6.9 EDSR 01-19-2016Request for Action
To
Item Number
Economic Development Authori
16.9
Agenda Section
Meeting Date
Prepared by
General Business
December 30, 2015
Amanda Othoudt, EDD
Item Description
Reviewed by
Patriot Converting Jobs Incentive Microloan
Cal Portner, City Administrator
Program
Reviewed by
Action Requested
Consider and provide recommendation to the City Council on the following Jobs Incentive Microloan
application for Patriot Converting. The Finance Committee may recommend approval, approval with
conditions, or denial of the request.
Background/Discussion
The city received an application from Patriot Converting, Inc., for a $200,000 Jobs Incentive Microloan.
The EDA Finance Committee reviewed and recommended the EDA approve the application.
Patriot Converting, Inc. is a paper converting service & supply company servicing the paper mills,
merchants, commercial printers, and folding carton industries. Patriot offers three major converting
services; sheeting, slitting/rewinding, and guillotine cutting. In addition, they sell paper products in the
industrial board markets including paper boards consumed for dry food packaging, industrial pallet
protection, and point of purchase displays.
Patriot currently operates out of two separate locations. They operate a 24,OOOsf manufacturing plant in
Anoka and a 40,OOOsf raw material warehouse in Champlin. They truck all raw materials daily between
the warehouse and the manufacturing plant with regular volumes of one million pounds of paper rolls
each week. By purchasing the facility in Elk River, they will be able to combine both of the facilities into
one location, and ultimately reduce double handling costs.
They have executed a purchase agreement on the property located at 12698 Industrial Boulevard,
contingent upon receiving city financial assistance.
The goal of the Jobs Incentive N icroloan program is to encourage the growth of new jobs and the
retention of existing jobs. The company currently employs 22 with an average hourly wage of $19.32/hr.
They intend to relocate to Elk River and retain the 22 FTE. The average hourly wages of the retained
jobs meet or exceed the minimum requirements of at least $15/hr.
Analysis
The attached memo from Springsted summarizes the analysis completed to date. Staff's analysis is shown
in Bold, alongside the applied policy.
11�EIE1 �r
[NATURE]
Purpose: To assist existing businesses with expansion and attract new businesses to the city whose local operations will
expand the city's economy through job retention and creation and maintain / grow the city's tax base. The
purpose of the Jobs Incentive Program is to encourage the creation of quality, high paying jobs within the city.
Patriot Converting will retain and relocate 22 FTE jobs to Elk River, paying between $15430 per
hour, exclusive of benefits.
Amount: Up to $200,000 of secondary financing not to exceed 20% of the project cost.
The total project cost is $3,981,340. The $200,000 requested is 5% of the total project cost.
Equity: Must have private -sector commitments for 50% of the project cost. Borrower must provide 10% or more of
project financing.
The applicant indicated they will provide $173,890 as equity contribution to the project in
addition to the seller carryback of $200,000 structured as unsecured debt with a 60 -month
payback, and the applicant will infuse $110,000 to cover the relocation costs associated with
moving their equipment from their existing facility in Anoka to Elk River. The total contribution
of $483,890 represents over 12% of equity in the project. This is more than the 10% required in
borrower equity as part of the program policy. Assuming receipt of the full microloan requested
amount of $200,000 (5% of project cost), private -sector financing provides the remaining 83%
through debt.
Criteria: Borrower must create one new full-time job for each ,$20,000 loaned, retain one new full-time job for each
$10,000 loaned, or combination of retainage and creation to meet the requirements. All new jobs must be
created within two years and retained for the period of the loan. Said jobs must pay greater of $15.00 per hour
or 150% of state or federal minimum wage, exclusive of benefits required by law. Any loans shall meet the city of
Elk liver Business Subsidy Policy for the creation of new jobs, as well as a 5year location requirement.
A combination of 22 FTE retained jobs provides up to $220,000 as qualifying maximum loan
amount, subject to other requirements being met. If approved, the loan agreement will reflect the
requirement to provide 22 retained jobs (22 * $10,000 = $220,000).
Summary
For the $200,000 requested, the application meets the minimum job retention and wage. Uses of the
funds as proposed are eligible expenses. The applicant meets the financial equity contribution of 10% as
required by the Policy. Ultimately, the EDA Finance committee and EDA Commissioners have the
discretion to consider each application in terms of its consistency with the goals of the city's
Comprehensive Plan and Economic Development Strategic Plan and in relation to the project's overall
impact on the community's economy.
Financial Impact
Previously, the Jobs Incentive Microloan program has been funded through the EDA Job Incentive
Microloan Fund account. The remaining balance of the Job Incentive Microloan Fund cash account is
95,403.58. It would be an option to fund the microloan through this account, with the remaining balance
of $104,596.42 funded by the regular Microloan Fund account. The full request of $200,000 could also
be funded by the regular Microloan Fund account. As of December 22, 2015, the balance of the
Microloan Fund cash account is $956,647.43. The EDA Finance Committee recommend the EDA
K\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Agenda Packets\2016\January 19
2016\6.9 sr Patriot Converting EDA Job Incentive N icroloan Request.docx
approve Patriot Converting, Inc.'s request for 1Vlicroloan funds with the stipulation that the city finance
director submits a recommendation to the EDA for which fund Patriot should utilize.
Attachments
■ Springsted Analysis (December 22, 2015)
■ Letter of denial from Riverland Bank (December, 2015)
■ 1Vlicroloan Application (December 4, 2015)
■ Revised Sources and Uses (December 22, 2015)
■ Contractor Bids
■ NEcroloan Agreement
■ Entity Guarantee
■ Personal Guarantee
■ Security Agreement
■ Promissory Note
■ Resolution
■ UCC Exhibit Addresses
■ UCC Exhibit List of all Equipment
■ UCC Exhibit List of new Equipment
■ UCC Form for all Equipment
■ UCC Form for new Equipment
N:ADepartments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Agenda Packets\2016\Januory 19
2016\ 6.9 sr Patriot Converting EDA Job Incentive Nficroloan Requestdocx
approve Patriot Converting, Inc.'s request for Microloan funds with the stipulation that the city finance
director submits a recommendation to the EDA for which fund Patriot should utilize.
Attachments
• Springsted Analysis (December 22, 2015)
■ Letter of denial from Riverland Bank (December, 2015)
■ Microloan Application (December 4, 2015)
■ Revised Sources and Uses (December 22, 2015)
■ Microloan Agreement
■ Entity Guarantee
■ Personal Guarantee
■ Security Agreement
■ Mortgage
■ Promissory Note
N:\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Agenda Packets\2016\January 19
2016\6.9 sr Patriot Converting EDA Job Incentive N icroloan Request.docx
Springsted Incorporated
380 Jackson Street, Suite 300
Springsted Saint Paul, MN 55101-2887
Tel: 651-223-3000
Fax: 651-223-3002
www.spdngsted.com
DRAFT MEMORANDUM
TO: Amanda Othoudt, Economic Development Director
FROM: Mikaela Huot, Vice President/Consultant
DATE: December 22, 2015
SUBJECT: Patriot Converting, Inc. — Jobs Incentive Microloan Fund Application Review
Summary
The City of Elk River received a loan request from Patriot Converting, Inc. (the applicant) through the Economic
Development Jobs Incentive Microloan Fund. The applicant has indicated the funds would be used to aid in the
acquisition and remodeling of an existing building for industrial use and the purchase of equipment. Through the
building purchase, the company plans to consolidate two existing operations into one facility. Doing so will save
significant costs due to the reduction in additional shipping and double handling costs.
At the request of City staff, Springsted has undertaken an initial review of the company's application and request to
determine that, based upon the provided information, the applicant meets the guidelines as set forth by the City of Elk
River's Economic Development Jobs Incentive Microloan Fund policy. The purpose of this memo is to outline the
components of the Jobs Incentive Microloan Fund Policy and Application, dated November 17, including the requests
for additional information that is necessary for review as it relates to the application submitted to the City by Patriot
Converting, Inc.
Project Eligibility Requirements under Jobs Incentive Program
For a project to qualify under the Jobs Incentive Program of the City of Elk River Economic Development Microloan
Fund policy an applicant must meet certain criteria:
• Must create one new full-time job for each $20,000 loaned, retain one new full-time job for each
$10,000 loaned, or combination of retainage and creation to meet the requirements:
• All new jobs must be created within 2 years and retained for the period of the loan:
• Created and retained jobs must pay greater than $15.00 per hour or 150% of State or Federal
minimum wages (whichever is greater):
• Any loans shall meet the City of Elk River Business Subsidy Policy for the creation of new jobs as
well as a 5 year location requirement:
• Eligible costs must be used for costs related to job creation and retention:
Public Sector Advisors
City of Elk River, Minnesota
Patriot Converting, Inc.
December 22, 2015
Page 2
The application received by the City includes a requested loan amount of $200, 000 with 22 jobs being created within 2
years. The average hourly wages of 17 jobs are $15-$17 and 5 jobs have annual salary of $63,000 for a total of 22
jobs. The project as proposed with the job creation would meet the City's Business Subsidy Policy. The microloan
funds would be used to meet the job creation requirements of the project.
3. Permitted Fund Uses of Microloan (Page 6 of Policy)
To qualify for receipt of a microloan, the applicant must utilize the funds for the specific purposes outlined in the City's
Economic Development Microloan policy. Funds may be used by the borrower for costs related to job creation and
retention as a result of the project. According to the policy, loans may be used for the following activities:
1. Building construction
2. Land acquisition
3. Machinery
4. Furniture, fixtures, and equipment (FF&E)
5. Renovation and modernization of buildings
6. Exterior renovation of retail, commercial and industrial buildings
7. Public infrastructure needed for economic development expansions
8. Investment real estate with a minimum of 50% of the space pre -leased
The funds would be used for equipment purchase and building purchase and remodeling.
4. Business Eligibility (Page 7 of Policy)
In addition to having an eligible project a business must also meet certain criteria before it is deemed eligible to
receive forgivable loan funds. According to the Economic Development Microloan Fund Policy, to be eligible for a
microloan a business must meet the following
• Business must be a for-profit corporation, partnership or sole proprietorship:
• Business must be a small business as defined by the small business administration:
• Business must have a positive net worth:
• Business must be an industrial, manufacturing, or technology-based industry:
• Religious, political, casino, sports facilities and pornographic enterprises are not eligible to use the
Economic Development Forgivable Loan Program:
Based on the submitted application, the business is a for-profit corporation defined as a small business, is an
industrial, manufacturing or technology-based industry and is not a religious, political, casino, sports facilities, or
pomographic enterprise. The two most recent full years of financial statements (2013 and 2014) indicates negative
total equity, however this can be attributed to the current company position of two locations and the additional costs of
double handling and shipping. Following the completion of the consolidation into one location in Elk River, the
company is showing projected positive total equity and income for the company starting in 2016.
City of Elk River, Minnesota
Patriot Converting, Inc.
December 22, 2015
Page 3
5. Microloan Fund Terms & Conditions (Page 7 of Policy)
To be determined if loan terms approved by the EDA.
6. Regulation for New Construction and Improvements (Page 7 of Policy)
To be regulated if funding is approved and determined to be used for any improvements of the existing building.
7. Loan Security and Guarantee Requirements (Page 8 of Policy)
The City's Economic Development Microloan Fund policy states that prior to the City granting a loan to a proposed
business, that the proposed project must meet certain loan security requirements. These requirements are:
• Applicant must be able to secure the loan by providing the EDA with a minimum of a subordinate
mortgage upon the building and/or assets or other approved collateral:
• Applicant must demonstrate the financial means to repay the loans, as determined by the Economic
Development Authority:
• Whenever possible, personal guarantees will be made part of any loan agreement:
• Key person life insurance may be required as determined by the EDA Finance Committee based on
loan amount and company ownership partners:
8. Timing of Project Expenses (Page 8 of Policy)
To be regulated if funding is approved and determined to be used for any improvements of the existing building.
