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EXHIBIT 10.38
GRANT AGREEMENT
This GRANT AGREEMENT, dated as of the 15th day of July, 1994 (the
"Agreement") between the City of Columbia, a body corporate and politic and a
political subdivision of the State of South Carolina, (the "City") and Air
South, Inc., an Illinois corporation qualified to do business in the State of
South Carolina (the "Grantee"),
WITNESSETH:
WHEREAS, the City, the Grantee, Lexington County, South Carolina
("Lexington County") and Richland County, South Carolina ("Richland County")
entered into that certain Memorandum of Understanding dated March 15, 1994 (the
"Local Memorandum") and the Grantee and the State of South Carolina (the
"State") entered into that certain Memorandum of Understanding dated March 25,
1994 (the "State Memorandum"), pursuant to which memoranda the Grantee agreed,
inter alia, to establish a regional passenger airline with its principal
operational base at the Columbia Metropolitan Airport and its corporate
headquarters and primary reservation center in the downtown area of the City
(the "Air South Operations") in exchange for certain grants to be made by the
City, Lexington County and Richland County and a certain loan to be made by
Lexington County (the "Term Loan"), all as described more particularly therein;
and
WHEREAS, in furtherance of its agreements under the Local Memorandum,
the City has agreed that, upon receipt by the City of funding under the City's
application to the Department of Housing and Urban Development ("HUD") for a
loan guarantee under Section 108 of the Housing and Community Development Act
of 1974, as amended, (the "Federal Act") as administered by HUD pursuant to the
Federal Act and by the City pursuant to Section 6-1-30, Code of Laws of South
Carolina, 1976, as amended, (the "State Act") (the loan guarantee program so
authorized and administered hereinafter referred to as the "Section 108
Program") and subject to the terms and conditions set forth herein, the City
shall provide financing assistance to the Grantee under the terms and subject
to the conditions of this Agreement, applicable laws, regulations and all other
federal and State requirements now or hereafter in effect, including without
limitation the Federal Act and the regulations promulgated thereunder (the
"Federal Regulations"), which transaction the City has authorized pursuant to
that certain Ordinance enacted by the City Council of the City on July 13,
1994; and
WHEREAS, the City and the Secretary of Housing and Urban Development
(the "Secretary") are, contemporaneously herewith, entering into that certain
CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND
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COMMUNITY DEVELOPMENT ACT OF 1974, AS AMENDED, 42 U.S.C. Section 5308 (the "HUD
Contract"), pursuant to which the City will obtain funds for the purpose of
providing assistance to the Grantee under the Section 108 Program; and
WHEREAS, under the Section 108 Program, HUD provides a guarantee (the
"HUD Guarantee") with respect to non-recourse notes issued by units of local
government such as the City, enabling them to sell their HUD-Guaranteed Notes
to lending institutions or to the public through underwritten public offerings,
and the units of local government may then loan or grant the proceeds obtained
from the sale of the HUD-Guaranteed Notes to business enterprises that meet job
creation and other requirements under the Section 108 Program; and
WHEREAS, as security for any HUD-Guaranteed Notes issued by the City,
federal law requires that the City pledge to the Secretary its entitlement to
certain Community Development Block Grant ("CDBG") monies (the "CDBG Pledge")
to provide funds with which to reimburse the Secretary if the HUD Guarantee is
paid on account of a default by the City under any HUD-Guaranteed Notes; and
WHEREAS, under the terms of the HUD Contract HUD has agreed to provide
a HUD-Guarantee of one or more HUD-Guaranteed Notes issued by the City
(collectively, if more than one, the "Air South HUD-Guaranteed Note") with the
proceeds of which the City will fund pursuant hereto a $1,500,000.00 grant to
Grantee for purposes of providing space for the corporate and operational
headquarters of Grantee and for relocation expenses and costs of advertising in
establishing the Air South Operations (the "Grant") and up to $15,000 of the
expenses of such transaction as set forth hereinbelow, and in consideration for
such HUD Guarantee the City has agreed to give its City Pledge in respect to
the Air South HUD-Guaranteed Note (the "Air South City Pledge"); and
WHEREAS, as a condition to and as consideration for its assistance in
obtaining the HUD Guarantee of the Air South HUD-Guaranteed Note, for the Air
South City Pledge and for making the Grant to the Grantee, the City requires
the Grantee to make certain representations and warranties and to enter into
certain covenants with respect to job creation and other federal requirements
under the Section 108 Program and with respect to the other terms and
conditions upon which the Grant will be made, all as set forth herein,
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties aforesaid agree to the following terms and
conditions:
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ARTICLE 1. TERMS AND CONDITIONS OF GRANT
Section 1.1. Amount of Grant: The Grant shall not exceed the
maximum principal amount of One Million Five Hundred Thousand and 00/100 Dollars
($1,500,000.00) and shall, subject to the provisions of Sections 1.7 and Article
IV hereof, be funded from time to time as needed for the purposes set forth in
Section 1.2 hereof and in accordance with the terms and conditions set forth in
Article III hereof. The City's obligation to make disbursements of funds under
the Grant shall expire on June 30, 1995 or such later date as the City, in its
sole discretion, shall determine (the "Cutoff Date").
