HomeMy WebLinkAbout2003-003 Section 108 Grant Agmt e 9414A- 4, /14
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City of Yakima
Section 108 Loan
Final
City Clerk
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City of Yakima
Section 108 Loan
1. Ordinance
2. Application
3. Acceptance / Awaid Letter
4. HUD Contract
5. Variable /Fixed Rate Note
6. EDI Contract
7. Master Trust /Fiscal Agency - HUD
8. Indenture & Trust; Agreement - City
9. Procedures
10. Forms
11. Questions
12. Trail Wagons Note
f
Fur hmg Approval /Agrement U.S. Department of Housing and Urban Development
Title I of the Housing and Community Office of Community Planning and Development
Development Act (Public Law 930383) Community Development Block Grant Program
fi
_ Hl- 00515R of 20515R
e of Grantee (as shown in item 5 of Standard Form 424) 3. Grantee's 9 - digit Tax ID Number 4. Date use of funds may begin
- of Yakima I (mm/dd/yyyy)
2. Grantee's Complete Address (as shown in item 5 of Standard Form 424) 5a. Project/Grant No. 1 6a. Amount Approved
129 North Second Street B 02 - MC - 53 - 0008
Yakima, Washington 98901 5b. Project/Grant No. 2 6b. Amount Approved
• 5c. Project/Grant No. 3 6c. Amount Approved
Grant Agreement: This Grant Agreement'' the Department of Housing and Urban Development (HUD) and the above named Grantee is made pursuant to the
authority of Title I of the Housing and Community Development Act of 1974, as amended, (42 USC 5301 et seq.). The Grantee's submissions' for Title I assistance, the
HUD regulations at 24 CFR Part 570 (as now in effect and as may be amended from time to time), and this Funding Approval, including any special conditions,
constitute part of the Agreement. Subject to the provisions of this Grant Agreement, HUD will make the funding assistance specified here available to the Grantee upon
execution of the Agreement by the parties. The funding assistance specified in. the Funding Approval may be used to pay costs incurred after the date specified in item
4 above provided the activities to which such costs are related are carried out in compliance with all applicable requirements. Pre- agreement costs may not be paid with
funding assistance specified here unless they are authorized in HUD regulations or approved by waiver and listed in the special conditions to the Funding Approval.
The Grantee agrees to assume all of the responsibilities for environmental review, decision making, and actions, as specified and required in regulations issued by the
. Secretary pursuant to Section 104(g) of Title I and published in 24 CFR Part 58. The Grantee further acknowledges its responsibility for adherence to the Agreement by
sub - recipient entities to which it makes funding assistance hereunder available.
U.S. Department of Housing and Urban Development (By Name) Grantee Name
Nelson R. Bregon 1 City of Yakima
Title {; I I Title
Deputy Assistant Secretary for G rant Programs - Mayef Ci Manager
igna i Date_(mm/dd /yyyy) n Date (mm/dd/yyyy)
7. Category of Title I Assistance for this Funding Action 8. Special Conditions 9a. Date HUD R ed Submission 10. check one
(check only one) , (check one) (mm/dd /yyyy) a. Orig. Funding
0 a. Entitlement, Sec 106(b) El None Approval
d 1 Attached 9b. Date Grantee Notified pp oval
ID b. State - Administered, Sec 106(d)(1) ® (mm/dd /yyyy) ® b. Amendment
I c. HUD - Administered Small Cities, Sec 106(d)(2)(B) Amendment Number
9c. Date of Start of Program Year
'. Indian CDBG Programs, Sec 106(a)(1),1 • (mm/dd /yyyy)
a. Surplus Urban Renewal Funds, Sec 112(b) 11. Amount of Community Development
❑ f. Special Purpose Grants, Sec 107 Block Grant FY
® g. Loan Guarantee, Sec 108 ( ) FY ( ) FY ( )
• a. Funds Reserved for this Grantee
b. Funds now being Approved
c. Reservation to be Cancelled
(11a minus 11b)
12a. Amount of Loan Guarantee Commitment now being Approved 12b. Name and complete Address of Public Agency .
$4,000,000
Loan Guarantee Acceptance Provisions for Designated Agencies:
The public agency hereby accepts the Grant. Agreement executed by the
Department of Housing and Urban Development on the above date with
respect to the above grant number(s) as Grantee designated to receive
12c. Name of Authorized Official for Designated Public Agency
loan guarantee assistance, and agrees to comply with thei terms and
conditions of the Agreement, applicable regulations, land other
requirements of HUD now or hereafter in effect, pertaining to the Title
assistance provided it.
Signature
HUD Accounting use Only .
Effective Date •
Batch TAC Program Y A Reg Area Document No. Project Number Category Amount (mm/dd /yyyy) F
1 53 —
•
1 7 6 — — — —
Y Project Number Amount
Y . ; Project Number Amount •
Date Entered PAS (mm /dd /yyyy) Date Entered LOCCS (mm /dd /yyyy) Batch Number Transaction Code • Entered By Verified By
24 CFR 570 form HUD -7082 (4/93)
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8. Special Conditions:
(a) In the eventI the applicant shall fail to submit a
promissory note or other. obligation to the
Secretary for inspection and guarantee before
February 28, 2004, this commitment shall terminate and
expire as of such date.
(b) The 'repayment schedule for the guaranteed loan shall be
acceptable to the Secretary.
(c) Pursuant to 24 CFR 570.705(b) (3), the applicant shall
furnish such additional security for the loan guarantee
as the Secretary deems appropriate. Such additional
security shall be specified in the contract required
under 24 CFR 570.705(b)(1).
(A) Prior t submitting notes or other obligations for
inspection and guarantee by HUD, the City shall
submit information required under Section 102(b) of the
Department of Housing and Urban Development Reform Act
of 1989 (42 U.S.C. 3531). This information shall be
submitted to HUD's Washington State Office.
(e) The public entity shall not incur any obligations to be
paid 'with guaranteed loan funds prior to the receipt of
a written determination from the HUD Washington State
Office that: (i) either each individual activity to be
undertaken or supported with loan guarantee funds will
meet ';the eligibility requirements of 24 CFR 570.703 and
the national objective requirements of 570.208, or the
public entity's procedures for assuring compliance with
the national objective and eligibility requirements are
acceptable; and, (ii) the public benefit standards of
§570.209(b) will be met.
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VFR Contract - Entitlement 11 -12 -02
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
CONTRACT FOR LOAN GUARANTEE ASSISTANCE UNDER
SECTION 108 OF THE HOUSING AND COMMUNITY DEVELOPMENT ACT
OF 1974; AS AMENDED, 42 U.S.C. §5308
Date of Contract
This Contract for Loan Guarantee Assistance ( "Contract ") is
entered into between the City of Yakima, Washington, as Borrower
(the "Borrower "), and the Secretary of Housing and Urban
Development ("Secretary"), as guarantor for the Guarantee made
pursuant to section 10,8 ( "Section 108 ") of title I of the Housing
and Community Development Act of 1974, as amended (the "Act ") and
24 CFR Part 570, Subpart M, of the promissory note executed
contemporaneously herewith and numbered B- 02 -MC -53 -0008, in the
Maximum Commitment Amount of $4,000,000, and any amended note or
note issued in substitution for such note and having the same
note number (the "Note "). This is the first Contract under the
Funding Approval ( "Commitment ") of the same number, which was
approved by the Secretary on January 1, 2002. The funds paid or
credited to the account of the Borrower pursuant to the Note are
referred to herein as the "Guaranteed Loan Funds." The Note
(including the Fiscal Agency Agreement and the Trust Agreement as
defined in Section I.A. of the Note and incorporated therein) is
hereby incorporated into the Contract. Terms used in the
Contract with initial capital letters and not otherwise defined
in the text hereof shall have the respective meanings given
thereto in the Note. The Fiscal Agency Agreement and the Trust
Agreement are sometimes collectively referred to herein as the
"Fiscal Agency /Trust Agreements," and the Fiscal Agent and the
Trustee respectively are sometimes collectively referred to as
the "Fiscal Agent /Trustee."
PART I
A. The Note: Advances and Records The Note provides that
Advances and Conversion Date Advances shall be made
thereunder upon the written request of the Borrower and the
approval of the Secretary, pursuant to this Contract and the
Fiscal Agency Agreement. The Commitment Schedule attached to
the Note represents the principal repayment schedule for the
Maximum Commitment'Amount of the Note. At all times, the
total amount of all Advances and Conversion Date Advances
under the Note for all Principal Due Dates shall not exceed
the Maximum Commitment Amount of the Note. Prior to the
Conversion Date (as defined in the Note, Section I.A.), the
total amount of Advances made by the Holder for each
Principal Due Date under the Note shall not exceed the
applicable Commitment Amount for such Principal Due Date set
forth in the Commitment Schedule of the Note. Prior to the
Conversion Date, the Borrower agrees that the Fiscal Agent
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pursuant to the Fiscal Agency Agreement shall record the date
and amount of each payment and Advance under the Note and
shall maintain the books and records of all Advances and
Conversion' Date Advances for each Principal Due Date,
interest rates onAdvances, payments, and Principal Amounts
outstanding for each Principal Due Date. On and after the
Conversion Date, the Borrower agrees that the Trustee
pursuant to the Trust Agreement will maintain the books and
records of all payments on the Note and all Principal Amounts
and interest rates on such Principal Amounts (each as to be
set forth on Schedule P &I to the Note). No advances of any
kind may be made on the Note after its Conversion Date.
B. Borrower's ''Requests for Advances. All requests for Advances
or Conversion Date Advances by the Borrower under the Note
shall: be in writing; specify the amount of the Advance
requested; identify the Note by Borrower, number and Maximum
Commitment' Amount; he addrP.s�Pd to the Secretary at the
address for notices specified in paragraph 12(f) of this
Contract; be signed by an authorized official of the
Borrower; and otherwise be in the form prescribed by the
Secretary. Advances and Conversion Date Advances shall be
requested and will) only be approved and made in increments of
not less than $1,0'00 for any Principal Due Date. A request
for an initial Advance under a Note, or a request for a
Conversion;Date Advance, shall be received by the Secretary
at least ten Business Days prior to the Borrower's proposed
Funding Date or.Co Date, as applicable. All other
requests for Advances shall be received by the Secretary not
less than five Business Days prior to the proposed Funding
Date. The Borroweir may not deliver a Note or a request for
an Advance or Conversion Date Advance to the Secretary more
than two calendar months prior to the Borrower's proposed
Funding Date. At least two Business Days prior to the
proposed Funding Date or Conversion Date if the Borrower's
request was timely! received, or the next available Funding
Date for which the request was timely received, the Secretary
shall, except as otherwise provided in paragraph 11(c) or 12
hereof, deliver a corresponding Authorization Order or
Advance Order (as applicable) to the Fiscal Agent in
accordance with Section 2.03 or 2.04 of the Fiscal Agency
Agreement for the applicable Funding Date or Conversion Date.
If the Borrower requests an Advance or Conversion Date
Advance of less than the outstanding Maximum Commitment
Amount under the Note, the Borrower may also specify in its
written request the amount of the Advance or Conversion Date
Advance to be allocated to each Commitment Amount or
Principal Amount per Principal Due Date under the Note. If
the Borrower does not specify how the Advance or Conversion
Date Advance should be allocated among Commitment
Amounts /Principal Due Dates, the Borrower hereby authorizes
the Secretary to direct the Fiscal Agent to allocate the
Advance to the respective Commitment Amounts or Principal
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Amounts in order of the earliest Principal Due Date(s).
C. Conversion; Public Offering. On the Conversion Date (if
any), trus,t certificates backed by the Note (and similar
notes issued by other Section 108 borrowers) will be
purchased for a purchase price of the full principal amount
thereof by underwriters selected by the Secretary (the
"Underwriters ") pursuant to an Underwriting Agreement between
the Underwriters And the Secretary, at a closing on such
Conversion Date as determined by the Secretary and the
Underwriters. The Borrower agrees that the interest rate at
which the trust certificate of a specified maturity is sold
to the Underwriters shall govern the interest rate inserted
on the Conversion Date in Schedule P &I of the Note for the
Principal Amount of corresponding maturity.
D. Consents. By execution of this Contract, the Borrower
ratifies and consents to the SPrrPtary's aelPrtien of the
Underwriters and authorizes the Secretary to negotiate with
the Underwriters the terms of the Underwriting Agreement and
of the public offering of interests in the trust certificates
to investors (inclluding the applicable interest rates). In
addition, by execultion hereof the Borrower ratifies and
consents to the Secretary's selection of the Fiscal
Agent /Trustee and 1 agrees to the respective terms of the
Fiscal Agency / Trusit Agreements. If Advances have been made
in the Maximum Commitment Amount of the Note not less than
ten Business Days }prior to the proposed Conversion Date, or
if•the Borrower requests a Conversion Date Advance, the
Borrower authorizes the Secretary to deliver Schedule P &I to
the Note completed in accordance herewith to the Fiscal
Agent /Trustee on the Conversion Date in accordance with the
Fiscal Agency /Trust Agreements, concurrent with delivery of
the Secretary's Guarantee of the trust certificates at the
closing on,the Coniersion Date, and thereafter the Note shall
be enforceable in accordance with its terms including
Schedule P &I. In addition, the Secretary reserves the right
to notify the Borrower not less than one calendar month in
advance of a specified Conversion Date that the Note will be
sold to the Underwriters on such date, if the Secretary in
his sole discretion determines that market conditions or
program needs require the participation in the proposed
public offering of all or substantially all Borrowers with
outstanding Advances.
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PART II
1. Receipt, Deposit and Use of Guaranteed Loan Funds.
(a) Except for funds deducted on the Conversion Date
pursuant to paragraph 4(b) and fees and charges deducted by
the Fiscal Agent /Trustee pursuant to paragraph 4(a), the
Guaranteed' Loan Funds shall be electronically transferred in
accordance with the Borrower's instructions for deposit in a
separate, identifiable custodial. account (the "Guaranteed
Loan Funds "Account ") with a financial institution whose
deposits or accounts are Federally insured. The Guaranteed
Loan Funds, Account shall be established and designated as
prescribed in the attached form document entitled "Letter
Agreement for Section 108 Loan Guarantee Program Custodial
Account" (Attachment 1) and shall be continuously maintained
for the Guaranteed Loan Funds. Such Letter Agreement must be
executed when the Guaranteed Loan Funds Account is
established. (A fully executed copy of such Letter Agreement
shall be submitted to the Secretary within thirty days of its
execution.)
The Borrower shall make withdrawals from said account only
for payment of the costs of approved Section 108 activities,
for transfer to the Loan Repayment Account or for the
temporary investment of funds pursuant to this paragraph
1(a). Such temporary investment of funds into the Guaranteed
Loan FundsInvestmnt' Account shall be required within three
Business Days after the balance of deposited funds exceeds
the amount'of the Federal deposit insurance on the Guaranteed
Loan Funds Account. At that time, any balance of funds in
the Guaranteed Loan Funds Account exceeding such insurance
coverage shall be fully (100%) and continuously invested in
Government V Obligations, as defined in paragraph 10 hereof,
held in the Guaranteed Loan Funds Investment Account.
All temporary investments, whether or not required as above,
shall be limited to Government Obligations having maturities
that are consistent with the cash requirements of the
approved activities. In no event shall the investments
mature on or after March 31, 2004, or have maturities which
exceed one year. All such investments shall be held in trust
for the benefit of the Secretary by the above financial
institution in an account (the "Guaranteed Loan Funds
Investment Account'I') established and designated as prescribed
in the attached form document entitled "Letter Agreement for
Section 108 Loan 4arantee Program Custodial Investment
Account" (Attachment 2), which account shall be maintained
for all Government Obligations purchased with funds from the
Guaranteed Loan Funds Account. The Guaranteed Loan Funds
Investment Account need only be established if and when the
Borrower is required to invest, or otherwise invests, the
Guaranteed Loan Funds in Government Obligations. Such Letter
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Agreement must be executed when the Guaranteed Loan Funds
Investment,., Account is established. (A fully executed copy of
such Letter Agree shall be submitted to the Secretary
within thirty day of its execution.) All proceeds and
income derived from such investments shall be returned to the
Guaranteed' Loan Funds Account.
All funds in the Guaranteed Loan Funds Account or the
Guaranteed Loan F Investment Account must be withdrawn
and disbursed by the Borrower for approved activities by
March 31, 2004. Any funds remaining in either Account after
this date shall be immediately transferred to the Loan
Repayment Account established pursuant to paragraph 6 of this
Contract.
.
(b) The Borrower shall by the fifteenth day of each month
provide the Secretary with a written statement showing the
balance of funds inn the Guaranteed Loan Funds Account and the
withdrawals from such account during the preceding calendar
month, and a statement identifying the obligations and their
assignments in the Guaranteed Loan Funds Investment Account.
(c) Upon the Secretary giving notice that the Borrower is in
Default under this Contract or the Note, all right, title,
and interest of the Borrower in and to the Guaranteed Loan
Funds and Guaranteed Loan Funds Investment Accounts shall
immediately vest in the Secretary for use in making payment
on the Note, purchase of Government Obligations in accordance
with paragraph 10, or payment of any other obligations of the
Borrower under this Contract or the Fiscal Agency /Trust
Agreements:
2. Payments Due on Note; Final Payment and Discharge. The
Borrower shall pay to the Fiscal Agent /Trustee, as collection
agent for the Note, all amounts due pursuant to the terms of
the Note. In accordance with the Note and the Fiscal
Agency /Trust Agreements, payment shall be made by 3:00 P.M.
(New York City time) on the seventh Business Day (the "Note
Payment Date ") preceding the relevant Interest Due Date or
Principal Due Date (each as defined in the Note). If any
Note Payment Date falls on a day that is not a Business Day,
then the required payment shall be made on the next Business
Day. Payment may be made by check or wire transfer.
Upon final, payment of all amounts due to _Holders under the
Note, including any payment made by the Secretary pursuant to
the Guarantee, the Fiscal Agent /Trustee is required by the
Fiscal Agency /Trust Agreements to return the Note to the
Secretary. Upon final payment to the Secretary of any
amounts due as a result of Guarantee Payments or otherwise
due udder • this Contract, the Secretary will cancel and return
the Note to the Borrower in discharge of the Borrower's
obligations under the Note.
