4.5. SR 07-16-2018 EOty1� ,.,�� Request for Action
River
To Item Number
Mayor and City Council 4.5
Agenda Section Meeting Date Prepared by
ConsentJuly 16, 2018 Amanda Othoudt,EDD
Item Description Reviewed by
Jobs Incentive 1Vlicroloan Application for Orluck Cal Portner, City Administrator
Industries, Inc. Reviewed by
Action Requested
Approve,by motion, a resolution approving the Jobs Incentive 1Vlicroloan and authorize the execution of
the microloan documents for Orluck Industries,Inc.
Background/Discussion
The city received an application from Orluck Industries, Inc. for a $200,000 Jobs Incentive Nlicroloan. They
are an aerospace manufacturer of seating, cargo, sensors,propulsion, and engine parts. They also provide
medical,locomotive, and manufacturing industry services and were recently awarded $15 million in long-term
contracts. Their annual income is $3 million and engineering and prototype costs are $500,000. The
requested loan is to fund the initial investment to bring the new parts into production. They employ 54 with
a total bi-weekly payroll of$115,000.
The Economic Development Authority held a public hearing earlier this evening to invite comments from
the public.
The Joint Finance Committee reviewed the application,financials and other supporting information and
determined the applicant met the fundamental goals of the policy and recommended approval of the loan.
Orluck commited to creating 10 new jobs over the next two years and retaining 54 existing jobs for the
project and will be required to meet the requirements of the city's Business Subsidy Policy for the creation of
new jobs, as well as a 5-year location requirement.
Financial Impact
The balance of the Jobs Incentive 1Vlicroloan Fund account is $224,100. The loan request of$200,000 is
proposed to be amortized over 7 years at 3%interest. Funds in this account continue to revolve and
payments are received regularly.
The EDA will receive security interest on two pieces of equipment taking first collateral position on the Ziess
Contura G2. This is a piece of inspection equipment with a fair market value of$100,000. Orluck received
confirmation that their Canadian lender Ibex will release their 2nd priority status on the Okuma Genos
M560V financed by the Bank of America. This piece of equipment has a fair market value of$145,000 and
EDA would have a second position on this collateral.
The Elk River Vision
A PehoMing community 2a itb revolutionary and spirited resourcefulness, exceptional POWERED By
service, and community engagement that encourages and inspires prosperity INAWRE1
Attachments
■ Resolution
■ EDA Staff Report Duly 16, 2018)
■ Joint Finance Committee Meeting Packet Uune 26, 2018)
City of
Elk City of Elk River
Wver City Council
Resolution 18-
A Resolution of the City Council of the City of Elk River Approving Loan
Agreement for Orluck Industries Project
WHEREAS, the City Council (the "Council") of the City of Elk River (the "City")
has received a proposal from Orluck Industries, Inc., a Minnesota corporation (the
"Borrower") that the Economic Development Authority of the City of Elk River (the
"EDA") enter into Loan Agreement (the "Loan Agreement") and related documents in
connection with a loan to the Borrower in the amount of$200,000 (the "Loan") pursuant to
the FDA's NEcroloan Program (the "Program").
WHEREAS, the EDA after a duly noticed public hearing, approved the Loan and
the Loan Agreement on this same date and a copy of the Loan Agreement is on file with the
City Clerk.
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Elk
River as follows:
Section 1. Business Subsidy.
1.01. The Loan constitutes a business subsidy within the meaning of Minnesota
Statutes, Section 116J.993 to 116J.995, as amended (the `Business Subsidy Act"), and the Loan
Agreement includes a "business subsidy agreement" as required under the Business Subsidy
Act.
1.02. The City has adopted a Business Subsidy Policy (the "Subsidy Policy'), which
sets the general criteria for all types of subsidies granted by the EDA, all as required under the
Business Subsidy Act.
1.03. On the date hereof, the EDA held a public hearing on the Loan in accordance
with the Business Subsidy Act.
Section 2. Consent.
2.01 In accordance with Section 116J.994, Subd. 3(d) of the Business Subsidy Act,
the City hereby approves the Loan Agreement and the business subsidy agreement provided
therein and consents to the EDA entering into the Loan Agreement and related documents
with the Borrower.
2.02 The City hereby approves the Loan in accordance with the Loan Agreement in
substantially the form on file with the City's Economic Development Director together NATUREJ
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 of the EDA prior to executing said documents and the City further; 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.
Approved by the City Council of the City of Elk River this 16th day of July,2018.
Passed and adopted this day of 2018.
John J. Dietz,Mayor
ATTEST:
Tina Allard, City NATUREI
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
Request for Action
To
Economic Development Authority
Item Number
4.1
Agenda Section
General Business
Meeting Date
July 16, 2018
Prepared by
Amanda Othoudt, EDD
Item Description
Jobs Incentive Microloan Application for Orluck
Industries, Inc.
Reviewed by
Cal Portner, City Administrator
Reviewed by
Action Requested
1. Open public hearing to consider comments on the proposed microloan application for Orluck
Industries, Inc. in the amount of $200,000.
2. Following the public hearing, the EDA is asked to consider adoption of the attached resolution
approving the Jobs Incentive Microloan. The EDA may recommend approval, approval with
conditions, or denial of the request to the City Council.
The City Council will review the recommendations and any comments generated from the public
hearing and formally act on the request at their regular meeting later this evening.
Background/Discussion
The city received an application from Orluck Industries, Inc. for a $200,000 Jobs Incentive Microloan.
Orluck Industries, Inc. is an aerospace manufacturer of seating, cargo, sensors, propulsion, and engine
parts. They also provide medical, locomotive, and manufacturing industry services.
Orluck was awarded $15 million in long-term agreements. Their annual income is $3 million and
engineering and prototype costs are $500,000. The requested loan is to fund the initial investment to
bring the new parts into production. The company currently employs 54 people with a total payroll of
$115,000 bi-weekly.
The Joint Finance Committee reviewed the application, financials and other supporting information for
the loan request and has determined that the applicant met the fundamental goals of the policy and
recommended approval of the loan due to Orluck committing to creation of 10 new jobs over the next
two years and retaining 54 existing jobs as a result of the project. Orluck will be required to meet the
requirements of the city’s Business Subsidy Policy for the creation of new jobs, as well as a 5-year
location requirement.
A public hearing must be held to invite comments for any business subsidy in an amount greater than
$150,000.
Financial Impact
The balance of the Jobs Incentive Microloan Fund account is $224,100. The loan request of $200,000 is
proposed to be amortized over 7 years at 3 percent interest. Funds in this account continue to revolve
and payments are received regularly.
