FIRST AMENDMENT TO LOAN AGREEMENT DATED JANUARY 3. 1984
THIS First Amendment to Loan Agreement dated January 3, 1984 ("First
Amendment") between XXXX HAULING AND WAREHOUSING SYSTEM, INC. ("Xxxx") and THE
CITY OF GLOUCESTER CITY, NEW JERSEY ("City") is made this 31st day of March,
1991.
WHEREAS, Xxxx and the City entered into a Loan Agreement dated January
3, 1984 (the "Loan Agreement") which provided that City lend to Xxxx the sum of
Three Million Five Hundred Ninety-Five Thousand, Five Hundred Thirty-Three
($3,595,533.00) Dollars (the "Loan") for the partial financing of the
construction of a marginal dock facility and the acquisition and installation of
two (2) rail supported container cranes ("Kochs Cranes"); and
WHEREAS, as evidence of its indebtedness to the City, Xxxx delivered a
Promissory Note dated March 15, 1984 for the sum of Three Million Three Hundred
Forty-Five Thousand, Five Hundred Thirty-Three ($3,345,533.00) Dollars and a
Promissory Note dated April 18, 1984 for the sum of Two Hundred Fifty Thousand
($250,000.00) Dollars (collectively the "Notes"); and
WHEREAS, the principal sum of the Loan as evidenced by the Notes
attributable to the partial financing of the acquisition and installation of the
Kochs Cranes is Eight Hundred Ninety-Three Thousand Four Hundred Twenty
($893,420.00) Dollars; and
WHEREAS, the repayment terms of the Loan Agreement provide that
principal repayment is to commence at the beginning of year five (5) and is to
be made in monthly installments in accordance with a twenty-five (25) year
amortization schedule, with a balloon payment of the outstanding principal
balance, together with all interest and accrued interest at the end of year
twelve (12) (i.e. April 30, 1997); and
WHEREAS, the Loan Agreement provides that interest on the Loan from
years five (5) through twelve (12) shall be computed at seven (7%) percent; and
WHEREAS, Xxxx'x current monthly repayments to the City for the Loan as
computed under the Loan Agreement are Twenty-Nine Thousand Two Hundred
Twenty-Four ($29,224.00) Dollars; and
WHEREAS, as a condition to the Loan being made to Xxxx, Oregon Avenue
Enterprises, Inc. ("OAE") executed a Surety Agreement on March 15, 1984 and a
Supplemental Surety Agreement on April 18, 1984 (collectively the "Sureties") in
favor of the City, whereby OAE unconditionally guaranteed repayment of Xxxx'x
Loan to the City; and
WHEREAS, OAE delivered to the City as security for the prompt repayment
of OAE's obligations under the Sureties, a Security Agreement dated March 15,
1984 and recorded in Mortgage Book 2785 at page 562 and a Supplemental Security
Agreement dated April 18, 1984 and recorded in Mortgage Book 2793 at page 940,
(collectively the "Security Agreements") granting to the City a security
interest in OAE's two (2) Kochs Cranes; and
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WHEREAS, Xxxx has requested the City to release its lien on the Kochs
Cranes as created under the Security Agreements and to relinquish any and all
rights the City has or may have in the Kochs Cranes.
WHEREAS, it is the express intention of Xxxx to relocate the Kochs
Cranes and its container business from Gloucester City to Packer Avenue
Terminal, Philadelphia, Pennsylvania; and
WHEREAS, the City is concerned that its release of lien, and subsequent
removal of the Kochs Cranes, will lead to Xxxx'x cessation of business
activities other than its container business within the City of Gloucester City
and that such cessation of business activities other than its container business
will cause serious and substantial detriment to the City;
NOW, THEREFORE, in consideration of the mutual terms, covenants,
provisions and conditions herein set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. The City hereby releases its lien on the Kochs Cranes as created
under the Security Agreements and any and all other documents executed in
conjunction with the Loan Agreement or which may have been created in any other
manner whatsoever.
2. The City hereby relinquishes any and all rights and interests it has
or may have in the Kochs Cranes arising out of the Loan Agreement and the
transactions effected thereunder, and which have been or may be created in law
or in equity.
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3. For purposes of the repayment terms of the Notes, the principal
balance of the Loan is hereby recalculated by a reduction of Eight Hundred
Ninety-Three Thousand Four Hundred Twenty ($893,420.00) Dollars, and the new
principal (including interest accrued to date) of the Notes, due by Xxxx to the
City as of March 31, 1991 is Three Million Three Hundred Twenty Thousand Seven
Hundred Ninety-Nine ($3,320,799.00) Dollars.
