LOAN AGREEMENT
(INDUSTRIAL AND COMMERCIAL BUSINESSES)
Revolving Loan Fund (RLF) Program
City of Algona, Iowa
THIS AGREEMENT, made and entered into this 5th day of August, 2005, by
and between the City of Algona, Iowa, (hereinafter referred to as "City") and
Hydrogen Engine Center, Inc., (hereinafter referred to as "Borrower"), with an
office located at 000 Xxxx Xxxx Xxxxxx, Xxxxxx, Xxxxxxx Xxxxxx, Xxxx.
WHEREAS, the City is desirous to promote and assist economic growth
through the development and expansion of qualified businesses, the creation of
jobs, and the expansion of the municipal tax base in the City of Algona; and
WHEREAS, Borrower has proposed a project to further these goals and,
having exhausted all other financing options, has applied for City financial
assistance for the project.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and conditions contained herein, the City and Borrower agree as
follows:
Section 1. The City agrees to loan Borrower the sum of Two Hundred
Thousand Dollars ($200,000.00). The Borrower will carry out a project totaling
Six Hundred Forty Thousand Dollars ($640,000.00). The project total includes the
City's loan amount. The City will not include an amount to reimburse the City's
administrative costs.
Section 2. Borrower shall:
(a) Abide by the terms and conditions of the Promissory Note;
(b) Exclusively use the proceeds of the loan from the City for building
construction purposes, which use shall be made within one (1) year from
the date of this Agreement, unless an extension is granted in writing
by the City; and
(c) Meet job performance measures as follows:
1. Job Creation in Algona, Iowa. The Borrower commits and
agrees that within two (2) years from the date of this Agreement, it
will create at least forty-two (42) new full time positions in addition
to its current employee total of two (2) full time positions. All of
the current employee positions as well as the minimum of forty-two (42)
new full time positions that are created must then be retained in
Algona continuously for an additional five (5) years.
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2. Borrower shall provide documentation of the number of jobs
created by the project, and if applicable, the number of jobs filled by
low and moderate income persons.
3. Borrower shall not discriminate against any employee or
applicant for employment because of race, color, religion, sex, age,
disability, or national origin.
Section 3. The funds from the City will not be loaned to Borrower until
Borrower has started construction. Borrower shall submit the appropriate bills
it receives to the City and the City shall then advance the needed loan proceeds
to Borrower. Borrower then agrees to use said funds to pay the bills. If the
bills submitted to the City total less than Two Hundred Thousand Dollars
($200,000.00), then not all loan proceeds will be made available by the City or
used by Borrower.
Section 4. Borrower hereby agrees to grant to the City, as security for
the $200,000.00 loan, a mortgage over real estate located in Kossuth County,
Iowa, legally described as follows:
Lots Three (3), Four (4) and Five (5) of Snap-On Industrial Park as
recorded in the Plat as Document No. 2002-1701, located in part of the
West Half of the Northwest Fractional Quarter (W1/2 NWfrl1/4) of
Section Six (6), Township Ninety-five (95) North, Range Twenty-eight
(28), West of the 5th P.M., City of Algona, Kossuth County, Iowa.
Section 5. Borrower acknowledges that the interest rate on the loan it
is receiving from the City is ten percent (10%) per annum, however, so long as
Borrower complies with all the job creation and job retention requirements set
forth in Section 2(c)(1), the interest will be forgiven annually which will
result in the rate of interest being zero percent (0%) per annum. Borrower
agrees that in the event it ever fails to meet any of the requirements set forth
in Section 2(c)(1), then the total balance under the loan will be immediately
due and payable. In addition, Borrower agrees to pay to the City all of the
interest that was forgiven in prior years as well as interest at the rate of ten
percent (10%) per annum from the date of the last principal payment until the
entire loan is paid in full. Said interest that was forgiven shall be due and
payable within sixty (60) days after demand is made by the City.
Section 6. Borrower agrees to an annual performance report to the City
by the fifteenth (15th) day after December 31 until the loan is repaid.
(a) Borrower agrees to submit all information and documentation
regarding project expenditures and employment as requested by the City.
(b) Borrower shall at all times keep proper books of account in a
manner satisfactory to the City.
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(c) Borrower will retain all records relating to the Revolving Loan
Fund project for a minimum of five (5) years beyond the loan, or longer
if any litigation or an audit is begun, or if a claim is initiated
involving the records. In these instances, the records will be retained
until the litigation, audit or claim has been resolved.
Section 7. Borrower agrees to submit annual job creation and retention
performance reports to the City by the fifteenth (15th) day of the month
following the end of each calendar year until the loan has been repaid.
Section 8. This Agreement is not assignable by Borrower without prior
written consent of the City.
Section 9. In the event that Borrower's business is sold, or the
business involuntarily or voluntarily files for bankruptcy, or the conditions of
the loan agreement are not met, then the total balance under the loan will be
immediately due and payable.
Section 10. The City may declare the loan to be in default if any of
the following events shall occur and be continuing:
(a) Borrower shall make any written representation under or in
connection with this Agreement that shall prove to have been incorrect
in any material respect when made.
(b) Borrower shall fail to make a timely payment in accordance with the
terms of the Promissory Note.
(c) Borrower shall fail to perform or observe any other term or
condition contained in this Agreement and any such failure shall remain
unremedied for thirty (30) days after written notice thereof shall have
been given by the City by return receipt mail.
(d) Borrower assigns this Agreement to another party without the prior
written consent of the City.
Section 11. Upon the City's declaration of default as defined in
Section 10, the City may:
(a) By notice to Borrower, declare the Loan payable under the
Promissory Note and this Agreement to be forthwith due and payable,
without presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by the parties.
(b) Take whatever action at law or in equity may appear necessary or
desirable to collect the payments and other amounts then due and
thereafter to become due or to enforce performance and observance of
any obligation, agreement or covenant of Borrower under this Agreement.
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No remedy herein conferred upon or reserved to the City is intended to
be exclusive of any other remedy or remedies, and each and every such
remedy shall be cumulative, and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity
or by statute.
Section 12. If Borrower fails to comply with the conditions of this
Agreement, the City may, after notice, suspend the Agreement and withhold
further payments or prohibit Borrower from incurring additional obligations of
Agreement funds, pending corrective action or a decision to terminate.
Section 13. Either the City or Borrower may pursue any remedy to
enforce this contract at law or equity under the laws of the State of Iowa. The
prevailing party shall be reimbursed for reasonable attorney fees.
Section 14. In carrying out the provisions of the Agreement or in
exercising any power or authority granted to Borrower thereby, there shall be no
liability, personal or otherwise, upon the City. Furthermore, Borrower shall
indemnify and save harmless the City from suits, actions or claims of any
character brought for or on account of any injuries or damages received by any
person or property resulting from operations of Borrower or any persons working
under Borrower out of the terms of this Agreement.
Section 15. This Agreement shall be binding and shall inure to the
benefit of the assigns, representatives and/or successors in interest.
Section 16. Borrower has filed an EDSA Application for Financial
Assistance. The City and Borrower agree that all EDSA requirements are also
applicable in this Agreement and are hereby incorporated by reference.
CITY OF ALGONA, IOWA HYDROGEN ENGINE CENTER, INC.
By: s/ Xxxx X. Xxxxx, Mayor By: s/Xxxxxxxx X. Xxxxxxxxx, President
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ATTEST:
s/Xxxxxx XxXxxxx, City Clerk By: s/Xxxx Xxx Xxxxxxxxx, Secretary
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