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3. Selection;; of New Fiscal Agent or Trustee. The Secretary
shall select a new Fiscal Agent or Trustee if the Fiscal
Agent or Trustee r esigns or is removed by the Secretary. The
Borrower hereby consents in advance to any such selection and
to any changes in the Fiscal Agency /Trust Agreements agreed
to by any Fiscal Agent or Trustee and the Secretary, subject
to paragraph 4(e) of this Contract.
4. Payments Due Fiscal Agent or Trustee; Documents to the
Secretary.
(a) The Borrower agrees to pay the fees of the Fiscal Agent
as required by Exhibit G to the Fiscal Agency Agreement, and
any additional amounts that may be due pursuant to Section
6.01 of the Fisca Agency Agreement. If not paid by the
Borrower by any other means prior thereto, the Borrower
agrees that any such fees or additional amounts that have
been i nr priAr to an Advance or a Conversion Date
Advance may be deducted by the Fiscal Agent /Trustee from the
proceeds of the Advance or Conversion Date Advance, as
applicable.
(b) The Borrower agrees to pay the Borrower's share, as
determined by the Secretary, of the customary and usual
issuance, underwriting, and other costs related to the public
offering and future administration of the Note and the trust
certificates, as approved by the Secretary, including the
cost of reimbursement and /or compensation of the Trustee
pursuant to the Trust Agreement, including Sections 3.11 and
7.01 thereof. In connection with the public offering on the
Conversion Date, such payment shall either be made by wire
transfer to the Trustee on the day prior to the Conversion
Date or shall be deducted from the Guaranteed Loan Funds on
the Conversion Date.
(c) The Borrower sihall submit to the Secretary not later than
ten Business Days prior to the Funding Date for the initial
Advance hereunder, or if not submitted earlier, prior to any
Conversion Date or Public Offering Date applicable to the
Note, this executed Contract, the executed Note, a request
for an Advance or 6 Conversion Date Advance (as applicable)
in proper form, and an opinion acceptable to the Secretary
from the Borrower's counsel to the effect that: (i) the
governing body of the Borrower has authorized by resolution
or ordinance, in accordance with applicable State and local
law, the issuance of the Note and the execution of this
Contract; (ii) the Note and this Contract are valid, binding,
and enforceable obligations of the Borrower; (iii) the pledge
of funds pursuant to 24 CFR 570.705(b) (2) and paragraph 5(a)
of this Contract is valid and binding; and (iv) there is no
outstanding litigation that will affect the validity of the
Note or this Contract. In addition, the Borrower shall submit
any other additional documents or opinions specifically
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required by this Contract (e.g., paragraph 5(c), or paragraph
15, et seq'.), at the time required thereby.
(d) The Borrower agrees to reimburse the Underwriters upon
demand by the Secretary for the Borrower's share, as
determined by the Secretary, of all reasonable out -of- pocket
expenses (including reasonable fees and disbursements of
counsel) incurred in connection with a proposed public
offering, if the Underwriters incur such. additional costs for
the public' offering because of any refusal, inability, or
failure on the part of the Borrower timely to submit in
acceptable '. form any document required by this Contract
(including, paragraph 4(c)), or because of any withdrawal by
the Borrower from the public offering, after the Borrower has
submitted 'a request for a Conversion Date Advance hereunder.
By execution and delivery of this Contract to the Secretary,
the Borrower hereby expressly authorizes the Secretary to pay
amounts due under this paragraph from funds pledged under
paragraph 5(a) of this Contract.
(e) The undertakings in paragraphs 3 and 4 of this Contract
are expressly subject to the requirement that the Fiscal
Agency /Trust Agreements shall in no event require payment of
fees or charges, reimbursement of expenses, or any
indemnification by the Borrower from any source other than
funds pledged pursuant to paragraphs 5 or 15 et seq. of this
Contract.
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5. Security. The Borrower hereby pledges as security for
repayment of the Note, and such other charges as may be
authorized'; in this Contract, the following:
(a) All allocations or grants which have been made or for
which the Borrower may become eligible under Section 106 of
the Act, as well als any grants which are or may become
available to the Blorrower pursuant to Section 108(q).
(b) Program income, as defined at 24 CFR 570.500(a) (or any
successor regulation), directly generated from the use of the
Guaranteed Loan Funds.
(c) Other security as described in paragraph 15, et seq.
(d) All proceeds (including insurance and condemnation
proceeds) from any of the foregoing.
• (e) All funds or investments in the accounts established
pursuant to paragraphs 1 and 6 of this Contract.
6. Loan Repayment Account.
(a) All amounts pledged pursuant to paragraphs 5(b), 5(c),
and 5(d) of this Contract shall be deposited immediately on
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receipt in a separate identifiable custodial account (the
"Loan Repayment Account ") with a financial institution whose
deposits or accounts are Federally insured. The, Loan
Repayment Account shall be established and designated as
prescribed' in the attached form document entitled "Letter
Agreement ',,for Section 108 Loan Guarantee Program Custodial
Account" (Attachm 1) and shall be maintained for such
pledged funds. Tr Loan Repayment Account need only be
established if and when the Borrower receives amounts pledged
pursuant do paragraph 5(b), 5(c) or 5(d),. Such Letter
Agreement must be executed when the Loan Repayment Account is
established. (A fully executed copy of such Letter Agreement
shall be submitted to the Secretary within thirty days of its
execution.') Borrower shall make withdrawals from said
account only for the purpose of paying interest and principal
due on the, Note (including the purchase of Government
Obligations in • ac with paragraph. 10 hereof), for
payment of any other obligation of the Borrower under this
Contract or the Fiscal Agency /Trust Agreements, or for the
temporary investm of funds pursuant to this paragraph,
until final payment and discharge of the indebtedness
evidenced by the Note, unless otherwise expressly authorized
by the Secretary writing. Such temporary investment of
funds shall be required within three Business Days after the
balance of funds exceeds the amount of the Federal
deposit insurance on the Loan Repayment Account. At that
time, the balance of funds in the Loan Repayment Account
exceeding such insurance coverage shall be fully (100%) and
continuously invested in Government Obligations, as defined
in paragraph 10 hereof.
All temporary investments, whether or not required as above,
shall be limited to Government Obligations having maturities
that are consistent with cash requirements for payment of
principal and interest as required under the Note. In no
event shall the maturities of such investments exceed one
year. All'`such investments shall be held in trust for the
benefit of the Secretary by the above financial institution
in an account (the "Loan Repayment Investment Account ")
established and designated as prescribed in the attached form
document entitled "Letter Agreement for Section 108 Loan
Guarantee program Custodial Investment Account" (Attachment
2), which.account shall be maintained for all Government •
Obligations purchased with funds from the Loan Repayment
Account. Such Letter Agreement must be executed when the
Loan Repayment Investment Account is established. (A fully
executed copy of such Letter Agreement shall be submitted to
the Secretary witin thirty days of its execution.) All
proceeds and income derived from such investments shall be
returned to the Loan Repayment Account.
(b) Borrower shall by the fifteenth day'of each month,
provide - the Secretary with a written statement showing the
balance of`.funds in the Loan Repayment Account and the
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deposits and withdrawals of all funds in such account during
the preceding calendar month and a statement identifying the
obligations and their assignments in the Loan Repayment
Investment,, Account.
(c) Upon','ithe Secretary giving notice that the Borrower is in
Default under thi Contract or the Note, all right, title,
and interest of the Borrower in and to the Loan Repayment and
Loan Repayment, Investment Accounts shall immediately vest in
the Secretary for use in making payment on the Note, purchase
of Government Obligations in accordance with paragraph 10, or
payment of any other obligation of the Borrower under this
Contract or the Fjiscal Agency /Trust Agreements.
7. Use of CDBG or EDI Funds for Repayment. Any funds available to .
the Borrower under 106 of the Act (including program
income derived therefrom) are authorized to be used by the
Borrower fbr payments due on the Note, Optional Redemption (as
defined in,,the Note), payment of any other obligation of the
Borrower under thils Contract or the Fiscal Agency /Trust
Agreements or the purchase of Government Obligations in
accordance; with paragraph 10. Any funds specifically available
to the Borrower for such payments or as a debt service reserve
under an EDI Grant Agreement pursuant to Section 108(q) of the
Act which supports the eligible project(s) and activities
financed by the Note may also be used therefor; any other use of
Section 108(q) funds for such purposes shall require the prior
written approval of the Secretary. Unless otherwise
specifically provilded herein or unless otherwise expressly
authorize by the Secretary in writing, the Borrower shall
substantially disburse funds available in the Loan Repayment or
the Loan Repayment Investment Accounts before funds from grants
under Section 106 of the Act are withdrawn from the U.S.
Treasury for such purposes.
8. Secretary's Right to Restrict Use of CDBG Funds to Repayment.
Upon a determination by the Secretary that payments required by
paragraph 2 and /or paragraph 4 of this Contract are unlikely to
be made as :specifiled, the Secretary may give the Borrower notice
that the. availability to the Borrower of funds pledged under
paragraph 5(a) of this Contract for purposes other than
satisfaction of the pledge is being restricted. This
restriction shall be in an amount estimated by the Secretary to
be sufficient to ensure that the payments referred to in
paragraph 2 and /or paragraph 4 hereof are made when due. This
restriction may be given effect by conditioning the restricted
amounts to, prohibit disbursement for purposes other than
satisfaction of the pledge at the time such restricted funds are
approved as grants, by limiting the Borrower's ability to draw
down or expend the restricted funds for other purposes, and by
disapproving payment requests submitted with respect to such
grants for'',purposes other than satisfaction of the pledge.
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9. Secretary'' Right to Use Pledged Funds for Repayment. The
Secretary may use funds pledged under paragraph 5(a) of this
Contract o funds restricted under grants pursuant to paragraph
8 of this ,Contract to make any payment required of the Borrower
under para',graph 2 and /or paragraph 4, if such payment has not
been timely made by the Borrower.
10. Defeasance. For purposes of this Contract, after the Conversion
Date the Note shall be deemed to have been paid (defeased) if
there shall have been deposited with the Trustee either moneys
or Government Oblilgations (as defined below), which in the sole
determination of the Secretary, mature and bear interest at
times and in amounts sufficient, together with any other moneys
on deposit;,with the Trustee for such purpose, to pay when due
the principal and interest to become due on the Note. The
Aggregate Principal Amount of the Note or any unpaid Principal
Amount maybe so dlefeased, in whole or in part, as of any
Principal nue Date. Tn w; th th Notre a n d the Trust
Agreement,rthe Borrower shall give timely notice and written
instructions to the Secretary and the Trustee concerning any
principal amounts proposed to be defeased, including any
Optional Redemptions proposed, which instructions shall be
approved by the Se If the unpaid Aggregate Principal
Amount of the Note guaranteed pursuant to this Contract shall be
defeased and deemed to have been paid in full, then the Borrower
shall be released from all agreements, covenants, and further
obligations under the Note.
"Government Obligation" means a direct obligation of, or any
obligation for which the full and timely payment of principal
and interest is guaranteed by, the United States of America,
including but not limited to, United States Treasury
Certificates of Indebtedness, Notes and Bonds - State and Local
Government or certificates of ownership of the principal
of or interest on direct obligations of, or obligations
unconditionally guaranteed by, ,the United States of America,
which obligations are held in trust by a commercial bank which
is a member of the Federal Reserve System and has capital and
surplus (exclusive of undivided profits) in excess of
$100,000,000.
11. Default. (a). A Default under the Note and this Contract
shall occur upon failure by the Borrower to:
(i) pay when due an installment of principal or interest
on the Note; or (ii) punctually and properly perform,
obser*, and comply with any covenant, agreement, or
condition contained in: (A) this Contract, (B) any
securi�;'ty agreement,. deed of trust, mortgage, assignment,
guaran',tee, or other contract securing payment of
indebt',edness evidenced by the Note, or (C) any future
amendments, modifications, restatements, renewals, or
extensions of any such documents.
it
11
(b) The Borrower waives notice of Default and opportunity
for hearing with respect to a Default under paragraph 11(a).
(c) In addition to Defaults under paragraph 11(a), the
Secretary may declare the Note in Default if the Secretary
makes a final decision in accordance with the provisions of
section 111 of the Act and 24 CFR 570.913 (or any successor
provisionsb), including requirements for reasonable notice and
opportunity for hearing, that the Borrower has failed to .
comply subtantiailly with title I of the Act.
Notwithstanding any other provision, following the giving of
such reaso notice, the Secretary may, in the Secretary's
sole discretion pending the Secretary's final decision,
withhold the guarantee of any or all obligations not yet
guaranteedjon behalf of the Borrower under outstanding
commitments, suspend approval of any further Advances or
Con.version!Date Advances under the Note, and /or direct the
Borrower'si;financilal institution to: refuse to honor any
instruments drawn upon, or withdrawals from, the Guaranteed
Loan FundsAccount or the Loan Repayment Account initiated by
the Borrower, and /or refuse to release obligations and
assignments by the Borrower from the Guaranteed Loan Funds
Investment1Account or the Loan Repayment Investment Account.
12. Remedial Actions. Upon a Default or declaration of Default
under thisContract, the Secretary may, in the Secretary's sole
discretion; take any or all of the following remedial actions:
(a) With any funds or security pledged under this Contract, the
Secretary may: (i) continue to make payments due on the Note,
(ii) make a prepayment under Section I.D. of the Note or make an
acceleration payment with respect to the principal amount of the
Note subject to Optional Redemption as provided in Section III
of the Note, (iii) purchase Government Obligations in accordance
with paragraph 10 of this Contract, (iv) pay any interest due
for late payment alp provided in the Note, this Contract, or the
Fiscal Agency /Trust Agreements, (v) pay any other obligation of
the Borrower under this Contract or the Fiscal Agency /Trust
Agreements; and /or (vi) pay any reasonable expenses incurred by
the Secretary or the Fiscal Agent /Trustee as result of the
Borrower's'1�Default.
(b) The Secretary may withhold the guarantee of any or all
obligations not yet guaranteed or the disbursement of any or all
grants not(Iyet disbursed in full under outstanding guarantee
commitments or grant approvals for the Borrower under Sections
108 and /or'106 of the Act.
(c) The Secretary may withhold approval of any or all further
Advances or Conversion Date Advances under the Note (if
applicable; direct the Borrower's financial institution to
refuse to: I honor any instruments drawn upon, or withdrawals
ii
12
from, the Guaranteed Loan Funds Account or the Loan Repayment
Account by'the Borrower, and /or to release obligations and
assignment's by the from the Guaranteed Loan Funds
InvestmenthAccount or the Loan Repayment Investment Account;
and /or direct the Borrower and /or the Borrower's financial
institution to transfer remaining balances from the Guaranteed
Loan FundsAccount to the Loan Repayment Account.
(d) Until!! the Conversion Date, or with respect to amounts
subject toOptional Redemption, the Secretary may accelerate the
Note.
(e) The Secretary may exercise any other appropriate remedies
or sanctions available by law or regulation applicable to the
assistance,provide'd under this Contract, or may institute any
other action available under law to recover Guaranteed Loan
Funds or tb reimburse the Secretary for any payment under the
Secretary's Guarantee or any reasonable expenses incurred by the
Secretary as a result of the Default.
(f) All notices and submissions provided for hereunder shall be
in writingHincludling by telex, telecopier or any other form of
facsimile communiclation) and mailed or sent or delivered, as to
each partyihereto, at its address set forth below or at such •
other address as shall be designated by such party in a written
notice to the other party hereto. All such notices and other
communications shall be effective when received as follows: (i)
if sent bylhand delivery, upon delivery; (ii) if sent by mail,
upon the earlier of the date of receipt or five Business Days
after deposit in the mail, postage prepaid; (iii) if sent by
telex, upon receipt by the sender of an answer back; and (iv) if
sent by telecopierl, upon receipt.
The Secretary:
U.S. Dept. of Housing and Urban. Development
Attentibn: Paul Webster, Director
( Financial Management Division
U451 7thlStreet, SW, Room 7180
Mashington, DC 20410
Borrower:
( ,City of Yakima
"129 North Second Street
Yakima, Washington 98901
"Attn: C_ty Manager
13. Limited Liability. Notwithstanding any other provision of this
Contract, the Fiscal Agency /Trust Agreements or the Note, any
recovery against the Borrower for any liability for amounts due
li
13
II
pursuant to the Note, the Fiscal Agency /Trust Agreements or this
Contract shall be limited to the sources of security pledged in
paragraphs or any Special Conditions of this Contract. Neither
the general credit nor the taxing power of the Borrower, or of
the State in which the Borrower is located, is pledged for any
payment due under the Note, the Contract, or the Fiscal
Agency /Trust Agreements.
14. Incorporat Grant Agreement. The Contract and the Note are
hereby incorporated in and made a part of the Grant Agreement
authorizedlby the !Secretary on January 1, 2002 under the Funding
Approval for grant number B- 02 -MC -53 -0008 to the Borrower. In
carrying out activities with the Guaranteed Loan Funds
hereunder out
Borrower agrees to comply with the Act and 24 CFR
Part 570, as provided in Subpart M thereof.
15. Special Conditions and Modifications:
(a) Paragraph 5(c) of the Contract is amended by deleting
the paragraph as written in its entirety and
substituting therefor the following:
ft
"(c) Other security, including, but not limited to, all
)rights of the Borrower (but none of the
lobligations of the Borrower) in and to the
'Security Documents' (as defined in paragraph
15(d) hereof) and to the collateral described
))therein. If necessary to provide the Secretary
;with a valid security interest in such other
security, the Borrower shall execute a security
greeme (the 'Borrower Security Agreement'),
(which Berrower Security Agreement shall be in a
form acceptable to the Secretary."
ii
(b) Guaranteed Loan Funds shall be used by the Borrower to
finance loans (individually, a "Business Loan") to one
or mo',re for - profit businesses (individually, a
"Busi(ness Borrower ") pursuant to 24 CFR 570.703(i) and
570.2'03.
