6.1 EDSR 06-17-2024The Elk River Vision
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Request for Action
To
Economic Development Authority
Item Number
6.1
Meeting Date
June 17, 2024
Prepared By
Brent O'Neil, Economic Development Director
Item Description
Microloan for Heritage Millwork, Inc.
Reviewed by
Cal Portner
Action Requested
Following the public hearing, approve by motion, a resolution authorizing a loan of $200,000 to Heritage
Millwork, Inc.
Background/Discussion
The EDA has received an application for an EDA microloan to fund equipment at a new manufacturing facility
to be constructed in Elk River. The loan request of $200,000 has been reviewed by the Joint Finance
Committee, which recommended approval. This loan funds a portion of an approximate $5 million equipment
purchase for Heritage Millwork's new Elk River facility and is a component of Heritage's overall investment in
the project of more than $20 million.
As structured, the loan would be amortized over 10 years at 3% interest. The loan would mature on the fifth
anniversary as a balloon payment. These are prevailing terms of the microloan program. The EDA would have
a third-position security interest, behind First Bank Elk River and the Small Business Administration. The loan
is further secured through the personal guaranties of the principal shareholders of Heritage.
Because total city subsidies for this project exceed $150,000, the project is required to comply with the city
business subsidy policy. In this case, Heritage is required to create 10 jobs per $20,000 in loan funds; 10
positions are required to be created as part of this loan award and are in addition to jobs required to be
created from other city incentive programs.
Financial Impact
This is an outlay from the microloan fund of $200,000 which is expected to be repaid to the fund, in full, plus
3% annual interest.
Mission/Policy/Goal
Support commercial and industrial development.
Attachments
1. Resolution - Heritage Microloan
2. Heritage Loan Agreement
3. Heritage Promissory Note
Page 12 of 104
4. Heritage Security Agreement
5. Heritage Guaranty D. Menth
6. Heritage Guaranty J. Menth
7. Heritage Guaranty A. Pulde
8. Heritage Guaranty P. Menth
9. Heritage JFC Staff Report (w/o attachments)
Page 13 of 104
The Economic Development Authority for the
City of Elk River, Minnesota
Resolution 24-03
A Resolution Approving Loan Agreement and Related Documents
(Heritage Millwork, Inc., Project)
WHEREAS,the Board of Commissioners (the “Board”) of the Economic Development
Authority of the City of Elk River, Minnesota (the “EDA”) has received a proposal from
Heritage Millwork, Inc., a Minnesota corporation, or an entity related thereto or affiliated
therewith (the “Borrower”), that the EDA assist the Borrower with the acquisition,
construction and equipping of an approximately 110,000 square foot industrial warehouse
facility (the “Project”) located on certain real property in the City of Elk River, Minnesota
(the “City”) by providing a loan to the Borrower in the amount of $200,000 (the “Loan”)
pursuant to the EDA’s Microloan Program (the “Program”); and
WHEREAS,proceeds of the Loan will be used by the Borrower to provide gap financing
for equipment to be used at the Project; and
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; and
WHEREAS,the Loan constitutes a business subsidy within the meaning of Minnesota
Statutes, Sections 116J.993 to 116J.995, as amended (the “Business Subsidy Act”), and on
this date hereof the Board held a duly noticed public hearing on the Loan; and
WHEREAS,the Loan Agreement includes a business subsidy agreement whereby the
Borrower shall agree to meet certain job and wage goals in connection with the Loan as
required by the Business Subsidy Act.
NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the
Economic Development Authority of the City of Elk River as follows:
1.01. The EDA hereby approves the Loan Agreement substantially in accordance
with the terms set forth in the form presented to the Board including the provisions granting
a business subsidy to the Borrower, pending approval of the business subsidy by the City
Council of the City, together with all related documents necessary in connection therewith,
including without limitation, a promissory note from the Borrower evidencing the Loan, a
security agreement evidencing a third position security interest in certain equipment, and
personal guaranties from Patrick Menth, Joseph Menth, David Menth and Anna Pulde
Page 14 of 104
(collectively, the “Loan Documents”), and the President and Executive Director are hereby
authorized and directed to negotiated the final terms thereof and, in their discretion and at
such time as they may deem appropriate, to execute the 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 thereunder.
1.02. 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. This Resolution shall not constitute an offer and the Loan Documents
shall not be effective until the date of execution thereof as provided herein. 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.
1.03. Upon execution and delivery of the Loan Documents, the officers and
employees of the EDA are hereby authorized and directed to take or cause to be taken such
actions as may be necessary on behalf of the City to implement the Loan Documents.
Approved by the Board of Commissioners of the Economic
Development Authority of the City of Elk River this 17th day of June, 2024.
President
ATTEST:
Executive Director
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LOAN AGREEMENT
(Microloan)
THIS LOAN AGREEMENT (“Agreement”) is made effective as of July __, 2024, by and
between HERITAGE MILLWORK, 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 Microloan Program loan to assist with
purchasing equipment in connection with the acquisition, construction and equipping of an
approximately 110,000 square foot industrial warehouse facility for use in the Borrower’
manufacturing business located at __________, Elk River, Minnesota (the “Loan Property”) in
the principal amount of $200,000.00.
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 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 third lien security interest in equipment located at
the Loan Property (the “Equipment”); and
(iii) The personal guaranties of Patrick Menth, David Menth, Anna Pulde and
Joseph Menth (collectively, the “Personal Guaranties”).
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 Guaranties and any other
security document required under this Agreement. The Loan proceeds will be used to help
finance the cost of acquisition of equipment to be used at the Loan Property. 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 Security Agreement will provide Lender
with a third priority security interest in all equipment located at the Loan Property (the
“Equipment”). The 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 Guaranties. Deliver to Lender the Personal Guaranties.
(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) certified resolutions 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) Lease. Deliver to Lender a copy of the lease agreement for the use of the
Loan Property, executed no later than the date of this Agreement, with at least a 5 year
term commencing upon issuance of a certificate of occupancy for the Development
Property, by and between PLM Properties, LLC (the “Landlord”), as landlord, and the
Borrower, as tenant (the “Lease”).
(h) Program Fee. Deliver to Lender the program fee of $2,000.
