6.3. EDSR 03-20-2017Na1Vavt 3-2` zv/ I
Request for Action
To
8tetaa Humber
Economic Development uthority 16.3
Agenda Section
Meeting Date
Prepared by
General Business
March 20, 2017
Amanda Othoudt, EDD
Item Description
Reviewed by
Subordination of Security Interest Request for
Cal Portner, City Administrator
Patriot Converting
Reviewed by
Action Requested
Approve, by motion, a resolution approving subordination of security interest for Patriot Converting, Inc.
Background/Discussion
At their January 19 meeting, the Economic Development Authority approved a $200,000 Jobs Incentive
Microloan to Patriot Converting, Inc. to renovate an existing facility and purchase new equipment.
Patriot Converting was required to secure the loan by providing the EDA with a first lien security interest
in certain equipment acquired with the loan. The EDA also held a second position blanket security
interest in all Patriot's equipment subordinate to Riverland Bank. In addition, the EDA received a
personal guarantee.
In October, Patriot purchased new equipment for use at their Elk River facility. They relocated some of
their existing equipment to their facility in Iowa to make room for the new equipment. The EDA
approved the First Amendment to the Loan Agreement and the Fust Amendment to the Security
Agreement allowing Patriot to amend the equipment provided as security for the loan.
Patriot has since refinanced a portion of equipment originally financed by Riverland Bank at their Elk
River facility with Central Minnesota Development Company on behalf of the SBA. As a requirement of
the refinancing, the SBA has required that Patriot obtain the EDA's consent to subordinate its security
interest in all equipment owned by Patriot located in Elk River to the SBA and Riverland and thereby
have a 3' lien position in such equipment. The EDA will continue to have a 2' lien position subordinate
to Riverland in all other equipment at the facility.
Financial Impact
None
Attachments
■ Amendment to the Loan Agreement
■ Amendment to the Security Agreement
■ UCC Filing
• Resolution
IIIEIEI 11
NATURE
FIRST AMENDMENT TO LOAN AGREEMENT
(Microloan)
FIRST AMENDMENT TO LOAN AGREEMENT ("Agreement") is made effective as of
2016, by and between PATRIOT CONVERTING, INC., a Minnesota corporation
(`Borrower"), and the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK
RIVER, a public body corporate and politic of the State of Minnesota ("Lender").
RECITALS
A. The Borrower and the Lender are parties to that certain Loan Agreement, dated as
of May 5, 2016 (the "Loan Agreement") whereby the Lender agreed to provide a loan to the
Borrower pursuant to its microloan program;
B. As security for the loan, the Lender required that the Borrower provide a first lien
security interest in certain equipment acquired with the proceeds of the loan;
C. The Borrower had requested that the Lender agree to amend the equipment
subject to the first lien security interest to reflect that the Borrower will use the loan proceeds to
purchase different equipment than originally anticipated; and
D. The Lender has agreed to the Borrower's request on the condition that the Loan
Agreement be amended as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, it
is hereby agreed as follows:
1. Exhibit A to the Loan Agreement is amended and restated as set forth in Exhibit
A attached hereto.
2. Paragraph C of the Loan Agreement shall be amended and restated as follows:
C. A Security Agreement, as amended by the First Amendment to Security
Agreement and all supplements and amendments thereto, securing the Note
("Security Agreement"). The Security Agreement is of even date herewith, is
executed by the Borrower, in favor of the Lender, as secured party, and provides a
first lien security interest in the equipment acquired by the Borrower with the
proceeds of the Loan and a second lien security interest in all other equipment of
the Borrower located in Minnesota currently owned or hereafter acquired by the
Borrower (the "Equipment");
3. Except as set forth herein, the Loan Agreement shall otherwise continue in full
force and effect, in accordance with its terms.
4. The Borrower shall pay all costs associated with the preparation of this
Amendment, the First Amendment to Security Agreement, amended UCC filing statements, and
filing amended UCC filing statements with the Minnesota Secretary of State.
487829v2 EL185-39
Signature Page to First Amendment 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.
PATRIOT CONVERTING, INC.
