7.2. EDSR 10-17-2022Request for Action
To Item Number
Economic Development Authority 7.2
Agenda Section Meeting Date Prepared by
General Business October 17, 2022 Brent O’Neil, Economic Development Director
Item Description Reviewed by
Orluck EDA Loan – Assignment and Cal Portner, City Administrator
Assumption Agreement
Reviewed by
Action Requested
Approve, by motion, the attached resolution authorizing the EDA to consent to an assignment and assumption
agreement between Orluck Industries and Twin City Metal Works (TCMW) regarding the EDA’s loan to Orluck.
Background/Discussion
Orluck Industries received an EDA loan for $200,000 in 2018, with a maturity date of July 2025 following an
extension granted two years ago. Orluck is an aerospace manufacturer of seating, propulsion, and engine parts. It
also provides medical, locomotive, and manufacturing industry services. This loan is secured by two pieces of
production equipment, of which the EDA holds a first collateral position on both.
Staff has been working with Orluck regarding changes at the company as they transfer most operations and assets
to TCMW. Many operations will remain the same. As Orluck no longer would hold the secured equipment, they
propose to assign liability to TCMW which would assume debt service liability and payments once the transfer is
complete this Fall which requires EDA board consent. The loan agreement terms would remain the same
including the EDA’s first collateral position on the equipment. The present principal balance is $87,956.03. This
balance is in line with an estimated value of the equipment.
The Business Subsidy Policy remains applicable and is addressed in the Assignment and Assumption Agreement to
ensure TCMW complies with the policy.
Financial Impact
As a continuation of an existing loan and amortization, this agreement does not alter the financial impact of the
EDA. The legal costs incurred by the EDA regarding this agreement are the responsibility of the borrower.
Mission/Policy/Goal
Support Elk River’s existing businesses through programmatic offerings.
Attachments
Resolution Consenting to an Assignment and Assumption Agreement
Orluck Industries Assignment and Assumption Agreement
Original Loan Documents
The Elk River Vision
A welcoming community with revolutionary and spirited resourcefulness, exceptional
service, and community engagement that encourages and inspires prosperity.
Updated: August 2020
RESOLUTION NO. 22-04
RESOLUTION APPROVING A LOAN ASSUPTION AGREEMENT
RELATING TO ORLUCK INDUSTRIES, INC.
BE IT RESOLVED By the Board of Commissioners (the “Board”) of the Economic
Development Authority of the City of Elk River, Minnesota (the “Authority”) as follows:
Section 1. Background; Findings.
(a) Pursuant to a Loan Agreement, dated as of July 17, 2018, between the Lender and
the Orluck Industries, Inc., a Minnesota corporation (the “Assignor”), as amended by a First
Amendment to Loan Agreement, dated as of April, 2020, between the Lender and the Assignor
(together, the “Loan Agreement”), the Lender made a loan to the Assignor in the original principal
amount of $200,000 (the “Loan”) for an expansion to its manufacturing business located at 13422
Business Center Drive, Elk River, Minnesota (the “Property”).
(b) As security for the Loan, the Assignor delivered a the Promissory Note dated July
17, 2018, in the original principal amount of $200,000 in favor of Lender (the “Note”) and the
Security Agreement, dated July 17, 2018, between Assignor and Lender (the “Security
Agreement”).
(c) Twin City Metal Works, LLC, a Minnesota limited liability company, intends to
acquire certain property and assets of the Assignor including the Zeiss Contura Q2 Inspection
Machine (SN 201304503763) and Okuma Genos M560V Machining Center (SN 195651) located at
the Property (the “Security”) which provided security for the Loan. As part of the proposed
acquisition, the Assignee has agreed to assume the Assignor’s Loan.
(d) The Assignor and the Assignee have requested that the Authority consent to the
assignment of the Assignor’s rights and obligations under Loan Agreement, Note, and the
Security Agreement to the Assignee pursuant to a Loan Assumption Agreement by and between
the Assignor and the Assignee with the consent of the Authority (the “Assignment Agreement”).
The Loan will also continue to be secured by a personal guaranty from Mark Orluck. 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 Assignment Agreement includes a
“business subsidy agreement” as required under the Business Subsidy Act.
Section 2. Approval of Assignment.
