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5.0. 6.0. 7.0. EDSR 06-14-1999 ELK RIVER ECONOMICDEVELOPMENT AUTHORITY • MEMORANDUM TO: Economic Development Authority Ai 9 OM: Paul Steinman, Director of Economic 4 Development DATE: June 7, 1999 SUBJECT: Agenda Memo for June 14, 1999 Meeting 5. 1998 Annual Report Presentation Staff will take approximately 20-25 minutes to highlight the significant issues within the 1998 annual report. This report was mailed to EDA members for the May EDA meeting,therefore it is not included in this packet. Please bring the Economic Development 1998 • Annual Report to this meeting for your reference 6. Northstar Die Casting Micro Loan As you are aware, Northstar Die Casting has modified its corporate structure and is now called Badger Die Casting. Since corporate restructuring, staff has worked with the owner of Badger Die Casting, at his request, to renegotiate repayment terms for the outstanding amount owed on the EDA micro loan in the approximate amount of $45,000. The following modifications to the loan terms have been proposed by Badger and are being recommended by staff at this time: • Reduction of the interest rate from 8.5 percent to 5.5 percent • Extension of the amortization schedule from 5 to 10 years All other terms of the agreement remain the same such as, full payment of principal and interest accumulating with a balloon payment due and payable on May 1,2003. This modification of the terms should aid Badger Die Casting in cash flow as it begins a rebuilding of its business. • 13065 Orono Parkway •P. O. Box 490 • Elk River, MN 55330-1743 • (612) 441-7420 • Fax (612) 441-7425 Equal Opportunity Housing and Equal Opportunity Employment Economic Development Agenda Memo June 7, 1999 P.age 2 • A new Guaranty will also be executed as part of the amended paperwork for this micro loan. Staff has discussed the new terms of this note with the owner of Badger Die Casting, Steve Whiting, and he has agreed verbally to the terms as stated. The city attorney's office is currently undertaking a UCC search on Badger Die Casting, LLC to determine what, if any, value there would be in obtaining a blanket Security Agreement from the company as part of this package. If there is no opportunity for additional security for this loan, staff, and the city attorney's office, suggest dropping the Security Agreement from the required paperwork for this transaction. Recommendation Staff recommends approval of the attached amended and restated Promissory Note and Guaranty for the assumption of the Northstar Die Casting micro loan by Badger.Die Casting, LLC. Attachments • Amended and Restated Promissory Note • Guaranty • Security Agreement 7. Discuss Business Retention Expansion Program Attachedis a memo from Marc Nevinski, assistant economic development director, regarding undertaking a business retention expansion program. Marc will review this information with the EDA at the meeting. i JUN a 41999 DO HE RTY 2800 Minnesota World Trade Center 3RUMBI,E. esMinnesota Seventh Street Saint Paul, 55101-4999 & BUTLER Telephone(651)265-4000 FAX(651)265-3900 PROFESSIONAL ASSOCIATION Attorneys at Law Writer's direct dial number: (651)265-4206 perroj@drblaw.com June 3, 1999 VIA FAX NO. 612/441-7425 AND U.S. MAIL Mr. Paul T. Steinman Director of Economic Development City of Elk River 13065 Orono Parkway P. O. Box 490 Elk River, MN 55330 Dear Mr. Steinman: 1111 In accordance with the request of the City of Elk River in its letter of May 18, 1999, we have prepared the following loan documentation: • Amended and Restated Promissory Note; • new Security Agreement; and • new Guaranty. Since the new corporation, Badger Die Casting, LLC, is executing a new Security Agreement,we should verify that the assets covered by the Security Agreement are free and clear of all other security interests. A UCC search should be performed on Badger Die Casting, LLC. Also, if the assets of Badger Die Casting were assets formerly owned by North Star Die Casting,we should also have a UCC search done on North Star to make sure that creditors of North Star do not have liens against assets that may now be owned by Badger Die Casting. Please note that we have attached the same schedule of equipment to the new Security Agreement as that which was attached to the 1998 Agreement. If this requires modification,please let us know. The letter from the City of Elk River makes reference to both the assumption of the 1998 Promissory Note and the drafting of a new Promissory Note. It seemed most expedient to prepare an Amended and Restated Note,incorporating the new payment terms and making it clear that the indebtedness 1111 evidenced by the Amended and Restated Note is the outstanding indebtedness under the 1998 Note. St.Paul•Minneapolis•Denver•San Ramon•Washington,D.C. DOHERTY RUMBLE BUTLER OFESSIONAL ASSOCIATION Mr. Paul T. Steinman June 3, 1999 Page 2 Please call with any questions. If you wish to have our office undertake the UCC searches described above,please let us know. Very truly yours, DOHERTY,RUMBLE&BUTLER PROFESSIONAL AS OCIATION CS2e664/ - /.