IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT
CEBA LOAN AGREEMENT
CEBA LOAN NUMBER: 05-CEBA-41
AWARD DATE: June 28, 2005
KIND OF AWARD: Forgivable Loan
AWARD AMOUNT: $ 250,000
THIS COMMUNITY ECONOMIC BETTERMENT ACCOUNT ("CEBA") AGREEMENT is made
by and among the IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, 000 Xxxx Xxxxx Xxxxxx,
Xxx Xxxxxx, Xxxx 00000 ("Department" or "IDED"), City of Algona ("Community"),
000 X. Xxxx Xx., Xxxxxx, Xxxx 00000-0000, and Hydrogen Engine Center
("Business"), 000 X. Xxxx Xxxxxx, Xxxxxx, Xxxx 00000.
The Department desires to make a loan to the Community for the benefit
of the Business and the Community desires to accept this loan, all upon the
terms and conditions set forth in this Agreement. The Community desires to make
a loan to the Business and the Business desires to accept this loan, all upon
the terms and conditions set forth in this Agreement.
THEREFORE, in consideration of the mutual promises contained in this
Agreement and other good and valuable consideration, it is agreed as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall apply:
1.1 AGREEMENT EXPIRATION DATE. "Agreement Expiration Date" means the
date the Agreement ceases to be in force and effect. The Agreement expires upon
the occurrence of one of the following: a) the Loan is repaid in full or
required part, including accrued interest, court costs and any penalties; b) the
Agreement is terminated by the Department due to any default under Article X; c)
no disbursement of CEBA funds has occurred within the twenty four months
immediately following the Award Date; or d) if the Agreement includes only a
Forgivable Loan, at the end of the three (3) year contract period if the
Business or Community has demonstrated successful completion of the project Job
Attainment and Wage Obligation.
1.2 AWARD DATE. "Award Date" means the date on which the Economic
Development Board approved the IDED CEBA participation.
1.3 COMMUNITY BASE JOBS. "Community Base Jobs" means the number of
Full-time Equivalent (FTE) Jobs the Department determines are in place in the
Community at the time of application for CEBA funds and which will remain in the
Community whether or not CEBA funds are awarded. Said jobs must be maintained
for a minimum of thirteen (13) weeks beyond the Project Completion Date.
1.4 CREATED JOBS. "Created Jobs" means the number of new Full-time
Equivalent (FTE) Jobs the Business will add to the Community which meet the
Project Wage Obligation over and above the number of Community Base Jobs and/or
Retained Jobs. Said jobs must be maintained for a minimum of thirteen (13) weeks
beyond the Project Completion Date.
1.5 FORGIVABLE LOAN. "Forgivable Loan" means a loan for which repayment
is eliminated in part or entirely if the Community and Business satisfy the
terms of this Agreement, including the Job Attainment and Wage Obligations
stated in Article VII.
1.6 FULL-TIME EQUIVALENT (FTE) JOB. "Full-time Equivalent (FTE) Job"
means the equivalent of employment of one (1) person for eight (8) hours per day
for a five (5) day forty (40) hour workweek for fifty two (52) weeks per year.
1.7 JOB ATTAINMENT OBLIGATION. "Job Attainment Obligation" means the
aggregate total number of Community Base Jobs, Retained Jobs, Created Jobs and
State Employment Level pledged by the Community and Business.
1.8 LOAN. "Loan" means either a Conventional Loan or a Forgivable Loan,
or both, the terms of which are or may be set forth in this Loan Agreement.
1.9 LOAN AGREEMENT or AGREEMENT. "Loan Agreement" or "Agreement" means
this Agreement, the Project budget and all of the notes, leases, assignments,
mortgages, and similar documents referred to in the Agreement and all other
instruments or documents executed by the Business or Community or otherwise
required in connection with the Agreement, including but not limited to the
following:
a. Attachment A, Project Budget and Attachment B, Project Schedule.
b. Attachment B1, Promissory Note of the Business.
c. Attachment B2, Promissory Note of the Community.
d. Attachment C, CEBA Application for Assistance.
e. List of positions and associated hourly rate of pay to be created
and/or retained as a result of this project. Those positions
paying equal to or greater than the project Wage Threshold must be
highlighted.
1.10 PROJECT. "Project" means the detailed description of the work,
services, job attainment requirements and other obligations to be performed or
accomplished by the Community and Business as described in this Agreement and
the CEBA application approved by the Department.
1.11 PROJECT COMPLETION DATE. "Project Completion Date" means July 30,
2010 and is the date by which the Project tasks shall have been fully
accomplished including fulfillment of the Job Attainment Obligation.
1.12 PROJECT WAGE OBLIGATION. The "Project Wage Obligation" is at least
100% of the County Average wage as compiled from data from the Department of
Employment Services. The "Project Wage Obligation" for this project is a
starting wage of at least $11.76/hour.
1.13 RETAINED JOBS. "Retained Jobs" means the number of Full-time
Equivalent (FTE) Jobs the Department determines are in place in the Community at
the time of application for CEBA assistance and which the Business and Community
agree will be retained due to receipt of the CEBA funds. Said jobs must be
maintained for a minimum of thirteen (13) weeks beyond the Project Completion
Date.
ARTICLE II
FUNDING
2.1 FUNDING SOURCE. The source of funding for the Loan is an
appropriation by the State legislature for the CEBA Program. With respect to the
closing of the Loan, processing of post-closing documents and administration of
the Loan until paid in full, the Business and Community shall comply with the
requirements, conditions and rules of the Department and any other public or
private entity having authority over the funds or the Loan.
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2.2 RECEIPT OF FUNDS. All payments under this Agreement are subject to
receipt by the Department of sufficient State funds for the CEBA program. Any
termination, reduction or delay of CEBA funds to the Department shall, at the
option of the Department, result in the termination, reduction or delay of CEBA
funds to the Community and the Business.
2.3 PRIOR COSTS. No expenditures made prior to the Award Date may be
included as Project costs for the purposes of this Agreement.