The EDA will receive security interest on two pieces of equipment taking first collateral position on
the Ziess Contura G2. This is a piece of inspection equipment with a fair market value of $100,000.
Orluck received confirmation that their Canadian lender Ibex will release their 2nd priority status on the
Okuma Genos M560V financed by the Bank of America. This piece of equipment has a fair market value
of $145,000 and EDA would have a second position on this collateral.
Attachments
Joint Finance Committee Meeting Packet (June 26, 2018)
Resolution
Loan Documents
Meeting
of the
Joint Finance
Committee
AGENDA
Tuesday, June 26, 2018
7:30 a.m.
Elk River City Hall
Upper Town Conference Room
1. CALL MEETING TO ORDER
2. CONSIDER AGENDA
3. CONSENT AGENDA
Considered to be routine and noncontroversial by the Economic Development Finance Committee and will be approved by one
motion. There will be no separate discussion of these items unless a Committee member, staff member, or citizen so requests, in
which case the item will be removed from the consent agenda and considered under the regular agenda.
3.1 January 30, 2018, Minutes
3.2 Revolving Loan Fund Balance Report
4. GENERAL BUSINESS
4.1 Jobs Incentive Microloan Application for Orluck Industries, Inc.
5. ANNOUNCEMENTS
6. ADJOURNMENT
Meeting Protocol
No sidebar discussions
No interruptions
State your concern
Ensure you understand
Don’t take things personally
Adhere to time limits
Come prepared
Ensure all are heard
Meeting of the Elk River Joint Finance Committee
Held at the Elk River City Hall
Tuesday, January 30, 3018
Members Present: Larry Toth, Ryan Hardin, Dan Tveite, Jim Gromberg, Bryan Provo, Chad
Vitzthum, Nate Ovall, Rhonda Magnussen, and Michelle Eder
Members Absent: None
Staff Present: Amanda Othoudt, Economic Development Director and Colleen Eddy,
Economic Development Specialist
Others Present: Mikaela Huot, Springsted Inc.; Pat Briggs, Applicant
1. Call Meeting to Order
Pursuant to due call and notice thereof, the meeting of the Elk River Joint Finance
Committee was called to order at 7:32 a.m.
2. Consider Agenda
Motion by Gromberg and seconded by Hardin to approve the January 30, 2018, Joint
Finance Committee agenda.
Motion carried 9-0.
3. Consent Agenda
Motion by Eder and seconded by Toth to approve the January 30, 2018, Joint Finance
Committee consent agenda:
3.1. July 25, 2017, Joint Finance Committee meeting minutes.
3.2. Revolving Loan Fund Balance report.
Motion carried 9-0.
4.1 Tax Increment Financing Applications – Jackson Hills Residential Suites and The
Elk River Lodge Suites, LLC
Ms. Othoudt presented the staff report. Mikaela Huot from Springsted presented the But
For analysis. Members discussed various aspects of the application.
Motion by Provo and seconded by Magnussen to recommend approval of
establishing Tax Increment Financing District 25 as outlined in the staff report.
Motion carried 7-2 with Hardin and Toth opposing.
5.1 Announcements
There were no announcements.
6. Adjournment
There being no further business, Mr. Tveite adjourned the meeting at 8:47 a.m.
Minutes prepared by Colleen Eddy.
_____________________
Tina Allard, City Clerk
___________________
Amanda Othoudt, Economic Development Director
ELK RIVER ECONOMIC DEVELOPMENT AUTHORITYMICRO LOANSCurrent Current66/14/18Loan Loan Interest Term Monthly Principal Borrower Date Amount Rate (Months) Payment Outstanding CurrentDie Concepts 6/3/2016 $185,200 2.00% 60 $936.90 $169,798.99 YHeritage Millwork 12/22/2016 $100,000 3.00% 60 $965.61 $87,663.29 YPatriot Converting 5/5/2016 $200,000 3.00% 60 $3,593.74 $120,207.78 YPreferred Powder 10/1/2013 $100,000 3.00% 60 $967.61 $57,052.59 YRalphies 9/10/2013 $74,999 3.00% 120 $724.20 $41,724.24 Y TOTAL MICRO LOANS $476,446.89 Micro Loan Fund 240Distinctive Iron 3/3/2015 $126,000 2.03% 60 $874.72 $100,049.16 YScott Morrell LLC 8/6/2015 $200,000 2.00% 60 $1,011.77 176,240.45 Y$276,289.61 DEED Jobs Incentive Loan Fund 242FFund Cash Balances 6/14/18:Micro Loan Fund - 240 $728,192.13State DEED Jobs Incentive - 242 $224,100.00
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity
Request for Action
To
Joint Finance Committee
Item Number
4.1
Agenda Section
General Business
Meeting Date
June 26, 2018
Prepared by
Amanda Othoudt, EDD
Item Description
Review Jobs Incentive Microloan Application for
Orluck Industries, Inc.
Reviewed by
Cal Portner, City Administrator
Reviewed by
Action Requested
Consider and provide a recommendation regarding a Jobs Incentive Microloan application for Orluck
Industries, Inc.
The Finance Committee may recommend approval, approval with conditions, or denial of the request.
Background/Discussion
The city received an application from Orluck Industries, Inc. for a $200,000 Industrial Incentive
Microloan.
Orluck Industries, Inc. is an aerospace manufacturer of seating, cargo, sensors, propulsion, and engine
parts. They also provide medical, locomotive, and manufacturing industry services.
Orluck was awarded $15 million in long-term agreements. Their annual income is $3 million and
engineering and prototype costs are $500,000. The requested loan is to fund the initial investment to
bring the new parts into production.
The company currently employs 54 people with a total payroll of $115,000 bi-weekly.
Analysis
Microloan Purpose: To assist existing business expansion and attract new businesses whose operations
will expand the local economy through job retention/creation and maintain/grow the tax base.
Orluck Industries, Inc. has committed to retaining 54 jobs and creating 10 new positions over the next two years with an
average wage of $24.65/hr.
Loan Amount: Up to $200,000 of secondary financing not to exceed 20% of the project cost.
The total project cost equals $500,000. The applicant requested $200,000 from the city representing 40% of the total
project costs. The Initiative Foundation has committed to providing $200,000 in project financing representing 40% of the
total project costs. The applicant indicated they will provide $100,000 as an equity contribution to the project representing
the remaining 20%.
Total secondary funding exceeds the threshold of 20% of the project costs per the policy.