Section 1.2. Purpose: The Grant assistance provided herein shall
be used solely for the following purposes:
(a) Up to $750,000 of the Grant shall be used to make lease payments
with respect to the office space at the location heretofore
approved by the City Manager at 0000 Xx. Xxxxxx Xxxxx, 0xx Xxxxx,
Xxxxxxxx, X.X. 00000, to be used by Grantee for its corporate
headquarters and central reservation center for the Air South
Operations ("Corporate Headquarters"), such payments to be made in
accordance with that certain Lease Agreement dated May 9, 1994
between Nepotes Limited Partnership (the "Lessor") and the Grantee
(the "Lease"); and
(b) Up to $750,000 of the Grant shall be used for payment of
relocation expenses and costs of advertising for the Air South
Operations.
Section 1.3. Expenses: Grantee shall pay, from sources other than
the Grant or the Term Loan, all fees, expenses and other costs related to the
making or securing of this Grant, excluding only the payment of legal and
financial fees payable to HUD pursuant to the HUD Contract which HUD charges the
City shall fund in part with up to $15,000 from the proceeds of the Air South
HUD-Guaranteed Note; provided, however, that upon failure on the part of the
Grantee to pay any such fees, expenses or costs to be paid by the Grantee, the
City may, in its sole discretion, pay the same and deduct the amount so paid
from the amount of the Grant to be disbursed to the Grantee hereunder.
Section 1.4. Low-to-Moderate Income Hiring: The Grantee agrees to
create not less than 200 full time equivalent jobs at its Corporate Headquarters
within two years following the date of initial air carrier service by the
Grantee (the "Start-up Date"). Of the total number of jobs created at the
Corporate Headquarters, not less than 51% shall be filled by persons from low
and moderate income families, all as determined in accordance with current HUD
Income Guidelines and other the Federal Regulations. The Grantee agrees to
maintain records adequate to document compliance with this Section 1.4 and,
until such time as the Grantee has fulfilled the requirements of the preceding
sentences of this Section 1.4, to provide the City within 30 days following the
end of each calendar quarter with written evidence satisfactory to the City as
to the number of jobs created at the Corporate
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Headquarters and the number of such jobs which have been made available to
persons of low to moderate income.
Section 1.5. Regulatory Compliance Required under Section 108
Program: Notwithstanding any other provision hereof or of any other instrument
or agreement to the contrary, the provisions of the Federal Act, the Federal
Regulations and, to the extent not inconsistent therewith, the provisions of
all other applicable federal, State or City laws, regulations or requirements
shall govern the award and administration of the Grant, and the Grantee agrees
to comply with, and be bound by, such laws and requirements and to cooperate
fully with the City with respect thereto. Such agreement on the part of the
Grantee shall include, but shall not be limited to the following federal laws
to the extent applicable to the Grantee's operations at the Corporate
Headquarters and such laws are incorporated herein by reference:
(a) Xxxxx-Xxxxx Act (40 USC 276a to a7);
(b) Certification Regarding Lobbying and Drug Free Workplace Act
(Appendix D);
(c) Policy Prohibiting Use of Excessive Force, 1990 HUD
Appropriations Act (P.L. 101-144) (Appendix E);
(d) Drug Free Workplace Act of 1988 (Appendix D);
(e) American Disabilities Act of 1990,
(f) Age Discrimination Act of 1975;
(g) Section 504 of the Rehabilitation Act of 197;
(h) Program Income (24 CFR 570.503 and 570.504);
(i) Programmatic and Budget Changes;
(j) Civil Rights and Fair Housing; Employment and Contracting
Opportunities (570.601, 570.607);
(k) Labor Standards (24 CFR 570.603);
(l) Environmental Requirements (25 CFR 570.604);
(m) Historic Preservation;
(n) National Flood Insurance Program (24 CFR 570.605);
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(o) Relocation, Real Property Acquisition and One-for-One Housing
Replacement (24 CFR 570.606);
(p) Lead-based Paint (24 CFR 570.608);
(r) Political Activity (24 CFR 570.207(a)(3));
(s) Conflict of Interest (24 CFR 570.611);
(t) Program Monitoring (24 CFR 570.501(b), 24 CFR 85-40(a) and
(e), and OMB Circular X-000, Xxxxxxxxxx X, Xxxxxxxxx (2));
(u) Suspension and Termination (24 CFR 570.503(b)(7), 24 CFR 85.43
and 44);
(v) Resident Aliens (24 CFR 570.613).
