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HomeMy WebLinkAboutResolution #1186 RESOLUTION NO. A RESOLUTION APPROVING AN AGREEMENT BETWEEN THE CITY OF CANTON AND BASEMENT DE-WATERING SYSTEMS, INC. AND DIRECTING THE MAYOR AND CITY CLERK TO EXECUTE AND DELIVER SAID LOAN AGREEMENT ON BEHALF OF THE CITY OF CANTON. Wf~REAS, the City of Canton has entered into negotiations with Basement De~nlatering Systems, Inc. for a loan from the City's Enterprise Zone Fund for the amount of $100,000.00, such funds to be made available through the City's loan agreement with the U.S. Department of Health and Human Services; and, Wf~2EAS, the City Council of the City of Canton has reviewed the terms and conditions of the proposed loan agreement, a copy of which is hereto attached and made a part hereof as Exhibit A; and, WHEREAS, the Canton City Council has determined that it is desireable and in the best interest of the City of Canton to approve said agreement. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CANTON, Fulton County, Illinois as follows: 1. That the Loan Agreement between the City of Canton and Basement De Watering Systems, Inc., which is attached hereto and made a part hereto as Exhibit A, is hereby approved, said Loan Agreement to be subject to and effective pursuant to the terms and conditions therein set forth. 2. That the Mayor and City Clerk are hereby authorized and directed to execute and deliver said Loan Agreement on behalf of the City of Canton. 3. That this Resolution shall be in full force and effect immediately upon its passage by the City Council of the City of Canton, Fulton County, Illinois and approval by the Mayor thereof. PASSED by the City Council of the City of Canton, Fulton County, Illinois at a regular meeting this 16th day of December , 19.86, upon a roll call vote as follows: AYES: Aldermen Kovachevich, Lilly, Stec k, Sarff, Workman, Bohler, May, Chapman NAYS: None. ABSENT: None. APPROVED: Donald E. Edwards, Mayor ATTEST: N Whi ,City Clerk Pu~~'sc~`~i®n Ins~r~ctions 1~1 Do not publish Publish in pamphlet form only O Publish in a general circulation newspaper _ _ ~Z ,~~~ ~' City Atf. _ Date -2- LOAN AGREEMENT (HHS/OCS) This agreement dated , 19 is between the City of Canton, an Illinois Municipal Corporation (hereinafter called "Lender") , and Basement De iniatering Systems, Inc. an Illinois corporation , (hereinafter called "Borrower") . In consideration of the mutual covenants and agreements contained herein, Lender and Borrower agree as follows: 1. Loan Terms: Lender agrees to loan the principal sum of 0~ Han~~ Thousand Dollars ($100,000.00) ------------------------ (hereinafter referred to as "Loan"), to be disbursed as hereinafter provided,' bearing interest at the rate of 9.0 percent per annum from the date funds are advanced hereunder up to and including gecember 31, 1988, and at the rate of 13.0 percent per annum thereafter for the ~ , remaining term of this loan as more specifically set forth in para- graph 2 below. The term of the loan is for 5 years from the date hereof. This loan is evidenced by a promissory note of even date herewith (Exhibit 1) made payable to the City of Canton, an Illinois Municipal Corporation. Borrower agrees to use the loan and its proceeds solely for activities as set forth in Borrower's approved Rural Development Loan Fund (hereinafter called "ROLE") application (including any supplements or modifications thereto), approved Business Plan (including any supplements or modifications thereto), 'each submitted to the Lender, the terms and conditions Qf this Loan Agreement and the Rules and Regulations governing the RDLF (45 CFR 1076.50) in effect on the date hereof, and all applicable Federal HHS /OCS : 10/1/84 and State of Illinois Laws, rules and regulations. 2. Repayment: Repayment of this loan shall be made as follows: 2.1 Principal shall be paid in Ten (10) equal semi-annual installments of ($ 10,000.00 ----------~ each com- mencing on the 1st day of June/~I~~ 19 87 and continuing every six months thereafter until said principal is fully paid. 2.2 Interest shall be paid on the unpaid principal bal- ance at the rate of 9.0 percent per annum with the first payment due on June/g1c 1st, 19 87 and then on December/ 1st, and June/~ 1st of each year until and including December 1st, 1988. After said period, interest shall be paid on the unpaid balance in said semi-annual installments at the rate of 13.0 percent per annum until said interest and principal is fully paid. 2.3 Unpaid interest shall be added to principal and bear interest at the same rate as noted above for said principal. Inter- est shall be considered unpaid if not received by Lender within 7 calendar days following the due date. 2.4 Borrower shall pay a late charge of 6$ of the payment due of principal or interest if payment for any of these is not received within 7 calendar days following the due date. The late charge shall be considered unpaid'if not received within 15 calendar days of the missed due date for which it was imposed. Any unpaid late charge shall be added to principal and bear interest at the same rate as noted above for said principal. Acceptance of a late charge by Lender does not constitute a waiver of default. -2- 2.5 Borrower shall have the right to prepay any and all interest and principal at any time without penalty or addi- tional interest and any such prepayments shall be applied to the next maturing installments of principal and interest. 