Exhibit 10.38
LOAN AGREEMENT
This Agreement made this 2nd day November 1999, between The City of
Oklahoma City, an Oklahoma Municipal Corporation (hereinafter "Lender") and
Tower Tech Inc., a publicly held Oklahoma Corporation (hereinafter "Borrower").
Definitions
Unless specifically provided otherwise or the context otherwise requires,
when used in the Loan Agreement:
(1) "Act" means the Housing and Community Development Act of 1974, Pub. L.
No. 93-383 codified as 42 U.S.C.ss.5301 et seq., as amended, and regulations
promulgated thereunder.
(2) "Audits" means the regular audit of the Borrower, a copy of which may be
requested by the Lender if required by HUD. 3) "Appropriate Draw Request" shall
consist of a complete and accurate statement by the Borrower on forms supplied
by Lender showing a complete and detailed breakdown of the total costs and
expenses incurred by Borrower for the project, reviewed by a committee comprised
of one representative of the Oklahoma Industries Authority, one from the Bank of
Oklahoma, one from the City Manager's office, and one from the Planning
Department.
(4) "City" means the City of Oklahoma City, an Oklahoma municipal corporation.
(5 "Closing Date" means the date of execution of this Loan Agreement by the
City.
(6) "Loan Funds" or "Funds" means proceeds of this Agreement.
(7) "Loan Documents" means this Loan Agreement, the Promissory Note, the
Mortgage, and other instruments, if any, securing repayment of the Loan. (8)
"Low and Moderate- Income Persons" means such persons as defined in 24 C.F.R.
Part 570, Section 570.3.
(9) "Project" means the Tower Tech manufacturing facility and other working
capital.
(10)"Project Site" means the location of the Project at SW 000xx Xxxxxx and
Interstate 44 within the corporate boundaries of the City of Oklahoma City,
Oklahoma, as more particularly described in Attachment "A".
(11)"Promissory Note" or "Note" means the promissory note of even date herewith
from Borrower to Lender evidencing the Loan.
(12)"Secretary" means the Secretary of Housing and Urban Development or any
other officialof HUD to whom the Secretary has delegated authority pursuant t
the Act.
(13) "Term" means the term of this Agreement, which shall commence upon the
Closing Date and shall terminate on the 12th month anniversary thereof or at
such time thereafter agreed to by both parties.
RECITALS
WHEREAS, Borrower has applied to the Lender for a Loan in the principal
sum of Two Million Dollars ($2,000,000) from Community Development Block Grant
Funds, and Lender has agreed to make a loan of such funds upon the terms and
conditions set forth below; and
WHEREAS, the purpose of this Loan is to assist the Borrower in the
operation of his manufacturing facility in Oklahoma City and providing operating
capital to aid the borrower; and
WHEREAS, the development ofthe Project will add, as previously agreed,
an additional 140 presently existing employees to the Oklahoma City area economy
and will add, as previously agreed, approximately 200 new employees within the
next three years and will provide other public benefits and qualify for
assistance under 24 CFR 570.208(a); and the Lender has agreed to provide Loan
Funds to Borrower for the Project; and the Loan from the Lender to Borrower for
the Project will assist in the development of the Project; and
WHEREAS, the Loan shall be evidenced by this Loan Agreement, the
Borrower's Promissory Note, and the Mortgage, and Uniform Commercial Code
Financing Statement; and
WHEREAS, the Lender is willing to make the Loan to Borrower
exclusively for the purposes herein above set forth, all upon the terms and
conditions herein set forth; and
WHEREAS, the Lender makes no commitment to future support and assumes
no obligation for future support of the activities contracted for herein, except
as expressly set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals and the
terms, covenants and conditions, representations and warranties contained
herein, the parties hereto agree as follows:
TITLE I
THE LOAN
1.1 The Loan. In reliance upon Borrower's representations and
warranties contained herein, and subject to the terms and conditions set forth
herein, the Lender hereby agrees to make a Loan to Borrower in the sum of Two
Million Dollars ($2,000,000) exclusively for the purposes set forth herein,
which Loan shall be funded out of funds received by the Lender through HUD from
the Community Development Block Grant (CDBG) program and from no other source.
