4.1. EDSR 09-22-2015 i1k Request for Action
River
To Item Number
Economic Development Authority Finance Committee 4.1
Agenda Section Meeting Date Prepared by
General Business September 22, 2015 Amanda Othoudt, EDD
Item Description Reviewed by
Uncollectable Microloans Cal Portner, City Administrator
Reviewed by
Action Requested
Hear update regarding uncollectable microloans.
Background/Discussion
Staff has identified two uncollectable microloans, Ethanol Technology and Sweet P's that are still
reflected on the financial statements.
There has been no activity to Ethanol Technology since September of 2011 and with Sweet P's since
April of 2014. During the audit each year,we are questioned as to the validity of these microloans and
whether they should remain on the financial statements.
Staff is looking for direction from the EDA finance committee on the interest to continue pursuing
collection of these loans.
Financial Impact
N/A
Attachments
• EDA Finance staff memo dated June 23, 2014
r MERE ®ATURE
O
Eli
Request for Action
River
To kern Number
Economic Development Authority Finance Committee 4.2
Agenda Section Meeting Date Prepared by
General Business June 23, 2014 Brian Beeman, Directory of Economic
Development
Item Description Reviewed by
Ethanol Technology Default Jeremy Barnhart, Deputy Director, CODD
Reviewed by
•
Action Requested
Hear update regarding Ethanol Technology.
Background/Discussion
As directed by the EDA in December, staff has been pursuing collection of$66,729.66, the unpaid
balance of a microloan given to Ethanol Technology August 25, 2008.
Staff has been attempting to solicit a response from the bank to formally agree on the assignment of the
loan and to receive an accurate principal balance due from the borrower, including the last date any
interest was paid. The $66,729.66 may increase due to accrued interest.
On June 9, 2014 Chad Vitzhum, a representative of First National Bank of Elk River and the lender,
reported that an answer is expected by June 16th. To date, no response has been received. If a response is
not heard from the bank by the end of the meeting, the attorney will write a letter to the bank requesting
a response to the documents sent to them.
Financial Impact
None.
Attachments
® EDA Finance Committee Packet dated June 9, 2014
PQ ERED 1
INATUPEJ
City of
Elk Request for Action
River
To Item Number
Economic Development Authority Finance Committee 2.2
Agenda Section Meeting Date Prepared by
General Business June 9, 2014 Brian Beeman, Directory of Economic
Development
kern Description Reviewed by
Ethanol Technology Default Jeremy Barnhart, Deputy Director, CODD
Reviewed by
Action Requested
Hear update regarding Ethanol Technology.
Background/Discussion
At the December 10, 2013 EDA Finance Committee meeting, the Committee directed staff work with
the EDA attorney to collect on Ethanol Technology's microloan default for the remaining balance of
$66,729.66. It was noted late last year that the bank had written off this loan and did not intend to go
after the borrower. The EDA concurred with the EDA Finance Committee's recommendation to pursue
a payback from the borrower. Since that time, the FDA's attorney has been attempting to solicit a
response from the bank to sign off on the assignment of the loan and to receive an accurate principal
balance due from the borrower, including the last date any interest was paid. Because it has been several
months since the process was initiated, staff felt the need to update the Committee. The EDA attorney
has provided a memo updating the Committee on the process by requesting that the bank sign over its
interests so that the FDA can pursue collecting. If a response is not heard from the bank within one week
from the date of this meeting, the attorney will be writing a letter to the bank requesting that they
participate in a response to the documents sent to them.
Financial Impact
None.