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. All of the proceeds of the Loan shall be used by the Borrower
for the Project. Prior to such disbursement, the Lender shall have received from the Borrower
such documentary evidence as the Lender deems necessary or appropriate, clearly demonstrating
the use of the requested disbursement for Project related costs, all of which shall be subject to the
Lender's approval.
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.
6. Books and Records. Borrower agrees to maintain accurate and complete books,
accounts and records in regard to the Loan Property and Equipment in a manner reasonably
acceptable to Lender. At Lender’s request, the Borrower shall furnish all such books, accounts
and records to the Lender’s municipal or financial advisor as reasonably demanded. The
Lender’s municipal advisor or financial advisor shall have the right to inspect, examine and copy
all such books, accounts and records. The Borrower will not be required to provide their books,
accounts and records directly to the Lender. At the time of Lender’s request of Borrower’s
books, accounts and records, the Borrower, Lender, and municipal or financial advisor shall
enter into a non-disclosure agreement regarding the use and confidentiality of such information.
The Borrower shall pay all costs associated with any analysis undertaken by the Lender’s
municipal or financial advisor and all costs and attorneys fees with respect to the drafting and
negotiation of any non-disclosure agreement.
7. Encumbrances and Transfer. Other than any mortgage in favor of the Bank of Elk
River to finance improvements to or operations at the Loan Property, the Mortgage in favor of
the City of Elk River, and the Lease from the Landlord to the Borrower, 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. 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
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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 or will cause Landlord to:
(a) Performance of Conditions. Promptly keep, perform and comply with all
of the terms, covenants and conditions to be kept and performed by Borrower and/or
Landlord, 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
and/or Landlord 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 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 and/or Landlord in connection with construction or operation of the Borrower
or Landlord’s businesses.
(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 their 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.
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(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. Borrower represents that it owns or will own all of
the Equipment at the Loan Property “free and clear,” that Lender will have a “third
priority” lien in the Equipment listed in the Equipment and that no other party has any
right, title or interest in the Equipment except for the senior liens of the First National
Bank of Elk River and the United States Small Business Administration.
(i) Litigation. Promptly inform Lender in writing of (a) all material
adverse changes in the financial condition of the Borrower or the Guarantors; and (b) all
litigation and claims and all threatened litigation and claims affecting the Borrower or
the Guarantors which could materially affect the financial condition of any one or
more of them.
(j) Financial Records. Maintain the books and records of the Borrower, and
permit Lender to examine and audit the books and records of the Borrower at all
reasonable times.
(k) Additional Assurances. Make, execute and deliver to Lender such
promissory notes, mortgages, security agreements, financing statements, instruments,
documents and other agreements as Lender or its attorneys may reasonably request to
evidence and secure the Loan and to perfect the Security Interest which is granted to
Lender.
(l) Financial Statements. Borrower shall deliver to the Lender as soon as
available, but in no event later than the earlier of 30 days after their completion or 120
days after the end of each fiscal year, its then current balance sheet, statements of income
and retained earnings and schedule of aging of accounts receivable and accounts payable,
prepared by an independent certified public accountant reasonably acceptable to the
Lender, and certified as correct to the best knowledge and belief by its chief financial
officer or other officer or person acceptable to the Lender.
(m) Tax Statements. During the entire term of this Agreement, the Borrower
and the Guarantors shall each provide to the Lender as soon as possible, but in no event
later than 15 days after the deadline to file such forms with the applicable governmental
authority, including extensions, copies of the Borrower's and the Guarantors’ federal
and state income tax returns for the then current fiscal year, including all schedules.
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(n) Negative Covenants. Borrower covenants and agrees with Lender that
while this Agreement is in effect, the Borrower shall not, without the prior written
consent of Lender, which shall not be unreasonably withheld: (a) Engage in any business
activities substantially different than those in which the Borrower is presently engaged;
(b) cease operations, liquidate, merge or consolidate with any other entity; (c) sell, assign
or transfer any of the assets of the Borrower which are related to the Borrower's business,
except in the ordinary course of business; or (d) purchase or retire any of Borrower's
outstanding shares or alter or amend Borrower's capital structure.
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, the Security 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, the Security 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) No litigation, tax claims or governmental proceedings are pending or
threatened against the Borrower, the Landlord or the Loan Property, and no judgment or
order of any court or administrative agency is outstanding against the Borrower, the
Landlord or the Loan Property which would have a material adverse effect on Borrower
or the Loan Property.
(d) 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. Neither the Borrower nor the Guarantors have any material contingent
obligations, liabilities for taxes, long-term leases, or unusual forward or long-term
commitments not disclosed by, or reserved against, in the information submitted by
Borrower and the Guarantors. Since the date of the latest of such statements, there has
been no material adverse change in the financial condition of Borrower or the Guarantors
from that set forth in the latest of such statements as at that date.
(e) All information, financial or other, which has been submitted by
Borrower, the personal guarantor, and the Landlord in connection with the Loan is true,
accurate and complete in all material respects. Borrower understands and agrees that
Lender is relying upon the above representations and warranties in extending the Loan to
Borrower. Borrower further agrees that the foregoing representations and warranties shall
be continuing in nature and shall remain in full force and effect until such time as the
Loan and Note shall be paid in full, or until this Agreement shall be terminated in the
manner provided above, whichever is the last to occur.
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12. Indemnification. Borrower agree 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 or Landlord abandons the Loan Property or moves its
operations outside the City.
(b) Failure of Borrower to make any payment when due on the Loan, which
such failure shall continue for a period of 10 days or more.
(c) Bankruptcy, reorganization, assignment, insolvency or liquidation
proceedings, or other proceedings for relief under any applicable bankruptcy law or other
law for relief of debtors are instituted by or against the Borrower and, if such proceedings
are instituted against the Borrower, an order, judgment or decree, without the consent of
Borrower appointing a trustee or receiver for the Borrower or any part of their 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.
(d) 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.
(e) 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 or has not caused the Landlord to take the necessary steps to correct or cure the
same within 30 days after written notice is given by Lender.
(f) 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,.
(g) A transfer which violates by Paragraph 9 hereof, Encumbrances and
Transfer, occurs.
(h) 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
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now or hereafter held by Lender, and such failure continues beyond any applicable cure
period.
(i) If Borrower fails to timely provide Lender any information necessary for
Lender to perfect its security interest in the Equipment.