The Finance Committee should consider the type of request and whether the applicant meets the
fundamental goals of the policy.
Equity: Must have private-sector commitments for 50% of the project cost. Borrower must provide 10%
or more of project financing.
The Initiative Foundation has committed to 50% of the project financing. The borrower will contribute $100,000 or 20%
of the project financing.
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 River Business Subsidy Policy for the creation of new jobs, as well as a 5-
year location requirement.
By retaining 54 jobs and creating 10 new jobs with an average wage of $24.65/hr. the applicant is eligible to receive the
maximum loan amount of $200,000.
Summary
The applicant is eligible for a loan of $200,000 meeting the equity, wage, and job criteria requirements
and the proposed fund uses are eligible expenses.
Financial Impact
The balance of the Jobs Incentive Microloan Fund account is $224,100.
The Initiative Foundation has agreed to partner with the city to leverage funds for the project through an
SBA guarantee loan of $200,000. A direct loan from the EDA of $200,000 could cover the remaining
$400,000 request.
Orluck is proposing to give the EDA collateral positions in two pieces of equipment and pay the
remaining balance of their loan with US Bank Equipment Financing for the Ziess Contura G2. This is a
piece of inspection equipment with a fair market value of $100,000. EDA can place a UCC Filing for this
equipment taking the first collateral position.
Orluck has asked Canadian lender Ibex to release their 2nd priority status on the Okuma Genos M560V
financed by the Bank of America. This piece of equipment has a fair market value of $145,000 and EDA
would have a second position on this collateral.
Attachments
Microloan Application & Supporting Materials
Corporate and Personal Financial Information (distributed at the meeting)
Equipment Appraisal (distributed at the meeting)
13422 Business Center Drive
Elk River, MN 55330
763-633-6005
June 8, 2018
This letter is intended to serve as our commitment to comply with the prevailing wage
requirements of the Elk River EDA and pay our employees no less than $15.00 per hour.
In the event of a successful microloan program that will help with the future growth of our
company, we also commit to add ten new employees to our company before the end of June 2021.
Thank-you for the opportunity to be a small part of what makes Elk River a great community in
which to live and work.
Best Regards!
Mark Orluck
Owner – Orluck Industries
MARK ORLUCK
1008 44th St NE, Buffalo, MN 55313 – 612-270-5570
morluck@orluckind.com
I am sixty years old, married thirty-seven years, with two children and seven grandchildren. I am a highly
motivated person who values fairness, kindness and compassion. I have been a successful business
owner for twenty years in the field of manufacturing.
EXPERIENCE
DATES FROM 1978 – TO 1984
MACHINIST – CHECKER MACHINE
DATES FROM 1985 – TO 1992
MACHINIST – SUPERIOR TOOL
DATES FROM 1992 – TO 1994
SHOP SUPERVISOR – IDEAL AREOSPACE
DATES FROM 1994 – TO PRESENT
BUSINESS OWNER – ORLUCK INDUSTRIES INC.
EDUCATION
ANOKA TECHNICAL COLLEGE
Machinist/Toolmaker Training – 2 year Degree
2
SKILLS
• Manufacturing Director
• Estimator
• Excellent Leadership Skills
• Strong Work Ethic. Loyal & Diligent
• Excellent Communication Skills
ACTIVITIES
I love Golf, drawing and painting, fishing and just relaxing with my wife Cheryl.
I am active in my church leading small groups.
I volunteer at the Food Shelf in my community.
JEFF ORLUCK
6570 Chesshire Lane N, Maple Grove, MN 55311 – 612-719-4960
jorluck@orluckind.com
I am sixty-two years old, married forty-three years, with four children and eight grandchildren. I am a
spiritual person who lives in a practical way, with values of integrity, trust, loyalty and kindness. I love
my family. I love to work. I love the arts. I have a varied work experience that provides a broad
understanding of relationships, business and finance and work successfully as a servant-leader in almost
any setting.
EXPERIENCE
DATES FROM 1971 – TO 1980
Employed in various positions in the food service industry.
DATES FROM 1980 – TO 1987
PHYSICAL PLANT DIRECTOR, NORTH CENTRAL BIBLE COLLEGE
Managed all Maintenance, Landscaping, Janitorial & Security of this four-year under-graduate college.
DATES FROM 1987 – TO 1992
DIRECTOR OF BUSINESS & PLANT, NORTH CENTRAL BIBLE COLLEGE
Managed all non-academic departments of this four-year under-graduate college, including accounting,
foodservice, housing, budget management, business administration and the physical plant.
DATES FROM 1992 – TO 2003
PASTOR, NORTHWEST CHRISTIAN FELLOWSHIP
Served as Senior Pastor wit many duties in this small non-denominational church of less than 100
adults. Led this congregation for twelve years and oversaw its closure in 2003 when it was determined
that it could no longer sustain itself.
DATES FROM 1992 – TO 2003
PARTNER/MANAGER, STARBUCKS
From pastoring, I moved into the marketplace and thoroughly enjoyed the world of coffee as a barista
and then as a store manager, successfully opening the second-floor store in the Mall of America.
DATES FROM 2003 – TO 2014
ADMINISTRATIVE DIRECTOR, SOURCE MN, INC.
Managed all finance and HR as the business administrator for this non-profit organization that works
with homeless youth and victims of sex—trafficking. Full-time position until 2009 when the Great
Recession hit the non-profit world and Source was forced to lay-off all employees who did not raise
their own support. Continued part-time until 2014 in the same capacity.
DATES FROM 2009 – TO CURRENT
OWNER, SMALL BUSINESS BOOKS & SERVICES
Started this business in 2009 when I moved to a part-time position with Source MN. Started with two
2
clients and an income of $2,000/month to 20 clients and an income of $10,000/month. I am not a CPA. I
provided bookkeeping services for Small Businesses and Non-Profit Organizations, including AR, AP,
Payroll, Cash Management and Regulatory Compliance. Orluck Industries was a client beginning in 2014
and soon became my largest customer, allowing me to hire additional employees/contractors to grow
the business.
DATES FROM 2016 – TO CURRENT
DIRECTOR OF FINANCE & HR, ORLUCK INDUSTRIES. INC.
Began transitioning into employment with Orluck Industries in 2016 and gradually moved to full time by
the end of 2017 as I turned over my client load to others. My first experience in manufacturing, which
has been a fun and demanding learning experience.
EDUCATION
COOPER HIGH SCHOOL
Graduated 1973.
