LOAN AGREEMENT
Made this 3rd day of January 1984 by and between the City of Gloucester
City; New Jersey ("Lender") and Xxxx Hauling and Warehousing System, Inc. a
corporation having its principal place of business in Gloucester City
("Borrower").
W I T N E S S E T H :
Background
On December 28, 1983, the Lender entered into A Grant Agreement, Grant
Number B-82-AB-34-0223 ("Grant Agreement") with the United States Department of
Housing and Urban Development ("HUD") for an Urban Development Action Grant
("UDAG") to finance a low cost loan ("Loan") to Borrower, to in turn finance
certain port development improvements at the Borrower's facility in Gloucester
City. Included in said port development improvements are the purchase of
capital equipment, real estate improvements and legal and other associated
costs, all of which constitute the "Project".
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The Equipment purchases in the form of two (2) rail supported container
cranes are being financed by a conventional loan of $5,333,000 (equivalent in
Deutshmarks) from Solzgitter Xxxxx GmbH of Bremen, West Germany. The mortgage
lender is National Acceptance Company of America, a Delaware Corporation located
in Chicago, Illinois, with a loan of $2,500,000 for the construction of a
marginal pier,
Specifically, the Project consists of the following application and
sources of funds:
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USE OF FUNDS SOURCES OF FUNDS
Line Item Activity UDAG Private Funds TOTAL
(Construction Pro Forma) Funds (see below) COSTS
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a. Land/Riparian Rights $ 293,200 $ 293,200
Acquisition Riparian Land rights
from State of New Jersey; Property and
riparian rights at 000 Xxxxxxxx Xxxxxx
b. Wetlands recreational $ 250,000 $ 250,000
park development bordering
Xxxxxx Creek in Camden, N.J.
c. Construction of marginal $2,702,113 $ 2,747,887 $ 5,450,000
dock facility for container-
ized cargo
d. Conversion of Building #1 $ 713,623 $ 713,623
into refrigerated warehousing
e. Development of parking/ $ 764,040 $ 764,040
cargo loading at Xxxxxxx
Avenue
f. Engineering Fees for $ 125,000 $ 125,000
marginal dock facility
g. Legal fee of New Jersey $ 9,000 $ 9,000
Corporate Counsel of Record
h. Legal fee of Corporation $ 35,000 $ 35,000
Counsel for Project
i. Construction Period Interest $ 350,000 $ 350,000
j. Real Estate Taxes during $ 2,250 $ 2,250
construction
k. Capital Equipment $ 893,420 $ 5,233,000 $ 6,126,420
(two (2) container cranes)
1. Operating losses (working $ 100,000 $ 100,000
capital) not counted in
leverage ratio
TOTAL PROJECT COSTS $3,595,533 $ 10,623,000 $14,218,533
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Sources of Funds (Private)
(1) National Acceptance Company shall make a mortgage loan to the
Borrower of $2,500,000 for development of the marginal pier facility.
(2) Solzgitter Xxxxx GmbH shall make a seller financed loan to the
Borrower of $5,333,000 (equivalent in Deutshmarks) for the two
container cranes.
(3) The Borrower shall expend not less than $2,790,000 in cash equity
for acquisition of property and riparian rights, development of
marginal pier facility, conversion of approximately 34,000 s.f. of
Building #1 into refrigerated warehousing, parking development, wetland
recreational park development, construction interest and taxes and any
professional fees related to this project.
TOTAL $10,623,000
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Thus, there is a financing gap of $3,595,533 to be filled by this loan
agreement. The source of funds for this is a Grant Agreement executed between
the HUD and the City of Gloucester City, New Jersey as identified above. The
terms of this Loan Agreement is based upon this Grant Agreement. These terms
itinerate that the Borrower provide to the Lender sufficient documented
evidence with respect to the following items:
PRECONDITIONS.
(a) All governmental approvals and permits, including but not limited
to the following:
(1) U.S. Corps of Engineers approvals and permits for dredging,
silting and other work within the navigable waters involved.
(2) All environmental clearances and approvals necessary to
accomplish the proposed Project.
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(3) All approvals and permits necessary for the establishment of
a wetland recreational parkland.
(4) Any and all other clearances, approvals and permits issued by
the proper Federal, State, County or municipal entities necessary
to initiate construction and completion of the proposed Project.