(j) 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.
(k) A default under the Personal Guaranties 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;
(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 their 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);
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(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. Upon the occurrence and
continuance of an Event of Default entitling Lender to accelerate the maturity thereof, or
in case the Loan shall have become due and payable, then and in every such case, Lender
may protect and enforce its rights by a suit or suits in equity or at law, either for: (i) the
specific performance of any covenant or agreement contained herein or in the Related
Documents or in aid of the execution of any power herein or therein granted; (ii) the
exercise of any rights and remedies provided in any of the Related Documents; or (iii) the
enforcement of any other appropriate legal or equitable remedy;;
(f) Lender, in exercising its rights hereunder, shall also have, without
limitation, all of the rights and remedies provided by the Minnesota Uniform Commercial
Code, Minnesota Statutes Chapter 336;
(g) exercise any remedies under the Personal Guaranties 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 Guaranties, the
Security Agreement and any other security instruments.
Each and every power or remedy herein specifically given shall be in addition to every
other power or remedy, existing or implied, given now or hereafter existing at law or in equity,
and each and every power and remedy herein specifically given or otherwise so existing may be
exercised from time to time and as often and in such order as may be deemed expedient by
Lender, and the exercise or the beginning of the exercise of one power or remedy shall not be
deemed a waiver of the right to exercise at the same time or thereafter any other power or
remedy. No delay or omission of Lender in the exercise of any right or power accruing hereunder
shall impair any such right or power or be construed to be a waiver of any default or
acquiescence therein.
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:
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If to Heritage:
Heritage Millwork, Inc.
________________
Elk River, Minnesota 55330
Attention: Patrick Menth
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
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
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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 (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 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 develop manufacturing facilities, increase
the tax base in the City, help an existing business expand in the City, and stimulate the
creation and retention of jobs. In consideration of the Business Subsidy provided to
assist with the Borrower’s acquisition of equipment for the Loan Property, the Borrower
represents that it will cause meet following goals (the “Goals”): the Borrower shall create
10 full-time equivalent jobs at the Loan Property with hourly wages of at least $21.00 per
hour exclusive of benefits 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 agree 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 date of closing on the Loan, 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, 2025, 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 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 they will continue operations in the Lender for
at least five years after the date of closing on the Loan. If the Borrower relocates
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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.
HERITAGE MILLWORK, 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
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PROMISSORY NOTE
(Microloan)
July __, 2024
Amount: $200,000.00
Interest: 3.00%
Maturity: August 1, 2029
FOR VALUE RECEIVED, the undersigned, HERITAGE MILLWORK, 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 August 1, 2029 (“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 the cost of
purchasing equipment in connection with the acquisition, construction and equipping of an
approximately 110,000 square industrial warehouse facility for use in the Borrower’
manufacturing business. The principal amount of this Note shall be amortized over a ten (10)
year period.
Based on the foregoing, the Borrower shall be obligated to make monthly installments
(each a “Monthly Installment”) in the amount of $________, which Monthly Installments shall
commence on ______ 1, 2024, and continue on the first (1st) 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 each of
Patrick Menth, David Menth, Anna Pulde and Joseph Menth 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 of Elk River 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 five percent (5.00%) 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 any 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 collection charges, 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.
Upon the occurrence at any time of an Event of Default or at any time thereafter, the
Lender shall have the right to set off any and all amounts due hereunder by the Borrower to the
Lender against any indebtedness or obligation of the Lender to the Borrower.
Upon the occurrence at any time of an Event of Default or at any time thereafter, the
outstanding principal balance hereof plus accrued interest hereon plus all other amounts due
hereunder shall, at the option of the Lender, be immediately due and payable, without notice of
demand.
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.
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The Borrower promises 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.
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.
The Holder of this Note shall not be deemed, by any act of omission or commission, to
have waived any of its rights or remedies hereunder unless such waiver is in writing and signed
by the Holder and then only to the extent specifically set forth in the writing. A waiver with
reference to one event shall not be construed as continuing or as a bar to or waiver of any right or
remedy as to a subsequent event. This Note may not be amended, modified, or changed except
only by an instrument in writing signed by the party against whom enforcement of any such
amendment, modifications, or change is sought.
If any term of this Note, or the application thereof to any person or circumstances shall,
to any extent, be invalid or unenforceable, the remainder of this Note, or the application of such
term to persons or circumstances other than those to which it is invalid or unenforceable shall not
be affected thereby, and each term of this Note shall be valid and enforceable to the fullest extent
permitted by law.
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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IN WITNESS WHEREOF, the undersigned have caused this Note to be effective as of
the day and year first above written.
HERITAGE MILLWORK, INC.
a Minnesota corporation
By:
Its: _________________________________
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SECURITY AGREEMENT
(Microloan)
This SECURITY AGREEMENT (“Agreement”) is made to be effective as of July __,
2024, by HERITAGE MILLWORK, 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, in the amount of $200,000 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 personal property and
equipment of the Grantor and personal property and equipment in which the Grantor
has rights, now owned or hereafter acquired, and located at or arising out of that
certain real property located at ______________, Elk River, MN, including, but not
limited to: Accounts; Chattel Paper; Inventory; Machinery; Equipment; Instruments,
including Promissory Notes; Investment Property; Documents; Deposit Accounts;
Letter-of-Credit Rights; General Intangibles; Supporting Obligations; and to the
extent not included in the foregoing as original collateral, the proceeds and products
of the foregoing. The terms Collateral shall also include (a) accessions, additions and
improvements to, replacements of, and substitutions for any of the foregoing; (b) all
products and proceeds of any of the foregoing; and (c) books, records and data 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.
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4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Grantor represents,
warrants and agrees that:
4.1. Principal Location. The Grantor’s principal office and manufacturing facility 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 and manufacturing facility.
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’ 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 liens of the First National Bank of Elk River and the
United States Small Business Administration. The Grantor will defend Secured
Party’s rights in the Collateral against the claims and demands of all other
persons.