(;e') Jerry D. Perron JDP995442.1 40 Enclosures III c: Mr. Peter K. Beck(w/o enc.) Ms. Karen R. Kees(w/o enc.) 0 AMENDED AND RESTATED PROMISSORY NOTE S $45,150.12 Elk River, Minnesota June 15, 1999 This Amended and Restated Promissory Note amends and restates in its entirety that certain Promissory Note made by Northstar Die Casting, L.L.C., a Minnesota limited liability company (the "Original Borrower") payable to the Economic Development Authority of the City of Elk River (the "Lender"), dated January 29, 1998, in the original principal amount of$50,000.00 (the "Original Note"). The outstanding principal balance of the Original Note on the date hereof is in the amount of$45,150.12, and such indebtedness has been assumed by Badger Die Casting, LLC, a Minnesota limited liability company, pursuant to the terms of this Amended and Restated Promissory Note. FOR VALUE RECEIVED, the undersigned promises to pay to the order of the Economic Development Authority of the City of Elk River (the "Lender"), at its office in Elk River, Minnesota, or at such other place as any present or future holder of this Note may designate from time to time, the principal sum of FORTY-FIVE THOUSAND ONE HUNDRED FIFTY AND 12/100 DOLLARS ($45,150.12) in lawful money of the United States of America, plus interest thereon from the date hereof until this Note is fully paid at an annual rate equal to five and one-half percent (5.5%), computed on the basis of the actual number of days elapsed and • a 360-day year. Commencing on July 15, 1999, and continuing on the 15th day of each month thereafter, to and including April 15, 2003, the undersigned shall pay to the Lender payments of principal and interest each in the amount of$490.00. The entire unpaid principal balance hereof, together with all accrued but unpaid interest thereon, together with any other charges under this Note shall be due and payable on May 1, 2003. All or any part of the unpaid balance of this Note may be prepaid at any time without penalty. Any prepayment shall be applied first to the payment of other charges under this Note, second to the payment of interest accrued through the date of payment, and third to the payment of principal. Any partial prepayment shall be applied to the principal hereof in inverse order of maturity. No prepayment shall suspend any required payments of principal or interest on this Note or reduce the amount of any scheduled payment. If any installment or payment under this Note is paid more than 10 days after the due date thereof, the undersigned agrees to pay a late payment charge of 5% of the installment or payment to cover the expenses of collection. This Note is secured by (i) a Security Agreement dated the date hereof (the "Security Agreement") between the undersigned, as Debtor, and the Lender, as Secured Party, and • (ii) a Guaranty made by Steve Whiting in favor of the Lender dated the date hereof (the "Guaranty"). In the event of any default in the payment of this Note, or the occurrence of any Event of Default as defined in the Security Agreement, then in any such event the holder of this KeesK 995359.1 Note may, at its option, declare this Note to be immediately due and payable and thereupon this Note shall become due and payable for the entire unpaid principal balance of this Note plus accrued interest and other charges on this Note without any presentment, demand, protest or other notice of any kind. The undersigned (i) waives demand, presentment, protest, notice of protest, notice of dishonor and notice of nonpayment of this Note; (ii) agrees that when or at any time after this Note becomes due the then holder of this Note may offset or charge the full amount owing on this Note against any account then maintained by the undersigned with such holder of this Note without notice; (iii) agrees to pay on demand all costs and expenses of all present and future holders of this Note in connection with this Note and any security and guaranties for this Note, including but not limited to reasonable attorneys' fees and legal expenses, plus interest on such amounts at the rate set forth in this Note; and (iv) consents to the personal jurisdiction of the