Section 1.6. Grantee to Obtain Authorization to Initiate and
Maintain Air South Operations: As a condition of making the initial disbursement
under the Grant, the Grantee shall provide the City with written evidence
satisfactory to the City that the Grantee has obtained and maintained a Section
401 Certificate from the U.S. Department of Transportation ("DOT") and such
other permits, consents and authorizations as may be required to initiate and
maintain the Air South Operations as contemplated by the Business Plan of the
Borrower dated February 17, 1994 with respect to the Air South Operations, as
amended from time to time with the prior written consent of the City, (the
"Business Plan") and by this Agreement and that all conditions precedent to
initial funding under the Term Loan have been met.
Section 1.7. No Warranty by City: The City's obligations
hereunder are limited to making a good faith effort to process requests for
advances under the Air South HUD-Guaranteed Note in order to obtain funds with
which to fund the Grant from time to time and to forwarding to the Grantee the
proceeds of the Air South HUD-Guaranteed Note, net of expenses, upon receipt
thereof by the City. The City makes no warranty that funds will be made
available from time to time under the HUD Contract or that funds will be
received at the times anticipated by the Borrower. Neither the City nor any of
its officers, employees or agents shall be liable for any action or failure to
act hereunder taken in good faith.
Section 1.8. Additional Documentation: The Grantee shall,
contemporaneously herewith, execute and deliver to the City the following:
(a) An opinion of counsel acceptable to the City in the form
attached hereto as Exhibit A; and
(b) Such other certificates and instruments as the City shall
reasonably
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require.
Upon request, the Grantee shall deliver to the City an assignment of
leasehold interest, acceptable to the City as to form and substance, which has
been duly executed by the Grantee and accepted by the Lessor and recorded in
the Office of the Register of Mesne Conveyances for Richland County and such
other places as may be required to preserve and protect the City's interest
thereunder.
The Grantee agrees that it will, at its own expense, maintain hazard,
public liability and key-man life insurance in such amounts and against such
risks as are customarily insured against by businesses of like size and type
and as is otherwise required by the provisions of the Term Loan and will
simultaneously with the execution and delivery of this Agreement and on each
anniversary hereof provide the City with certificates evidencing such insurance
coverages in form acceptable to the City.
ARTICLE II. GRANTEE'S REPRESENTATIONS AND WARRANTIES AND COVENANTS
Section 2.1. Representations, Warranties and Covenants by the Grantee:
The Grantee hereby makes the following representations and warranties and
acknowledges and agrees that each and every such representation and warranty
has been material to the City's determination to make the Grant shall be true,
accurate and complete as of the date of any disbursement of the Grant:
(a) The Grantee has been duly organized and validly exists as a
corporation under the laws of the State of Illinois, has power
to enter into this Agreement and to carry out and give effect
to the transactions contemplated by this Agreement to be
performed by the Borrower, including without limitation the
establishment and operation of the Air South Operations, and
has authorized the taking of all action necessary to enter
into this Agreement and carry out such transactions.
(b) There is no action or proceeding pending or threatened against
the Grantee before any court or administrative agency that
might adversely affect the ability of the Grantee to perform
its obligations under this Agreement, including without
limitation the establishment and operation of the Air South
Operations, and all authorizations, consents and approvals of
governmental bodies or agencies, required in connection with
the performance of the Grantee's obligations hereunder,
including without limitation the establishment and operation
of the Air South Operations, have been obtained and will be
obtained whenever required hereunder or by law.
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(c) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby,
including without limitation the establishment and operation
of the Air South Operations, nor the fulfillment of or
compliance with the terms and conditions of this Agreement is
prevented, limited by, or conflicts with or results in a
breach of, the terms, conditions, or provisions of any
corporate restrictions or any evidence of indebtedness,
agreement or instrument of whatever nature to which the
Grantee is now a party or by which it or its property is
bound, or constitutes a default under any of the foregoing.