2.4 DISBURSEMENT OF LESS THAN THE TOTAL AWARD AMOUNT. If the total
award amount has not been disbursed within one hundred twenty (120) days of the
Project Completion Date, then the Department shall be under no obligation for
further disbursement. And, the Community and Business shall be obligated to the
extent of Loan proceeds received.
ARTICLE III
TERMS OF FORGIVABLE LOAN
3.1 FORGIVABLE LOAN. The Department agrees to make a Forgivable Loan to
the Community on behalf of the Business in the amount of $250,000. Interest
begins accruing at the date of disbursement of funds.
3.2 PROMISSORY NOTES. The obligation to repay the Forgivable Loan shall
be evidenced by Promissory Notes executed by the Business and the Community (see
Attachments B1 and B2).
3.3 OTHER TERMS. Funds to be disbursed when all conditions to
disbursement have been satisfied, including:
a) Securing the other funding as identified in the CEBA
Application For Assistance.
b) Verification of conforming benefits/medical package as proposed
in the CEBA Application For Assistance.
3.4 PREPAYMENT. The outstanding principal and accrued interest of this
Loan, or any part thereof that is not forgiven, may be prepaid in part or in
full at any time without penalty.
3.5 ACCELERATION UPON DEFAULT. If there is a failure to pay any
installment of principal and interest when due, or only a portion is paid, or in
the event of any other default under this Loan, the Department may declare the
entire unpaid principal and all accrued interest immediately due and payable.
3.6 FORGIVABLE LOAN Repayment or Waiver. The Department will, in its
sole discretion, determine if the Business has satisfied the terms of this
Agreement, including fulfillment of the Job Attainment and Wage Obligation by
the Project Completion Date. If the Department determines that the Business has
satisfied said terms and has continued to satisfy said terms for thirteen (13)
weeks past the Project Completion Date, then barring any other default,
repayment of principal and interest which would otherwise have accrued for the
time period beginning with the Award Date and ending with the Project Completion
Date shall be permanently waived. If the Department does not waive repayment,
the Forgivable Loan shall be repaid in accordance with the terms of Article
10.4(a) of this agreement.
ARTICLE IV
CONDITIONS TO DISBURSEMENT OF FUNDS
Unless and until the following conditions have been satisfied, the
Department shall be under no obligation to disburse to the Community or Business
any amounts under the Loan Agreement:
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4.1 AUTHORITY. The Business shall have submitted the following
documents to the Department:
a. Certificate of Good Standing of the corporation.
b. Certified copy of the corporation's Articles of Incorporation.
c. Certificate of Incumbency naming the current officers and directors
of the corporation.
d. Resolution of the Board of Directors authorizing the corporation's
execution and delivery of this Loan Agreement and the Note and
borrowing hereunder, and such other papers as the Department may
reasonably request; and specifying the officer(s) authorized to execute
the Loan Agreement and bind the corporation.
e. Pursuant to Article 6.1(i) of this Contract, a signed Authorization
for Release of Confidential State Tax Information form, to permit IDED
to receive the Business's state tax information directly from the Iowa
Department of Revenue for purposes of annually updating the Iowa Public
Return on Investment Analysis.
4.2 CONSULTATION WITH EMPLOYMENT SERVICES. The Business shall have
provided documentation to the Department that it has consulted with the area
Department of Employment Services (DES) Workforce Center office to discuss
employment services available. In addition, the Business must provide to DES
agencies a list of positions to be created including job descriptions and
qualifications.
4.3 LOAN AGREEMENT EXECUTED. The Loan Agreement shall have been
properly executed and, where required, acknowledged.
4.4 PROJECT FINANCIAL COMMITMENTS. The Business and Community shall
have submitted a letter from each of the following committing to the specified
financial involvement in the Project and received the Department's approval of
the letters of commitment including rate and terms:
==================================================================
SOURCE FORM AMOUNT
------------------- --------------------- ------------------------
Algona EDC Loan/FL $143,316
------------------- --------------------- ------------------------
City of Algona Loan $200,000
------------------- --------------------- ------------------------
Investors Convertible Loan $650,000
------------------- --------------------- ------------------------
Owners Cash $150,000
------------------- --------------------- ------------------------
==================================================================
Each letter shall include the amount, terms and conditions of the financial
commitment, as well as any applicable schedules.
4.5 RECORDING. The Business and Community shall have properly recorded
in the appropriate office of the Recorder of Deeds and/or the Secretary of State
any mortgage, security agreement, financing statement or similar document
required by the Department under the Loan Agreement, with all recording charges
paid.
4.6 SOLID AND HAZARDOUS WASTE REDUCTION PLAN. A Business which
generates solid or hazardous waste shall have submitted the following
information concerning the project site:
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a. A copy of the completed audit and management plan if the
Business has conducted an in-house or an external audit and a corresponding
management plan within the last three years; or
b. If the Business has not conducted an in-house or external
audit and corresponding management plan within the last three years, a copy of a
letter from the Iowa Department of Natural Resources or the Iowa Waste Reduction
Center indicating they have met with the Business and an external audit has been
initiated, or, a copy of the outline of the Business' proposed in-house audit
and a description of how and when the audit will be performed. Furthermore, the
Business shall submit a copy of the completed in-house or external audit within
30 days of its completion or receipt, which time period shall not exceed 90 days
from the disbursement date of the financial assistance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUSINESS
To induce the Department to make the Loan referred to in this
Agreement, the Business represents, covenants and warrants that:
5.1 AUTHORITY. The Business is a corporation duly organized and validly
existing under the laws of the state of incorporation and is in good standing,
and has complied with all applicable laws of the State of Iowa. The Business is
duly authorized and empowered to execute and deliver the Loan Agreement. All
action on the Business' part, such as appropriate resolution of its Board of
Directors for the execution and delivery of the Loan Agreement, has been
effectively taken.
5.2 FINANCIAL INFORMATION. All financial statements and related
materials concerning the Business and the Project provided to the Department are
true and correct in all material respects and completely and accurately
represent the subject matter thereof as of the effective date of the statements
and related materials, and no material adverse change has occurred since that
date.
5.3 APPLICATION. The contents of the application the Business submitted
to the Department for CEBA funding is a complete and accurate representation of
the Business and the Project as of the date of submission and there has been no
material adverse change in the organization, operation, business prospects,
fixed properties or key personnel of the Business since the date the Business
submitted its CEBA application to the Department.