9. Procedural Guidelines for Application and Approval (Page 8 of Policy)
To be regulated if funding is approved and determined to be used for any improvements of the existing building.
The EDA Finance Committee is asked to evaluate the project application based on the
following criteria
a. Project design: evaluation of project design will include review of proposed activities, time lines and a
capacity to implement
b. Financial feasibility: availability of funds, private involvement, financial packaging and cost effectiveness
• Appropriate ratio of private funds to microloan funds: $3,781,340/$200,000
• Sufficient cash flow to cover proposed debt service as demonstrated by financial statements and
projections: with the consolidation of business operations from two existing facilities into one large
City of Elk River, Minnesota
Patriot Converting, Inc.
December 22, 2015
Page 4
space in Elk River, the company is projecting positive net income beginning in 2016 and moving forward.
This positive net income and cash flow will allow the cover the proposed debt service.
• Ability to demonstrate positive net worth: due to the anticipated business consolidation and
associated cost savings, the company is projecting positive net income commencing in 2016.
• Letter of commitment from applicant pledging to complete the project during proposed project
duration: Provided
• Letter of commitment from other financing sources stating terms and conditions of their
participation. Rivedand Bank is willing to participate with Central Minnesota Development Company in
the SBA 504 loan program to provide financing for the project conditioned on approval by the Small
Business Administration, a certain appraised value and the proposal signed by the borrower. This letter
from Rivedand Bank has been provided in conjunction with the loan application and supporting
documents.
• Sufficient collateral: Rivedand Bank and Small Business Administration are in position #1 and #2 on
the property. The EDA will be blanket 2^d position on the equipment A personal/corporate guarantee
will also be provided.
c. All other information as required in the application and/or additional information as may be requested by the
Economic Development Authority
d. Project compliance with all city codes and policies
e. Program Objectives: In addition to quality job and wage creation/retention requirements, the applicant must
meet all Microloan Fund criteria and demonstrate how the proposed activities will meet at least one of the
following objectives:
• The project contributes to the fulfillment of the city's approved and adopted economic development
and/or redevelopment plans
• The project prevents or eliminates slums and blight
• The project increases the local tax base
• The project brings a structure into compliance with an existing building code violation
11e 1�[��1. V L
BANK
Memo to the City of Elk River
Letter of Commitment
SBA 504 Program
Michael A. Stilwell
3048 Bunker Lake Blvd NW
Andover, MN 55304 USA
RE: Stilwell Holdings, LLC (Trade name: Patriot Converting, Inc,) 3048 Bunker Lake Blvd NW, Andover, MN 55304
Dear Michael,
Riverland Bank has reviewed the borrower's application for a $3,365,100 loan for full project financing for the
purchase and Improvements of the real estate (and or equipment) located at 12698 Industrial Blvd NW, Elk River,
MN 55330, This bank is not in a position to meet the borrower's request for full project financing at the time as
the loan maturity exceeds our normal credit policy. To the best of our knowledge, financing the total project cost
is not available at interest rate and terms prevalent In our community.
Riverland Bank, however, is willing to participate with Central Minnesota Development Company in the SBA 504
loan program to benefit Stilwell Holdings, LLC. In this connection, the Bank's $1,869,500 loan would have an initial
rate of interest at 4.15%. The note will be for a term of 11 years with an amortiiation of 20 years. The 11 year
term will have an initial rate of 4.15% fixed for 12 months during the interest -only period, reprice at the end of
the 12 month Interest -only period to 4.15% for first 5 years. At the end of 5 years, interest rate will reprice @WSJ
Prime +1.009 for remainder of term. This loan will be secured with a 1St UCC mortgage on subject real estate.
in addition, Riverland Bank, is willing to provide an interim loan in the amount of $1,495,600 to be repaid within
one year from the proceeds of the debenture sale. The loan will have a fixed rate of 4.15% for a maximum term of
12 months paying interest only. This interim loan is to be secured by a second security interest lien on the subject
real estate (and/or a project specific or blanket lien on equipment). in addition, the SBA approval of this loan is
conditioned upon the receipt by SBA from Bank of a one-time participation fee equal to one-half of one percent of
the principal amount of the bank loan attributable to the 504 project that is senior to the SBA.
This is conditioned based on approval by the Small Business Administration, an appraised value of $3,740,000 and
the proposal that was signed by the borrower. These conditions will also include provisions reviewed by the bank
and its legal counsel as appropriate for this transaction and for transactions of this type.
Sincerely,
Gary White
SVP of Commercial Lending
Riverland Bank
700 SEVILLE DRIVE, SUITE 100 - JORDAN, MINNESOTA 55362 PHONE 952.492.2760 • FAX 962.492.6944
950 McKinley St..
Anoka, MN 55303
PATRIOT
Office: 763-427-5710
Converting, Inc . Fax: 763427-5709
S.
2 December 2015
VIA — E -Mail
Re: Letter of Commitment
To whom this may concern,
1, Michael Stilwell, Hereby commit to the City of Elk River, if awarded this microloan to assist in
the expansion & move to Elk River, to complete this project within reasonable timelines.
Our pian is to be complete with the project by December 315, 2016 with no foreseeable delays.
If any issue would arise we commit to keep the city in close contact & communicate our plans
to overcome those issues.
If you have any current questions or concerns please feel free to call me at 763-427-5710.
Sincerely,
Michael A. Stilwell
Executive Vice President
ELK RIVER ECONOMIC DEVELOPMENT
MICROLOAN FUND APPLICATION
1. CONTACT INFORMATION
Legal Name of Business: Patriot Converting, Inc
Project Site Address: 12698 Industrial Blvd
City / State / Zip Elk River MN 55330
Contact Person(s) Mike Stilwell
Business Phone 763-427-5710 Fax 763-427-5710
Horne Phone NIA Email mikeAnatriotconvertingcot
Check One: Proprietor _X Corporation Partnership
Federal ID # 42.1589774 State ID #
2. NATURE OF LOAN REQUEST
Which Micro -Loan Program are you applying for?
Industrial Incentive Program
Downtown Revitalization Financing Program
Energy Efficiency Improvement Program
X Jobs Incentive Program
Amount Requested: 200.000.00 Total Project Cost: S 3,981,340.00
Type of project:
New construction for a start-up business
New construction for an existing business
On site expansion
X Equipment purchase
X Remodeling. (drrk one) / Industrial
X Other Building Pure ase
Page 12 of 19 f 0INA"T"U1 If
RA
Please give a brief summary of your business and its products or service:
Patriot Converting, Inc, is a paper converting service & supply
company servicing the paper mills, merchants, commercial printers, and
folding carton industries. Patriot offers 3 major converting services of 1)
Sheeting, 2) Slitting/Rewinding, 3) Guillotine Cutter. Additional services
include trucking, skid & pallet making, paper recycling, warehousing, and 3
party logistics.
In addition, Patriot Converting sells paper products in the industrial board
markets. These include paper boards consumed for dry food packaging,
industrial pallet protection, and point of purchase displays.
Please give a brief summary of the project:
Patriot currently has a manufacturing plant in Anoka of 24,000 sq. ft. and a
raw material warehouse in Champlin of 40,000 sq. ft. Patriot has to truck all
raw material between the warehouse and manufacturing plant daily; regular
volumes of 1,000,000 lbs. of paper rolls each week. This project includes
purchasing a new facility & remodeling it to combine Patriots 2 facilities into
l; allowing Patriot to reduce double handling costs.
Patriot will also upgrade parts of its manufacturing lines with tracks, trollies,
and large scissor lifts to allow for larger format material to be processes in its
facilities. This will not only increase capacity but also allow for added
capabilities in service platforms. Currently Patriot is restricted by the space
constraints and is unable to add warehousing clients or add equipment to
gain production capacity.
Please describe how this loan will impact your project:
This Micro Fund loan will help Patriot bridge the Gap in its current project to
add the equipment upgrades required during this move. As described above
Patriot plans to add a track and trolley system onto its machines to better
load the raw materials into the machines. Patriot also plans to upgrade the
scissor lifts for the finished product stage to expand its size range it can
handle. Lastly Patriot plants to rebuild the communications closet to handle
the required machine communications within the plant and to it's facilities in
Iowa.
Page 13 of 19
INATUREY
3. FINANCING
Em el cit CMsts
Land
Site improvements
Buildings (attach plans & costs)
Equipment/Machinery/Fixtures
(attach list and estimated costs)
Remodeling
Industrial Inventoty/Working Capital
Other (attach description) —
Total Costs
$
$ 3.050.000.00
fl Ili fl
If ff
$ 175,840.00
$ 3,98040.
,PrWosed Sources of Fid in Please See Attached
Sheet
SOJJRC NAS
TF"S
AMOUNT
Bank Loan Riverland Bank
20/4.15% _
31,869- 50,00
Bank Loan SBA
20/4.15%
$1.58.000:00
Other Private Funds Seller Cam Back
10/6%
$200.000.00
Applicant Contribution Owner's F4gity
SZ
1173.890.00
Other
Fed Grant/Loan
;
State Grant/Loan
EDA Microloan Elk River
5/3%
1200.000.00
Tax Increment Financing
#
Tax Abatement
$
Total Financing
$3.981,340,00
Page 14 of 19
11MERli it
INAWRE
Lien
Description of Collateral Position
To Bank 1 P -Mc -t3' I" Position $1.869.450.00
To Bank 2 Progeny 2' Position $1.538.000,00
To Private Sources N/A — Person/Coxa Guarantee
To Other Sources
To Federal Govt
To State
To EDA h icroloan _F4uiument Blanket 2nd Position $200.000.00
Page 15of19 FONIaII 8T
�ri�1�URE
Value of Collatgtal
Book Value Cost Existing Liens
Land $ $
Buildings $3.740.000.00 13.740.000.00 $
Machinery & Equip. $841.850.00 $1,129,,615.00 $539.034.00
Other $ $
Other. $ $ ;
4. JOB & WAGE GOALS
Present # of Employees 22 Total Payroll (970.000.00
,jobs To Be Created*
Please nrovide th& fAi^nAna inf^atinn nn :.,hr , e... a., , e ...:aL:. 7 .
job Title
Number
of jobs
Average
Hourly
Wage
Annual
SsJazy
Are the Jobs
Permanent or
Temporary?
Expected
Hiring
Date
Management
5
$63,000
Permanent
Retain
CSR
2
$15.00
Retain
Machine Ops
7
$17.00
Retain
Prod Assistant
8
$15.00
Retain
- ar loan is ror loo retention only, please explain m Business Plan.
Pteglam Objectives
(Check all that apply)
X_ The project contributes to the fulfillment of the city's approved and adopted
economic development and/or redevelopment plans.
The project prevents or eliminates slums and blight.
X The project increases the local tax base.
_X Tlne project brings a structure into compliance with an existing building code
violation.