(d) The Grantee has received paid in capital contributions
aggregating not less than $1,000,000 (excluding from such
calculation any shares purchased with money borrowed from the
Grantee).
(e) The Grantee acknowledges that the City is making the Grant in
reliance upon the Business Plan, a copy of which has been
provided to the City by the Grantee, and the Grantee
represents and warrants that such Business Plan is true,
accurate and complete as of the date hereof and will be true,
accurate and complete in all material respects as of the date
of each draw under the Grant pursuant to Article III hereof
and that its Section 401 Certificate is in full force and
effect and will be in full force and effect as of the date of
each draw under the Grant pursuant to Article III hereof.
(f) The Grantee's Corporate Headquarters is located at 0000 Xx.
Xxxxxx Xxxxx, 0xx Xxxxx, Xxxxxxxx, Xxxxx Xxxxxxxx 00000; the
Grantee shall give the City not less than thirty (30) days
prior written notice of any change in the location of the
Grantee's Corporate Headquarters or base of operations or of
any substantial change in the nature of the operations
conducted at such locations or of any substantial reduction in
the level of employment at such locations which occur during
the five year period following the Start-up Date.
(g) Grantee represents to the City that it has at all times
pertinent to this Agreement been represented by advisors of its
own selection, including but not limited to attorneys-at-law
and/or certified public accountants; that it has not relied
upon any statement, representation, warranty, agreement or
information provided by the City, its employees, agents or
attorneys; that it acknowledges that it is informed by its
advisors of its respective rights, duties, and obligations with
respect to the Grant under all applicable laws.
(h) The Grantee agrees to comply with all applicable DOT
requirements and all other governmental requirements as may be
necessary to operate the
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Air South Operations as contemplated by the Business Plan and
this Agreement.
(i) If any time during the period ending five years from the
Start-up Date, the Grantee becomes aware of any facts,
occurrences, information, statements, or events that render
any of the foregoing representations or warranties herein made
untrue or materially misleading or incomplete, Grantee shall
immediately notify the City in writing of such facts,
occurrences, information, statements or events.
Section 2.2. No Assignment by Grantee: The Grantee may not assign
or transfer the whole or any part of this Agreement, and any such assignment by
the Grantee without the prior written consent of the City shall render this
Agreement null and void.
Section 2.3. Maintenance of Air South Operations in Current
Location: Except as set forth in this Section 2.3, the Grantee, for a period of
not less than five years from the Start-up Date shall maintain its existence and
continue as a corporation either organized under the laws of, or duly qualified
to do business as a corporation in, the State, and the Grantee shall not during
such five year period, without the prior written consent of the City:
(a) sell, lease, convey, assign, transfer or otherwise dispose of
all or substantially all of its assets or consolidate with or
merge into another entity or assign, convey or dispose of any
interest in its assets or operating rights (including without
limitation operating or landing rights, type certificates,
operating certificates, licenses, regulatory approvals,
leasehold or contract rights, tradenames or trademarks or
other rights in tangible or intangible property) or permit the
sale of stock to a third person or group of persons so that
current management relinquishes control over more than
one-half of either of the assets, operations or voting rights
with respect to the stock of the Grantee; or
(b) relocate its principal operational base to a location other
than the Columbia Metropolitan Airport or its Corporate
Headquarters from its current location.
The Grantee need not comply with the provisions of paragraph (a) of
this Section 2.3 if the successor corporation or person or group succeeding to
control of the Grantee, as the case may be, agrees to comply with the
provisions of this Agreement by delivery to the City of a written assumption
agreement which shall be satisfactory to the City as to form and content. The
Grantee need not comply with the provisions of paragraphs (a) or (b) of this
Section 2.3 if there is paid to the City liquidated damages in an amount equal
to $3,000,000 (or such lesser amount as has been advanced to the Grantee by the
City, Lexington County and Richland County under their respective grants),
together with interest thereon at the rate
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per annum equal to 4% from the date of the respective advances under such
grants. Such liquidated damages represent a return of the respective grants
made by the City, Lexington County and Richland County in the amounts of
$1,500,000, $750,000 and $750,000, respectively, and the City shall receive the
liquidated damages attributable to the respective amounts advanced by Lexington
and Richland Counties on behalf of such Counties and shall pay over such
amounts to the respective County. Each of Lexington and Richland Counties shall
be deemed to be a third party beneficiary of this Grant Agreement for purposes
of this Section 2.3 The amount of liquidated damages shall be reduced by twenty
percent (20%) at the end of each year after the Start-up Date, and the
provisions of this Section 2.3 shall terminate at the end of the fifth year
following the Start-up Date.
