Exhibit 10.09
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS MORTGAGE AT ANY ONE TIME, THE
MAXIMUM PRINCIPAL AMOUNT OF INDEBTEDNESS SECURED BY THIS MORTGAGE, EXCLUDING
ADVANCES MADE BY THE MORTGAGEE IN PROTECTION OF THE MORTGAGED PROPERTY OR THE
LIEN OF THIS MORTGAGE, IS $17,194,529.00 UNDER CHAPTER 287 OF MINNESOTA
STATUTES.
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS
AND FIXTURE FILING
     THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND RENTS AND
FIXTURE FILING is made as of June 1, 2008 (this “Instrument”), by the Mortgagor,
LTF REAL ESTATE VRDN I, LLC, a Delaware limited liability company, whose mailing
address is 2902 Corporate Place, Chanhassen, MN 55317 (“Mortgagor”), in favor of
and for the benefit of the Mortgagee, GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation, whose mailing address is Suite 470, 8400 Normandale Lake
Boulevard, Minneapolis, Minnesota 55437 (“Mortgagee”).
     Mortgagor, in consideration of the indebtedness herein recited, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, irrevocably gives, grants, sells, conveys, warrants, sets
over, mortgages and assigns to Mortgagee, as security for such indebtedness, all
of Mortgagor’s estate, right, title and interest, now owned or hereafter
acquired, including any reversion or remainder interest, in the real property
located in the City of Chanhassen, County of Carver, State of Minnesota
described on Exhibit A attached hereto and incorporated herein including all
heretofore or hereafter vacated alleys and streets abutting the property, and
all easements, rights, appurtenances, tenements, hereditaments, rents,
royalties, mineral, oil and gas rights and profits, water, water rights and
water stock appurtenant to the property (collectively “Premises”);
     TOGETHER with all of Mortgagor’s estate, right, title and interest, now
owned or hereafter acquired, in, under and to:
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     (a) all buildings, structures, improvements, parking areas, landscaping,
equipment, fixtures and articles of property now or hereafter erected on or
attached to the Premises; including, but without being limited to, all heating,
air conditioning, manufacturing and incinerating apparatus and equipment; all
boilers, engines, motors, dynamos, generating equipment, piping and plumbing
fixtures, water heaters, walk-in refrigerators and freezers, cooling,
ventilating, sprinkling and vacuum cleaning systems, fire extinguishing
apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, signs, and outdoor shrubbery
and plants, and including also all interest of any owner of the Premises in any
of such items hereafter at any time acquired under conditional sale contract,
chattel mortgage or other title retaining or security instrument, all of which
property mentioned in this clause (a) shall be deemed part of the realty covered
by this Instrument and not severable wholly or in part without material injury
to the freehold of the Premises (all of the foregoing together with replacements
and additions thereto are referred to herein as “Improvements”); and
     (b) all compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (i) taking or damaging of the Premises
or Improvements thereon by reason of any public or private improvement,
condemnation proceeding (including change of grade), sale or transfer in lieu of
condemnation, or fire, earthquake or other casualty, or (ii) any injury to or
decrease in the value of the Premises or the Improvements for any reason
whatsoever;
     (c) proceeds under any insurance any time provided with respect to the
Premises, Improvements and other collateral described herein for the benefit of
or naming Mortgagee and refunds or rebates of taxes or assessments on the
Premises;
     (d) all written and oral leases and rental agreements (including, without
limitation, that certain Lease Agreement dated June 13, 2008 (the “Lease
Agreement”) between Mortgagor and LTF Club Operations Company, Inc. (“Tenant”))
(including extensions, renewals and subleases; each of the foregoing singularly
shall be referred to herein as a “Lease,” and all of the foregoing shall be
referred to collectively herein as the “Leases”) now or hereafter affecting the
Premises including, without limitation, all rents, issues, income, profits and
other revenues and income therefrom and from the renting, leasing or bailment of
Improvements and equipment (“Rents”), all guaranties of tenants’ performance
under the Leases (including, without limitation, all rights, title and interest
in that certain Lease Guaranty and Negative Pledge Agreement dated as of June 1,
2008 by Life Time Fitness, Inc.), all letter-of-credit rights and all other
supporting obligations associated with the Leases and all rights and claims of
any kind that Mortgagor may have against any tenant under the Leases or in
connection with the termination or rejection of the Leases in a bankruptcy or
insolvency proceeding;
     (e) to the extent assignable without third party consents, plans,
specifications, documents, contracts and agreements relating to the design or
construction of the Improvements; Mortgagor’s rights under any payment,
performance, or other bond in connection with the design or construction of the
Improvements; all landscaping and construction materials, supplies, and
equipment used or to be used or consumed in connection with construction of the
Improvements, whether stored on the Premises or at some other location; and
contracts, agreements, and
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purchase orders with contractors, subcontractors, suppliers, and materialmen
incidental to the design or construction of the Improvements;
     (f) to the extent permitted by applicable law and to the extent assignable
without third party consents, all contracts, deposits, deposit accounts,
accounts, rights, claims or causes of action pertaining to or affecting the
Premises or the Improvements, including, without limitation, all supporting
obligations and any and all proceeds thereof, options or contracts to acquire
other property for use in connection with operation or development of the
Premises or Improvements, management contracts, service or supply contracts,
permits, licenses, franchises and certificates with respect to the Premises and
Improvements, and all commitments or agreements, now or hereafter in existence
with respect to the Premises and Improvements, intended by the obligor thereof
to provide Mortgagor with proceeds to satisfy the obligations evidenced hereby
or improve the Premises or Improvements, and the right to receive all proceeds
due under such commitments or agreements including refundable deposits and fees;
     (g) all books, records, surveys, reports and other documents related to the
Premises, the Improvements, the Leases or other items of collateral described
herein; and
     (h) all additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and intangible, described
herein.
     All of the foregoing described collateral is exclusive of any goods,
equipment, inventory, furniture, furnishings or trade fixtures owned and
supplied by tenants or subtenants of the Premises. The Premises, the
Improvements, the Leases and all of the rest of the foregoing property are
herein referred to as the “Property.”
     TO HAVE AND TO HOLD the Property and all parts, rights, members and
appurtenances thereof to the use, benefit and behoof of Mortgagee and its
successors and assigns in fee simple forever.
     TO SECURE TO Mortgagee (a) the repayment of the obligations under the
Reimbursement Agreement dated as of June 1, 2008 (as amended, the “Reimbursement
Agreement”) by and among Mortgagor, Mortgagee and GE Government Finance, Inc.
and all renewals, extensions and modifications thereof; (c) the repayment of any
future advances, with interest thereon, made by Mortgagee to Mortgagor pursuant
to Section 30 hereof (the “Future Advances”); (d) the payment of all other sums,
with interest thereon, advanced in accordance herewith to protect the security
of this Instrument or to fulfill any of Mortgagor’s obligations hereunder or
under the other Financing Documents (as defined below); (e) the performance of
the covenants and agreements of Mortgagor contained herein or in the other