COMPASSION BIBLE SCHOOL
Unaccredited bible school focused on biblical studies and life application. Graduated 1975
NORTH CENTRAL BIBLE COLLEGE
Took various classes as an employee. No degree.
SKILLS
• Working Knowledge and Practical Application of
Business Finance and Accounting
• Experience in Human Resources
• Strong Work Ethic. Loyal & Diligent
• Excellent Communication and Public
Speaking Skills
ACTIVITIES
Many and varied roles of service in the church world:
Teaching adults, teens and children
Event planning and coordinating
Writing and directing comedy and other public performances
Serving the homeless and marginalized in urban settings
CURRICULUM VITAE
Peter. Stephen. Orluck
23035 Turquoise Street, Saint Augusta MN, 56301.
Mobile-+917899705763-Email Id: porluck@Orluckaero.com
Objective: To work with an organization where in my professional experience and expertise can be utilized to achieve the organizational growth. Continuously learning and applying new things to achieve excellence in the future.
Experience:
• Machinist from 1994-2005. Worked in precision machining. CAD/CAM programming.
• Started offline programming as a process in my company.
• 2005-2007 worked as a project manager
• Lead team to implement ERP solution based in SQL.
• Lead implementation and successful registration to AS9100 with no prior quality system
in place.
• Implemented various HR programs: Employee handbook,401k plan, Structured Vacation
Pay, flexible start times.
• Lead business into Aerospace industry. Zero aerospace to 80% aerospace.
• 2007-till now President/ CEO and Board Member at Orluck Industry US /Orluck
Aerospace INDIA.
Educational Qualification:
Year of
passing Performance College/University 2005 First Class Bachelor's in science from St. Cloud State University, MN, USA.
Personal Profile:
Name : Peter Stephen Orluck
Father's Name : Mark Stephen Orluck
Date of Birth : 27-April-1981
Gender : Male
Marital status : Married
Nationality : USA
Languages known : English, Spanish.
Passport : Yes I, Peter, hereby declare that the above information is true to the best of my knowledge & belief. DATE: PLACE: With Regards
Peter Stephen Orluck
Jean Carlson
____________________________________________________________________________________________
Highlights of Qualifications
• Human Resource and Financial Experience wrote employee handbooks and policies performed new employee
orientation managed benefits plans processed payroll, quarterly payroll taxes sales and use tax filing accounts receivables
and payables performed professional collection calls bank account reconciliation SHRM certified
• Training Program Development & Delivery wrote knowledgebase articles prepared training programs provided
continued education developed learning tools, reference documents and presentation materials traveled nationwide to
provide training to customers
• Employee Development & Team Building interviewed, hired and trained employees established realistic
expectations and objectives for measuring developed both short and long-term training plans for ongoing improvement
scheduled regular meetings with individuals to discuss progress and challenges encouraged openness, candor and honesty
• Customer Service Skills & Interpersonal Ability communicated effectively and established excellent rapport
with clients via phone and e-mail support served as liaison between cross functional departments answered questions related
to product use and installation managed 24 hour on-call programs
• Project Management developed and executed Technical Support implementation and ERP conversion plans managed
customer upgrade process developed departmental metrics and designed reports to measure led Y2K conversion effort core
team member for ISO9001 certification managed recall programs developed procedures to maintain service inventory
published status reports, project schedules and action item tracking coordinated system data entry
• Professional Improvement Skills developed automated labeling systems established management procedures for
ERP software, including full user training and support revised authorized service center protocol to include computerized tracking
and replenishing of consignment inventory developed procedures to maintain service inventory, set accurate reorder points and
monitor usage automatically skilled Crystal Reports and Access report writer
Career History
Orluck Industries, Inc. – Elk River, MN Director – Operations Jan 2016 - current Director – Administration Jun 2007-Jul 2014
JBT Machining – Ramsey, MN Office Manager Jul 2014-Jan 2016
Amplifon USA – Plymouth, MN Dec 2006-Jun 2007 Senior Credit Specialist
Core-Mark International – Plymouth, MN Apr 2006-Aug 2006 Assistant Credit Manager
Arrow Building Center – Big Lake, MN Mar 2004-Apr 2006 Accounts Receivable/Office
Roxio, Inc. – Maple Grove, MN (formerly Adaptec, Inc & Wild File, Inc.) Dec 1998-Apr 2003 Technical Support Manager
Mallinckrodt, Inc – Plymouth, MN (formerly NPB & Aequitron Medical, Inc.) Mar 1986-Dec1998 System Analyst, Integration Team, Global Service Administrator, Technical Support
Sperry Corporation – Roseville, MN Oct 1984-Jan 1986 Computer Test Technician References Available Upon Request
Jeff,
Since we have not had our loan committee meeting yet, I cannot issue a commitment letter. However,
listed below are the proposed terms and conditions for our transaction:
Borrower: Orluck Industries, Inc.
Amount: $200,000
Interest Rate: 7.00 % fixed
Amortization: 7 years
Payment: $3,020 monthly
Collateral: Junior lien on business assets
Guaranty: Mark Orluck
Insurance: Property and Life
Contingency: SBA approval
If you have any questions regarding this matter, please contact me.
Sincerely,
Dan Bullert
Business Finance Manager
Initiative Foundation
405 1st St. SE | Little Falls, MN 56345
Ph. (320) 631-2013 | www.ifound.org
529644v1 JSB EL185-56
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER
COUNTY OF SHERBURNE
STATE OF MINNESOTA
RESOLUTION NO. 2018-____
RESOLUTION APPROVING LOAN AGREEMENT AND RELATED DOCUMENTS
(ORLUCK INDUSTRIES 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 Orluck Industries,
Inc., a Minnesota corporation (the “Borrower”) that the EDA assist in financing operating costs and
investments associated with an expansion of the Borrower’s existing aerospace manufacturing
business located on certain real property in the City of Elk River, Minnesota (the “City”) in
anticipation of new long term contracts received by the Borrower by providing a loan to the
Borrower in the amount of $200,000 (the “Loan”) pursuant to the EDA’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:
Section 1. Business Subsidy.
1.01. The Loan constitutes a business subsidy within the meaning of Minnesota Statutes,
Section 116J.993 to 116J.995, as amended (the “Business Subsidy Act”), and the Loan Agreement
includes a “business subsidy agreement” as required under the Business Subsidy Act.
1.02. The City has adopted a Business Subsidy Policy (the “Subsidy Policy”), which sets the
general criteria for all types of subsidies granted by the EDA, all as required under the Business Subsidy
Act.
1.03. On the date hereof, the EDA held a public hearing on the Loan in accordance with the
Business Subsidy Act.