Attachments
® Memo dated June 3, 2014 from Campbell Knutson Law Firm
® Draft Assignment Agreement from Campbell Knutson Law Firm
a Draft Allonge to Promissory Note from Campbell Knutson Law Firm
EDA Finance Committee November 5, 2013 Packet
a EDA Finance Committee December 10, 2013 Packet
'P® p E R E D R,V
NATURE
CAMPBELL KNUTSON
fi•Y AA 3
!:,).;,:,:. „q,l:;:i, TO: Elk River EDA Finance Committee
FROM: John Kelly
, . . t. .,ti? Fnai:°e,
DATE: June 3,2014
;,,;,;, : . ,t . RE: Borrower: Ethanol Technology of Minnesota,LLC
Originating Lender: First National Bank of Elk River the"Bank")
Participation Lender: Elk River EDA
Loan Amount: $74,000.00
Date of Loan: August 25,2008
Maturity Date: August 25,2013
I have prepared an Assignment Agreement of the following documents wherein the
Bank assigns its interest in them to the EDA so that the EDA can take whatever actions
it deems necessary to attempt to collect the monies owing them from the Borrower:
1. Promissory Note executed by Ethanol Technology of Minnesota, LLC
("Borrower")dated 8/25/08 in the amount of$74,000.00("Note").
2. Security Agreement executed by the Borrower securing the Note("Security
Agreement").
3. Guaranty executed by Hitech Motor Sports,Inc. ("Hitech")guaranteeing the
obligations of the Borrower under the Note("Hitech Guaranty").
4. Guaranty of Barton C. Wells("B.Wells") guaranteeing the obligations of the
Borrower under the Note("B. Wells Guaranty").
I am waiting for the Bank to provide me with the current principal balance due from the
Borrower and the last date that any interest was paid, along with the name of the officer
at the Bank that I should send the documents to for approval and signature. Once I
receive that information I will send the assignment documents to the Bank for its
approval.
........... ........::a Iii
I73697v3
'At 1 ., yam.icA 1.14m,
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT ("Agreement") is made and entered into as
of the day of June, 2014, by and between the FIRST NATIONAL BANK OF
ELK RIVER, whose address is 729 Main Street, Elk River, Minnesota 55330-1504
("Assignor") and the ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY,
whose address is 13065 Orono Parkway, Elk River, Minnesota 55330 ("Assignee").
RECITALS:
WHEREAS, Assignor currently is the holder of a Promissory Note in the amount
of Seventy-four Thousand and No/100 Dollars ($74,000.00) executed by ETHANOL
TECHNOLOGY OF MINNESOTA, LLC, a Minnesota limited liability company,
whose address is 16820 Highway 10 NW, Elk River, Minnesota 55330 ("Borrower") in
favor of the Assignor, dated August 25, 2008 ("Note"); and
WHEREAS, the Note is secured by (i) a Mortgage dated August 25, 2008
executed by Barton C. Wells, LLC ("BC Wells") on certain property located in the City
of Elk River as described in the Mortgage which was recorded on September 10, 2008, as
Document No. 679619 in the Office of the County Recorder, Sherburne County,
Minnesota (`Mortgage"); (ii) a Security Agreement dated August 25, 2008 executed by
Hitech Motorsport Inc. ("Hitech") ("Hitech Security Agreement"); (iii) Security
Agreement dated August 25, 2008 executed by Ethanol Technology of Minnesota, LLC
("Ethanol Technology") ("Ethanol Security Agreement"); (iv) guaranty by Barton C.