Financing Documents; and (f) the repayment of all sums now or hereafter owing to
Mortgagee by Mortgagor pursuant to any instrument which recites that it is
secured hereby. The indebtedness and obligations described in clauses (a)-(f)
above are collectively referred to herein as the “Indebtedness.” The
Reimbursement Agreement, this Instrument, and all other documents evidencing,
securing or guaranteeing the Indebtedness (except the Environmental Indemnity
Agreement Regarding Hazardous Substances), as the same may be modified or
amended from time to time, are referred to herein as the “Financing Documents.”
The terms of the Financing Documents secured hereby may provide that the
interest rate or payment terms or balance due
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may be indexed, adjusted, renewed, or renegotiated from time to time, and this
Instrument shall continue to secure the Indebtedness notwithstanding any such
indexing, adjustment, renewal or renegotiation. If not sooner paid, the
Indebtedness secured by this Instrument is due and payable in full on June 1,
2033.
     Mortgagor represents and warrants that Mortgagor has good, marketable and
insurable title to, and has the right to mortgage an indefeasible fee simple
estate in, the Premises, Improvements, Rents and Leases, and the right to convey
the other Property, that the Property is unencumbered and that Mortgagor will
warrant and forever defend unto Mortgagee the title to the Property against all
claims and demands, subject only to the permitted exceptions set forth in
Exhibit B attached hereto (herein “Permitted Exceptions”).
     Mortgagor represents, warrants, covenants and agrees for the benefit of
Mortgagee as follows:
     Section 1. Payment of Principal and Interest. Mortgagor shall promptly pay
or cause to be paid when due the principal of and interest on the Indebtedness,
any prepayment and other charges provided in the Financing Documents and all
other sums secured by this Instrument.
     Section 2. Funds for Taxes, Insurance and Other Charges. Except as is
hereinafter provided with respect to the impounding of such payments by
Mortgagee following the occurrence of an Event of Default (hereinafter defined),
Mortgagor shall pay or cause to be paid when due, prior to delinquency, all
annual real estate taxes, insurance premiums, assessments, water and sewer
rates, ground rents and other charges (the “Impositions”) payable with respect
to the Property. Upon the occurrence of an Event of Default, and at Mortgagee’s
sole option at any time thereafter, Mortgagor shall pay in addition to each
monthly payment due under the Reimbursement Agreement, one-twelfth of the annual
Impositions (as estimated by Mortgagee in its sole discretion), to be held by
Mortgagee in escrow without interest to Mortgagor, for the payment of such
Impositions (such payments being referred to herein as “Impounds”).
     Annually during the term of this Instrument, Mortgagee shall compare the
Impounds collected to the Impositions paid or to be paid. If the amount of such
Impounds held by Mortgagee at such time shall exceed the amount deemed necessary
by Mortgagee to provide for the payment of Impositions as they fall due, if no
Event of Default shall have occurred and be continuing, such excess shall be at
Mortgagor’s option, either repaid to Mortgagor or credited to Mortgagor on the
next monthly installment or installments of Impounds due. If at any time the
amount of the Impounds held by Mortgagee shall be less than the amount deemed
necessary by Mortgagee to pay Impositions as they fall due, Mortgagor shall pay
to Mortgagee any amount necessary to make up the deficiency within 30 days after
notice from Mortgagee to Mortgagor requesting payment thereof. Upon the
occurrence of an Event of Default hereunder, Mortgagee may apply, in any amount
and in any order as Mortgagee shall determine in Mortgagee’s sole discretion,
any Impounds held by Mortgagee at the time of application (i) to pay Impositions
which are now or will hereafter become due, or (ii) as a credit against sums
secured by this Instrument. Upon payment in full of all sums secured by this
Instrument, Mortgagee shall refund to Mortgagor any Impounds then held by
Mortgagee.
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     Section 3. Application of Payments. (a) Each installment payment received
by Mortgagee from Mortgagor under or with respect to the Reimbursement Agreement
or this Instrument or the other Financing Documents shall be applied by
Mortgagee to the Indebtedness in such order as provided in the Financing
Documents.
     (b) If requested by Mortgagee, Mortgagor shall promptly furnish to
Mortgagee all notices of Impositions which become due, and in the event
Mortgagor shall make payment directly, Mortgagor shall promptly furnish to
Mortgagee receipts evidencing such payments.
     Section 4. Charges, Liens. Mortgagor shall promptly discharge any lien
which has, or may have, priority over or equality with, the lien of this
Instrument, and Mortgagor shall pay, when due, the claims of all persons
supplying labor or materials to or in connection with the Property. Mortgagor
shall not allow any lien to be perfected against the Property other than the
Permitted Exceptions set forth in Exhibit B attached hereto. If any such lien is
filed against the Property, Mortgagor shall promptly, at its own expense, cause
such lien to be released of record or bonded off and to deliver evidence of such
release or bonding to Mortgagee. Mortgagor may contest any such lien by
appropriate proceedings in good faith, timely filed, provided that enforcement
of the lien is stayed pending such contest or Mortgagor pays to Mortgagee 125%
of the amount of the lien to be held by Mortgagee in escrow without interest to
Mortgagor. Mortgagee may require that Mortgagor post security for payment of
such lien.
     Section 5. Insurance and Damage or Destruction of Property. Mortgagor shall
obtain and maintain the types of insurance upon and relating to the Property as
required by the Reimbursement Agreement, and, upon the damage or destruction of
the Property, insurance proceeds shall be disbursed as provided in the
Reimbursement Agreement.
     Section 6. [Reserved.]
     Section 7. [Reserved.]
     Section 8. Protection of Mortgagee’s Security. If an Event of Default shall
have occurred and be continuing, or if any action or proceeding is commenced
which affects the Property or title thereto or the interest of Mortgagee
therein, including, but not limited to, eminent domain, insolvency, code
enforcement, or arrangements or proceedings involving a bankrupt or decedent,
then Mortgagee at Mortgagee’s option may make such appearances, disburse such
sums and take such action as Mortgagee deems necessary, in its sole discretion,
to protect Mortgagee’s interest, including, but not limited to (a) disbursement
of reasonable attorneys’ fees, (b) entry upon the Property to make repairs and
(c) procurement of satisfactory insurance as provided in Section 5 hereof.
     Any amounts disbursed by Mortgagee pursuant to this Section, with interest
thereon, shall become additional Indebtedness of Mortgagor secured by this
Instrument. Unless Mortgagor and Mortgagee agree to other terms of payment, such
amounts shall be immediately due and payable and shall bear interest from the
date of disbursement at the Post-Default Rate (as defined in the Reimbursement
Agreement). Mortgagor hereby covenants and agrees that Mortgagee shall be
subrogated to the lien of any mortgage or other lien discharged, in whole or
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in part, by the Indebtedness. Nothing contained in this Section shall require
Mortgagee to incur any expense or take any action hereunder.
     Section 9. Inspection. Mortgagee may make or cause to be made entries upon
the Property to inspect the interior and exterior thereof. Except in the case of
emergency, such inspection shall be with reasonable prior notice and shall in
any case be with due regard to rights of tenants.
     Section 10. Condemnation. If the Property, or any part thereof, shall be
condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid and applied
as provided in the Reimbursement Agreement.