Borrower shall have the right to receive Loan Funds only pursuant to the terms
and conditions of this Agreement and in accordance with the Act, and then only
to the extent CDBG proceeds are made available to the Lender by HUD. Should
anticipated sources of Loan Funds become unavailable to the Lender, the Lender
shall within a reasonable time not to exceed ten (10) working days notify
Borrower in writing and the Lender shall be released from all liability for that
portion of the Funds to be provided to Borrower by the Lender under this Loan
Agreement which have not been received by the Lender from HUD.
1.2 Loan Documentation. The Loan will be evidenced by this Loan
Agreement, the Note, the Mortgage, and the Uniform Commercial
Code Financing Statement.
1.3 Demand. Lender may demand repayment of the Loan in the event
of the occurrence of an Event of Default hereunder.
ARTICLE II
BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to make the Loan, Borrower represents
and warrants (which representations and warranties shall be true and correct as
of the execution hereof and shall survive the execution and delivery of this
Loan Agreement) as follows:
2.1 Organization of Borrower, Authority to Enter into Agreement.
Borrower is an Oklahoma corporation duly formed and validly in existence and in
good standing pursuant to laws of the State of Oklahoma and duly domesticated in
the State of Oklahoma. Borrower has the right and power to purchase and occupy
the Project Site, and to develop the Project; and Borrower has full power and
authority to enter into this Agreement. The execution, delivery and performance
of this Agreement has been duly authorized by all-necessary corporate action and
no other authorization by Borrower is required for the execution, delivery and
performance of this Agreement.
2.2 No Litigation. As of the date of execution of this Agreement,
there are no actions, suits or proceedings pending, or to the knowledge of
Borrower threatened against or affecting it, its controlling Board, or the
Project in any court at law or in equity, or before or by any governmental or
municipal authority which might have a materially adverse effect on the ability
of Borrower to perform its obligations hereunder.
2.3 Title. Borrower has legal title in the Project Site sufficient
to enable Borrower to develop the Project thereon.
2.4 Covenants, Zoning and Codes. Borrower has complied to date and
will continue to comply with all-applicable enviromenental statutes and
regulations applicable to the development of the Project. All permits, consents,
approvals or authorizations by, or registrations, declarations, withholding of
objections or filings with any governmental body necessary in connection with
the valid execution, delivery and performance of the Loan Documents, or
presently necessary for the development of the Project, have been obtained, are
valid, adequate and in full force and effect or will be obtained prior to the
commencement of any Project Activities for which a permit, consent, approval or
authorization is necessary. Development of the Project will in all respects
conform to and comply with all covenants, conditions, restrictions and
reservations affecting the Project Site and with all applicable zoning,
environmental protection, use and building codes, laws, regulations and
ordinances.
2.5 Creation of Jobs. Lender has relied upon representations made by
Borrower that the Project is expected to create a specific number of permanent
new job opportunities, including a specific number of new permanent job
opportunities for Low and Moderate-Income Persons. By its execution of the Loan
Documents, Borrower acknowledges its previous representation, as stated in the
Loan Agreement dated September 8, 1997 by and between the City of Oklahoma City
and Tower Tech (Prior Agreement), pertaining to the creation of jobs and
obligation to create approximately 200 new permanent jobs. Borrower agrees to
use its best efforts to ensure that at least 51 percent of all new permanent
jobs resulting from the Project are made available to Low and Moderate income
Persons.
2.6 Compliance With Documents. As of the date hereof and for so long as
this Agreement remains in effect, Borrower is and shall remain in full
compliance with all of the terms and conditions of the Loan Documents, and no
Event of Default has or shall have occurred and be continuing, which, with the
lapse of time or the giving of notice, or both, would constitute such an Event
of Default under the foregoing.
