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132759067v2 5 ARTICLE II REPRESENTATIONS Section 2.1 Representations by the Issuer. The Issuer makes the following representations as the basis for its covenants herein: (1) The Issuer is a municipal corporation pursuant to the laws of the State of Minnesota; (2) There is no pending or, to the undersigned's actual knowledge, without inquiry or investigation, threatened suit, action, or proceeding against the Issuer before any court, arbitrator, administrative agency, or other governmental authority that challenges the Issuer's execution and delivery of this Agreement, the Note, and the Pledge Agreement; (3) To the actual knowledge of the undersigned, without inquiry or investigation, the execution and delivery of this Agreement, the Note, and the Pledge Agreement will not constitute a breach of or default under any existing (a) provision of any special legislative act or charter provision relating to the establishment of the Issuer or (b) agreement, indenture, mortgage, lease or other instrument to which the Issuer is a party or by which it is bound; and (4) No proceeding of the Issuer for the issuance, execution or delivery of this Agreement, the Note, and the Pledge Agreement has been repealed, rescinded, amended or revoked and Lender is entitled to rely on the same as if the same were fully incorporated herein, including without limitation, the Resolution. Section 2.2 Representations by the Borrower. The Borrower makes the following representations as the basis for its covenants herein: (1) The Borrower is a Minnesota nonprofit corporation in good standing, is duly authorized to conduct its business in all states where its activities require such authorization, has power to enter into this Agreement, the Security Agreement, and the Mortgage and to use the Facility for the purpose set forth in this Agreement and by proper corporate action has authorized the execution and delivery of this Agreement, the Security Agreement, and the Mortgage; (2) Not more than five percent (5%) of the proceeds of the Note will be used, directly or indirectly, to finance property used in an unrelated trade or business of the Borrower determined by applying Section 513(a) of the Code or in the trade or business of any person other than an organization described in Section 501(c)(3) of the Code. There is no action, proceeding or investigation pending or threatened by the Internal Revenue Service or authorities of the State of Minnesota which, if adversely determined, might result in a modification of the status of the Borrower as an organization described in Section 501(c)(3) of the Code; (3) The execution and delivery of this Agreement, the Security Agreement, and the Mortgage, the consummation of the transactions contemplated thereby, and the fulfillment of the terms and conditions thereof do not and will not conflict with or result in a breach of any of the terms or conditions of the Borrower's articles of incorporation, its bylaws,