     Section 11. Mortgagor and Lien not Released. From time to time, and subject
to the requirements of the Reimbursement Agreement, Mortgagee may, at
Mortgagee’s option, without giving notice to or obtaining the consent of
Mortgagor, Mortgagor’s successors or assigns or of any junior lienholder or
guarantors, without liability on Mortgagee’s part and notwithstanding
Mortgagor’s breach of any covenant or agreement of Mortgagor in this Instrument,
extend the time for payment of the Indebtedness or any part thereof, reduce the
payments thereon, release anyone liable on any of the Indebtedness, accept an
extension or modification or renewal note or notes therefor, modify the terms
and time of payment of the Indebtedness, release from the lien of this
Instrument any part of the Property, take or release other or additional
security, reconvey any part of the Property, consent to any map or plan of the
Property, consent to the granting of any easement, join in any extension or
subordination agreement, and agree in writing with Mortgagor to modify the rate
of interest or period of amortization of the obligations under the Reimbursement
Agreement or decrease the amount of the monthly installments payable thereunder.
Any actions taken by Mortgagee pursuant to the terms of this Section shall not
affect the obligation of Mortgagor or Mortgagor’s successors or assigns to pay
the sums secured by this Instrument and to observe the covenants of Mortgagor
contained herein, shall not affect the guaranty of any person, corporation,
partnership or other entity for payment of the Indebtedness, and shall not
affect the lien or priority of the lien hereof on the Property. Mortgagor shall
pay Mortgagee a service charge, together with such title insurance premiums and
attorneys’ fees as may be incurred at Mortgagee’s option, for any such action if
taken at Mortgagor’s request.
     Section 12. Forbearance by Mortgagee not a Waiver. Any forbearance by
Mortgagee in exercising any right or remedy hereunder, or otherwise afforded by
applicable law, shall not be a waiver of or preclude the exercise of any other
right or remedy. The acceptance by Mortgagee of payment of any sum secured by
this Instrument after the due date of such payment shall not be a waiver of
Mortgagee’s right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Mortgagee shall not be a waiver of Mortgagee’s right to accelerate the maturity
of the Indebtedness secured by this Instrument, nor shall Mortgagee’s receipt of
any awards, proceeds or damages under Sections 5 and 10 hereof operate to cure
or waive Mortgagor’s default in payment of sums secured by this Instrument.
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     Section 13. Uniform Commercial Code Security Agreement. This Instrument is
intended to be a security agreement pursuant to the Uniform Commercial Code, as
enacted in the State of Minnesota (the “Uniform Commercial Code”) for any of the
items specified above as part of the Property which, under applicable law, may
be subject to a security interest pursuant to the Uniform Commercial Code, and
Mortgagor hereby grants and conveys to Mortgagee a first and prior security
interest in all of the Property that constitutes personalty, whether now owned
or hereafter acquired. Mortgagor agrees that Mortgagee may file this Instrument,
or a reproduction thereof, in the real estate records or other appropriate
index, as a financing statement for any of the items specified above as part of
the Property. Any reproduction of this Instrument or of any other security
agreement or financing statement shall be sufficient as a financing statement.
In addition, Mortgagor agrees to execute and deliver to Mortgagee, upon
Mortgagee’s request, any financing statements, extensions, renewals, amendments
and other records, and reproductions of this Instrument in such form as
Mortgagee may require to perfect a security interest with respect to the
foregoing items. Mortgagor shall pay all costs of filing such financing
statements and any extensions, renewals, amendments and releases thereof, and
shall pay all costs and expenses of any record searches for financing statements
Mortgagee may require. Mortgagor hereby waives any and all rights Mortgagor may
have to file in the real estate records or any other index or record any
financing statement, amendment, termination statement or other record pertaining
to the Collateral and/or Mortgagee’s interest therein. Without the prior written
consent of Mortgagee, Mortgagor shall not create or suffer to be created
pursuant to the Uniform Commercial Code any other security interest in said
items, including replacements and additions thereto. Upon an Event of Default,
Mortgagee shall have the remedies of a secured party under the Uniform
Commercial Code, and Mortgagee may also invoke the remedies provided in
Sections 24, 25, 26 and 27 hereof as to such items. In exercising any of said
remedies Mortgagee may proceed against the items of real property and any items
of personal property specified above separately or together and in any order
whatsoever, without in any way affecting the availability of Mortgagee’s
remedies under the Uniform Commercial Code or of the remedies provided in
Sections 24, 25, 26 and 27 hereof.
     Section 14. Leases of the Property. Mortgagor shall comply with and observe
Mortgagor’s obligations as landlord under all Leases of the Property or any part
thereof. All Leases now or hereafter entered into will be in form and substance
subject to the approval of Mortgagee. Mortgagor shall pay all reasonable
attorneys’ fees incurred by Mortgagee in reviewing any Lease or proposed Lease.
All Leases of the Property shall specifically provide that such Leases are
subordinate to this Instrument; that the tenant attorns to Mortgagee, such
attornment to be effective upon Mortgagee’s acquisition of title to the
Property; that the tenant agrees to execute such further evidences of attornment
as Mortgagee may from time to time request; that the attornment of the tenant
shall not be terminated by foreclosure; and that Mortgagee may, at Mortgagee’s
option, accept or reject such attornments. Mortgagor shall not, without
Mortgagee’s prior written consent, request or consent to the subordination of
any Lease of all or any part of the Property to any lien subordinate to this
Instrument. If Mortgagor becomes aware that any tenant proposes to do, or is
doing, any act or thing which may give rise to any right of set-off against
rent, Mortgagor shall (i) take such steps as shall be reasonably calculated to
prevent the accrual of any right to a set-off against rent, (ii) immediately
notify Mortgagee thereof in writing and of the amount of said set-offs, and
(iii) within ten (10) days after such accrual, reimburse the tenant who shall
have acquired such right to set-off or take such
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other steps as shall effectively discharge such setoff and as shall assure that
rents thereafter due shall continue to be payable without set-off or deduction.
Upon Mortgagee’s receipt of notice of the occurrence of any default or violation
by Mortgagor of any of its obligations under the Leases, Mortgagee shall have
the immediate right, but not the duty or obligation, without prior written
notice to Mortgagor or to any third party, to enter upon the Property and to
take such actions as Mortgagee may deem necessary to cure the default or
violation by Mortgagor under the Leases. The costs incurred by Mortgagee in
taking any such actions pursuant to this paragraph shall become part of the
Indebtedness, shall bear interest at the Post-Default Rate, and shall be payable
by Mortgagor to Mortgagee on demand. Mortgagee shall have no liability to
Mortgagor or to any third party for any actions taken by Mortgagee or not taken
pursuant to this paragraph.
     Section 15. Remedies Cumulative. Each remedy provided in this Instrument is
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently, independently or
successively, in any order whatsoever.
     Section 16. Transfers of the Property or Beneficial Interests in Mortgagor;
Assumption. Mortgagee may, at its option, declare all sums secured by this
Instrument to be immediately due and payable, and Mortgagee may invoke any