5.4 CLAIMS AND PROCEEDINGS. There are no actions, lawsuits or
proceedings pending or, to the knowledge of the Business, threatened against the
Business affecting in any manner whatsoever their rights to execute the Loan or
the ability of the Community or Business to make the payments required under the
Loan, or to otherwise comply with the obligations of the Business contained
under the Loan. There are no actions, lawsuits or proceedings at law or in
equity, or before any governmental or administrative authority pending or, to
the knowledge of the Business, threatened against or affecting the Business or
any property or collateral pledged as security for the Loan.
5.5 PRIOR AGREEMENTS. The Community and the Business separately or
jointly have not entered into any verbal or written contracts, agreements or
arrangements of any kind which are inconsistent with the Loan Agreement.
5.6 EFFECTIVE DATE. The covenants, warranties and representations of
this Article are made as of the date of this Agreement and shall be deemed to be
renewed and restated by the Business at the time of each advance or request for
disbursement of funds.
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ARTICLE VI
COVENANTS OF BUSINESS
6.1 AFFIRMATIVE COVENANTS. Until payment in full or required part, or
forgiveness of the Loan, the Business covenants with the Community and IDED
that:
(a) PROJECT WORK AND SERVICES. The Business shall complete the
work and services detailed in its CEBA application by the Project Completion
Date.
(b) JOB ATTAINMENT OBLIGATION. By the Project Completion Date
and as the Agreement may require for additional time periods thereafter, the
Business shall have fulfilled its Job Attainment Obligation described in Article
VII of this Agreement.
(c) BUSINESS RETENTION. The Business shall have and maintain
in the Community (and State, if required) the Business premises and operations
at least through the Agreement Expiration Date.
(d) RECORDS AND ACCOUNTS. The Business shall maintain job data
information, books, records, documents and other evidence pertaining to all
costs and expenses incurred and revenues received under this Loan Agreement
concerning the project, in sufficient detail to reflect all costs, direct and
indirect, of labor, materials, equipment, supplies, services and other costs and
expenses of whatever nature, for which payment is claimed under this Loan
Agreement. The Business shall retain all records for a period of three (3) years
from the Agreement Expiration Date.
(e) ACCESS TO RECORDS/INSPECTIONS. The Business shall, upon
reasonable notice and at any time (during normal business hours), permit the
Community and its representatives and the Department, its representatives or the
State Auditor to examine, audit and/or copy (i) any plans and work details
pertaining to the Project, (ii) all of the Business' books, records and accounts
relating to the Project, and (iii) all other documentation or materials related
to this Loan; the Business shall provide proper facilities for making such
examination and/or inspection.
(f) USE OF LOAN FUNDS. The Business shall expend funds
received under the Loan only for the purposes and activities described in its
CEBA Application and approved by the Department.
(g) DOCUMENTATION. The Business shall deliver to the Community
and/or IDED, upon request, (i) copies of all contracts or agreements relating to
the Project, (ii) invoices, receipts, statements or vouchers relating to the
Project, (iii) a list of all unpaid bills for labor and materials in connection
with the Project, (iv) budgets and revisions showing estimated Project costs and
funds required at any given time to complete and pay for the Project, and (v)
current and year-to-date operating statements, including but not limited to a
Profit and Loss and Balance Sheet, not older than sixty (60) days from the date
of request.
(h) NOTICE OF PROCEEDINGS. The Business shall promptly notify
the Community and IDED of the initiation of any claims, lawsuits, bankruptcy
proceedings or other proceedings brought against the Business which would
adversely impact the Project, including, but not limited to, any proceedings to
assert or enforce liens against collateral securing the Loan.
(i) REPORTS. The Business shall execute an Authorization for
Release of Confidential State Tax Information form, to permit IDED to receive
the Business's state tax information directly from the Iowa Department of
Revenue for purposes of annually updating the Iowa Public Return on Investment
Analysis for this Project. The Business shall submit to IDED any other
information requested by IDED to update the Iowa Public Return on Investment
Analysis for this Project. The Business shall prepare, sign and submit the
following reports to the Community throughout the Project period:
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Report Due Date
------ --------
Mid-Year Status Report July 10th for the period ending June 30th
End-of-Year Status Report Includes: January 10th for the period ending Dec. 31st
- Public Return on Investment Update
- Payroll Register with all created and/or
retained jobs highlighted and indicate
jobs paying at least $11.76
- "Employer's Contribution and Payroll Report"
End of Project Report Within 30 days of Project Completion Date
Same items as End-of-Year Report
End of Job Maintenance Period Report Within 30 days of the end of the Job
Same items as End-of-Year Report Maintenance Period
(j) NOTICE OF BUSINESS CHANGES. The Business shall provide
prompt advance notice to the Community and the Department of any proposed change
in the Business ownership, structure or control which would materially affect
the Project.
(k) NOTICE OF MEETINGS. The Business shall notify the
Community and the Department at least ten (10) working days in advance of all
Board of Directors and Stockholders meetings at which the subject matter of this
Loan Agreement or Project is proposed to be discussed. The Business shall
provide the Department with copies of the agenda and minutes of such meetings
and expressly agrees that a representative of the Department has a right to
attend any and all such meetings for the purposes of the discussion of the
Project and the Loan.
(l) MAINTENANCE OF PROJECT PROPERTY AND INSURANCE. The
Business shall maintain the Project property in good repair and condition,
ordinary wear and tear excepted, and shall not suffer or commit waste or damage
upon the Project property. At the Department's request, the Business shall pay
for and maintain insurance against loss or damage by fire, tornado, and other
hazards, casualties, and contingencies and all risks from time to time included
under "extended coverage" policies. This insurance shall be in an amount not
less than the full insurable value of the Project property. The Business shall
name the Community and Department as a mortgagee and/or an additional loss payee
as appropriate and submit copies of the policies to the Department.