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4.6. Collateral Location. The Grantor will keep all tangible Collateral at
___________, 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.
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. Grantor agrees to maintain accurate and complete books,
accounts and records in regard to the Loan Property and Equipment in a manner
reasonably acceptable to Secured Party. At Secured Party’s request, the Grantor
shall furnish all such books, accounts and records to the Secured Party’s
municipal or financial advisor as reasonably demanded. The Secured Party’s
municipal advisor or financial advisor shall have the right to inspect, examine and
copy all such books, accounts and records. The Grantor will not be required to
provide its books, accounts and records directly to the Secured Party. At the time
of Secured Party’s request of Grantor’s books, accounts and records, the Grantor,
Secured Party, and municipal or financial advisor shall enter into a non-disclosure
agreement regarding the use and confidentiality of such information. The Grantor
shall pay all costs associated with any analysis undertaken by the Secured Party’s
municipal or financial advisor and all costs and attorneys fees with respect to the
drafting and negotiation of any non-disclosure agreement.
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.
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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’ signature where permitted by law,
in each case in such form and substance as Secured Party may determine. The
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 insolvency, dissolution, liquidation, merger, or consolidation of the Grantor,
however defined; (f) the Grantor voluntarily files, or has filed against it involuntarily, a
petition under the United States Bankruptcy Code; (g) any appointment of a receiver,
trustee, or similar officer of any property of the Grantor or any assignment for the
benefit of creditors of the Grantor; (h) any default under the terms of this Agreement
or any other note, obligation, agreement, mortgage, or other writing heretofore,
herewith or hereafter given to or acquired by the Secured Party to which the Grantor is
a party; (i) the sale, lease or other disposition (whether in one transaction or in a
series of transactions) to one or more persons other than in the ordinary course of
business of all or a substantial part of the assets of the Grantor; (j) the entry of any
judgment against the Grantor which is not discharged in a manner acceptable to the
Secured Party within thirty (30) days after such entry; or (k) the issuance of levy of any
writ, warrant, attachment, garnishment, execution, or other process against any
property of the Grantor; or (l) the attachment of any tax lien to any property of the
Grantor; or (m) any statement, representation, or warranty made by Grantor (or any
representative of the Grantor) to the Secured Party at any time shall be incorrect or
misleading in any material respect when made; or (n) there is a material adverse change
in the condition (financial or otherwise), business, or property of the Grantor.
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 Obligations to be immediately due
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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. LIMITED POWER OF ATTORNEY. If the Grantor at any time fails to perform or
observe any agreement herein, the Secured Party, in the name and on behalf of the
Grantor or, at its option, in its own name, may perform or observe such agreement and
take any action which the Secured Party may deem necessary or desirable to cure or
correct such failure. The Grantor irrevocably authorizes Secured Party and grants the
Secured Party a limited power of attorney in the name and on behalf of the Grantor or, at
its option, in its own name, to collect, receive, receipt for, create, prepare, complete,
execute, endorse, deliver, and file any and all financing statements, insurance
applications, remittances, instruments, documents, chattel paper, and other writings,
to grant an extension to, compromise, settle, waive, notify, amend, adjust, change,
and release any obligation of any account Grantor, obligor, insurer, or other person
pertaining to any Collateral, and take any other action deemed by the Secured Party to be
necessary or desirable to establish, perfect, protect, or enforce the Security Interest. All
of the Secured Party's advances, charges, costs, and expenses, including without
limitation reasonable attorneys' fees, in connection with the Obligations and in the
protection and exercise of any rights or remedies hereunder, together with interest
thereon at the highest rate then applicable to any of the Obligations, shall be secured
hereunder and shall be paid by the Grantor to the Secured Party on demand.
8. MISCELLANEOUS. The following miscellaneous provisions are a part of this
Agreement:
8.1. 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.
8.2. 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.
8.3. 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.
8.4. 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.
8.5. 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.
8.6. 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.
8.7. Successors and Assigns. This Agreement is binding upon and will inure to the
benefit of the parties and their successors and assigns.
8.8. 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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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.
HERITAGE MILLWORK, INC.,
a Minnesota corporation
By:
Its: ___________________________
Address:
Heritage Millwork, Inc.
Attn: Patrick Menth
_______________
Elk River, MN 55330
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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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PERSONAL GUARANTY
(Microloan — David Menth)
Elk River, Minnesota
July __, 2024
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 Heritage Millwork, 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 including the that certain Promissory Note of even date herewith, in
the original aggregate principal amount of $200,000, executed and delivered by the Borrower to the
Lender, in accordance with the terms of the Loan Agreement, of even date herewith, between the
Borrower and the Lender, 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
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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
resort for payment of the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned shall be and
remain liable for any deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any other person for
such deficiency is discharged pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in addition to and shall be
cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise,
without any limitation as to amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness is
thereafter set aside, recovered, rescinded or required to be returned for any reason (including
without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other
person), the Indebtedness to which such payment was applied shall for the purposes of this
guaranty be deemed to have continued in existence, notwithstanding such application, and this
guaranty shall be enforceable as to such Indebtedness as fully as if such application had never
been made.
The undersigned waives: (1) notice of acceptance of this guaranty and of the creation and
existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice
of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other
demands and notices to the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in connection with any controversy
related to this guaranty, waives any argument that venue in such forums is not convenient, and
agrees that any litigation initiated by the undersigned against the Lender in connection with this
guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the
United States District Court, District of Minnesota.
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
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any of the Indebtedness and as to any collateral security, including but not limited to all claims,
rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and
subrogation, whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise, whether or not the Indebtedness has been fully paid,
and all payments and recoveries under this guaranty shall be considered equity investments by
the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any
person other than the Borrower. No delay or failure by the Lender in exercising any right, and
no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights
hereunder, and no modification or amendment of this guaranty shall be effective unless the same
is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with
respect to the specific instance involved and shall not impair or affect the rights of the Lender or
the provisions of this guaranty in any other respect at any other time. This guaranty shall
continue until written notice of revocation of this guaranty, executed by the undersigned, has
been received by the Lender; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to Indebtedness arising before
the Lender receives such written notice of revocation, and the sole effect of revocation of this
guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is
unconnected with Indebtedness theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or application of this guaranty shall
not affect other lawful provisions and applications hereof and to this end the provisions of this
guaranty are declared to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them respectively, and
shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and
construed in accordance with the laws of the State of Minnesota.
Agrees that the Lender shall not be required to first resort for payment to the Borrower or
any other person, corporation or entity, or their properties or estate, or any other right or remedy
whatsoever, prior to enforcing this Guaranty.