(b) Title (leasehold or fee simple as appropriate) to all land
necessary for the Project, shall be held by the Borrower. These
documents shall be accompanied by a legal opinion of counsel to the
Borrower certifying that on a specified date, either an original ALTA
policy of land or mortgage title insurance, or other records
identified in the opinion, were examined by Borrower's counsel; and
that said policy or other records identify the Borrower, or a
wholly-owned subsidiary of the Borrower,
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as the owner or lessee of record, in fee simple or leasehold of said
property. The opinion shall further state that on the date specified
by Borrower's counsel, the record fee simple or leasehold title to
said real property was vested, in the Borrower, or such subsidiary
thereof.
(c) Loan from Xxxxx to the Borrower for $5,333,000 for financing, in
part, the purchase and installation of two (2) rail supported
container cranes. This loan contract is accompanied by opinion of
Borrower's legal counsel that same is legally valid and enforceable
under the laws of the State of New Jersey, and that all persons
executing these documents on behalf of the Borrower were authorized to
do so.
(d) Loan from "NAC" to the Borrower for $2,500,000 for development of
the marginal pier facility. This loan contract is accompanied by
opinion of Borrower's legal counsel that same is legally valid and
enforceable under the laws of the State of New Jersey, and that all
persons executing these documents on behalf of the Borrower were
authorized to do so.
(e) Borrower shall provide not less than $2,790,000
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in equity funds. for the acquisition of real property and riparian
rights, the development, in part, of the marginal pier facility, the
parking facility on Xxxxxxx Avenue, the development of a wetlands park
in Camden City immediately north of Xxxxxx Creek, local property taxes
and construction period interest and professional fees related to this
project. Evidence shall be on the letterhead of the Borrower and/or
the lending institution (by way of an irrevocable and unconditional
letter of credit) identifying the amount of liquid assets on hand or
immediately available and applicable to the project or which have been
expended by Borrower subsequent to HUD's preliminary approval of the
UDAG and in furtherance of project activities identified above. The
document shall be executed by an authorized officer of the Borrower
and/or the lending institution, and shall have attached an opinion of
the Borrower's legal counsel or certified public accountant that the
document is properly authorized and reflects an accurate appraisal of
the equity funds, on hand, immediately available, irrevocably
committed or which have been expended by Borrower subsequent to HUD's
preliminary approval of the UDAG in furtherance of project activities
identified above.
All of the above evidentiary materials (a) through (3) must be
provided to the Lender on or before January 31, 1984.
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LOAN TERMS
(1) Lender is obliged to carry out the project activities
identified above at a cost of not less than $14,218,533.
(2) Lender shall loan $3,595,533 to Borrower for the partial
financing of the construction of a marginal dock facility and the
acquisition and installation of two (2) rail supported container
cranes. The terms and conditions of the loan shall be consistent
with the following:
(i) Construction Loan
(A) Interest - No Interest.
(B) Construction Period - The construction period shall
commence upon the initial disbursement of Grant Funds and
shall continue for a period of 14 months from said initial
disbursement, but in no event later than April 30, 1985.
(C) Disbursement/Ratio - Loan disbursements shall be
based on vouchers submitted by the Borrower and certified by
the architect, construction manager, or other certifying
official as shall be acceptable to the Lender. All
submissions by contractors of monthly requisitions shall be
on AIA Forms 702 and 703 or their equivalent.
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No disbursement of loan funds shall be made until the Borrower has
certified that it has expended $2,790,000 in cash equity.
No loan disbursements shall be made in an amount which together with
previous disbursements would exceed the ratio of $1.00 of UDAG Funds for every
$2.90 of private funds expended by the Borrower for the Project. Expenditure
documentation shall be properly presented to the Lender by the Borrower.
(ii) Permanent Loan
(A) Term 12 years commencing upon the completion of
construction, but in no event later than April 30, 1985.
(B) Interest - Five percent (5%) during years one through
four. Seven percent (7%) during years five through twelve.
(C) Repayment
(aa) Years one through four, interest shall accrue at
five percent (5%) per annum and shall be added to the loan
principal in year five (5) to form a new enlarged principal
balance. Principal
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payments during years one through four shall be deferred.
(bb) Years five through twelve interest at seven
percent (7%) on the new enlarged loan principal together
with a principal repayment is to be made in monthly
installments in accordance with a 25-year amortization
schedule. A balloon payment of the outstanding principal
balance together with all interest and accrued interest
shall be made at the end of year 12.