Section 2.4. Financial Statements and Other Information: During the
five-year period following the Start-up Date, the Grantee shall furnish to the
City copies of all financial information provided to Lexington County or the
South Carolina Jobs-Economic Development Authority ("JEDA") in connection with
the Term Loan, which financial information shall include, at minimum, the
following:
(a) within 90 days following the end of each fiscal year, annual
audited financial statements for the Grantee prepared by an
independent accountant acceptable to the City;
(b) such other information as the City shall reasonably request
regarding the Grantee's employment levels, including without
limitation all such information as may be required to
determine compliance with Section 1.4 hereof; and
(c) such other information as the City shall reasonably request
regarding the making and administration of the Grant.
ARTICLE Ill. DISBURSEMENTS OF GRANT MONIES
Section 3.1. Procedures: The City shall disburse that portion of
the Grant to be used to pay the cost of providing office space for the Corporate
Headquarters monthly in Installments of $15,625 each directly to Lessor for
application to the Basic Rent then due and owing by the Grantee under the Lease
or in such other manner as may be agreed to between the City and Lessor.
That portion of the Grant to be used for advertising purposes shall be
disbursed not more frequently than twice monthly by JEDA as agent for the City
in accordance with the terms and conditions set forth in the Grant
Administration Agreement of even date herewith between the City and JEDA and
upon the occurrence of the following:
(a) receipt by JEDA not less than twenty (20) days prior to the date when
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the funds are requested to be paid of a requisition in the
standard form used by JEDA signed by the President or Chief
Financial Officer of the Grantee stating the name of the
person, firm or corporation to whom payment is to be made or
has been made and the amount to be paid or which has been paid
or for which reimbursement is sought, accompanied by invoices
or other documentation acceptable to JEDA verifying such
expenses;
(b) determination by JEDA that the use intended by the Grantee of
the proceeds of the Grant is eligible for financing under the
Section 108 Program and this Agreement;
(c) there shall exist no event of default hereunder, and JEDA
shall have received a written certificate to such effect
executed by the President or Chief Financial Officer of the
Grantee in the form attached hereto as EXHIBIT B.
Such disbursements by JEDA shall be subject to receipt of adequate funding
under the Air South HUD-Guaranteed Note and to the further terms and conditions
specified in that certain Grant Administration Agreement of even date herewith
among the City, the Grantee and JEDA. JEDA shall deduct from each disbursement
its administration fee as specified in the above-mentioned Grant Administration
Agreement. The City reserves the right to designate from time to time other
agents or subcontractors to administer the Grant or perform any of its
obligations hereunder.
The Grantee acknowledges that the City must submit each request for
funds under the Grant to HUD and agrees that neither the City nor JEDA shall be
liable for any delays in processing any requisition submitted hereunder. The
City shall use, and shall require JEDA to use, their respective best efforts to
submit to HUD a request for payment with respect to each acceptable requisition
within ten (10) days following receipt thereof.
Notwithstanding anything herein to the contrary, no disbursement shall
be made under the Grant until such time as the Grantee has paid, from sources
other than Grant funds or other Section 108 Program funds, all amounts due and
owing under the interim loan by the Columbia Development Corporation described
in the Local Memorandum.
Section 3.2. Suspension of Disbursements: Notwithstanding
anything herein to the contrary, the City shall not be obligated to disburse any
monies under the Grant after the Cutoff Date, and no disbursements shall be made
under the Grant for any purpose without the written consent of the City Manager
during any period as to which an event of default hereunder shall exist nor
during any period as to which either Lexington County, JEDA or any agency of the
State shall have notified the Grantee that disbursements under the Term Loan
have been terminated or suspended. It shall be within the sole discretion of the
City to determine whether an event of default hereunder or a cessation of
disbursements
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under the Term Loan will give rise to termination of this Agreement or whether
the City will resume advances hereunder.