(m) INDEMNIFICATION. The Business shall indemnify and hold
harmless the Department, its officers and employees, from and against any and
all losses, except those losses incurred by the Department resulting from
willful misconduct or negligence on its or their part. The Business shall
indemnify and hold harmless the Community, its officers and employees from and
against any and all losses, except those losses incurred by the Community
resulting from willful misconduct or negligence on its or their part, which
losses shall include losses of the Community incurred in indemnifying and
holding harmless the Department.
(n) PROJECT FEES. The Business shall promptly pay all
appraisal, survey, recording, title, license, permit and other fees and expenses
incurred incident to the Loan.
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(o) INTEREST AND SURPLUS PROCEEDS. The Business shall return
all unexpended Loan proceeds and interest accrued on Loan proceeds to the
Community within thirty (30) days after the Project Completion Date.
(p) (PROJECTS WITH CEBA AWARDS GREATER THAN $500,000).
Business shall provide at least 80% of the cost of standard medical and dental
insurance for Full-time Equivalent (FTE) employees.
6.2 NEGATIVE COVENANTS. So long as the Business is indebted to IDED
and/or Community, the Business shall not, without prior written disclosure to
the Community and IDED and prior written consent of IDED (unless IDED prior
approval is expressly waived below), directly or indirectly:
(a) BUSINESS' INTEREST. Assign, waive or transfer any of
Business' rights, powers, duties or obligations under this Loan Agreement.
(b) PROPERTY/COLLATERAL. Sell, transfer, convey, assign,
encumber or otherwise dispose of any of the real property or other collateral
securing the Loan.
(c) RESTRICTIONS. Place or permit any restrictions, covenants
or any similar limitations on the real property and/or other collateral securing
the Loan.
(d) REMOVAL OF COLLATERAL. Remove from the Project site or the
State all or any part of the collateral securing the Loan.
(e) RELOCATION OR ABANDONMENT. Relocate its operations,
physical facilities or jobs (including Created, Retained and Community Base
Jobs) assisted with the Loan proceeds outside the Community or abandon its
operations or facilities or a substantial portion thereof within the Community
during the Loan term.
(f) BUSINESS OWNERSHIP. Materially change the ownership
structure or control of the business affecting the Project, including but not
limited to, entering into any merger or consolidation with any person, firm or
corporation or permitting substantial distribution, liquidation or other
disposal of business assets directly associated with the Project. Changes in the
business ownership, structure or control which do not materially affect the
Project shall require forty-five (45) days prior written notice of the Community
and Department, but not written consent of, the Department. The materiality of
the change and whether or not the change affects the Project shall be determined
by the Department.
(g) BUSINESS OPERATION. Materially change the nature of the
business being conducted, or proposed to be conducted, as described in the
Business' application for CEBA funding.
ARTICLE VII
JOB ATTAINMENT AND WAGE OBLIGATION
7.1 COMMUNITY EMPLOYMENT LEVEL. On the Project Completion Date, the
Business shall have in the Community a total of 51 FTE Jobs as set forth below:
================================== ============================== ==========================================
PROJECT EMPLOYMENT ATTAINMENT OBLIGATION WAGE OBLIGATION
---------------------------------- ------------------------------ ------------------------------------------
Community Based Jobs 2 N/A
---------------------------------- ------------------------------ ------------------------------------------
Retained Jobs 0 N/A
---------------------------------- ------------------------------ ------------------------------------------
Created Jobs 49 $11.76/hr
---------------------------------- ------------------------------ ------------------------------------------
TOTAL 51 38 @ at least $11.76/hr and an
average wage of at least $24.94/hr
================================== ============================== ==========================================
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7.2 STATE EMPLOYMENT LEVEL. On the Project Completion Date, the
Business shall have a minimum employment level in the State of Iowa, exclusive
of its Community employment level, of at least 2 FTE Jobs. This State minimum
employment level shall also be maintained through the thirteenth (13th) week
after the Project Completion Date.
7.3 CALCULATION OF JOB ATTAINMENT OBLIGATION. The Department has the
final authority to assess whether the Business has met its Job Attainment and
Wage Obligation at the Project Completion Date. The Department shall determine
the number of Community Base, Retained and Created FTE Jobs maintained, retained
and created by the Business. The Community and the Department reserve the right
to monitor and measure at any time during the Agreement term the number of FTE
jobs maintained and/or retained and/or created by the Business.
ARTICLE VIII
COVENANTS OF THE COMMUNITY
8.1 AFFIRMATIVE COVENANTS. Until payment in full or required part, or
forgiveness of the Loan, the Community covenants with IDED that:
(a) PROJECT WORK AND SERVICES. The Community shall perform
work and services detailed in the CEBA application by the Project Completion
Date.
(b) REPORTS REVIEW. The Community shall review and sign the
reports prepared by the Business as required under the Loan Agreement and
forward them to the Department. The reports shall be submitted by the Community
by the 15th of the month of receipt, and for the final reports, within sixty
(60) days after the Project Completion Date or Agreement Expiration Date period,
whichever is applicable.
(c) RECORDS. The Community shall maintain books, records and
documents in sufficient detail to demonstrate compliance with the Loan Agreement
and shall maintain these materials for a period of three (3) years beyond the
Agreement Expiration Date.
(d) FILING. The Community shall file in a proper and timely
manner any and all Security Instruments required in connection with the Loan,
naming the Department as co-security holder as required in Article 9.1 and
promptly providing the Department with date-stamped copies of said Security
Instruments. The Community shall, at the Department's request, obtain and
provide to the Department lien searches or attorney's title opinions.
(e) INDEMNIFICATION. The Community shall indemnify and hold
harmless the Department, its officers and employees as defined in Article
9.4(b).
(f) REQUESTS FOR LOAN FUNDS. The Community shall review the
Business' requests for Loan funds to ensure that the requests are in compliance
with the Department's requisition procedures and shall execute and forward the
requests to the Department for processing.
(g) REPAYMENTS. The Community shall promptly forward to the
Department all Loan repayments received from the Business.
(h) UNUSED LOAN PROCEEDS. The Community shall return all
unused Loan proceeds, including interest accrued on Loan proceeds, to the
Department within thirty (30) days after the Project Completion Date.