4. The Notes shall be marked "cancelled" and returned to Xxxx in
exchange for the delivery by Xxxx of two (2) new Promissory Notes in the
respective amounts of $3,320,799.00 and $893,420.00.
5. Xxxx shall execute a Promissory Note whereby Xxxx promises to pay
the sum of Eight Hundred Ninety-Three Thousand Four Hundred Twenty ($893,420.00)
Dollars, without interest, to the City in twenty-two (22) equal monthly
installments commencing March 31, 1991.
6. Xxxx shall execute a Promissory Note whereby Xxxx promises to pay
the sum of Three Million Three Hundred Twenty Thousand Seven Hundred Ninety-Nine
($3,320,799.00) Dollars in monthly installments of Twenty-Three Thousand Nine
Hundred Fifty-Three Dollars and Twenty Six ($23,953.26) Cents commencing March
31, 1991, with a final balloon payment on April 30, 1997 of Two Million Nine
Hundred Twenty-One Thousand Eight Hundred Forty-Six ($2,921,846.00) Dollars.
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7. Xxxx shall make a presentation to the Mayor and Council, to its
satisfaction, with regard to future business operations of Xxxx at its
Gloucester City location.
8. Xxxx shall execute an Agreement that a cessation of business
activities, as defined in the Agreement, in Gloucester City constitutes a
default under the Loan Agreement dated January 3, 1984 (UDAG I) between the
parties, as amended March 31, 1991 and the Loan Agreement dated August 3, 1984
(UDAG II) between the parties, as amended March 31, 1991.
9. The City shall deliver to Xxxx a properly executed Form UCC-3, a
Satisfaction of Security Agreement, and any and all other documents which may be
necessary of record which shall serve as evidence that the City has relinquished
any and all of its rights and interest in the Kochs Cranes and which may be
further necessary to give effect to the reduction of the principal of the Loan.
10. Except as otherwise stated herein, all other terms and conditions
of the Loan Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this First Amendment
the day and year first above written.
XXXX HAULING AND WAREHOUSING SYSTEM, INC.
BY: /s/ Xxxxxxx Xxxxxx
------------------------------------
XXXXXXX XXXXXX, Vice President
ATTEST:
/s/ Xxxx Xxxxx
-----------------------------------
Xxxx Xxxxx, Secretary
(Corporate Seal)
CITY OF GLOUCESTER CITY
BY: /s/ Xxxxxx X. Xxxx
-----------------------------------
XXXXXX X. XXXX, MAYOR
ATTEST:
/s/ Xxxx X. Xxxxx
-----------------------------------
(Municipal Seal)
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application and sources of funds:
USE OF FUNDS SOURCE OF FUNDS TOTAL
Line Item Activity ------------------------ COSTS
------------------ UDAG Private -----
Funds Funds
--------- ---------
a. Dredging planting and
other mitigation activities
for wetland park in
Pennsauken Township. 956,000 956,000
b. Completion of marginal
dock facility. 2,000,000 4,114,900 6,114,900
c. Replace roof at building
#8. 140,000 140,000
d. Transit shed expansion
at Pier #8. 744,000 744,000
e. Engineering Fees. 100,000 100,000
f. Legal Fees. 24,000 24,000
g. Construction Period
Interest. 615,700 615,700
h. Real Estate Taxes. 2,400 2,400
i. Equipment not counted in
leverage ratio. 458,000 458,000
---------- ---------- ----------
j. TOTAL PROJECT COST $2,000,000 $7,155,000 $9,155,000
Sources of Funds (Private)
1. Bankers* shall make a mortgage loan to the Borrower of Five Million
Five Hundred Thousand Dollars ($5,500,000.00) for development of the
marginal pier facility.
2. AEL or equivalent shall make a loan to the Borrower of Three
Hundred Fifty-five Thousand Dollars ($355,000.00) for the capital
equipment as previously mentioned.
3. The Borrower shall expend not less than One
*also referred to herein as Private Mortgage Lender and/or Underwriters.
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Million Three Hundred Thousand Dollars ($1,300,000.00) in cash equity
for offsite wetland park improvements in Pennsauken Township,
development of marginal pier facility, building construction
improvements, capital equipment, construction interest and taxes and
any professional fees related to this project.
TOTAL $7,155,000.00
Thus, there is a financing gap of Two Million Dollars ($2,000,000.00)
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 the Loan Agreement is based upon that Grant
Agreement. These terms specify 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 water
involved.
2. All environmental clearances and approvals necessary to
accomplish the proposed Project.