Page 16 of 19 P A 1 I a E a a 1
IN
ATURE
S. PROJECT CONTACTS
Aitre
Name Bill Erhart
Address 316 East Main St Anoka, MN 55303
Phone 763-427-7800
Name Tracy Sanders
Address 1001 Twelve Oaks Center Dr. Suite 1018 Wayzata.MN 55397
Phone 952-543-9801
Financing Sources (lenders, Barters,et... 1
Name Gary White — Rhmdand Bank
Address 700 Seville Dr. #100 Jord n MN 55359
Phone 651-356-4096
Name Scott Schake - CMDC
Address 1885 Station Parkway Suite A Andover. MN 55304
Phone_ 763-784-3337
Patent Company
Name
Address
Phone
Others
Name
Address
Phone
Name
Address
Phone
Page 17 of 19
INAWRE
6. ATTACHMENTS CHECK LIST
Please attach the following:
_..._X__,A) Written Business Plan:
1. Description of Business
2. Ownership
3. Management
4. Date Established
5. Products/Services
G. Future Plans
_XB) Financial Statements for Past Two Years
—X—C) Financial Projections for Two Years
,_.,X D) Resume of Owner/Management
._,_X E) Personal Financial Statements of Proprietor, Partners,
Guarantors
F) Letter of Commitment from Applicant Pledging to Complete
During the Proposed Project Duration
—X G) Letter of Commitment from the Other Sources of Financing,
Stating Terms and Conditions of their Participation in
Project
—X --H) Fee of 1% of amount of loan request
7. AGREEMENT
I / We certify that all information provided in this application is true and correct to the best
of my/our knowledge. I / We authorize the city of Elk River and the Finance Committee to
check credit references and verify financial and other informatio.9f I / We agree to provide
any additional information as may be requested a city Finance Committee,
APPLICANT SIGNATURE
BY Michael Stilwell
DATE 12/2/15
P2ge18Of19 t i E At ! 1
INATUREl
Exhibit A: Downtown Area
Page 19 of 19
NAME
Patriot Application Attachments:
3.0: Other Financing Costs:
• SBA Fee $42,440.00
• Closing Costs $58,400.00
• Interest Reserves $75,000.00
• Total $175,840.00
Michael A. Stilwell
3048 Bunker Lake Blvd NW 651-308-4526
Andover, MN 55304 Mike@patriotconverting.com
Objective
Visionary entrepreneur focusing on sustainable leadership
Education
Bachelor in Applied Science Business Management, March 2011
Minnesota School of Business, Blaine, MN
Associate in Applied Science Business Administration, March 2009
Minnesota School of Business, Blaine, MN
Chemical Biological Radiological Nuclear Specialist August 2007
U.S. Army Chemical School, Ft. Leonardwood, MO
Related Courses and Skills
• Lean Manufacturing
• Financial Management
• Office Management
• Leadership & Management
* Efficient Operations Management
• EOS Implementation
Experience
Vice President & CFO September 2003 — Present
Patriot Converting, Inc DBA Midwest Paper Supply Anoka, MN
• Established management team to effectively manage all company functions for 4
plants in 2 states and 40 employees
• Built financial proformas & ROI's for multi -state expansions valued over $8 million
• Implemented expansion plans to achieve business plan growing company 5x size in
8 years & over $5 million in revenues
Sergeant E-5 CORN Specialist February 2006 — February 2012
U.S. Army St. Paul, MN
• Prepare unit of 120 soldiers for CBRN threats during monthly training
• Repair, maintenance, and calibrate chemical detectors and protection gear
• Controlled sensitive items valued over $750,000 and insured high security
Community Volunteer September 2001- Present
Eagle Brook Church
• Monthly volunteer in needed areas
Boy Scouts
• Assisted in training events involving leadership, first aid, first responder, wilderness
survival, social responsibilities, and good citizenship.
Local Food Shelf
0 Assisted in food shelf set up at local church monthly
Borrower's Name
Patriot Elk River, MN
Project Costs:
Purchal;e Property
$3,050,000.00
Building improvements
$555,500.00
Closing costs
$58,400.00
Contingency/Interest�Reserve A
$75,000:0Q
Subtotal
$3,738,11 p
SBA 504 Debenture Pricing
$42,40.00
Total SBA 504 Eligible Cost
ij3,181,
Ot►teject Costs
($137.90)
C-tluipment & Me ry
$106,000.00
Relocation
$11010
7ota1 Project Costs
$4091,:00
12/28/2015
SBA 504 Debenture Pricing
Net Debenture Proceeds
$1,495,560.00
Funding Fee (.25%)
$3,738.90
SBA Guaranty Fee
$7,477.80
CDC Processing Fee (1.5%)
$22,433.40
CDC Closing Costs
$2,500.00
Subtotal
$36,150.10
Underwriters Fee *
$6,152.00 $1,537,861.55
Balance to Borrower
($137.90)
Gross Debenture Amount
$1,538,000.00
* Underwriters fee is .4% on 20 -year loans and .375% on 10 -year loans
Maverick Cutting & Breaking
807 Broadway St. NE.
Suite 185
Minneapolis, MN 55413
612-455-7330
Provide saw cutting, removal, and concrete c
'Load Flipper - 8'x 8' - 6" thick floor
"Cutter Lift Table #1 - 3' x 5' - 6" thick floor
'Cutter Lift Table #2 - Tx 5'- 6" thick floor
Sheeter #1 - See Drawings
(2) 4'3.09"x15'.78"
—(1) 2'6.65"x5'1.7"
`*(1) 21.94-41.7-
-(I) 7'6.39N5'10.54-
(1) 6'3.85"x11'9.48"
Sheeter #2 - See Drawings
(2) 4'3.09"x15'.78"
—(1) 2'6.65 -x5'1.7-
-(1)
'6.65"x5'1.7"—(1) 2'1.94"x5'1 - 7"
—(1) 7'6.39"x5' 10.54"
This Proposal Does Not Include:
1. Layout of openings.
2. Vapor barrier.
3. Epoxy at dowels.
4. Any demolition or saw cutting not specifically no
above.
5. Temporary protection, including temporary
enclosures,
partitions, weather protection, dust barriers, guard
rails,
etc.
6. Payment & performance bond.
7. Permits and fees.
8. Any demolition not specifically noted above.
Date 12/2/2015
invoice
Expiration DF _a
3/3112018
TO Patriot Converting, INC
950 Mckinley St
Anoka, MN 55303
Phone 763-427-5710
payment'l of M, Due Date
GL Mechanical
14048 Terrace RD NE
Ham Lake, MN 55304
Name / Address
Patriot Converting
950 McKinley St.
Anoka, MN 55303
Estimate
Date
Estimate #
12/9/2015
21374
Project
Description
Qty
Rate
Total
Demo & Rebuilt communication closet including 1 - remote climate
control, 1 - monitored key pad lock, 2 -server racks with mounts &
shelving, up to 40 - CAT 5e connection runs to machinery stations,
360 - port quick connection switch board, and 1 dust control.
1
35,000.00
35,000.00
Total $35,000.00
GL Mechanical
14048 Terrace RD NE
Ham Lake, MN 55304
I Name /Address I
Patriot Converting
950 McKinley St.
Anoka, MN 55303
Estimate
Date
Estimate #
12/9/2015
21375
Project
Description
Qty
Rate
Total
Equipment Moving: Relocate 1 GCM Goodstrong Sheeter SN: 2124
1
25,000.00
25,000.00
from Anoka Mn Plant to Elk River plant including forklift rentals,
rigging, flat bed, and all required equipment.
Exclusions: Concrete, pre-cut pits, electricity, air, any building
modifications for machine.
Work to be completed by 2 technicians, over 5 days, and no
over -time.
Total $25,000.00
JM EQUIPMENT INC.
December 09, 2015 ConverSng ;vlac7linery rciu icr,s
Mike Stilwell
Brian Stilwell
Patriot Converting
950 McKinley Street
Anoka, MN, 55303
Ph: 763-427-5710
Q-15-0902-3
Quote for an upgrade to replace cable lift table on Goodstrong sheeter sn. 2124 to
a hydraulic scissor lift table
Total: $ 45,963.00
Q-15-0902-9
Quote for Goodstrong Track and Trolley for Sheeter SN 27246
Standard 14.5 ft Length. (center of side shift box to end of track)
Total: $38,941.00
Q-15-0902-10
Quote for Goodstrong Track and Trolley for Sheeter SN 2124
Standard 14.5 ft Length. (center of side shift box to end of track)
Total: $30,096.00
Grand Total: $115,000.00
FOB: Sturgis, MI
TERMS: 50% down with purchase order/ 50% down before shipment
DELIVERY: TBD
WARRANTY: Parts marked with bullets are warranted sixty days from date of
shipment. If the buyer within this period notifies seller of any claimed deficiency or
defect in the covered parts and if the seller agrees to the claim, seller will at its option and
expense either repair the same or provide a replacement.
This quote is valid for a period of 60 days.
Thank you for your interest in our equipment.
Mick Merrell
Seth Merrell
4051/2 W. Congress - P.O. Box 7183 - Sturgis, MI 49091 - Phone: (269) 659-0093 - Fax: (269) 659-8694
www.jmequipment.net
LOAN AGREEMENT
(Microloan)
THIS LOAN AGREEMENT ("Agreement") is made effective as of 1
2016, by and between STILWELL HOLDINGS, LLC, a Minnesota limited liability company
("Borrower"), and the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK
RIVER, a public body corporate .and politic of the State of Minnesota ("Lender"),
A. Borrower has applied to Lender for a Microloan Program loan for equipment to
be located at located at 12698 Industrial Boulevard NW, Elk River, Minnesota (the "Loan
Property") in the principal amount of $200,00:0.00.
B. Lender is willing to make such loan to Borrower in the principal amount of
$200,000,00 (the "Loan"), subject to all of the terms and conditions of this Agreement.
C. Contemporaneously with the execution. hereof, Borrower is delivering to Lender
the following security documents:
(i) A Promissory Note ("Note") effective as of the date herewith made by
Borrower and payable to the order of Lender, in the original principal amount of
$200,000.00.
(ii) A Security Agreement securing the Note ("Security Agreement"). The
Security Agreement is of even date herewith, is executed by the Entity Guarantor, in favor
of the Lender, as secured party, and provides a first lien security interest in the equipment
acquired by the Entity Guarantor with the proceeds of the Loan and a second lien security
interest in all other equipment of the Entity Guarantor located in Minnesota currently
owned or hereafter acquired by the Borrower (the "Equipment");
(iii) The personal guaranty of Michael Stilwell, Executive Vice President of
Borrower (the "Personal Guaranty"); and
(iv) An entity guaranty (the "Entity Guaranty") of Patriot Converting, Inc. (the
"Entity Guarantor").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, it is
hereby agreed as follows:
1. Amount and Purpose of Loan. Borrower agrees to take and Lender agrees to
make a loan in the principal amount of Two Hundred Thousand and No/100s Dollars
($200,000.00) (the "Loan") to be advanced in single disbursement as hereinafter provided, the
Loan to be evidenced by the Note and secured by the Security Agreement, the Personal
Guaranty, the Entity Guaranty and any other security document required under this Agreement.
473881v2 EL185-39
The Loan proceeds will be used only towards the cost of acquisition of equipment to be used at
the Loan Property.
2. Equipment and Security Interest. The Entity Guarantor has provided Lender a
preliminary list of the Equipment to be acquired with the proceeds of the Loan that shall be
subject to the first lien Equipment Security Interest, which is attached as Exhibit A. The Security
Agreement will provide Lender with a first priority security interest in such Equipment and a
second priority security interest in all other Equipment of the Entity Guarantor located in
Minnesota.
3. Documents to be Delivered. Borrower covenants and agrees to immediately
cause the compliance with the following conditions:
(a) Note. Deliver to Lender the Note.
(b) Security Agreemen . Deliver to Lender the Security Agreement, together
with evidence that a UCC -1 Financing Statement has been or will be duty filed for
record.
(c) Personal Guaranty. Deliver to Lender the Personal Guaranty.
(d) Entity Guaranty. Deliver to Lender the Entity Guaranty.
(e) Organizational Documents and Resolutions. Deliver to Lender copies of
the (i) articles of organization for Borrower certified by the Minnesota Secretary of State,
(ii) certificate of good standing for Borrower issued by the Minnesota Secretary of State;
(iii) Borrower's operating agreement, member control agreement and bylaws; and (iv)
certified resolutions of Borrower authorizing the execution and delivery of this
Agreement, the Note and any other document to be executed by Borrower pursuant to
this Agreement.