(c) Each)Busines Loan shall be evidenced by a promissory
note '(individually, the "Business Note" and,
collel',ctively1 the "Business Notes ") and a loan
agreement (the "Business Loan Agreement "). The
Businss Not and Business Loan Agreement shall contain
such ,provisions as the Secretary deems necessary. The
amount. of principal and /or interest payable under the
Business Not during the twelve -month period beginning
July l of each year and ending on June 30 of the next
succeeding year shall be equal to or greater than the
amount of prAncipal and /or interest payable under the
Note 'for the corresponding period. No Business Note
shalliibe subject to redemption or prepayment earlier
II
14
than the earliest possible redemption date under the
terms of the Note. The Business Loan shall be fully
secu'red by one or more of the following forms of
collateral (collectively, the "Collateral ").
(i),A lien on real property (the "Real Property "),
established through an appropriate and properly
•
`recorded mortgage (the "Business Mortgage "). The
Business 'Mortgage shall contain such provisions as
the Secretary deems necessary. The Business
• Mortgage may be subordinated to another lien on
the property; provided, however, that the
principal amount of the Business Loan secured by
the Reall Property shall not exceed an amount equal
to 80 percent of the "as improved" appraised
market value, less the outstanding balance on
other indebtedness secured by a mortgage lien of
senior or equal priority on the Real Property.
(ii) :A security interest (collectively referred to as
the "Security Interests ") in machinery and
equipment ( "M &E "), accounts receivable, inventory,
and other items of personal property collectively,
the "Personal Property "). The Security Interests
may be subordinated to another lien; provided,
however, that the principal amount of the Business
Loan secured by the Personal Property shall not
exceed an amount determined as follows:
(A) in the case of used M &E, not more than 90
percent of the appraised net liquidation value,
'less the outstanding balance of other indebtedness
secured by a senior security interest in such M &E;
and
(B) in the case of new M &E, not more than 80
•
percent of the cost thereof (including
installation), less the outstanding balance of
other indebtedness secured by a senior security
interest in such M &E; and
(C) in the case of accounts receivable, not more
than 80 percent of the average of the ending
balances of the last three (3) years of accounts
receivable, less the outstanding balance of other
indebtedness secured by a senior security interest
in said accounts receivable; and
(D) in the case of inventory, not more than 50
percent of the average of the ending inventory
balances of the last three (3) years, less the
outstanding balance of other indebtedness secured
by a senior security interest in said inventory.
15
The Security Interests shall, be granted pursuant
•
to an appropriate security agreement (the
"Security Agreement"), which Security Agreement
also shall be referenced in appropriate Uniform
Commercial Code Financing Statements filed in
' accordance with the Uniform Commercial Code. The
Security Agreement and such Uniform Commercial
Code Financing Statements shall contain such
provisions as the Secretary deems necessary.
(iii): Any and all rights, titles, and interests of the
Business Borrower to any leases covering the Real
Property. Such rights, titles, and interests
shall be the subject of an appropriate and
properly recorded collateral assignment of leases
and rents (the "Collateral Assignment of Leases
and Rents "). The Collateral Assignment of Leases
and Rents shall he in a form acceptable to the
Secretalry. N
(iv) Any and all rights, titles, and interests of the
Business Borrower in any loan or debt service.
reserve accounts established for the purpose of
'securing the Business Loan. Such rights, titles,
and interests shall be the subject of a collateral
assignment of interest in loan or debt service
reserve accounts (the "Collateral Assignment of
Interest in Loan or Debt Service Reserve
Accounts "). The Collateral Assignment of Interest
in Loan 'or Debt Service Reserve Accounts shall be
in a form acceptable to the Secretary.
(v) Such other alternative collateral or security
"arrangements as may be requested by the Borrower
and approved by the Secretary in writing.
(d) The Borrower shall select a financial institution
acceptable to the Secretary (the "Custodian ") to act as
custodian for the_documents specified in paragraph
15(e) below (the "Security Documents "). The Borrower
and the Custodian shall enter into a written agreement
containing such provisions as the Secretary deems
necessary. A fully executed copy of such agreement,
with'origina]_ signatures, shall be forwarded to the
Secretary contemporaneously with the delivery of
documents pursuant to paragraph 15(e) below.
(e) Not later than five (5) business days after
disbursement by. the Borrower of Guaranteed Loan Funds
to a''Business Borrower, the Borrower shall deliver'to
the Custodian the following (as applicable to that
activity):
(i) the original Business Note endorsed in blank and
16
without recourse.
(ii), The original Business Loan Agreement, and an
'assignment thereof to the Secretary, which
'assignment shall be in a form acceptable to the
Secretary.
(iii), The original recorded Business Mortgage signed by
the Business Borrower and an assignment thereof to
the Secretary, in , a recordable form but
unrecorded, which assignment shall be in a form
'acceptable to the Secretary.
•
(iv) The original Collateral Assignment of Leases and
.Rents and an assignment thereof to the Secretary,
in a re form but unrecorded, which
assignment shall be in a form acceptable to the
Secretary.
•
(v) :The original Security Agreement and an assignment
thereof to the Secretary, which assignment shall
be in a form acceptable to the Secretary.
(vi) ',The original Collateral Assignment of Interest in
Loan or Debt Service Reserve Accounts.
(vii) jf Guaranteed Loan Funds are used to acquire real
property, an appraisal of the fee simple ownership
:interest in the Property. The appraisal shall be
; completd by an appraiser who is certified by the
'state and has a professional designation (such as
, "SRA" or "MAI "), and shall conform to the
•
'standards of the Financial Institutions Reform,
Recover y and Enforcement Act of 1989 ( "FIRREA ").
(viii) If Guaranteed Loan Funds are used to acquire used
M &E, an appraisal of its net liquidation value.
(ix) A mortgagee title policy, issued by a company and
an a form acceptable to the Secretary, naming the,
Borrower as the insured party. The policy must
either include in the definition of the "insured"
each successor in ownership of the indebtedness
secured by the Mortgage or be accompanied by an
endorsement of the policy to the Secretary.
(x) A certified survey with a legal description
conforming to the title policy and the Business
Mortgage.
1
(xi) An opinion of Borrower's counsel on its
letterhead, addressed-and satisfactory to the
Secretary, that:
•
1
17
(A) the Business Borrower is duly organized and
validly existing as a [corporation,
partnership, etc.] under the laws of the
State of and is [existing,
qualified to do business, in good standing,
as applicable] in and under the laws of the
Stlate of Washington;
(B) the Business Note has been duly executed and
delivered by an authorized party and is a
valid and binding obligation of the Business
Borrower, enforce in accord with i tg
terms, except as limited by bankruptcy and
similar laws affecting creditors generally;
and
(C) the instruments specified in (ii) through
• ( above are valid a n d l l h in d ing
obligations, enforceable in accordance with
their respective terms.
To the extent that the foregoing opinion deals
with maiters customarily within the due diligence
of counsel to the Business Borrower, Borrower's,
; counsel may attach and expressly rely on an
opinion of Business Borrower's counsel
'satisfactory to the Secretary.
(xii) •Any instruments, documents, agreements, and legal
opinions required pursuant to paragraph 15(c) (v).
(f) The Borrower covenants that it shall:
(i) °ensure the diligent performance of the usual and
, customary functions related to the servicing of
the Business Notes; and
(ii) 'promptly perfect the Security Interests by filing
a financing statement in accordance with the
requirements of the Uniform Commercial Code and
shall file such additional statements as are
necessary to maintain the perfected Security
Interests.
•
(g) The Borrower shall promptly notify the Secretary in
writing whenever an event which constitutes a default
(an "'Event of Default ") under (and as defined in) any
of the Security Documents pertaining to a Business Loan
has occurred and has continued unremedied for a period
of 90', days after such occurrence. Such Business Loan
shall' be hereinafter referred to as the "Nonperforming
Business Loan." However, if a Debt Service Reserve •
Fund, has been established by the Borrower in an amount
•
.
18
sufficient to satisfy at least one year's debt service
to HUD on the Nonperforming Business Loan(s) at the
date that the loan(s) become nonperforming, the
Borrower shall have an additional year prior to the
required notification to remedy the default.
Notification of a Nonperforming Business Loan shall be
delivered to the Secretary as directed in paragraph
12(f) above.
The Borrower shall within 60 days of such notification
take one of the following actions:
(i) The Borrower may replace the Nonperforming
Business Loan with another, performing loan (the
"Replacement Loan ") which meets the security
requirements specified in paragraph 15(c). Such
replacement shall be effected by delivery to the
Custodian of the Security Documents that would be
delivered if the Replacement Loan were made from
Guaranteed Loan Funds. If the payments of
principlal and interest on the Replacement Loan are
insufficient to satisfy the payments that are due
on the Nonperforming Business Loan, the Borrower
shall piurchase Government Obligations that mature
and bear interest at times and in amounts
sufficient, together with payments due on the
'Replacement Loan, to pay when due the principal
and interest to become due on the Nonperforming
, Business Loan. Such Government Obligations shall
ibe deposited in the Loan Repayment Investment
Account.
(ii) If the Borrower elects not to replace a
Nonperforming Business Loan, the Borrower shall
purchase Government Obligations that mature and
bear interest at times and in amounts sufficient
to pay when due the principal and interest to
become due on the Nonperforming Business Loan.
(This action shall be required only with respect
to Nonperforming Business Loans that have not been
replaced as provided under (i) above.) Such
Government Obligations shall be deposited in the
Loan Repayment Investment Account.
(h) Paragraph 12 is amended by adding at the end thereof
the following language:
"(g) The Secretary may complete the endorsement of the
Business Notes and record the assignments referred
to in paragraph 15(e), and thereby effectuate the
transfer of the documents referenced and
underlying indebtedness from the Borrower to the
Secretary or the Secretary's assignee.
19
"(h) The Secretary may exercise or enforce any and all
other rights or remedies (including any and all •
rights and remedies available to a secured party
under the Uniform Commercial Code) available by
law or agreement (including any of the Security
Documents, as defined in paragraph 15(d)) against
the Borrower, against the Business Borrower, or
'against any other person or property."
(i) The Grant Agreement, of even date herewith for grant
number B'- 98 -ED -53 -0048, to the Borrower for $1,000,000
in EDI Grant Funds is hereby incorporated in this
Contract and made a. part hereof.
(j) (i) The Borrower acknowledges and agrees that the
. Secretary's guarantee of the Note is made in reliance
upon'the availability of grants pledged pursuant to
paragraph 5(6) (individually, a "Pledged Grant" and,
collectively, the "Pledged Grants ") in any Federal
fisc year subsequent to the Federal fiscal year
ending Septe 30, 2003 to: (A) pay when due the
payments to become due on the Note, or (B) defease (or,
if permitted', prepay) the full amount outstanding on
the Note. The Borrower further acknowledges and agrees
that if the Secretary (in the Secretary's sole
discretion) determines that Pledged Grants are unlikely
to be available for either of such purposes, such
determination be a permissible basis for any of
the actions specified in paragraphs 15(j)(ii) and (iii)
below (without notice or hearing, which the Borrower
expressly waives.
(ii) Upon written notice from the Secretary to the
Borrower at the address specified in paragraph 12(f)
above that the Secretary (in the Secretary's sole
discretion) has determined that Pledged Grants are
unlikely to be available for either of the purposes
specified in (A) and (B) of paragraph 15(j)(i) above
(such' notice being hereinafter referred to as the
"Notice of Impaired Security "), the Secretary may limit
the availability of Pledged Grants by withholding
amounts at the time a Pledged Grant is approved or by
disapproving payment requests (drawdowns) submitted
with respect to Pledged Grants.
(iii) If after 60 days from the Notice of Impaired
Security the Secretary (in the Secretary's sole
discretion) determines that Pledged Grants are still
unlikely to be available for either of the purposes
specified in (A) and (B) of paragraph 15(j)(i) above,
the Secretary, may declare the Note in Default and
exercise anyland all remedies available under paragraph
12. This paragraph 15(j)(iii) shall not affect the
right` of the Secretary to declare the Note and /or this
20
Contract in Default pursuant to paragraph 11 and to
exercise in connection therewith any and all remedies
available under paragraph 12.
(iv) All notices and submissions provided for hereunder
shall be submitted as directed in paragraph 12(f)
above.
[Rest of Page Intentionally Left Blank]
•
•
•
21
IN WITNES'S WHEREOF, the undersigned, as authorized officials on
behalf of the Borrower or the Secretary, have executed this Contract
for Loan Guarantee Assistance, which shall be effective as of the
date of execution hereof on behalf of the Secretary.
•
• City of Yakima, Washington
BORROWER
ATTEST:
X CLA-0—).1-/ BY: �. :jet,
(Signature) (Signature)
k &rekt__ � r7;> b ter , `�
(Name) (Name)
ri- ro / _. ., I�pp .� I �
L.-Pi 9 LA i� �' >, ' L t {r�
(Title) (Title)
62 I D___o e_3
(Date)
•
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT
BY:
(Signature)
Nelson R. Bregon
• (Name)
Deputy Assistant Secretary
For Grant Programs
(Title)
(Date)
•
•
•
II
•
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
SECTION 108 LOAN GUARANTEE PROGRAM
II
VARIABLE/FIXED RATE NOTE
NOTE NUMBER: B- 02 -MC -53 -0008 DATE OF NOTE:
BORROWER: City 4 f Yakima, Washington PRINCIPAL DUE DATES AND PRINCIPAL
AMOUNT: Before the Conversion Date, the
aggregate of Advances made for each
applicable Principal Due Date specified in the
Commitment Schedule to this Note; on or after
the Conversion Date, the Principal Amount (if
any) listed for each Principal Due Date in
Schedule P & I hereto.
MAXIMUM COMMITMENT
AMOUNT: 54,000,000
COMMITMENT AMOUNTS: See
Commitment Schedule attached hereto
VARIABLE INTEREST RATE: As set forth below.
REGISTERED HOL ® ER: AFTERWATCH & CO
As Nominee for
Money Market Obligations Trust
on behalf of its Government Obligations Fund
I. Terms Applicable Before the Conversion Date
A. - Advances
For value received, the undersigned, the City of Yakima (the "Borrower ", which term includes
any successors and assigns), a public entity organized and existing under the laws of the State (or
Commonwealth as applicable) of Washington promises to pay to the Registered Holder (the
Note VFR 2022- 8/5/02
"Holder," which term includes any successors or assigns), at the time, in the manner, and with
u �
int at the rate or rates hereinafter provided, such amounts as may be advanced under this
Note from time to time by the Holder for disbursement to, or on behalf of, the Borrower
(individually, an "Advance", and collectively, "Advances"). The Holder shall make Advances
upon the written request of the Borrower and the approval of the Secretary of Housing and Urban
Development or his designee (the "Secretary "), pursuant to the Contract for Loan Guarantee
Assistance (as furtherldefined in Section IV.A. of this Note, the "Contract "), and the Amended
and Restated Master Fiscal AgenI y Agreement (the ''Fiscal Agency Agreement ") dated as of
May 17, 2000, between The Chase Manhattan Bank (now known as JPMorgan Chase Bank), as
Fiscal Agent (the "Fiscal Agent "), and the Secretary. The total amount of Advances made for
each Principal Due Date under this Note shall not exceed the applicable Commitment Amount
for such Principal Due Date set forth on the Commitment Schedule attached hereto. The
aggregate of all Advances under this Note for all Principal Due Dates shall not exceed the
Maximum Commitment Amount specified on the attached Commitment Schedule. The Fiscal
Agent shall record the date and amount of all payments and Advances on this Note and maintain
the books and records of all such Advances and Commitment Amounts for each corresponding
Principal Due Date, and all payments. No Advances shall be made on this Note after its
Conversion Date.
As used herein, "Conversion Date" means the date (if any) upon which this Note is (i)
delivered by the Holder to the Fiscal Agent against payment therefor by the purchasers selected
by the Secretary to make such payment; and (ii) assigned to JPMorgan Chase Bank (or any
successor thereto) acting in its capacity as Trustee (the "Trustee ") pursuant to a Trust Agreement
between the Secretary and the Triistee, dated as of January 1, 1995, as such agreement may be
amended or supplemented (the "Trust Agreement "). Upon the occurrence of both (i) and (ii) in
the previous sentence, Section III of this Note applies, thereby converting this Note to a fixed
rate obligation.
B. Variable Rate of Interest
From and including the date of each Advance to but excluding the earlier of (i) the
Conversion Date, andl;(ii) the date of redemption or prepayment of such Advance pursuant to
Section I.D. below (each such date of redemption or prepayment, a "Prepayment Date ") interest
shall be paid quarterly:,, at a variable interest rate (as set forth below) on the unpaid principal
balance of each Advance on the first day of each February, May, August and November (each, an
"Interim Payment Date "), commencing on the first Interim Payment Date after the initial
Advance is made under this Note. Interest also shall be paid on each applicable Conversion
Date, Prepayment Date or Principal Due Date. The amount of interest payable on each Interim
Payment Date will represent interest accrued during the three -month period ending immediately
prior to such Interim Payment Date, or in the case of the first Interim Payment Date following
each Advance that is not made on an Interim Payment Date, the period from and including the
date of such Advance to but excluding the first Interim Payment Date following such Advance.
The amount of interest payable on this Note's Conversion Date, Prepayment Date, or on any
Note VFR 2022- 8/5/02 2
Principal Due Date tl%at precedes such Conversion Date will represent interest accrued during the
period from the last Interim Payment Date to such Conversion Date, Prepayment Date, or
Principal Due Date, respectively.
The initial variable interest rate for each Advance will be set on the date of such Advance
and will be equal to 20 basis points (0.2 %) above the Applicable LIBO Rate (as hereinafter
defined) and thereafter will be adjusted monthly on the first day of each month (each, a "Reset
Date ") to a variable interest rate Equal to 20 basis points (0.2%) above the Applicable LIBO Rate
(such interest rate, as ! reset from time to time, the "Standard Note Rate "). If the Conversion Date
for this Note has not occurred by the March 1 following the initial Advance under this Note, then
the terms of Appendix A shall be used to set the variable interest rate. If the Fiscal Agent does
•
not receive notice of either a Negotiated Special Interest Rate or Holder Determined Special
II
Interest Rate (as defined in Appendix A attached hereto) from the Secretary or Holder,
respectively, by the times specie d in Appendix A to this Note, then the Standard Note Rate
shall apply for the period to which such Negotiated Special Interest Rate or Holder Determined
Special Interest Rate would otherwise apply. The Fiscal Agent may conclusively rely on any
such notice as to the correctness of any matters set forth therein. Appendix A shall be
inapplicable to this Note on or after the Conversion Date..