(a) The Assignment Agreement as presented to the Authority, together with all related
documents necessary in connection therewith (collectively, the “Loan Documents”) are hereby in all
respects approved; and the President and Executive Director are hereby authorized and directed to
execute the Assignment Agreement and any Loan Documents to which the Authority is a party on
behalf of the Authority and to carry out, on behalf of the Authority, the Authority’s obligations
thereunder.
(b) 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 Authority 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
Authority. 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.
Approved by the Board of Commissioners of the Economic Development Authority of the
City of Elk River, Minnesota this 17th day of October, 2022.
President
ATTEST:
Executive Director
LOAN ASSUMPTION AGREEMENT
(Elk River Jobs Incentive Microloan)
THIS LOAN ASSUMPTION AGREEMENT (this “Agreement”) is dated as of
______________ , 2022 (the “Effective Date”) by and between ORLUCK INDUSTRIES, INC.,
a Minnesota corporation (“Assignor”) and TWIN CITY METAL WORKS, LLC, a Minnesota
limited liability company (the “Assignee”) and consented to by the ECONOMIC
DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, MINNESOTA, a public
body corporate and politic of the State of Minnesota (“Lender”).
RECITALS:
A. Pursuant to a Loan Agreement, dated as of July 17, 2018, between the Lender and
the Assignor, as amended by a First Amendment to Loan Agreement, dated as of April, 2020,
between the Lender and the Assignor (together, the “Loan Agreement”), the Lender made a loan
to the Assignor in the original principal amount of $200,000 (the “Loan”) for an expansion to its
manufacturing business located at 13422 Business Center Drive, Elk River, Minnesota (the
“Property”).
B. The parties hereby acknowledge that the Loan is currently outstanding in the
principal amount of $87,956.03.
C. The Assignee intends to acquire certain property and assets of the Assignor
including the Zeiss Contura Q2 Inspection Machine (SN 201304503763) and Okuma Genos
M560V Machining Center (SN 195651) located at the Property (the “Security”) which provided
security for the Loan. As part of the proposed transfer of the Security, the Assignee has agreed
to assume the Assignor’s Loan.
D. The parties have requested and received the consent of the Board of
Commissioners of the Lender to the proposed transaction.
AGREEMENT:
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledge, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following capitalized terms have the
following meanings:
“Financing Statement” means the UCC-1 Financing Statement given by Assignor in
favor of Lender and filed with the Minnesota Secretary of State’s Office on June 19, 2018 as
Filing No. 1024875000061.
“Loan” has the meaning given in the recitals to this Agreement.
“Loan Agreement” has the meaning given in the recitals to this Agreement.
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“Loan Documents” means the Loan Agreement, Note, Security Agreement and Financing
Statement.
“Note” means the Promissory Note dated July 17, 2018, in the original principal amount
of $200,000, given by Assignor in favor of Lender.
“Security Agreement” means a Security Agreement, dated July 17, 2018, between
Assignor and Lender, securing the Loan.
2. Assignment and Assumption. From and after the Effective Date, and subject to
and conditioned upon completion of the merger transaction between Assignor and Assignee:
(a) Assignor assigns to Assignee all of Assignor’s right, title and interest in
and to the Loan Documents; and
(b) Assignee (i) assumes and agrees to pay all of the payment obligations of
Assignor as provided in the Loan Documents, (ii) assumes and agrees to perform all of
the other obligations of Assignor under the Loan Documents, and (iii) agrees to abide and
be bound by all of the terms of the Loan Documents, all as though the Loan Documents
had been made, executed and delivered by Assignee.
(c) Assignee shall make its first loan payment on November 17, 2022.
(d) The Monthly Installment and Maturity Date shall remain the same.
Accrued interest and the Lender’s costs, expenses and attorney’s fees associated with this
Agreement shall be added to the final Monthly Installment payable on the Maturity Date
as shown in Exhibit A attached hereto.
3. Personal Guaranty. The Personal Guaranty of Mark Orluck shall continue to
secure the Loan.
