Prepared by: Xxxxxxx X. Xxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxx, XX 00000
PH: (515) 295-3565
LOAN AGREEMENT
WITNESSETH this Loan Agreement dated this 27th day of June, 2005, by
and between Algona Area Economic Development Corporation, hereinafter referred
to as "AAEDC", and Hydrogen Engine Center, Inc., hereinafter referred to as
"HEC".
WHEREAS, AAEDC desires to promote and assist economic growth through
the expansion of businesses and the creation of jobs in and around the City of
Algona, Iowa; and
WHEREAS, HEC has proposed a project to further those goals and has
applied to AAEDC for financial assistance for the project in the form of a
request for the conveyance of real estate currently owned by AAEDC and legally
described as:
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 (W'/2NWfrl'/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; and
WHEREAS, HEC will construct major improvements that will become part of
the real estate; and
WHEREAS, AAEDC and HEC have agreed to the terms of a payment plan for
the real estate in the case where certain performance obligations of HEC are not
accomplished; and
WHEREAS, the real estate and to-be-constructed improvements and other
property will stand and be pledged by HEC to AAEDC as security for any payments
that may be required to be made from HEC to AAEDC.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and conditions herein set forth, the parties agree as follows:
1. PRINCIPAL AMOUNT OF LOAN. AAEDC hereby loans to HEC the sum of One
Hundred Forty-six Thousand One Hundred Twenty-four Dollars ($146,124.00).
2. INTEREST. Interest on the loan shall accrue at the rate of eight
percent (8%) per annum. Interest shall be capitalized on a yearly basis.
3. FORGIVABLE LOAN/PAYMENTS, IF NOT FORGIVEN.
A. As a ten year forgivable loan of One Hundred Thirty-five
Thousand Three Hundred Dollars ($135,300.00) conditioned upon the HEC
achieving a performance target obligation of one hundred (100) new full
time equivalent (FTE) positions by June 1, 2015, all FTEs to be paid a
-1-
minimum wage equal to or greater than the average hourly wage for
workers in Kossuth County, Iowa, as determined annually by Iowa
Workforce Development.
B. Provided HEC has certified fifty (50) new FTEs by June 1,
2010, and such fifty (50) FTEs are continuously retained in Algona
until June 1, 2015, AAEDC shall forgive Sixty-seven Thousand Six
Hundred Fifty Dollars ($67,650.00) of the principal balance of this
obligation and all associated interest.
C. If HEC certifies an additional fifty (50) FTEs by June 1,
2015 (100 FTEs total), then an additional Sixty-seven Thousand Six
Hundred Fifty Dollars ($67,650.00) of principal balance and all
associated interest shall be forgiven and HEC's only obligation shall
be to pay the lump sum balance of the loan, Ten Thousand Eight Hundred
Twenty-four Dollars ($10,824.00) to AAEDC on June 1, 2015, without
interest.
D. In the event the HEC fails to achieve the performance
target obligation of fifty (50) FTEs by June 1, 2010, then the HEC
shall pay to AAEDC One Hundred Forty-six Thousand One Hundred
Twenty-four Dollars ($146,124.00) of principal plus capitalized
interest to said date.
E. In the event the HEC achieves the initial performance
target obligation on June 1, 2010, but fails to retain said jobs until
June 1, 2015, then HEC shall pay to AAEDC One Hundred Forty-six
Thousand One Hundred Twenty-four Dollars ($146,124.00) of principal
plus capitalized interest on June 1, 2015.
F. In the event HEC fails to achieve the second performance
target obligation on June 1, 2015, then HEC shall pay AAEDC
Seventy-eight Thousand Four Hundred Seventy-four Dollars ($78,474.00)
of principal plus capitalized interest to said date on June 1, 2015.
Capitalized interest on said amount of principal shall only be
calculated from June 1, 2010, to June 1, 2015.
4. PURPOSE. The purpose of the loan is to assist HEC in the purchase of
the following described real estate now owned by AAEDC:
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 (W'/zNWfrl'/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.
