AGREEMENT FOR LOAN OF
SMALL CITIES DEVELOPMENT PROGRAM FUNDS
PARTIES
THIS AGREEMENT is made and entered into the 5th day of October, 1994,
and renewed this 14th day of December 1999 by and between the CITY OF MANKATO
(hereinafter called "City") and XXXXXXX ELECTRONICS, INC. (hereinafter called
"Developer");
BACKGROUND
City has applied to the Minnesota Department of Trade and Economic
Development for a Small Cities Development Program Grant and has received
approval for said grant;
A Grant Agreement (hereinafter called "Grant Agreement") between the
Minnesota Department of Trade and Economic Development and the City has been
executed which Grant Agreement requires that the Developer secure sufficient
private financing and agree to loan terms with the City for Small Cities
Development Grant funds used to assist in financing the Project;
All parties to this Agreement agree to incorporate into this Agreement
by reference said SCDP Grant Agreement, Grant No. CDAP 94-0105-H-FY95, as is
fully set forth herein word for word;
AGREEMENT
It is agreed by and between the parties hereto as follows:
ARTICLE I
Definitions
In this Agreement, unless a different meaning clearly appears from the
context:
"City" means City of Mankato.
"Collateral" means a mortgage on the Development Property.
"Developer" means Xxxxxxx Electronics, Inc.
"Development Property" means the real property described as Xxxx 0 xxx
0, Xxxxx 0, Xxxxxxxx Xxxxxxxxxx Centre, except that part of Xxx 0, Xxxxx Xxxxx,
Xxxxxxxx Xxxxxxxxxx Xxxxxx, according to the plat thereof on file and of record
with the Blue Earth County Recorder, lying southerly of a line parallel with the
distant 201.90 fee south of the north line of said Xxx 0, Xxxx Xxxxx Xxxxxx,
Xxxxxxxxx.
"Grantor Agency" means Minnesota Department of Trade and Economic
Development.
"Grant Agreement" means Minnesota Department of Trade and Economic
Development Grant Agreement No. CDAP 94-0105-H-FY95.
"Lender" means the City of Mankato, which has made a separate loan to
the Developer in the amount of $1,699,620.00.
"Leverage Funds" means the funds provided by or for the account of the
Developer pursuant to Article 2.
"Project" means the loan of SCDP grant funds to Developer to assist in
the construction of a 52,800 square foot commercial building in the City of
Mankato's Eastwood Industrial Centre.
"State" means the State of Minnesota.
"SCDP" means Minnesota Small Cities Development Program.
ARTICLE 2
Financing for Project
Developer has secured from City a commitment for funds, which, when
added to the funds to be provided under the SCDP, will enable Developer to
complete the Project. Specifically, Developer estimates that the completion of
the Project, including furniture, equipment, land acquisition, engineering, and
all contingencies, will cost $3,060,893.00. This sum shall come from the
following sources:
(1) SCDP grant to City, which City will loan to Developer, in the
sum of $500,000.00.
(2) A loan directly from the City to Developer in the sum of
$1,699,620.00.
(3) Southeastern Minnesota Initiative Fund loan in the sum of
$100,000.00.
(4) Tax Increment Financing in the sum of $235,380.00
(5) Developer Funds or Bank Financing in the sum of $525,893.00.
ARTICLE 3
SCDP Loan Terms and Conditions
1. Original Loan Terms. The principal amount of the loan of SCDP funds
by the City to the Developer shall not exceed $500,000.00. The loan shall bear
interest at a rate of four (4) percent per annum. Payments shall be monthly and
shall be in a sum that would result in amortization of the loan over a period of
twenty years. A balloon payment of all amounts then owing, however, will be due
and payable at the end of five years. The loan terms may not be modified without
prior written approval from the Grantor Agency.
2. Prepayment. Prepayment of the loan may occur at any time during the
loan without penalty.