(D) Security - The loan shall be secured by a security
interest, deed of trust or mortgage in favor of the Lender upon
all assets of the Borrower comprising the Project. The security
position of the Lender may be subordinated to the security
interest of the Mortgage Lender (NAC) and the Equipment Lender
(Xxxxx) provided that the aggregate principal amount of Mortgage
Lender's loan and the Equipment Lender's loan does not exceed
$7,833,000. The security interest, deed of trust or mortgage
shall also contain standard provisions to protect the interest of
the second mortgagee, including, for example, a provision that a
default under the first mortgage which could permit a foreclosure
by the first mortgagee shall constitute a default under the
second mortgage and the unpaid principal balance and interest
shall be due and payable. NOTWITHSTANDING the foregoing provision
of this paragraph (D), it is understood that the security
interest referred to herein in all cases is junior and
subordinate to existing security interests granted by borrower to
third party lenders prior to the date of the execution of this
agreement and other than that as specified above.
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(E) Sale/Refinancing - The entire balance of the
outstanding principal of this UDAGloan and all accrued unpaid
interest thereon, shall become immediately due and payable upon
the bankruptcy, reorganization, syndication, dissolution or
liquidation of the Borrower, or upon the sale, partial sale,
refinancing, exchange, transfer, sale under foreclosure, or other
disposition of the Project Site, improvements and/or capital
equipment situated thereon, except for a one time refinancing of
the Mortgage Lender's outstanding loan balance any time during
the first year following completion of construction for this
Project and except for the one time refinancing of the Equipment
Lender's outstanding loan balance any time during five years
following completion of construction for this Project provided
such refinancing does not exceed the original amount of each
respective loan. Lender does agree to request permission from HUD
permitting Borrower to extend the eligible period during which
Borrower can refinance, if so requested by Borrower.
(iii) Prepayment - Prepayment may occur at any time without
penalty.
(iv) Guarantee - Borrower shall unconditionally and irrevocably
guarantee repayment of the Loan and completion of the Project.
(3) The timeframe to be conformed to by the Borrower for the beginning
and completion of project activities is as follows:
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Commencement Completion
Activity Date Date
-------- ------------ ----------
Acqusition of nine acres of On or before
riparian land rights from March 1, 1984 March 30, 1984
the State of New Jersey
Acquisition of property On or before
and riparian rights Xxxxx 0, 0000 Xxxxx 30, 1984
at 000 Xxxxxxxx Xxxxxx
Development and construction On or before
of marginal dock facility March 1, 1984 April 30, 1985
Development of Wetlands On or before
Recreational Park at the March 1, 1984 April 30, 0000
Xxxxxx Xxxx/Xxxxxx Xxxxx
site
Development of approximately On or before April 30, 1985
15 acres of parking/cargo March 1, 1984
loading space on Xxxxxxx
Avenue
Acqusition and installation On or before April 30, 1985
of two (2) rail supported March 1, 1984
container cranes
Conversion of approximately On or before April 30, 1985
34,000 square feet of Building March 1, 1984
#1 into refrigerated xxxx-
housing
In the event Borrower cannot complete any activity by this timetable,
then Borrower must notify the Lender in writing at least ten (10) days prior to
a deadline and request an extension for a specific date and state its reasons.
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(4) The Borrower shall provide Lender documented evidence in the form
of employment or payroll records as certified by an authorized officer of
the Borrower as to conformance with the following employment goals as set
for the project:
(a) Total permanent jobs generated by the project (i.e. additions
to Borrower's work force): 335
(b) Total permanent jobs filled by persons of low/moderate income
as defined under Section 570.3 of 24 C.F.R., Part 570 as may be from
time to time amended: 331
(c) Total permanent jobs filled by "CETA -Eligible" persons (i.e.
"chronically unemployed"): 8
(d) Total permanent jobs filled by minority persons: 149
The above job goals shall be met within 36 months from November 3,
1983, or by November 2, 1986. The Borrower agrees to use its best efforts to
create or cause to be created within this time period those jobs identified
above.
(5) Borrower will include in all contract relating to any and all
construction activities financed in part or
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in whole by the UDAG loan the language of Exhibit A relating to Federally
required general bid conditions. Borrower will cooperate with Lender's on
site inspection and review of contractors records to insure compliance with
these conditions. Particular attention is addressed to Federal requirements
on the payment of prevailing wages for all labor.
(6) Borrower and Lender will individually comply with the relevant
provisions set forth in Exhibit B as they pertain to
(a) Program Income as applied to costs and for its use for Title
I eligible activities;
(b) Maintaining Records and right to inspect;
(c) Access to Project by HUD;
(d) No Assignment of Succession;
(e) HUD Approval of Loan Agreement Amendments;
(f) Disclaimer of Relationship and Conflict of Interest;
(g) Limitation of Lender's Liability; and
(h) Sign Display at Project Site.