(f) Organizational Documents and Resolutions. Deliver to Lender copies of
the (i) articles of incorporation for Entity Guarantor certified by the Minnesota Secretary
of State, (ii) certificate of good standing for Entity Guarantor issued by the Minnesota
Secretary of State; (iii) Entity Guarantor's bylaws; and (iv) certified resolutions of Entity
Guarantor authorizing the execution and delivery of the Entity Guaranty, the Security
Agreement and any other document to be executed by Entity Guarantor pursuant to this
Agreement.
(g) Insurance. Deliver to Lender: (i) a certificate or policy for all insurance
required, under the terms hereof to be maintained by Borrower; and (ii) evidence that no
part of the Loan Property is located in an area designated as being a flood plain or flood
hazard area as defined by the Flood Hazard Boundary Map published by the Federal
Insurance Administration.
2
473881v2 ELI 85-39
(h) Compliance with Laws Etc. Deliver to Lender such evidence as Lender
may require as to the compliance of the Loan Property with: (i) all applicable laws,
codes, rules, regulations and ordinances, including, without limitation, those relative to
environmental protection, protection of wetlands, building and zoning matters and the
Americans with Disabilities Act; and (ii) the requirements of any restrictive covenants,
conditions and restrictions; conditional use permit or planned unit development
applicable to the Loan Property.
(i) Hazardous Substances. Deliver to Lender evidence acceptable to Lender,
that: (i) the Loan Property has not been used as a hazardous waste storage facility or
burial site; (ii) the soil is free from hazardous waste, hazardous substances, pollutants and
contaminants; and (iii) no hazardous waste, hazardous substance, pollutant or
contaminant has been used in the construction or use of any building or other
improvement on the Loan Property. For purposes of this subparagraph, the terms
"hazardous waste," "hazardous substances," "pollutants" and "contaminants" shall
include, but not be limited to, polychlorinated biphenyls (PCBs), asbestos, petroleum
products and any other chemical or substance determined to be a hazard to human health
or the environment.
0) Lease. Deliver to Lender a copy of the lease agreement for the use of the
Loan Property, executed no later than the date of this Agreement, with at least a 5 -year
term commencing upon issuance of a certificate of occupancy for the Development
Property, by and between Borrower, as landlord, and Entity Guarantor, as tenant (the
"Lease").
(k) Program Fee. Deliver to Lender the program fee of $2,000; the Lender
acknowledges that the Borrower has previously paid the Lender's program fee.
Lender may waive any of the above requirements in its sole discretion.
4. Disbursement of Loan. Upon receipt by Lender of all of the items required
pursuant to Section 3 above in the form and condition required therein, Lender agrees to disburse
the Loan proceeds to Borrower.
5. Access to, Loan Prop
SA L_y. Lender and its respective representatives shallhave at
all reasonable times the right to enter and have free access to the Loan Property and the right to
inspect the Loan Property.
6. Books and Records. Borrower agrees to maintain accurate and complete books,
accounts and records in regard to the Loan Property in a manner reasonably acceptable to
Lender. Lender and its representatives shall have the right to inspect, examine and copy all such
books and records of Borrower and Borrower shall, at Lender's request, furnish such information
as Lender may reasonably demand. Borrower shall also ensure that Entity Guarantor maintains
accurate and complete books, accounts, and records in regard to the Equipment in a manner
reasonably acceptable to Lender. Lender and its representatives shall have the right to, inspect,
3
47388lv2 ELI 85-39
examine and copy all such books and records of Entity Guarantor and Entity Guarantor shall, at
Lender's, request, furnish such information as Lender may reasonably demand.
7. Encumbrances and Transfer. Other than any mortgage to finance improvements
to or operations at the Loan Property and the Lease to the Entity Guarantor, Borrower agrees not
to sell, transfer, lease or convey the Loan Property or any part of it, or any interest therein, or
encumber the Loan Property or any part of it, in any manner, without written consent of Lender
which consent may be granted or withheld in the sole discretion of Lender. This requirement
shall apply to each and every sale, transfer, lease or conveyance, whether voluntary or
involuntary and whether or not Lender has consented to any such prior sale, transfer lease or
conveyance. The Entity Guarantor has agreed, pursuant to the Security Agreement, not to sell,
transfer, lease or convey the Equipment or any part of it, or any interest therein, or encumber the
Equipment or any part of it, in any manner, without the written consent of Lender which consent
may be granted or withheld in the sole discretion of Lender. This requirement shall apply to
each and every sale, transfer, lease or conveyance, whether voluntary or involuntary and whether
or not Lender has consented to any such prior sale, transfer lease or conveyance.
8. Time of Essence. Time is of the essence in the performance of this
Agreement.
9. Assignability. Borrower shall not assign this Agreement without written consent
of Lender, which consent may be withheld, conditioned or delayed in Lender's sole discretion.
Lender may freely assign or otherwise transfer (including by participation) all or any part of its
interest in the Loan or any or all of the Loan documents, in Lender's sole discretion.
I O. Miscellaneous Covenants of Borrower. Borrower covenants and agrees with
Lender that, without cost to Lender, Borrower will or will cause Entity Guarantor to:
(a) Performance of Conditions. Promptly keep, perform and comply with all
of the terms, covenants and conditions to be kept and performed by Borrower and/or
Entity Guarantor, as required by the City of Elk River (the "City"') and any other
governmental body having jurisdiction over the Loan Property; keep unimpaired the
rights of Borrower and/or Entity Guarantor under any pen -nit or agreement issued or
made by the City or other governmental body having jurisdiction over the Loan Property;
and to enforce the prompt performance of all of the terms, covenants and conditions to be
kept and performed by the City or other governmental body having jurisdiction over the
Loan Property, respectively, under any pen -nits or agreements issued or made by the City
or such other governmental bodies, and any contractors under all contracts obtained or
held by Borrower and/or Entity Guarantor in connection with construction or operation of
the Borrower or Entity Guarantor's businesses.
(b) Amendment, Etc, of Documents. Not amend, cancel, terminate,
supplement or waive any of the material terms, covenants and conditions of any permit or
agreement issued or made by the City or any other governmental body having jurisdiction
over the Loan Property, or any other contracts obtained or held by Borrower and/or
4
473881v2 ELI 85-39
Entity Guarantor in connection with any contracts, documents or agreements referred to
herein without the prior written approval of Lender.
(c) Perforinance of Note, Security Agreement, etc. Without limiting the
foregoing, keep and perform all of the terms,, covenants, conditions and requirements of
the Note, the Security Agreement and this Agreement.
(d) Insurance, During the term of this Agreement, Borrower shall procure and
maintain or cause to be procured and maintained at its sole expense, casualty insurance,
public liability insurance and such other types of insurance as are reasonably required by
Lender from time to time, with coverages and in amounts normally held by owners of
property similar to the Loan Property (as improved) and with companies satisfactory to
Lender. The policy or policies or duly executed certificate or certificates for such
insurance and renewals or replacements thereof shall be deposited with Lender.
(e) Pay charges. Immediately pay all loan charges including, but not limited
to: (i) Lender's attorneys' fees; (ii) title insurance fees, costs and premiums; (iii) filing
fees of any instruments required under this Agreement.
(f) Default Notices. Provide Lender with a copy of any default notice
received by the Borrower or the Entity Guarantor pursuant to, any documents related to
any financing secured by the Loan Property or the Equipment (to the extent that such
notice is sent by a party other than Lender), promptly after receipt of the same.
(g) Continual Operation. At all times while any portion of the Loan remains
outstanding, Borrower will: (i) maintain its status as a for profit entity; (ii) maintain a
positive net worth; and (iii) will operate its business from the Loan Property in a first
class manner.
(h) Title to Equipment. Borrower represents that Entity Guarantor owns or
will own all of the Equipment listed in Exhibit A "free and clear," that Lender will have a
"first priority" lien in the Equipment listed in Exhibit A pursuant to the Security
Agreement and that no other party has any right, title or interest in the Equipment listed
in Exhibit A.
11. Warranties. Borrower represents and warrants to Lender the following:
(a) The Borrower is limited liability cornpany duly forrned, validly existing
and in good standing under the laws of the State of Minnesota.
(b) The making and performance of this Agreement and the execution and
delivery of the Note, the Security Agreement and any other instrument required
hereunder are within the powers of the Borrower and the Entity Guarantor and have been
duly authorized by all necessary company action on the part of the Borrower and the
Entity Guarantor. This Agreement and the Note, Security Agreement and any other
instruments required hereunder have been duly executed and delivered and are the legal,
5
473881v2 EL185-39
valid and binding obligations of the Borrower and the Entity Guarantor enforceable in
accordance with their respective terms.
(e) No litigation, tax claims or governmental proceedings are pending or
threatened against the Borrower, the Entity Guarantor or the Loan Property, and no
judgment or order of any court or administrative agency is outstanding against the
Borrower, the Entity Guarantor or the Loan Property which would have a material
adverse effect on Borrower, the Entity Guarantor or the Loan Property.
(d) Borrower and the Entity Guarantor have filed all tax returns (federal and
state) required to be filed for all prior years and paid all taxes shown thereon to be due,
including interest and penalties. Borrower and the Entity Guarantor will file all such
returns and pay all such taxes for the current and future years.
(e) All information, financial or other, which has been submitted by
Borrower, the personal guarantors, and the Entity Guarantor in connection with the Loan
is true, accurate and complete in all material respects,
(f) Entity Guarantor is under common ownership.
12. Indemnification. Borrower agrees to indemnify Lender and save it harmless
against all loss, liability, expense, or damages including but not limited to attorneys' fees, which
may arise by reason of the assertion of any lien against the Loan Property or the Equipment.
Borrower will indemnify and hold Lender harmless from any damages Lender may suffer or
incur from Borrower's breach of its covenant in Section 12(h).
13. Defaults. Each of the following shall constitute an Event of Default:
(a) If Borrower or Entity Guarantor abandons the Loan Property,
(b) Bankruptcy, reorganization, assignment, insolvency or liquidation
proceedings, or other proceedings for relief under any applicable bankruptcy law or other
law for relief of debtors are instituted by or against Borrower and, if such proceedings are
instituted against Borrower, an order, judgment or decree, without the consent of
Borrower appointing a trustee or receiver for Borrower or any part of its property or
approving a petition under the bankruptcy laws of the United States or any similar laws
of any state or other competent jurisdiction, shall have remained in force undischarged or
unstaged for a period of thirty (30) days.
(c) Any judgment, attachment, garnishment or other similar process is entered
against Borrower or against any property or assets of Borrower and is not released,
satisfied or discharged or bonded to Lender's satisfaction within thirty (30); days of entry.
(d) Any of the terms, covenants or conditions of any permit or other
agreement issued or made by the City or other governmental body having jurisdiction
over the Loan Property are not complied with within the time required thereby or are
6
473881 Q ELI 85-39
terminated or modified by the City or such other governmental body and Borrower has
not taken or has not caused the Entity Guarantor to take the necessary steps to correct or
cure the same within thirty (30) days after written notice is given by Lender.
(e) Any mechanic's or material supplier's lien is filed, against the Loan
Property and is not released, satisfied or discharged or bonded to Lender's satisfaction,
subject, however, to Borrower's right to contest the same in accordance with the
provisions of the Security Agreement.
(f) A transfer which violates by Paragraph 9 hereof, Encumbrances and
Transfer, occurs.