3. Assignment. The Developer will not sell the property or assign its
rights or interests therein or its interest in this Loan Agreement, or any part
thereof In the event the Developer sells, conveys, transfers, further mortgages
or encumbers or disposes of the property, or any part thereof, or any interest
therein, or agrees so to do, the Developer shall immediately pay all outstanding
principal and accrued interest. This shall be in addition to any other remedies
at law or equity available to the City.
4. Termination. This Agreement shall automatically terminate without
any notice to Developer (1) if the loan proceeds have not been disbursed to the
Developer prior to December 31, 1994, or such later date as may be agreed upon
between and among Borrower, Lender and Contractor; or (2) if a petition is filed
by or against the Developer under the U.S. Bankruptcy Code, or if voluntary,
such a petition is not dismissed within sixty (60) business days following such
petition.
5. Xxxxx-Xxxxx. The $500,000 loan is for construction. A wage decision
must be requested from the Grantor, as Xxxxx-Xxxxx Labor Standards provisions
would apply. If any of the equipment items financed in whole or in part with
SCDP funds require more than an incidental amount of installation work, a wage
decision must be requested from the Grantor, as Xxxxx-Xxxxx Labor Standards
provisions would apply to the total project. The following factors should be
considered in determining whether the amount of the installation activity is
more than incidental:
(a) the cost of the equipment itself, compared to the cost of
its installation;
(b) the existence of a high absolute cost of installation
(even if the equipment costs much more);
(c) the necessity for structural modification to house the
equipment or widening of entrances to accommodate its installation; and
(d) the necessity for upgrading electrical wiring, etc.
6. Non-Minnesota Construction Contracts. The Developer must comply with
Minnesota Statute, 1989, ss.290.9705, by either:
(a) depositing with the State eight (8) percent of every
payment made to non-Minnesota construction contractors where the
contract exceeds $100,000; or
(b) receiving an exemption from this requirement from the
Minnesota Department of Revenue.
7. Lobbying. The Developer must not use SCDP funds to pay any person
for influencing or attempting to influence an officer or employee of a federal
agency, a member of Congress, an officer or employee of Congress, or any
employee of a member of Congress in connection with the awarding of any federal
contract, the making of a federal grant, the making of a federal loan, the
entering into of any cooperative agreement, and the extension, continuation,
renewal, amendment, or modification of any federal contract, grant, loan, or
cooperative agreement. If the grantee uses non-federal funds to conduct any of
the aforementioned activities, the grantee must complete and submit Standard
Form LLL, "Disclosure Form to Report Lobbying."
ARTICLE 4
Default and Collateral
1. Default. The Developer shall be in default under this Agreement upon
the happening of any of the following events:
(a) nonpayment, when due, of any amount payable on SCDP loan
or failure to observe, or perform any terms thereof-, provided such
nonpayment is not remedied within ten (10) business days after written
notice thereof by either the Developer or the City;
(b) if Developer is in breach of any material respect of any
obligation or agreement of the Developer under this Agreement, provided
Developer remains in breach in any material respect for thirty (30)
business days after written notice thereof to the Developer by the
City; provided, however, that if such breach shall reasonably be
incapable of being cured within such thirty (30) business days after
notice, and if Developer commences and diligently prosecutes the
appropriate steps to cure such breach, no default shall exist so long
as Developer is proceeding to cure such breach;
(c) if any material covenant, warranty or representation of
Developer shall prove to be untrue in any material respect, provided
such covenant, warranty or representation of Developer remains untrue
in any material respect for thirty (30) business days after written
notice thereof to the Developer by the City; provided, however, that if
such untruth shall reasonable be incapable of being corrected within
such thirty (30) business days after notice, and if Developer commences
and diligently prosecutes the appropriate steps to correct such
untruth, no default shall exist so long as Developer is so proceeding
to correct such untruth;
(d) if the Developer becomes insolvent or generally unable to
pay debts as they mature or makes an assignment for the benefit of
creditors, provided such insolvency or general inability to pay is not
remedied within sixty (60) business days after written notice thereof
by either Developer or the City;
(e) entry of a final judgment against Developer which such
judgment the City reasonably deems will have a material, adverse impact
on Developer's ability to comply with its obligations under this
Agreement;
(f) transfer by the Developer of any part of the Collateral to
any entity other than a wholly-owned subsidiary of Developer provided
such is not approved in writing by the City;
(g) merger or consolidation where such merger or consolidation
is not approved in writing by the City, which approval will not be
unreasonably withheld; or
(h) loss, theft, substantial damage, destruction or
encumbrance of any of the Collateral, provided that such is not
remedied within sixty (60) business days after written notice thereof
by either Developer or the City (including, without limitation, by a
pledge of insurance proceeds or by substitute Collateral satisfactory
to the City).