"LIBO Rate" for any given Business Day means, except in the case of manifest error, the
interest rate per annum published on that day in the Eastern Edition of The Wall Street Journal or
any successor publication ( "WSJ ") published by Dow Jones & Company, Inc., in the section
titled "Money Rates" (or any successor section) and opposite the caption "London Interbank
Offered Rates (LIBOR) -- three months" (or any successor caption). If such rate does not appear
in WSJ on a given Business Day, for each interest period, the LIBO Rate shall be the interest
rate, converted to a bond- equival not yield basis, for deposits in U.S. dollars for three months
which appears on Telerate Page 3750 or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British Bankers' Association
for the purpose of displaying such rate (together, "Telerate Page 3750 ") as of 11:00 a.m., London
time, on the day (the 'Determination Date ") that is two London Banking Days preceding the
relevant Reset Date or Advance. If such rate does not appear on Telerate Page 3750 on such
Determination Date, such rate shall be obtained from the Reuters Screen ISDA Page as of 11:00
a.m., London time, on such Determination Date. If, in turn, such rate does not appear on the
Reuters Screen ISDA 'Page on such Determination Date, the offered quotation from each of four
reference banks (expressed as a percentage per annum) as of approximately 11:00 a.m., London
time, on such Determination Date for deposits in U.S. dollars to prime banks on the London
interbank market fora 3 -month p commencing on the Reset Date or date of such Advance,
shall be obtained. If at least two luch quotations are provided, the LIBO Rate for such Reset Date
or date of such Advance will be the arithmetic mean of the quotations, rounded to five decimal
places. If fewer than two such quotations are provided as requested, the LIBO Rate for that
Determination Date shall be the rate for the most recent day preceding such Determination Date
for which the LIBO Rate shall have been displayed on Telerate Page 3750. The LIBO Rate for
Note VFR 2022- 8/5/02 3
any interest period shall be converted to a bond - equivalent yield basis by multiplying such rate
by the actual number I nf days in s�,ch interest period and dividing that number by 180,
"Applicable LIBO Rate" tneans: (1) with respect to the initial interest rate for the first
Advance hereunder, the LIBO Rate two London Banking Days before the date of such first
Advance; (2) with respect to the initial interest rate for any subsequent Advance made before the
first Reset Date, the interest rate borne by the first Advance; (3) with respect to the initial interest
rate for any subsequent Advance u made after the first Reset Date, the LIBO Rate two London
Banking Days before the immediiately preceding Reset Date; and (4) with respect to the
subsequent interest rate at any Reset Date for any Advance, the LIBO Rate two London Banking
Days before such Rest Date.
II
"London Banking Day" means any day in which dealings in deposits in United States Tn
London ar��:�ng Lay meu..s u�.y y .�� whih ,.,, �rg .�� deposits ,,.
dollars are transacted Jr" the L ondon interbank market. Interest p o n o r b the
Conversion Date shall be calculated on the basis of a 360 -day year and the actual number of days
lapsed.
C. Principal Amount
Prior to the Conversion Date, the aggregate amount of Advances under this Note for each
specified Principal Du Date shall be the Principal Amount paid by the Borrower on such
Principal Due Date (a assigned to such Advances by the Secretary's instructions to the Fiscal
Agent in accordance with the Contract and the Fiscal Agency Agreement), except to the extent
such Principal Amount shall have been reduced by redemption before such Principal Due Date as
provided below.
!;I
D. Redemption before Conversion Date
P'.
At any time on or before the Conversion Date, the Borrower, with the consent of the
Secretary, may redeem this Note, in whole or in part, upon fourteen calendar days notice to the
Fiscal Agent and the Secretary, at the purchase price of one hundred percent (100 %) of the
unpaid Principal Amount to be redeemed, plus accrued interest thereon to the date of redemption.
Partial redemptions shall be credited against the applicable Principal Amount(s). The related
Commitment Amounts and the Maximum Commitment Amount shall be adjusted concurrently
with any such redemptions in accordance with the Secretary's instructions to the Fiscal Agent
pursuant to the Contract and the Fiscal Agency Agreement.
II. Conversion
The following ,events shall occur on the Conversion Date:
•
•
I i
Note VFR 2022- 8/5/02 4
If
A. Schedule P &I
ii
On the Conversion Date all Advances owed by the Borrower under this Note with the
same Principal Due Date shall be aggregated into a single Principal Amount which will accrue
interest at the fixed rate applicable to such Principal Due Date. Such Principal Amount may be
adjusted by the Fiscal Agent in accordance with the following paragraph or paragraph IV.H, as
applicable. Whether f or not adjusted, each Principal Amount, the fixed rate applicable to each
Principal Amount, a the l „bl Principal Due b +
1 iiii�ipai iiivuii�, ai u ie appii�av e Pri1'iCipai Lue Date, shall listed v� S�ed by the Secretary in
Schedule P &I. Schedule P &I will be provided by the Secretary to the Fiscal Agent and attached
to this Note by the Fiscal Agent upon the Fiscal Agent's receipt of this Note on the Conversion
Date.
B. Conversion Date Advances
III
If, on or prior to the Conversion Date, the Borrower has not utilized the entire
Commitment Amount indicated on the Commitment Schedule attached hereto for a given
Principal Due Date, the Borrower may, in accordance with the Fiscal Agency Agreement and the
Contract, and with the approval of the Secretary, utilize such Commitment Amount on the
Conversion Date to obtain a Conversion Date Advance. A "Conversion Date Advance" shall
mean any amount by which the Secretary instructs the Fiscal Agent to increase a Principal
Amount on Schedule P &I for a given Principal Due Date, effective as of the Conversion Date of
this Note. Conversion Date Advances shall be funded by the sale of this Note to the purchaser
selected by the Secretary. The proceeds of a Conversion Date Advance (net of any applicable
fees) shall be distributed to or on behalf of the Borrower on the Conversion Date. The total
amount of Conversio Date Advances hereunder shall not exceed the sum of any unused
Commitment Amounts for all Principal Due Dates.
III. Terms Applicable Upon Conversion
If
The following 'terms shall apply to this Note from the Conversion Date (if any) until this
Note is canceled, or matured and paid in full:
Commencing on the Conversion Date, the Borrower promises to pay to the Holder on the
applicable Principal due Date each Principal Amount set forth on the attached Schedule P &I,
together with interest on each such Principal Amount at the rate applicable thereto specified on
the Schedule P &I. Int erest shall be calculated and payments shall be made in the manner set
forth below.
Interest on each scheduled Principal Amount of this Note due as of a given date specified
on Schedule P &I hereto shall accrue at the related per annum rate specified on Schedule P &I
from (and including) the Conversion Date to (but excluding) such Principal Due Date or, if
applicable, to the applicable Interest Due Date on which an Optional Redemption (as defined
below) occurs. Each interest amount accrued.on each unpaid Principal Amount of this Note shall
Note VFR 2022- 8/5/02 5
be due semiannually as of February 1 and August 1 of each year (each such February 1 and
August 1, an "Interest Due Date ") commencing on the first such date after the Conversion Date,
until each Principal Amount listed on Schedule P &I to this Note is paid in full. Interest shall be
calculated on the basis of a 360 -day year consisting of twelve 30 -day months.
Certain Principal Arhount that are indicated as being eligible for Optional Redemption
on Schedule P &I may be paid, in whole or in part, at the option of the Borrower as of any
Interest t tT 1 .,+ 'f d such L du "Optional l t' "\ T
l���eres� Due Dare on or a��er «�e ua�e s in suc�� schedule (an p�T.,�Ta� edelrTp�lor� �. �n
order to elect an Optional Redemption of such a Principal Amount, the Borrower shall give
notice of its intention to prepay l Principal Amount to the Trustee and the Secretary not less than
60 days and not morel than 90 days prior to the Interest Due Date as of which the Borrower
intends to prepay the Principal Amount. The Trustee shall apply any payments received in
r te_ _ + :_ 1 T1�� I_ -- _ of � 1
respect of vptioliai der 1ptions in accordance with written instructions of he Borrower, as
,1 b- 1, + 1 Amounts is + + + indicated b eligible approved �y the Secretary. PriiiGipai c�uivuu�� �l'ia� are not as being c iui
Optional Redemption, on Schedule P &I may not be prepaid.
IV. General Terms
A. Addit Definitions
For purposes o'f this Note, the following terms shall be defined as follows:
"Business Day" shall mean a day on which banking institutions in New York City are not
required or authorized to remain c losed and on which the Federal Reserve Bank and the New
York Stock Exchange are not clos I ed. If any payment (including a payment by the Secretary) is
required to be made on a day that is not a Business Day, then payment shall be made on the next
Business Day.
ii
"Contract" shall mean the Contract for Loan Guarantee Assistance, and any amendments
thereto, among the Secretary and the Borrower, the designated public entity named therein (if
applicable), and the State named therein (if applicable), that refers to and incorporates this Note
by the number hereof. "',
"Principal Amount" shall mean: (i) before the Conversion Date for this Note, the
aggregate amount of Advances made for each Principal Due Date specified in the Commitment
Schedule attached to this Note, less the amount of any redemptions pursuant to Section I.D.
hereof, and any principal repayment; and (ii) on or after the Conversion Date, the principal
amount (if any) stated for each Principal Due Date in Schedule P &I attached hereto, less the
amount of any principal repayment and any Optional Redemptions made pursuant to Section III
hereof and the Trust Agreement.
Note VFR 2022- 8/5/02 6
B. Timely Payment to Fiscal Agent or Trustee
Notwithstanding anything contained in Section I, Section II, or Section III, the Borrower,
in accordance with the Contract,I shall be required to make all payments of interest and principal,
including any Optional Redemption payment, directly to the Fiscal Agent or the Trustee (as
applicable) on the seventh Business Day prior to the appropriate Interim Payment Date, Interest
Due Date, Principal Due Date, Prepayment Date, or date of Optional Redemption, as applicable.
C. Interest on Late Payments
If a payment of principal or interest herein provided for shall not be made by either (i)
2:30 p.m. on an Interest Due Date or Principal Due Date; or (ii) 2:30 p.m. on the second Business
Day (as herein defined) next succeeding an Interim Payment Date, then interest shall accrue on
the amount of such payment at the then applicable interest rate or rates payable on this Note,
from the relevant due date, as the case may be, until the date such payment is made. Nothing in
the immediately preceding sentence shall be construed as permitting or implying that the
Borrower may, without the written consent of the Holder and the Secretary, modify, extend, alter
or affect in any manner whatsoever the right of the Holder timely to receive any and all payments
of principal and interest specified in this Note.
D. Applicability of Fiscal Agency Agreement or Trust Agreement
Prior to the Conversion Date, this Note and Advances and payments made hereunder
shall be administered'Ipursuant toy the terms of the Fiscal Agency Agreement and are subject to
such agreement. On or after the Conversion Date, this Note and Advances and payments made
hereunder shall be administered pursuant to the Trust Agreement and are subject to such
agreement. The terms and provisions of the Fiscal Agency Agreement or the Trust Agreement,
insofar as they affect the rights, duties and obligations of the Holder and/or the Borrower, are
hereby incorporated herein and form a part of this Note. The Borrower hereby agrees to be
bound by all obligations of the Borrower to the Fiscal Agent set forth in the Fiscal Agency
Agreement. Capitalized terms not defined in this Note shall have the meanings ascribed to them
in the Fiscal Agency Agreement or Trust Agreement, as applicable. The Fiscal Agency
Agreement provides for the Fiscal Agent to perform certain duties, including the duties of (i)
paying agent and calculation agent for this Note until its Conversion Date, and (ii) registrar for
this Note until this Note is cancel or a new registrar appointed, each in accordance with the
Fiscal Agency Agreement. The Trust Agreement provides for the Trustee to perform certain
duties, including the duties of collection agent for this Note after its Conversion Date until a new
Trustee is appointed in accordance with the Trust Agreement. This Note may be surrendered to
the Fiscal Agent for registration of transfer or exchange, as provided in the Fiscal Agency
Agreement. The Fiscal Agent and Trustee each shall permit reasonable inspection to be made of
a copy of the Fiscal Agency Agreement or Trust Agreement kept on file at its respective
corporate trust office. Neither the Fiscal Agency Agreement nor the Trust Agreement shall
change the Borrower's payment obligations under this Note.
Note VFR 2022- 8/5/02 7
E. Applicability of Contract and Secretary's Guarantee
This Note evidences indebtedness incurred pursuant to and in accordance with the
Contract and pursuant to Section 108 of Title I of the Housing and Community Development Act
of 1974, as amended (42 U.S.C. I§ 5308) (the "HCD Act "). This Note is subject to the terms and
provisions of the Contract, to which Contract reference is hereby made for a statement of said
terms and provisions and for a description of the collateral security for this Note. The payment
C 1 the 1' 1„ Principal T1.,., Dates 1'„ 1 T
of principal on the applicable Principal Due Dates and interest on the applicable interim Payment
Dates or Interest Duel under this Note is unconditionally guaranteed by the Secretary to the
Holder through a guarantee (the "Guarantee "). Execution of the Secretary's Guarantee is required
before this Note is effective, and such Guarantee shall be issued pursuant to and in accordance
with the terms of the Contract and Section 108 of the HCD Act.
F. Default
A default under this Note shall occur upon failure by the Borrower to pay principal or
interest on this Note when due hereunder. If a Borrower defaults on the payment of any interest
or Principal Amounts when due, f or if the Secretary gives notice of a final decision to declare the
Borrower in default pursuant to the following paragraph of this Section IV.F., the Secretary may,
but is not obligated to, make on any date on or prior to the Conversion Date with fourteen.
calendar days prior notice to the Fiscal Agent, or on the seventh Business Day preceding any
Interest Due Date on or after the first permissible Optional Redemption date with seven Business
Days prior notice to the Trustee, an acceleration payment to the Fiscal Agent or the Trustee, as
applicable, equal to the Aggregate Principal Amount of the Note, together with accrued and
unpaid interest thereon to such acceleration payment date or Interest Due Date, as applicable. In
the event that any such acceleration payment is made from sources other than funds pledged by
the Borrower as security under the Contract (or other Borrower funds), the amounts paid on
behalf of the Borrower shall be deemed to be immediately due and payable to the Secretary.
Nothing in this paragraph shall be construed as permitting or implying that the Borrower may,
without the written consent of the Holder and the Secretary, modify, extend, alter or affect in any
manner whatsoever the right of the Holder timely to receive any and all payments of principal
and interest specified in this Note.
In addition, the Secretary may declare the Borrower in default under this Note if the
Secretary makes a final decision in accordance with the provisions of 24 C.F.R. § 570.913 (or
any successor regulat'i'on thereof) including requirements for reasonable notice and opportunity
for hearing, that the Borrower has failed to comply substantially with Title I of the HCD Act.
Following the giving of such reasonable notice, the Secretary may take the remedial actions
specified as available in the relevant provisions of the Contract pending the Secretary's final
decision.
Note VFR 2022 - 8/5/02 8
•
G. Holder's Reliance on Guarantee
Following a' default by the Borrower under the terms of this Note, the Holder agrees to
rely wholly and exclusively for repayment of this Note upon the Guarantee. The enforcement of
any instruments or agreements securing or otherwise related to this Note shall be the sole
responsibility of the Secretary, and the Holder shall not be responsible for the preparation,
contents or administration of such instruments and agreements, or for any actions taken in
connection with such instrume_tits and agreement. The Holder, to the extent it is legally able to do
so, shall bind or cause to be bound its successors and assigns to all limitations imposed upon the
Holder by this Note..
H. Amendment
This Note may only be amended with the prior written consent of the Secretary and the
Borrower. No such amendment shall reduce, without the prior written consent of the Holder of
this Note, in any manner the amount of, or delay the timing of, payments required to be received
on this Note by the Holder, Fiscal Agent or Trustee, including Guarantee Payments; provided
that prior to the Conversion Date, the Commitment Amounts on the Commitment Schedule
attached hereto, and { the Principal Amounts due on the corresponding Principal Due Dates may
be rescheduled pursuant to written instructions given to the Fiscal Agent by the Secretary with
the written agreement of the Borrower and the Secretary absent the consent of the Holder.
I. Waivers
The Borrower hereby waives any requirement for presentment, protest or other demand
or notice with respect to this Note. The Borrower hereby waives notice of default and
opportunity for hearing for any failure to make a payment when due.
J. Delivery and Effective Date
This Note is deemed issued, executed, and delivered on behalf of the Borrower by its
authorized official as' an obligation guaranteed by the Secretary pursuant to Section 108 of the
HCD Act, effective as of the date of the Secretary's Guarantee.
V. Borrower - Specific Provisions In accordance with RCW 35.21.735, this note shall be
repaid solely from one or more special funds held by one or more custodians appointed pursuant
to such statute and from the security pledged under the Contract. This note is not an obligation
of the City of Yakima or the State of Washington, and neither the faith and credit nor the taxing
power or of the State or any or any Municipal Corporation or subdivision of the State, or any
agency of any of the foregoing , his pledged to the payment of Principal, Interest, or Premium, if
any, on this note. Nothing herein shall constitute a debt or indebtedness of the borrower payable
from public funds within the meaning of any constitutional or statutory limitation on the
incurring of debt. Any obligations of borrower under documents incorporated herein are subject
to the limitation of liability set forth in the Contract.
Note VFR 2022- 8/5/02 9
•
IN WITNESS WHEREOF, the undersigned, as an authorized official of the Borrower,
has executed and delivered this Note.
City of Yakima, Washington
BORROWER
By:�` -�
(Signature)
f1, 2P-ts, Z-
(Name)
Y t ar
ATTEST:
/�
I / / L wI -
(Signature
?
(Name)
Ci/e roc
(Title) 3.4-
Note VFR 2022 - 8/5/02
10
ASSIGNMENT AND TRANSFER
For value received, the undersigned assigns and transfers this Note to
(Name and Address of Assignee)
(Social Security or Other Identifying Number of Assignee)
and irrevocably appoints
attorney -in -fact to transfer it on the books kept for registration of the Note, with full power of
substitution.