remedies permitted or not prohibited by Sections 24, 25, 26 and 27 hereof, if,
except as otherwise permitted under the Reimbursement Agreement, title to the
Property is changed or there is any transfer of any interest in the Property or
in the income therefrom, by sale, lease, contract, mortgage, deed of trust,
further encumbrance or otherwise (including any such transfers as security for
additional financing of the Property).
     Section 17. Notice. Except for any notice required under applicable law to
be given in another manner, all notices, certificates, requests, demands and
other communications provided for hereunder or under any other Financing
Document shall be in writing and shall be (a) personally delivered, (b) sent by
first class United States mail, or (c) sent by overnight courier of national
reputation, in each case addressed to the party to whom notice is being given at
its address as set forth above or, as to each party, at such other address as
may hereafter be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section. All such notices,
requests, demands and other communications shall be deemed to have been given on
(a) the date received if personally delivered, (b) when deposited in the mail if
delivered by mail, or (c) the date sent if sent by overnight courier.
     Section 18. Successors and Assigns Bound; Joint and Several Liability;
Agents; Captions. The covenants and agreements herein contained shall bind, and
the rights hereunder shall inure to, the respective heirs, successors and
assigns of Mortgagee and Mortgagor, subject to the provisions of Section 16
hereof. If Mortgagor is comprised of more than one person or entity, whether as
individuals, partners, partnerships or corporations, each such person or entity
shall be jointly and severally liable for Mortgagor’s obligations hereunder. In
exercising any rights hereunder or taking any actions provided for herein,
Mortgagee may act through its employees, agents or independent contractors as
authorized by Mortgagee. The captions and headings of the sections of this
Instrument are for convenience only and are not to be used to interpret or
define the provisions hereof.
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     Section 19. Waiver of Statute of Limitations. Mortgagor hereby waives the
right to assert any statute of limitations as a bar to the enforcement of the
lien of this Instrument or to any action brought to enforce the Reimbursement
Agreement or any other obligation secured by this Instrument.
     Section 20. Waiver of Marshalling. Notwithstanding the existence of any
other security interests in the Property held by Mortgagee or by any other
party, Mortgagee shall have the right to determine the order in which any or all
of the Property shall be subjected to the remedies provided herein. Mortgagee
shall have the right to determine the order in which any or all portions of the
Indebtedness secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Mortgagor, any party who consents to
this Instrument and any party who now or hereafter acquires a security interest
in the Property and who has actual or constructive notice hereof hereby waives
any and all right to require the marshalling of assets in connection with the
exercise of any of the remedies permitted by applicable law or provided herein.
     Section 21. Advances, Costs and Expenses. Mortgagor shall pay within ten
(10) days after written demand from Mortgagee all sums advanced by Mortgagee and
all out-of-pocket costs and expenses incurred by Mortgagee in taking any actions
pursuant to the Financing Documents including reasonable attorneys’ fees and
disbursements, accountants’ fees, appraisal and inspection fees and the costs
for title reports and guaranties, together with interest thereon at the
Post-Default Rate from the date such costs were advanced or incurred. All such
costs and expenses incurred by Mortgagee, and advances made, shall constitute
advances under this Instrument to protect the Property and shall be secured by
and have the same priority as the lien of this Instrument. If Mortgagor fails to
pay any such advances, costs and expenses and interest thereon, Mortgagee,
without foreclosing the lien of this Instrument, may at its option commence an
independent action against Mortgagor for the recovery of the costs, expenses
and/or advances, with interest, together with costs of suit, costs of title
reports and guaranty of title, disbursements of counsel and attorneys’ fees
incurred therein or in any appeal therefrom.
     Section 22. Assignment of Leases and Rents. Mortgagor, for good and
valuable consideration, the receipt of which is hereby acknowledged, to secure
the Indebtedness, does hereby absolutely and unconditionally grant, bargain,
sell, transfer, assign, convey, set over and deliver unto Mortgagee all right,
title and interest of Mortgagor in, to and under the Leases of the Property,
whether now in existence or hereafter entered into, and all guaranties,
amendments, extensions and renewals of said Leases and any of them, and all
Rents which may now or hereafter be or become due or owing under the Leases, and
any of them, or on account of the use of the Property.
          Mortgagor represents, warrants, covenants and agrees with Mortgagee as
follows:
          (a) The sole ownership of the entire lessor’s interest in the Leases
is vested in Mortgagor, and Mortgagor has not, and shall not, perform any acts
or execute any other instruments which might prevent Mortgagee from fully
exercising its rights with respect to the Leases under any of the terms,
covenants and conditions of this Instrument.
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          (b) The Leases are and shall be valid and enforceable in accordance
with their terms and have not been and shall not be altered, modified, amended,
terminated, canceled, renewed or surrendered except as approved in writing by
Mortgagee. The terms and conditions of the Leases have not been and shall not be
waived in any manner whatsoever except as approved in writing by Mortgagee.
          (c) Mortgagor shall not amend any Lease without prior written notice
to Mortgagee and Mortgagee’s prior written consent.
          (d) There are no defaults now existing under any of the Leases and, to
the best of Mortgagor’s knowledge, there exists no state of facts which, with
the giving of notice or lapse of time or both, would constitute a default under
any of the Leases.
          (e) Mortgagor shall give prompt written notice to Mortgagee of any
notice received by Mortgagor claiming that a default has occurred under any of
the Leases on the part of Mortgagor, together with a complete copy of any such
notice.
          (f) Each of the Leases shall remain in full force and effect
irrespective of any merger of the interest of lessor and any lessee under any of
the Leases.
          (g) Mortgagor will not permit any Lease to become subordinate to any
lien other than the lien of this Instrument.
          The assignment made hereunder is an absolute, present assignment from
Mortgagor to Mortgagee, effective immediately, and is not merely an assignment
for security purposes but is irrevocable by Mortgagor so long as the
Indebtedness remains outstanding. Notwithstanding the foregoing, until a notice
is sent to the Mortgagor in writing that an Event of Default (as defined below)
has occurred under the terms and conditions of the Reimbursement Agreement or
any instrument constituting security for Mortgagor’s obligations under the
Reimbursement Agreement (which notice is hereafter called a “Notice”), Mortgagor
is granted a license to receive, collect and enjoy the Rents accruing from the
Property.
          If an Event of Default shall occur, Mortgagee may, at its option,
after service of a Notice, receive and collect all such Rents as they become
due, from the Property. Mortgagee shall thereafter continue to receive and
collect all such Rents, until Mortgagee shall otherwise agree in writing. All
sums received by Mortgagor after service of such Notice shall be deemed received
in trust and shall be immediately turned over to Mortgagee.
          Upon the occurrence and during the continuation of an Event of