2.7 Incorporation of Re-presentations and Warranties. The request by
Borrower for any payment of Loan funds under the Loan Documents shall constitute
a certification by Borrower that the aforesaid representations and warranties
are true and correct as of the date of such request.
ARTICLE III
CONDITIONS PRECEDENT TO LOAN CLOSING
The Lender's obligation to enter into and perform its duties under the
Loan Documents shall be subject to the full and complete satisfaction of the
following conditions precedent:
3.1 Documents. The Lender shall have received and approved fully
executed originals of this Loan Agreement, the Note, the Mortgage, the Uniform
Commercial Code Financing Statement, and the non-recourse personal guarantee, in
a form approved by Lender, Xxxxxx Xxxxxx, Chief Executive Officer; Xxxxxx Xxxxx,
President; Xxxxx Xxxxxx, Vice President; and Xxxxxxx Xxxxxxxx, Chief Finance
Officer secured by a pledge of their common stock in Tower Tech Inc. all of
which shall have been duly authorized, executed and delivered by Borrower.
3.2 Evidence of Authority. The Lender shall, upon written request,
receive evidence satisfactory to it that Borrower and the persons signing on
behalf of Borrower have the capacity and authority to. execute and deliver the
Loan Documents on behalf of Borrower.
3.3 Insurance. Borrower shall, for so long as the Loan Documents remain
in effect, at its cost and expense, carry and maintain general public liability
insurance against claims for bodily injury, personal injury, death and property
damage occurring or arising out of the Project, which insurance shall cover such
claims as may be occasioned by any act, omission, or negligence of Borrower or
its officers ' agents, representatives, assigns or servants relating to the
Project. The limits of liability insurance, which may be required to be
increased from time to time as deemed necessary by the Lender, with the approval
of Borrower, which shall not be unreasonably withheld, shall be not less than
One Million Dollars ($ 1,000,000.00) combined single limit personal injury and
property damage insurance. The insurance required above shall be issued by an
insurance company or companies authorized to do business within the State of
Oklahoma or by such other similar insurance coverage approved by the Insurance
Commissioner of the State of Oklahoma. The Lender shall be specifically named as
an additional insured on all such policies, and any such policy or policies
shall be primary to any other valid and collectible insurance.
ARTICLE IV
CONDITIONS PRECEDENT TO LOAN DISBURSAL
4.1 Conditions Precedent to Disbursal of Loan Funds. The Lender's
obligation to disburse Loan Funds pursuant to the terms hereof shall, in
addition to compliance with the terms of Article III hereof, be subject to
satisfaction of the following condition precedent:
(a) The Lender shall have received and have in its possession
sufficient proceeds from HUD to fund the disbursal request of Borrower.
Borrower acknowledges that it has no right to the Loan funds other than
to have them disbursed by the Lender in accordance with the terms of
this Loan Agreement and in accordance with the Act and then only to the
extent the Lender has received funds from HUD.
(b) Receipt by Lender of an Appropriate Draw Request covering
the sum to be reimbursed for eligible expenses incurred to
develop the Project.
4.2 Conditions Precedent to Subsequent Disbursals. In addition to
compliance with the conditions set forth in Section 4.1 hereof, Lender's
obligation to make any dispersal of Loan Funds after the initial dispersal shall
be subject to satisfaction of the following conditions precedent:
(a) Borrower shall be in full compliance and shall not be in default
hereunder or under any of the Loan Documents, provided, however, that Lender
may, in its sole discretion, elect to make advances notwithstanding the
existence of a default, and any advance so made shall be deemed to have been
made pursuant to the Loan Documents;
(b) Neither the Project nor the Project Site nor any part thereof shall
have been materially damaged, destroyed, condemned or threatened with
condemnation unless Borrower shall show to Lender's satisfaction that the
Project remains viable; and
(c) No order or notice shall been made by, or received from, any
governmental agency having jurisdiction, stating that the development of the
Project is or will be in violation of any law, ordinance, code or regulation
affecting the Project Site.