state and federal courts located in the State of Minnesota in connection with any controversy related in any way to this Note or any security or guaranty for this Note, waives any argument that venue in such forums is not convenient, and agrees that any litigation initiated by the undersigned against the Lender or any other present or future holder of this Note relating in any way to this Note, the Security Agreement, or the Guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the United States District Court, District of Minnesota. Interest on any amount under this Note shall continue to accrue, at the option of any present or future holder of this Note, until such holder receives final payment of such amount in collected funds in form and substance acceptable to such holder. • No waiver of any right or remedy under this Note shall be valid unless in writing executed by the holder of this Note, and any such waiver shall be effective only in the specific instance and for the specific purpose given. All rights and remedies of all present and future holders of this Note shall be cumulative and may be exercised singly, concurrently or successively. This Note shall bind the undersigned and the heirs, representatives, successors and assigns of the undersigned. This Note shall be governed by and construed in accordance with the laws of the State of Minnesota. THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE UNDERSIGNED HAS READ ALL OF THIS NOTE AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS NOTE. THE UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY ANY PRESENT OR FUTURE HOLDER OF THIS NOTE WITH THE EXPRESS PROVISIONS OF THIS NOTE SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES. BADGER DIE CASTING, LLC By Title • KeesK 995359.1 2. • GUARANTY Elk River, Minnesota June 15, 1999 For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of and to induce financial accommodations 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 (hereinafter called the "Lender")to or for the account of Badger Die Casting, LLC, a Minnesota limited liability company(hereinafter called 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 and also to others to the extent of their participations granted to or interests therein created or acquired for them by 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, iaccommodation party or otherwise (hereinafter collectively referred to as the "Indebtedness"); and the undersigned agrees to pay on demand all of the Lender's fees, costs, expenses and 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 terms 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, realise 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 KeesK 995388.1 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 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. The undersigned hereby agrees that the Lender shall have no duty to advise the undersigned of information now or hereafter known to the Lender regarding the financial or other condition of the Borrower or any other person primarily or secondarily liable on the Indebtedness or regarding any circumstance bearing on the risk of nonpayment of the Indebtedness. The undersigned acknowledges and agrees that the undersigned has conducted its own investigation of the business and affairs of the Borrower and any other person primarily or secondarily liable on the Indebtedness to its satisfaction, has not relied and will not rely on any information provided by the Lender in determining whether to enter into or continue this guaranty, and is and will continue to remain informed of the Borrower's financial condition, the status and financial condition of other guarantors, if any, and all other circumstances which bear upon the risk of nonpayment of the Indebtedness. 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 4111 KeesK 995388.1 2. 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 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 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 REPRESENTS, CERTIFIES,WARRANTS AND AGREES THAT THE UNDERSIGNED HAS READ ALL OF THIS GUARANTY AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY THE BANK WITH THE EXPRESS PROVISIONS OF THIS 410 KeesK 995388.1 3. O GUARANTY SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES. Steve Whiting • • KeesK 995388.1 4. • SECURITY AGREEMENT Date: June 15, 1999 Secured Debtor: Badger Die Casting, LLC Party: Elk River Economic Development Address: Authority Address: 13065 Orono Parkway Elk River,MN 55330 1. SECURITY INTEREST. To secure the payment and performance of that certain Amended and Restated Promissory