Agrees that this Guaranty shall be construed as a continuing, absolute, and unconditional
guaranty without regard to (I) the validity, regularity or enforceability or the Obligations or the
disaffirmance thereof in any insolvency or bankruptcy proceeding relating to the Borrower; or
(2) any event or any conduct or action of the Borrower or the Lender or any other party which
might otherwise constitute a legal or equitable discharge of a surety or guarantor but for this
provision.
All property of the Guarantor, 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 Guarantor with and each claim of the Guarantor against the Lender, shall be
subject to a lien and security interest in favor of the Lender, as security for all liabilities of the
Guarantor 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 Guarantor
agrees to promptly provide the Lender from time to time with financial statements of the
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Guarantor, in form and substance acceptable to the Lender, at least once every 12 months and as
otherwise requested by the Lender. The Guarantor 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 Guarantor as the Lender may request, in form and substance
acceptable to the Lender.
The Guarantor agrees to deliver to the Lender: (i) on or before the earlier of thirty (30)
days after its completion or one hundred twenty (120) days following each calendar year, the
signed personal financial statement of the Guarantor, in a form acceptable to Lender and dated as
of December 31st of the immediately preceding year, which financial statement presents the
financial condition (including all guaranty and other contingent obligations) of the Guarantor as
of such date; and (ii) as soon as available, but in no event later than their required filing, the
federal income tax return, including all schedules and forms, for the applicable year for the
Guarantor. In addition, Guarantor agrees with reasonable promptness, to provide to Lender such
further information regarding the business, operations, affairs and financial and other condition
of the Guarantor as the Lender may reasonably request.
The Guarantor warrants and represents to the Lender as follows:
a.Enforceability. This Guaranty constitutes the legal, valid and binding
obligation of the Guarantor, enforceable in accordance with its terms (subject, as to
enforceability, to limitations resulting from bankruptcy, insolvency or other similar
laws affecting creditors' rights generally).
b.Litigation. There is no action, suit or proceeding pending or, to the
knowledge of the Guarantor, threatened against or affecting the Guarantor which, if
adversely determined, would have a material adverse effect on the condition (financial
or otherwise), property or assets of the Guarantor, or which would question total
validity of this Guaranty or any instrument, document or other agreement related hereto
or required hereby, or impair the ability of the Guarantor to perform his or her
obligations hereunder or thereunder.
c.Default. Guarantor is not in default of a material provision under any
material agreement, instrument, decree or order to which he or she is a party or by
which he or she or his or her property is bound or affected.
d.Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any governmental authority or any
third party is required in connection with the execution and delivery of this Guaranty or
any of the agreements or instruments herein mentioned to which Guarantor is a party or
the carrying out or performance of any of the transactions required or contemplated
hereby or thereby or, if required, such consent, approval, order or authorization has
been obtained or such registration, declaration or filing has been accomplished or such
notice has been given prior to the date hereof.
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e.Taxes. Guarantor has filed all tax returns required to be filed and has
paid all taxes shown thereon to be due, including interest and penalties, which are not
being contested in good faith and by appropriate proceedings and none of them has any
information or knowledge of any objections to or claims for additional taxes in respect
of federal income or excess profits tax returns for prior years.
The undersigned is the _________ of the Borrower and the undersigned acknowledges
and agrees that the Indebtedness is being utilized by the Borrower to assist in financing
equipment to be used at the real property located at ____________, Elk River, Minnesota (the
“Property”), and such equipment 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.
David Menth
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PERSONAL GUARANTY
(Microloan — JOSEPH MENTH)
Elk River, Minnesota
July __, 2024
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 Heritage Millwork, 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 including the that certain Promissory Note of even date herewith, in
the original aggregate principal amount of $200,000, executed and delivered by the Borrower to the
Lender, in accordance with the terms of the Loan Agreement, of even date herewith, between the
Borrower and the Lender, 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
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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
resort for payment of the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned shall be and
remain liable for any deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any other person for
such deficiency is discharged pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in addition to and shall be
cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise,
without any limitation as to amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness is
thereafter set aside, recovered, rescinded or required to be returned for any reason (including
without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other
person), the Indebtedness to which such payment was applied shall for the purposes of this
guaranty be deemed to have continued in existence, notwithstanding such application, and this
guaranty shall be enforceable as to such Indebtedness as fully as if such application had never
been made.
The undersigned waives: (1) notice of acceptance of this guaranty and of the creation and
existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice
of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other
demands and notices to the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in connection with any controversy
related to this guaranty, waives any argument that venue in such forums is not convenient, and
agrees that any litigation initiated by the undersigned against the Lender in connection with this
guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the
United States District Court, District of Minnesota.
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
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any of the Indebtedness and as to any collateral security, including but not limited to all claims,
rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and
subrogation, whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise, whether or not the Indebtedness has been fully paid,
and all payments and recoveries under this guaranty shall be considered equity investments by
the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any
person other than the Borrower. No delay or failure by the Lender in exercising any right, and
no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights
hereunder, and no modification or amendment of this guaranty shall be effective unless the same
is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with
respect to the specific instance involved and shall not impair or affect the rights of the Lender or
the provisions of this guaranty in any other respect at any other time. This guaranty shall
continue until written notice of revocation of this guaranty, executed by the undersigned, has
been received by the Lender; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to Indebtedness arising before
the Lender receives such written notice of revocation, and the sole effect of revocation of this
guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is
unconnected with Indebtedness theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or application of this guaranty shall
not affect other lawful provisions and applications hereof and to this end the provisions of this
guaranty are declared to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them respectively, and
shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and
construed in accordance with the laws of the State of Minnesota.
Agrees that the Lender shall not be required to first resort for payment to the Borrower or
any other person, corporation or entity, or their properties or estate, or any other right or remedy
whatsoever, prior to enforcing this Guaranty.
Agrees that this Guaranty shall be construed as a continuing, absolute, and unconditional
guaranty without regard to (I) the validity, regularity or enforceability or the Obligations or the
disaffirmance thereof in any insolvency or bankruptcy proceeding relating to the Borrower; or
(2) any event or any conduct or action of the Borrower or the Lender or any other party which
might otherwise constitute a legal or equitable discharge of a surety or guarantor but for this
provision.