ARTICLE IV. AGREEMENT NON-RECOURSE TO CITY
Section 4.1. Release and Indemnification of City: The Grantee
hereby releases the City from, and agrees that the City and JEDA and their
respective officers, directors, members, employees, attorneys and agents shall
not be liable for, and agrees to indemnify and hold harmless the City and JEDA
and their respective officers, directors, members, employees, attorneys and
agents against:
(a) any liability, cost or expense, including without limitation
reasonable attorneys' fees in the administration of the HUD
Contract, the Air South HUD-Guaranteed Note, the Grant and
this Agreement (hereinafter collectively referred to as the
"Section 108 Documents") and the obligations imposed on the
City and JEDA thereby and hereby (except as expressly set
forth otherwise in Section 1.3 hereof);
(b) any or all liability or loss, cost or expense, including
without limitation reasonable attorneys' fees, resulting from
or arising out of any loss or damage to property or any injury
to or death of any person occurring in connection with or on
or about the Corporate Headquarters or the Air South
Operations or resulting from any defect in the fixtures,
machinery, equipment or other property used in connection with
the Corporate Headquarters or the Air South Operations or
arising out of, pertaining to, or having any connection with,
the Corporate Headquarters or the Air South Operations or the
financing thereof (whether or not arising out of acts,
omissions or negligence of the Grantee or any of its agents,
contractors, servants, employees, licensees, lessees or
assignees);
(c) any or all liability or loss, cost or expense, including
without limitation reasonable attorneys' fees, arising out of
or in connection with or pertaining to the issuance, sale or
delivery of the Air South HUD-Guaranteed Note, including, but
not limited to, liabilities arising under the Securities Act
of 1933, the Securities Exchange Act of 1934 or any applicable
state securities laws, but such indemnity for securities
liabilities shall be subject to the limitation that the
Grantee shall not be liable for any representations made with
respect to the City; and
(d) any or all liability or loss, cost or expense, including
without limitation reasonable attorneys' fees, arising out of
or in connection with or pertaining to the transactions
contemplated under this Agreement and the other Section 108
Documents, including without limitation any
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liability, loss, cost or expense arising under the
environmental laws of any jurisdiction.
Notwithstanding the fact that it is in the intention of the parties
hereto that neither the City, JEDA, nor their respective officers, directors,
members, employees, attorneys and agent shall incur any pecuniary liability by
reason of the terms of this Agreement or of any other Section 108 Document, or
the undertakings required of the City and JEDA hereunder and thereunder, by
reason of the issuance and sale of the Air South HUD-Guaranteed Note, the
execution of the Section 108 Documents or the performance of any act requested
of the City or JEDA by the Grantee, including all claims, liabilities or losses
arising in connection with the violation of any statutes or regulations
pertaining to the foregoing; nevertheless, if the City or JEDA or any of their
respective officers, directors, members, employees, attorneys or agents should
incur any such pecuniary liability, then in such event the Grantee shall
indemnify and hold the City or JEDA and their respective officers, directors,
members, employees, attorneys and agents harmless against all claims by or on
behalf of any person, firm or corporation or other legal entity arising out of
the same and all costs and expenses incurred in connection with any such claim
or in connection with any action or proceeding brought thereon. Upon notice
from the City or JEDA, the Grantee shall defend the City and JEDA and their
respective officers, directors, members, employees, attorneys and agents in any
such action or proceeding. If called upon to provide indemnity under this
Section 4.1, the Grantee shall be subrogated to the rights of the indemnified
party.
Section 4.2. Limited Liability of City: no breach by the City of
this Agreement or of any provision or condition hereof shall result in the
imposition of any pecuniary liability upon the City or any charge upon the
general credit or taxing power of the City. The liability of the City under
this Agreement and any provision or condition hereof or for any breach or
default by the City of any of the foregoing shall be limited solely and
exclusively to the proceeds of the Air South HUD-Guaranteed Note received by
the City pursuant to the HUD Contract. The City shall not be required to
execute or perform any of its duties, obligations, powers or covenants
hereunder except to the extent said proceeds are available therefor.
No covenant, agreement or obligation contained herein shall be deemed
to be a covenant, agreement or obligation of any present or future director,
member, officer, employee or agent of the City in his individual capacity, and
neither the members of the City Council of the City nor any officer thereof
executing this Agreement shall be liable personally under this Agreement. No
officer, director, member, employee or agent of the City shall incur any
personal liability with respect to any other action taken, or not taken, by him
pursuant to this Agreement, provided he does not act with malicious intent.
The provisions of this Section 4.2 shall control every other provision
of this Agreement, anything in such other provisions to the contrary
notwithstanding.
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ARTICLE V. EVENTS OF DEFAULT
Section 5.1. Events of Default: The following shall constitute
events of default by the Grantee under this Agreement:
(a) Any material representation or warranty of the Grantee shall
have been false, inaccurate or misleading when made;
(b) The Grantee shall have breached its covenant in Section 2.3
hereof;
(c) The Grantee shall default in any of its covenants and
agreements hereunder other than those specified in paragraph
(b) hereof, and such default shall not have been cured within
thirty (30) days following the occurrence thereof; or
(d) The Grantee shall be in default under the Term Loan.