By:
Michael Stilwell
Its: Vice President
S-1
487829v2 EL185-39
EXHIBIT A
Equipment List
Item
Description
Purchase Price
Status
45-0902-9
Track & Trolley System #2
$38,941.00
7246 -TT
-21374
Communication Closet Rebuild
$35,000.00
TBD
21375
Equipment Move & Relocate
$25,000.00
NA
-21380
Pits & Concrete
$25,000.00
NA
Doll
$3,500.00
BD
Iower
Cascades Clam
$24,000.00
BD
ane
Semi Trailers
35,000.00
BD
ane
2 Semi Trailers
$35,000.00
TBD
A-1
487829v2 ELI 85-39
Signature Page to First Amendment 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
En
Name:
Its: President
By:
Name:
Its: Executive Director
S-2
487829x2 EL185-39
FIRST AIWIINDAIENT TO
an) RIT I' AGREEN[ENT
This FIRST AMEND
be effective
O oration
LK R (Gran or") and —the E' SECURITY
CO
AGREE,
IVER (the "Secured p y o OMIC DEVEO p CONVERTElVT (�� endment") is made to
MENS AUTHORITy OF T Minn
HE CITY
A. RECITALS
microloan pro On May 5, 2016, the Sec
&'am; tired p
arty prOvided a loan to the Grantor
B. As security for pursuant to its
Secured P
certain
the SeSecurityAgreement
a fi st�lien e�'veoas O�Ma antor and �e
the Loan u ' Y S 20 Secure
, ntyinterest ' Ce 16 "Sec d P
In certain (the Security arty entered into that
C equipment Agreement') Providing
securing The Grantor har acquired with the pros
g the loan from the se eVp sted that the S eeds of
loan proceeds to purchase diff t arty to the ecured P y allow equi Grantor to w it to
lenient than origin 0 reflect that the B amend the collateral
D. The Grantor agecured Party
yanticipat�. and Use will use the
at'tY have agreed
this to
NOW THEREFORE amend the description of the
Amendment, the parties 'ag� nisi
er Won of the above recitals
1 Exhibit,Se and the promises set forth in
in Exhibit A attached h ° S°0uritY Agreement is amended and r
follows: Paragra the Se restated
est as set forth
Security
Agree
1. Ment is
liabilityONIONS. amended
now agation o Obligations„ and restated as
f ev means collectively each debt,
limitation rli y typeand
, Grant
amend r ah, gat onsafte owe created nature which
th the Grant,, P "LoOr may
an anmentthe Securedo art O chid ng without
replaceme� ehents an
at is of even date ), and the Prom. men t, and any
existing or, ' and substi with and 'ssory note of
here
or to bece created or arisin tutions therefor all amendments,
performam ' absolute or co' and whether dir )' Whether now
is at any tir of the foregoin contingent °r indirect, due
Secured 4holesC7nded, sett asi ani such payin
and the repayment or
Ole or in part indeanor recov ed frentom
or m
Y bankruptcy,
from o�pa by
487824v2 ELIg5_39n�ptcy, insorr
1 ncy, or
similar proceeding instituted by or against the Grantor or any other
guarantor of any Obligation, or otherwise, including but not limited to all
principal, interest, fees, expenses and other charges.
3. The Borrower agrees to provide serial numbers for the new equipment
within 20 days of the date hereof.
4. Except as set forth herein, the Security Agreement shall otherwise
continue in full force and effect, in accordance with its terms.
[Signature Pages follow]
2
487824v2 ELI 85-39
7824-2 El 185_30
�o "'ITNESS �'NEREOF
S-1
the Parties have executed this Agree
Ment
as of the date first
pOT CO�ERTIl'G' INC'.:
ATR
a Mu>nesot c aRo I1VG, INC,
By:
Its:
Address:
Patriot Cone
A g8Milce Stil eg Inc.
ll
Elk Rave dustIal Blvd
55330
Filing Number: 914101800079
Date: 11/082016
Time: 12:23 PM
STATE OF MINNESOTA
Office: Office of the Minnesota
Secretary of State
UCC3 - Collateral Restate - UCC Financing Statement
ORIGINAL FILING NUMBER: 890767100108
ORIGINAL FILING DATE: 06/03/2016
RETURN ACKNOWLEDGEMENT TO:
Capitol Lien Capitol Lien Records & Research Inc
1010 N Dale Street
Saint Paul, MN 55117
AUTHORIZING PARTY
ORGANIZATION'S NAME
Economic Development Authority of the City of Elk River
COLLATERAL
Pursuant to the Security Agreement, dated as of May 5, 2016, as amended from the Debtor to the Secured Party, the Debtor has
pledged and granted to the Secured Party all right, title and interest in and to the equipment listed on Exhibit A attached hereto.
