HomeMy WebLinkAboutResolution #1056RESOLUTION N0. 1056
A RESOLUTION APPROVING A SUBORDINATION AGREEMENT BETWEEN THE CITY
OF CANTON AND THE FIRM OF CANTON CORPORATION AND DIRECTING THE
MAYOR AND CITY CLERK TO EXECUTE SAID SUBORDINATION AGREEMENT ON
BEHALF OF THE CITY OF CANTON.
WHEREAS, the City of Canton, Illinois has reviewed terms of
the proposed subordination agreement, between the City of Canton
and Canton Corporation, a copy of which is hereto attached and
made a part hereof as "Exhibit A"; and,
WHEREAS, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF CANTON, Fulton County, Illinois, as follows:
1. That the Subordination Agreement between the City of Canton
and Canton Corporation, which is attached hereto and made a part
hereof as Exhibit A, is hereby approved, said Subordination Agreement
to be subject to and effective pursuant to the terms and conditions
set forth therein.
2. That the Mayor and the City Clerk are hereby authorized
and directed to execute and deliver said Subordination 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 ~~_ day of NovemUe~ , 1984,
upon a roll call vote as followst
AYES: Aldermen Horr, May, Carl, Worlanan, Sarff, Savill, Hamrrnzd,
Kovachevich.
NAYS : None ,
ABSENT : NCne,
APPROVED:
Donald E. Edwards, Mayor.
ATTEST:
l.W' ~~
L~" \ /
Nancy Whi s. City Clerk.
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT, dated as of
September 21, 1984, is made by and between THE CITY OF CANTON,
an Illinois municipal corporation (hereinafter the "Subordinating
Creditor"), and THE NATIONAL BANK OF CANTON (hereinafter the
"Agent"), as agent for the Banks and Savings and Loan Associations
(hereinafter collectively the "Bank Group") signatory to a
certain Term Loan Agreement, dated as of the date hereof (here-
inafter the "Term Loan Agreement"), with The Canton Corporation,
an Ohio corporation (hereinafter the "Company").
The Subordinating Creditor and the Agent, on
behalf of the Bank Group, hereby agrees as follows:
1. The Bank Group, by and through the Agent, and
the Agent, acknowledge and agree that, in connection with a loan
of DCCA funds in the amount of $400,000 to be made by the
Subordinating Creditor to the Company on or about the date
hereof (hereinafter, the "DCCA Loan"), the Subordinating
Creditor is to receive a first mortgage on the real property
of the Company (hereinafter the "First Mortgage") and a first
lien on after-acquired property of the Company having a value
at the time of acquisition not exceeding $200,000 (hereinafter
the "First Lien"). In consideration of the receipt of the
First Mortgage and the First Lien from the Company, and in
order to induce the Bank Group to make loans to the Company
under and pursuant to the Term Loan Agreement, the
Subordinating Creditor hereby agrees that, in the
event of default by the Company under the terms of the
DCCA Loan, and to the extent that all amounts realized
by the Subordinating Creditor upon foreclosure of the
First Mortgage and First Lien (hereinafter the "Foreclosure
Proceeds") are insufficient to satisfy in full the obligations
of the Company to the Subordinating Creditor under the
DCCA Loan, then all amounts remaining unpaid and due and
owing by the Company to the Subordinating Creditor under
the DCCA Loan after application of the Foreclosure Proceeds
shall be subordinated to any and all indebtedness of the Company
to the Bank Group under the Term Loan Agreement.
2. The Bank Group, by and through the Agent,
and the Agent hereby acknowledge and agree that notwithstanding
any other provision of this Subordination Agreement, so long
as no event of default has occurred and is continuing under
the Term Loan Agreement, the Subordinating Creditor shall
have the right to receive from the Company any and all payments
of principal and/or interest from time to time owing by the
Company under the terms of the DCCA Loan and/or the terms
of any loan agreement and/or promissory note executed in
connection therewith (hereinafter the "DCCA Loan Payments").
The Bank Group, by and through the Agent, and the Agent further
agree, so long as no event of default has occurred and is
continuing under the Term Loan Agreement, not to take, or
cause to be taken, any action aimed at preventing.,. enjoining
-2-
or otherwise stopping any DCCA Loan Payment, including without
limitation, directing the Company not to make any such DCCA
Loan Payment, and agree to give the Subordinating Creditor
timely notice of any default by the Company under the Term
Loan Agreement.
3. The Agent represents and warrants that
it has full power and authority to execute and deliver this
Subordination Agreement on behalf of the Bank Group, and by
so doing to bind each of the members of the Bank Group to
the terms hereof.
THE NATIONAL BANK OF CANTON,
as agent for the Bank Group
CITY OF CANTON, an Illinois
municipal corporation
By:
By:
ATTEST:
City Clerk