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PROMISSORY NOTE
FOR VALUE RECEIVED, Zaidan Holdings Inc., a Canadian corporation (the
"Borrower") promises to pay to the order of the Housing and Redevelopment
Authority in and for the City of Columbia Heights, a public body corporate and
politic under the laws of Minnesota (the "HRA"), payable at the office of the
Executive Director in the City of Columbia Heights, the sum of $1,015,099 (the
"Original Principal") , together with interest on the unpaid principal balance thereof
at the annual rate set forth below, in accordance with the following terms:
(a) All capitalized terms herein have the meaning provided in the Purchase
and Property Tax Agreement by and among the HRA, the City of
Columbia Heights and the Borrower dated November 23, 1994 (the
"Purchase Agreement"), unless the context herein clearly requires
otherwise. For the purposes of this Note, the term "Transfer" means
any total or partial sale, assignment, conveyance, lease or transfer in
any other mode with respect to the Property, provided that the First
Mortgage, the Second Mortgage and any lease of the Property to tenants
therein shall not constitute a Transfer.
(b) Interest shall accrue on all unpaid principal balance at the rate of 4%
per annum commencing with the date hereof and ending when the entire
principal balance hereof is paid in full.
(c) Borrower shall make the following principal payments under this Note
together with accrued interest at the assumed rate of eight percent (8%)
per annum:
Payment Date Principal Payment Interest Payment
December 1, 1995 79,958 $20,042
December 1, 1996 40,355 13,645
December 1, 1997 43,583 10,417
December 1, 1998 86,626 6,930
In the event Borrower punctually and duly makes the foregoing
payments, the HRA shall forgive the following amounts of principal
outstanding under the Note, and HRA shall also forgive accrued but
unpaid interest (set forth in paragraph (b) above) as of said payment
date:
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(1 )
(2)
Outstanding
Principal
Balance
(3)
Principal
Payment
Made
(4)
Additional
Principal
Forl?:iven
Payment
Date
12/1/95 $1,015,099 $ 79,958 $244,028
12/1/96 691,113 40,355 123,161
12/1/97 527,597 43,583 133,012
12/1/98 351,002 86,626 264,376
(5)
Remaining
Principal
Balance
$1 ,015 ,099
$691,113
527,597
351,002*
0*
* [subject to the provisions of the following paragraph (d)]
As long as Borrower punctually and duly makes the payments set forth above,
Borrower may, subject to the provisions of paragraph (d) below, at any time
before December 1, 1998 prepay the entire Remaining Principal Balance as
shown in column (5) of the immediately preceding table by paying to the HRA
an amount equal to: (i) the total principal payments shown in column (3) of
the table that have not as of the date of the prepayment yet been made; plus
(ii) accrued but unpaid interest on the amount set forth in clause (i) above at
the assumed rate of eight percent (8%) per annum. In the event of said
prepayment all interest accrued but unpaid pursuant to paragraph (b) above
shall be forgiven.
(d) If principal and interest payments are made in accordance with the
preceding paragraph (c), then after December 1, 1998 the Borrower
shall be obligated hereunder as follows:
(i) If, through December 31, 2009, there is no Event of Default by
the Borrower under the Purchase Agreement or the Mortgage and
no Transfer has occurred, no additional principal or interest
shall be payable and the Note shall be deemed paid in full as of
December 31, 2009;
(ii) Upon an Event of Default by the Borrower under the Purchase
Agreement or the Mortgage, or upon a Transfer, then in addition
to any principal or interest paid before December 1, 1998, and
notwithstanding the Remaining Principal Balance of $0 shown in
column (5) of the table set forth in paragraph (c) above, a
principal payment shall be payable in the amount of $250,000
within 10 days after receipt of notice from the HRA of the Event
of Default or Transfer. Upon payment by the Borrower of
additional principal in such amount, the Note shall be deemed
paid in full.
(ill) Notwithstanding anything to the contrary in clauses (i) and (ii) ,
if the Borrower prepays the outstanding balance of the total
principal payments shown in column (3) of the table set forth in
paragraph (c) above together with interest thereon at the rate
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of eight percent (8%) per annum on or before December 1, 1995,
no additional principal or interest shall be payable thereafter and
the Note shall be deemed paid in full as of the date of such
prepayment.
(e) If at any time from the date of this Note through and including
December 1, 1998 there occurs an Event of Default by the Borrower
under this Note, the Mortgage, or the Purchase Agreement, or there is
a Transfer by the Borrower, then the outstanding balance of principal
as shown as the Remaining Principal Balance set forth in column (5) of
the table in paragraph (c) as of the date of the Event of Default or
Transfer together with accrued interest thereon at the rate set forth in
paragraph (b) shall be immediately due and payable upon receipt of
notice thereof from the HRA.
(f) If the assessor's market value of the Property for taxes payable in 1995
is $4,800,000, then the Borrower shall be entitled to a credit against
the payment due on December 1, 1995 under paragraph (c) hereof,
which credit shall be in the amount of: the total tax increment
attributable to the Property that is payable to the HRA in calendar year
1995 and arising from an estimated market value of $4,800,000, less the
tax increment that would have been attributable to the Property payable
in calendar year 1995 if the assessor's market value had been $1,630,800
(the "Credit Amount"); provided that the HRA shall apply as a credit
on December 1, 1995 only that portion of the Credit Amount actually
received by the HRA from Anoka County as of December 1, 1995. Any
portion of the Credit Amount in excess of the amount applied as a credit
on December 1, 1995 shall be carried over and applied as a credit
against payments due on any subsequent December 1 until the balance
of the Credit Amount has been applied against payments due under
paragraph (c) hereof. At least 10 days before each payment date
hereunder, the HRA shall notify the Borrower as to the amount of the
credit under this paragraph, provided if the HRA fails to provide such
timely notice, the Borrower remains obligated to pay the amount due on
any payment date under paragraph (c) without regard to any credit
under this paragraph. No credit under this paragraph shall apply
against any amount due under paragraph (e) hereof.
This Note is issued to the HRA pursuant to the Purchase Agreement and a
Mortgage given by the Borrower or Borrower's assignee to the HRA of even date
herewith. The payment obligation created by this Note is secured by the terms and
conditions set forth in the Purchase Agreement and the Mortgage, and, if not cured
within the time allotted therefor, an Event of Default under the Purchase Agreement
or the Mortgage shall be a default in this Note.
The Borrower agrees to pay all costs of collection, including a reasonable
attorneys fee, in case payment shall not be made in accordance with the terms of this
Note, and waives presentment for payment, notice of nonpayment, protest and notice
of protest and diligence in enforcing payment or bringing suit against the Borrower
without notice to it and without affecting its liability hereon.
WBB5054
CL160-70
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Dated: IMrch 10 ,1995
SJB85054
CL160-70
ZAIDAN HOLDINGS, INC.
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