Dated:
Note: The signature to this assignment
must correspond with the name as written on
the face of the Note without alteration or
enlargement or other change.
Signature Guaranteed:
Qualified Financial Institution
By:
Authorized Signature
Note VFR 2022- 8/5/02 1 1
APPENDIX A
Special Pre - Conversion Interest Rates.
(a) The Holder and the Secretary contemplate that the majority of the outstanding
Variable /Fixed Rate Notes will be purchased by underwriters selected by the
Secretary for sale in public offerings to occur each year. If a public offering
including this ;Note has not occurred by each March 1 following the initial
Advance under this Note, the Secretary shall, upon request, advise the Holder as
to when a public offering including this Note is expected to occur, and the Holder
and the Secretary agree to consult with each other as to what the interest rate on
this Note will be after May 1 of that year if a public offering has not occurred by
such May 1. The Holder ( shall notify the Secretary if such consultation has not
occurred by April i of that year. If no public offering including this Note has
occurred on or before such May 1, the applicable interest rate on this Note from
such May 1 shall be the rate (if any) negotiated and agreed upon by the Secretary
and the Holder. Such rate may be the Standard Note Rate or some other rate
agreed upon by the Holder and the Secretary at least two Business Days before
such May 1 (such other rate, the "Negotiated Special Interest Rate "). The
Secretary shall notify the Fiscal Agent and the Holder in writing of any
Negotiated Special Interest Rate within two Business Days of the determination
thereof.
(b) If the Secretary and the Holder do not, by the April 15th preceding such May 1,
negotiate and agree under Section (a) of this Appendix on an interest rate
applicable to this Note, then the Holder may, on or before the April 20th
preceding such May 1, give written notice to the Secretary of its intent to change
the interest rate on this Note and, if such notice was given during such period, the
Holder may, on such May 1, unilaterally determine (subject to the terms of this
paragraph) the interest rat that this Note will bear (such rate, the "Holder
Determined Interest Rate';') from and including such May 1 to but excluding the
earliest of: (i)i,the Conversion Date; (ii) the date that this Note is purchased by a
new Holder (as described in Section (c) below) or (iii) a Monthly Special Reset
Date (as defined below). Interest from and including such May 1 to but excluding
the Public Offering Date shall be paid on the unpaid principal balance of all
outstanding Advances under this Note at the rate(s) to be determined by the
Holder which, based upon then prevailing market conditions and taking into
account all the circumstances, will enable the Holder to sell this Note at one
hundred percent (100 %) of the aggregate amount of all Advances hereunder prior
to the date of such sale. Such interest rate shall be determined as of such May 1
and shall be determined again on the foregoing basis on the first of each month
thereafter (thefirst of each month after such May 1, a "Monthly Special Reset
Note VFR 2022- 8/5/02
Date "). The Holder shall notify the Fiscal Agent and the Secretary in writing
within two Business Days following such dates of the determination of the Holder
Determined Interest Rate and each applicable interest rate determined on a
Monthly Special Reset Date.
(c) If the Secretary and the Holder have failed to agree upon an interest rate pursuant
to Section (a) of this Appendix A, the Secretary, upon seven calendar days notice
to the Holder, I;may arrange for the purchase of this Note in full by another entity
on the following May 1 or any Business Day thereafter. If such a purchase
occurs, the Holder shall sell and assign this Note to,the purchaser thereof without
recourse to the Holder and deliver this Note and its Guarantee to the Fiscal Agent
for registration in the name of the purchaser thereof in accordance with the
Secretary's written instructions. The purchase price for this Note shall be 100% of
the aggregate amount of all Advances owing hereunder plus accrued interest to
the date of purchase. Payment to the Holder of the purchase price for this Note
shall be made by the purchaser thereof in Federal funds at the offices of the
Holder, or at such other place as shall be agreed upon by the Holder and the
Secretary, at 10:00 a.m., New York time, on the date of purchase. After such
purchase date this Note shall bear a rate of interest negotiated between the
Secretary and the new interim Holder (the "New Purchaser Special Interest
Rate "). The Secretary shall notify the Fiscal Agent and the new purchaser in
writing of any 'New Purchaser Special Interest Rate within two Business Days
following the date of determination thereof.
(d) Notwithstanding Sections (a) through (c) (inclusive) of this Appendix, no
Borrower is obligated to pay interest at a variable rate exceeding the maximum
rate permitted by generally applicable law of the Borrower's state (such rate, the
"Maximum Rate "). If the borrower receives notice of a variable interest payment
that exceeds the Maximum Rate, then the Borrower shall timely pay such amount
as does not exceed the Maximum Rate, and concurrently shall notify the Secretary
and the Fiscal Agent of the reason for any interest non - payment.
Note VFR 2022- 8/5/02 2
1
r I
lil
COMMITMENT SCHEDULE
Note No. B- 02 -MC -53 -0008
II
•
Principal Due Date Commitment Amount
,
August 1, 2003 $ 0
August 1, 2004 145,000
August 1, 2005 150,000
August 1, 2006 155,000
Aug-H 1 9007 160 nnn
August 1, 2008 165,000
August 1, 2009 170,000
August 1, 2010 175,000
August 1, 2011 185,000
August 1, 2012 195,000
August 1, 2013 205,000
August 1, 2014 215,000
August 1, 2015 225,000
August 1, 2016 235,000
August 1, 2017 245,000
August 1, 2018 255,000
August 1, 2019 265,000
August 1, 2020 275,000
August 1, 2021 285,000
August 1, 2022 295,000
Maximum Commitment Amount $4,000,000
Note VFR 2022- 8/5/02
r
i
SCHEDULE P &I
Note No. B- 02 -MC -53 -0008
it
Principal Amount Principal Interest Rate Optional Redemption Available
Due Date
YES NO
$ August 1 2003 X
August 1 , 2004 X
August 1, 2005 X
August 1, 2006 X
August 1, 2007 X
August 1, 2008 X
August 1, 2009 X
August 1, 2010 X
August 1, 2011 X
August 1, 2012 X
August 1, 2013 X
August 1, 2014 X
August 1, 2015 X
j August 1, 2016 X
August 1, 2017 X
li August 1, 2018 X
II August 1, 2019 • X
August 1, 2020 X
August 1, 2021 X
August 1, 2022 X
ii
Principal Amounts for which Optional Redemption is available may be redeemed, subject to the
terms contained herein and in the Trust Agreement, on any Interest Due Date on or after
August 1, 2012.
Note VFR 2022 8 -5 -02
Grant No. B- 98 -ED -53 -0048
ECONOMIC DEVELOPMENT INITIATIVE (EDI) GRANT AGREEMENT
U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
This Agreement is made and entered into by and between THE
A
SECRETARY OF HOUSING ND URBAN DEVELOPMENT, acting by and through
the Assistant Secretary for Community Planning and Development,
( "HUD "), and the City of Yakima, Washington (the "Recipient ").
1. Background; Purpose. This Agreement is authorized by
section 108(q) of the Housing and Community Development Act of
1974, as amended by section 232(a) of the Multifamily Housing
Property Disposition Reform Act of 1994,.codified at 42 U.S.C.
5308(q) (coll "the Act "). Pursuant to th Act on April
30, 1998, at 63 FR 23897, HUD published a Notice of Funding
Availability and Program Guidelines for the Economic Development
Initiative (the "NOFA "), which set forth the terms and conditions
under which units of general local government could apply for and
receive grants under section 108(q) of the Act ( "EDI Grants ") and
related section 108 loan guarantees from HUD for Economic
Development Projects ( "EDI Projects "), as defined in the NOFA.
Pursuant to the NOFA, the Recipient has applied for, and HUD has
approved, an E!'I Grant for the Recipient. The purpose of this.
Agreement is to set forth the terms and conditions under which
HUD will provide EDI Grant funds to the Recipient in connection
with the Approved EDI Projects described in the Recipient's
Approved Application, as further defined herein. The terms and
conditions of the related Section 108 Guarantee (as defined in
par. 3 hereof) l are set forth in the Recipient's separate Section
108 loan guarantee application, Funding Approval, and Contract
for Loan Guarantee Assistance.
2. Approved Grant Amount, Projects, and Uses of Funds.
ll
a. By execution of this Agreement on behalf of the Secretary
in the space provided below, HUD agrees, subject to the terms of
this Agreement,;' to provide EDI Grant funds in the amount of
$1,000,000 ( "EDI Grant ").
b. This g4ant is approved for the following Approved EDI
Projects descriFbed in the Approved Application: Yakima Economic
Development Loan Fund Project ( "Approved Project ").
c. The grant funds shall be used in connection with•the
Approved Projec;t for the following specifically Approved Uses
• ( "Approved Used "):
(1) EDI funds will be used to reduce the interest cost
to eligible borrowers, pursuant to 24 CFR
r i
�I ;
• 2
570.703(i)(1) activities eligible under 24 CFR
570.203, and
(2) .EDI funds will be used as a loan loss reserve,
pursuant to 24 CFR 570.703(k) a debt service
reserve in accordance with a contract enter into
pursuant 24 CFR 570.705(b)(1).
3. Relationship .to Section 108 Loan Guarantee Application.
This approved EDI Granit is conditioned upon the Recipient's
receipt of Section 108 guaranteed loan proceeds for the Approved
Project in an amount not less than 54,000,000 (the "Section 108
Guarantee ").
II
Section 108 Guarantee proceeds shall be advanced and disbursed to
carry out eligible activities under the Section.108 Contract for
Loan GuaranteelAssistance executed concurrently herewith in a
ratio not less than $4 of such proceeds for each $1,00 of EDI
Grant funds disbursed for Approved Uses (the "Ratio ").
•
4. Regulations; Approved Application. This Agreement will
be governed and controlled by the following in effect as of the
date of notification to the Recipient of award of this grant: the
Act, the NOFA,and.HUD regulations codified at 24 CFR Part 570 or
incorporated therein (provisions for.use of CDBG funds, to the
extent applicable) (hereafter collectively referred to as the
"Regulations ")�� The Recipient's application submissions,
including the certifications and assurances and any documentation
required to meet any grant award conditions, and including any
amendments made in accordance with this Agreement, are hereby
incorporated in this Agreement as finally approved by HUD (herein
referred to asl : the "Approved Application "). Unless the context
otherwise requires, a 'reference to "this Agreement" herein shall
be deemed to include the Act, the Regulations, and the Approved
Application.
5. Performance Agreement of Recipient. By execution of
this Agreement ion its behalf in the spice provided below, the
Recipient agrees to carry out the Approved Project on a timely
basis and otherwise in compliance with this Agreement (including
the Act, the NOFA, the Regulations, and the Approved Application,
except as otherwise specifically provided in this Agreement).
The Recipient agrees to assure, and to accept responsibility for,
such compliance by any other entities to which it makes grant
funds available for, or which it otherwise allows to participate
in, the Approved Project covered by this Agreement.
•
6. Release, Deposit, and Timing of Expenditure of Grant
Funds and Program Income.
a. The Recipient agrees to comply with environmental review
procedures under 24 CFR 570.200(a)(4) and 24 CFR Part 58 in order
to obtain releases of grant funds under this Agreement. In
1
1
it
3
particular, the Recipient must not commit local or Federal funds
for the approved activities prior to obtaining HUD approval of
its request for release of funds, except as provided in 24 CFR
58.22(c), 58.34 or 58.35(b).
b. Notwithstanding any other provision of the Regulations or
this Agreement, the Recipient may not withdraw grant funds from
the U.S. Treasury on alccount of the EDI Grant under this
Agreement until after execution on behalf of HUD of the Guarantee
and Contract for Loan Guarantee Assistance for the applicable
Approved Project described in paragraph 2 of this Agreement.
c. This EDI Grant must be entirely withdrawn and expended
for Approved Uses for the applicable Approved Project on or
before September 30, 2005.
d. All program income from this EDI Grant is deemed to be
program income of the 'Approved Project, which is jointly financed
by the Section 108 Guarantee. The Recipient agrees that all such
program income constitutes security for the repayment of the
Section 108 Guarantee, and shall be initially deposited in, the
Loan Repayment Account established by the Recipient, or its
designated public agency, under paragraph 6 of the Contract(s)
for Loan Guarantee Assistance for the Section 108 Guarantee, and
shall be disbursed for the purposes and within the time period
specified in said paragraph 6 of such Contract. Upon full and
complete repayment of the Section 108 Guarantee, all such program
income shall be used in accordance with 24 CFR 570.504.
7. Pre -Award Costs. Notwithstanding any other provision of
this Agreement or the Regulations, "the effective date of the
grant agreement" for this EDI Grant for purposes of 24 CFR
570.200(h) is the date of award of this EDI Grant by HUD, which
was November, 1998. "Pre -award costs" may be incurred by the
Recipient prior to such date and reimbursed with EDI Grant funds
hereunder, to the extent such costs comply with 24 CFR 570.200(h)
and this Agreement. The EDI Grant funds provided hereunder may be
used to pay for costs incurred on or after such date, provided
such costs otherwise comply with this Agreement. However, the
timing of use and the availability of the EDI Grant funds to
actually pay for such costs are subject to paragraph 6 of this
Agreement.
8. Amendment; Record - Keeping.
a. This Agreement or the Approved Application may be amended
only with the prior written approval of HUD. To request approval
of an amendment, the Recipient shall attach the proposed
revisions to the applicable pages of this Agreement or the
Approved Application to a cover letter addressed as required
below (see paragraph 11) for notices to HUD and signed by the
Recipient's official representative for this grant. In
considering proposed amendments to this Agreement or the Approved
4
Application, HUD shall review, among other things, whether the
amendment would have affected the ranking of the application in
the year it was approved sufficiently to have resulted in the
application not ranking high enough for funding, and whether the
amendment is otherwise consistent with the Act, the Regulations,
and the NOFA. Any increase in the amount of the approved EDI
Grant represents a new grant obligation by HUD and must be
dbcumented by a formal' amendment to this Agreement, or a new EDI
Grant Agreement, executed on behalf of the parties by officials
with the authority to lexecute the original Agreement.
b. The Recipient shall at all times maintain an up -to -date
copy of its Approved Application, including all amendments
approved in writing by HUD, and all drawdowns, deposits, and
expenditures of grant funds and program income under this
Agreement and any other records required by 24 CFR 570.506, in
its files and available for audit or inspection by duly
authorized representatives of HUD or the Comptroller General of
the United States.
9. Default; Remedies. A default under this Agreement shall
consist of anyiiuse of grant funds other than as authorized by
this Agreement) any other noncompliance with this Agreement
deemed material by HUDI, or any misrepresentation or omission in
the application submissions " which, if known to HUD, would have
resulted in this grant being provided. If HUD determines
that the Recipient is in default, HUD will give the Recipient
written notice)of this determination and the corrective or
remedial actions proposed by HUD to cure the default or mitigate
its effects, to the extent possible, and to prevent a
continuation or recurrence of the default (the "initial notice of
default "). Further description of the processes of audit,
performance monitoring and the corrective and remedial actions
available to HUD which apply to grants under the Act, including
this EDI Grant, is provided in 24 CFR 570, particularly
Subpart 0. Nohdelay or omission by HUD in exercising any right
or remedy under this Agreement shall impair HUD's ability to
exercise such night or remedy or constitute a waiver of, or
acquiescence in, any Recipient default.
;; ,
10. Close -out. Except as may be otherwise specifically
provided, close -out of this grant shall be subject to 24 CFR
570.509, or such close-out instructions as may hereafter be
issued by HUD specifically for EDI Grants.
11. General. HUD notifications to the Recipient under this
Agreement maybe addressed to the Recipient's address as stated
in the Approved Application, unless the Recipient otherwise
notifies HUD in writing. Recipient notifications to HUD shall be
to the:
li
It
i 5
U.S. Department l of Housing and Urban Development
Attention, Direcltor, Financial Management Division,
451 Seventh Street, SW, Room 7180
Washington, DC 20410,
unless the Recipient I s otherwise notified in writing by HUD.
The Recipient's rights under this Agreement may not be
assigned without the prior written approval of HUD. This
Agreement constitutes the entire Agreement between the Recipient
and HUD, and it may not be amended except in writing and executed
by authorized officials of both HUD and the Recipient, as
provided in paragraph 8.
12. Binding Agreement. This Agreement is binding with
respect to HUDin accordance with its terms upon execution by HUD
in the space provided below, subject to execution on behalf of
the Recipient.
II
13. Special Condition(s).
II
There are no special conditions.
[Rest of Page Intentionally Left Blank]
I I
h
•
•
I
6
This Agreement is hereby executed on behalf of the parties
as follows:
•
City of Yakima, Washington
RECIPIENT
ATTEST:
BY: ��� 1
� �1
(Signature) (Signature)
XccrtAit S. '! e +s �. A 2.0.-is
JY
(Name) (Name)
✓ (Title) I t . - . -. . (
: vl„ a o 03
•
(Date)
Employer Identification Number
(EIN) of 'Recipient
•
SECRETARY OF HOUSING AND URBAN
DEVELOPMENT
BY:
(Signature)
Nelson R. Bregon
(Name)
Deputy Assistant Secretary
for Grant Programs
- (Title)
(Date)
•
INDENTURE OF TRUST AND CUSTODIAL AGREEMENT
THIS INDENTURE OF TRUST AND CUSTODIAL AGREEMENT is made and dated as
of Marche' 2003, by and between THE CITY OF YAKIMA, WASHINGTON, a municipal
corporation organized and existing under the laws of the State of Washington, and JPMORGAN
CHASE BANK, a banking corporation organized and existing under the laws of the State of New
York with its principal corporate trust office in New York, New York, as trustee and as custodian
for the United States Department of Housing and Urban Development.