4. Business Subsidy.
(a) In order to satisfy the provisions of Minnesota Statutes, Sections
116J.993 to 116J.995, as amended (the “Business Subsidies Act”), the Assignee
acknowledges and agrees that the amount of the “Business Subsidy” granted to the
Assignee under this Agreement is the outstanding balance of the Loan which is $
87,956.03. The public purpose of the Business Subsidy is to help a business locate in
the City of Elk River, Minnesota (the “City”), increase and maintain the tax base in the
City and stimulate the retention of high-quality jobs. In consideration of the Business
Subsidy provided to help a new business locate within the City, the Assignee represents
that it will meet the following goals (the “Goals”): the Assignee shall create 1 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 Effective Date (the “Benefit Date”).
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(b) If none of the Goals are met, the Assignee agrees to repay all of the
Business Subsidy to the Lender, 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 Assignee 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 1 (i.e. number of jobs set
forth in the Goals).
(c) The Assignee 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 Assignee agrees to file these reports no later than March 1 of each year
commencing March 1, 2023, and within 30 days after the deadline for meeting the
Goals. The Lender agrees that if it does not receive the reports, it will mail the
Assignee 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 Assignee 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 Assignee agrees that it will continue operations in the City for at
least 5 years after the date of closing on the Loan. If the Assignee 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 Assignee.
5. No Other Amendments Intended. No amendment of the Loan Documents is
intended and all other terms and conditions of the Loan Documents shall remain in full force
and effect and shall not be modified or released in any way by this Agreement.
6. UCC-1 Financing Statements. Assignee agrees that Lender may file a UCC-1
Financing Statement and/or UCC-3 Amendment relating to the collateral described in the
Financing Statement, to the extent necessary for Lender to maintain a perfected security
interest in such collateral from and after the Effective Date. The Security shall continue to
remain subject to the Security Agreement and nothing contained herein or done pursuant
hereto shall affect or be construed to affect the lien of the Security Agreement or priority
thereof over other liens, charges or encumbrances against the Security.
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7. Representations. The Assignor and the Assignee hereby warrant and represent
to Lender that (i) they have full power and authority to execute and deliver this Agreement and
the documents related hereto, and that this Agreement and the documents related hereto
constitute the legal, valid and binding obligations of said party, enforceable in accordance with
their respective terms; and (ii) each of them has fully considered the terms of this Agreement and
the documents related hereto and has had the opportunity to discuss this Agreement with its legal
counsel, and that each of them is executing this Agreement and the documents thereto without
any coercion or duress on the Lender.
8. Release. The Assignor and the Assignee hereby release Lender, each of its
officers, directors, employees, legal counsel and other representatives from any and all claims,
demands, causes of action, liability, damage, loss, costs and expenses which it has paid, incurred
or sustained or believed that it has paid, incurred or sustained, known or unknown, absolute or
contingent, liquidated or unliquidated, as a result of or related to (i) the transactions evidenced by
or related to the Loan Documents or this Agreement, (ii) any acts or omissions of the Lender or
any of its officers, directors, agents or employees in connection therewith or related thereto,
(iii) any acts or omissions of Lender or any of its officers, directors, agents or employees in
connection therewith or related thereto, or (iv) the extension or denial of credit.
9. No Defenses. The Assignor and the Assignee acknowledge and agree with
Lender that no events, conditions or circumstances have arisen or exist as of the date hereof
which would give the Assignor or the Assignee the right to assert a defense, claim, counterclaim
and/or setoff any claim by Lender for payment of amounts owing under the Loan Documents.
Any defense, right of setoff, claim or counterclaim which might otherwise be available to the
Assignor or Assignee against Lender with respect to the Loan Documents is hereby fully and
finally waived and released in all respects.
10. Further Assurances. The Assignor and the Assignee hereby agree to execute
and deliver to Lender such other agreements, documents and instruments as are deemed
necessary or advisable by Lender in order to effectuate the purposes of this Agreement.
11. Authority. The Assignor and the Assignee hereby represent and warrant that
they have full power and authority to execute this Agreement and the documents related
hereto, that the partners, members and/or governors (as the case may be) of each such party
have taken all actions necessary to authorize the execution of this Agreement, and that the
manager executing this Agreement on behalf of each such entity have been duly authorized to
execute this Agreement and the documents related hereto.
12. Notice. For purposes of notice under the Loan Documents, the Assignees’s
address is:
Twin City Metal Works, LLC
_________________________
Attn: __________________
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13. Costs. The Assignee shall pay all costs and expenses, including recording fees,
attorneys’ fees and title fees, paid or incurred by Lender in connection with the preparation of
this Agreement and the closing and consummation of the transaction contemplated hereby.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, without giving effect to the choice of law
provisions thereof.