3. All approvals and permits necessary for the establishment
of a wetland
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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, 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 AEL, or equivalent, to the Borrower, or Borrower's
wholly owned subsidiary, for Three Hundred Fifty-five Thousand Dollars
($355,000.00) for financing, in part, the purchase of twelve (12)
forklift trucks and one bulldozer. This
9
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 Bankers to the Borrower for Five Million Five
Hundred Thousand Dollars ($5,500,000.00) 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 One Million Three
Hundred Thousand Dollars ($1,300,000.00) in equity funds for the
aforementioned Project activities. Evidence of Borrower's equity
contribution shall be on the letterhead of the Borrower or the lending
institution identifying the amount of liquid assets on hand or
immediately available and applicable to the project or which have been
expended by Borrower (for acquisition and construction activities
only, this must have been expended subsequent to HUD's preliminary
approval of the UDAG) in furtherance of project activities identified
above. The document
10
shall be executed by an authorized officer of the Borrower or the
lending institution, and shall have attached an opinion of the
Borrower's legal counsel 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 (and where applicable, subsequent to HUD's
preliminary approval of the UDAG) in furtherance of project activities
identified above.
All of the above evidentiary materials (a) through (e) must be provided
to the Lender on or before August 3, 1984.
LOAN TERMS
1. Borrower is obliged to carry out the privately financed project
activities identified above at a cost of not less than Seven Million one Hundred
Fifty-five Thousand Dollars ($7,155,000.00).
2. Lender shall loan Two Million Dollars ($2,000,000.00) to Borrower
for the partial financing of the construction of a marginal dock facility as
extended by approximately 6.53 acres from the UDAG Phase 1 facility. The terms
and conditions of the loan shall be consistent with the following:
I. UDAG Interim Loan:
(a) Principal: The principal amount of the Interim Loan shall be
no more than Two Million Dollars ($2,000,000.00).
(b) Interest: The interest rate shall be six
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percent (6%) per annum. Interest shall be forgiven during the term of the
Interim Loan.
(c) Disbursement/Ratio: Loan disbursements shall be based on
vouchers submitted by Borrower, verified by Lender, and certified by the
architect, construction manager, or other certifying official as shall be
acceptable to Lender. All submissions by contractors of monthly requisitions
shall be on AIA forms 702 and 703 or their equivalent.
No loans shall be disbursed until Borrower has first expended not less
than One Million Three Hundred Thousand Dollars ($1,300,000.00) of private funds
for the Project.
After Borrower has expended equity funds in the amount of One Million
Three Hundred Thousand Dollars ($1,300,000.00), UDAG funds may be disbursed for
Project activities in a ratio of not more than One Dollar ($1.00) of UDAG funds
to Three Dollars Fifty Cents ($3.50) of countable private funds; thus, for every
Four Dollars Fifty Cents ($4.50) of funds expended on the Project (after any
required equity contribution) not more than One Dollar ($1.00) will be UDAG
funds and not less than Three Dollars Fifty Cents ($3.50) will be countable
private funds.
II. UDAG Permanent Loan:
(a) Term: Term of the UDAG Permanent Loan shall be eleven and one
half (11 1/2) years commencing upon completion of construction, but in
no event later than April 30, 1985.
(b) Principal: The principal of the UDAG Permanent Loan shall be
the amount disbursed under the UDAG Interim Loan.
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(c) Interest: The interest rate shall be six percent (6%) per
annum during years one (1) through two and one half (2 1/2); and seven
and one half percent (7 1/2%) per annum during the remaining years of
the UDAG Permanent Loan Term.
(d) Repayment: Interest payments shall be deferred and accrued
for thirty (30) months and shall be added to the principal balance of
the UDAG Permanent Loan to form a new enlarged. principal balance.
Thereafter repayment of principal and interest shall be made in
quarterly installments in accordance with a 22.5 year amortization
schedule during the Term of the UDAG Permanent Loan, with a balloon
payment sufficient to pay off the entire outstanding indebtedness at
maturity of the UDAG Permanent Loan.
REQUIRED ADDITIONAL PROVISIONS APPLICABLE TO UDAG INTERIM AND PERMANENT LOANS:
III. Security: The UDAG Loan shall be secured by a deed of trust or
mortgage in favor of Lender upon all land, buildings, fixtures, equipment
and other assets of the Borrower comprising the Project, as defined by this
Loan Agreement and UDAG Grant Agreement #B-82-AB-34-0223. The security
position of the Lender may be subordinated to the Private Mortgage Lender's
loan or Underwriter's bond purchase and the security interests of AEL's or
equivalent's loan in an aggregate amount not to exceed Five Million Eight
Hundred Fifty-five Thousand Dollars ($5,855,000.00).