2. Remedies Upon Default.
(a) In the event of a default and the failure to cure it in
the time allotted thereof (or to commence and diligently proceed to
cure such default if reasonable incapable of being cured within the
time allotted thereof), the City shall have the right at its option and
without demand or notice, to declare all or any part of the loan
immediately due and payable, and in addition to the rights and remedies
granted hereby, the City shall have all of the rights and remedies
under the Uniform Commercial Code or any applicable law.
(b) Developer agrees in the event of a default and the failure
to cure it in the time allotted therefor, to make the Collateral
available to the City. In the event of any lawsuit under this
Agreement, reasonable attorney's fees and costs will be awarded to the
prevailing party. If any notice of sale, disposition or other intended
action by the City is required by law to be given to Developer at the
it shall be given not less than fifteen (15) days before such sale,
disposition or other intended action. Waiver of and default hereunder
by the City shall not be a waiver of any other default or of the same
default on a later occasion. No delays or failure by the City to
exercise any right or remedy shall be a waiver of such right or remedy
and no single or partial exercise by the City of any right or remedy
shall preclude other or further exercise thereof of the exercise of any
other right or remedy at any other time.
3. Collateral. The Developer shall grant to the City a mortgage on the
Development Property according to the terms of the mortgage instrument between
the Developer and the City.
ARTICLE 5
Loan Disbursement Provisions
1. Payment Requisition Documentation and Format. Loan disbursements
shall be for construction costs in the amount of $500,000.00 from SCDP funds.
The loan funds for construction may be disbursed to the Developer only after the
City has received from the Developer invoices for construction costs and only on
a cost-sharing ration of 16.34% loan funds to 83.66% other funds.
2. Provision of Evidentiary Materials. No disbursements of loan funds
shall be made until all evidentiary materials required by the Grantor Agency
have been submitted and approved by the Grantor Agency.
3. Project Time Frame (Schedule). The time frame outlined in the SCDP
application pertaining to the Project shall be met by the Developer.
4. Permanent Loan Terms. The permanent SCDP loan of $500,000.00 shall
be for a term of ten (10) years, but with payments in a sum that would amortize
the loan over fifteen (15) years, with a balloon payment due at the end of ten
(10) years, commencing not later than January 1, 1995. The interest rate shall
be four (4) percent per annum for the 120 months of the loan period.
5. Loan Repayment Schedule. Repayment of the principal sum together
with accrued interest, shall be made in monthly installments, commencing January
1, 1995, in the amount of $3,029.90, and shall continue to be made in the amount
of $3,029.90 on the first day of each month thereafter until February 1, 2000,
when the payment shall increase to $3,698.44 on the first day of each month
beginning in February 2000, and continuing until January 1, 2005, at which time
the entire outstanding principal balance, along with interest accrued thereon
until the date of payment shall become due and payable in full. Developer
understands that this will be a balloon payment. The total monthly payment
amount due from Developer to Lender will include the amount necessary to
amortize the additional loan amount being provided by Lender of $1,699,620.00
and renegotiated at an outstanding principal balance of $1,321,913.59.
6. Leveraged Funds. The leveraged funds described in the SCDP
application must be used for the same purposes and under the same terms, rates,
and conditions as specified unless prior written consent is received from the
Grantor Agency.