Wells pursuant to a Guaranty Agreement dated August 25, 2008 ("Wells Guaranty"); and
(v) guaranty of Hitech pursuant to a Guaranty Agreement dated August 25, 2008 ("Hitech
Guaranty"); and
WHEREAS, Assignor and Assignee entered into a Participation Certificate and
Agreement dated August 25, 2008 wherein the Assignor sold to the Assignee an
undivided one hundred percent (100%) interest in the principal and interest accruing
under the terms of the Note; and
WHEREAS, Borrower is in default under the terms, covenants and conditions of
the Note, Mortgage, Ethanol Security Agreement and the Guarantors Barton C. Wells and
Hitech are in default under their respective Guaranty Agreements, and the Assignor does
not wish to proceed with any collection activity against Borrower under the Note,
Mortgage, Ethanol Security Agreement or against Hitech and/or Barton C. Wells under
the terms of their respective Guaranty Agreements and the Assignee believes that it is in
its best interest to proceed with collection under the terms of the Note, Mortgage, Hi tech
Security Agreement and Ethanol Security Agreement along with actions against Barton
175805•I 1
C. Wells and Hitech under the Wells Guaranty and the Hitech Guaranty (hereinafter
jointly referred to as the "Guaranties"); and
WHEREAS, Assignor desires to transfer and assign the Note (without recourse)
to the Assignee as well as all of the Assignor's interest in the Mortgage, Wells Guaranty,
Hitech Guaranty and all of the Loan Documents associated with the Note and Assignee
desires to purchase the Note, Mortgage, the Guaranty of Hitech and Guaranty of Wells
and all other Loan Documents associated with the Note from the Assignor.
NOW, THEREFORE, in consideration of the foregoing premises, the
undertakings and mutual covenants and agreements contained herein and for other good
and valuable consideration, Assignor and Assignee hereby agree as follows:
1. Assignment and Purchase of Note, Mortgage and Loan
Documents. Assignor does hereby irrevocably sell, assign, transfer and convey
"without recourse", except as to the warranties, representations and covenants expressly
contained herein, all of Assignor's rights, title and interest in and to the Note, together
with the Mortgage and the Property described in the Mortgage, the Wells Guaranty,
Hitech Guaranty, and all other Loan Documents, including all claims, chooses in action,
rights and causes of action at any time belonging or accruing to the Assignor in
connection with the Note, Mortgage, Guaranties and other Loan Documents, and all right,
title and interest of Assignor in and to the Property, all property rights, security interests,
claims, insurance proceeds and all personal property, furniture, fixtures and equipment
secured by the Mortgage, and Assignee shall have all the rights of the Assignor
thereunder.
2. Representations and Warranties of Assignee. Assignee acknowledges
and agrees that the Assignor has not made any representations as to collectability of the
amount owing under the Note, Mortgage and/or Guaranties and/or the value of the
Property or the condition of the title to the Property and that Assignee has reviewed the
Note, Mortgage, Guaranties and all of the Loan Documents and has made its own
independent investigation of the financial condition of Borrower, Barton C. Wells and
Hitech and the condition of title to the Property.
3. Representations and Warranties of Assignor. Assignor represents and
warrants as of the date hereof as follows:
A. That Assignor owns and has clear title to the Note, Guaranties, and the
Mortgage securing the same, and all other Loan Documents, free and clear of any lien or
encumbrance, set offs, counterclaims and defenses of any nature, and that the same have
not been amended except as set forth herein and that Assignor has the full power, right
and authority to sell, assign, transfer and convey the same, and that all necessary
proceedings on the part of the Assignor have been duly taken to authorize the sale,
175805v1 2
transfer, assignment and conveyance, including the execution and delivery to Assignee of
all documents necessary for the sale, transfer. conveyance and assignment and this
Agreement.
B. That the current principal balance owing under the Note is
$ along with interest thereon from and after the day of
, 20
C. Except as otherwise set forth in this Agreement, Assignor specifically
disclaims any warranty, guaranty or representation, oral or written, past, present or future
with respect to the Note, Mortgage, Guaranties, any other Loan Document, including,
without limitation: (i) the validity or enforceability of the Note, Mortgage, Guaranties, or
any other Loan Document; (ii) the validity, enforceability, existence, or priority of any
lien or security interest securing the Note including the Property; (iii) existence of or
basis for any claim, counterclaim, defense or offset relating to the Note, Mortgage,
Guaranties, or any other Loan Document; (iv) the financial condition of Borrower, Barton
C. Wells or Hitech; (v) the compliance of the Note, Mortgage, Guaranties or any other
Loan Document with any laws, ordinances or regulations of any governmental agency;
(vi) the title to, or the condition, sufficiency, suitability or the value of any collateral
securing the Note including the Property; and (vii) the future performance of Borrower
under the Note or Barton C. Wells or Hitech under their respective Guaranties.