This filing represents a purchase money security interest from the Debtor to the Secured Party in and to the equipment listed on
Exhibit A attached hereto.
ADDITIONAL FILER REFERENCE DATA: Elk River Patriot Converting Project
UCC FINANCING STATEMENT AMENDMENT
FOLLOW INSTRUCTIONS
A. NAME S PHONE OF CONTACT AT FILER (optional)
Kim Conley (612-337-9268)
kganley@ken nedy-graven,com
Kennedy & Graven, Chartered (JSB)
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
L
890767100108
s.
J
SPACE
In the REAL
USE
Effectiveness of the Financing Statement Nentlged above Is terminated with respect to the security Intereat(s) of Secured Party authorizing this Termination
Statement
3. Q ASSIGNMENT (full or penial): Provide name of Assignee In item 7a or 7b, gad address of Assignee In Ilam 7c ara name of Assignor In Item 0
For partial assignment, complete Items 7 and D and also Indicate affected collateral In Item e
4. ❑ CONTINUATION: Effectiveness of the Financing Statement Identified above with respect to the security Intereet(s) of Secured Party authorizing this Continuation Statement Is
continued for the additional period provided by applicable low
5.F-1 PARTY INFORMATION CHANGE:
AND Check aria of these three Duxes to:
OR
71b. INDIVIDUAL'S SURNAME
INDIVIDUAL'S FIRST PERSONAL NAME
INDIVIDUAL'S ADDITIONAL NAME(S)ANITIAL(S)
SUFFIX
7c. MAILING ADDRESS
CITY
STATE
POSTAL CODE
COUNTRY
e. V] COLLATERAL CHANGE: bag check one of mesa four boxes: ❑ADD collateral U DELETE collateral VJ RESTATE covered collateral IJ ASSIGN collateral
Indicate collateral:
Pursuant to the Security Agreement, dated as of May 5, 2016, as amended from the Debtor to the Secured Party, the Debtor
has pledged and granted to the Secured Party all right, title and interest in and to the equipment listed on Exhibit A attached
hereto. This filing represents a purchase money security interest from the Debtor to the Secured Party in and to the
equipment listed on Exhibit A attached hereto.
9. NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS AMENDMENT: Provide only gag name (go ergo) (name of Assignor, If this Is an Assignment)
If this Is an Amendment Authorized by a DEBTOR, check here F-1 and pmttlde name of authorizing Debtor
Economic Development Authority of the City of Elk River
OR_...._.......... .......... o-.,,..r.,�..�...,., .,...�
10.OPTIONAL FILER REFERENCE DATA:
Elk River Patriot Converting Project
Intematlonal Assoclatlon of Commercial Administrators IIACA)
FILING OFFICE COPY — UCC FINANCING STATEMENT AMENDMENT (Form UCC3) (Rev. 04/20111)
UCC3 — Miscellaneous — UCC1 Subordination
ORIGINAL FILING NUMBER: 890767100108
ORIGINAL FILING DATE: June 3, 2016
RETURN ACKNOWLEDGEMENT TO:
Donna Spah
Central Minnesota Development Company
1885 Station Parkway NW, Suite A
Andover, MN 55304
AUTHORIZING PARY:
Organization Name
Economic Development Authority of the City of Elk River
SUBORDINATION:
See Exhibit A
EXIIIBIT A
To
UCC3- Financing Statement Amendment
Naming
The Economic Development Authority of the City Elk River as Authorizing Party
And
Central Minnesota Development Company, a Minnesota non-profit corporation as Filer
The Economic Development Authority of the City Elk River as secured parry hereby subordinates its Secretary
of State Minnesota UCC 1 Financing Statements identified as follows:
Filing Number: 890767100108 Dated 06/03/2016
The Debtor on the above UCCI filing is Patriot Converting, Inc., a Minnesota corporation.