Section 2. Approval of Documents.
2.01. 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 providing a security interest in certain equipment, and a
personal guaranty from Mark Orluck, (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 EDA’s obligations
529644v1 JSB EL185-56
thereunder.
2.02. 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.
529644v1 JSB EL185-56
Approved by the Board of Commissioners of the Economic Development Authority of the
City of Elk River this 16th day of July, 2018.
President
ATTEST:
Executive Director
1
491713v1 EL185-46
LOAN AGREEMENT
(Jobs Incentive Microloan)
THIS LOAN AGREEMENT (“Agreement”) is made effective as of July 17, 2018, by and
between ORLUCK INDUSTRIES, INC., a Minnesota corporation (the “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. Borrower has applied to Lender for a Jobs Incentive Microloan Program loan in
the principal amount of $200,000.00 to assist with financing operating costs and investments
associated with an expansion of an existing aerospace manufacturing business located at 13422
Business Center Drive, Elk River, Minnesota (the “Loan Property”) in anticipation of new long
term contracts received by the Borrower.
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 by the Borrower 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 Borrower, in favor of the
Lender, as secured party, and provides a first or second lien security interest in equipment
owned by the Borrower (the “Equipment”); and
(iii) The personal guaranty of Mark Orluck, President of the Borrower (the
“Personal Guaranty”).
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 the Loan, to be advanced in a single disbursement as hereinafter provided, and evidenced
by the Note and secured by the Security Agreement, the Personal Guaranty and any other
security document required under this Agreement. The Loan proceeds will be used to help
financing operating costs and investments associated with an expansion of an existing aerospace
manufacturing business in anticipation of new long term contracts received by the Borrower.
Subject to the prepayment provisions set forth in the Note, the Borrower agrees to repay the
Loan by making all payments of principal, interest and any premium, penalty or charge that are
required to be made under the Note at the times and in the amounts provided therein
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2. Equipment and Security Interest. The Borrower has provided Lender a list of the
Equipment that shall be subject to the security interest in the Equipment, which is attached as
Exhibit A. The Security Agreement will provide Lender with a first priority security interest in a
portion of the Equipment and a second priority lien in a portion of the Equipment. Borrower
hereby consents to the Lender recording a UCC-1 Filing Statement with respect to all such
Equipment.
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 Agreement. Deliver to Lender the Security Agreement, together
with evidence that a UCC-1 Financing Statement has been or will be duly filed for
record.
(c) Personal Guaranty. Deliver to Lender the Personal Guaranty.
(d) Organizational Documents and Resolutions. Deliver to Lender copies of
the (i) articles of incorporation for the Borrower certified by the Minnesota Secretary of
State, (ii) a certificate of good standing for the Borrower issued by the Minnesota
Secretary of State; (iii) bylaws for the Borrower; and (iv) a certified resolution of the
Borrower authorizing the execution and delivery of this Agreement, the Note and any
other document to be executed by Borrower pursuant to this Agreement.
(e) 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.
(f) 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.
(g) Program Fee. Deliver to Lender the program fee of $2,000.
(h) A form of subordination from the Bank of Elk River subordinating its
interest in the Zeiss Contura Q2 Inspection Machine.
Lender may waive any of the above requirements in its sole discretion.
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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 Property. Lender and its respective representatives shall have at
all reasonable times the right to enter and have free access to the Loan Property and the right to
inspect the Loan Property and the Equipment.
6. Books and Records. Borrower agrees to maintain accurate and complete books,
accounts and records in regard to the Loan Property and the Equipment 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.
7. Encumbrances and Transfer. Other than a lease between the Borrower and its
landlord, 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 Borrower 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. The 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.
10. Miscellaneous Covenants of Borrower. Borrower covenants and agrees with
Lender that, without cost to Lender, Borrower will:
(a) Performance of Conditions. Promptly keep, perform and comply with all
of the terms, covenants and conditions to be kept and performed by Borrower, 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 under any
permit 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
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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
permits or agreements issued or made by the City or such other governmental bodies, and
any contractors under all contracts obtained or held by Borrower in connection with the
operation of the Borrower’s business.
(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 in
connection with any contracts, documents or agreements referred to herein without the
prior written approval of Lender.
(c) Performance 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. Pay all charges associated with the Loan, including, but not
limited to: (i) Lender’s attorneys’ fees; and (ii) filing fees of any instruments required
under this Agreement (collectively, the “Administrative Costs”) within 30 days of the
Lender providing written notice to the Borrower of Lender’s costs. Administrative Costs
shall be evidenced by invoices, statements or other reasonable written evidence of costs
incurred by the Lender.
(f) Default Notices. Provide Lender with a copy of any default notice
received by the Borrower 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. The Borrower represents that it 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 Zeiss Contura Q2 Inspection Machine listed in Exhibit A and a
“second priority” lien in the Okuma Genus M560V Machining Center (the “Machining
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Center”) 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 except for the senior
liens of the Machinery Finance Resources, LLC in the Machining Center.
11. Warranties. Borrower represents and warrants to Lender the following:
(a) The Borrower is a corporation duly formed, 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 and any other instrument required hereunder are within the powers
of the Borrower and have been duly authorized by all necessary corporate action on the
part of the Borrower. This Agreement and the Note and any other instruments required
hereunder have been duly executed and delivered and are the legal, valid and binding
obligations of the Borrower, legally enforceable against it.
(c) The execution and delivery of the Security Agreement is within the
powers of the Borrower and has been duly authorized by all necessary corporation action
on the part of the Borrower. The Security Agreement has been duly executed and
delivered and is the legal, valid and binding obligations of the Borrower enforceable in
accordance with their respective terms.
(d) No litigation, tax claims or governmental proceedings are pending or
threatened against the Borrower or the Loan Property, and no judgment or order of any
court or administrative agency is outstanding against the Borrower or the Loan Property
which would have a material adverse effect on Borrower or the Loan Property.
(e) Borrower has 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 will file all such returns and pay all such taxes for the current and
future years.
(f) All information, financial or other, which has been submitted by Borrower
and the personal guarantor in connection with the Loan is true, accurate and complete in
all material respects.
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.
13. Defaults. Each of the following shall constitute an Event of Default:
(a) If Borrower abandons the Loan Property.
(b) Bankruptcy, reorganization, assignment, insolvency or liquidation
proceedings, or other proceedings for relief under any applicable bankruptcy law or other
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law for relief of debtors are instituted by or against the Borrower and, if such proceedings
are instituted against either of the Borrower, an order, judgment or decree, without the
consent of Borrower appointing a trustee or receiver for the 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 unstayed for a period of 30 days.