The deed of trust or mortgage shall also contain standard provisions to
protect the interest of the second
13
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 of the UDAG Loan shall become immediately due and
payable.
To the extent permitted by law, all of the personal property described
in the mortgage shall be deemed to be fixtures and part of the real property. As
to any part of such personal property not deemed or permitted by law to be
fixtures, the mortgage shall constitute a security agreement under the Uniform
Commercial Code.
IV. Sale/Refinancing: The entire balance of the outstanding principal
of the UDAG loan 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 Private Mortgage Lender's outstanding loan
balance any time during the first year following completion of construction for
this Project. Thus the security position of the Lender will be subordinated to a
security position of the Private Mortgage Lender of such refinancing for the
full amount thereof, provided that the total amount of the refinancing shall
not be greater than the sum of (a) Five Million Five Hundred Thousand
Dollars ($5,500,000.00) (of the Private Mortgage Lender's funds for
this Project), (b)
14
Two Million Five Hundred Thousand Dollars ($2,500,000.00) of the Mortgage
Lender's funds in the Project identified in the UDAG Grant Agreement
#B-82-AB-34-0223, and (c) Seven Million Seven Hundred Thirty-eight Thousand Nine
Hundred Eighty Nine Dollars ($7,738,989.00) which represents the outstanding
balance on non-UDAG mortgage financing to the mortgage lender, National
Acceptance Company. This provision supercedes Paragraph 2 (II) E (on page 12) of
the existing Loan Agreement on the first phase of this project (refer to Grant
Number B-84-AB-34-0223) except that the permission for one time refinancing of
the Equipment Lender's (Xxxxx Xxxxx of Bremen, West Germany) outstanding loan
balance is still effective any time during five (5) years following completion
of construction for this first phase UDAG Project.
(aa) Prepayment: Prepayment may occur at any time without penalty.
(bb) Guarantee: Guarantor shall unconditionally and irrevocably
guarantee repayment of the Interim/Permanent Loan and completion of the
Project within the time frame set forth in (3) below. The Guarantor shall
be Xxxxxx X. Xxxx, President of the Borrower. The Guarantor shall also
irrevocably and unconditionally guarantee the repayment of the UDAG
Interim/Permanent Loan, identified in the first phase of this project and
by UDAG Grant Agreement #B-82-AB-34-0223.
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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Activity Commencement Date Completion Date
-------- ----------------- ---------------
a. Dredging, planting
and other mitigation
activities for Wetland
Park. October 1, 1984 April 30, 1985
b. Completion of con-
struction of marginal
dock facility October 1, 1984 April 30, 1985
c. Replace roof on
Building #8 and expand
transient shed October 1, 1984 April 30, 1985
d. Purchase of cargo
handling equipment October 1, 1984 April 30, 1985
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.
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): 178
(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: 176
(c) Total permanent jobs filled by "CETA-Eligible" persons (i.e.
"chronically unemployed") 3
(d) Total permanent jobs filled by minority persons: 75
The above job goals shall be met within thirty (30) months from May 4,
1984, or by November 3, 1986. The Borrower
16
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 contracts relating to any and all
construction activities financed in part or in whole by the UDAG Loan language
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 construction labor,
which wages must be paid for all construction activities comprising this
Project.
6. Borrower and Lender will individually comply with the relevant
provisions set forth in Exhibit A 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.
7. Borrower hereby agrees that the happening or occurrence of any of
the following will constitute, at the sole option of Lender, a default
hereunder:
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(a) Failure by Borrower to make any payment of principal and
interest within thirty (30) days after due date hereunder:
(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.
8. Borrower hereby covenants, warrants 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 may be created by 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;
(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;
(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 six (6) 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 Borrowerr 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, Attention:
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 employee(s).
9. The provisions of paragraph 7 and 8 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.
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10. No provisions of this Loan Agreement can be deemed to have been
waived by Lender, except if in writting duly executed by Lender.
11. This is the entire agreement between the parties, and there is no
outside condition, warrant, agreement or understanding.
12. This Agreement shall reference the Grant Agreement which shall
control in all instances where this Agreement is silent.
13. Severability - If any provision of this Agreement, or the
application of such provision of any persons 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.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement, the
day and year first above written.
XXXX HAULING AND WAREHOUSING
SYSTEM, INC.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------
CORPORATE SEAL ATTEST: Xxxx X. Xxxxx
----------------------------
CITY OF GLOUCESTER, NEW JERSEY
By: /s/ Xxxxxx
-------------------------------
ATTEST: /s/ Xxxxxx
---------------------------
MUNICIPAL SEAL
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Exhibit A
Obligations of Both Parties
Program Income Applied to Costs:
(a) All Program Income received by the Lender prior to the completion
of all UDAG Activities, shall be transmitted to the Borrower for payment of
costs incurred to complete UDAG activities; in effect, this would reduce the
UDAG funds received by the Lender from HUD but would not diminish the UDAG loan
amount by the Borrower.