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(i) NOTICE OF MEETINGS. The Community shall notify the
Department at least ten (10) days in advance of all public or closed meetings at
which the subject matter of this Loan and/or the Project is proposed to be
discussed. The Community shall provide the Department with copies of the agenda
and minutes of such meetings and expressly agrees that a representative of the
Department has the right to attend any such meetings for the purposes of the
discussion of the Project and/or the Loan.
(j) NOTICE TO DEPARTMENT. In the event the Community becomes
aware of any material alteration in the Project, initiation of any investigation
or proceeding involving the Project or Loan, change in the Business' ownership,
structure or operation, or any other similar occurrence, the Community shall
promptly notify the Department.
(k) RESPONSIBILITY UPON DEFAULT. If the Business fails to
perform under the terms of the Loan Agreement and the Department declares the
Business in default, the Community shall be primarily responsible for recovery
of Loan proceeds, as well as penalties, interest, costs and foreclosure on
collateral. The Department may also initiate an action to recover such proceeds,
or may intervene in any action commenced by the Community.
8.2 NEGATIVE COVENANTS. So long as the Business is indebted to IDED and
loan payments are in arrears or past due, the Community shall not, without
written consent of IDED:
(a) ACCEPTANCE OF LOAN REPAYMENTS. Accept any loan repayments
and/or settlements on community funds considered local effort in this agreement.
(b) ASSIGNMENT. Assign its rights and responsibilities under
this Loan Agreement.
(c) ALTER FINANCIAL COMMITMENTS. Alter, accelerate or
otherwise change the terms of the Community's financial commitment to the
Business as set forth in Article 4.5.
(d) ADMINISTRATION. Discontinue administration or loan
servicing activities under the Loan Agreement.
ARTICLE IX
SECURITY
9.1 SECURITY INSTRUMENTS. The Business shall execute in joint favor of
the Community and the Department all security agreements, financing statements,
mortgages, personal and/or corporate guarantees (hereafter, "Security
Instruments") as required by the Department. The following Security Instruments
shall be executed by the Business:
Blanket UCC-1.
9.2 FINANCING STATEMENT. If the Department requires the filing of a
financing statement, the Community shall provide the Department with a copy of
the date-stamped financing statement and a certified lien search which reflects
the recordation of the security interests of the Department and the Community
and all other lien-holder of record. The Community shall ensure that the
financing statement(s) include language approved by the Department to secure its
interests.
9.3 MORTGAGE. If the Department requires the filing of a mortgage, the
Community shall provide the Department with a copy of the date-stamped, recorded
mortgage and an attorney's Opinion of Title reflecting the interests of the
Community and the Department.
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9.4 COMMUNITY LIABILITY.
(a) The Community shall be solely responsible for the proper
and timely filing of all Security Instruments executed by the Business pursuant
to this Article.
(b) The Community's liability under this Loan Agreement is
limited to those amounts which the Community recovers from the Business in
unused Loan proceeds, enforcement of judgments against the Business and through
its good faith enforcement of the Security Instruments executed by the Business
under this Article. Nothing in this paragraph shall limit the recovery of
principal and interest by the Department in the event of Community's fraud,
negligence, or gross mismanagement in the application for, or use of, sums
loaned under the Loan Agreement.
9.5 COST VARIATION. In the event that the total Project cost is less
than the amount specified in this Agreement, the CEBA participation shall be
reduced at the same ratio as CEBA funds are to the total Project cost, and any
disbursed excess above the reduced CEBA participation amount shall be returned
immediately to IDED with interest at the rate of six percent (6%) per annum from
the date of disbursement by IDED.
ARTICLE X
DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT. The following shall constitute Events of
Default under this Loan Agreement:
(a) MATERIAL MISREPRESENTATION. If at any time any
representation, warranty or statement made or furnished to the Department by, or
on behalf of, the Business or Community in connection with this Loan Agreement
or to induce the Department to make a loan to the Community and/or Business
shall be determined by the Department to be incorrect, false, misleading or
erroneous in any material respect when made or furnished and shall not have been
remedied to the Department's satisfaction within thirty (30) days after written
notice by the Department is given to the Business or Community.
(b) NON-PAYMENT. If the Business fails to make a payment when
due under the terms of this Loan Agreement within thirty (30) days following
written notice of such overdue payment is given to the Business by the
Department.
(c) NONCOMPLIANCE. If there is a failure by the Business or
Community to comply with any of the covenants, terms or conditions contained in
this Agreement or Security Instruments executed pursuant to this Agreement.
(d) PROJECT COMPLETION DATE. If the Project, in the sole
judgment of the Department, is not completed on or before the Project Completion
Date.
(e) JOB ATTAINMENT OBLIGATION. If the Business, in the
exclusive judgment of the Department, fails to meet its Job Attainment and Wage
Obligation.
(f) BUSINESS CHANGES. If there is a material change in the
Business ownership, structure or control which occurs without the prior written
disclosure to and if required, written permission of the Department.
(g) RELOCATION OR ABANDONMENT. If there is a relocation or
abandonment of the Business or jobs created or retained under the Project.
-11-
(h) MISSPENDING. If the Business or Community expends Loan
proceeds for purposes not described in the CEBA application or authorized by the
Department.
(i) INSOLVENCY OR BANKRUPTCY If the Business becomes insolvent
or bankrupt, or admits in writing its inability to pay its debts as they mature,
or makes an assignment for the benefit of creditors, or the Business applies for
or consents to the appointment of a trustee or receiver for the Business or for
the major part of its property; or if a trustee or receiver is appointed for the
Business or for all or a substantial part of the assets of the Business and the
order of such appointment is not discharged, vacated or stayed within sixty (60)
days after such appointment; or if bankruptcy, reorganization, arrangement,
insolvency, or liquidation proceedings or other proceedings for relief under any
bankruptcy or similar law or laws for the relief of debtors, are instituted by
or against the Business and, if instituted against the Business, is consented
to, or, if contested by the Business is not dismissed by the adverse parties or
by an order, decree or judgment within sixty (60) days after such institution.
(j) INSURANCE. If loss, theft, damage or destruction of any
substantial portion of the property of the Business occurs for which there is
either no insurance coverage or for which, in the opinion of the Department,
there is insufficient insurance coverage.