Note dated June 15, 1999, executed and delivered by the Debtor to the Secured Party in the principal sum of$45,150.12 plus interest and other charges as therein provided, and all amendments, extensions, renewals and replacements thereof(herein collectively referred to as the "Obligations"), the Debtor grants the Secured Party a security interest (the "Security Interest") in the following property(the "Collateral"): All inventory of the Debtor and all returns of such inventory, and all warehouse receipts, bills of lading and other documents of title covering such inventory, whether now existing or hereafter arising, whether now owned or hereafter acquired; • All equipment of the Debtor, including without limitation the items listed on Exhibit A attached hereto, together with all accessions, accessories, attachments, fittings, increases, parts, repairs, returns, renewals and substitutions of all or any part thereof, and all warehouse receipts, bills of lading and other documents of title covering such equipment, whether now existing or hereafter arising, whether now owned or hereafter acquired; All accounts, instruments, chattel paper, other rights to payment, deposit accounts, money, patents, patent applications, trademarks, trademark applications, copyrights, copyright applications, trade names, other names, and other general intangibles of the Debtor, together with all rights, liens, security interests and other interests which the Debtor may at any time have by law or agreement against any account debtor or obligor obligated to make any such payment or against any of the property of such account debtor or obligor, whether now existing or hereafter arising, whether now owned or hereafter acquired; and all products and proceeds of the foregoing property, including without limitation all accounts, instruments, chattel paper, other rights to payment, deposit accounts, money, insurance proceeds and general intangibles related to the foregoing property, and all refunds of insurance premiums due or to become due under all insurance policies covering the foregoing property. 2. REPRESENTATIONS,WARRANTIES AND AGREEMENTS. The Debtor represents, warrants and agrees as follows: KeesK 995382.1 • a. The Debtor is a limited liability company organized under the laws of Minnesota, and the address of the Debtor's chief executive office is shown at the beginning of this Agreement. The Debtor has not used any trade name, assumed name. The Debtor shall give the Secured Party prior written notice of any change in such address or the Debtor's name. The Debtor has authority to execute and perform this Agreement. The Debtor's Internal Revenue Service taxpayer identification number is 41- b. If any Collateral is or will become a fixture, the record owner of the real estate is , and the legal description of the real estate is c. The Debtor is the owner of the Collateral, or will be the owner of the Collateral hereafter acquired, free of all security interests, liens and encumbrances other than the Security Interest and any other security interest of the Secured Party. The Debtor shall not permit any security interest, lien or encumbrance, other than the Security Interest and any other security interest of the Secured Party,to attach to any Collateral without the prior written consent of the Secured Party. The Debtor shall defend the Collateral against the claims and demands of all persons other than the Secured Party, and shall promptly pay all taxes, assessments and other government charges upon or against the Debtor, any Collateral and the Security Interest. No financing statement covering any Collateral is on file in any public office. If any Collateral is or will become a fixture, the Debtor, at the request of the Secured Party, shall furnish the Secured Party with a statement or statements executed by all persons who have or claim an interest in the real estate, in form acceptable to the Secured Party, which statement or statements shall provide that such persons consent to the Security Interest. d. The Debtor shall not sell or otherwise dispose of any Collateral or any interest therein without the prior written consent of the Secured Party, except that, until the occurrence of an Event of Default or the revocation by the Secured Party of the Debtor's right to do so, the Debtor may sell or lease any Collateral constituting inventory in the ordinary course of business at prices constituting the fair market value thereof. For purposes of this Agreement, a transfer in partial or total satisfaction of a debt, obligation or liability shall not constitute a sale or lease in the ordinary course