4. Assignor's Documents. At the closing of this transaction, Assignor agrees
to deliver to Assignee the following documents:
A. The original Promissory Note and any amendments of Promissory Note
endorsed without recourse to Assignee;
B. The original Mortgage, including all amendments;
C. An Assignment of the Mortgage (Statutory Form), effectively assigning,
transferring and setting over unto Assignee all of Assignor's rights, title and interest to the
Mortgage and the Property;
D. The original Guaranties of Barton C. Wells and Hitech.
5. All Agreements Reflected Herein. All understandings and agreements
heretofore or simultaneously had between the parties are merged in this Agreement and
are contained herein, and this Agreement fully and completely expresses the agreement
between the parties with respect to the subject matter hereof. Neither party is relying
upon any covenants, representations or warranties of the others which are not set forth in
this Agreement.
1758O5v1 3
6. Agreements for the Benefit of Parties Only. The agreements, promises
and covenants herein contained are for the sole benefit of the Assignor and Assignee,
their successors and assigns, and are not intended to create and do not create any rights in
third parties. This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, executors, personal representatives, successors and
permitted assigns. The parties agree that they will execute any other documents that are
reasonably necessary to effectuate the terms of this Agreement.
7. Notices. All written notices and demands of any kind, which either party
may be required or may desire to serve upon the other party in connection with this
Agreement, may be served (as an alternative to personal service) by registered or certified
mail or by any nationally recognized overnight courier service. Any such notice or
demand so served by registered or certified mail shall be deposited in the United States
Mail with postage thereon fully prepaid and addressed to the party to be served at the
address set forth opposite their name below. Service of any such notice or demand so
made by mail shall be deemed served three (3) business days after the day of
mailing. Service of any notice or demand made by overnight courier shall be deemed
given one (I) business day after deposit with such courier.
8. Counterparts. The parties to this Agreement hereby acknowledge and
agree that this document may be signed in counterpart and that the execution of the
counterpart shall be fully effective, binding and enforceable, and furthermore that no
defense shall be raised by the parties hereto due to the execution of this Agreement in
counterpart.
9. Recitals. The Recitals set forth above are incorporated in the body of this
Agreement as if they were fully set forth herein and the definitions contained in the
Recitals shall have the same meaning when used in the body of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above, in multiple counterparts, each of which shall be deemed an
original and all of which shall evidence but one agreement.
FIRST NATIONAL BANK OF ELK RIVER
By:
Its:
175805v 4
ZIA RIVER ECONOMIC
DEVELOPMENT AUTHORITY
By:
Its:
And
Its:
175805v1 5
s
ALLONGE TO PROMISSORY NOTE
This ALLONGE TO PROMISSORY NOTE made this _day of June,
2014, whereby the FIRST NATIONAL BANK OF ELK RIVER does hereby assign to
the ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY, without recourse,
all of its right, title and interest in and to that Promissory Note dated August 25, 2008
executed by ETHANOL TECHNOLOGY OF MINNESOTA, LLC in favor of the FIRST
NATIONAL BANK OF ELK RIVER in the amount of$74,000.00.
Dated this day of June, 2014.
FIRST NATIONAL BANK OF ELK RIVER
By:
Its:
176588v1
City of
)1*
EI Request for Action
River
To 1 Item Number
EDA Finance Committee 1 2.1
Agenda Section Meeting Date Prepared by
General Business November 5,2013 Brian Beeman, Director of Economic
Development
kern Description Reviewed by
Ethanol Technology Default Jeremy Barnhart,Deputy Director,CODD
Reviewed by
Action Requested •
Consider Ethanol Technology default and make recommendation to the EDA.
