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Contract No. 14-
<br /> Intercreditor Agreement
<br /> Between City of Elk River, Preferred Powder Coating, LLC, Preferred Real Estate
<br /> Holdings, LLC, Lloyd Peterson and Dan Bosshart, and First National Bank of Elk
<br /> River
<br /> THIS AGREEMENT is entered into as of the date set forth below,by and among the City of
<br /> Elk River,a Minnesota municipal corporation(the"Subordinate Creditor"),Preferred Powder Coating,
<br /> LLC,a Minnesota limited liability company,Preferred Real Estate Holding,LLC,a Minnesota limited
<br /> liability company,Lloyd Peterson and Dan Bosshart (both collectively and individually referred to as
<br /> "Debtor"), and First National Bank of Elk River, a national bank association (the "Bank"). In
<br /> consideration of the mutual agreements set forth herein,and for other good and valuable consideration,
<br /> the receipt and sufficiency of which is hereby acknowledged by all of the parties, the parties agree as
<br /> follows:
<br /> A. Debt Subordination
<br /> 1. As used in this Agreement, the "Creditor's Claim" refers to all of the Debtor's debts,
<br /> obligations and liabilities to the Subordinate Creditor, now existing or hereafter arising, direct or
<br /> indirect, absolute or contingent, joint or several, whether as maker, endorser, surety, guarantor or
<br /> otherwise, as well as all notes and other writings now and hereafter evidencing the same, including,
<br /> without limitation, those obligations evidenced by the following:
<br /> a. Promissory Note in the principal amount of$680,695.00,made,executed and delivered
<br /> by Preferred Real Estate Holding, LLC to the order of Subordinate Creditor on
<br /> September 26, 2013 (the "Purchase Price Note");
<br /> b. Development Agreement between Preferred Real Estate Holding, LLC and
<br /> Subordinate Creditor dated September 26,2013 (the"Development Agreement");and
<br /> C. Guaranty of Preferred Powder Coating, LLC, Lloyd Peterson and Dan Bosshart, in
<br /> favor of Subordinate Creditor, to secure the obligations of Preferred Real Estate
<br /> Holding,LLC pursuant to the Development Agreement (the "Shortfall Guaranty").
<br /> 2. All of the debts,obligations and liabilities of Debtor to the Bank,now existing or hereafter
<br /> arising,direct or indirect,absolute or contingent,joint or several,whether as maker, endorser, surety,
<br /> guarantor or otherwise,as well as all notes and other writings now and hereafter evidencing the same,
<br /> are herein called the "Bank's Claim."The Bank's Claim shall include,without limitation,obligations of
<br /> Debtor evidenced by the following:
<br /> a. Construction and Term Loan Agreement between Debtor and Bank dated September
<br /> 26, 2013 ("Loan Agreement"),in the original amount of Five Hundred Ninety Three
<br /> Thousand and No/100 Dollars ($5,093,000.00), as amended on May , 2014 to
<br /> include additional credit extended by Bank to Debtor, increasing the total
<br /> amount of indebtedness issued pursuant to the Loan Agreement to the sum Five
<br /> Million Four Hundred Seventy Nine Thousand Dollars ($5,479,000.00).
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