4.3 Borrower's Draw Requests. Subject to the conditions precedent in
Section 4. 1 (a), Lender agrees that it will make every reasonable effort to
disburse the Loan installments within ten (10) days after receipt of each
Appropriate Draw Request from Borrower provided said Draw Request is submitted
on any Monday work day.
4.4 Collateral. Borrower has executed a Promissory Note of even date
with this Loan Agreement to evidence its promise to repay the Loan. The
Promissory Note will be secured by a Mortgage on the Project Site.
ARTICLE V
BORROWER'S LOAN COVENANTS
5.1 General. From and after the date hereof and during the Term, Borrower
covenants and agrees that it will: (a) Accomplish the project and provide for
the "Creation of Jobs" as set forth in Section 2.5. (b) Obtain and maintain the
insurance required herein.
5.2 Payment of Obligations. Borrower shall pay all indebtedness, taxes
and other obligations pertaining to the Project or Project Site for which it is
liable before they shall become delinquent; provided, however, Borrower shall
have the right to contest any such obligations in good faith, and shall not be
obligated to pay any such obligation so long as such contest has not been
finally determined.
5.3 Changes to Project . There shall be no material change to the
Project without the prior written approval of the Lender, and, to the extent
that such approvals may be required, the appropriate governmental authorities.
5.4 Compliance with Laws. All work performed in connection with
Borrower's development of the Project and Borrower's use of the proceeds of the
Loan shall comply with the Act and all other applicable laws, ordinances, rules
and regulations of federal, state, county or municipal governments or agencies.
5.5 Inspections. The Lender and the Secretary or their representatives
shall have the right at all reasonable times during regular business hours (and
at any time in the event of an emergency) to enter upon the Project Site and
inspect the Project to determine that the same is in conformity with this Loan
Agreement and all laws, ordinances, rules and regulations applicable to
Borrower's use of the Loan Funds. The Lender and the Secretary or their
representatives shall have the further right, from time to time, to inspect
Borrower's books and records relating to Borrower's use of the Loan Funds.
Without limiting the foregoing, Borrower shall permit the Lender and the
Secretary or their representatives to examine and copy all books, records and
other papers relating to Borrower's use of the Loan Funds to insure Borrower's
compliance with the Act and applicable provisions of 24 CFR Part 570. The Lender
agrees that subject to provisions of the Oklahoma Open Records Act, 51 Okla.
Stat. 1991, ss. 24. A. 1 et seq. and any other applicable law, to keep all
information regarding Borrower and its operations confidential, and to provide
Borrower with prior notice and an opportunity to object to any request for
disclosure of such information, other than to the Secretary or as otherwise
required by law.
5.6 Notify the Lender of Litigation or Complaints. Borrower shall
immediately notify the Lender in writing, of all material proceedings,
litigations or claims which may adversely affect Borrower's rights hereunder or
any part of the Project or Project Site, and of all material complaints or
charges made by any governmental authority affecting Borrower, the Project, or
the Project Site which may require material changes in the development of the
Project.
5.7 Indemnify the Lender. Borrower shall indemnify and hold the Lender,
its elected and appointed officials and any employees, harmless from all claims
and causes of actions of any person or entity which results in damages or injury
incurred by the Lender of whatsoever nature (excluding any consequential or
incidental damages or damages, claims or causes of action due to the Lender's
negligence or the Lender's breach of this Loan Agreement), caused by any acts or
omissions of Borrower and arising out of or in any way connected with this Loan
Agreement, the Project Site and or the development of the Project or arising out
of Borrower's breach of the provisions of this Loan Agreement, including the
cost and defense thereof using counsel approved by the Lender. Notwithstanding
anything contained herein to the contrary, the foregoing indemnification given
by Borrower to the Lender shall not be effective or enforceable against Borrower
unless the Lender gives Borrower written notice of any such claims or causes of
action of said person or entity made against the Lender within ten (10) working
days of the Lender's knowledge of such claims or causes of action, and the
Lender does not commence or enter into any settlements or negotiations of
settlement with any person or entity relating to the matters covered by
Borrower's indemnification without Borrower's prior written consent. If Borrower
fails to defend or perform its obligations under this indemnification within
twenty (20) days after written request by the Lender, the Lender may settle,
commence, or defend any action or proceeding purporting to affect the rights,
duties or liabilities of the Lender, the parties to the Loan Document, or the
Project Site or the Project and Borrower shall pay all of the Lender's costs and
expense incurred thereby on demand. This section shall survive execution,
delivery and performance of the Loan Documents.