(g) Borrower: (i) fails to pay when due any amount due under this Agreement,
the Note, or any other documents listed in Section 3; (ii) fails toerfuri-n. any other
p I
obligation to be performed under this Agreement, the Note, or any other document
executed by Borrower pursuant to this Agreement; or (iii) fails to pay any amount or
perform any obligation under any other note, or other agreement now or hereafter made
by Borrower in favor of or with Lender or otherwise now or hereafter held by Lender or
Bank, and such failure continues beyond any applicable cure period.
(h) Entity Guarantor fails to timely provide Lender any information necessary
for Lender to perfect its security interest in the Equipment.
(i) Any representation or warranty by Borrower contained herein or in the
Note, the Security Agreement, or any other instrument required hereunder is false or
untrue in any material respect when made.
0) A default under the Lease, Entity Guaranty, the Personal Guaranty, or the
Security Agreement beyond any applicable notice and cure period.
Upon the occurrence of an Event of Default, Lender, at its option, shall, in addition to any other
remedies which it might be entitled to by law, have the right to:
(a) Take possession of the Equipment;
(b) Perform such other acts or deeds which reasonably may be necessary to
cure any default existing under this Agreement, and to this end, it is hereby agreed as
follows:
(i) All sums expended by Lender in effectuating its rights under
paragraphs (ii) and (iii) of this paragraph shall be deemed to have
been advanced under this Agreement and to be secured by the
Security Agreement and any other security document required under
this Agreement as security for the Loan.
7
47388tv2 EL185-39
(ii) Borrower hereby constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution either in the name of
Lender or in the name of Borrower or in the name of both, for the
following purposes: (A) to prosecute and defend all actions or
proceedings in connection with the Loan Property or the Equipment
and do any and every act which Borrower might do in its own
behalf; (13) to perform each of the terms, covenants and conditions to
be kept and performed by Borrower under any contracts and/or
leases obtained or held by Borrower in connection with the operation
of the Loan Property and any other contracts; (C) without limiting
the foregoing, to perform each of the terms, covenants and
conditions to be kept or performed by Borrower under this
Agreement, the Security Agreement and any other instrument
required under this Agreement; and (D) to do all things that Lender
reasonably deems necessary or advisable for the purpose of carrying
out the powers enumerated in (A), (B), (C) and (D) of this
Subparagraph (ii);
(iii) The powers herein granted Lender shall be deemed to be powers
coupled with an interest and the same are irrevocable;
(c) cancel this Agreement;
(d) bring appropriate action to enforce such performance and the correction of
such Event of Default;
(c) declare the entire unpaid principal of the Note and all accrued interest
thereon immediately due and payable without notice;
(f) exercise any remedies under the Entity Guaranty, the Personal Guaranty,
or the Security Agreement, foreclose any other security instrument referred to in this
Agreement and/or exercise any other rights or remedies it may have under the Entity
Guaranty, the Personal Guaranty, the Security Agreement and any other security
instruments.
16. Default under Note and Security Agreement. The failure by Borrower to keep or
perforrn any of the terms, covenants and conditions to be kept or performed by it under this
Agreement shall constitute a default under the Note, the Security Agreement and any other
security instrument held by Lender in connection with the Loan.
17. Notices. Any notices given hereunder shall be in writing and shall be deemed to
have been given when delivered personally or three (3) days after deposited in the United States
mail, registered, postage prepaid, addressed as follows:
If to Borrower:
8
473881v2 EL185-39
If to Lender:
Stilwell Holdings, LLC
Attention: Michael Stilwell
Economic Development Authority of the City of Elk River
13065 Orono Parkway
Elk River, Minnesota 55330
Attri. Director of Economic Development
or addressed to any such party at such other address as such party shall hereafter furnish by
notice to the other party. Any notice delivered personally to Borrower shall be delivered to, an
officer of Borrower, and any notice delivered personally to Lender shall be delivered to an
officer of Lender at the address for Lender for the mailing of notices. Either party may change its
address for the giving of notices by giving the other party at least ten (10) days' notice in the
manner provided above.
18. Headings, The headings used in this Agreement are for convenience only and do
not define, limit or construe the contents of this Agreement.
19. Bindings on Successors and Asg&,,ns. Subject to the limitations on transfer
contained in this Agreement, this Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Minnesota, without giving effect to any choice or conflict of law
provision or rule.
21. Counterparts. This Agreement may be executed in two (2) or more counterparts,
each of which shall be an original and all of which shall constitute the carne agreement.
22. Entire Agreemen . This Agreement, the Note, the Security Agreement and the
other documents executed by Borrower and/or Lender pursuant to this Agreement contain the
entire agreement between the parties with respect to the subject matter hereof and supersede all
prior understandings and agreements, both oral and written. This Agreement may be amended
only in a writing signed by the parties hereto.
23. Fees and Expenses. Borrower agrees to pay to Lender immediately upon demand
all costs and expenses, including, without limitation, all attorneys' fees, incurred by Lender in
connection with the enforcement of the Lender's rights and/or the collection of any amounts
which become due to Lender under this Agreement, the Note, the Security Agreement or the
other documents executed in connection herewith; and the prosecution or defense of any action
in any way related to this Agreement, the Note, the Security Agreement or the other documents
executed in connection herewith.
9
473881v ELI 85-39
24. Business Subsidies Act.
(a) In order to satisfy the provisions of Minnesota Statutes, Sections I I 6J.993
to 116J.995 (the "Business Subsidies Act"), the Borrower acknowledges and agrees that
the amount of the "Business Subsidy" granted to the Borrower under this Agreement is
the amount of the loan, which is $200,000, and that the Business Subsidy is needed
because the project is not sufficiently feasible for the Borrower to undertake without the
Business Subsidy. The public purpose of the Business Subsidy is to develop
manufacturing facilities, increase the tax base in the City and stimulate the creation and
retention of jobs. In consideration of the Business Subsidy provided for the Borrower's
acquisition of equipment for the Loan Property, the Borrower represents that pursuant to
the terms of the Lease, it will cause the Entity Guarantor to meet following goals (the
"Goals"): the Entity Guarantor shall relocate or create [22] full-time equivalent jobs in
Elk River, Minnesota, at the Loan Property at an hourly wage equal to the greater of
$15.00 per hour or 150% of the state or federal minimum wage, whichever is greater, by
the two (2) year anniversary of the date of closing on the Loan.
(b) If none of the Goals are met, the Borrower agree to repay all of the
Business Subsidy to the City, plus interest ("Interest") set at the greater of 4% per annum,
or the implicit price deflator defined in Minnesota Statutes Section 275.70, subdivision 3,
accruing from and after the date of closing on the Loan, compounded semiannually. If
the Goals are met in part, the Borrower agrees to repay a portion of the Business Subsidy
(plus Interest) determined by multiplying the Business Subsidy by a fraction, the
numerator of which is the number of jobs in the Goals which were not created at the
wage level set forth above and the denominator of which is [22] (i.e. number of jobs set
forth in the Goals).
(c) The Borrower agrees to: (i) report its progress on achieving the Goals to
the City until the later of the date the Goals are met or two years from the Benefit Date,
or, if the Goals are not met, until the date the Business Subsidy is repaid, (ii) include in
the report the information required in Section 116J.994, subdivision 7 of the Business
Subsidies Act on forms developed by the Minnesota Department of Employment and
Economic Development, and (iii) send completed reports to the City. The Borrower
agrees to file these reports no later than March I of each year commencing March 1,
2016, and within 30 days after the deadline for meeting the Goals. The City agrees that if
it does not receive the reports, it will mail the Entity Guarantor and the Borrower a
warning within one week of the required filing date. If within 14 days of the post marked
date of the warning the reports are not made, the Borrower agrees to pay to the City a
penalty of $100 for each subsequent day until the report is filed up to a maximum of
$1,000.
(d) The Borrower agrees that, pursuant to the terms of the Lease, it will cause
the Entity Guarantor to continue operations in the City for at least five years after the date
of closing on the Loan,
10
47388 1 Q ELI 85-39
(e) Other than the loan provided pursuant to this Agreement, there are no
other state or local government agencies providing financial assistance for the project.
(0 There is no parent corporation of the Entity Guarantor or the Borrower,
[Signature Pages follow]
473881Q ELI 85-39
Signature Page to Loan Agreement
IN TESTIMONY WHEREOF, each of the parties hereto has caused these presents to be
effective as of the day and year first above written.
STILWELL HOLDINGS, LLC
0
Michael Stilwell
Its: Vice President
S -I
473881 Q ELI 85-39
Signature Page to Loan Agreement
IN TESTIMONY WHEREOF, each of the parties hereto has caused these presents to be
effective: as of the day and year first above written.
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER
M
Name:
Its: President
By:
Name:
Its: Executive Director
S-2
47388lv2 E0,185-39
I M as I I ON".
Equipment List
Item Description Purchase Price Status
ENTITY GUARANTY
(Microloan)
Elk River, Minnesota
12016
............
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of and to induce financial accommodations of any kind, with
or without security, given or to be given or continued at any time and from time to time by the
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (the "Lender")
to or for the account of STILWELL HOLDINGS, LLC (the "Borrower"), the undersigned
absolutely and unconditionally guarantees to the Lender the full and prompt payment when due,
whether at maturity or earlier by reason of acceleration or otherwise, of any and all indebtedness,
obligations and liabilities of the Borrower (and any and all successors of the Borrower) to the
Lender, now or hereafter existing, absolute or contingent, independent, joint, several or joint and
several, secured or unsecured, due or to become due, contractual or tortious, liquidated or
unliquidated, arising by assignment or otherwise, including without limitation all indebtedness,
obligations and liabilities owed by the Borrower (and any and all successors of the Borrower) as
a member of any partnership, syndicate, association or other group, and whether incurred by the
Borrower (or any successor of the Borrower) as principal, surety, endorser, guarantor,
accommodation party or otherwise (collectively, the "Indebtedness"); and the undersigned agrees
to pay on demand all of the Lender's fees, costs, expenses and reasonable attorneys' fees in
connection with the Indebtedness, any security therefor, and this guaranty, plus interest on such
amounts at the highest rate then applicable to any of the Indebtedness.
The Lender may at any time and from time to time, without consent of or notice to the
undersigned, without incurring responsibility to the undersigned, without releasing, impairing or
affecting the liability of the undersigned hereunder, upon or without any ten -ns or conditions, and
in whole or in part: (1) sell, pledge, surrender, compromise, settle, release, renew, subordinate,
extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any
manner and in any order any Indebtedness, any evidence thereof, or any security or other
guaranty therefor; (2) accept any security for, or other guarantors of, any Indebtedness; (3) fail,
neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the liquidation of the
Indebtedness, or to exercise any other right against the Borrower, the undersigned, any other
guarantor or any other person; and (4) apply any payments and credits to the Indebtedness in any
manner and in any order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment of the liability of
the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the
undersigned hereunder, and the undersigned waives any and all defenses, of the Borrower
pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign this or any other
guaranty shall not release, impair or affect the liability of the undersigned hereunder. This
guaranty is a primary obligation of the undersigned and the Lender shall not be required to first
resort for payment of the Indebtedness to the Borrower or any other person, their properties or
473883v1 EL185-39
estates, or any security or other rights or remedies whatsoever. The undersigned shall be and
remain liable for any deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any other person for
such deficiency is discharged pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in addition to and shall be
cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise,
without any limitation as to amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness
is thereafter set aside, recovered, rescinded or required to be returned for any reason (including
without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other
person), the Indebtedness to which such payment was applied shall for the purposes of this
guaranty be deemed to have continued in existence, notwithstanding such application, and this
guaranty shall be enforceable as to such Indebtedness as fully as if such application had never
been made.