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(7) Borrower will be reimbursed (a grant, not a loan) for up to
$15,000 in costs incurred by the Borrower in the preparation of the UDAG
application, and for any and all other costs incurred by the Borrower that
are reimbursable as UDAG Administration, per Borrower's contract for
consulting services with X'Xxxxxxxxx/Xxxxxxx, Joint Venture Development
Consultants. The reimbursement grant will be made upon the occasion of the
initial drawdown of the Lender under the UDAG. Such drawdown may occur
after all evidentiary documents, including this Loan Agreement and other
documents referred to in this Loan Agreement have been reviewed and
approved by HUD leading to the issuance of a Letter of Credit, and upon the
removal of all grant conditions imposed by HUD.
(8) Borrower hereby agrees that the happening or occurrence of any of
the following will, at the sole option of Lender, will constitute a default
hereunder:
(a) Failure by Borrower to make any payment of principal and
interest within thirty (30) days after due date hereunder:
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(b) Failure by Borrower to perform any covenant or warranty
hereunder within thirty (30) days after receipt of written notice from
Lender to perform or carry out the same.
(9) Borrower hereby covenants, warranty and represents as follows:
(a) That all financial statements, profit and loss statements,
statements as to ownership, and other statements given to Lender are
true and correct and that Borrower has full and complete title to any
and all property which may be pledged or in which a security interest
has been created for this Loan;
(b) That Borrower will inform Lender of any litigation involving
Borrower, the adverse determination of which might substantially
prejudice payment of the Loan; and
(c) That Borrower will maintain adequate fire, theft, general and
public liability insurance and will deliver upon Lender's request,
copies of said policies evidencing such insurance.
(d) That Borrower has full corporate authority from its
respective shareholders and directors to enter into this Loan
Agreement; and
(e) That the proceeds of the Loan will be used only in connection
with the Project.
(f) That Borrower will participate in Lender's "job bank" program
and that both parties agree to the following obligations:
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(i) Borrower acknowledges and reaffirms unconditionally Borrower's
obligation and commitment to generate 16 additional permanent full-time
non-union jobs as set forth in the UDAG application. Borrower understands,
covenants and agrees that the Lender (City of Gloucester) will be given the
first opportunity to fill these additional employment positions with the
Borrower, through the Job Bank Program established by the Lender.
(ii) Borrower, in implementing its commitment to generate such
employment positions, shall contact the Job Bank representative of the Lender
with a written notification of the position available together with all
pertinent data relating to the employment. Such notification will be sent
directly to the Gloucester City Community Development Office, Attn: Community
Development Program Administrator.
(iii) Thereafter, the Lender shall have a fourteen (14) day period of
time within which to provide candidate(s) who are qualified and eligible for
such employment:
(iv) In the event the Lender fails to provide such candidate(s) or that
candidate proves to be unsuited to the positions available, the Borrower shall
at that time be free to make its own decision respecting the placement of the
additional employees.
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(10) The provisions of paragraph 8 and 9 notwithstanding, Borrower will
have thirty (30) days from receipt of written notice of default or breach, under
this agreement, to cure such default or breach.
(11) Borrower agrees to lease to the Lender the warehouse at 000
Xxxxxxxx Xxxxxx for a term of ninety-nine (99) years at an annual rent of One
($1.00) Dollar commencing the date this agreement is fully executed. The Lender
agrees to support Borrower in the acquisition, implementation and utilization of
riparian grants from the State of New Jersey to Borrower with regard, and
adjacent to, 000 Xxxxxxxx Xxxxxx as well as the riparian right adjacent to the
city street known as Monmouth Street.
(12) No provisions of this Loan Agreement can be deemed to have been
waived by Lender, except if in writing duly executed by Lender. Furthermore, no
waiver of any breach of default will be deemed a waiver of a breach or default
thereafter occurring.
(13) This is the entire agreement between the parties, and there is no
outside condition, warrant, agreement or understanding.
(14) This Agreement shall reference the Grant Agreement which shall
control in all instances where this Agreement is silent.
(15) Severability - If any provision of this Agreement, or the
application of such provision to any persons
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or circumstances, is held invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby.
IT WITNESS WHEREOF, the parties have executed this Loan Agreement, the
day and year first above written.
XXXX HAULING & WAREHOUSING SYSTEMS, INC.
BY:/s/ Xxxxxxx Xxxxxx
---------------------------------
CORPORATE SEAL ATTEST:/s/ Xxxx X. Xxxxx
-------------------------------
CITY OF GLOUCESTER, NEW JERSEY
BY:/s/ Xxxxxx [illegible]
---------------------------------
ATTEST:/s/ Xxxxxx X. [illegible]
-----------------------------
MUNICIPAL SEAL
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