3. Certification: Immediately before the date of the loan disbursement, the Borrower shall submit the following documentations to Lender: 3.1 A current copy of the Borrower's articles of incor- poration or charter. 3.2 Certifications that there has been no material adverse change in Borrower's financial condition or any condition which would adversely affect the Borrower's ability to carry out the terms and conditions of this agreement. 3.3 If a corporation, a certified copy of Borrower's corporate resolution authorizing and directing the execution and _ delivery by Borrower to Lender of this agreement and all related documents. ~ __ 4. Disbursement Procedure: 4.1 Disbursement shall take place after this loan agree- ment and the promissory note (Exhibit 1) are executed, the documenta- tion called for in paragraph 3 above and any other conditions precedent to disbursement 6f funds under this award arQ fully satisfied, and Borrower has delivered to Lender all requisite security instruments in form and substance acceptable to Lender. 4.2 In addition to any of the foregoing, loan funds will only be disbursed upon completion of all of the following in form and sub- stance satisfactory to the Lender: (a) Collateral security agreement(s) specified in paragraph 8; (b) Lender's receipt of any necessary final written approval from OCS; and -3- (c) Evidence of compliance with other terms and conditions specified in paragraph 18. 4.3 Borrower shall maintain a separate ledger for RDLF funds obtained hereunder. 5. Reporting and Access Requirements: (a) Within five (5) working days of Lender's written request, Borrower agrees to make all of its books, accounts .and other financial data relating to this loan available to Lender, or, Lender's authorized agents (to include Lender's auditors) within the City of Canton, Illinois. (b) Borrower, its consultants and contractors, shall permit on site inspections of records or assets (wherever located) by Lender or by Lender's authorized representatives and shall effect- _ tively require their agents, employees and board members to furnish such information as, in the judgment of Lender or Lender's author= ized~representatives, may be relevant to the question of Borrower's compliance with the terms of Borrower's approved Rural Development Loan Fund application (including any supplements or any modification thereto),~to Borrower's approved businessplan~ (including any supple- ments or any modifications thereto), to Borrower's compliance with this loan agreement, or to Borrower's compliance with the rules and regulations governing the RDLF (45 CFR 1076.50) in effect on the date hereof and to all applicable Federal and State of Illinois laws, rules and regulations. 6. Assignment; Except as expressly provided in the loan agreement, Borrower shall not assign any right, title or interest in and to this Agree- meat, or, to any security pedged in repayment of this loan without -4- first obtaining Lender's written consent thereto and, as applicable, prior OCS written approval. 7. Default: On the occurrence of any event of default as described below, Lender may declare all or any portion of the debt and inter- est created hereby to be immediately due and payable and may pro- ceed to enforce its rights under this loan agreement or any other instruments securing or relating to this loan and in accordance with the law and regulati~ans applicable hereto. Any of the follow- ing may, without limitation, be regarded as an "event of default" in the sole discretion of the Lender: (A) Failure, inability or unwillingness of Borrower to carry out or comply with the specific terms or condi- tions of this loan agreement, or any federal or state laws, rules, or regulations, applicable to this loan __ agreement, or with such OCS regulations as may become applicable at any time. (B) Failure of Borrower to pay any installment of principal or interest on its promissory note to Lender when due as specified in paragraph 2 above. (C) The occurrence of: (1) Borrower's becoming insolvent or bankdupt, or ceasing, being unable, or admitting in writing its inability, to pay its debts as they mature, or making a general assignment with creditors; (2) proceedings for the appointment of a receiver, trustee of liquidator of Borrower, or of a substantial part of its assets, being authorized or instituted by or against it; or -5- (3) proceedings under any bankruptcy, reorganization, readjustment of debt, insolvency, dissolution, liquida- tion, or other similar law of any jurisdiction being authorized or instituted by or against this Borrower. (D) Submission or making of any report, statement, warranty, or representation by Borrower or agent on its behalf to Lender or OCS in connection with the financial assistance awarded hereunder which is false, incomplete, or incorrect in any material respect. (E) Failure of Borrower to remedy any material adverse change in its financial or other condition arising since the date hereof which condition was an inducement to this loan. (F) Except as expressly provided in this loan agreement, any attempt by Borrower to assign any right, tithe, or interest in and to this agreement, or, to any security pledged in repayment of this loan without first obtaining Lender's written consent thereto. 