The undersigned waives: (1) notice of acceptance of this guaranty and of the creation and
existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice
of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other
demands and notices to the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in connection with any controversy
related to this guaranty, waives any argument that venue in such forums is not convenient, and
agrees that any litigation initiated by the undersigned against the Lender in connection with this
guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the
United States District Court, District of Minnesota.
All property of the undersigned, now or hereafter in the possession, control or custody of
or in transit to the Lender for any purpose, including without limitation the balance of every
account of the undersigned with and each claim of the undersigned against the Lender, shall be
subject to a lien and security interest in favor of the Lender, as security for all liabilities of the
undersigned to the Lender, and shall be subject to be set off against any and all such liabilities,
and the Lender may at any time and from time to time at its option and without notice
appropriate and apply any such property toward the payment of any and all such liabilities. The
undersigned agrees to promptly provide the Lender, from time to time with financial statements
of the undersigned, in form and substance acceptable to the Lender, at least once every 12
months and as otherwise requested by the Lender. The undersigned agrees to promptly provide
the Lender from time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Lender may request, in form and
substance acceptable to the Lender.
The undersigned waives all claims, rights and remedies which the undersigned may now
have or hereafter acquire against any person at any time now or hereafter liable to payment of
any of the Indebtedness and as to any collateral security, including but not limited to all claims,
rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and
subrogation, whether or not such claim, right or remedy arises in equity, under contract, by
2
4738810 EL185-39
statute, under common law or otherwise, whether or not the Indebtedness has been fully paid,
and all payments and recoveries under this guaranty shall be considered equity investments by
the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any
person other than the Borrower. No delay or failure by the Lender in exercising any right, and
no partial or single exercise thereof shall constitute a waiver thereof No waiver of any rights
hereunder, and no modification or amendment of this guaranty shall be effective unless the same
is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with
respect to the specific instance involved and shall not impair or affect the rights of the Lender or
the provisions of this guaranty in any other respect at any other time. This guaranty shall
continue until written notice of revocation of this guaranty, executed by the undersigned, has
been received by the Lender; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to Indebtedness arising before
the Lender receives such written notice of revocation, and the sole effect of revocation of this
guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is
unconnected with Indebtedness theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or application of this guaranty shall
not affect other lawful provisions and applications hereof and to this end the provisions of this
guaranty are declared to be severable. This guaranty shall bind the undersigned and the
representatives, successors and assigns of the undersigned, and of each of them respectively, and
shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and
construed in accordance with the laws of the State of Minnesota.
The undersigned is the occupant of the property located at 12698 Industrial Boulevard
NW, Elk River, Minnesota (the "Property"). Borrower is acquiring the Property and will be
leasing it to the undersigned pursuant to a certain lease agreement (the "Lease"). Borrower and
the undersigned are under common ownership. The undersigned acknowledges and agrees that
the Indebtedness is being utilized by Borrower to finance the cost of equipment at the Property,
and such equipment will support the undersigned's ability to fulfill its obligations under the
Lease and, therefore, the undersigned's obligations under this Guaranty are proper, valid and
enforceable. This Guaranty has been approved by unanimous consent of the board of governors
of the undersigned.
3
473883v1 EL185-39
PATRIOT CONVERTING, INC.,
a Minnesota corporation
i -A
473883v1 EL185-39
Michael A. Stilwell, Executive Vice President
El
PERSONAL GUARANTY
(Microloan ---Michael A. Stilwell)
Elk River, Minnesota
2016
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, and in consideration of and to induce financial accommodations of any kind, with
or without security, given or to be given or continued at any time and from time to time by the
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (the "Lender")
to or for the account of STILWELL HOLDINGS, LLC (the "Borrower"), the undersigned
absolutely and unconditionally guaranty to the Lender the full and prompt payment when due,
whether at maturity or earlier by reason of acceleration or otherwise, of any and all indebtedness,
obligations, and liabilities of the Borrower (and any and all successors of the Borrower) to the
Lender, now or hereafter existing, absolute or contingent, independent, joint, several or joint and
several, secured or unsecured, due or to become due, contractual or tortious, liquidated or
unliquidated, arising by assignment or otherwise, including without limitation all indebtedness,
obligations and liabilities owed by the Borrower (and any and all successors of the Borrower) as
a member of any partnership, syndicate, association or other group, and whether incurred by the
Borrower (or any successor of the Borrower) as principal, surety, endorser, guarantor,
accommodation party or otherwise (collectively, the "Indebtedness"); and the undersigned agrees
to pay on demand all of the Lender's fees, costs, expenses and reasonable attorneys' fees in
connection with the Indebtedness, any security therefor, and this guaranty, plus, interest on such
amounts at the highest rate then applicable to any of the Indebtedness,.
The Lender may at any time and from time to, time, without consent of or notice to the
undersigned, without incurring responsibility to the undersigned, without releasing, impairing or
affecting the liability of the undersigned hereunder, upon or without any ten -ns or conditions, and
in whole or in part: (1) sell, pledge, surrender, compromise, settle, release, renew, subordinate,
extend, alter, substitute, exchange, change, modify or otherwise dispose of or deal with in any
manner and in any order any Indebtedness, any evidence thereof, or any security or other
guaranty therefor; (2) accept any security for, or other guarantors of, any Indebtedness; (3) fail,
neglect or omit to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the liquidation of the
Indebtedness, or to exercise any other right against the Borrower, the undersigned, any other
guarantor or any other person; and (4) apply any payments and credits to the Indebtedness in any
manner and in any order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment of the liability of
the undersigned hereunder, shall in any way release, impair or otherwise affect the liability of the
undersigned hereunder, and the undersigned waives any and all defenses of the Borrower
pertaining to the Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign this, or any other,
guaranty shall not release, impair or affect the liability of the undersigned hereunder. This
guaranty is a primary obligation of the undersigned and the Lender shall not be required to first
4738870 EI -185-39
resort for payment of the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned shall be and
remain liable for any deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any other person for
such deficiency is discharged pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in addition to and shall be
cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise,
without any limitation as to amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness is
thereafter set aside, recovered, rescinded or required to be returned for any reason (including
without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other
person), the Indebtedness to which such payment was applied shall for the purposes of this
guaranty be deemed to have continued in existence, notwithstanding such application, and this
guaranty shall be enforceable as to such Indebtedness as fully as if such application had never
been made.
The undersigned waives: (1) notice of acceptance of this guaranty and of the creation and
existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice
of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other
demands and notices to the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in connection with any controversy
related to this guaranty, waives any argument that venue in such forums is not convenient, and
agrees that any litigation initiated by the undersigned against the Lender in connection with this
guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the
United States District Court, District of Minnesota.
All property of the undersigned, now or hereafter in the possession, control or custody of
or in transit to the Lender for any purpose, including without limitation the balance of every
account of the undersigned with and each claim of the undersigned against the Lender, shall be
subject to a lien and security interest in favor of the Lender, as security for all liabilities of the
undersigned to the Lender, and shall be subject to be set off against any and all such liabilities,
and the Lender may at any time and from time to time at its option and without notice
appropriate and apply any such property toward the payment of any and all such liabilities. The
undersigned agrees to promptly provide the Lender from time to time with financial statements
of the undersigned, in form and substance acceptable to the Lender, at least once every 12
months and as otherwise requested by the Lender. The undersigned agrees to promptly provide
the Lender from time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Lender may request, in form and
substance acceptable to the Lender.
The undersigned waives all claims, rights and remedies which the undersigned may now
have or hereafter acquire against any person at any time now or hereafter liable to payment of
any of the Indebtedness and as to any collateral security, including but not limited to all claims,
rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and
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473887v1 EL185-39
subrogation, whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise, whether or not the Indebtedness has been fully paid,
and all payments and recoveries under this guaranty shall be considered equity investments by
the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any
person other than the Borrower. No delay or failure by the Lender in exercising any right, and
no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights
hereunder, and no modification or amendment of this guaranty shall be effective unless the same
is in writing duly executed by the Lender, and each such. waiver, if any, shall apply only with
respect to the specific instance involved and shall not impair or affect the rights of the Lender or
the provisions of this guaranty in any other respect at any other tinfle. This guaranty shall
continue until written notice of revocation of this guaranty, executed by the undersigned, has
been received by the Lender; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to Indebtedness arising before
the Lender receives such written notice of revocation, and the sole effect of revocation of this
guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is
uncormected with Indebtedness theretofore arising or transactions theretofore entered into.
Any invalidity or unenforecability of any provision or application of this guaranty shall
not affect other lawful provisions and applications hereof and to this end the provisions of this
guaranty are declared to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them respectively, and
shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and
construed in accordance with the laws of the State of Minnesota.
The undersigned is an owner and member of the Borrower and the undersigned
acknowledges and agrees that the Indebtedness is being utilized by the Borrower to purchase
equipment to be used at the real property located at 12698 Industrial Boulevard NW, Elk River,
Minnesota (the "Property"), and such equipment will materially financially benefit the
undersigned and, therefore, the undersigned's obligations under this Guaranty are proper, valid
,and enforceable.
THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES
THAT THE UNDERSIGNED HAS READ ALL OF THIS GUARANTY AND UNDERSTAND
ALL OF THE PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREES
THAT COMPLIANCE BY THE LENDER WITH THE EXPRESS PROVISIONS OF 'THIS
GUARANTY SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED
REASONABLE FOR ALL PURPOSES.
Michael A. Stilwell
3
473887vi ELI 85-39
SECURITY AGREEMENT
(Microloan)
This SECURITY AGREEMENT ("Agreement") is made to be effective as of
---1 2016, by PATRIOT CONVERTING, INC., a Minnesota corporation ("Grantor")
and the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER (the
"Secured Party").
AGREEMENT
In consideration of the above recitals, and the promises set forth in this Agreement, the
parties agree as follows:
I OBLIGATIONS. "Obligations" means collectively each debt, liability and obligation of
every type and nature which Stilwell Holdings, LLC, a Minnesota limited liability
company ("Borrower") may now or at any time hereafter owe to Secured Party (including
without limitation the obligations created under the loan agreement (the "Loan
Agreement") and the promissory note of the Borrower to Secured Party of even date
herewith and all amendments, replacements, restatements, and substitutions therefor),
together with the obligations of Patriot Converting, Inc. (the "Entity Guarantor") to
Secured Party pursuant to the Entity Guaranty of even date herewith, whether now
existing or hereafter created or arising, and whether direct or indirect, due or to become
due, absolute or contingent, and the repayment or performance of any of the foregoing if
any such payment or performance is at any time avoided, rescinded, set aside, or
recovered from or repaid by Secured Party, in whole or in part, in any bankruptcy,
insolvency, or similar proceeding instituted by or against the Borrower, the Entity
Guarantor or any other guarantor of any Obligation, or otherwise,, including but not
limited to all principal, interest, fees, expenses and other charges.
2. COLLATERAL. "Collateral" means collectively all of the following property of the
Grantor, whether now owned or hereafter acquired: (a) equipment specified on the
attached Exhibit A wherever located; (b) subject to liens, of record, all equipment of the
Grantor located in Minnesota; (c) accessions, additions and improvements to,
replacements of, and substitutions for any of the foregoing wherever located; (d) all
products and proceeds of any of the foregoing wherever located; and (e) books, records
and data, wherever located, in any forret relating to any of the foregoing.
3. SECURITY INTEREST. The Grantor grants to Secured Party a security interest
("'Security Interest") in the Collateral to secure the payment and performance of the
Obligations. The Security Interest continues in effect until this Agreement is terminated
in writing by Secured Party.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor represents,
warrants and agrees that:
473884v2 EIA S5-39
4.1. Principal Office/Residence. The Grantor' chief executive office/residence is
located at the address specified on the signature pages to this Agreement. The
Grantor must give Secured Party written notice prior to any change in the location
of the Grantor' principal office/residence.