ARTICLE 6
Provision of Evidentiary Material Requirement
1. Provision of Evidentiary Materials. The Developer shall agree to
provide to the City all evidentiary materials according to the format and
timetable cited in the Grant Agreement. The City will for-xxxx said materials to
the Grantor Agency and assist in expediting reviews leading to a release of SCDP
funds.
2. Documentation of Use of Funds. The Developer must provide the City
with necessary documentation that the SCDP loan proceeds and leveraged funds
have been used for the items and purposes stated in the SCDP application, prior
to submitting the final progress report and requesting grant closeout from the
Grantor Agency.
3. The Developer must document that equipment items purchased with SCDP
loan funds are of reasonable cost, in accordance with OMB Circular A-87.
ARTICLE 7
Provision of New Permanent Jobs
1. Employment Objective. The Developer agrees to take affirmative
action to ensure that 85 new permanent jobs will be created by the Project, of
which, at a minimum, 51% shall be held by low and moderate income individuals.
The Developer agrees that the above job requirements shall be completed December
31, 1996. These requirements were completed as of the December 14 , 1999,
renegotiation.
2. Employment Documentation. The Developer shall complete and provide
to the City notification of employment semi-annually of hiring each new
employee. This notification requirement will not be necessary after December 31,
1996, provided the employment objective set forth above has been met. In
addition, the Developer agrees to provide verification that jobs are available
to persons of low and moderate income by documenting that once the jobs are
filled, at least 51% of the persons hired are of low and moderate income
families, as per Section 8 income guidelines.
3. Job Creation Documentation. The grantee must include job creation
information in each semi-annual progress report. This information shall be
provided by the Developer and must include:
(a) jobs created
(b) job title per job
(c) date employees hired
4. First Source Employment Referral Agreement. Developer agrees to list
any vacant or new positions with the job services of the Commissioner of Job
Services or a local service unit operated by a county or counties operating
under a joint powers agreement, one or more cities of the first class operating
under a joint powers agreement, or a city of the first class.
ARTICLE 8
Provision of Monitoring Information Related to Project Progress
The Developer shall agree to provide to the City information for
incorporation into progress reports, as required by the Grantor Agency and as
needed by the City, to monitor Project implementation for compliance with
grantor and local guidelines.
ARTICLE 9
Nondiscrimination
The provisions of Minnesota Statutes, Section 181.59, which relate to
civil rights and discrimination, shall be considered a part of this Agreement as
though wholly set forth herein.
ARTICLE 10
Developer's Acknowledgments, Representations, and Warrants
1. Acknowledgements. The Developer acknowledges that the City, in order
to obtain funds for part of the City's activities in connection with the
Project, has applied for a Small Cities Development Program Grant (the "Grant")
to the Commissioner of the Minnesota Department of Trade and Economic
Development (the "Commissioner") under the Small Cities Development Program,
Community Development Division, and that the City will be entering into the
Grant Agreement with the Commissioner setting forth the terms, conditions, and
requirements as to the Grant.
The Developer further acknowledges that the Developer has made certain
representations and statements as to those activities of the Project to be
carried out and completed by the Developer which were contained in and made part
of the application for the Grant and that the Developer is designated and
identified under the Grant Agreement.
A copy of the Grant Agreement shall be on file in the offices of the
City's Community Development Department. In the event any provision of this
Agreement relating to the Developer's obligations hereunder shall be
inconsistent with the provisions of the Grant Agreement relating to the
Developer's activities thereunder, the provisions of the Grant Agreement shall
prevail.
The Developer acknowledges that nothing contained in the Grant
Agreement or this Agreement, nor any act of the Commissioner or the City shall
be deemed or construed to create any relationship or third-party beneficiary,
principal and agent, limited or general partnership, or joint venture, or of any
association or relationship involving the Commissioner.
2. Representations and Warranties. Developer warrants and represents,
in connection with the Grant and for the benefit of the Commissioner and the
City, that:
(a) The representations, statements, and other matters
provided by the Developer relating to those activities of the Project
to be completed by the Developer, which were contained in the
application for the Grant, were true and complete in all material
respects as of the date of submission to the City and that such
representations, statements, and other matters are true as of the date
of this Agreement.