(k) INSECURITY. The Department shall deem itself insecure in
good faith and reasonably believes, after consideration of all the facts and
circumstances then existing, that the prospect of payment and satisfaction of
the obligations under this Agreement, or the performance of or observance of the
covenants in this Agreement, or the value of its collateral is or will be
materially impaired.
10.2 NOTICE OF DEFAULT. The Department shall issue a written notice of
default providing therein a thirty (30) day period in which the Business shall
have an opportunity to cure, provided that cure is possible and feasible.
10.3 REMEDIES UPON DEFAULT. If the default remains unremedied, IDED
shall have the right, in addition to any rights and remedies available to it
under any of the Security Instruments, to do one or more of the following:
(a) exercise any remedy provided by law;
(b) declare the unpaid principal plus interest then accrued
on the Note due and payable immediately without
presentment, demand, protest, notice of protest, notice
of intention to accelerate or other notice of any kind,
all of which are expressly waived by the Business.
10.4 FAILURE TO MEET JOB ATTAINMENT OBLIGATION. If the Business is
determined by the Department to be in default of the Loan Agreement due to
meeting less than one hundred percent (100%) of its Job Attainment and Wage
Obligation, the Department may require full Loan repayment as described in
section 10.3 above or, at its discretion, the Department may permit repayment of
Loan proceeds using the following criteria:
(a) FORGIVABLE LOANS. If the CEBA award is a Forgivable Loan,
interest buy-down or interest subsidy, the Department may require repayment of
Loan proceeds as follows:
A three-year $250,000 forgivable loan. There will be no
principal or interest payments or accruals for years one, two, and three. At the
project completion date, if the Business has fulfilled at least 50% of its job
creation/retention (if applicable) and wage obligation, $6,578.94 will be
forgiven for each new FTE job created/retained (if applicable) and maintained
-12-
for at least ninety days past the project completion date. Any balance
(shortfall) will be amortized over a two year period (beginning at the project
completion date) at six (6%) percent interest per annum with equal monthly
payments, and, interest will be charged at six (6%) percent per annum from the
date of the first CEBA disbursement on the shortfall amount with that amount
accrued as of the project completion date being due and payable immediately. If
the Business has a current loan balance, the shortfall balance and existing
balance will be combined to reflect a single monthly payment.
(b) CONVENTIONAL LOANS. If the Business received a Loan at a
rate that is below the annual interest rate for non-compliance as set
periodically by the IDED Board, the remaining principal amount of the Loan may
be prorated between the percentage of FTE Jobs created/retained (if applicable)
at the Project Wage Threshold and the percentage of the shortfall. The shortfall
principal portion may be amortized over the remaining term of the Loan,
beginning at the Project Completion Date, at an annual interest rate as
determined periodically by the IDED Board. Interest will be charged beginning
from the date Loan proceeds were disbursed to the Community on behalf of the
Business; interest accrued from this date will be due immediately. The pro rata
portion of the Loan associated with the percentage of FTE Jobs created will be
amortized at the original rate and term.
ARTICLE XI
DISBURSEMENT PROCEDURES
11.1 REQUEST FOR REIMBURSEMENT. All disbursements of proceeds shall be
subject to receipt by the Department of requests for disbursement submitted by
the Community. Requests for disbursement shall be in form and content acceptable
to the Department.
ARTICLE XII
GENERAL TERMS AND PROVISIONS
12.1 BINDING EFFECT. This Loan Agreement shall be binding upon and
shall inure to the benefit of the Department, Community and Business and their
respective heirs, successors, legal representatives and assigns. The
obligations, covenants, warranties, acknowledgments, waivers, agreements, terms,
provisions and conditions of this Loan Agreement shall be jointly and severally
enforceable against the parties to this Loan Agreement.
12.2 COMPLIANCE WITH LAWS AND REGULATIONS. The Community and Business
shall comply with all applicable State and Federal laws, rules (including the
administrative rules adopted by the Department for the CEBA Program - 261 Iowa
Administrative Code, chapter 53), ordinances, regulations and orders.
12.3 TERMINATION FOR CONVENIENCE. In addition to termination due to an
Event of Default or non-appropriation of CEBA funds, this Loan Agreement may be
terminated in whole, or in part, when the Department, Community and the Business
agree that the continuation of the Project would not produce beneficial results
commensurate with the future disbursement of Loan funds. The Department,
Community and Business shall agree upon the termination conditions. The
Community and Business shall not incur new obligations after the effective date
of the termination and shall cancel as many outstanding obligations as is
reasonably possible. The Department will allow full credit to the Community or
the Business for the Department share of the non-cancelable obligations
allowable under the Loan Agreement and properly incurred by the Community or
Business prior to termination.
12.4 PROCEDURE UPON TERMINATION. If the Loan Agreement is terminated
for convenience, an Event of Default or non-appropriation of CEBA funds,
disbursements shall be allowed for costs up to the date of termination
-13-
determined by the Department to be in compliance with this Loan Agreement. The
Community and the Business shall return to the Department all unencumbered Loan
proceeds within one (1) week of receipt of Notice of Termination. Any costs
previously paid by the Department which are subsequently determined to be
unallowable through audit, monitoring or closeout procedures shall be returned
to the Department within thirty (30) days of the disallowance.
12.5 SURVIVAL OF AGREEMENT. If any portion of this Loan Agreement is
held to be invalid or unenforceable, the remainder shall be valid and
enforceable. The provisions of this Loan Agreement shall survive the execution
of all instruments herein mentioned and shall continue in full force until the
Loan is paid in full.
12.6 GOVERNING LAW. This Loan Agreement and all Security Instruments
shall be interpreted in accordance with the law of the State of Iowa, and any
action relating to the Loan Agreement shall only be commenced in the Iowa
District Court for Polk County or the United States District Court for the
Southern District of Iowa.