Default, Mortgagor hereby irrevocably appoints Mortgagee its true and lawful
attorney-in-fact with power of substitution and with full power for Mortgagee in
its own name and capacity or in the name and capacity of Mortgagor, from and
after service of Notice, to demand, collect, receive and give complete
acquittances for any and all Rents accruing from the Property, either in its own
name or in the name of Mortgagor or otherwise, which Mortgagee may deem
necessary or desirable in order to collect and enforce the payment of the Rents
and to demand, collect, receive, endorse, and deposit all checks, drafts, money
orders or notes given in payment of such Rents. Such appointment is coupled with
an interest and is irrevocable. Mortgagee shall not be
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liable for or prejudiced by any loss of any note, checks, drafts, etc., unless
such loss shall have been found by a court of competent jurisdiction to have
been due to the gross negligence or willful misconduct of Mortgagee.
          Mortgagee shall apply the Rents received from Mortgagor’s lessees,
toward Mortgagor’s obligations under the Reimbursement Agreement. If no Event of
Default remains uncured, amounts received in excess of Mortgagor’s obligations
under the Reimbursement Agreement shall be remitted to Mortgagor in a timely
manner. Nothing contained herein shall be construed to constitute Mortgagee as a
mortgagee-in-possession in absence of its physically taking possession of the
Property.
          Upon the occurrence and during the continuation of an Event of
Default, Mortgagor also hereby irrevocably appoints Mortgagee from and after
service of notice as its true and lawful attorney-in-fact to appear in any state
or federal bankruptcy, insolvency, or reorganization proceeding in any state or
federal court involving any of the tenants of the Leases. Lessees of the
Property are hereby expressly authorized and directed, from and after service of
a Notice to pay any and all amounts due Mortgagor pursuant to the Leases to
Mortgagee or such nominee as Mortgagee may designate in writing delivered to and
received by such lessees who are expressly relieved of any and all duty,
liability or obligation to Mortgagor in respect of all payments so made.
          If an Event of Default shall occur, Mortgagee is hereby vested with
full power from and after service of a Notice to use all measures, legal and
equitable, deemed by it necessary or proper to enforce the assignment granted
hereunder and to collect the Rents assigned hereunder, including the right of
Mortgagee or its designee, to enter upon the Property, or any part thereof, and
take possession of all or any part of the Property together with all personal
property, fixtures, documents, books, records, papers and accounts of Mortgagor
relating thereto, and may exclude the Mortgagor, its agents and servants, wholly
therefrom. Mortgagor hereby grants full power and authority to Mortgagee to
exercise all rights, privileges and powers herein granted at any and all times
after service of a Notice, with full power to use and apply all of the Rents and
other income herein assigned to the payment of the costs of managing and
operating the Property and of any indebtedness or liability of Mortgagor to
Mortgagee, including but not limited to the payment of taxes, special
assessments, insurance premiums, damage claims, the costs of maintaining,
repairing, rebuilding and restoring the Improvements on the Premises or of
making the same rentable, reasonable attorneys’ fees incurred in connection with
the enforcement of the assignment granted hereunder, and of payments due from
Mortgagor to Mortgagee under the Reimbursement Agreement and this Instrument,
all in such order as Mortgagee may determine. Mortgagee shall be under no
obligation to exercise or prosecute any of the rights or claims assigned to it
hereunder or to perform or carry out any of the obligations of the lessor under
any of the Leases and does not assume any of the liabilities in connection with
or arising or growing out of the covenants and agreements of Mortgagor in the
Leases. It is further understood that the assignment granted hereunder shall not
operate to place responsibility for the control, care, management or repair of
the Property, or parts thereof, upon Mortgagee, nor shall it operate to make
Mortgagee liable for the performance of any of the terms and conditions of any
of the Leases, or for any waste of the Property by any lessee under any of the
Leases or any other person, or for any dangerous or
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defective condition of the Property or for any negligence in the management,
upkeep, repair or control of the Property resulting in loss or injury or death
to any lessee, licensee, employee or stranger, unless the same shall have been
found by a court of competent jurisdiction to have been due to the gross
negligence or willful misconduct of Mortgagee.
     Section 23. Default. The following shall each constitute an event of
default (“Event of Default”):
     (a) The occurrence of an “Event of Default” (as defined in either Lease
Agreement) under either Lease Agreement or the termination of either Lease
Agreement; or
     (b) Except as permitted by the Reimbursement Agreement, the Property is
transferred or any agreement to transfer any part or interest in the Property in
any manner whatsoever is made or entered into; or
     (c) If any lease agreement covering any portion of the Property is executed
by Mortgagor (other than the Lease Agreement) without Mortgagee’s prior written
consent, except as permitted in either Subordination, Attornment or
Lessee-Lessor Estoppel Agreement of even date herewith among Mortgagor,
Mortgagee and Tenant; or
     (d) Any warranty, representation or statement furnished to Mortgagee by or
on behalf of Mortgagor under this Instrument, any of the other Financing
Documents or the Environmental Indemnity Agreement Regarding Hazardous
Substances, shall prove to have been false or misleading in any material
respect; or
     (e) Failure of Mortgagor to observe or perform any other covenant,
condition or obligation under this Instrument, any other Financing Document or
the Environmental Indemnity Regarding Hazardous Substances for a period of
30 days after written notice is given to Mortgagor specifying such failure and
directing that it be remedied, or if the failure stated in such notice cannot be
corrected within such 30-day period, Mortgagor fails within such time to
commence and pursue curative action with reasonable diligence or fails at any
time after expiration of such applicable cure period to continue with reasonable
diligence all necessary curative actions; or
     (f) The abandonment or vacation of the Property by Tenant, except for a
period not to exceed six months for the purpose of environmental remediation or
remodeling or repairing the Improvements in accordance with the terms of the
Reimbursement Agreement; or
     (g) An Event of Default shall occur under the Reimbursement Agreement.
     Section 24. Rights and Remedies on Default. Upon the occurrence of any
Event of Default and at any time thereafter, Mortgagee may exercise any one or
more of the following rights and remedies:
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     (a) Mortgagee may declare the entire Indebtedness immediately due and
payable, without notice, presentment, protest, demand or action of any nature
whatsoever (each of which hereby is expressly waived by Mortgagor), whereupon
the same shall become immediately due and payable.
     (b) Mortgagee shall have the right to foreclose this Instrument in
accordance with applicable law.
     (c) In the event of any foreclosure, to the extent permitted by applicable
law, Mortgagee will be entitled to a judgment which will provide that if the
foreclosure sale proceeds are insufficient to satisfy the judgment, execution
may issue for any amount by which the unpaid balance of the obligations secured
by this Instrument exceeds the net sale proceeds payable to Mortgagee.
     (d) With respect to all or any part of the Property that constitutes
personalty, Mortgagee shall have all rights and remedies of secured party under
the Uniform Commercial Code.