5.8 Further Assistance. Borrower shall at any time and from time to
time upon request of the Lender take or cause to be taken any action or execute,
acknowledge, deliver or record any further documents, opinions, or other
instruments which the Lender is required to do or obtain by HUD or by any other
federal, state or county regulatory agency or which the Lender feels are
required to carry out the intent of the Lender and Borrower under the Loan
Documents.
5.9 Upon failure of Borrower to comply with any of the foregoing Loan
Covenants, the Lender may declare an Event of Default hereunder and exercise its
rights and remedies pursuant to Article VI of this Agreement.
ARTICLE VI
DEFAULT AND REMEDIES
6.1 Event of Default. The occurrence of any of the following events and
failure to cure such occurrence within stated periods shall constitute an Event
of Default hereunder:
(a) Any breach by Borrower of any of the covenants and
conditions of the Loan Documents, which breach is not cured by Borrower
to the Lender's reasonable satisfaction within twenty (20) days from
the receipt of written notice thereof, provided, however, that in the
event of a breach or default by Borrower which is outside of the
control of Borrower and which cannot be cured within said twenty (20)
days, Borrower shall have commenced to cure its breach or default
within said twenty (20) days and thereafter diligently proceed to cure
its breach or default; or
b) Any written representation, warranty or disclosure made to
the Lender by Borrower that proves to be materially false or misleading
as of the date when made, whether or not such representation or
disclosure appears in this Loan Agreement; or
(c) Any material change in the development of the Project
without the prior written approval of the Lender which change is not
corrected or substantially corrected within twenty (20) days after
receipt of written notice thereof from the Lender to Borrower; or
(d) Failure by Borrower to defend, indemnify and/or hold
harmless the Lender pursuant to Section 5.7 to this Loan Agreement.
(e) Notwithstanding anything to the contrary contained herein,
any violation by Borrower of the Act-or any other laws, ordinances,
rules or regulations applicable to the
Project or Borrower's use of the Loan Funds shall immediately constitute an
Event of Default hereunder.
6.2 Remedies. Upon the occurrence of any Event of Default not timely
cured as provided herein, all of the outstanding principle balance and interest
accrued thereon, if any, shall be immediately due and payable and the Lender
shall have recourse against the collateral pledged as described in Section 4.4
hereof to the extent such amount remains unpaid.
6.3 Penalties. In the event of a default, interest at the per annum
rate established in the Note shall accrue on the total principal amount of the
Loan then outstanding, from the date of the occurrence of such default until
payment as required hereunder shall have been made in full.
ARTICLE VU
MISCELLANEOUS
7.1 No Waiver. No waiver of any default or breach by Borrower under the
Loan Documents shall be implied from any failure by Lender to take action on
account of such default if such default persists or is repeated, and no express
waiver shall be operative only for the time and to the extent therein stated.
Waivers of any covenant, term or condition contained herein shall not be
construed as a waiver of any subsequent breach of the same covenant, term or
condition. The consent or approval by Lender to, or of, any act by Borrower
requiring further consent or approval shall not be deemed to waive or render
unnecessary the consent or approval to, or of, any subsequent similar act.
7.2 Successors and Assigns. This Loan Agreement is made and entered
into for the sole protection and benefit of the Lender and Borrower, their
successors and assigns, and no other person or persons shall have any right of
action hereunder. The terms hereof shall inure to the benefit of the successors
and assigns of the parties hereto; provided, however, that Borrower's interest
hereunder cannot be assigned or otherwise transferred without the prior written
consent of the Lender.
