RES 17-02 ECONOMIC DEVELOPMENT AUTHORITY
�..- OF THE CITY OF ELK RIVER
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION NO. 17-02
RESOLUTION APPROVING SUBORDINATION OF SECURITY INTEREST
Section 1. Recitals.
1.01 On May 5, 2016, the Economic Development Authority of the City of Elk River
(the"EDA")provided a microloan (the "Loan")in the amount of$200,000 to Patriot Converting,
Inc., a Minnesota corporation (referred to as "Debtor") pursuant to a Loan Agreement, dated as
of May 5, 2016 (the "Loan Agreement") between the EDA and the Debtor. The Loan was
secured by a personal guaranty of Michael Stillwell, Executive Vice President of the Borrower
and by a security interest in certain equipment of the Debtor as evidenced by a Security
Agreement, dated as of May 5, 2016 (the"Security Agreement") from the Debtor to the EDA.
1.02 On October 17, 2016, the Board of Commissioners (the "Board") of the EDA
approved the First Amendment to the Loan Agreement and the First Amendment to the Security
Agreement allowing the Debtor to amend the equipment provided as security for the Loan.
1.03. The Debtor has refinanced a portion of equipment originally financed by
Riverland Bank ("Riverland") at its facility in the City of Elk River with Central Minnesota
Development Company on behalf of the United States Small Business Administration (the
"SBA"). As a requirement of the refinancing, the SBA has required that the Debtor obtain the
EDA's consent to subordinate its security interest in all equipment owned by the Debtor located
at the Debtor's Elk River facility to the SBA and Riverland and thereby have a 3rd lien position
in such equipment. The EDA will continue to have a 2nd lien position (subordinate to Riverland)
in all other equipment at the Debtor's Elk River facility and a 1st lien position in certain
equipment purchased with the proceeds of the Loan.
NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners (the "Board") of the
Economic Development Authority of the City of Elk River(the"EDA") as follows:
Section 2. Approval of Subordination Agreement.
2.01. The subordination of the EDA's security interest in the Debtor's equipment to the
SBA (the "Subordination") is hereby in all respects approved together with any related documents
necessary in connection therewith, and the President and Executive Director are hereby authorized
and directed to execute any documents necessary to effect the Subordination on behalf of the EDA
and to carry out, on behalf of the EDA, the EDA's obligations thereunder. 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
496287v2 JSB EL185-39
Approved by the Board of Commissioners of the Economic Development Authority of the
City of Elk River this 21st day of March,2017.
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President
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496287v2 JSB EL185-39