(b) To the best of the Developer's knowledge, no member,
officer, or employee of the City or its designees or agents, no
consultant, member of the governing body of the City, and no other
public official of the City, who exercises or has exercised any
functions or responsibilities with respect to the Project during his or
her tenure shall have any interest, direct or indirect, in any contract
or subcontract, or the proceeds thereof, for work to be performed in
connection with the Project or in any activity, or benefit therefrom,
which is part of this Project.
(c) The Developer acknowledges that the Commissioner, in
selecting the City as recipient of the Grant, relied in material part
upon the assured completion of the Project to be carried out by the
Developer, and the Developer assures the City that said Project will be
carried out by the Developer.
(d) The Developer warrants that to the best of its knowledge,
it has obtained all federal, state, and local governmental approvals,
reviews, and permits required by law to be obtained in connection with
the Project.
(e) The Developer warrants that it shall keep and maintain
books, records, and other documents relating directly to the receipt
and disbursements of SCDP loan proceeds and that any duly authorized
representative of the Commissioner shall, at all reasonable times, have
access to and the right to inspect, copy, audit, and examine all such
books, records, and other documents of the Developer until the
completion of all closeout procedures respecting the SCDP loan and the
final settlement and conclusion of all issues arising out of this loan.
(f) The Developer warrants that no transfer of SCDP loan
proceeds by the City to the Developer shall be or be deemed an
assignment of the loan proceeds and the Developer shall neither succeed
to any rights, benefits, or advantages of the City under the Grant
Agreement, nor attain any right, privileges, authorities, or interests
in or under the Grant Agreement.
(g) The Developer warrants that it has fully complied with all
applicable state and federal laws pertaining to its business and will
continue said compliance throughout the terms of this Agreement. If, at
any time, notice of noncompliance is received by the Developer, it
agrees to take any necessary action to comply with the State or Federal
law in question.
ARTICLE 11
Other Special Conditions
1. Antitrust. Developer hereby assigns to the State of Minnesota any
and all claims for overcharges as to goods and/or services provided in
connection with this contract resulting from antitrust violations which arise
under the antitrust laws of the United States and the antitrust laws of the
State of Minnesota.
2. Workers' Compensation Insurance. Developer has obtained workers'
compensation insurance as required by Minnesota Statutes, 1982, Section 176.181,
Subd. 2. Developer's workers' compensation insurance information is as follows:
(a) Company Name: State Fund Mutual
(b) Policy Number: 002789.209
(c) Local Agency: Xxxx Hero, 0000 Xxxxxx Xxxxx Xxxxx, #000,
Xxxx Xxxxxxx, XX 00000
3. Business With the State of Minnesota/State Tax Laws. Notice to
Developer. You are required by Minnesota Statutes, 1982, Section 270.66, to
provide your Minnesota tax identification number if you do business with the
State of Minnesota. This information may be used in the enforcement of Federal
and State tax laws. Supplying these numbers could result in an action to require
you to file State tax returns and pay delinquent State tax liabilities. This
contract will not be approved unless these numbers are provided. These numbers
will be available to Federal and State tax authorities and State personnel
involved in the payment of State obligations.
Minnesota Tax ID: 6997761
Federal Employer ID: 00-0000000
IN WITNESS WHEREOF, the City has caused this Agreement to be duly
executed in its name and behalf and the Developer has caused this Agreement to
be duly executed in its name and behalf as of the date first above written.
Subscribed and sworn to before me CITY OF MANKATO, MINNESOTA, this 14th day of
December, 1999.
/s/ Xxxxx Xxxxxx By: /s/
Notary Public Its City Manager
Subscribed and sworn to before me XXXXXXX ELECTRONICS, INC. this 14th day of
December, 1999.
/s/ Xxxx Xxxxxx By: /s/ X. X. Xxxxxxx
Notary Public Its Chairman and CEO