Background/Discussion
In August 2008 the EDA approved a Micro Loan in the amount of$74,000 for Ethanol Technology to
assist in the purchase of equipment and complete remodeling for the expanded business venture.The
term of the loan was a 10 year amortization with a 5 year balloon at 3%. The loan was secured by a 2''
position lien on equipment,inventory, accounts receivable,real estate and personal guarantee.The loan
was structured as a participation loan with First National Bank of Elk River.There last payment was
February 25,2010.
The company defaulted on its loan in 2010 and went bankrupt shortly thereafter.The First National Bank
has written off this loan. The remaining balance is $66,729.66.The City of Elk River's Finance
Department is asking that this loan be closed out by the end of 2013.The City's attorney has written a
resolution to close out this account.
Staff is asking that the Finance Committee make a recommendation to the EDA to write off this loan so
that it can be closed out by the end of 2013.
Financial Impact
N/A
Attachments
° Ethanol Technology Amortization
A._
'P 0 kY E R E U t ti
ETHANOL TECHNOLOGY
$74,000 EDA MICRO LOAN
Amortization Schedule
Participating Bank: First National Bank
Dated: August 25,2008 Payable to: City of Elk River
Amount: $74,000 Due: 25th of Each Month
Interest Rate: 3.00%
Term: 5 yr.Balloon-120 Months Amortization
Payments: Monthly Principal&Interest Starting September 25,2008
Payment Total Unpaid Date Payments
Period Payment Principal Interest Lzty fees Balance Paid Remaining
$74,000.00
9/25/2008 $716.03 481.70 234.33 73,518.30 10/6/2008 59
10/25/2008 716.03 636.39 79.64 72,881.91 10/17/2008 58
11/25/2008 716.03 473.09 242.94 72,408.82 11/26/2008 57
12/25/2008 716.03 360.02 356.01 72,048.80 1/26/2009 56
1/25/2009 716.03 589.94 126.09 71,458.86 2/17/2009 55
2/25/2009 716.03 590.98 125.05 70,867.88 3/9/2009 54
57.28 4/3/2009 late fees
3/25/2009 773.31 444.37 271.66 57.28 70,423.51 4/22/2009 53
4/25/2009 773.31 428.47 287.56 57.28 69,995.04 6/12/2009 52
5/25/2009 716.03 511.87 204.16 69,483.17 7/17/2009 51
6/25/2009 830.59 669.71 46.32 114.56 68,813.46 7/27/2009 50
7/25/2009 773.31 521.06 164.97 57.28 68,292.40 8/27/2009 49
8/25/2009 716.03 471.32 244.71 67,821.08 10/8/2009 48
9/25/2009 773.31 444.74 271,29 57.28 67,376.34 11/30/2009 47
10/25/2009 168.44 0.00 168.44 67,376.34 2/18/2011 46
11/25/2009 157.22 0.00 157.22 67,376.34 3/25/2011 45 325.66
12/25/2009 174.05 0.00 174,05 67,376.34 5/31/2011 44
1/25/2010 716.03 182.63 533.40 67,193.71 8/3/2011 43
2/25/2010 716.03 464.05 251.98 66,729.66 9/14/2011 42
3/25/2010 716.03 566.02 150.01 66,163.64 41
4/25/2010 716.03 551.41 164.62 65,612.23 40
5/25/2010 716.03 558.10 157.93 65,054.13 39
6/25/2010 716.03 554.28 161.75 64,499.85 38
7/25/2010 716.03 560.88 155.15 63,938.97 37
8/25/2010 716.03 557.16 158.87 63,381.81 36
9/25/2010 716.03 558.60 157.43 62,823.21 35
10/25/2010 716.03 565.08 150.95 62,258.13 34
11/25/2010 716.03 561.50 154.53 61,696.63 33
12/25/2010 716.03 567.89 148.14 61,128.74 32
1/25/2011 716.03 564.42 151.61 60,564.32 31
2/25/2011 716.03 565.88 150.15 59,998.44 30
3/25/2011 716.03 581.73 134.30 59,416.71 29