15. Headings. The descriptive headings for the several sections of this Agreement
are inserted for convenience only and shall not define or limit any of the terms or provisions
hereof.
16. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
17. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which shall be deemed one instrument.
\[The remainder of this page has been left blank intentionally.\]
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LOAN ASSUMPTION AGREEMENT
(Elk River Jobs Incentive Microloan)
Signature Page
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
ASSIGNOR: ASSIGNEE:
ORLUCK INDUSTRIES, INC., TWIN CITY METAL WORKS, LLC, a
a Minnesota corporation Minnesota limited liability company
By: ________________________________ By:_________________________________
Print Name: __________________________ Print Name: __________________________
Its:_________________________________ Its:__________________________________
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CONSENT
The undersigned, Economic Development Authority of the City of Elk River, a public
body corporate and politic of the State of Minnesota (“Lender”), hereby consents, in accordance
with the Loan Documents (as defined in the foregoing Loan Assumption Agreement (the
“Assignment”)), to (A) the assignment of the Loan Documents by the Assignor named therein
(the “Assignor”) to, and the assumption of the obligations thereunder by, the Assignee named
therein (the “Assignee”) as provided in the Assignment, and (B) the execution and delivery by
the Assignor and the Assignee of the Assignment, and the terms and provisions thereof.
LENDER:
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF ELK RIVER, a political
subdivision of the State of Minnesota
By: _________________________________
Print Name:__________________________
Its: President
By: _________________________________
Print Name:__________________________
Its: Executive Director
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Exhibit A
Amortization Schedule
\[Insert at Execution\]
DOCSOPEN\\EL185\\56\\816081.v3-9/29/22
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
491713v1 EL18546
2. Eouipment 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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4917130 EL18546
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
491713vl EL18546
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.
(i) 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 fast
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 "fast
priority" lien in the Zeiss Contura Q2 hlspection Machine listed in Exhibit A and a
"second priority" lien in the Okuma Genus M560V Machining Center (the "Machining
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491713A EL185-46
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
5
491713vl EL18546
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;
6
491713v1 ELI8546
(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.
7
49171M EL185-46
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:
If to Lender:
Orluck Industries, hic.
12422 Business Center Drive
Elk River, Minnesota 55330
Attention: Jeff Orluck — Director of Finance and HR
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 parry 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
491713vl ELIS546
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 1161993
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 -rime
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)
detennined 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
9
491713vl EL18546
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]
10
491713vl EL185-46
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:
S-1
491713v1 EL185-46
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: L -�-
Its: Executive Director
S-2
491713vl EL185-06
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
529329v2 EL185-56
PROMISSORY NOTE
(Jobs Incentive Microloan)
Amount: $200,000.00
Interest: 3.00%
Maturity: June 17, 2025
July 17, 2018
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 tern
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 Guaranty 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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529333v2 EL185-56
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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529333v2 EL185-56
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]
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: gep
S-1
529333v2 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:
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.
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 Part'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 Parry'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.
529330v2 EL185-56
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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52933M EL185-56
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 Parry 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 Parry are cumulative and may be exercised singularly or
concurrently, at Secured Party's option.
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
4
529330v2 EL185-56
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. Inte agr tion. 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.
TT 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.
52933W ELI85-56
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
ORLUCK INDUSTRIES, INC.,
a Minnesota corporation
By: r�w i
Its: n . r C
Address:
Orluck Industries, Inc.
12422 Business Center Drive
Elk River, Minnesota 55330
Attention: Jeff Orluck — Director of Finance and
HR
S-1
52933M EL185-56
SECURED PARTY:
ECONOMIC DEVELOPMENT
AUTHORITY OF THE CITY OF ELK
RIVER
By:
Address:
13065 Orono Parkway
Elk River, MN 55330
S-2
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 Q2Inspection Machine
$171,765.60
195651
Okurna Genos M560V Machining Center
$302,520.15
A-1
529330v2 ELI85-56
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
529331vt EL185-56
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
529331A EL185-56
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.
�ba
Mark Orluck
5293310 EL185-56