HomeMy WebLinkAbout03-19-1987 Special Emergency Council Minutes 1~1
A special emergency meeting of the Canton City Council was
held on March 19, 1987 in council chambers.
PLEDGE OF ALLEGIANCE OPENED THE MEETING FOLLOWED BY THE ~
INVOCATION GIVEN BY CITY CLERK NANCY WHITES.
Mayor Edwards asked for roll call at 5:00 p.m. Present . ,
Alderman Zilly, Steck, Sarff, Workman, Bohler, May, Chapman.
Absent : Alderman Kovachevich.
PURPOSE OF THE MEETING TO CONSIDER AND TAKE FINAL ACTION ON ;
A LETTER OR MEMORANDUM OF UNDERSTANDING OR AGREEMENT RECEIVED '
FROM THE CANTON INDUSTRIAL CORPORATION (CIC) BEARING DATE OF
MARCH 16, 1987.
RESOLUTION - APPROVING A MEMORANDUM OF UNDERSTANDING BETWEEN
THE CANTON INDUSTRIAL CORPORATION AND THE CITY OF CANTON. Second
reading, read by title. Steve Clark from CIC addressed the '
O council. He said after the first of the year we came to the '
~ city council with a suggestion and idea of changing some of
~ the debt for equity. That was the DCCA loan for stock. And
at the time, the reason for that was to acquire some additional
= financing from FmHA. The FmHA has some very significant
requirements as far as their capitol necessitates in order
Q to qualify for a loan. The question at that time, were we
a new company, or an old organization? Because they were
significally different in the way they treated you. What they
had asked us to have was 25~ equity. They only require a 10~
equity for an on going concern at the time we evaluated the
position with the city. And obivously we don't want to change
debt for equity, nor do you want to acquire equity for debt
if we could meet these requirements in any other manner. We
were concerned that the $400,000 probably would not push us
over the 25~ requirement.
At that time when we were talking to the advisory board of
the Loan Committe, they said they were going to look at other
alternatives to securing the types of financing that was
necessary for the growth stage which the CIC corporation was
currently going thru.
What we really would like to do is make some changes in the
manner in which we treat our stockholders and our warrant
holders, and you have to file that. And it needs to be filed
very quickly.
In looking thru what has transpired in 1986 with our accountant
firm, we find we've been in error 3 different places. We did
not make the loan payment that we had intended to make in
December in anticipation of changing the debt for equity. We
did receive some money for warrants and of that we received
$4,500. Today we have not transmitted any of those finances
to the city. So we are in technical violation, we thought
when we got the first $200,000 we owed it to you, that's the
way we read it. And we agree with Jim Malmgren's enterpretation,
we should pay it as it comes in, upto and including the first
$200,000.
Counsel from our CPA firm told us this is an opportunity for
us to capitalize those expenses, so at the end of our year
our records in fact showed we had not bought more than $50,000
worth of capitol equipment or made significant changes.
Were up against a time constraint and hope to leave here with
a signed agreement tonight.
~.'72
CONTINUED March 19, 1987
Mayor Edwards said this meeting was called an emergency meeting
for such as time for CIC.
David Leezer Community Development Director had some concerns.
He said he needed to know more about the exchange of stock
shares for equity, but Steve already explained. I would like
to see some kind of a consideration added for delaying of
payments. That we would agree to delay payments until June
8, 1987, and if all payments were not current by 5:00 p.m.
June 8, 1987 than all appropriate penalties shall be reverted
back to the stated condition of the contract. Unless CIC can
show just cause.
A request has been made to waive the penalties of compliance
with the capitol improvements of over $50,000. I would want
some kind of document stating what types of improvements their
discussing. And what improvements were made to the facility
to warrant this request, for my own protection.
I would be willing to accept their request if we receive the
following: 1) Receive an insurance certificate or policy showing
the city as loss payee; 2) Stock certificates for collateral;
3) No longer exchange common stock; 4) All payments not current
by 5:00 p.m. June 18, 1987 all penalties be reverted back to
the stated conditions of the contract.
Steve Clark said they just had a real estate survey done of
the facility for insurance purposes and believes the city will
be pleased with the findings.
Jim Mamlmgren City Attorney said we could add to a motion to
make it condition, that signing is not to be reviewed as our
right to insist on payments on other dates and times.
Motion by Alderman Steck, second by Alderman Zilly to place
the resolution on its passage. Discussion. Alderman Chapman
asked how can we delay payments to FmHA and DCCA? David Leezer
reported that he had talked to both FmHA and DCCA and they
voiced no objections. Roll call. AYES - Aldermen Chapman,
May, Bohler, Workman, Sarff, Steck and Zilly. NAYS - None.
Motion carried. 7 AYES 0 NAYS 1 ABSENT. Resolution being
#1195.
Motion by Alderman Sarff, second by Alderman Workman, the city
enter an agreement with CIC with the following stipulations.
1) Receive an insurance certificate naming the city as loss
payee.
2. Using stock certificates in CIC as collateral.
3. Eliminating the changing of common stock.
4. All loan payments not current .by 5:00 p.m. on June 8, 1987,
all penalties be reverted back to the stated condition of the
contract. Voice vote, motion carried.
ADJOURNEMENT: Motion by Alderman May, second by Alderman Sarff
to adjourn. Voice vote, motion carried. Council adjourned
at 5:30 p.m.
f '
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CITY CLERK
APPROVED .
MAYOR