7.3 Notices. Any notice, demand or request required under the Loan
Document shall be given in writing at the addresses set forth below by personal
service, overnight courier providing a receipt, or registered or certified first
class mail, return receipt requested. The addresses may be changed by notice to
the other party given in the same manner as provided above. If notice is given
by mail, it shall be deemed received on the earlier of: (I) receipt as shown on
the return receipt, or (ii) three (3) days after its deposit in the U.S. Mail.
To Borrower:
Attention:
Tower Tech Inc.
X.X. Xxx 000000
Xxxxxxxx Xxxx, XX 00000
Xxxxxxx X. Xxxxxxxx,
Chief Financial Officer
To The Lender:
The City of Oklahoma City
Planning Department
000 Xxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx, Planning Director
7.4 Time. Time is of the essence of the Loan Document.
7.5 Amendments. No amendment, modification, or termination of any
provisions of any of the Loan Document shall in any event be effective unless
the same shall be in writing and signed by parties.
7.6 Headings. The article and section headings in no way define, limit,
extend or interpret the scope of the Loan Document or of any particular article
or section thereof.
7.7 Number and Gender. When the context in which the words are used in
the Loan Documents indicate that such is the intent, words in the singular
number shall include the plural and vice-versa. References to any gender shall
also include the other gender if applicable under the circumstances
7.8 Validity. The provisions of this Loan Agreement are severable and
if any word, sentence, clause, phrase, or other portion of this Loan Agreement
is, for any reason, held invalid by any court of competent jurisdiction, such
portion shall be deemed a separate, distinct and independent provision and such
holding shall not affect the validity of the remaining portions of this Loan
Agreement.
7.9 Governing Law. This Loan Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma, except to the
extent federal law applies.
7.10 Survival of Warranties. All agreements, representations and
warranties made herein survive the execution and delivery of the Loan Document
and the making of the Loan hereunder and continue in full force and effect until
the obligations of Borrower under the Loan Documents are satisfied in full.
7. 11 Venue and Forum. In the event that any legal action should be
filed by either party against the other, the venue and forum for such action
shall be the District Court of Oklahoma County, Oklahoma.
7.12 Attorney's Fees. In the event Lender shall bring an action to
enforce the terms and conditions of the Loan Documents, Lender, if prevailing,
shall be entitled to recover all of its costs and expenses, including, but not
limited to, reasonable attorney's fees as determined by the court.
7.13 Duplicate Originals. The Loan Document shall be executed in more
than one counterpart, each of the parties hereto shall receive an original
counterpart; provided, however, that all originals together shall constitute one
and the same agreement.
7.14 Other Federal Provisions. This Loan is subject to applicable
provisions contained in 24 CFR 570.
IN WITNESS WHEREOF, Borrower and the Lender have executed this Loan
Agreement as of the date first written above by and through their duly
authorized representatives.
THE CITY OF OKLAHOMA CITY
ss/XXXX XXXXXXXXX
--------------
Mayor
ATTEST:
ss/XXXXXX X. XXXXXX
-------------------
City Clerk
APPROVED as to form and legality this 7th day of November 1999.
ss/XXXXXXX XXXXXXX
-------------------
Assistant Municipal Counselor
ATTEST:
TOWER TECH, INC.
By:ss/XXXXXXX X. XXXXXXXX
---------------------
Chief Financial Officer
CORPORATE ACKNOWLEDGMENT
STATE OF OKLAHOMA
COUNTY OF OKLAHOMA
On this 1st day of November, 1999, before me personally appeared Xxxxxxx X.
Xxxxxxxx known to be the CFO of Tower Tech, Inc., that executed the within and
foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said corporation, for the uses and purposes therein
mentioned, and on oath stated that he/she was authorized to execute said
instrument and that the seal affixed is the corporate seal of said corporation.
In Witness Whereof I have hereunto set my hand the day and year first above
written.
ss/XXXXX XXXXX XXXX
--------------------
NOTARY PUBLIC
MY COMMISSION EXPIRES: March 9, 2002
ATTACHMENT "A"