(c) Any judgment, attachment, garnishment or other similar process is entered
against the Borrower or against any property or assets of the Borrower and is not
released, satisfied or discharged or bonded to Lender’s satisfaction within 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
terminated or modified by the City or such other governmental body and Borrower have
not taken the necessary steps to correct or cure the same within 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 the Borrower’s right to contest the same in accordance with the
provisions of the Security Agreement.
(f) A transfer which violates by Paragraphs 7 or 9 hereof occurs.
(g) If 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 to perform any
other obligation to be performed under this Agreement, the Note, the Security
Agreement, 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, and such failure continues beyond any applicable cure
period.
(h) 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.
(i) A default under 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;
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(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.
(ii) Borrower hereby constitutes and appoints Lender it’s 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; (B) 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 until such time
as the Note is paid in full;
(c) cancel this Agreement;
(d) bring appropriate action to enforce such performance and the correction of
such Event of Default;
(e) 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 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 Personal Guaranty, the
Security Agreement and any other security instruments.
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16. Default under Note and Security Agreement. The failure by Borrower to keep or
perform any of the terms, covenants and conditions to be kept or performed by either of them
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 the Borrower:
Orluck Industries, Inc.
12422 Business Center Drive
Elk River, Minnesota 55330
Attention: Jeff Orluck – Director of Finance and HR
If to Lender:
Economic Development Authority of the City of Elk River
13065 Orono Parkway
Elk River, Minnesota 55330
Attn: 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 Assigns. 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 same agreement.
22. Entire Agreement. 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
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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.
24. Business Subsidies Act.
(a) In order to satisfy the provisions of Minnesota Statutes, Sections 116J.993
to 116J.995, as amended (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 help an
existing business expand in the City, increase the tax base in the City and stimulate the
creation and retention of high-quality jobs. In consideration of the Business Subsidy
provided to assist with operating costs and investments associated with an expansion of
an existing aerospace manufacturing business in the City, the Borrower represents that it
will cause meet following goals (the “Goals”): the Borrower shall create 10 full-time
equivalent jobs in Elk River, Minnesota, at the Loan Property at an average hourly wage
equal to $15.00 per hour exclusive of benefits, or 150% of the state or federal minimum
wage exclusive of benefits, whichever is greater, by the two (2) year anniversary of the
date of closing on the Loan (the “Benefit Date”).
(b) If none of the Goals are met, the Borrower agrees to repay all of the
Business Subsidy to the EDA, 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 Benefit Date, 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 10 (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 Lender 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 Lender.
The Borrower agrees to file these reports no later than March 1 of each year commencing
March 1, 2019, and within 30 days after the deadline for meeting the Goals. The Lender
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agrees that if it does not receive the reports, it will mail 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 Lender 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 it will continue operations in the City for at least
5 years after the date of closing on the Loan. If the Borrower relocates operations outside
of the City at any time prior to the maturity date of the Loan, the Loan shall be
immediately due and payable in full.
(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.
(f) There is no parent corporation of the Borrower.
[Signature Pages follow]
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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.
ORLUCK INDUSTRIES, INC.
By:
Its:__________________________________
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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
By:
Name:
Its: President
By:
Name:
Its: Executive Director
529329v2 EL185-56
EXHIBIT A
Equipment List
Serial No. Description Purchase Price
201304503763 Zeiss Contura Q2 Inspection Machine $171,765.60
195651 Okuma Genos M560V Machining Center $302,520.15
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PROMISSORY NOTE
(Jobs Incentive Microloan)
July 17, 2018
Amount: $200,000.00 Interest: 3.00%
Maturity: June 17, 2025
FOR VALUE RECEIVED, the undersigned, ORLUCK INDUSTRIES, INC., a
Minnesota corporation (the “Borrower”) 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 June 17, 2025 (“Maturity Date”), the principal sum of Two Hundred
Thousand and 00/100 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 a portion operating costs
and investments associated with an expansion of the Borrower’s existing aerospace
manufacturing business in the City of Elk River (the “City”) in anticipation of new long term
contracts received by the Borrower. The principal amount of this Note shall be amortized over a
seven (7) year period.
Based on the foregoing, the Borrower shall be obligated to make monthly installments
(each a “Monthly Installment”) in the amount of $2,642.66, which Monthly Installments shall
commence on August 17, 2018, and continue on the seventeenth (17th) 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 the Borrower to Lender and the Personal Guarant y made by Mark Orluck
to Lender both 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 performed by the 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.
This Note shall be immediately due and payable in full if the Borrower relocates
operations outside of the City prior to the Maturity Date.
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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 eight percent (8.00%) 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
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 promise 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 judgment 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 the Borrower, its successors
and assigns.
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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.
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]
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529333v2 EL185-56
IN WITNESS WHEREOF, the undersigned have caused this Note to be effective as of
the day and year first above written.
ORLUCK INDUSTRIES, INC.
a Minnesota corporation
By:
Its: _________________________________
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529330v2 EL185-56
SECURITY AGREEMENT
(Jobs Incentive Microloan)
This SECURITY AGREEMENT (“Agreement”) is made to be effective as of July 17,
2018, by ORLUCK INDUSTRIES, 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:
1. OBLIGATIONS. “Obligations” means collectively each debt, liability and obligation of
every type and nature which the Grantor may now or at any time hereafter owe to
Secured Party (including without limitation the obligations of the Grantor created under
the loan agreement (the “Loan Agreement”) and the promissory note of the Grantor to
Secured Party of even date herewith and all amendments, replacements, restatements, and
substitutions therefor), 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
Grantor 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) accessions, additions and improvements to,
replacements of, and substitutions for any of the foregoing wherever located; (c) all
products and proceeds of any of the foregoing wherever located; and (d) books, records
and data, wherever located, in any form 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:
4.1. Principal Office/Residence. The Grantor’s 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’s principal office/residence.
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529330v2 EL185-56
4.2. Organization; Authority. The Grantor is a corporation, duly 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’s 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,
terminations 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 and the senior lien of Machinery Finance Resources, LLC relating to the
Okuma Genos M560V Machining Center described in Exhibit A. 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 13422
Business Center Drive, Elk River, Minnesota 55330.
4.7. Collateral Use. The Grantor must use the Collateral only for business purposes.
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.