4.2. Organization; Authority. The Grantor is a corporation, duty organized, existing
and in good standing under the laws of the state of its organization. and has full
power and authority to enter into this Agreement. The Grantor' state of
organization/residence is Minnesota and its exact legal name is as set forth on the
signature page to this Agreement. The Grantor will not change its state of
organization, form of organization or name without Secured Party's prior written
consent.
4.3. Perfection of Security Interest. The Grantor will execute and deliver, and
irrevocably appoints Secured Party (which appointment is coupled with an
interest) the Grantor's attorney-in-fact to execute and deliver in the Grantor's
name, all financing statements (including, but not limited to, amendments,
ten-ninations, and terminations of other security interests in any of the Collateral),
control agreements and other agreements which Secured Party may at any time
reasonably request in order to secure, protect, perfect, collect or enforce the
Security Interest, the Grantor shall, at any time and from time to time, take such
steps as Secured Party may reasonably request for Secured Party: (i) to obtain an
acknowledgement, in form and substance reasonably satisfactory to Secured
Party, of any bailee having possession of any of the Collateral that such bailee
holds such Collateral for Secured Party; and (ii) otherwise to ensure the continued
perfection and priority of the Security Interest in any of the Collateral and the
preservation of the rights of Secured Party therein.
4.4. Enforceability of Collateral. To the extent the Collateral consists of accounts,
instruments, documents, chattel paper, letter -of -credit rights, letters of credit or
general intangibles, the Collateral is enforceable in accordance with its terms, is
genuine, complies with applicable laws concerning form, content and manner of
preparation and execution, and all persons appearing to be obligated on the
Collateral have authority and capacity to contract and are in fact obligated as they
appear to be on the Collateral.
4.5. Title to Collateral. The Grantor holds good and marketable title to the Collateral
free of all security interests and encumbrances. The Grantor will keep the
Collateral free of all security interests and encumbrances except for the Security
Interest. The Grantor will defend Secured Party's rights in the Collateral against
the claims and demands of all other persons,
4.6. Collateral Location. The Grantor will keep all tangible Collateral at 12698
Industrial Boulevard NW, Elk River, Minnesota 55330.
4.7. Collateral Use. The Grantor must use the Collateral only for business purposes.
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473884v2 ELI 85-39
The Grantor must not use or keep any Collateral for any unlawful purpose or in
violation of any federal, state or local law, statute or ordinance.
4.8. Maintenance of Collateral. The Grantor must maintain all tangible Collateral in
good condition and repair. The Grantor must not commit or pen -nit damage to or
destruction of any of the Collateral. The Grantor must give Secured Party prompt
written notice of any material loss of or damage to any tangible Collateral and of
any other happening or event that materially affects the existence, value or
arnount of the Collateral.
4.9. Disposition of Collateral. The Grantor must not sell or otherwise dispose of any
Collateral or any interest in any Collateral without the prior written consent of
Secured Party, except that until the occurrence of an Event of Default (as defined
in Section 5 below), the Grantor may sell any inventory constituting Collateral in
the ordinary course of the Grantor's business.
4.10. Taxes, Assessments and Liens. The Grantor must promptly pay all taxes and
other governmental charges levied or assessed upon or against any Collateral.
4.11. Records- Access. The Grantor must keep accurate and complete records
pertaining to the Collateral and to the Grantor's business and financial condition
and will submit to Secured Party all reports regarding the Collateral and the
Grantor's business and financial condition as and when Secured Party may
reasonably request. During nonrial business hours, the Grantor must permit
Secured Party and its representatives to examine or inspect any Collateral,
wherever located, and to examine, inspect and copy the Grantor"s books and
records relating to the Collateral and the Grantor's business and financial
condition.
4.12. Insurance. The Grantor must keep all tangible Collateral insured against risks of
fire (including so-called extended coverage), theft and other risks and in such
amounts as Secured Party may reasonably request, with any loss payable to
Secured Party to the extent of its interest. The Grantor assigns to Secured Party
all money due or to become due with respect to, and all other rights of the Grantor
with respect to, all insurance concerning the Collateral and the Grantor directs the
issuer of any such insurance to pay all such money directly to Secured Party.
4,13, Collection Costs. The Grantor must reimburse Secured Party on demand for all
costs of collection of any of the Obligations and all other expenses incurred by
Secured Party in connection with the perfection, protection, defense or
enforcement of the Security Interest and this Agreement, including all reasonable
attorneys' fees, incurred by Secured Party whether or not any litigation or
bankruptcy or insolvency proceeding is commenced.
4,14. Financing Statements. The Grantor authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
473884v2 E1,185-39
any part of the Collateral without the Grantor' signature where permitted by law,
in each case in such form and substance as Secured Party may determine. The
Grantor shall pay all filing, registration and recording fees and any taxes, duties,
imports, assessments and charges arising out of or in connection with the
execution and delivery of this Agreement, any agreement supplemental hereto,
any financing statements, and any instruments of further assurance.
5. EVENTS OF DEFAULT. Each of the following is an "Event of Default" under this
Agreement: (a) the Borrower or the Entity Guarantor fails to pay any of the Obligations
when due and any applicable grace period lapses without cure by the Borrower or the
Entity Guarantor; (b) the Borrower or the Entity Guarantor fails to timely perform any
other Obligation and any applicable grace period lapses without cure by the Borrower or
the Entity Guarantor; (c) any representation made by the Grantor in this Agreement or in
any financial statement or report submitted by the Borrower or the Entity Guarantor to
Secured Party proves to have been materially false or misleading when made; (d) the
Borrower or the Entity Guarantor ceases to conduct its business; (c) the Borrower or the
Entity Guarantor is or becomes insolvent, however defined; (f) the Borrower or the Entity
Guarantor voluntarily files, or has filed against it involuntarily, a petition under the
United States Bankruptcy Code; or (g) if the Borrower or the Entity Guarantor is
dissolved or liquidated.
6. REMEDIES UPON EVENT OF DEFAULT, Upon the occurrence of an Event of
Default and at any time thereafter, Secured Party may exercise one or more of the
following rights and remedies. (a) declare any or all unmatured Obligations to be
immediately due and payable without presentment or any other notice or demand and
immediately enforce payment of any or all of the Obligations; (b) require the Grantor to
make the Collateral available to Secured Party at a place to be designated by Secured
Party; (c) exercise and enforce any rights or remedies available upon default to a secured
party under the Uniform Commercial Code as amended from time to time ("UCC"), and,
if notice to the Grantor of the intended disposition of Collateral or any other intended
action is required by law, such notice shall be commercially reasonable if given at least
ten (l n) calendar days prior to the intended disposition or other action; and (d) exercise
and enforce any other rights or remedies available to Secured Party by law or agreement
against the Collateral, the Borrower or the Entity Guarantor, or any other person or
property. Secured Party's duty of care with respect to Collateral in its possession will be
fulfilled if Secured Party exercises reasonable care in physically safekeeping the
Collateral or, in the case of Collateral in the possession of a bailee or other third person,
exercises reasonable care in the selection of the bailee or other third person. Mere delay
or failure to act will not preclude the exercise or enforcement of any of Secured Party's
rights or remedies. All rights and remedies of Secured Party are cumulative and may be
exercised singularly or concurrently, at Secured Party's option.
7. MISCELLANEOUS. The following miscellaneous provisions are a part of this
Agreement:
7.1. Definitions. Terms not otherwise defined in this Agreement shall have the
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473884v2 ELI 85-39
meanings ascribed to them, if any, under the UCC and such meanings shall
automatically change at the time that any amendment to the UCC, which changes
such meanings, shall become effective.
7.2. Notices, All notices under this Agreement must be in writing and will be deemed
given when delivered or placed in the United States mail, registered or certified,
postage prepaid, addressed to the respective party at the respective address set
forth below its signature on the signature page to this Agreement. Any party may
change its address for notices under this Agreement by giving written notice to
the other parties.
7.3. Amendments/Waivers. This Agreement ri'my be waived, amended, modified or
terrninated and the Security Interest may be released only in a writing signed by
Secured Party. Any waiver signed by Secured Party will be effective only in the
specific instance and for the specific purpose given.
7.4. Applicable Law. This Agreement is governed by the laws of the State of
Minnesota without regard to the conflict of law principles. If any provision of
this Agreement is held unlawful or unenforceable in any respect, such illegality or
unenforceability will not affect other provisions or applications that can be given
effect and this Agreement will be construed and enforced as if the unlawful or
unenforceable provision or application had never been contained in or prescribed
by this, Agreement.
7.5. Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of this
Agreement.
7.6. Integration. This Agreement embodies the entire agreement and understanding
among the parties relative to subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter.
7.7. Successors and Assigns. This Agreement is binding upon and will inure to the
benefit of the parties and their successors and assigns.
7.8. Counterparts. This Agreement may be executed in several counterparts, each of
which will be an original, and all of which will constitute one and the same
instrument.
5
473884v2 ELI 85-39
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
1 —1L 11 iT1 I, 1 1
IMMEM
PATRIOT CONVERTING, INC.,
a Minnesota corporation
U0. m
Its:
Address:
c/o Patriot Converting Inc.
Attn: Mike Stilwell
12698 Industrial Blvd
Elk River, MN 55330
S-1
473984v2 EL185-39
ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY OF ELK
RIVER
By:
Its:
By:
Its,:
Address:
13065 Orono Parkway
Elk River, MN 55330
S-2
473884v2 EI -185-39
EXHIBIT A
List of Equipment
All of the following property of the Grantor, whether now owned or hereafter acquired and
wherever located: (a) equipment specified below; (b) accessions, additions and improvements to,
replacements of, and substitutions for any of the foregoing; (c) all products and proceeds of any
of the foregoing; and (d) books, records and data in any form relating to any of the foregoing.
Item Description Purchase Price Status
A-1
473884v2 ELI 85-39
PROMISSORY NOTE,
(Microloan)
Arriount: 5200,000.00
Interest: 3.00%
Maturity: , 2021
2016
FOR VALUE RECEIVED, the undersigned, STILWELL HOLDINGS, LLC, a
Minnesota limited liability company ("Borro,wer")�, promises to pay to the order of the
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER., a public body
corporate and politic of the State of Minnesota ("Lender"), at 13065 Orono Parkway, Elk River,
Minnesota 55330, or such other place as the Lender or any other holder of this Note may
designate in writing, on or before 1, 2021 ("Maturity Date"), the principal sum of Two
Hundred Thousand and 010/100 Dollars ($200,000.00), together with interest on any and all
amounts remaining unpaid thereon from time to time from the date hereof (computed on the
basis of actual days elapsed in a year of 360 days) at a fixed interest rate of three percent (3%)
per annum.
This Note is made pursuant to a Loan Agreement, between Borrower and Lender, of even
date herewith ("Loan Agreement") which provides for the payment of the cost of purchasing
equipment. The principal amount of this, Note shall be amortized over a five (5) year period.
Based on the foregoing, the Borrower shall be obligated to make monthly installments
(each a "Monthly Installment") in the amount of , which Monthly Installments
shall commence on , 2016, and continue on the first (I st) day of each and every month
thereafter until the Maturity Date, when all outstanding principal and accrued but unpaid interest
shall be payable in full.
This Note is secured by, among other things a Security Agreement ("Security
Agreement") given by Patriot Converting, Inc, to Lender, the Personal Guaranty made by
Michael Stilwell, and that certain Entity Guaranty made by Patriot Converting, Inc. all of which
are made to Lender of even date herewith (collectively, the "Security Documents'''). All of the
terms and conditions contained in the Security Documents, which are to be kept and perfortned
by Borrower are hereby made a part of this Note to the same extent and with the same force and
effect as if they were fully set forth herein; and Borrower covenants, and agrees to keep and
perform them, or cause them to be kept and performed, strictly in accordance with their terms.