5. PROMISSORY NOTE. HEC shall sign a standard form Promissory Note
incorporating the terms hereof.
6. MORTGAGE SECURITY. As security for all sums due or which will become
due from HEC to AAEDC, HEC shall execute a Mortgage to AAEDC in and to the
following described real estate:
-2-
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 (W'/zNWfrl/) 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.
The mortgage shall include any and all improvements which may be
constructed by HEC on the above-described real estate.
7. EMPLOYMENT RECORD DOCUMENTATION AND RETENTION. HEC shall make
employment figure available to AAEDC on an annual basis, with reports due on
June 15th of each year until the loan is repaid. In addition to the annual
reports to AAEDC HEC agrees to retain all of its employment records for a
minimum of seven (7) years beyond the date of this loan and shall allow AAEDC or
its designated representative to examine their employment records at any point
in time to insure that the minimum job requirements are being met.
8. DEFAULT. In the event HEC sells, assigns or otherwise transfers its
interest in the above-described real estate (excluding any mortgages HEC might
grant upon the real estate), or involuntarily or voluntarily files for
bankruptcy, or the conditions of this Loan Agreement are not met, then HEC shall
be considered in default and the total unpaid balance under the loan will be
immediately due and payable.
9. ADDITIONAL DEFAULT. It shall also be considered an act of default
if, in
AAEDC's judgment, the greater percentage of HEC's business operation or
employees has moved from Algona, Iowa, or been outsourced during the ten (10)
year period of this loan.
10. REMEDIES. No remedy herein conferred upon or reserved to AAEDC 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.
11. JURISDICTION. This Loan Agreement was entered into in Algona,
Kossuth County, Iowa, and shall be governed by the laws of the State of Iowa.
The parties consent to the jurisdiction of the District Court of Iowa in and for
Kossuth County to resolve any and all disputes hereunder.
12. ENTIRE AGREEMENT. This instrument contains the entire Agreement of
the parties with respect to the subject matter hereof, any other oral or written
agreements entered into with respect thereto are revoked and superseded by this
Agreement; and no representations, warranties or inducements have been made by
either of the parties except as expressly set forth herein. Any changes,
modifications, adjustments or amendments to this Agreement must be in writing.
-3-
13. SEVERABILITY. If any provision of this Agreement is declared void,
such provision shall be deemed severed from this Agreement, which shall
otherwise remain in full force and effect.
14. BINDING EFFECT/ASSIGNABILITY. This Agreement shall be binding upon
the parties hereto and upon their respective executors, administrators, legal
representatives, and successors. This Loan Agreement may not be assigned by HEC
without the express written consent of AAEDC.
15. CONSTRUCTION. This Agreement shall be governed and construed in
accordance with the laws of the State of Iowa. Captions are included for
convenient reference only and shall not in any way affect the interpretation of
any provision hereof.
16. NOTICES. All notices under this Agreement must be in writing. The
notices must be delivered personally or mailed by certified mail, return receipt
requested, to the other party or to that party's attorney.
17. LEGAL COUNSEL. All parties affirmatively represent and acknowledge
that they have been represented by competent legal counsel of their choosing in
connection with this Agreement.
18. ATTORNEY FEES AND COURT COSTS. If either party files suit to
enforce
any of the terms of this Agreement, the prevailing party shall be entitled to
recover court costs and reasonable attorney's fees.
Dated this 27th day of June, 2005.
ALGONA AREA ECONOMIC
DEVELOPMENT CORPORATION
By: s/Xxxxx Xxxxxx
------------------------------
Xxxxx Xxxxxx, President
By: Xxxx Xxxx
------------------------------
Xxxx Xxxx, Secretary
HYDROGEN ENGINE CENTER, INC.
By: s/Xxxxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxxxx X. Xxxxxxxxx, President
By: s/Xxxx Xxx Xxxxxxxxx
------------------------------
Xxxx Xxx Xxxxxxxxx, Secretary
-4-