     (e) Mortgagee shall have the right to have a receiver appointed to take
possession of any or all of the Property, with the power to protect and preserve
the Property, to operate the Property preceding foreclosure or sale, to collect
all the Rents from the Property and apply the proceeds, over and above cost of
the receivership, against the sums due under this Instrument, and to exercise
all of the rights with respect to the Property described in Section 22 above.
The receiver may serve without bond if permitted by law. To the extent permitted
by law, Mortgagee’s right to the appointment of a receiver shall exist whether
or not apparent value of the Property exceeds the sums due under this Instrument
by a substantial amount. Employment by Mortgagee shall not disqualify a person
from serving as a receiver.
     (f) In the event Mortgagor remains in possession of the Property after the
Property is sold as provided above or Mortgagee otherwise becomes entitled to
possession of the Property upon default of Mortgagor, Mortgagor shall become a
tenant at will of Mortgagee or the purchaser of the Property and shall pay a
reasonable rental for use of the Property while in Mortgagee’s possession.
     (g) Mortgagee shall have any other right or remedy provided in this
Instrument, the Reimbursement Agreement or any other Financing Document or
instrument delivered by Mortgagor in connection therewith, or available at law,
in equity or otherwise.
     (h) Mortgagor does hereby grant and confer upon Mortgagee the fullest
rights and remedies available for foreclosure of this Instrument by action or by
advertisement pursuant to Minn. Stat. Chapters 580, 581 and 582, as said
statutes may be amended from time to time, and pursuant to other applicable
Minnesota laws and statutes, as amended, governing and authorizing mortgage
foreclosures by action or by advertisement; and the power of sale granted to
Mortgagee in this Instrument shall include, without limitation,
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the power of sale required to permit, at Mortgagee’s option, lawful foreclosure
of this Instrument by advertisement in accordance with the statutes then made
and provided.
     Section 25. Sale of the Property. In exercising its rights and remedies,
Mortgagee may, at Mortgagee’s sole discretion, cause all or any part of the
Property to be sold as a whole or in parcels, and certain portions of the
Property may be sold without selling other portions. Mortgagee may bid at any
public sale on all or any portion of the Property.
     Section 26. Notice of Sale. Mortgagee shall give Mortgagor reasonable
notice of the time and place of any public sale of any personal property or of
the time after which any private sale or other intended disposition of the
personal property is to be made. Reasonable notice shall mean notice given in
accordance with applicable law, including notices given in the manner and at the
times required for notices in a nonjudicial foreclosure.
     Section 27. Waiver; Election of Remedies. A waiver by either party of a
breach of a provision of this Instrument shall not constitute a waiver of or
prejudice the party’s right otherwise to demand strict compliance with that
provision or any other provision. Election by Mortgagee to pursue any remedy
shall not exclude pursuit of any other remedy, and all remedies of Mortgagee
under this Instrument are cumulative and not exclusive. An election to make
expenditures or take action to perform an obligation of Mortgagor shall not
affect Mortgagee’s right to declare a default and exercise its remedies under
this Instrument.
     Mortgagee’s rights and remedies hereunder upon the occurrence of an Event
of Default shall include, without limitation, the fullest range and benefit of
the rights and remedies made available to a mortgagee pursuant to Minn. Stat. §
576.01 and Minn. Stat. § 559.17, as said statutes may be amended from time to
time. In the event that Mortgagee elects to exercise its remedies under said
statutes, or any of said remedies, the terms and provisions of said statutes, as
amended, governing the exercise of said remedies shall govern, control and take
precedence over any contrary terms contained in this Instrument. The exercise by
Mortgagee of the statutory remedies referenced in this paragraph shall not
constitute Mortgagee a “mortgagee-in-possession” under Minnesota law, or give
rise to any liability which might otherwise attach to Mortgagee as a
mortgagee-in-possession.
     Section 28. Satisfaction of Mortgage. Upon payment of all sums secured by
this Instrument, Mortgagee shall execute a satisfaction of this Instrument and
shall surrender this Instrument to the person or persons legally entitled
thereto. Such person or persons shall pay Mortgagee’s costs incurred in
connection with satisfaction of this Instrument.
     Section 29. Use of Property. The Property is not currently used for
agricultural, farming, timber or grazing purposes. Mortgagor warrants that this
Instrument is and will at all times constitute a commercial mortgage, as defined
under appropriate state law.
     Section 30. Future Advances. Upon request of Mortgagor, Mortgagee, at
Mortgagee’s option so long as this Instrument secures Indebtedness held by
Mortgagee, may make Future Advances to Mortgagor. Such Future Advances, with
interest thereon, shall be secured by this Instrument when evidenced by
promissory notes stating that said notes are secured hereby.
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     Section 31. Imposition of Tax by State.
          (a) The following constitute state taxes to which this Section
applies:
     (i) A specific tax upon mortgages or upon all or any part of the
indebtedness secured by a mortgage.
     (ii) A specific tax on a mortgagor which the taxpayer is authorized or
required to deduct from payments on the indebtedness secured by a mortgage.
     (iii) A tax on a mortgage chargeable against the mortgagee or the holder of
the note secured.
     (iv) A specific tax on all or any portion of the indebtedness or on
payments of principal and interest made by a mortgagor.
     (b) If any state tax to which this Section applies is enacted subsequent to
the date of this Instrument, this shall have the same effect as an Event of
Default, and Mortgagee may exercise any or all of the remedies available to it
unless the following conditions are met:
     (i) Mortgagor may lawfully pay the tax or charge imposed by state tax, and
     (ii) Mortgagor pays the tax or charge within 30 days after notice from
Mortgagee that the tax law has been levied.
     Section 32. Attorneys’ Fees. In the event suit or action is instituted to
enforce or interpret any of the terms of this Instrument (including without
limitation efforts to modify or vacate any automatic stay or injunction), the
prevailing party shall be entitled to recover all expenses reasonably incurred
at, before and after trial and on appeal whether or not taxable as costs, or in
any bankruptcy proceeding including (without limitation) attorneys’ fees,
witness fees (expert and otherwise), deposition costs, copying charges and other
expenses. Whether or not any court action is involved, all reasonable expenses,
including but not limited to the costs of searching records, obtaining title
reports, surveyor reports and title insurance incurred by Mortgagee that are
necessary at any time in Mortgagee’s opinion for the protection of its interest
or enforcement of its rights shall become a part of the Indebtedness payable on
demand and shall bear interest from the date of expenditure until repaid at the
interest rate as provided in the Reimbursement Agreement. The term “attorneys’
fees” as used in the Financing Documents shall be deemed to mean such fees as
are reasonable and actually incurred.
     Section 33. Governing Law; Severability. This Instrument shall be governed
by the law of the State of Minnesota applicable to contracts made and to be
performed therein (excluding choice-of-law principles). In the event that any
provision or clause of this Instrument or the Reimbursement Agreement conflicts
with applicable law, such conflict shall not affect other provisions of this
Instrument or the Reimbursement Agreement which can be given effect