All property of the Guarantor, 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 Guarantor with and each claim of the Guarantor against the Lender, shall be
subject to a lien and security interest in favor of the Lender, as security for all liabilities of the
Guarantor 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 Guarantor
agrees to promptly provide the Lender from time to time with financial statements of the
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Guarantor, in form and substance acceptable to the Lender, at least once every 12 months and as
otherwise requested by the Lender. The Guarantor 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 Guarantor as the Lender may request, in form and substance
acceptable to the Lender.
The Guarantor agrees to deliver to the Lender: (i) on or before the earlier of thirty (30)
days after its completion or one hundred twenty (120) days following each calendar year, the
signed personal financial statement of the Guarantor, in a form acceptable to Lender and dated as
of December 31st of the immediately preceding year, which financial statement presents the
financial condition (including all guaranty and other contingent obligations) of the Guarantor as
of such date; and (ii) as soon as available, but in no event later than their required filing, the
federal income tax return, including all schedules and forms, for the applicable year for the
Guarantor. In addition, Guarantor agrees with reasonable promptness, to provide to Lender such
further information regarding the business, operations, affairs and financial and other condition
of the Guarantor as the Lender may reasonably request.
The Guarantor warrants and represents to the Lender as follows:
a.Enforceability. This Guaranty constitutes the legal, valid and binding
obligation of the Guarantor, enforceable in accordance with its terms (subject, as to
enforceability, to limitations resulting from bankruptcy, insolvency or other similar
laws affecting creditors' rights generally).
b.Litigation. There is no action, suit or proceeding pending or, to the
knowledge of the Guarantor, threatened against or affecting the Guarantor which, if
adversely determined, would have a material adverse effect on the condition (financial
or otherwise), property or assets of the Guarantor, or which would question total
validity of this Guaranty or any instrument, document or other agreement related hereto
or required hereby, or impair the ability of the Guarantor to perform his or her
obligations hereunder or thereunder.
c.Default. Guarantor is not in default of a material provision under any
material agreement, instrument, decree or order to which he or she is a party or by
which he or she or his or her property is bound or affected.
d.Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any governmental authority or any
third party is required in connection with the execution and delivery of this Guaranty or
any of the agreements or instruments herein mentioned to which Guarantor is a party or
the carrying out or performance of any of the transactions required or contemplated
hereby or thereby or, if required, such consent, approval, order or authorization has
been obtained or such registration, declaration or filing has been accomplished or such
notice has been given prior to the date hereof.
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e.Taxes. Guarantor has filed all tax returns required to be filed and has
paid all taxes shown thereon to be due, including interest and penalties, which are not
being contested in good faith and by appropriate proceedings and none of them has any
information or knowledge of any objections to or claims for additional taxes in respect
of federal income or excess profits tax returns for prior years.
The undersigned is the _________ of the Borrower and the undersigned acknowledges
and agrees that the Indebtedness is being utilized by the Borrower to assist in financing
equipment to be used at the real property located at ____________, Elk River, Minnesota (the
“Property”), and such equipment 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.
JOSEPH MENTH
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PERSONAL GUARANTY
(Microloan — Anna Pulde)
Elk River, Minnesota
July __, 2024
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 Heritage Millwork, 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 including the that certain Promissory Note of even date herewith, in
the original aggregate principal amount of $200,000, executed and delivered by the Borrower to the
Lender, in accordance with the terms of the Loan Agreement, of even date herewith, between the
Borrower and the Lender, 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
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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
resort for payment of the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned shall be and
remain liable for any deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any other person for
such deficiency is discharged pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in addition to and shall be
cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise,
without any limitation as to amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness is
thereafter set aside, recovered, rescinded or required to be returned for any reason (including
without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other
person), the Indebtedness to which such payment was applied shall for the purposes of this
guaranty be deemed to have continued in existence, notwithstanding such application, and this
guaranty shall be enforceable as to such Indebtedness as fully as if such application had never
been made.
The undersigned waives: (1) notice of acceptance of this guaranty and of the creation and
existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice
of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other
demands and notices to the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in connection with any controversy
related to this guaranty, waives any argument that venue in such forums is not convenient, and
agrees that any litigation initiated by the undersigned against the Lender in connection with this
guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the
United States District Court, District of Minnesota.
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
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any of the Indebtedness and as to any collateral security, including but not limited to all claims,
rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and
subrogation, whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise, whether or not the Indebtedness has been fully paid,
and all payments and recoveries under this guaranty shall be considered equity investments by
the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any
person other than the Borrower. No delay or failure by the Lender in exercising any right, and
no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights
hereunder, and no modification or amendment of this guaranty shall be effective unless the same
is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with
respect to the specific instance involved and shall not impair or affect the rights of the Lender or
the provisions of this guaranty in any other respect at any other time. This guaranty shall
continue until written notice of revocation of this guaranty, executed by the undersigned, has
been received by the Lender; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to Indebtedness arising before
the Lender receives such written notice of revocation, and the sole effect of revocation of this
guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is
unconnected with Indebtedness theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or application of this guaranty shall
not affect other lawful provisions and applications hereof and to this end the provisions of this
guaranty are declared to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them respectively, and
shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and
construed in accordance with the laws of the State of Minnesota.
Agrees that the Lender shall not be required to first resort for payment to the Borrower or
any other person, corporation or entity, or their properties or estate, or any other right or remedy
whatsoever, prior to enforcing this Guaranty.
Agrees that this Guaranty shall be construed as a continuing, absolute, and unconditional
guaranty without regard to (I) the validity, regularity or enforceability or the Obligations or the
disaffirmance thereof in any insolvency or bankruptcy proceeding relating to the Borrower; or
(2) any event or any conduct or action of the Borrower or the Lender or any other party which
might otherwise constitute a legal or equitable discharge of a surety or guarantor but for this
provision.
All property of the Guarantor, 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 Guarantor with and each claim of the Guarantor against the Lender, shall be
subject to a lien and security interest in favor of the Lender, as security for all liabilities of the
Guarantor 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 Guarantor
agrees to promptly provide the Lender from time to time with financial statements of the
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Guarantor, in form and substance acceptable to the Lender, at least once every 12 months and as
otherwise requested by the Lender. The Guarantor 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 Guarantor as the Lender may request, in form and substance
acceptable to the Lender.