RECITALS
WHEREAS, the City is authorized by RCW 35.21.735 to enter into contracts with the
United States, to receive and expend funds derived thereunder for lawful purposes, and to enter into
loan agreements with the United States which establish the terms under which such loans will be
repaid; and
WHEREAS, the City has entered into the HUD Contract with HUD, pursuant to which the
City will derive funds for the purposes permitted thereunder, and in connection therewith, will
execute the City Note in the maximum principal amount of up to Four Million Dollars
($4,000,000.00); and
WHEREAS, the City, acting by and through the Office of Community and Economic
Development ( "RCO "), will loan portions of the funds received pursuant to the HUD Contract and
evidenced by the City Note, to one or more separate Obligors; and
WHEREAS, the HUD Contract requires that the proceeds of the City Note be held separate
and apart from other City funds and invested in accordance with the HUD Contract prior to
disbursement to the Obligors; and
WHEREAS, the City, acting by and through RCO, will enter into separate Loan Agreements
with each Obligor and pursuant thereto (a) each Obligor will execute an Obligor Note to the City,
and a Deed of Trust and other security instruments for the benefit of the City (together, the
"Security ") and (b) the City will lend the Obligors funds derived under the HUD Contract; and
WHEREAS, the HUD Contract requires that the funds derived from the Loan Agreements
prior to repayment of the City Note be kept separate and apart from other City funds and invested in
accordance with the HUD Contract; and
WHEREAS, the HUD Contract requires that the City assign or cause the assignment of the
Security to HUD and that such security shall be deposited with a custodian on behalf of HUD; and
WHEREAS, the City has been awarded an EDI Grant under Section 108(q) of the Housing
and Community Development Act of 1974, as amended, in the amount of One Million Dollars
($1,000,000.00); and
Page 1 - Indenture of Trust and Custodian Agreement
WHEREAS, the City intends to use all or a portion of the EDI Grant to fund interest subsidy
accounts for certain of the Obligor Notes, which accounts shall also be pledged by the benefited
Obligor as additional Security, and held hereunder as Security for the City Note; and
WHEREAS, the City desires that the Custodian (a) receive funds from HUD pursuant to the
HUD Contract, (b) disburse proceeds of the City Note to the Obligors, (c) collect payments under
the Obligor Notes, (d) use the money derived from repayment of the Obligor Notes to make
payments on the City Note, (e) act as custodian of the Security on behalf of HUD, (f) act on behalf
of the City to enforce the Security in the event of a default under the Obligor Notes under certain
circumstances specified herein, and (g) receive, hold and disburse as provided herein funds obtained
under the EDT Grant; and
WHEREAS, in order to establish and declare the terms and conditions upon which the
proceeds of the City Note and the EDI Grant are to be invested and disbursed and the Security shall
be held in the custody of the Custodian, the City has authorized the execution and delivery of this
Indenture; and
WHEREAS, all acts and proceedings required by law necessary to constitute this Indenture
a valid and binding agreement for the uses and purposes herein set forth in accordance with its
terms, have been done and taken, and the execution and delivery of this Indenture have been in all
respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
The City, in consideration of the premises and the acceptance by the Custodian of the trusts
hereby created and for other good and valuable consideration, the receipt of which is hereby
acknowledged, in order to secure the payment of the principal of and interest on the City Note and,
under certain circumstances specified herein, the Obligor Notes, according to their tenor and effect,
and to secure the performance and observance by the City of all the covenants expressed or implied
herein and in the City Note, does hereby bargain, sell, convey, mortgage, assign, pledge and grant,
without recourse, to the Custodian and its successors and assigns in trust forever:
I.
All funds and accounts now or hereafter established under this Indenture and the
investments thereof, if any, and money, securities and obligations therein (subject to disbursements
from any such fund or account upon the conditions set forth in this Indenture);
II.
Any and all property of every kind and nature from time to time hereafter conveyed,
pledged, assigned or transferred by delivery or by writing of any kind, as and for additional security
for payment of this Indenture hereunder by the City or by anyone on or in its behalf to the
Custodian, which is hereby authorized to receive the same at any time as security hereunder;
III.
All rights and interest of the City in and to the Trust Estate as now or hereafter established;
Page 2 - Indenture of Trust and Custodian Agreement
IV.
All moneys and securities from time to time held by the Custodian as a portion of the Trust
Estate under the terms; of this Indenture (but not as custodian on behalf of HUD) and any and all
other real or personal property of every name and nature concurrently herewith or from time to time
hereafter by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or
transferred as and for additional security hereunder by the City or by anyone on or in its behalf, or
with its written consent, to the Custodian which is hereby authorized to receive any and all such
property at any and all times and to hold and apply the same subject to the terms hereof; and
V.
To the extent not covered hereinabove, all proceeds of all of the foregoing;
TO HAVE ANip TO HOLD all and singular, the Trust Estate, whether now owned or
hereafter acquired;
IN TRUST NE VERTHELESS, upon the terms and trusts herein set forth for the security and
protection of HUD and the City, subject to the provisions hereof;
II
PROVIDED, HOWEVER, that the proceeds of the City Note allocable to any loan to a
single Obligor evidenced by a single Obligor Note, all funds received on the sale of the City Note or
on the payment of anyl Note which must be held in a Guaranteed Loan Funds Account,
Loan Repayment Account, or other account which the City is required to establish under the HUD
Contract, and funds received by the City pursuant to the EDI Grant which are required to be
deposited with the Custodian in a separate reserve account in connection with any Obligor Note,
shall be held by the Custodian in separate subaccounts and used and applied only in connection with
the Obligor Note and portion of the City Note for which such subaccount is established, it being the
intention of the partiesp,that the funds received by the Custodian, whether from the proceeds of the
sale of the City Note, in repayment thereof, or otherwise with regard to any separate loan evidenced
by an Obligor Note be (treated as though held in a separate trust or subtrust under the provisions of
this Indenture; and •
PROVIDED, FURTHER, that if the City, its successors or its assigns shall well and truly
pay, or cause to be pai id, the principal of and interest on the City Note due or to become due thereon,
at the times and in the manner mentioned in the City Note and as provided in the Fiscal Agency
Agreement, according to the true intent and meaning thereof, and shall cause the payments to be
made as required under Article IV hereof, or shall provide for the payment thereof in accordance
with the Fiscal Agency Agreement, and shall well and truly keep, perform and observe all the
covenants and conditions pursuant to the terms of the City Note to be kept, performed and observed
by it, and shall pay or cause to be paid to the Custodian sums of money due or to become due in
accordance with the terms and provisions hereof, then upon such final payments or deposits as
provided in the HUD 4ontract, the Fiscal Agency Agreement and Article IX hereof, the City Note
and the rights hereby granted as to such City Note shall cease, terminate and be void, and the
Custodian shall thereupon cancel and discharge the City Note and execute and deliver to the City,
such instruments in writing as shall be requisite to evidence the discharge hereof
Page 3 - Indenture of Trust and Custod Agreement
THIS INDENTURE FURTHER WITNESSETH, that the City does hereby covenant and
agree with the Custodian, and the Custodian does hereby agree as the custodian and trustee
hereunder, as follows:
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this
Section shall, for all purposes of this Indenture (including the Recitals and Granting Clauses) and of
any indenture supplemental hereto of any certificate, opinion or other document herein
mentioned, have the meanings herein specified, to be equally applicable to both the singular and
plural forms of any of the terms l i erein defined.
"Accounts "_means the accounts created and established pursuant to this Indenture,
including, but not limited to, the Guaranteed Loan Funds Account, the Loan Repayment Account
and the EDI Grant Reserve Account.
"Administrative Fees and Expenses" means all application, commitment, financing or
similar fees charged, or reimbursement for administrative or other expenses (including reasonable
attorneys' fees) incurred by the Custodian pursuant to this Indenture following an Event of Default
hereunder.
"Authorized Representative" means with respect to the City, the Mayor, the Director of
Community and Economic Development, or any other officer or any other person or persons
designated as an Authorized Representative of the City by an ordinance or resolution of the City
Council filed with the Custodian.
"Business Day" means any day other than a Saturday,. a Sunday, a day on which banking
institutions in the State of Washington or New York are required or authorized to remain closed, or
a day on which the Federal Reserve Bank of New York and the New York Stock Exchange are
closed.
"City" means The City of Yakima, Washington, a municipal corporation under the laws of
the State of Washington and for purposes of this Indenture, acting through RCO.
"City Note "_means the not or notes of the City dated as of , 2003 issued
pursuant to the HUD Contract in the maximum principal amount of Four Million Dollars
($4,000,000.00), and any extensions or replacements thereof in accordance with the HUD Contract.
"Closing Date "_means as to the portion of the City Note allocable to each Obligor Note, the
date on which the initial advance made under City Note to fund such Obligor Note is made.
"Custodian" means JPMorgan Chase Bank, a banking corporation organized and existing
under the laws of the State of New York and regulated by the Federal Deposit Insurance
Corporation, with its principal corporate trust office in New York, New York, or its successor, as
Custodian hereunder as provided in Section 4.01.
Page 4 - Indenture of Trust and Custodian Agreement
"Custodian Fee" means the acceptance fee of $1,500 due on the first Closing Date and the
annual fees of the Custodian in th amount of $2,000 plus $1,000 for each Obligor Note then
outstanding, payable in advance on the first Closing Date and each anniversary of such date
therafter, so long as the City Note or any part thereof remains outstanding.
"Deed of Trust" means any deed of trust granted for the benefit of the City to secure an
Obligor Loan; and "Deeds of Trust" means, collectively, all of such Deeds of Trust.
"Deposit Date" means, when used in connection with any Obligor Note, the definition
assigned to such term by the related Loan Agreement.
"EDI Grant" means the grant made to the City pursuant to Grant Agreement No. B- 98 -ED-
53 -0048.
"EDI Grant Agreement" means the EDI Grant Agreement No. B- 98 -BD -53 -0048, dated
2003, by and between the City and HUD.
"EDI Grant Reserve Account" means the Account of that name established by Section 4.01
of this Indenture.
"Event of Default" means any of the events specified in Section 6.01 hereof.
"Fiscal Agent" means JPMorgan Chase Bank, a New York banking corporation, and any
successor under the Fiscal Agency Agreement.
"Fiscal Agency Agreement" means the Amended and Restated Master Fiscal Agency
Agreement dated as of May 17, 2000 among the Secretary of Housing and Urban Development and
The Chase Manhattan Bank (formerly known as Chemical Bank, and now known as JPMorgan
Chase Bank), as Fiscal Agent.
"Government Obligations" means direct obligations of, or any obligation for which the full
and timely payment of principal and interest is guaranteed by, the United States of America,
including but not limited to, United States Treasury Certificates of Indebtedness, Notes and
Bonds -State and Local',' Government Series, or certificates of ownership of the principal of or
interest on direct obligations of, or, obligations unconditionally guaranteed by, the United States of
America, which obligations are held in trust by a commercial bank which is a member of the
Federal Reserve System and has capital and surplus (exclusive of undivided profits) in excess of
$100,000,000.
"Guaranteed Loan Funds Account" means the special account of that name created pursuant
to Section 4.01 hereof.
"Guarantor" means, with respect to any Obligor Note, a Person who guarantees payment
thereof pursuant to a Guaranty.
"Guaranty" means, with respect to any Obligor Note for which the City has required one, an
unconditional guaranty of payment, executed by one or more Guarantors in favor of the City.
Page 5 - Indenture of Trust and Custodian Agreement
"HUD" means the United States Department of Housing and Urban Development, acting
through its Secretary.
"HUD Contract" means the Contract for Loan Guarantee Assistance under Section 108 of
the Housing and Community Development Act of 1974, as amended, 42 U.S.C. § 5308 between the
City and HUD with respect to the City Note pursuant to the Loan Guarantee Commitment dated as
of November 6, 2002.
"Indenture" means this Indenture of Trust and Custodial Agreement, as originally executed
or as it may be supplemented, modified or amended from time to time by any Supplemental
Indenture, unless in the case of one or more Supplemental Indentures, the context requires
otherwise.
Investment Earnings" means all earnings derived from the investment of money held in any
Accounts (including subaccounts) established under this Indenture.
"Loan Agreement" means an agreement or agreements between the City and an Obligor with
respect to, among other things, the related Obligor Note and the Security therefore; and "Loan
Agreements" means collectively,' all of such Loan Agreements.
"Loan Repayment Account" means the special fund so designated and established by
Section 4.01 of this Indenture.
"Obligor" means the maker of and payor under any Obligor Note to the City.
"Obligor Note" means a note of an Obligor made or assigned to the Custodian on behalf of
the City and assigned hereunder t? evidencing a loan of a portion of the City Note proceeds
made under the related Loan Agrement; and "Obligor Notes" means, collectively, all such Obligor
Notes outstanding from time to time.
"Outstanding" when used as of any particular time with reference to the City Note, means
the City Note except (1) if theretofore canceled by the City or surrendered to the City for
cancellation, (2) with respect to which all liability of the City shall have been discharged in
accordance with the Fiscal Agency Agreement, and (3) for the transfer or exchange of or in lieu of
or in substitution for which another Note shall have been authenticated and delivered by the Fiscal
Agent.
"Payment Date" means each date on which interest or principal on the City Note is due and
payable.
"Person" means an individual, corporation, firm, association, partnership, trust, or other
legal entity or group of entities, including a governmental entity or any agency or political
subdivision thereof.
"Principal Corporate Trust Office" means, with respect to the Custodian, the office of the
Custodian at New York, New York or such other or additional offices, as may be specified to the
City by the Custodian.
Page 6 - Indenture of Trust and Custodian Agreement
"RCO" means the City Office of Community and Economic Development.
"Secretary" means the Secretary of HUD.
"Security" means the secu documents evidencing or granting a security interest in
property as security for the Obligor Notes, including without limitation, the Loan Agreements, the
Obligor Notes, the Deeds of Trust and any other documents included in the definition of "Security
Documents" in the HUD Contract.
"State" means the State of Washington.
"Supplemental Indenture" means any indenture hereafter duly authorized and entered into
between the City and the Custodian, supplementing, modifying or amending this Indenture; but only
if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
"Trust Estate" means the trust estate pledged and assigned by the City and described in the
Granting Clauses of this Indenture; provided that, the Trust Estate shall not include the Security so
long as it is held by the Custodian as custodian on behalf of HUD; and provided further that, at such
time as a portion of the City Note paid in full in accordance with the Fiscal Agency Agreement
but amounts are owed to the City under the related Obligor Note, upon release of the Security for
such Obligor Note by HUD, such 'Security shall become a part of the Trust Estate to secure payment
of such Obligor Note.
SECTION 1.02. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall include
the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience
only and shall be deemed to mean and include the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of article and sections herein and the table of contents hereof are solely
for convenience of reference, do not constitute a part hereof and shall not affect the meaning,
construction or effect hereof
(c) All references herein to "Articles, " "Sections" and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Indenture; the words "herein," "hereof"
"hereby," "hereunder" and other words of similar import refer to this Indenture as a whole and not
to any particular Article, Section or subdivision hereof.
(d) This Indenture means this instrument as originally adopted and as it may be
supplemented, modified or amended from time to time by any Supplemental Indenture, unless in the
case of one or more Supplemental) Indentures the context requires otherwise.
(e) The HUD Contract the Fiscal Agency Agreement, copies of which have been
received by the Custodian, are hereby incorporated herein by reference. In the event of any conflict,
contradiction or inconsistency between the terms of this Indenture and the HUD Contract, the terms
of the HUD Contract shall prevail!unless waived in writing by HUD.
Page 7 - Indenture of Trust and Custodian Agreement
(f) In accordance with the HUD Contract, the City and the Custodian will, enter into a
Letter Agreement for Section 108 Loan Guarantee Program Account, and a Letter Agreement for
Section 108 Loan Guarantee Program Custodial Investment Account, in the forms attached hereto
as Exhibit A -1 and A -2, respectively (collectively, the "Letter Agreements "). This Indenture is
intended to amplify the provisions of the Letter Agreements and insofar as possible, the Letter
Agreements and this Indenture should be read and interpreted together as a single document.
SECTION 1.03. Indenture and City Note Constitute a Contract: Pledge. In consideration of
the guarantee of the City Note by HUD and to the extent provided herein: (a) this Indenture shall be
deemed to be and shall constitute a contract between the City and the Custodian and for the benefit
o f Hun (h) the pledge and assign made herein and duties, covenants, obligations and
agreements set forth herein to be observed and performed by or on behalf of the City shall be for the
benefit, protection and security of HUD; (c) the City, as security for the payment of the principal of,
and the interest on, the City Note and as security for the observance and performance of any other
duty, covenant, obligation or agreement of the City under the City Note all in accordance with the
provisions thereof and hereof, does hereby grant, bargain, sell, convey, pledge, assign and confirm
to the Custodian the Trust Estate 1 (d) the pledge made hereby is valid and binding from the time
when the pledge is made and the Trust Estate shall immediately be subject to the lien of such pledge
without any physical delivery the or further act, and the lien of such pledge shall be valid and
binding as against all parties having claims of any kind in tort, contract or otherwise against the City
irrespective of whether such parties have notice thereof; and (e) the City Note shall be a special
obligation of the City payable from and secured exclusively by a pledge of the Trust Estate as
provided herein and amounts specifically pledged to HUD under the HUD Contract.
ARTICLE II
THE CITY NOTE
SECTION 2.01. Delivery of City Note and Assignment of Security.
(a) Pursuant to the HUD Contract and contemporaneously with the execution of this
Indenture, the City will execute and deliver the City Note to the Custodian. On or prior to the first
Closing Date to occur with respect to one or more Obligor Notes, the Custodian, on behalf of the
City, will receive the funds provided for in the HUD Contract required to fund such Obligor Note(s)
and the following documents
(i) an executed copy of the HUD Contract;
(ii) an executed copy of the Fiscal Agency Agreement,
(iii) the original of the related Obligor Note(s), endorsed in blank and without
recourse by the City;
(iv) an original, counterpart of the related Loan Agreement(s), together with an
assignment thereof by the City in favor of HUD,
(v) the related original recorded Deed of Trust(s), together with an unrecorded
assignment of the beneficiary's interest therein by the City to the Secretary, and
Page 8 - Indenture of Trust and Custodian Agreement
(vi) any Additional Security for the related Obligor Note(s).
On each subsequent Closing Date with respect to one or more Obligor Notes, the Custodian,
on behalf of the City, will receive the funds provided for in the HUD Contract to fund such Obligor
Note(s), as well as the related documents described in Sections 2.01(a)(iii), 2.01(a)(iv), 2.01(a)(v)
and 2.01(a)(vi) hereof.