Program Income Use of "Eligible Activities":
(b) All Program Income received by the Lender after the completion of
all UDAG Activities shall, at the option of the Lender, either be transmitted to
the Borrower with Lender approval, for community and economic development
activities which would be eligible for assistance under Title I of the Federal
Housing and Community Development Act, unless otherwise provided in the
close-out agreement between Lender and HUD.
Maintaining Records and Right to Inspect:
(c) Each Participating Party shall keep and maintain books, records and
other documents relating directly to the receipt and disbursement of such grant
funds; and any duly authorized representative of the Secretary of HUD, or
Comptroller General of the United States shall, at all reasonable times, have
access to and the right to inspect, copy, audit and examine all such books,
records and other documents of such Participating Party until the completion of
all closeout procedures respecting this grant and the final settlement and
conclusion of all
21
issues arising out of this grant.
(d) Each Participating Party agrees that any duly authorized
representative of the Secretary of HUD shall, at all reasonable times, have
access to any portion of the Project in which such Participating Party is
involved until the completion of all close-out procedures respecting this grant.
No Assignment of Succession:
(e) No transfer of grant funds by the Lender to the Borrower shall be
or be deemed an assignment of grant funds, and that the Borrower shall neither
succeed to any rights, benefits or advantages of the Lender under the UDAG Grant
Agreement, nor attain any rights, privileges, authorities or interests in or
under the Grant Agreement.
HUD Approvalof Amendments:
(f) During the term of the Lender's Grant Agreement this Loan Agreement
or other relevant contracts shall not be amended in any material respect without
the prior written approval of the Secretary of HUD. "Material" shall be defined
as anything which cancels or reduces any developmental, construction, job
creating, or financial obligation of any Participating Party by more than ten
percent (10%), changes the sites or character of any development activity, or
increases any time for performance by a party by more than thirty (30) days.
Disclaimer of Relationship:
(g) Nothing contained in the Lender's Grant Agreement, or in the
contract between these parties, nor any act of the Secretary of HUD, the Lender,
or any of the parties, shall be deemed or construed by any of the parties, or by
the third
22
persons, to create any relationship of third-party beneficiary, principal and
agent, limited or general partnership, or joint venture, or of any association
or relationship involving the Secretary.
Conflict of Interest:
(h) Except for approved eligible administrative and personnel costs, no
member, officer, or employee of the Lender, or its designees, or agents, no
consultant, no member of the governing body of the Lender or the locality in
which the program is situated and no other public official of the Lender or such
locality or localities, who exercises or has exercised any functions or
responsibilities with respect to the Project during his or her tenure, or who is
in a position to participate in a decision making process or gain insider
information with regard to the project, shall have any interest, direct or
indirect, in any contract or subcontract, or the proceeds thereof, for work to
be performed in connection with the Project or in any activity, or benefit
therefrom, which is part of the Project at any time during or after such
person's tenure. Rules governing the behavior of both parties shall be
consistent with 24 CFR Sec. 570.611. This provision shall be in addition to the
requirements in Attachments O of OMB Circular A-102 and A-110.
(However, upon written request of the Lender, the Secretary of HUD may
agree in writing to waive a conflict otherwise prohibited by this provision
whenever there has been full public disclosure of the conflict of interest, and
the Secretary of HUD determines that undue hardship will result
23
either to the Lender or the person affected by applying the prohibition and that
the granting of a waiver is in the public interest. No such request for a waiver
shall be made by Lender which would, in any way, permit a violation of State or
local law or any charter provision of the Lender).
Limitation of Lender's Liability:
(i) The Lender shall not be liable to any Participating Party, or to
any party except HUD, for completion of, or the failure to complete, any
activities which are a part of the Project, except those specified below:
1. Lender shall lend to Borrower Grant Funds in an amount not to exceed
Two Million Dollars ($2,000,000.00) to partially finance projects costs.
2. Lender shall be responsible for administering the Project a UDAG
cost not to exceed Twenty Thousand Dollars ($20,000.00).
3. Lender may reimburse itself and the Borrower for actual
administrative cost incurred in preparation of the application pursuant to 24
CFR 570 in an amount not to exceed Twenty-six Thousand Dollars ($26,000.00).
Sign Display:
(j) Borrower will produce and display a sign on the project site as per
the specifications of the Lender for the duration of the project. The costs of
such sign may be payable from the UDAG loan.
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