The Guarantor agrees to deliver to the Lender: (i) on or before the earlier of thirty (30)
days after its completion or one hundred twenty (120) days following each calendar year, the
signed personal financial statement of the Guarantor, in a form acceptable to Lender and dated as
of December 31st of the immediately preceding year, which financial statement presents the
financial condition (including all guaranty and other contingent obligations) of the Guarantor as
of such date; and (ii) as soon as available, but in no event later than their required filing, the
federal income tax return, including all schedules and forms, for the applicable year for the
Guarantor. In addition, Guarantor agrees with reasonable promptness, to provide to Lender such
further information regarding the business, operations, affairs and financial and other condition
of the Guarantor as the Lender may reasonably request.
The Guarantor warrants and represents to the Lender as follows:
a.Enforceability. This Guaranty constitutes the legal, valid and binding
obligation of the Guarantor, enforceable in accordance with its terms (subject, as to
enforceability, to limitations resulting from bankruptcy, insolvency or other similar
laws affecting creditors' rights generally).
b.Litigation. There is no action, suit or proceeding pending or, to the
knowledge of the Guarantor, threatened against or affecting the Guarantor which, if
adversely determined, would have a material adverse effect on the condition (financial
or otherwise), property or assets of the Guarantor, or which would question total
validity of this Guaranty or any instrument, document or other agreement related hereto
or required hereby, or impair the ability of the Guarantor to perform his or her
obligations hereunder or thereunder.
c.Default. Guarantor is not in default of a material provision under any
material agreement, instrument, decree or order to which he or she is a party or by
which he or she or his or her property is bound or affected.
d.Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any governmental authority or any
third party is required in connection with the execution and delivery of this Guaranty or
any of the agreements or instruments herein mentioned to which Guarantor is a party or
the carrying out or performance of any of the transactions required or contemplated
hereby or thereby or, if required, such consent, approval, order or authorization has
been obtained or such registration, declaration or filing has been accomplished or such
notice has been given prior to the date hereof.
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e.Taxes. Guarantor has filed all tax returns required to be filed and has
paid all taxes shown thereon to be due, including interest and penalties, which are not
being contested in good faith and by appropriate proceedings and none of them has any
information or knowledge of any objections to or claims for additional taxes in respect
of federal income or excess profits tax returns for prior years.
The undersigned is the _________ of the Borrower and the undersigned acknowledges
and agrees that the Indebtedness is being utilized by the Borrower to assist in financing
equipment to be used at the real property located at ____________, Elk River, Minnesota (the
“Property”), and such equipment 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.
Anna Pulde
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PERSONAL GUARANTY
(Microloan — Patrick Menth)
Elk River, Minnesota
July __, 2024
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 Heritage Millwork, 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 including the that certain Promissory Note of even date herewith, in
the original aggregate principal amount of $200,000, executed and delivered by the Borrower to the
Lender, in accordance with the terms of the Loan Agreement, of even date herewith, between the
Borrower and the Lender, 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
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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
resort for payment of the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned shall be and
remain liable for any deficiency remaining after foreclosure of any mortgage or security interest
securing the Indebtedness, whether or not the liability of the Borrower or any other person for
such deficiency is discharged pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in addition to and shall be
cumulative with all other liabilities of the undersigned to the Lender, as guarantor or otherwise,
without any limitation as to amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Lender to the Indebtedness is
thereafter set aside, recovered, rescinded or required to be returned for any reason (including
without limitation the bankruptcy, insolvency or reorganization of the Borrower or any other
person), the Indebtedness to which such payment was applied shall for the purposes of this
guaranty be deemed to have continued in existence, notwithstanding such application, and this
guaranty shall be enforceable as to such Indebtedness as fully as if such application had never
been made.
The undersigned waives: (1) notice of acceptance of this guaranty and of the creation and
existence of the Indebtedness; (2) presentment, demand for payment, notice of dishonor, notice
of nonpayment, and protest of any instrument evidencing the Indebtedness; and (3) all other
demands and notices to the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal jurisdiction of
the state and federal courts located in the State of Minnesota in connection with any controversy
related to this guaranty, waives any argument that venue in such forums is not convenient, and
agrees that any litigation initiated by the undersigned against the Lender in connection with this
guaranty shall be venued in either the District Court of Sherburne County, Minnesota, or the
United States District Court, District of Minnesota.
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
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any of the Indebtedness and as to any collateral security, including but not limited to all claims,
rights and remedies of contribution, indemnification, exoneration, reimbursement, recourse and
subrogation, whether or not such claim, right or remedy arises in equity, under contract, by
statute, under common law or otherwise, whether or not the Indebtedness has been fully paid,
and all payments and recoveries under this guaranty shall be considered equity investments by
the undersigned in the Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully paid, against any
person other than the Borrower. No delay or failure by the Lender in exercising any right, and
no partial or single exercise thereof shall constitute a waiver thereof. No waiver of any rights
hereunder, and no modification or amendment of this guaranty shall be effective unless the same
is in writing duly executed by the Lender, and each such waiver, if any, shall apply only with
respect to the specific instance involved and shall not impair or affect the rights of the Lender or
the provisions of this guaranty in any other respect at any other time. This guaranty shall
continue until written notice of revocation of this guaranty, executed by the undersigned, has
been received by the Lender; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to Indebtedness arising before
the Lender receives such written notice of revocation, and the sole effect of revocation of this
guaranty shall be to exclude from this guaranty Indebtedness thereafter arising which is
unconnected with Indebtedness theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or application of this guaranty shall
not affect other lawful provisions and applications hereof and to this end the provisions of this
guaranty are declared to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them respectively, and
shall benefit the Lender, its successors and assigns. This guaranty shall be governed by and
construed in accordance with the laws of the State of Minnesota.
Agrees that the Lender shall not be required to first resort for payment to the Borrower or
any other person, corporation or entity, or their properties or estate, or any other right or remedy
whatsoever, prior to enforcing this Guaranty.
Agrees that this Guaranty shall be construed as a continuing, absolute, and unconditional
guaranty without regard to (I) the validity, regularity or enforceability or the Obligations or the
disaffirmance thereof in any insolvency or bankruptcy proceeding relating to the Borrower; or
(2) any event or any conduct or action of the Borrower or the Lender or any other party which
might otherwise constitute a legal or equitable discharge of a surety or guarantor but for this
provision.