(b) The proceeds, including accrued interest, if any, of the portion of the City Note
allocable to an Obligor Note shall be applied simultaneously with the delivery of such Obligor Note
as follows:
(i) There shall be deposited in the subaccount in the Loan Repayment Account
related to such portion of the City Note and such Obligor Note, the amount, if any, equal to the sum
of the interest accrued and to accrue on the City Note to the Closing Date for such Obligor Note;
(ii) The remaining balance of the proceeds of the portion of the City Note shall
be deposited in the subaccount in the Guaranteed Loan Funds Account related to such City Note
and such Obligor Note, and disbursed to pay costs of the related project in accordance with the
related Loan Agreement.
(c) The City hereby authorizes and instructs the Custodian on its behalf to issue to HUD
a receipt for the Security in a foink approved by HUD and to hold the Security as custodian on
behalf of HUD outside of the Trust Estate in accordance with Article III hereof.
SECTION 2.02 Terms of City Note.
(a) Payments of the City Note shall be made by the Custodian in accordance with its
terms and the provisions of the Fiscal Agency Agreement exclusively from funds available in the
Loan Repayment Account; provided that payments with respect to that portion of the City Note
allocable to any Obligor Note shall be made only from the subaccount of the Loan Repayment
Account related to such Obligor Note. The Custodian may determine that the City Note has been
paid in full only upon receipt of written notice from the Fiscal Agent or HUD to that effect.
(b) In accordance with the HUD Contract, the Custodian shall remit to the Fiscal Agent,
the interest and principal due in immediately available funds. The Custodian shall not be obligated
to make any payment of principal or interest on the City Note except from moneys in the funds held
hereunder or received from or on behalf of the City derived from payments made on the Obligor
Notes, and shall not be obligated to advance any of its own funds in furtherance of any activities or
duties hereunder.
ARTICLE III
CUSTODY OF SECURITY
SECTION 3.01. Custodian of Security.
Page 9 - Indenture of Trust and Custodian Agreement
(a) The Custodian shall act on behalf of HUD as custodian of the Security. The
Custodian, shall segregate and maintain continuous custody and control of all documents
comprising the Security deposited with it on behalf of HUD, in secure and fire resistant facilities, in
accordance with customary standards for such storage; provided, that upon full and final payment of
a portion of the City Note allocable to a particular Obligor Note in accordance with the HUD
Contract and the Fiscal Agency Agreement, the Custodian shall release that portion of the Security
allocable to such Obligor Note in accordance with the terms of the City Note and the related Loan
Documents.
(b) At any reasonable time, the Custodian shall make available for examination and
audit by re presentatives of the City, HUD and /or any Obligor (but as to such Obligor, only as to
Security relating to its Obligor's Note), all documents comprising the Security in the custody of the
Custodian.
(c) Upon notice to the Custodian by HUD that a default has occurred under the HUD
C the Custodian shall comply with such requirements as HUD shall make with respect to
delivery of the Security, including, but not limited to, the delivery to HUD or its designees of all
documents comprising the Security in the Custodian's custody. If, following such a default under
the HUD Contract, HUD elects to assume or transfer the duties and obligations of the City and
elects to continue the custodial relationship with the Custodian hereunder, the Custodian agrees to
continue its custodial obligations herein for HUD for a reasonable time on the same terms and
conditions as set forth herein; provided, that in no event shall HUD be obligated to pay
compensation or fees for the holding or release of any document during such reasonable period. If,
however, HUD elects to terminate this custodial relationship, the Custodian shall comply with the
provisions of this election by HUD.
(d) Upon notice by the City to the Custodian, as custodian of the Security, that a default
has occurred under any Obligor Note, and upon the written approval of HUD and receipt of
reasonable indemnity against anticipated expenses and liability to its satisfaction (including but not
limited to liability under applicable environmental laws) (which indemnity, at the option of the
Custodian, is a condition precedent to its duties hereunder) the Custodian shall, in its own name and
as the trustee of an express trust, take any or all of the actions specified in Section 6.02 hereof The
net proceeds derived from any such actions of the Custodian after payment of the fees and expenses
of the Custodian (including reasonable attorneys' fees) shall be deposited hereunder in the
subaccount of the Loan Repayment Account related to such defaulted Obligor Note, for the benefit
of HUD and as security for the portion of the City Note allocable to such Obligor Note, and shall
become a part of the Trust Estate.
(e) At such time as a portion of the City Note allocable to any Obligor Note is paid in
full in accordance with Section 2.02(a), the Custodian shall no longer act as custodian on behalf of
HUD as to such portion of the City Note, and the Security held as security therefor shall become
part of the Trust Estate without further act by the City or any Obligor for the benefit of the City, to
be disposed of in accordance with this Indenture.
•
(f) Notwithstanding anything herein to the contrary, and so long as any such Security is
held for the benefit of HUD, the Custodian shall not dispose of or take any action with respect to the
Security without the written consent of HUD, except as may be necessary to maintain custody of
such Security as custodian and trustee for HUD.
Page 10 - Indenture of Trust and Custodian Agreement
ARTICLE IV
FUNDING AN OBLIGOR LOAN; PAYMENT OF PRINCIPAL
OF AND INTEREST ON THE CITY NOTE
SECTION 4.01. Creation of Accounts. The following accounts and subaccounts are hereby
and shall be created and established with the Custodian as to the City Note, to be held in trust and
maintained separate and apart from all other funds and accounts of the Custodian.
(a) A Guaranteed Loan Funds Account, including therein a subaccount for the portion of
the City Note allocable to each Obligor Note;
(b) A Loan Repayment Account, including therein a subaccount for the portion of the
City Note allocable to each Obligor Note;
(c) A Guaranteed Loan Funds Investment Account, including therein a subaccount for
the portion of the City Note allocable to each Obligor Note;
(d) A Loan, Repayment Investment Account, including therein a subaccount for the
portion of the City Note allocable to each Obligor Note; and
(e) An EDI Grant Reserve Account, including therein a subaccount for the portion of the
City Note allocable to each Obligor Note.
Each of the accounts and subaccounts created by this Indenture is hereby pledged to, and
charged with, the payment of the principal and interest on the City Note as the same shall become
due; provided that money and investments held in any subaccount related to the portion of the City
Note allocable to a particular Obligor Note may not be used for the payment of any other Obligor
Note or portion of the City Note:
The Custodian may, in its discretion, establish such additional accounts and subaccounts
within any of the accounts, as the Custodian may deem necessary or useful for the purpose of
identifying more precisely the sources of payments into and disbursements from that account, or for
the purpose of complying with the requirements of the HUD Contract, but the establishment of any
such account or subaccount shall not alter or modify any of the requirements of the City Note with
respect to a deposit or use of money in the accounts, or result in commingling of funds not
permitted hereunder.
SECTION 4.02. Guaranteed Loan Funds Account. The proceeds of the City Note allocable
to each Obligor Note (less accrued interest, if any) shall be deposited in the Guaranteed Loan Funds
Account and credited to the related subaccount, and shall be used to fund such Obligor Note. The
amounts in each subaccount of the Guaranteed Loan Funds Account, until applied as hereinafter
provided, shall be held as securityl for payment of the portion of the City Note allocable to such
Obligor Note; and no amount in any other subaccount of the Guaranteed Loan Funds Account shall
constitute or be held as security for such portion of the City Note. The Custodian shall make
payment from each subaccount ofIthe Guaranteed Loan Funds Account of the entire amount
deposited therein upon its receipt thereof in accordance with written instructions from the City from
Page 11 - Indenture of Trust and Custodian Agreement
time to time, signed by its Authorized Representative, in the form attached hereto as Exhibit A and
incorporated by reference herein.
SECTION 4.03. Establishment of Guaranteed Loan Funds Investment Account. The
Custodian shall transfer from each subaccount of the Guaranteed Loan Funds Account to the related
subaccounts of the Guaranteed Loan Funds Investment Account, any proceeds of the City Note
allocable to the related Obligor Note and any Investment Earnings thereon that are required to be
invested in Government Obligations pursuant to the HUD Contract, and shall hold and invest any
funds in such subaccount in Government Obligations in accordance with Section 4.09 hereof. All
funds held in any subaccount of the Guaranteed Loan Funds Investment Account shall be held for
c r e dit to the related subaccount of the Guaranteed Loan Funds Account.
SECTION 4.04. Loan Repayment Account.
(a) The Custodian shall deposit the following sums into the related subaccount of the
Loan Repayment Account:
(i) On the Closing Date with respect to any Obligor Note, all amounts derived
from accrued interest required to be deposited therein pursuant to Section 2.01(b)(i) of this
Indenture, if any;
(ii) As received, all Investment Earnings on the amounts credited to such
subaccount in the Loan Repayment Account;
(iii) All moneys received from the related Obligor under the related Obligor Note;
and
(iv) Net proceeds received upon any foreclosure under the Security for such
Obligor Note and the portion of the City Note allocable thereto, after payment of the costs and
expenses of the foreclosure, including without limitation, any and all of the Custodian's expenses
and costs and reasonable attorneys' fees.
Upon receipt of written notice from the Fiscal Agent of the rate and amount of interest to become
due and payable on any portion of the City Note allocable to a particular Obligor Note, the
Custodian shall mail notice to the related Obligor, with a copy to the City, of the corresponding
amount owed by such Obligor under such Obligor Note, together with notice of the time or times by
which such amount or amounts is due to the Custodian in accordance with the related Loan
Agreement and/or such Obligor Note.
(b) The City hereby authorizes and directs the Custodian to withdraw money from each
subaccount of the Loan Repayment Account in accordance with the HUD Contract no later than the
fifth Business Day prior to each Payment Date in amounts sufficient to pay the principal of and
interest on the portion of the City Note for which such subaccount was established as the same shall
become due and payable on such Payment Date. Moneys in each subaccount shall be used solely
for the payment of the principal of and interest on the portion of the City Note as to which such
subaccount was created as the same shall become due and payable at maturity, upon redemption or
acceleration or otherwise, and the lien of HUD on such moneys created by the Granting Clauses
hereof shall be first and prior to the lien of any other Person thereon.
Page 12 - Indenture of Trust and Custodian Agreement
(c) The moneys credited to the subaccount in the Loan Repayment Account for the
portion of City Note related to each Obligor Note shall not be commingled, except for investment
purposes pursuant to Section 4.09 with any other moneys held by the Custodian under the City
Note. Any amounts in a Loan Repayment Account remaining after the related portion of the City
Note is fully paid and after all related amounts due to HUD and all related fees and expenses of the
Custodian have been paid, shall be deposited in the related subaccount in the Guaranteed Loan
Funds Account subject to the further direction of the City, with the consent of HUD, or, with the
consent of HUD, paid to City. Obligor has irrevocably assigned all of its right, title and interest in
funds deposited in the subaccount of the Loan Repayment Account and Loan Repayment
In Account related to its Obligor Note, to the Custodian and the City, and shall have no
residual interest in any portion of said accounts.
SECTION 4.05 Loan Repayment Investment Account. The Custodian shall transfer from
each subaccount of the Loan Repayment Account to the related subaccount of the Loan Repayment
Investment Account, any funds deposited in the Loan Repayment Account that are not promptly
paid to the holder of the City Note and any Investment Earnings thereon, which funds are required
to be invested in Government Obligations pursuant to the HUD Contract. The Custodian shall hold
and invest any such Loan Repayment Account Funds in such account or subaccount in Government
Obligations in accordance with Section 4.09 hereof All funds held in any subaccount of the Loan
Repayment Investment Account shall be held for credit to the related subaccount of the Loan
Repayment Account.
SECTION 4.06 EDI Grant Reserve Account.
(a) The Custodian shall establish an EDI Grant Reserve Account, and shall further
establish with respect to each Obligor Note, separate subaccounts for each Obligor Note, to be
funded from proceeds of the EDI Grant allocable to such Obligor Note on the date of Closing with
respect to such Obligor Note, if a y. Pending disbursement, the funds in each subaccount of the
EDI Grant Reserve Account shall be invested and reinvested as directed in writing by the City, and
the Investment Earnings on such investments shall be credited to and deposited in the subaccount
giving rise to such investments.
(b) If on any Deposit Date with respect to any Obligor Note, the effective interest rate on
such Obligor Note is higher than the threshold established under such Obligor Note in the related
Loan Agreement, sufficient funds are not on deposit in the related subaccount of the Loan
Repayment Account to the pay the full amount then due in accordance with Section 4.06 of the
related Loan Agreement, the Custodian shall disburse funds from the related EDI Grant Reserve
Account to pay the excess interest then due; provided, that the Custodian shall not disburse funds
from the subaccount in the EDI Grant Reserve Accounts established in connection with any Obligor
Note to pay interest on any other Obligor Note. The Custodian agrees to provide Shortfall Notices
(as defined by the respective Loan Agreements) to the City and respective Obligors in accordance
with Section 4.6(b) of the Loan Agreements.
(c) After payment in frill or defeasance of that portion of the City Note as to which a
subaccount in the EDI Grant Reserve Account is established, the Custodian shall hold and disburse
the funds in such subaccount of the EDI Grant Reserve Account as directed by the City, subject to
applicable provisions of the EDI Grant Agreement, if any, relating to any remaining proceeds of the
Page 13 - Indenture of Trust and Custodian Agreement
•
EDI Grant. The Obligor has irrevocably assigned all of its right, title and interest in funds deposited
in the subaccount of the EDI Grant Reserve Account related to its Obligor Note, to the Custodian
and the City, and shall have no residual interest in any portion of the EDI Grant Reserve Account.
SECTION 4.07. Liens. Except as permitted under the City Note, the City shall not pledge as
security for any other obligation, the accounts and moneys held pursuant to the City Note.
SECTION 4.08. Moneys Held in Trust. All moneys required to be deposited with or paid to
the Custodian for deposit into the accounts and subaccounts established under any provisions
hereof, and all moneys withdrawn from said accounts and subaccounts and held by the Custodian
s h a ll be held by the Custodian in trust. Such moneys shall, while so held, constitute part of the Trust
Estate and be subject to the lien hereof.
SECTION 4.09. Investment of Money. All money held in the subaccounts of the Loan
Repayment Investment Account, the Guaranteed Loan Funds Investment Account and the EDI
Grant Reserve Account shall be invested by the Custodian upon written instructions of the City in
Government Obligations having maturities that are consistent with cash requirements for the
payment of principal of and interest on the related City Note for which the subaccount was created.
In no event shall the maturities of such investments exceed one year.
The City may give the Custodian additional limitations or requirements that are consistent
with the fiduciary duties of the Custodian as described in and limited by the City Note. The
Custodian shall have no obligation to approve or disapprove of any such direction and shall suffer
no liability whatsoever in following such direction.
In the absence of direction from the City, the Custodian shall invest all money on hand in
the funds or accounts established hereunder in Government Obligations for the benefit of the City or
HUD, subject to the limitations set forth in the first paragraph of this Section 4. 09.
The Custodian shall provide timely reports to the City, to the respective Obligors, and as by
applicable law required, the Internal Revenue Service and/or other governmental entities,
concerning investment earnings. Gains and losses in any account allocable to a particular Obligor
shall be reported under such Obligor's federal tax identification number.
ARTICLE V
GENERAL COVENANTS
SECTION 5.01. Nature of Security. The City Note is a special obligation of the City
payable only from the special funds established therefor under the City Note and future Community
Development Block Grant funds of the City pursuant to the HUD Contract.
The City shall record, or cause to be recorded, each Deed of Trust securing any Obligor
Note in the real property records of Yakima County, Washington, and shall file UCC Financing
Statements in Olympia, Washington or such other applicable filing office as necessary to perfect the
security interests granted in the Security.
Page 14 - Indenture of Trust and Custodian Agreement
The City shall promptly cause to be paid, solely from the sources stated herein, the principal
of and interest on the City Note at the place, on the dates and in the manner provided herein and in
the City Note according to the true intent and meaning thereof.
The Custodian shall request the City or the Obligor, as applicable, to execute (if such
execution is required for any such filing) and the Custodian shall file in a timely manner (but only if
received from the City or the Obligor, as applicable, if execution by the City or the Obligor, as
applicable, is necessary) any and all continuation statements as were initially required under the
UCC (as determined by the City) in order to continue the security interests granted or assigned to
the Custodian in the Security. The Custodian shall notify the City or the Obligor, as applicable, of
the pending expiration of such se interest no later than 60 days prior to such expiration. Any
expenses, including legal fees, in in preparing and filing any such statements shall be paid by
the City as an expense of the Trust Estate hereunder.
SECTION 5.02. Performance of Covenants of the City, Representations. The City shall
faithfully perform at all times any and all covenants, undertakings, stipulations and provisions
contained in the City Note and in all proceedings pertaining thereto. The City represents that it is
duly authorized under the Constit and laws of the State to issue the City Note, to enter into the
City Note and to pledge and assign the Custodian the Trust Estate, and that the City Note in the
hands of the owner(s) thereof is and will be a valid and binding special limited obligation of the
City.
In accordance with RCW 35.21.735, the City Note, and any payments or obligations under
the HUD Contract, and any documents or agreements relating thereto, including, without limitation,
this Indenture, shall be a valid claim only against and payable solely from, the accounts held by the
Custodian and from the security pledged under the FEUD Contract, and shall not be an obligation of
the City or the State, and neither the faith and credit nor the taxing power of the City or State or any
municipal corporation or subdivision of the State or any agency of any of the foregoing is pledged
to the payment of principal, interest or premium, if any, on the City Note or for any amounts due
under the HUD Contract, any Obligor Note or any documents or agreements relating thereto,
including, without limitation, this Indenture and the Fiscal Agency Agreement. Nothing herein shall
constitute a debt or indebtedness of the City payable from public funds within the meaning of any
constitutional or statutory limitation on the incurring of debt.
The City shall pay or cause to be paid all Administrative Fees and Expenses and the
Custodian Fees and hereby instructs the Custodian to send invoices with respect thereto to each
Obligor for payment thereof as requested by the City in writing. The Custodian shall notify the City
in the event the Obligor fails to pay such invoices in full within ten days of their mailing by first
class mail.