Section 5.2. Remedies: If Grantee does not comply with the
provisions of this Agreement, the City may in its sole discretion take any
and/or all of the following actions:
(a) In the case of a violation of the low-to-moderate-income
hiring requirement specified at Section 1.4 hereof, require
repayment of all of the Grant, together with interest thereon
at the rate per annum equal to the federal debt collection
rate in effect on the first business day following expiration
of the two year period specified in Section 1.4 above as
documented by the South Carolina Governor's Office and
computed on the basis of a 360 day year and the actual number
of days elapsed from the date of each advance of Grant monies
to the Grantee;
(b) In the case of a violation of its covenants in Section 2.3,
require the Grantee to pay the liquidated damages specified in
Section 2.3 hereof;
(c) Require the Grantee to take corrective actions to comply with
this Agreement;
(d) Cancel, terminate or suspend in whole or in part funding under
this Agreement or refrain from extending further assistance to
the Grantee until such time as Grantee is in full compliance;
or
(e) Take such other action at law or in equity as may be necessary
to protect its rights and interests hereunder, including
without limitation a suit for specific performance.
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ARTICLE VI. MISCELLANEOUS
Section 6.1. Severability: Any provision of this Agreement which
is or becomes illegal, invalid or unenforceable in any respect shall not in any
way affect or impair the legality, validity and enforceability of the other
provisions of this Agreement.
Section 6.2. Notices: Notices hereunder shall be sent by first
class mail or facsimile transmission as follows:
If to the City:
City of Columbia
City Hall
0000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: City Manager
Fax # (000) 000-0000
If to the Grantee:
Air South, Inc.
0000 Xx. Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Financial Officer
Fax # (000) 000-0000
The parties may by notice given hereunder designate changes of address
for purposes of this Agreement.
Section 6.3. Governing Laws: In addition to the federal laws and
regulations cited herein, this Agreement is made under and shall be construed
in accordance with the laws, regulations and ordinances of the State of South
Carolina and the City. By executing this Grant, the Grantee agrees to submit to
the jurisdiction in the courts of the State of South Carolina or the
appropriate federal courts for all matters arising or to arise hereunder.
Section 6.4. Effective Date: This Agreement is effective as of the
date of initial funding to the Grantee in accordance with the provisions of
Article III hereof.
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IN WITNESS WHEREOF, this Agreement has been executed as of the 15th day of
July, 1994.
CITY OF COLUMBIA SOUTH CAROLINA
By: /s/ Xxxxxx Xxxxx
----------------------------------
ATTEST: Xxxxxx Xxxxx
Its: Mayor
By: /s/ Zenda Leaks
----------------------------------
Zenda Leaks
Clerk to the City
GRANTEE:
AIR SOUTH, INC.
By: /s/
-----------------
Its: C.F.O.
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EXHIBIT A
(DRAFT OF GRANTEE'S COUNSEL OPINION]
September __, 1994
City of Columbia, South Carolina
City Hall
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
South Carolina Jobs-Economic Development Authority
0000 Xxxxxxx Xxxxxx, Xxx. 0000
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
XxXxxx & Xxxxxxx, P.A.
NationsBank Tower
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
RE: $1,500,000 Maximum Amount Section 108 Grant from the City
of Columbia, South Carolina to Air South, Inc.
Ladies and Gentlemen:
I am general counsel to Air South, Inc. (the "Grantee") and have acted
as such in connection with the execution and delivery of a Grant Agreement
dated as of July 15, 1994 (the "Grant Agreement") between the City of Columbia,
South Carolina (the "City") and the Grantee, pursuant to which the City will
make available funds to the Grantee from time to time in amounts aggregating
up to $12,000,000 (the "Grant"). In connection with the execution and delivery
of the Grant Agreement, the City and the Secretary of Housing and Urban
Development ("HUD") will enter into that certain CONTRACT FOR Grant GUARANTEE
ASSISTANCE UNDER SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF
1974 AS AMENDED, 42 U.S.C. Section 5308 (the "HUD Contract"), pursuant to which
the City will issue certain notes to be guaranteed by HUD in order to obtain
the funds with which to make the Grant. In exchange for the HUD guarantee of
the City's notes, the City has pledged to HUD
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certain community development block grant funds to which the City is or may
become entitled as security for repayment of the notes (the ("CDBG Pledge").