If the Lender, or any other holder of this Note, has not received the full amount of any
Monthly Installment provided for in this Note, by the end of ten (10) calendar days, after the date
it is, due, Borrower shall pay a late charge fee to the Lender, or any other holder of this Note.
The amount of the late charge fee shall be five percent (5.00%) of the overdue Monthly
Installment. The Borrower shall pay this late charge fee on demand, however, collection of the
late charge fee shall not be deemed a waiver of the Lender's, right to declare an Event of Default
47388Ov2 EL185-39
and exercise its rights and remedies as provided for in the Loan Agreement and the Security
Documents.
Each Monthly Installment and other payments made under this Note shall be applied as
follows: (i) first, to be applied against and pay interest which has accrued and remains unpaid on
the date the payment is received; then (ii) to be applied against and pay unpaid late charges and
any other charges, including attorneys' fees and protective advances; and then (iii) all remaining
amounts, if any, shall be applied against and reduce the then outstanding principal balance of this
Note.
If an Event of Default shall occur hereunder or under the Loan Agreement or any
Security Document and any cure period provided for in the Loan Agreement or such Security
Document has expired, the Borrower agrees to pay a default rate of interest equal to ten percent
(10.00%) per annum as the applicable interest rate of this Note, and the entire principal amount
outstanding, accrued interest and any other charges due hereon shall at once become due and
payable at the option of the Lender or the holder hereof. Any failure of the Lender to exercise its
right to, increase the interest rate by the default rate of interest set forth above or its option to
accelerate this Note at any time shall not constitute a waiver of the right to exercise the same
right to increase the interest rate or accelerate at any subsequent time. Notwithstanding anything
contained herein to the contrary, the default rate of interest hereon shall never exceed the highest
rate permitted by law.
The Borrower may prepay the principal under this note at any time and from time to time,
in whole or in part, without premium or penalty. No partial prepayment shall postpone the due
date of any Monthly Installment or reduce the amount of any such Monthly Installment unless
the Lender agrees otherwise in writing.
All sums payable to the Lender under this Note shall be paid in immediately available
funds.
The Borrower promises to pay all costs in connection with the enforcement of this Note,
including but not limited to, those costs, expenses and attorneys' fees of Lender whether or not
suit is filed with respect thereto and whether or not such cost or expense is paid or incurred or to
be paid or incurred prior to or after the entry of j udgment or for the pursuance of, or defense of,
any litigation, appellate, bankruptcy or insolvency proceeding.
Presentment, notice of dishonor and protest are hereby waived by all makers, sureties,
guarantors and endorsers hereof. This Note shall be binding upon Borrower, its successors and
assigns.
The remedies of Lender, as provided herein and in the Loan Agreement and the Security
Documents, shall be cumulative and concurrent and may be pursued singly, successively or
together, at the sole discretion of Lender, and may be exercised as often as occasion therefor
shall occur; and the failure to exercise any such right or remedy shall in no event be construed as
a waiver or release thereof.
Time is of the essence hereof.
2
47388M ELI 85-39
This Note shall be governed by and be construed under the laws of the State of Minnesota,
without regard to principles of conflicts of law.
[Signature Page Follows]
3
47388Ov2 ELI 85-39
IN WITNESS WHEREOF, the undersigned has caused this Note to be effective as of the
day and year first above written.
STILWELL HOLDINGS, LLC
a Minnesota limited liability company
In
Michael A. Stilwell
Its: Executive Vice President
S-1
47388Ov2 ELI 85-39
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION NO. 2016 -
RESOLUTION APPROVING LOAN AGREEMENT AND RELATED DOCUMENTS
(PATRIOT CONVERTING PROJECT)
WHEREAS, the Board of Commissioners (the "Board") of the Economic Development
Authority of the City of Elk River (the "EDA") has received a proposal from Stilwell Holdings, LLC
(the `Borrower") that the EDA assist in financing the Borrower's the purchase, renovation and
equipping of an existing building located on certain real property in the City of Elk River, Minnesota
(the "City") by providing a loan to the Borrower in the amount of $200,000 (the "Loan") pursuant
to the FDA's Microloan Program (the "Program").
WHEREAS, the EDA has caused to be prepared a Loan Agreement (the "Loan
Agreement") with the Borrower setting forth, among other things, the terms and conditions under
which the EDA will make the loan, a copy of which is on file with the Executive Director.
NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Economic
Development Authority of the City of Elk River as follows:
1.01. Subject to approval by the City Council after a public hearing, the Loan Agreement as
presented to the EDA, together with all related documents necessary in connection therewith, including
without limitation, a Promissory Note from the Borrower evidencing the Loan, a Security Agreement in
certain equipment and entity guaranty from Patriot Converting, Inc., and a personal guaranty from
Michael Stilwell, (all as defined in and described in the Loan Agreement) (collectively, the "Loan
Documents") are hereby in all respects approved, in substantially the form on file with the City's
Economic Development Director; and the President and Executive Director are hereby authorized and
directed to execute the Loan Agreement and any Loan Documents to which the EDA is a party on
behalf of the EDA and to carry out, on behalf of the EDA, the FDA's obligations thereunder.
1.02. The approval hereby given to the Loan Documents includes approval of such
additional details therein as may be necessary and appropriate and such modifications thereof, deletions
therefrom and additions thereto as may be necessary and appropriate and approved by legal counsel to
the EDA and by the President and Executive Director prior to executing said documents; and said
officers are hereby authorized to approve said changes on behalf of the EDA. The execution of any
instrument by the President and Executive Director shall be conclusive evidence of the approval of
such document in accordance with the terms hereof. In the event of absence or disability of said
officers, any of the documents authorized by this Resolution to be executed may be executed without
further act or authorization of the Board by any duly designated acting official, or by such other officer
or officers of the Board as, in the opinion of the City Attorney, may act in their behalf.
4738900 JSB BL185-39
Approved by the Board of Commissioners of the Economic Development Authority of the
City of Elk River this 19th day of January, 2016.
President
ATTEST:
Executive Director
4738900 JSB BL185-39
EXHIBIT A
to
UCC -1 Financing Statement
Naming
PATRIOT CONVERTING, INC., as Debtor
and
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, as Secured Party
Address of Properties:
[list all Minnesota locations]
473953vl JSB BL185-39
EXHIBIT A
to
UCC -1 Financing Statement
Naming
PATRIOT CONVERTING, INC., as Debtor
and
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, as Secured Party
List of Equipment:
[List equipment acquired with Loan proceeds]
473952vl JSB BL185-39
UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS
A. NAME & PHONE OF CONTACT AT FILER (optional)
B. E-MAIL CONTACT AT FILER (optional)
C. SEND ACKNOWLEDGMENT TO: (Name and Address)
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1. DEBTORS NAME: Provide only one Debtor name (1a or 1b) (use exact, full name, do not omit, modify, or abbreviate any part of the Debtor's name), if any part of the Individual Debtor's
name will not fit in line 1 b, leave all of item 1 blank, check here ❑ and provide the Individual Debtor information in item 10 of the Financing Statement Addendum (Form UCC1Ad)
OR
1a. ORGANIZATION'S NAME
1b. INDIVIDUAL'S SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX
1c. MAILINGADDRESS
CITY
STATE
�POSTALCODE
COUNTRY
2. DEBTORS NAME: Provide only one Debtor name (2a or 2b) (use exact, full name, do not omit, modify, or abbreviate any part of the Debtor's name), if any part of the Individual Debtor's
name will not fit in line 2b, leave all of item 2 blank, check here ❑ and provide the Individual Debtor information in item 10 of the Financing Statement Addendum (Form UCC1Ad)
OR
2a. ORGANIZATION'S NAME
2b. INDIVIDUAL'S SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX
2c. MAILING ADDRESS
CITY
STATE
�POSTALCODE
COUNTRY
3. SECURED PARTY'S NAME (or NAME of ASSIGNEE of ASSIGNOR SECURED PARTY) Provide only one Secured Partv name (3a or 3b)
OR
3a. ORGANIZATION'S NAME
3b. INDIVIDUAL'S SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX
3c. MAILING ADDRESS
CITY
STATE
�POSTALCODE
COUNTRY
4. COLLATERAL: This financing statement covers the following collateral:
5. Check only if applicable and check only one box: Collateral is U held in a Trust (see UCC1Ad, item 17 and Instructions) U being administered by a Decedent's Personal Representative
6a. Check only if applicable and check only one box: 6b. Check only if applicable and check only one box:
❑ Public -Finance Transaction ❑ Manufactured -Home Transaction ❑ A Debtor is a Transmitting Utility ❑ Agricultural Lien ❑ Non -UCC Filing
7. ALTERNATIVE DESIGNATION (if applicable): ❑ Lessee/Lessor ❑ Consignee/Consignor ❑ Seller/Buyer ❑ Bailee/Bailor ❑ Licensee/Licensor
8. OPTIONAL FILER REFERENCE DATA
FILING OFFICE COPY — UCC FINANCING STATEMENT (Form UCC1) (Rev. 04/20/11)
UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS
A. NAME & PHONE OF CONTACT AT FILER (optional)
B. E-MAIL CONTACT AT FILER (optional)
C. SEND ACKNOWLEDGMENT TO: (Name and Address)
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1. DEBTORS NAME: Provide only one Debtor name (1a or 1b) (use exact, full name, do not omit, modify, or abbreviate any part of the Debtor's name), if any part of the Individual Debtor's
name will not fit in line 1 b, leave all of item 1 blank, check here ❑ and provide the Individual Debtor information in item 10 of the Financing Statement Addendum (Form UCC1Ad)
OR
1a. ORGANIZATION'S NAME
1b. INDIVIDUAL'S SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX
1c. MAILINGADDRESS
CITY
STATE
�POSTALCODE
COUNTRY
2. DEBTORS NAME: Provide only one Debtor name (2a or 2b) (use exact, full name, do not omit, modify, or abbreviate any part of the Debtor's name), if any part of the Individual Debtor's
name will not fit in line 2b, leave all of item 2 blank, check here ❑ and provide the Individual Debtor information in item 10 of the Financing Statement Addendum (Form UCC1Ad)
OR
2a. ORGANIZATION'S NAME
2b. INDIVIDUAL'S SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX
2c. MAILING ADDRESS
CITY
STATE
�POSTALCODE
COUNTRY
3. SECURED PARTY'S NAME (or NAME of ASSIGNEE of ASSIGNOR SECURED PARTY) Provide only one Secured Partv name (3a or 3b)
OR
3a. ORGANIZATION'S NAME
3b. INDIVIDUAL'S SURNAME FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX
3c. MAILING ADDRESS
CITY
STATE
�POSTALCODE
COUNTRY
4. COLLATERAL: This financing statement covers the following collateral:
5. Check only if applicable and check only one box: Collateral is U held in a Trust (see UCC1Ad, item 17 and Instructions) U being administered by a Decedent's Personal Representative
6a. Check only if applicable and check only one box: 6b. Check only if applicable and check only one box:
❑ Public -Finance Transaction ❑ Manufactured -Home Transaction ❑ A Debtor is a Transmitting Utility ❑ Agricultural Lien ❑ Non -UCC Filing
7. ALTERNATIVE DESIGNATION (if applicable): ❑ Lessee/Lessor ❑ Consignee/Consignor ❑ Seller/Buyer ❑ Bailee/Bailor ❑ Licensee/Licensor
8. OPTIONAL FILER REFERENCE DATA
FILING OFFICE COPY — UCC FINANCING STATEMENT (Form UCC1) (Rev. 04/20/11)