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Section 3.2. Permitted Encumbrances. "Permitted Encumbrances" shall mean, with
<br />respect to the Mortgaged Property, the Lease and the following:
<br />(a) (the Subordinate Loan including the Line of Credit in an amount up
<br />to $600,000;1
<br />(b) liens for taxes, levies, assessments, utility rents, rates and charges, licenses
<br />or permits or other impositions, provided that in each case the same shall either (i) not be
<br />due and payable, (ii) not be delinquent to the extent that penalties for nonpayment may
<br />then be assessed, or the Mortgaged Property or any portion thereof, shall then be subject
<br />to forfeiture, or (iii) be a lien, the amount or validity of which is being contested in good
<br />faith by the Company in accordance with Section 4.5 of the Loan Agreement;
<br />(c) mechanics', workmen's, repairmen's, supplier's, vendors' or carriers' liens
<br />or other similar liens, provided that the contract price secured by the lien is not yet due or
<br />the amount or validity of the lien shall be contested in good faith by the Company in
<br />accordance with Section 4.4 of the Loan Agreement;
<br />(d) financing statements naming the Issuer or the Company as debtor and
<br />naming the Issuer or the Trustee as secured party, filed to perfect the security interests
<br />granted by the Indenture, the Loan Agreement and this Mortgage;
<br />(e) rights of the United States or any state or political subdivision thereof
<br />(which for purposes of this definition shall include any taxing or improvement district),
<br />or other public or governmental authority or agency, to take, use or control property or to
<br />terminate any right, power, franchise, grant, license or permit previously in force;
<br />(f) any leases or subleases or assignments permitted under Section 7.1 of the
<br />Loan Agreement;
<br />(g) the pendency or fling of any application or proceedings seeking to annex
<br />or rezone the Mortgaged Property or any portion thereof, or to include it in any political
<br />subdivision;
<br />(h) those liens, encumbrances, easements, servitudes, licenses, rights -of -way
<br />described in Exhibit B attached hereto; and
<br />(i) such minor defects, irregularities, encumbrances and clouds on title as
<br />normally exist with respect to property similar in character to the Mortgaged Property
<br />and as do not, in the opinion of independent counsel delivered to the Issuer, materially
<br />impair the property affected thereby for the purposes of the Mortgaged Property.
<br />Section 3.3. Hazardous Materials. The Company covenants, warrants and represents
<br />to the Trustee, its successors and assigns, (i) that to the best of the Company's knowledge,
<br />without independent investigation; and except as disclosed to the Trustee in writing, no
<br />dangerous, toxic or hazardous pollutants, chemical wastes or substances as defined in the Federal
<br />Comprehensive Environmental Response Compensation and Liability Act of 1980 ("CERCLA"),
<br />or the Federal Resource Conservation and Recovery Act of 1976 ("RCRA"), or the Minnesota
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