of business. e. Each account, instrument, chattel paper, other right to payment and general intangible constituting Collateral is, or will be when acquired, the valid, genuine and legally enforceable obligation of the account debtor or other obligor named therein or in the Debtor's records pertaining thereto as being obligated to pay such obligation, subject to no defense, setoff or counterclaim. The Debtor shall not, without the prior written consent of the Secured Party, agree to any material modification or amendment of any such obligation or agree to any cancellation or subordination of any such obligation. f. Other than inventory in transit and motor vehicles in use, all tangible Collateral shall be located at the following address(es): • KeesK 995382.1 2. • , and no such Collateral shall be located at any other address without the prior written consent of the Secured Party. g. The Debtor shall(i)keep all tangible Collateral in good condition and repair, normal depreciation excepted;(ii)from time to time replace any worn, broken or defective parts thereof; (iii) promptly notify the Secured Party of any loss of or material damage to any Collateral or of any adverse change in the prospect of payment of any account, instrument, chattel paper, other right to payment or general intangible constituting Collateral; (iv)not permit any Collateral to be used or kept for any unlawful purpose or in violation of any federal, state or local law; (v) keep all tangible Collateral insured in such amounts, against such risks and in such companies as shall be acceptable to the Secured Party, with loss payable clauses in favor of the Secured Party to the extent of its interest in form acceptable to the Secured Party(including without limitation a provision for at least 30 days' prior written notice to the Secured Party of any cancellation or modification of such insurance), and deliver policies or certificates of such insurance to the Secured Party; (vi) at the Debtor's chief executive office, keep accurate and complete records pertaining to the Collateral and the Debtor's financial condition,business and property, and submit to the Secured Party such periodic reports concerning the Collateral and the Debtor's financial condition, business and property as the Secured Party may from time to time request; (vii) at all reasonable times permit the Secured Party and its representatives to examine and inspect any Collateral, and to examine, inspect and copy the Debtor's records pertaining to the Collateral and the Debtor's financial condition, business and property; (viii)at the Secured Party's request, promptly execute, endorse and deliver such financing statements and other instruments, documents, chattel paper and writings and take such other actions • deemed by the Secured Party to be necessary or desirable to establish, protect, perfect or enforce the Security Interest and the rights of the Secured Party under this Agreement and applicable law, and pay all costs of filing financing statements and other writings in all public offices where filing is deemed by the Secured Party to be necessary or desirable. 3. COLLECTION RIGHTS. At any time before or after an Event of Default, as defined hereafter,the Secured Party may, and at the request of the Secured Party the Debtor shall, promptly notify any account debtor or obligor of any account, instrument, chattel paper, other right to payment or general intangible constituting Collateral that the same has been assigned to the Secured Party and direct such account debtor or obligor to make all future payments to the Secured Party. In addition, at the request of the Secured Party,the Debtor shall deposit in a collateral account designated by the Secured Party all proceeds constituting Collateral, in their original form received (with any necessary endorsement),within one business day after receipt of such proceeds by the Debtor. Until the Debtor makes each such deposit, the Debtor will hold all such proceeds separately in trust for the Secured Party for deposit in such collateral account, and will not commingle any such proceeds with any other property. The Debtor shall have no right to withdraw any funds from such collateral account, and the Debtor shall have no control over such collateral account. Such collateral account and all funds at any time therein shall constitute Collateral under this Agreement. Before or upon final collection of any funds in such collateral account, the Secured Party, at its discretion, may release any such funds to the Debtor or any account of the Debtor or apply any such funds to the Obligations whether or not then due. Any release of funds to the Debtor or any account of the Debtor shall not prevent KeesK 995382.1 3. the Secured Party from subsequently applying any funds to the Obligations. All items credited to such collateral account and subsequently returned and all other costs, fees and charges of the Secured Party in connection with such collateral account may be charged by the Secured Party to any account of the Debtor, and the Debtor shall pay the Secured Party all such amounts on demand. 