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ECONOMIC DEVELOPMENT AUTHORITY �..- OF THE CITY OF ELK RIVER COUNTY OF SHERBURNE STATE OF MINNESOTA RESOLUTION NO. 17-02 RESOLUTION APPROVING SUBORDINATION OF SECURITY INTEREST Section 1. Recitals. 1.01 On May 5, 2016, the Economic Development Authority of the City of Elk River (the"EDA")provided a microloan (the "Loan")in the amount of$200,000 to Patriot Converting, Inc., a Minnesota corporation (referred to as "Debtor") pursuant to a Loan Agreement, dated as of May 5, 2016 (the "Loan Agreement") between the EDA and the Debtor. The Loan was secured by a personal guaranty of Michael Stillwell, Executive Vice President of the Borrower and by a security interest in certain equipment of the Debtor as evidenced by a Security Agreement, dated as of May 5, 2016 (the"Security Agreement") from the Debtor to the EDA. 1.02 On October 17, 2016, the Board of Commissioners (the "Board") of the EDA approved the First Amendment to the Loan Agreement and the First Amendment to the Security Agreement allowing the Debtor to amend the equipment provided as security for the Loan. 1.03. The Debtor has refinanced a portion of equipment originally financed by Riverland Bank ("Riverland") at its facility in the City of Elk River with Central Minnesota Development Company on behalf of the United States Small Business Administration (the "SBA"). As a requirement of the refinancing, the SBA has required that the Debtor obtain the EDA's consent to subordinate its security interest in all equipment owned by the Debtor located at the Debtor's Elk River facility to the SBA and Riverland and thereby have a 3rd lien position in such equipment. The EDA will continue to have a 2nd lien position (subordinate to Riverland) in all other equipment at the Debtor's Elk River facility and a 1st lien position in certain equipment purchased with the proceeds of the Loan. NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners (the "Board") of the Economic Development Authority of the City of Elk River(the"EDA") as follows: Section 2. Approval of Subordination Agreement. 2.01. The subordination of the EDA's security interest in the Debtor's equipment to the SBA (the "Subordination") is hereby in all respects approved together with any related documents necessary in connection therewith, and the President and Executive Director are hereby authorized and directed to execute any documents necessary to effect the Subordination on behalf of the EDA and to carry out, on behalf of the EDA, the EDA's obligations thereunder. The execution of any instrument by the President and Executive Director shall be conclusive evidence of the approval of such document in accordance with the terms hereof. In the event of absence or disability of said officers, any of the documents authorized by this Resolution to be executed may be executed without further act or authorization of the Board by any duly designated acting official, or by such other officer or officers of the Board as, in the opinion of the City Attorney,may act in their behalf 496287v2 JSB EL185-39