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without the conflicting provision, and to this end the provisions of this
Instrument and the Reimbursement Agreement are declared to be severable.
     Section 34. Time of Essence. Time is of the essence of this Instrument.
     Section 35. Changes in Writing. This Instrument and any of its terms may
only be changed, waived, discharged or terminated by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. Any agreement subsequently made by Mortgagor or
Mortgagee relating to this Instrument shall be superior to the rights of the
holder of any intervening lien or encumbrance.
     Section 36. No Offset. Mortgagor’s obligation to make payments and perform
all obligations, covenants and warranties under this Instrument and under the
Financing Documents shall be absolute and unconditional and shall not be
affected by any circumstance, including without limitation any setoff,
counterclaim, abatement, suspension, recoupment, deduction, defense or other
right that Mortgagor or any guarantor may have or claim against Mortgagee or any
entity participating in the obligations secured hereby. The foregoing provisions
of this Section, however, do not constitute a waiver of any claim or demand
which Mortgagor or any guarantor may have in damages or otherwise against
Mortgagee or any other person, or preclude Mortgagor from maintaining a separate
action thereon; provided, however, that Mortgagor waives any right it may have
at law or in equity to consolidate such separate action with any action or
proceeding brought by Mortgagee.
     Section 37. Reimbursement Agreement. If any conflict or inconsistency
exists between the terms of this Instrument and the terms of the Reimbursement
Agreement, the terms of the Reimbursement Agreement shall govern.
     Section 38. Mortgage Registry Tax. Mortgagor agrees to pay upon demand, or
upon demand to promptly reimburse Mortgagee for the payment of, the amount of
the Mortgage Registry Tax payable with respect to and upon the recording of this
Instrument in accordance with Minn. Stat. § 287.05.
     Section 39. Waiver of Jury Trial. MORTGAGOR AND MORTGAGEE HEREBY KNOWINGLY,
VOLUNTARILY AND INTELLIGENTLY WAIVE ANY AND ALL RIGHTS THAT MORTGAGOR OR
MORTGAGEE MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE UNITED STATES OF
AMERICA OR THE STATE OF MINNESOTA, TO A TRIAL BY JURY OF ANY AND ALL ISSUES
ARISING DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING RELATING TO THIS
INSTRUMENT, THE FINANCING DOCUMENTS OR ANY TRANSACTIONS CONTEMPLATED THEREBY OR
RELATED THERETO. IT IS INTENDED THAT THIS WAIVER SHALL APPLY TO ANY AND ALL
DEFENSES, RIGHTS, CLAIMS AND/OR COUNTERCLAIMS IN ANY SUCH ACTION OR PROCEEDING.
     EACH PARTY UNDERSTANDS THAT THIS WAIVER IS A WAIVER OF A CONSTITUTIONAL
SAFEGUARD, AND EACH PARTY INDIVIDUALLY BELIEVES THAT THERE ARE SUFFICIENT
ALTERNATE PROCEDURAL AND SUBSTANTIVE
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SAFEGUARDS, INCLUDING, A TRIAL BY AN IMPARTIAL JUDGE, THAT ADEQUATELY OFFSET THE
WAIVER CONTAINED HEREIN.
     Section 40. Special Provisions Modifying or Affecting this Instrument by
Reason of the State in which the Property is Located. By virtue of the fact that
the Property is located in the State of Minnesota, the provisions set forth
below shall be applicable to this Instrument, and to the extent applicable,
shall modify, affect and supplement the other provisions hereof.
     (a) Application of Rents. In the event that a receiver has been appointed,
all Rents collected by Mortgagee pursuant to such receiver, shall, to the extent
required by applicable law, be held and applied in the following order:
     (i) to payment of all reasonable fees of the receiver, if any, approved by
the court;
     (ii) to the repayment when due of all tenant security deposits pursuant to
the provisions of Minnesota Statutes § 504B.178;
     (iii) to payment of all delinquent or current real estate taxes and special
assessments payable with respect to the Property or, if this Instrument so
requires, to the periodic escrow for the payment thereof;
     (iv) to payment of all premiums then due for the insurance required by the
provisions of this Instrument or, if this Instrument so requires, to the
periodic escrow for the payment thereof;
     (v) to payment of expenses incurred for normal maintenance of the Property;
     (vi) if received prior to any foreclosure sale of the Property to Mortgagee
for payment of the Indebtedness secured by this Instrument, but no such payment
made after acceleration of the Indebtedness shall affect such acceleration; and
     (vii) if received during or with respect to a period after a foreclosure
sale of the Property:
          (1) if the purchaser at the foreclosure sale is not Mortgagee, first
to Mortgagee to the extent of any deficiency of the sale proceeds to repay the
Indebtedness secured by this Instrument, second to the purchaser as a credit to
the redemption price, but if the Property is not redeemed, then to the purchaser
of the Property; and
          (2) if the purchaser at the foreclosure sale is Mortgagee, first to
Mortgagee to the extent of any deficiency of the sale proceeds to repay the
Indebtedness secured by this Instrument and the balance to be retained by
Mortgagee as a credit to the redemption price, but if the
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Property is not redeemed, then to Mortgagee, whether or not such deficiency
exists.
     The rights and powers of Mortgagee under the Assignment of Leases and Rents
contained in this Instrument and the application of the Rents shall continue and
remain in full force and effect both before and after commencement of any action
or procedure to foreclose this Instrument, after any foreclosure sale of
Mortgagor’s interest in the Property in connection with the foreclosure of this
Instrument, and until expiration of the period of redemption from any such
foreclosure sale, whether or not any deficiency from the unpaid balance of the
Indebtedness exists after such foreclosure sale.
     (b) Foreclosure; Action or Advertisement. Mortgagee may (and is hereby
authorized and empowered to) foreclose this Instrument by action or
advertisement, pursuant to the statutes of the State of Minnesota in such case
made and provided, power being expressly granted to sell the Property at public
auction and convey the same to the purchaser to the full extent of Mortgagor’s
interest and, out of the proceeds arising from such sale, to pay all
Indebtedness secured hereby with interest, and all legal costs and charges of
such foreclosure and the maximum attorneys’ fees permitted by law, which costs,
charges and fees Mortgagor agrees to pay. Any real estate or interest or estate
sold hereunder may be sold in one parcel, as an entirety, or in such parcels and
in such manner or order as Mortgagee, in its sole discretion, may elect. In case
of any sale of the Property pursuant to any judgment or decree of any court or
at public auction or otherwise in connection with the enforcement of any of the
terms of this Instrument, Mortgagee, its successors and assigns, may become the
purchaser, and for the purpose of making settlement for or payment of the
purchase price, shall be entitled to deliver over and use any sum then due under
the Reimbursement Agreement and any claims for interest accrued and unpaid
thereon, together with all other sums, with interest, advanced and unpaid
hereunder, and all statutory charges for such foreclosure including maximum
attorney’s fees allowed by law in order that there may be credited as paid on
the purchase price the sum then due under the Reimbursement Agreement and all
other sums, with interest, advanced and unpaid hereunder, and all charges and
expenses of such foreclosure including maximum attorney’s fees allowed by law.
     (c) Instrument as Fixture Filing. From the date of its recording, this
Instrument shall be effective as a financing statement filed as a fixture filing
with respect to all goods constituting part of the Property (as more
particularly described in item (a) of the granting clause of this Instrument)
which are or are to become fixtures related to the real estate described herein.
For this purpose, the following information is set forth:

     
(i)
  Name and Address of Mortgagor:
 
   
 
  LTF REAL ESTATE VRDN I, LLC
 
  2902 Corporate Place
 
  Chanhassen, Minnesota 55317
 
   
(ii)
  Name and Address of Mortgagee:

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  GENERAL ELECTRIC CAPITAL CORPORATION
 
  8400 Normandale Lake Boulevard, Suite 470
 
  Minneapolis, Minnesota 55437
 
   
(iii)
  This document covers goods which are or are to become fixtures.
 
   
(iv)
  The name of the record owner of the Property is the Mortgagor described above.
 
   
(v)
  Mortgagor is organized as a limited liability company.
 
   
(vi)
  Mortgagor’s jurisdiction of organization is Delaware.
 
   
(vii)
  Mortgagor’s organizational identification number is DE 4543759.

[REMAINDER OF PAGE INTENTIONALLY BLANK;
EXECUTION PAGE FOLLOWS]
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     IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS INSTRUMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL PROMISES NOT CONTAINED IN THIS WRITTEN INSTRUMENT MAY BE LEGALLY ENFORCED.
YOU MAY CHANGE THE TERMS OF THIS INSTRUMENT ONLY BY ANOTHER WRITTEN INSTRUMENT.
     IN WITNESS WHEREOF, Mortgagor has executed this Instrument or has caused
the same to be executed by its representatives thereunto duly authorized.

              MORTGAGOR:
 
            LTF REAL ESTATE VRDN I, LLC,     a Delaware limited liability
company
 
       
 
  By:    
 
       
 
  Name:    
 
       
 
  Title:    
 
       

         
STATE OF MINNESOTA
)     
 
)  ss.    
COUNTY OF                                         
)     

     This instrument was acknowledged before me a notary public on
                          , 2008 by Eric J. Buss, as the Secretary of LTF REAL
ESTATE VRDN I, LLC, a Delaware limited liability company, on behalf of said
limited liability company.

         
 
   
 
  Notary Public
 
  My commission expires:  

Prepared by, recording requested by and,
after recording, return to:
Andrews P. Romshek, Esq.
Kutak Rock LLP
1650 Farnam Street
Omaha, NE 68102-2186
(402) 346-6000
[EXECUTION PAGE OF MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF LEASES AND RENTS AND FIXTURE FILING]
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Exhibit A to Mortgage
DESCRIPTION OF PROPERTY

     
Property Address:
  2902 Corporate Place
 
  Chanhassen, MN

Parcel 1: Lot 2, Block 1, LIFE TIME FITNESS 2ND ADDITION, according to the
recorded plat thereof, Carver County, Minnesota.
Torrens Property-Certificate of Title No. 33647.0
Parcel 2: Non-exclusive easements as contained in the Declaration of Cross
Access, Parking, Sanitary Sewer, Storm Water and Water Easements dated
February 18, 2008, recorded March 19, 2008, as Document No. 166225
APN: 25.077004
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Exhibit B to Mortgage
PERMITTED EXCEPTIONS
     1. Real estate taxes for the year 2009 and thereafter, not yet due and
payable.
     2. Special assessments hereafter levied, not yet due and payable.
     3. Final Certificate memorialized on the Certificate of Title for purposes
of showing existing access control only, dated March 24, 1980, recorded
April 21, 1980 as Document No. T31518.
     4. Right of Way in favor of the Public for purposes of showing existing
access control only, dated January 14, 2000, recorded January 20, 2000 as
Document No. T112494.
     5. Terms and conditions of Arboretum Business Park Development Contract/PUD
Agreement dated August 25, 1997, recorded September 12, 1997 as Document
No. T98262, as amended by the following:
     Addendum “A” to Development Contract/PUD Agreement dated September 22,
1997, recorded February 18, 1998 as Document No. T100332.
     Addendum “B” to Development Contract/PUD Agreement dated May 11, 1998,
recorded July 8, 1998 as Document No. T102658.
     First Amendment to Arboretum Business Park Development Contract/PUD
Agreement dated August 20, 2001, recorded December 4, 2001 as Document
No. T123316.
     Second Amendment to Arboretum Business Park Development Contract/PUD
Agreement dated December 10, 2001, recorded September 12, 2003 as Document
No. T140561.
     Third Amendment to Arboretum Business Park Development Contract/PUD
Agreement dated April 14, 2003, recorded December 3, 2003 as Document
No. T142928.
     Certificate of Compliance granted September 13, 2004 from the City of
Chanhassen, a municipal corporation to Chaska Gateway Partners Limited
Partnership and recorded November 17, 2004 as Document No. T149708.
     6. Conveyance of the right of access, being the right of ingress to and
egress from the land to State Highway No. 5 as contained in Warranty Deed dated
July 21, 2000, recorded July 31, 2000 as Document No. T115101.
     7. Terms and conditions of Arboretum Business Park 4th Addition Development
Contract/PUD Agreement dated June 24, 2002, recorded July 22, 2002 as Document
No. T128490.
Chanhassen, Minnesota

 

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     8. Terms, conditions, covenants, restrictions and easements created
pursuant to Declaration of Covenants, Conditions, Restrictions and Easements
dated July 8, 2002, recorded July 22, 2002 as Document No. T128493.
     9. Easement for lane dividers and landscaping purposes, together with any
incidental rights, in favor of the City of Chanhassen, as contained in the
Declaration of Easements, dated November 6, 2004, recorded November 17, 2004 as
Document No. 149707.
     10. Easements as shown on the recorded plat of LIFE TIME FITNESS and on the
recorded plat of LIFE TIME FITNESS 2ND ADDITION.
     11. Terms and conditions of Life Time Fitness Development Contract/PUD
Agreement dated August 9, 2004, recorded December 8, 2004 as Document
No. T150097.
     12. Terms and conditions of Site Plan Permit # 04-22 by and between the
City of Chanhassen and Life Time Fitness dated August 9, 2004, recorded
December 8, 2004 as Document No. T150099.
     13. Terms, conditions, easements, restrictions, covenants and provisions as
contained in the Declaration of Cross Access, Parking, Sanitary Sewer, Storm
Water and Water Easements dated February.
     14. The following as disclosed by the survey prepared by Alliant
Engineering, Inc., dated April 25, 2008, Job No. 60035:
          a. drainage and utility easement per Arboretum Business Park;
          b. storm sewer line crossing the western side of the land.
Chanhassen, Minnesota