8. Collateral: (A) The personal guarantees of Dennis W. Dawson and Jerry D. Jarnigan per Exhibit 2 attached. (B) A first security interest in supplies, stock in trade, and machinery at a minimal aggregate value of 133$ of the value of such supplies, stock in trade, and machinery. For purposes of valuation, all such supplies, stock in trade, and machinery shall be valued at its actual purchase price, or, at its current depreciated value, which- ever is applicable. -6- -7- 9. Other Parties: This loan agreement is not for the benefit of third parties. Lender shall not by under any obligation to any such parties, whether directly or indirectly interested in the loan agreement, to pay any charges or expenses incident to compliance by Borrower with any of the duties or obligations imposed hereby. 10. Costs and Expenses: Borrower agrees to reimburse Lender for costs and expenses, court costs, reasonable attorney fees, and all other out-of-pocket expenses paid by Lender in enforcing the terms and conditions of this agreement occassioned by Borrower's failure to comply with such terms and c©nditions. Borrower hereby irrevocably consents that all such attorney fees, costs, and expenses, and out-of-pocket expenses may be included in any judgment awarded to Lender in any proceeding at law or in equity to enforce this agreement. Borrower hereby irrevocably empowers any attorney at any time hereafter to appear for Borrower in any court in term time or vacation, and confess judgment against Borrower, each or any of us, (as applicable), including any guarantor(s) hereof, without process of this Loan Agreement in favor of any legal holder, for all sums owing hereon, interest, costs, and resonable attorney's fees, and to waive all right of appeal, release all errors and consent to immed- iate execution. 11. Retention and Creation of Jobs: Lender and Borrower recognize and agree that the loan pro- vided by Lender to Borrower is in direct support of Borrower's activities specified in the approved application and business plan. -8- Both Lender and Borrower recognize and agree that new jobs will be created and/or exisitng jobs retained; a majority of new jobs created shall be filled by persons whose family incomes are at or below the Poverty Guidelines as established by the Secretary, Health and Human Services, at the time the jobs are filled. Borrow- er covenants and agrees to not relocate jobs created by use of this loan from Lender's corporate limits as long as any indebtedness exists hereunder. 12. Notice: Notice shall be given to any party hereto by United States mail, certified mail, return receipt requested, and directed to the following addresses: To Lender: City Clerk City Building --- 210 East Chestnut Street ~~ Canton, Illinois 61520 Any notice given to the Lender shall include an informational copy, mailed as aforesaid, and addressed to the attention of the City Attorney at the above stated address. To the Borrower : Basement De Z4atering Systems, Ir~c. 162 East Chestnut Street Canton, Illinois 61520 13. Successors and Assigns: The Loan Agreement shall be binding upon Borrower and its successors and assigns and upon Lender and its successors and assigns, and shall survive the closing of the Loan and disbursement of pro- ceeds. ~ r -9- 14. Applicable Laws:. Interpretation of the terms and provision of this loan agreement shall be in accordance with applicable Federal laws and with the laws of the State of Illinois. 15. Management of Borrower: Except as provided to the contrary in this loan agreement, the Borrower shall have the right: (i) to merge with or into any other corporation with Lender's prior written consent, (ii) to make a public offering of its stock, or, (iii) to take any other corporate action that the Borrower deems to be in its best interest. 16. Insurance: Borrower agrees to keep the improvements now and hereafter upon the premises set forth in Exhibit 2 insured against damage by fire, windstorm, and such other hazards as the Lender may require to be insured against until the loan is paid in full, or, in the case of foreclosure until expiration of the period of redemption. The aggregate amount of such insurance shall not be less than the aggregate sum of the unpaid principal or this loan and accrued interest and penalties thereto appertaining. Borrower shall pro- vide Lender with a copy of such insurance policy or policies and shall show the Lender as mortgagee and loss payee thereon. 