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4.8. Maintenance of Collateral. The Grantor must maintain all tangible Collateral in
good condition and repair. The Grantor must not commit or permit 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
amount 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 normal 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
any part of the Collateral without the Grantor’s signature where permitted by law,
in each case in such form and substance as Secured Party may determine. The
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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 Grantor fails to pay any of the Obligations when due and any
applicable grace period lapses without cure by the Grantor; (b) the Grantor fails to timely
perform any other Obligation and any applicable grace period lapses without cure by the
Grantor; (c) any representation made by the Grantor in this Agreement or in any financial
statement or report submitted by the Grantor to Secured Party proves to have been
materially false or misleading when made; (d) the Grantor ceases to conduct its business;
(e) the Grantor is or becomes insolvent, however defined; (f) the Grantor voluntarily
files, or has filed against it involuntarily, a petition under the United States Bankruptcy
Code; or (g) if the Grantor 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 (10) 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 Grantor, 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
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
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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 may be waived, amended, modified or
terminated 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.
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529330v2 EL185-56
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
ORLUCK INDUSTRIES, INC.,
a Minnesota corporation
By:
Its: ___________________________
Address:
Orluck Industries, Inc.
12422 Business Center Drive
Elk River, Minnesota 55330
Attention: Jeff Orluck – Director of Finance and
HR
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529330v2 EL185-56
SECURED PARTY:
ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY OF ELK
RIVER
By:
Its:
By:
Its:
Address:
13065 Orono Parkway
Elk River, MN 55330
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529330v2 EL185-56
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.
Serial No. Description Purchase Price
201304503763 Zeiss Contura Q2 Inspection Machine $171,765.60
195651 Okuma Genos M560V Machining Center $302,520.15
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529331v1 EL185-56
PERSONAL GUARANTY
(Jobs Incentive Microloan — Mark Orluck)
Elk River, Minnesota
July 17, 2018
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 Orluck Industries, Inc. (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 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, 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
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resort for payment of the Indebtedness to the Borrower or any other person, its 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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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 is the President of the Borrower and the undersigned acknowledges and
agrees that the Indebtedness is being utilized by the Borrower to assist in financing operating
costs and investments associated with an expansion of an existing aerospace manufacturing
business in the City of Elk River (the “City”) in anticipation of new long term contracts received
by the Borrower, and such investments 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.
Mark Orluck
529838v1 JSB EL185-56
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (the “Agreement”) is made and entered into this day
of July, 2018, by the ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, a
public body corporate and politic of the State of Minnesota (the "EDA") and THE BANK OF ELK RIVER
(the “Bank”), a Minnesota banking corporation.
R E C I T A L S
A. WHEREAS, the Bank holds a blanket security interest in certain equipment owned by
Orluck Industries, Inc. (“Orluck”) located at 12422 Business Center Drive, Elk River, Minnesota 55330,
including a security interest in the Zeiss Contura Q2 Inspection Machine with serial number 201304503763
(the “Equipment”) as evidenced by UCC1 Financing Statement Number ________ filed _________ which
was provided as security for a loan made by the Bank to Orluck.
B. WHEREAS, the EDA is providing a loan to Orluck in the amount of $200,000 (the
“Loan”) pursuant to a Loan Agreement dated July __, 2018 (the “Loan Agreement”), between Orluck and
the EDA. As a condition of providing the Loan, the EDA has required that Orluck provide a first priority
security interest in the Equipment pursuant to a Security Agreement, dated July __, 2018 (the “Security
Agreement”) between Orluck and the EDA.
NOW THEREFORE, in consideration of the foregoing recitals and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
1. The Bank agrees to subordinate any and all right, title, lien or interest the Bank has, may
have or may hereafter acquire in the Equipment to the Loan, the Security Agreement, and the EDA’s
security interest in the Equipment securing Orluck’s obligations under the Loan Agreement, and agrees that
its security interest in the Equipment is in all respects subordinate to the Loan, the Security Agreement, and
the EDA’s security interest in the Equipment notwithstanding any other priority requirements which may
otherwise exist.
2. The Bank consents to the filing of the following documents with the Minnesota Secretary
of State in the following order (i) an amendment to UCC1 Financing Statement number __________ in
substantially the form attached hereto as Exhibit A deleting the Equipment from the list of collateral, (ii)
the filing of a UCC-1 for the Equipment listing the EDA as the secured party in substantially the form
attached hereto as Exhibit B, and (iii) the filing of a UCC-1 for the Equipment with the Bank as the secured
party substantially in the form attached hereto as Exhibit C.
529838v1 JSB EL185-56
3. This Agreement shall be binding upon the EDA and the Bank and their respective
successors and assigns and shall inure to the benefit of and may be enforced by their successors and assigns.
4. This Agreement shall be governed by and construed in accordance with the laws of the
State of Minnesota.
5. This Agreement may be executed in any number of counterparts and by the different parties
hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
(Signature page follows)
529838v1 JSB EL185-56
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER
By:
Name:
Its: President
By:
Name:
Its: Executive Director
THE BANK OF ELK RIVER
By:
Name:
Its: ____________________________
529838v1 JSB EL185-56
EXHIBIT A
UCC-3 AMENDMENT
529838v1 JSB EL185-56
EXHIBIT B
EDA UCC-1
529838v1 JSB EL185-56
EXHIBIT C
BANK UCC-1
1b.This FINANCING STATEMENT AMENDMENT is to be filed [for record]
(or recorded) in the REAL ESTATE RECORDS
Filer: attach Amendment Addendum (Form UCC3Ad) and provide Debtor’s name in item 13
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
RESTATE covered collateral ASSIGN collateral
Check one of these three boxes to:
FIRST PERSONAL NAME SUFFIXADDITIONAL NAME(S)/INITIAL(S)OR
A. NAME & PHONE OF CONTACT AT FILER (optional)
1a. INITIAL FINANCING STATEMENT FILE NUMBER
PARTY INFORMATION CHANGE:
ASSIGNMENT (full or partial): Provide name of Assignee in item 7a or 7b, and address of Assignee in item 7c and name of Assignor in item 9
For partial assignment, complete items 7 and 9 and also indicate affected collateral in item 8
TERMINATION: Effectiveness of the Financing Statement identified above is terminated with respect to the security interest(s) of Secured Party authorizing this Termination
Statement
CONTINUATION: Effectiveness of the Financing Statement identified above with respect to the security interest(s) of Secured Party authorizing this Continuation Statement is
continued for the additional period provided by applicable law
2.
3.
4.