4. LIMITED POWER OF ATTORNEY. If the Debtor at any time fails to perform or observe any agreement herein, the Secured Party, in the name and on behalf of the Debtor or, at its option, in its own name, may perform or observe such agreement and take any action which the Secured Party may deem necessary or desirable to cure or correct such failure. The Debtor irrevocably authorizes Secured Party and grants the Secured Party a limited power of attorney in the name and on behalf of the Debtor or, at its option, in its own name, to collect, receive, receipt for, create, prepare, complete, execute, endorse, deliver and file any and all financing statements, insurance applications, remittances, instruments, documents, chattel paper and other writings, to grant any extension to, compromise, settle,waive, notify, amend, adjust, change and release any obligation of any account debtor, obligor, insurer or other person pertaining to any Collateral, and to take any other action deemed by the Secured Party to be necessary or desirable to establish, perfect, protect or enforce the Security Interest. All of the Secured Party's advances, fees, charges, costs and expenses,including but not limited to audit fees and expenses and reasonable attorneys' fees and legal expenses, in connection with the Obligations and in the protection and exercise of any rights or remedies hereunder, together with interest thereon at the highest rate then applicable to any of the Obligations, shall be secured hereunder and shall be paid by the Debtor to the Secured Party on 1111 demand. 5. EVENTS OF DEFAULT. The occurrence of any of the following events shall constitute an "Event of Default": (a) any breach or default in the payment or performance of any of the Obligations; or (b) any breach or default under the terms of this Agreement or any other note, obligation, mortgage, guaranty, other agreement, or other writing heretofore, herewith or hereafter existing to which the Debtor or any maker, endorser, guarantor or surety of any of the Obligations or any other person providing security for any of the Obligations or for any guaranty of any of the Obligations is a party; or(c)the insolvency, death, dissolution, liquidation, merger or consolidation of the Debtor or any such maker, endorser, guarantor, surety or other person; or(d) any appointment of a receiver, trustee or similar officer of any property of the Debtor or any such maker, endorser, guarantor, surety or other person; or(e) any assignment for the benefit of creditors of the Debtor or any such maker, endorser, guarantor, surety or other person; or (f) any commencement of any proceeding under any bankruptcy, insolvency, receivership, dissolution, liquidation or similar law by or against the Debtor or any such maker, endorser, guarantor, surety or other person; or(g) the sale, lease or other disposition(whether in one transaction or in a series of transactions)to one or more persons of all or a substantial part of the assets of the Debtor or any such maker, endorser, guarantor, surety or other person; or(h) the Debtor or any such maker, endorser, guarantor, surety or other person takes any action to revoke or terminate any agreement, liability or security in favor of the Secured Party; or (i) the entry of any judgment or other order for the payment of money in the amount of$25,000.00 or more against the Debtor or any such maker, endorser, guarantor, surety or any other person; or(j)the issuance or levy of any writ, warrant, attachment, garnishment, execution • KeesK 995382.1 4. • or other process against any property of the Debtor or any such maker, endorser, guarantor, surety or any other person; or(k)the attachment of any tax lien to any property of the Debtor or any such maker, endorser, guarantor, surety or other person; or(1) any statement, representation or warranty made by the Debtor or any such maker, endorser, guarantor, surety or other person (or any representative of the Debtor or any such maker, endorser, guarantor, surety or other person)to the Secured Party at any time shall be incorrect or misleading in any material respect when made; or(m) there is a material adverse change in the condition(financial or otherwise), business or property of the Debtor or any such maker, endorser, guarantor, surety or other person; or(n)the Secured Party shall in good faith believe that the prospect for due and punctual payment or performance of any of the Obligations, this Agreement or any other note, obligation, mortgage, guaranty, or other agreement heretofore, herewith or hereafter given to or acquired by the Secured Party in connection with any of the Obligations is impaired, or (o) the relocation of Debtor's business operations outside the City of Elk River. 