As a condition to and as consideration for its assistance in obtaining
the HUD guarantee of the City's notes, for the CDBG Pledge and for making the
Grant to the Grantee, the City has required the Grantee to make certain
representations and warranties and to enter into and perform certain covenants
with respect to job creation and other federal requirements in connection with
HUD's guarantee and with respect to the other terms and conditions upon which
the Grant will be made, all as set forth in the Grant Agreement. Disbursement
of a portion of the Grant shall be made in accordance with the Grant Agreement
and with that certain Grant Administration Agreement dated as of July 15, 1994
among the City, the South Carolina Jobs-Economic Development Authority and the
Grantee (the "Grant Administration Agreement").
The Grant Agreement and the Grant Administration Agreement are
hereinafter collectively referred to as the "Grant Documents". Capitalized
terms utilized herein and not otherwise defined herein shall have the meanings
ascribed to them in the Grant Agreement.
Please be advised that I have examined the Grant Documents and such
corporate proceedings and records of the Grantee and public registries and have
made investigation of such other matters as in my judgment permits me to render
an informed opinion on the matters set forth herein. I am a member of the Bar
of the State of Illinois and have assumed for purposes of this opinion that the
law of the State of South Carolina, where controlling as to the matters set
forth herein, is the same as the law of Illinois. Based upon the foregoing, it
is my opinion that:
1. The Grantee is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois, with corporate
powers adequate to own its property, to carry on its business as now conducted
and as proposed in the Business Plan and the Grant Documents to be conducted
and to perform its obligations under the Grant Documents. The Grantee is duly
qualified as a foreign corporation and is in good standing in the State of
South Carolina and in each other jurisdiction in which its conduct of business
or ownership of property makes such qualification necessary.
2. The execution, delivery and performance by the Grantee of each
of the Grant Documents are within the Grantee's power and authority, and the
Grantee has duly authorized the execution and delivery thereof and the taking
of all action necessary to carry out and give effect to the transactions
contemplated thereby.
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3. Neither the execution and delivery of any of the Grant
Documents, nor the consummation of the transactions therein contemplated, nor
fulfillment of or compliance with the provisions thereof, will (i) violate or
contravene any of the provisions of the charter, by-laws, articles of
incorporation or other governing documents of the Grantee; (ii) violate or
contravene any of the provisions of any law, governmental rule, regulation,
judgment, decree, writ, injunction, demand, order, franchise or permit binding
on the Grantee or its properties; (iii) conflict with or result in a breach of,
or constitute a default under (nor is there any waiver in effect which, if not
in effect, would result in any of the foregoing), any of the provisions of any
mortgage, contract or other instrument to which the Grantee is a party or by
which it or its property is bound; (iv) result in the creation or imposition of
any lien, charge or encumbrance upon any property of the Grantee pursuant to
the terms of any such indenture, mortgage, contract or other instrument except
the lien created by the Grant Documents; or (v) result in an occurrence of an
event for which any holder or holders of indebtedness may declare the same due
and payable.
4. Each of the Grant Documents has been duly executed and
delivered by the Grantee. Assuming the due execution and delivery thereof by
the other parties thereto, each Grant Document constitutes a legal, valid and
binding instrument enforceable in accordance with its terms.
5. There is no pending action or proceeding before any court,
governmental agency or arbitrator against or directly involving the Grantee,
and, to the best of my knowledge after diligent inquiry, there is no threatened
action, law suit or proceeding or any basis therefor affecting the Grantee
before any court, governmental agency or arbitrator which, in any case, may
materially and adversely affect the financial condition, operations or business
prospects of the Grantee or which affects the validity of any Grant Document or
any action taken or to be taken pursuant thereto.
6. No consent of any person and no authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body or other person is required for the due execution, delivery
and performance by the Grantee of the Grant Documents, except such as have been
obtained, including without limitation, approval of the shareholders or the
trustees or holders of any indebtedness of the Grantee.
Sincerely,
Xxxxxx Xxxxx, General Counsel
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EXHIBIT B
CERTIFICATE AS TO NO DEFAULT
The undersigned, the duly appointed_____________________________ of Air
South, Inc. (the "Grantee"), hereby certifies as follows:
(1) all of the representations and warranties of the Grantee in
the Grant Agreement dated as of July 15, 1994 (the "Grant
Agreement") are true, accurate and complete in all material
respects as of the date hereof as if made on the date hereof;
(2) no events of default exist under the terms of the Grant
Agreement;
(3) the Grantee has complied with all covenants and agreements to
be performed on its part under the Grant Agreement; and
(4) the Grantee currently maintains in effect all insurance
required to be maintained under the terms of the Grant
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be
executed and delivered this _____ day of _____, 199__.
By:
----------------------------------
, Air South, Inc.
-----------------
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