12.7 MODIFICATION. Neither this Loan Agreement nor any provision of the
Security Instruments executed in connection with this Loan Agreement may be
changed, waived, discharged or terminated orally, but only by a written document
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
12.8 NOTICES. Whenever this Loan Agreement requires or permits any
notice or written request by one party to another, it shall be in writing,
enclosed in an envelope, addressed to the party to be notified at the address
heretofore stated (or at such other address as may have been designated by
written notice), properly stamped, sealed and deposited in the United State
Mail. Any such notice given hereunder shall be deemed delivered upon the earlier
of actual receipt or two (2) business days after posting. The Department may
rely on the addresses of the Business and Community set forth heretofore, as
modified from time to time, as being the addresses of the Community and
Business.
12.9 INVESTMENT OF LOAN FUNDS. Temporarily idle Loan proceeds held by
the Community or Business may be invested provided such investments shall be in
accordance with State law, shall be controlled by the Community or Business, and
any interest accrued shall be credited to and expended on the Project prior to
the expenditure of other Loan proceeds. All Loan proceeds remaining, including
accrued interest, after all allowable Project costs have been paid or obligated
shall be returned to the Department within thirty (30) days after the Project
Completion Date.
12.10 WAIVERS. No waiver by the Department of any default hereunder
shall operate as a waiver of any other default or of the same default on any
future occasion. No delay on the part of the Department in exercising any right
or remedy hereunder shall operate as a waiver thereof. No single or partial
exercise of any right or remedy by the Department shall preclude future exercise
thereof or the exercise of any other right or remedy.
12.11 LIMITATION. It is agreed between the Community and the Business
that the Department shall not, under any circumstances, be obligated financially
under this Loan Agreement except to disburse funds according to the terms of the
Agreement.
12.12 ENFORCEMENT EXPENSES. The Business shall pay upon demand any and
all reasonable fees and expenses of the Community and/or the Department,
including the fees and expenses of their attorneys, experts and agents, in
connection with the exercise or enforcement of any of the rights of the
Department and/or Community under the Loan Agreement.
-14-
12.13 HEADINGS. The headings in this Loan Agreement are intended solely
for convenience of reference and shall be given no effect in the construction
and interpretation of this Loan Agreement.
12.14 FINAL AUTHORITY. The Department shall have the final authority to
assess whether the Business has met its Job Attainment Obligation and whether
the Community and Business have otherwise complied with the terms of this
Agreement.
12.15 INTEGRATION. This Loan Agreement contains the entire
understanding between the Community, Business and the Department and any
representations that may have been made before or after the signing of this Loan
Agreement, which are not contained herein, are non-binding, void and of no
effect. None of the parties have relied on any such prior representation in
entering into this Loan Agreement.
12.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement
effective as of the Award Date first stated.
COMMUNITY: COMMUNITY:
Attorney for City of Algona City of Algona
Approved as to form and content.
BY: s/ Xxxx X. Xxxxxx, BY: s/ Xxxxxxx X. Lighter
Algona City Attorney Mayor Pro-Tem
----------------------------- ---------------------------------
Name/Title Name/Title
IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT:
BY: s/ Xxxxxxx Xxxxxxx
-------------------------------------------
Xxxxxxx Xxxxxxx, Business Services
Division of Administration
BUSINESS:
Hydrogen Engine Center
BY: s/ Xxxxxxxx X. Xxxxxxxxx
--------------------------------------------
Signature
Xxxxxxxx X. Xxxxxxxxx, President
--------------------------------------------
Type or Print Name, Title
-15-
Contract Number 05-CEBA-41 ATTACHMENT B1
Hydrogen Engine Center PROMISSORY NOTE - BUSINESS
Page 1 of 2
IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT
CEBA PROGRAM
PROMISSORY NOTE
Loan Number: 05-CEBA-41
Des Moines, Iowa
---------------------
(City and State)
Amount: $250,000 June 28, 2005
---------------------
(Date)
FOR VALUE RECEIVED, the undersigned (hereafter called the "Maker")
promises to pay to the order of the City of Algona (hereafter called the
"Payee"), at its office at 000 X. Xxxx Xx., Xxxxxx, Xxxx 00000-0000, or upon
notice to the Maker, at such other place as may be designated from time to time
by the holder, the principal sum of $250,000, to be paid as follows:
A $250,000 forgivable loan at six (6%) percent interest to be paid as follows:
--------------------------------------------------------------------------------
A three-year $250,000 forgivable loan. There will be no principal or
interest payments or accruals for years one, two, and three. At the project
completion date, if the Business has fulfilled at least 50% of its job
creation/retention (if applicable) and wage obligation, $6,578.94 will be
forgiven for each new FTE job created/retained (if applicable) and maintained
for at least ninety days past the project completion date. Any balance
(shortfall) will be amortized over a two year period (beginning at the project
completion date) at six (6%) percent interest per annum with equal monthly
payments, and, interest will be charged at six (6%) percent per annum from the
date of the first CEBA disbursement on the shortfall amount with that amount
accrued as of the project completion date being due and payable immediately. If
the Business has a current loan balance, the shortfall balance and existing
balance will be combined to reflect a single monthly payment.
1. Payments. All payments under the Note shall be applied in this
order: (1) to interest, and (2) to principal.
2. Loan Agreement; Acceleration Upon Default. This Note is issued by
Maker to evidence an obligation to repay a loan according to the terms of Loan
Agreement #05-CEBA-41 of June 28, 2005 between the Payee and Maker and, at the
election of the holder without notice to the Maker, shall become immediately due
and payable in the event any payment is not made when due or upon the occurrence
of any event of default under the terms of the Loan Agreement.
3. Reduced Amount. In the event the Maker fails to requisition and
spend the full face amount of the Note as set out above, then the amount of each
installment payment shall be reduced accordingly in equal amounts.
4. Security. Payment of this Note is secured by a Blanket UCC-1 and the
holder is entitled to the benefits of the security therein described.
In case of a decline in the market value of the collateral, or any part
thereof, the Payee may demand that additional collateral of quality and value
satisfactory to holder be delivered, pledged and transferred to holder.
Contract Number 05-CEBA-41 ATTACHMENT B1
Hydrogen Engine Center PROMISSORY NOTE - BUSINESS
Page 2 of 2
5. Waiver. No delay or omission on the part of the holder in exercising
any right under this Note shall operate as a waiver of that right or of any
other right under this Note. A waiver on any one occasion shall not be construed
as a bar to or waiver of any right and/or remedy on any future occasion.