6b. INDIVIDUAL'S SURNAME
6a. ORGANIZATION'S NAME
DELETE name: Give record nameto be deleted in item 6a or 6b
6. CURRENT RECORD INFORMATION: Complete for Party Information Change - provide only one name (6a or 6b)
7. CHANGED OR ADDED INFORMATION: Complete for Assignment or Party Information Change - provide only one name (7a or 7b) (use exact, full name; do not omit, modify, or abbreviate any part of the Debtor’s name)
8.
UCC FINANCING STATEMENT AMENDMENT
FOLLOW INSTRUCTIONS
ADD name: Complete item7a or 7b, and item 7c
OR FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S)SUFFIX
9a. ORGANIZATION'S NAME
9b. INDIVIDUAL'S SURNAME
10. OPTIONAL FILER REFERENCE DATA:
9. NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS AMENDMENT: Provide only one name (9a or 9b) (name of Assignor, if this is an Assignment)
If this is an Amendment authorized by a DEBTOR, check here and provide name of authorizing Debtor
B. E-MAIL CONTACT AT FILER (optional)
C. SEND ACKNOWLEDGMENT TO: (Name and Address)
CHANGE name and/or address: Completeitem 6a or 6b; and item 7a or 7b and item 7cDebtor or Secured Party of record
Check one of these two boxes:AND
This Change affects
5.
ADD collateral DELETE collateralCOLLATERAL CHANGE:Also check one of these four boxes:
OR
7a. ORGANIZATION'S NAME
POSTAL CODECITY7c. MAILING ADDRESS
7b. INDIVIDUAL'S SURNAME
INDIVIDUAL'S FIRST PERSONAL NAME
INDIVIDUAL'S ADDITIONAL NAME(S)/INITIAL(S)
STATE
SUFFIX
COUNTRY
Indicate collateral:
FILING OFFICE COPY — UCC FINANCING STATEMENT AMENDMENT (Form UCC3) (Rev. 04/20/11)
493385v1 JSB EL185-46
EXHIBIT A
to
UCC-1 Financing Statement
Naming
ORLUCK INDUSTRIES, INC., as Debtor
and
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, as Secured Party
List of Equipment:
Serial No. Description Purchase Price
201304503763 Zeiss Contura Q2 Inspection Machine $171,765.60
195651 Okuma Genos M560V Machining Center $302,520.15
B. E-MAIL CONTACT AT FILER (optional)
FILING OFFICE COPY — UCC FINANCING STATEMENT (Form UCC1) (Rev. 04/20/11)
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS
A. NAME & PHONE OF CONTACT AT FILER (optional)
OR
1a. ORGANIZATION'S NAME
POSTAL CODECITY1c. MAILING ADDRESS
1b. INDIVIDUAL'S SURNAME
STATE COUNTRY
8. OPTIONAL FILER REFERENCE DATA:
A Debtor is a Transmitting UtilityManufactured-Home TransactionPublic-Finance Transaction
6a. Check only if applicable and check only one box:
7. ALTERNATIVE DESIGNATION (if applicable):Seller/Buyer Bailee/BailorConsignee/ConsignorLessee/Lessor
Agricultural Lien Non-UCC Filing
OR 3b. INDIVIDUAL'S SURNAME FIRST PERSONAL NAME
POSTAL CODE3c. MAILING ADDRESS CITY
ADDITIONAL NAME(S)/INITIAL(S)
STATE
SUFFIX
COUNTRY
3a. ORGANIZATION'S NAME
3. SECURED PARTY'S NAME (or NAME of ASSIGNEE of ASSIGNOR SECURED PARTY): Provide only one Secured Party name (3a or 3b)
4. COLLATERAL: This financing statement covers the following collateral:
C. SEND ACKNOWLEDGMENT TO: (Name and Address)
6b. Check only if applicable and check only one box:
Licensee/Licensor
Collateral is5. Check only if applicable and check only one box:held in a Trust (see UCC1Ad, item 17 and Instructions)being administered by a Decedent’s Personal Representative
OR
2a. ORGANIZATION'S NAME
POSTAL CODECITY2c. MAILING ADDRESS
2b. INDIVIDUAL'S SURNAME
STATE
SUFFIX
COUNTRY
FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S)SUFFIX
ADDITIONAL NAME(S)/INITIAL(S)FIRST PERSONAL NAME
1. DEBTOR'S 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 1b, leave all of item 1 blank, check here and provide the Individual Debtor information in item 10 of the Financing Statement Addendum (Form UCC1Ad)
2. DEBTOR'S 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)
B. E-MAIL CONTACT AT FILER (optional)
FILING OFFICE COPY — UCC FINANCING STATEMENT (Form UCC1) (Rev. 04/20/11)
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS
A. NAME & PHONE OF CONTACT AT FILER (optional)
OR
1a. ORGANIZATION'S NAME
POSTAL CODECITY1c. MAILING ADDRESS
1b. INDIVIDUAL'S SURNAME
STATE COUNTRY
8. OPTIONAL FILER REFERENCE DATA:
A Debtor is a Transmitting UtilityManufactured-Home TransactionPublic-Finance Transaction
6a. Check only if applicable and check only one box:
7. ALTERNATIVE DESIGNATION (if applicable):Seller/Buyer Bailee/BailorConsignee/ConsignorLessee/Lessor
Agricultural Lien Non-UCC Filing
OR 3b. INDIVIDUAL'S SURNAME FIRST PERSONAL NAME
POSTAL CODE3c. MAILING ADDRESS CITY
ADDITIONAL NAME(S)/INITIAL(S)
STATE
SUFFIX
COUNTRY
3a. ORGANIZATION'S NAME
3. SECURED PARTY'S NAME (or NAME of ASSIGNEE of ASSIGNOR SECURED PARTY): Provide only one Secured Party name (3a or 3b)
4. COLLATERAL: This financing statement covers the following collateral:
C. SEND ACKNOWLEDGMENT TO: (Name and Address)
6b. Check only if applicable and check only one box:
Licensee/Licensor
Collateral is5. Check only if applicable and check only one box:held in a Trust (see UCC1Ad, item 17 and Instructions)being administered by a Decedent’s Personal Representative
OR
2a. ORGANIZATION'S NAME
POSTAL CODECITY2c. MAILING ADDRESS
2b. INDIVIDUAL'S SURNAME
STATE
SUFFIX
COUNTRY
FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S)SUFFIX
ADDITIONAL NAME(S)/INITIAL(S)FIRST PERSONAL NAME
1. DEBTOR'S 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 1b, leave all of item 1 blank, check here and provide the Individual Debtor information in item 10 of the Financing Statement Addendum (Form UCC1Ad)
2. DEBTOR'S 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)