4/25/2011 716.03 568.84 147.19 58,847.87 2.8
5/25/2011 716.03 575.01 141.02 58,272.86 27
6/25/2011 716.03 571.80 144.23 57,701.06 26
7/25/2011 716.03 577.88 138.15 57,123.18 25
8/25/2011 716.03 574.77 141.26 56,548,41 24
9/25/2011 716.03 576.25 139.78 55,972.16 23
10/25/2011 716.03 582.20 133.83 55,389.96 2.2
11/25/2011 716.03 579.25 136.78 54,810.71 21
12/25/2011 716.03 585.11 130.92 54,225.60 20
1/25/2012 716.03 582.25 133.78 53,643.35 19
2/25/2012 716.03 583.76 132.27 53,059.59 18
3/25/2012 716.03 593.70 122.33 52,465.89 17
4/25/2012 716.03 586.80 129.23 51,879.09 16
5/25/2012 716.03 592.44 125.59 51,286.65 15
6/25/2012 716.03 589.85 126.18 50,696.80 14
7/25/2012 716.03 595.39 120.64 50,101.41 13
8/25/2012 716.03 592,91 123.12 49,508.50 12
9/25/2012 716.03 594.44 121.59 48,914.06 11
10/25/2012 716.03 599.85 116.18 48,314.21 10
11/25/2012 716.03 597.53 118.50 47,716.68 9
12/25/2012 716.03 602.84 113.19 47,113.84 8
1/25/2013 716.03 600.63 115.40 46,513.21 7
2/25/2013 716.03 602.18 113.85 45,911.03 6
3/25/2013 716.03 614.60 101.43 45,296.43 5
4/25/2013 716.03 605.32 110.71 44,691.11 4
5/25/2013 716.03 610.41 105.62 44,080.70 3
6/25/2013 716.03 608.46 107.57 43,472.24 2
7/25/2013 716.03 613.45 102.58 42,858.79 1
8/25/2013 42,963.20 42,858.79 104.41 0.00 0
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
Sherburne County,Minnesota
RESOLUTION#
AUTHORIZING THE WRITE OFF OF AN UNCOLLECTIBLE DEBT IN THE
AMOUNT OF$66,729.66,RELATING TO A MICRO LOAN WITH ETHANOL
TECHNOLOGY OF MINNESOTA,LLC
WHEREAS, the Elk River Economic Development Authority entered into a
Participation Agreement with the First National Bank of EIk River("Bank")on August 8, 2008,
for the administration of an EDA funded Micro Loan for Ethanol Technology of Minnesota ,
LLC ("Borrower") in the amount of$74,000.00 ("Loan") of which$66,729.66 remains unpaid
("Balance"); and
WHEREAS, the Bank has determined that the Balance of the loan is uncollectible and
has determined to write off the debt under the terms of the"Participation Agreement"; and
WHEREAS, the EDA agrees with the Banks finding in this matter and desires to write
off the Balance of the loan;
NOW,THEREFORE, be it resolved by the Elk River Economic Development
Authority that the efforts to collect the Balance of Borrower's debt relating to the Loan have
been unsuccessful by the Bank, the Bank has determined that the appropriate action is to write
173175v2
off the Balance of the debt and the EDA, therefore, deems the debt uncollectible hereby
authorizes to write off the debt of the Borrower in the amount of$66,729.66 from the EDA's
loan accounts.
Passed and duly adopted by the EIk River Economic Development Authority this day
of , 2013.
Daniel Tveite,President
ATTEST:
Brian Beeman, Executive Director
173175v2 2
c or
\L
E,y lk . Request for Action
River
To Rem Number
EDA Finance Committee 4.1
Agenda Section Meeting Date Prepared by
General Business December 10,2013 Brian Beeman,Director of Economic
Development
Item Description Reviewed by
Ethanol Technology Default Jeremy Barnhart, Deputy Director, CODD
Reviewed by #
Action Requested
Consider Ethanol Technology default and make recommendation to the EDA.