6. REMEDIES. Upon the commencement of any proceeding under any bankruptcy law by or against the Debtor or any such maker, endorser, guarantor, surety or other person, all Obligations automatically shall become immediately due and payable in full, without declaration, presentment, or other notice or demand, all of which are hereby waived by the Debtor. In addition, upon the occurrence of any Event of Default and at any time thereafter, the Secured Party may exercise any one or more of the following rights and remedies: (a) declare all Obligations to be immediately due and payable in full, and the same shall thereupon be immediately due and payable in full, without presentment or other notice or demand, all of which are hereby waived by the Debtor; (b) require the Debtor to assemble all or any part of the Collateral and make it available to the Secured Party at a place to be designated by the Secured Party which is reasonably convenient to both parties; (c) exercise and enforce any and all rights and remedies available upon default under this Agreement, the Uniform Commercial Code, and any other applicable agreements and laws. If notice to the Debtor of any intended disposition of Collateral or other action is required, such notice shall be deemed reasonably and properly given if mailed by regular or certified mail, postage prepaid, to the Debtor at the address stated at the beginning of this Agreement or at the most recent address shown in the Secured Party's records, at least 10 days prior to the action described in such notice. The Debtor 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 Agreement, the Collateral, the Security Interest or any of the Obligations, waives any argument that venue in such forums is not convenient, and agrees that any litigation initiated by the Debtor against the Secured Party in connection with this Agreement,the Collateral, the Security Interest or any of the Obligations shall be venued in either the District Court of Sherburne County, Minnesota, or the United States District Court, District of Minnesota. 7. MISCELLANEOUS. A carbon, photographic or other reproduction of this Agreement is sufficient as a financing statement. No provision of this Agreement can be waived, modified, amended, abridged, supplemented, terminated or discharged and the Security Interest cannot be released or terminated, except by a writing duly executed by the Secured Party. A waiver shall be effective only in the specific instance and for the specific purpose given. No delay or failure to act • KeesK 995382.1 5. • shall preclude the exercise or enforcement of any of the Secured Party's rights or remedies. All rights and remedies of the Secured Party shall be cumulative and may be exercised singularly, concurrently or successively at the Secured Party's option, and the exercise or enforcement of any one such right or remedy shall not be a condition to or bar the exercise or enforcement of any other. This Agreement shall bind and benefit the Debtor and the Secured Party and their respective successors and assigns and shall take effect when executed by the Debtor and delivered to the Secured Party, and the Debtor waives notice of the Secured Party's acceptance hereof. If any provision or application of this Agreement is held unlawful or unenforceable in any respect, such illegality or unenforceability shall not affect other provisions or applications which can be given effect, and this Agreement shall be construed as if the unlawful or unenforceable provision or application had never been contained herein or prescribed hereby. All representations and warranties contained in this Agreement shall survive the execution, delivery and performance of this Agreement and the creation, payment and performance of the Obligations. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. THE DEBTOR REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE DEBTOR HAS READ ALL OF THIS AGREEMENT AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS AGREEMENT. THE DEBTOR ALSO AGREES THAT COMPLIANCE BY THE SECURED PARTY WITH THE EXPRESS PROVISIONS OF THIS AGREEMENT SHALL CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES. S BADGER DIE CASTING, LLC By Title • KeesK 995382.1 6. . . III EXHIBIT A Sort Code reefs DeacriptiOT. Condition Appraised Value Wood 1' x 4' Good 425.00 I �._. _ wooden _ -- _ 415.00_,__. Poor "l{G.00 wooden able � 'air Round Tables wood Orwin Top 6 Chalre lair ,*,30.00 Office Doak Poor $15.00 1 Executive Doak Wood Good $100.00 wood Craden:a a1oti 6' High Sack Coed $125.00 4 Nall lioturoa mead 050.00 • executive D.ok wood Grain QoOd $100.00 3 Katal Denko old offica Pair 016.00 Poor $10.00 }total Table 670.00 2 Chairs Poor Goad 540.00 5 Shelf 1 Aookc.nsc Cood $150.00 Executive Doak Chair Burgandy Poord 56.00 3 Chair' Upholstered ;156.00 Tv & VCR Uvod Ir, Lounge Paix Fair 540.00 o�fie+ Daak y5C.0o Computer Station Wood Orain Fair Bookcase 2 shelve Fair 525,00 Executive Deak Chair Burgaadp• GoOd ,5150,00 $60.00ir 3 nffica Chairs Fa $10.00 • 2 Chairs Upholelcred Fair- 2 Pictures _ Good 040.00 Credenre Hood Good $50.00 III Computer Station Wood Good $150.00 Kates Cooler Electric FaSY $75.00 Computer station. 7 Piece Good 5100.00 ahslf Fair 520.00 2 Upholstered Side Chairs Fair $30.00 Computor Station Tair *40.00 Executive De2k Woaa Good $100.00 Desk ?fetal - Wood Top Fair eie.Oe Peak wood Fair 350.00 :alio Fair 525.00 K X r rcelpreacor H.avy Duty Turbine Pair 35000.00 Air cor..preaaor Gardiner (Backup Spare) fair 200.00 Sarnia51000.00, DarrTruck 2 wheal Fair Sand Place Cabinet 3' x 3' x 5' Tair 5450.00 g' :2 '4600•'Tor'Lestar• Die Cast Sere4131 :Mod HP WO' Cood *25000.60 Machine 61500.00 Overhead Crane Portable Good 51500.00 ?tiller Welder ?IC Fair Parte Cleaner So'Vvant Spray Good ;1o0.00 Tool Sharpener Hammond Farr 5200.00 Drill Press 2 Head Allen Fair 5250.02 Work :able Vire Attached Good 5100.00 Lathe..Lodge & $ zlpley-. .Aer# 43066.Mod 1013-17 x,ar • .. • ••- *L0o0.00.- Remelt Furnace Kemp Fair $1500.00 Remelt Furnace Lindberg Fair *1500.00 Cleuair. Lathe Ser$ 151756 Xod 1500 Fair ;1000.00 . . Band -Saw --- . ._._. Cooe1 - - - 4,150:00-- 2 Oxy Acet Torch Sets Mo Tanks ( Rented ) Fair 5150.00 Safety tiler rein $2000.00 ir E50.00 Radom Mill ;IOC.00 Battery Charger Cantury rear 31000.00 Good Preaau:-A Has�ter Northcta2' 6500.00 • Killing Machine Hunt Fair B - 1 • i • • EXHIBIT A ort Code =tom Description Condition Appraiaad value Good 5300,00. Shaker/Poliahsr Automated Good $300,00 . Heat Spin Dryer -'Good $$500.00 , -•••- Evaporator brya Virtu Aftir"Tue;tb"ling 19. 600 Ton Lester Dia Cast Sera 798 Hod HP 3X EP Good $25000.00 Machina d S400.00 Automatic Driller Graymilla Good 6 Mine Fans • Floor L Table Top FGood $4r $6100.00 • Metal Totes On Wheels Spin Dryer Non-Heating Good 1000.00 Lube Tank With Pumps + Backup good $aoo.00Good $150.00 Tool Cabinet On Casters X2150.00 Denison 15 Ton Trim Press Kerr 19652 Mod Unknown. Good Good 2000.00. Hot Oil Machine Eu $250.00 • 43 Marble Plinth Cordax 1805 MEP Good $250.00 Drafting Table With Compass $100.00 Marble Plinth 2 ' x 3' With Gauges $200.00 Marble Plinth Trustone 2'x41,46" Ex 5300,00 Goodod 4 Sections Pallet Racking 15' High $00,00 Dock Ramp Aluminum Fair- Good $1075.00 Telephone System Marlin 14 Stations Pair 1000.00 Work Table Heavy 4' x 14' Metal Fair $200.00 2 Strapper:: With Bands And Clips5300.00 Pallet Racking Heavy Duty Good • Poor $150.00 5 Air CRackinonare Older Window Models $a0.00 O Coffee Machine Fait Gray .aG0 Tan File Cabinet d $60. GcQ 2 File Cabinets 4 Drawer 560.00 • 2 Drwrar Fair Fair Dell o.00 Poor S3 Coffee Machine cmmercial $1530.00 Computer4yate:n '70.00 3 Microwave ovens Older Poor rd $;75.00 Laser Printer ait 580,00 Good 2 Dot Matrix Printers Wide Carriage Fair $200.000.00 Fax Machine Plain Paper rile Cabinet Metal Poor Computer System horthgate good '$2so0.ao00.00 Lateral File 4' Good ;1505 .00 Safe Floor Model Good 0,00 TypaWriter Nile Cabinet Tan 2 Drawer Fair 54 540.00 Xerox Fair $45.00 Paper Shredder MediaGood Median Duty $25.00 Fair $2 Freeaer Old Green Used In Lounge Poor 52.5.00 File Cabinet Gray 4 Drawrer Fair $50.00 Computer Printer Panasonic r_ Goo $25,00 Pile Cabinet Tan 2 Drawer Good $4$25.00 T Qaugee See Attached Report 5300.00 J G L Ex $5300 .00 Optical Coroariter. - -• " pair- .00 'V 1988 Ford Truck F150. 0ickup- 41500 Caterpillar Fail Pork Truck Pair $2100.00 York Truck Clark Fair- _._..•..... ..-----$2100..0.0_ .1986..Ford.Truck-.. _ . .. F600 12% Box _ _. .-.-- Pair $2000..00 . - Fork Truck • Komatsu ..'a...$_ w�^ $303031.00 ' o : GY • 1a�S�.Go Sash M�h L GNC 1/rX�e.a nAc li • of 7co.cG Add, Ad ju-511...ew1 s. 5ocun as 1aOlsocOHAect - 3•g9101.DO B - 2