All property of the Guarantor, 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 Guarantor with and each claim of the Guarantor against the Lender, shall be
subject to a lien and security interest in favor of the Lender, as security for all liabilities of the
Guarantor 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 Guarantor
agrees to promptly provide the Lender from time to time with financial statements of the
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Guarantor, in form and substance acceptable to the Lender, at least once every 12 months and as
otherwise requested by the Lender. The Guarantor 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 Guarantor as the Lender may request, in form and substance
acceptable to the Lender.
The Guarantor agrees to deliver to the Lender: (i) on or before the earlier of thirty (30)
days after its completion or one hundred twenty (120) days following each calendar year, the
signed personal financial statement of the Guarantor, in a form acceptable to Lender and dated as
of December 31st of the immediately preceding year, which financial statement presents the
financial condition (including all guaranty and other contingent obligations) of the Guarantor as
of such date; and (ii) as soon as available, but in no event later than their required filing, the
federal income tax return, including all schedules and forms, for the applicable year for the
Guarantor. In addition, Guarantor agrees with reasonable promptness, to provide to Lender such
further information regarding the business, operations, affairs and financial and other condition
of the Guarantor as the Lender may reasonably request.
The Guarantor warrants and represents to the Lender as follows:
a.Enforceability. This Guaranty constitutes the legal, valid and binding
obligation of the Guarantor, enforceable in accordance with its terms (subject, as to
enforceability, to limitations resulting from bankruptcy, insolvency or other similar
laws affecting creditors' rights generally).
b.Litigation. There is no action, suit or proceeding pending or, to the
knowledge of the Guarantor, threatened against or affecting the Guarantor which, if
adversely determined, would have a material adverse effect on the condition (financial
or otherwise), property or assets of the Guarantor, or which would question total
validity of this Guaranty or any instrument, document or other agreement related hereto
or required hereby, or impair the ability of the Guarantor to perform his or her
obligations hereunder or thereunder.
c.Default. Guarantor is not in default of a material provision under any
material agreement, instrument, decree or order to which he or she is a party or by
which he or she or his or her property is bound or affected.
d.Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any governmental authority or any
third party is required in connection with the execution and delivery of this Guaranty or
any of the agreements or instruments herein mentioned to which Guarantor is a party or
the carrying out or performance of any of the transactions required or contemplated
hereby or thereby or, if required, such consent, approval, order or authorization has
been obtained or such registration, declaration or filing has been accomplished or such
notice has been given prior to the date hereof.
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e.Taxes. Guarantor has filed all tax returns required to be filed and has
paid all taxes shown thereon to be due, including interest and penalties, which are not
being contested in good faith and by appropriate proceedings and none of them has any
information or knowledge of any objections to or claims for additional taxes in respect
of federal income or excess profits tax returns for prior years.
The undersigned is the _________ of the Borrower and the undersigned acknowledges
and agrees that the Indebtedness is being utilized by the Borrower to assist in financing
equipment to be used at the real property located at ____________, Elk River, Minnesota (the
“Property”), and such equipment 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.
Patrick Menth
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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 Meeting
Item Number
4.1
Agenda Section
General Business
Meeting Date
May 14, 2024
Prepared by
Brent O’Neil, Economic Development Director
Reviewed by
Joshua Mollan, Economic Development Specialist
Item Description
Microloan Application Review – Heritage Millwork
Reviewed by
Action Requested
Consider and provide recommendation to the EDA on a microloan application received from Heritage
Millwork, Inc. The Joint Finance Committee may recommend approval, approval with conditions, or
denial of the request.
Background/Discussion
The city received an application from Heritage Millwork, Inc. requesting a $200,000 job incentive loan
from the EDA revolving loan funds. The funds in this program are seeded from a previous Minnesota
Investment Fund award through the state Department of Employment and Economic Development
(DEED).
The Jobs Incentive Microloan Program goal is to encourage the growth of new jobs and the retention of
existing jobs. The company currently employs 70 employees in multiple locations, with 8 presently in Elk
River. The proposed Heritage consolidation of facilities in Elk River would result in all jobs being in Elk
River and the potential for job expansion opportunities as well. The average hourly wage is $32.41 per
hour for existing positions. The potential for six new positions would have an average wage of $23.00 per
hour.
Analysis
Purpose: To assist existing businesses with expansion and attract new businesses to the city whose local
operations will expand the city’s economy through job retention and creation and maintain/
grow the city’s tax base. The purpose of the program is to encourage the creation of quality,
high-paying jobs within the city.
Amount: Up to $200,000 of secondary financing not to exceed 20% of the project cost.
The total project cost is in excess of $21,000,000. The requested amount is
approximately 1%, less than the 20% maximum allowed.
Equity: Must have private-sector commitments for 50% of the project cost. Borrower must provide
10% or more of project financing.
Page 63 of 104
The applicant’s S/U statement indicates the company will be contributing $2,116,947
in cash equity, or 10% of total project costs. new equipment. This includes
approximately $12MM for facility construction and $5MM in equipment.
Criteria: 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 ($15.12),
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.
All positions are in excess of the wage requirement of $15.12, as the lowest hourly wage
for all positions is $21.00 per hour.
Summary
The applicant is eligible for a maximum loan of $200,000 per the city’s policy, meeting the equity, wage,
and job criteria requirements and the proposed fund uses are eligible expenses. The project scored 42 out
of 50 points, representing a highly desirable project.
Terms
The loan will be amortized over 10 years at 3% with a 5-year balloon payment. The EDA would retain a
3rd position on the equipment behind the principal lender First Bank Elk River and Small Business
Administration. Staff and the applicant have discussed securing the loan with a personal guarantee.
Financial Impact
If the committee agrees this loan meets the goals of the city and EDA, the loan funds could be funded
from the DEED account, which has a balance of $439,246.36. Similarly, it could be funded from the
EDA’s Business Microloan Fund which has a balance exceeding $1,000,000.
Attachments
▪Microloan Application
▪Scoring Worksheet
▪Company Information
▪Commitment Letter from the First Bank Elk River
▪Microloan – Additional Information
▪Company Financials (confidential, available at the meeting)
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