Background/Discussion
The company defaulted on its loan in 2010 and went bankrupt shortly thereafter. First National Bank has
written off this loan.The remaining balance is $66,729.66.The City of Elk River's Finance Department is
asking that this loan be closed out by the end of 2013. The City's attorney has written a resolution to
close out this account.
On November 5,2013, the EDA Finance Committee directed staff to determine if the City can go after
personal guarantee assets. Staff contacted First National Bank and it was determined that there are
personal assets. However, the bank didn't pursue those assets because they deemed it cost prohibitive.
The process may take several months, and could require intervention by the court system.The legal fees,
time, and resources required may outweigh the benefits.
Staff recommends the Finance Committee write off this loan so that it can be closed out by the end of
2013. The EDA attorney looked into the matter and she will be present to offer any comments.
Financial Impact
N/A
Attachments
® EDA Attorney Memo
p November 5, 2013 Staff report
tz Ethanol Technology Amortization Chart
a Resolution to write off loan
;011ERED ST
NATURE
. I!
k� f CAMP ELL
/.$ ib
c'.:,:,,r+;:js TO: Elk River EDA Finance Committee
FROM: John Kelly
Andrea McDowell Poehler
DATE: December 3,2013
f ; RE: Borrower: Ethanol Technology of Minnesota, LLC
.;,,:. ` ' Originating Lender: First National Bank of Elk River
Participation Lender: Elk River EDA
Loan Amount: $74,000.00
Date of Loan: August 25,2008
Maturity Date: August 25,2013
I have reviewed the following documents that you have provided me with
concerning the above-entitled matter:
1. Promissory Note executed by Ethanol Technology of Minnesota, LLC
("Borrower")dated 8/25/08 in the amount of$74,000.00("Note").
2, Security Agreement executed by the Borrower securing the Note("Security
Agreement").
3. Mortgage executed by Barton C. Wells,LLC("Mortgage")securing the
Note with certain rca property in Sherburne County("Property").
4. Guaranty executed by Hitech Motor Sports,Inc. ("Hitech") guaranteeing
the obligations of the Borrower under the Note("Hitech Guaranty").
5, Guaranty of Barton C. Wells("B. Wells") guaranteeing the obligations of
the Borrower under the Note("B. Wells Guaranty").
• 1
6, Agreement between First National Bank of Elk River, the Borrower,Hitech
Motor Sports,Inc,, Barton C, Wells,individually,Barton C, Wells,LLC
and Barton C. Wells Enterprises,Inc.,hereinafter jointly referred to as the
"Guarantors"and relating to the modification of two Notes held by the First
'.1 + National Bank of Elk River including the Note of the Borrower.
173697v2
. 1
Elk River EDA Finance Committee
Decembe 3, 2013
Page Three
If the Borrower and Guarantors default and do not answer the Summons and Complaint,the
following amounts would be necessary to enter the default judgment against each of the parties so
that the EDA could take the actions necessary to collect therefrom.
1. Enter the judgments and transcribe the judgments to the counties where the parties are
located if there are not located in Sherburne County, approximately$700.
2, Take the deposition of the applicable parties to determine what assets they have in order to
collect on the same,$700 to$1,000 per party or approximately$1,000 since Mr.Barton
would be able to answer most questions. If any assets are found,then there would be
additional cost to secure the same and have a sale thereof,the amount to do this would
depend upon what assets are actually found and the value thereof.
If the Borrower and the Guarantors answer the Summons and Complaint,there would be
significant cost in attempting to collect in that the matter would have to proceed to a summary
judgment motion or trial and the EDA would have to prove up the actual amount owing and there
would have to be no defenses to said action. This cost would range upward of$2,500 to $3,000
and take considerable time to get on the court calendars to actually have a trial if needed.
173697v2