6. Waiver of Protest. Each maker, surety, endorser and guarantor of
this Note, expressly waives presentment, protest, demand, notice of dishonor or
default, and notice of any kind with respect to this Note.
7. Costs of Collection. The Maker will pay on demand all costs of
collection, maintenance of collateral, legal expenses, and attorneys' fees
incurred or paid by the holder in collecting and/or enforcing this Note on
default.
8. Meaning of Terms. As used in this Note, "holder" shall mean the
Payee or other endorsee of this Note, who is in possession of it, or the bearer
hereof, if this Note is at the time payable to the bearer. The word "Maker"
shall mean each of the undersigned. If this Note is signed by more than one
person, it shall be the joint and several liabilities of such persons.
9. Miscellaneous. The captions of paragraphs in this Promissory Note
are for the convenience of reference only, shall not define or limit the
provisions hereof and shall not have any legal or other significance whatsoever.
ADDRESS: Hydrogen Engine Center
000 X. Xxxx Xx.
Xxxxxx, Xxxx 00000
BY:
-------------------------------------------
(Signature)
-------------------------------------------
(Type or Print Name, Title)
ATTEST:
-------------------------------------------
(Signature, Title)
Contract Number 05-CEBA-41 ATTACHMENT B2
Hydrogen Engine Center PROMISSORY NOTE - COMMUNITY
Page 1 of 2
IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT
CEBA PROGRAM
PROMISSORY NOTE
Loan Number 05-CEBA-41
Des Moines, Iowa
---------------------
(City and State)
Amount: $250,000 June 28, 2005
---------------------
(Date)
FOR VALUE RECEIVED, the undersigned (hereafter called the "Maker")
promises to pay to the order of the State of Iowa, Department of Economic
Development (hereafter called the "Payee"), at its office at 000 Xxxx Xxxxx
Xxxxxx, Xxx Xxxxxx, Xxxx 00000, or upon notice to the Maker, at such other place
as may be designated from time to time by the holder, the principal sum of
$250,000, to be paid as follows:
A $250,000 forgivable loan at six (6%) percent interest to be paid as follows:
--------------------------------------------------------------------------------
A three-year $250,000 forgivable loan. There will be no principal or
interest payments or accruals for years one, two, and three. At the project
completion date, if the Business has fulfilled at least 50% of its job
creation/retention (if applicable) and wage obligation, $6,578.94 will be
forgiven for each new FTE job created/retained (if applicable) and maintained
for at least ninety days past the project completion date. Any balance
(shortfall) will be amortized over a two year period (beginning at the project
completion date) at six (6%) percent interest per annum with equal monthly
payments, and, interest will be charged at six (6%) percent per annum from the
date of the first CEBA disbursement on the shortfall amount with that amount
accrued as of the project completion date being due and payable immediately. If
the Business has a current loan balance, the shortfall balance and existing
balance will be combined to reflect a single monthly payment.
1. Payments. All payments under the Note shall be applied in this
order: (1) to interest, and (2) to principal.
2. Loan Agreement; Acceleration Upon Default. This Note is issued by
Maker to evidence an obligation to repay a loan according to the terms of Loan
Agreement #05-CEBA-41 of June 28, 2005 between the Payee and Maker and, at the
election of the holder without notice to the Maker, shall become immediately due
and payable in the event any payment is not made when due or upon the occurrence
of any event of default under the terms of the Loan Agreement.
3. Limitation. Maker's liability for the repayment of this Note is
limited to those amounts Maker collects through its good faith enforcement of
security interest which Maker represents that it has obtained or will obtain as
required by the above-referenced Loan Agreement. Upon exhaustion of its rights
in the collateral granted by such security interest, the Maker will have no
liability for any deficiency owing Payee under this Note. Nothing in this
paragraph shall limit the recovery of principal and interest by Payee in the
event of Maker's fraud, negligence, or gross mismanagement in the application
for, or use of, sums loaned under the above-referenced Loan Agreement.
Contract Number 05-CEBA-41 ATTACHMENT B2
Hydrogen Engine Center PROMISSORY NOTE - COMMUNITY
Page 2 of 2
4. Reduced Amount. In the event the Maker fails to requisition and
spend the full face amount of the Note as set out above, then the amount of each
installment payment shall be reduced accordingly in equal amounts.
5. Security. Payment of this Note is secured by a Blanket UCC-1 and the
holder is entitled to the benefits of the security therein described.
In case of a decline in the market value of the collateral, or any part
thereof, the Payee may demand that additional collateral of quality and value
satisfactory to holder be delivered, pledged and transferred to holder.
6. Waiver. No delay or omission on the part of the holder in exercising
any right under this Note shall operate as a waiver of that right or of any
other right under this Note. A waiver on any one occasion shall not be construed
as a bar to or waiver of any right and/or remedy on any future occasion.
7. Waiver of Protest. Each maker, surety, endorser and guarantor of
this Note, expressly waives presentment, protest, demand, notice of dishonor or
default, and notice of any kind with respect to this Note.
8. Costs of Collection. The Maker will pay on demand all costs of
collection, maintenance of collateral, legal expenses, and attorneys' fees
incurred or paid by the holder in collecting and/or enforcing this Note on
default.
9. Meaning of Terms. As used in this Note, "holder" shall mean the
Payee or other endorsee of this Note, who is in possession of it, or the bearer
hereof, if this Note is at the time payable to the bearer. The word "Maker"
shall mean each of the undersigned. If this Note is signed by more than one
person, it shall be the joint and several liabilities of such persons.
10. Miscellaneous. The captions of paragraphs in this Promissory Note
are for the convenience of reference only, shall not define or limit the
provisions hereof and shall not have any legal or other significance whatsoever.
ADDRESS: City of Algona
000 X. Xxxx Xx
Xxxxxx, Xxxx 00000-0000
BY:
----------------------------------------
(Signature)
----------------------------------------
(Type or Print Name, Title)
ATTEST:
---------------------------------------
(Signature, Title)
