorney's fees.
<br />6. For the protection of the HRA, the Owner will, during all the time until the indebtedness secured by
<br />this mortgage is fully paid, maintain all risk property insurance, naming the HRA as an additional
<br />insured, in an amount not less than the full insurable replacement value of the Property. Said
<br />insurance shall be written by a company or companies licensed to do business in Minnesota and
<br />rated Class A-:VII or better by A.M. Best Company. The term "full insurable replacement value"
<br />shall mean the actual replacement cost of the Property (excluding foundation and excavation costs
<br />and costs of underground flues, pipes, drains, and other items customarily omitted from replacement
<br />cost valuation for insurance purposes), without deduction for depreciation. The Owner will assign
<br />and deliver the policies of such insurance to the HRA so and in such manner and form that the HRA
<br />shall at all times, until the full payment of said indebtedness, have and hold the said policies as a
<br />collateral and further security for the payment of said indebtedness, or at the option of the HRA will
<br />make such policies payable in case of loss to the HRA as its interest may appear and will deposit
<br />them with the HRA, and in default of so doing, that the HRA may, but has no obligation to, obtain
<br />such insurance from year to year, or for one or more years at a time, and pay the premiums therefor,
<br />and that the Owner will forthwith repay to the HRA the same, with interest at the mortgage rate, and
<br />that the same shall become a part of the debt secured by this mortgage in like manner as the principal
<br />sum. The Owner may retain any moneys received by him/her on the policies, but the same shall
<br />apply in part payment of this mortgage.
<br />7. This Mortgage shall terminate and shall be of no further force or effect upon payment in full of the
<br />Installment Loan and accrued interest thereon.
<br />8. The Owner will indemnify, save, and hold harmless the HRA, the City of Elk River, Minnesota,
<br />Central Minnesota Housing Partnership, Inc., their officers, agents,. and employees, from and against
<br />any claim, cause of action, damage, liability, loss or expense, including attorney's fees incurred by
<br />the HRA, made by any party in connection with or arising from (i) the presence, if any, of hazardous
<br />wastes or pollutants on the Property; (ii) any loss or damage to property or any injury to or death of
<br />any person occurring at or about or resulting from any defect in the Property, (iii) the performance
<br />of, or failure to perform, this Mortgage. Nothing herein shall be deemed a waiver of any statutory
<br />limitations of liability or immunity.
<br />S-2
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