17. Retention of Records: Borrower hereby agrees to retain intact all of its books, accounts, and other financial data relating to this loan for a per- iod of four (4) years following the end of Borrower's fiscal year -10- of the last entry therein and, further, agrees to make the same available for Lender's inspection upon the same terms and conditions as set forth in numerical Paragraph 5 of this loan agreement. 18. Other Terms and Conditions: (A) No person in the United States shall on the grounds of race, color, religion, sex, age, handicap, marital status, or nat- ional origin, be denied the proceeds of, or be subject to discrimina- tion under the activities approved as a result of this loan. Borrower agrees to comply with the applicable regulations promulgated by the Civil Rights Act of 1964 and Section 623 of the Economic Opportunity Act of 1964, as amended, 42 U.S.C., §2971c. (B) Disbursement shall only take place after acceptable written showings of legally binding, irrevocable commitments for the balance of the project funding has been placed on file with Lender by Borrower. r -11- IN WITNESS WHEREOF, Lender and Borrower have executed duplicate originals of this loan agreement as of the date first above-mentioned. BORROWER: Basement De~r7atering Systems, Inc, an Illinois corporation, BY: Its President. Date: Address: 162 East Chestnut Street Canton, Illinois 61520 Phone: (309) 647-0331 ATTEST LENDER: City of ;Canton, an Illinois municipal corporation, BY: Its Mayor. Date: Address: 210 East Chestnut Street Canton, Illinois 61520 Phone: (309) 647-0065/0020 ATTEST: Corporate Secretary. City Clerk. -12- (EXHIBIT 1) NOTE Basement De~niatering Systems, Inc. promises to pay to the order of the CITY OF CANTON, an Illinois municipal corporation, the sum of One Hundred Thousand Dollars together with interest thereon at the rate of 9.0 $ per annum from the date hereof to and including December 31 , 19 88 , and at the rate of 13_ .0 _$ per annum thereafter to and including December 1 19 91 PAYMENT SCHEDULE: (a) PRINCIPAL: Principal shall be paid in Ten _ (10) equal semi-annual installments of $ 10,000.00 each commencing on the 1st day of June , 19 , and continuing every six months thereafter until the principal sum of $ 100,000.00 is paid in full. (b) INTEREST: Interest shall be paid on the unpaid principal balance at the rate of 9.0 $ per annum with the first payment due on June 1 , 19 87 , an~C then on Deter 1st and June 1st of each year until and including December 1Gt , 19 88 After such period, interest shall be paid on the unpaid principal balance in said semi-annual installments at the rate of 13.0 $ per annum until said interest and principal is fully paid.. Unpaid interest shall be added to principal and bear interest at the same rate as noted above for principal. Interest whall be con- sidered unpaid if n.ot received by the City of Canton within 7 calendar days following the due date. , shal_1 have the right to prepay any aad all interest an principal at-any time without penalty or additional interest. This Note is specifically made subject to the terms and condition of a certain "Loan Agreement" between Basement De-Watering Systems, Inc. and the City of Canton, dated as of , 19 , and approved by City of Canton Resolution Number on 19 (as amended) as fully as though all the terms and conditions of said Loan Agreement were fully set forth at this place verbatim. • v JG\..41 c ~ttc r+aYluCll L V1 L7115 1VOLe, $a hereby irrevocably empowers any attorney at any time herea ter to appear for us in any court in term time or vacation, and confess judgment against us, each or any of us, including any guarantor(s) hereof, without process of this Note in favor of any legal holder, for all sums owing hereon, interest, costs, and reasonable attorney's fees, and to waive all right of appeal, release all errors and con-~ sent to immediate execution. DATED: This day of , 19 Basemexit De-Waterincr Systems, Inc. , an . Illinois corporation gy. Its President and Its Vice-President Corporate Secretary. (Corporate Seal) ~3/QC3: 10/1/84 GUAF.ANTEE FOR VALUE RECEIVED, the .undersigned, . Jerry D. Jarnagin and Dennis W. Dawson ~ hereby guarantee the payment of the foregoing Note at maturity or at any time thereafter., with interest as specified therein, waiving presentment, demand, notice, protest, and diligence in collecting, and we each of us hereby irrevocably empower any attorney at any time hereafter to appear for us, either or any of us, in any court in term time or in vacation, and confess judgment against us, each or any of us, including any within maker or makers, guarantor or guarantors hereof, without process on this Note in favor of the legal holder, for said within sum, interest, costs, and reasonable attorney's. fees, and to waive all right of appeal, to release all errors and consent to immediate execution. DATED: This .day of ~ .. ... 19. .. • Jerry D. Jarnigan s awson