The subordination shall be to a UCC 1 Financing Statement dated March 16, 2016 Filing Number
940984900027with Central Minnesota Development Company, a Minnesota non-profit corporation as Secured
Party and Patriot Converting, Inc. Debtor AND three UCCI Financing Statements with Riverland Bank, Jordon,
MN as Secured Party and Patriot Converting, Inc. as Debtor.
The Riverland Bank UCCI Financing Statements to be Subordinated are Minnesota Secretary of Filing
Numbers:
901542500020 original filing date 09/12/16;
901541000022 original filing date 09/12/16; and
893974300027 original filing date 06/30/16, respectfully.
The Authority's Executive Officer is authorized to execute the appropriate UCCI Financing Statement
Amendment documents necessary to effect the subordination above described.
UCC3 — Miscellaneous — UCCI Subordination
ORIGINAL FILING NUMBER: 890767100110
ORIGINAL FILING DATE: June 3, 2016
RETURN ACKNOWLEDGEMENT TO:
Donna Spah
Central Minnesota Development Company
1885 Station Parkway NW, Suite A
Andover, MN 55304
AUTHORIZING PARY:
Organization Name
Economic Development Authority of the City of Elk River
SUBORDINATION:
EXHIBIT A
To
UCC3- Financing Statement Amendment
Naming
The Economic Development Authority of the City Elk River as Authorizing Party
And
Central Minnesota Development Company, a Minnesota non-profit corporation as Filer
The Economic Development Authority of the City Elk River as secured party hereby subordinates its Secretary
of State Minnesota UCCI Financing Statements identified as follows:
Filing Number: 890767100110 Dated 06/03/2016
The Debtor on the above UCCI filing is Patriot Converting, Inc., a Minnesota corporation.
The subordination shall be to a UCC1 Financing Statement dated March 16, 2016 Filing Number
940984900027with Central Minnesota Development Company, a Minnesota non-profit corporation as Secured
Party and Patriot Converting, Inc. Debtor AND three UCCI Financing Statements with Riverland Bank, Jordon,
MN as Secured Party and Patriot Converting, Inc. as Debtor.
The Riverland Bank UCC 1 Financing Statements to be Subordinated are Minnesota Secretary of Filing
Numbers:
901542500020 original filing date 09/12/16;
901541000022 original filing date 09/12/16; and
893974300027 original filing date 06/30/16, respectfully.
The Authority's Executive Officer is authorized to execute the appropriate UCC 1 Financing Statement
Amendment documents necessary to effect the subordinations above described.
Filing Number; 914101800079
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;
Item
Description
Status
Q-15-0902-9
rack & TrolleySystem #00
7246 -TT
Q-21374
Communication Closet R0
V34
7450FE15MF0404
Q-21375
ui ment Move & Relo0
A
21380
its & Concrete
0
A
Teton
Roll Pusher
0
-3530
3542
0 ota
Power Dolly
$3,500.00
15700
0 ota
Cascades Clamp
$24,000.00
2110139TI
Great Dane
2 Semi Trailers
$35,000.00
1GRAA06295G334431
l GRAA06256SG334418
473952YJSB EL185-39
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION NO.
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 obtained additional financing for additional equipment at its
facility in the City of Elk River from the Central Minnesota Development Company on behalf of
the United States Small Business Administration (the "SBA"). As a requirement of the
additional financing, the SBA has required that the Debtor obtain the EDA's consent to
subordinate its security interest in equipment owned by the Debtor to the SBA and thereby have
a 3`d lien (rather than 2nd lien) position in such equipment.
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 A eement.
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 cavy out, on behalf of the EDA, the FDA'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.
496287v11SB ELI 85-39
Approved by the Board of Commissioners of the Economic Development Authority of the
City of Elk River this 21st day of March, 2017.
President
ATTEST:
Executive Director
4962870 7SB ELI 85-39