SECTION 5.03. Maintenance of Corporate Existence: Compliance With Laws. The City
shall at all times maintain its existence, and it shall comply with all valid acts, rules, regulations,
orders and directions of any legislative, executive, administrative or judicial body known to it to be
applicable to this Indenture.
SECTION 5.04. Further Instruments. At the expense of the City, the City shall, upon the
request of the Custodian, from tine to time execute and deliver such further instruments as may be
reasonable and as may be required to carry out the purposes of this Indenture.
Page 15 - Indenture of Trust and Custodian Agreement
SECTION 5.05. Lien Release. Within 60 days after the City pays or causes to be paid to the
holder of the City Note the principal and interest and redemption price, if any, to become due
thereon, at the times and in the manner stipulated therein and in the City Note, the City shall
provide and the Custodian and the City shall record such instruments as shall be necessary to
release the lien of HUD against the Security held as security therefor.
SECTION 5.06. Disposal of Properties. Neither the City nor the Custodian shall sell,
mortgage, lease or otherwise dispose of the properties subject to the Security except as provided in
the Security.
SECTION 5.07. Moneys to Be Held in Trust. Except as otherwise provided herein, all
moneys required to be deposited With or paid to the Custodian for the account of any subaccount
established under any provision of the City Note for a City Note in accordance with this Indenture
shall be held in trust for BUD and shall constitute part of the Trust Estate while held by the
C
SECTION 5.08. Statements. The Custodian shall provide to HUD and the City by the
fifteenth day of each month, a written statement showing the balance of the funds in each
subaccount of the Loan Repayment Account, Loan Repayment Investment Account, Guaranteed
Loan Funds Account, Guaranteed Loan Funds Investment Account, and EDI Grant Reserve
Account and the deposits and withdrawals of all funds in such account during the preceding
calendar month and a statement identifying the investments therein. Contemporaneously, the
Custodian shall further provide copies of such written statements relating only to the subaccounts
established for any particular Obligor Note, to the related Obligor.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
SECTION 6.01. Events ofiDefault. The following events shall be Events of Default:
(a) Default by the City in the observance of any of the covenants, agreements or
conditions on its part in the City Note contained, if such default shall have continued for a period of
60 days after receipt of written notice thereof, specifying such default and requiring the same to be
remedied, shall have been given to the City by the Custodian;
(b) The failure of the City to pay or cause to be paid any Custodian Fee or
Administrative Fees and Expenses which failure continues for at least 30 days following written
notice thereof by the Custodian to the City; or
(c) Written notice to the Custodian from the City of an event of default (however
defined) under the Security, but only after the Security shall have become part of the Trust Estate.
Upon an Event of Default the Custodian may resign and/or take any action at law or in
equity to enforce the provisions of this Indenture in accordance with Section 6.05 hereof. The
Custodian shall notify the City, HUD and the Fiscal Agent of any Event of Default.
Page 16 - Indenture of Trust and Custodian Agreement
SECTION 6.02. Default in Obligor Note. If any default shall occur under an Obligor Note or
any Security therefor, then, and in each and every such case during the continuance of any such
default of which the Custodian has actual notice, the Custodian shall notify the City, the Obligor in
default and HUD, and upon the written direction of (i) the City, with the written consent of HUD so
long as the City Note remains outstanding and is not in default, or (ii) HUD, so long as the City
Note remains outstanding and is in subject to receipt by the Custodian of reasonable
indemnity against anticipated expenses and liability to its satisfaction (including but not limited to
liability under any applicable environmental laws) (which indemnity, at the option of the Custodian,
is a condition precedent to its duties hereunder), the Custodian shall, in its own name and as the
trustee of an express trust take any or all of the following actions:
(a) Proceed against the Guarantor under the related Guaranty, if any;
(b) By mandamus, or other suit, action or proceeding at law or in equity, enforce all
rights of the City and HUD and require the City to carry out any agreements with or for the benefit
o f HT TD and to perform its duties under this Indenture, provided, that any such remedy may be
taken only to the extent permitted under the applicable previsions of the Security or this Indenture,
as the case may be;
(c) Bring suit upon an Obligor Note;
(d) Foreclose on the Security for an Obligor Note or exercise any remedies thereunder;
or
(e) By action or suit in equity enjoin any acts or things which may be unlawful or in
violation of the rights of HUD or the City.
The Custodian shall not be responsible for the propriety of or be liable for the consequences
of following the written direction of HUD or the City (with written consent by HUD so long as a
City Note is outstanding and in default).
SECTION 6.03. Application of Revenues and Other Funds After Default. If a default under
an Obligor Note shall occur and be continuing, all funds then held or thereafter received by the
Custodian under any of the provisions of the City Note, any Guaranty or the Security in connection
with such Obligor Note shall be applied by the Custodian as follows and in the following order:
(a) To the payment of any expenses necessary in the opinion of the Custodian to protect
the interests of HUD and the City and payment of reasonable fees and charges and expenses of the
Custodian (including reasonable fees and disbursements of its counsel) incurred in connection with
the performance of its powers and duties under the City Note;
(b) To the payment of the principal of and interest then due on that portion of the City
Note issued to fund the loan to the Obligor in default, subject to the provisions of this Indenture, as
follows:
(i) Unless the principal of such portion of the City Note shall have become or
have been declared due and payable,
I
Page 17 - Indenture of Trust and Custodia n Agreement
First: To the payment of all installments of interest then due in the order of
the maturity of such installments and, if the amount available shall not be sufficient to pay in full
any installment or installments maturing on the same date, then to the payment thereof ratably,
according to the amounts due thereon, to the persons entitled thereto, without any discrimination or
preference; and
Second: To the payment of the unpaid principal of such portion of the City
Note which shall have become du whether at maturity or by call for redemption, with interest on
the overdue principal at the rate borne by the City Note, and, if the amount available shall not be
sufficient to pay in full the City Note, together with such interest, then to the payment thereof
ratably , according to amounts according to th amou nts of principal due on such date to the Persons entitled thereto,
ratably, mo- principal
without any discrimination or preference;
(ii) If the principal of such portion of the City Note shall have become or have
been declared due and payable, to the payment of the principal and interest then due and unpaid
u pon the City Note, with interest on the overdue principal at the rate borne by the City Note, and, if
the amount available shall not be sufficient to pay in full the whole amount so due and unpaid, then
to the payment thereof ratably, without preference or priority of principal over interest, or of interest
over principal, or of any installment of interest over any other installment of interest, of the City
Note, according to the amounts due respectively for principal and interest;
(iii) If the Custodian has applied any funds in the subaccount of the EDI Grant
Reserve Account established in connection with such portion of the City Note, the Custodian shall
pay into such subaccount the amount so applied; and
(c) All other amounts due to any other Person legally entitled thereto, including the City.
SECTION 6.04 Default under City Note. Upon the occurrence of an Event of Default, the
Custodian, as custodian and trustee for HUD, shall promptly notify HUD, the Fiscal Agent and the
City of such default and take such action with regard thereto or with regard to any Security held as
security therefor as requested or authorized by HUD; provided, that the City shall pay all fees, costs
and expenses incurred by the Custodian in connection therewith.
SECTION 6.05. Custodian to Represent HUD and the City. The Custodian is hereby
irrevocably appointed as Custodian and true and lawful attorney -in -fact of the City for the purpose
of exercising and prosecuting on its behalf such rights and remedies as may be available to the City
under the provisions of the City Nte, the HUD Contract, this Indenture, any Guaranty, the Security
and applicable provisions of any other law. Upon the occurrence and continuance of a default under
an Obligor Note or other occasion giving rise to a right in the Custodian to represent the City or
HUD, the Custodian, upon the written request of the City (subject to HUD approval so long as the
City Note is outstanding and there exists an Event of Default as to such City Note) or the written
request of HUD, so long as there exists and Event of Default as to the City Note, and in each case
upon being indemnified against anticipated expenses and liabilities to its reasonable satisfaction
therefor (including but not limited Ito applicable environmental laws) (which indemnity, at the
option of the Custodian, is a condition precedent to its duties hereunder), shall, proceed to protect or
enforce its rights or the rights of such parties by such appropriate action, suit, mandamus or other
proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity,
either for the specific performance,' of any covenant or agreement contained herein, or in aid of the
Page 18 - Indenture of Trust and Custodian Agreement
execution of any power herein granted, or for the enforcement of any other appropriate legal or
equitable right or remedy vested in the Custodian or in the City or HUD under this Indenture or any
other law; and upon instituting such proceeding, the Custodian shall be entitled, as a matter of right,
to the appointment of a receiver of the Revenues and other assets pledged under this Indenture,
pending such proceedings. All rights of action under this Indenture may be prosecuted and enforced
by the Custodian without the possession of the City Note or the production thereof in any
proceeding relating thereto, and any such suit, action or proceeding instituted by the Custodian shall
be brought in the name of the Custodian for the benefit and protection of the City and HUD, subject
to the provisions of this Indenture.
SECTION 6.06. Termination of Proceedings. In case any proceedings taken by the
Custodian on account of any default under any Obligor Note shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Custodian, then in every
such case the City, the 'Custodian and HUD, subject to any determination in such proceedings, shall
be restored to their former positions and rights hereunder, severally and respectively, and all rights,
remedies, powers and duties of the City, the Custodian and HUD shall continue as though no such
proceedings had been taken.
SECTION 6.07. Remedies Not Exclusive. No remedy herein conferred upon or reserved to
the Custodian, the City or to HUD is intended to be exclusive of any other remedy or remedies, and
each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to
any other remedy given hereunder or now or hereafter existing at law or in equity or otherwise.
SECTION 6.08. No Waiver of Default. No delay or omission of the Custodian, the City or
HUD to exercise any right or power arising upon the occurrence of any default shall impair any
such right or power or shall be construed to be a waiver of any such default or an acquiescence
therein, end every power and remedy given by the City Note to the Custodian, the City or to HUD
may be exercised from time to time and as often as may be deemed expedient.
ARTICLE VII
THE CUSTODIAN
SECTION 7.01. Acceptance of Trust. The Custodian accepts and agrees to execute the
trusts hereby created, but only upon the additional terms set forth in this Article VII.
SECTION 7.02. Custodian May Act Through Agents: Answerable. Only for Willful
Misconduct or Negligence. The Custodian may exercise any powers hereunder and perform any
duties required of it pursuant to the City Note through attorneys, agents, officers or employees, and
shall be entitled to advice of counsiel concerning all questions hereunder. The Custodian shall not
be answerable for the exercise of any discretion or power under this Indenture nor for anything
whatever in connection with the triist hereunder, except only its own willful misconduct or
negligence or that of its agents, off cers and employees. The Custodian may consult with counsel
and the advice of such counselor any opinion of counsel shall be full and complete authorization
and protection in respect of any action taken or omitted by it hereunder in good faith in accordance
with such advice or opinion of counsel. The Custodian shall not be responsible for any loss or
damage resulting from any action or inaction in good faith in reliance upon such opinion or advice.
The permissive right of the Custodian to do things enumerated in this Indenture shall not be
Page 19 - Indenture of Trust and Custodian Agreement
construed as a duty. All money received by the Custodian shall, until used or applied as herein
provided, be held in trust for the purpose for which it was received. Neither the Custodian nor any
paying agent shall be under any liability for interest on any money received by it hereunder.
SECTION 7.03. Compensation and Indemnification.
(a) The Custodian shall receive from the Obligors, as compensation for its services
hereunder, the Custodian Fee for the City Note for so long as the City Note is Outstanding. In
addition, the Custodian shall be entitled to payment and/or reimbursement from the Obligors for
reasonable fees for its services rendered hereunder and all costs, advances, counsel fees and other
expenses reasonably and necessarily made or incurred by the Custodian (including the reasonable
compensation and the expenses acid disbursements of its counsel and all Persons not regularly in its
employ), in connection with such services hereunder. Fees and costs directly allocable to an
Obligor relating to services provided by the Custodian in connection with the related Obligor Note,
Loan Agreement, Security, or portion of the City Note, shall be paid by such Obligor; and all other
fees and costs shall be prorated among the Obligors in accordance with the allocable principal of the
City Note then Outstanding. Notwithstanding the foregoing, in the event an Obligor shall default in
the payment of such fees, costs, advances, counsel fees and other such reasonable expenses incurred
by the Custodian, the Trustee shall be entitled to payment and/or reimbursement from the City for
reasonable fees for its services rendered hereunder following any Event of Default or default under
the Obligor Note; and, whether or not any such Event of Default or default has occurred,
disbursements and all costs, advances, counsel fees and other expenses reasonably and necessarily
made or incurred by the Trustee (including the reasonable compensation and the expenses and
disbursements of its counsel and all persons not regularly in its employ), in connection with such
services hereunder. In the event that it should become necessary that the Trustee perform
extraordinary services, it shall be entitled to reasonable extra compensation therefor in the same
manner as provided herein, and to reimbursement for reasonable and necessary extraordinary
expenses in connection therewith;, provided, that if such extraordinary services are due to the
negligence or willful misconduct of the Trustee, or any paying agent, it shall not be entitled to
compensation or reimbursement therefor.
(b) Each Obligor (each, an "Indemnitor "), individually but not jointly and severally, shall
indemnify, defend and hold the Trustee and its directors, officers, employees and agents
(collectively with the Trustee, the I "Indemnitees ") harmless from and against every loss, liability or
expense, including without limitation damages, fines, suits, actions, demands, penalties, costs, out -
of- pocket or incidental expenses, legal fees and expenses, the allocated costs and expenses of in-
house counsel and legal staff and the costs and expenses of defending or preparing to defend against
any claim (collectively, "Losses ") j directly or indirectly caused by such Indemnitor and that may be
imposed on, incurred by, or asserted against, any Indemnitee for or in respect of the Trustee's (1)
execution and delivery of this Indenture, (2) compliance or attempted compliance with or reliance
upon any instruction or other direction upon which the Trustee is authorized to rely pursuant to the
terms of this Indenture and (3) performance under this Indenture, except in the case of such
performance only and with respect to any Indemnitee, to the extent that the Loss resulted from such
Indemnitee's negligence or willful misconduct. In furtherance and not in limitation of the
foregoing, in no event shall any liability or obligation of any Indemnitor under this paragraph attach
to, or become the liability or obligation of any other Indemnitor. The provisions of this Section
shall survive the termination of this Indenture and the resignation or removal of the Trustee for any
Page 20 - Indenture of Trust and Custodian Agreement
reason. The Trustee's claims against any Indemnitor under this section shall have priority over all
other claims against such Indemnitor under this Indenture.
(c) The obligations of each Obligor under this Section 7.03 shall apply whether or not such
obligation is expressed in such Obligor's Loan Agreement.
SECTION 7.04. Notice of Default; Right to Investigate. The Custodian shall, within
30 days after the occurrence of anli Event of Default under an Obligor Note, give written notice by
first class mail to HUD, the City, the Fiscal Agent and the related Obligor of all Events of Default
known to the Custodian unless such Event of Default has been remedied; provided that, except in
the case of an Event of Default under Clauses (a) or (b) of Section 6.01, the Custodian may
withhold such notice so long as it good faith determines that such withholding is in the interest of
the City and HUD. The Custodian shall not be deemed to have notice of any default unless it has
actual knowledge thereof or has been notified in writing of such default at the Principal Office of
the Custodian by the City or HUD. The Custodian may, however, at any time require of the City,
full information as to the performance of any covenant hereunder; and, if information satisfactory to
it is not forthcoming, the Custodian may make or cause to be made an investigation into the affairs
of the City related to this Indenture. Except as otherwise expressly provided herein, the Custodian
shall not be bound to ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or of any of the documents executed in connection with
a City Note or Obligor Note or any of the Security, or as to the existence of a default thereunder.
The Custodian shall not be responsible for the validity, adequacy, effectiveness or priority of any
collateral given to or held by it.
SECTION 7.05. Duties and Responsibilities. Except during the continuance of a default by
the City hereunder, the Custodian undertakes to perform such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants or obligations shall be read into
this Indenture against the Custodian and in the absence of bad faith on its part, the Custodian may
conclusively rely, as to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates and opinions furnished to the Custodian and conforming to the
requirements of this Indenture. If any such default shall have occurred and be continuing, the
Custodian shall exercise such of the rights and remedies vested in it by this Indenture and shall use
the same degree of care in their exercise as a prudent Person would exercise or use in the
circumstances in the conduct of his or her own affairs; provided, that if in the opinion of the
Custodian such action may tend to involve expense or liability (including but not limited to liability
under any applicable environmental law) it shall not be obligated to take such action unless it is
furnished, as a condition precedent to any duty to act hereunder, with indemnity, and arrangements
for payment thereof, satisfactory to it.
The Custodian shall not be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the City or HUD, related to the time, method,
and place of conducting any proceeding for any remedy available to the Custodian, or exercising
any trust or power conferred upon the Custodian, under this Indenture.
The Custodian shall have no responsibility and makes no warranties and representations,
either express or implied, with respect to any information, statement or recital herein or in the
Security or the City Note or other disclosure material prepared or distributed with respect to the
City Note.
Page 21 - Indenture of Trust and Custodian Agreement
The Custodian's rights to immunities and protection from liability hereunder and its rights to
payment of fees and expenses shall survive its resignation or removal and the final payment or
defeasance of the City Note or the discharge of this Indenture.
The Custodian makes no warranty or representation, either express or implied, as to the title,
value, design, compliance with specifications or with legal requirements, quality, durability,
operation, condition, merchantability or fitness for any particular purpose or fitness for the use
contemplated by the City of any project financed in connection with the City Note or any portion
thereof, or any other representation or warranty with respect to such project or any portion thereof.
In no event s hall the (custodian be liable for incidental, indirect, special or consequential damages,
in connection with or arising out of such project.
No provision in this Indenture or any other writing hereunder or thereunder shall require the
Custodian in its individual capacity to expend or risk funds or otherwise incur any financial liability
in the performance of its or the Custodian's rights or powers hereunder.
In accepting the trusts hereby created but excluding its role as custodian of the Security, the
Custodian acts solely as Custodian for the benefit of HUD and the City and not its individual
capacity, and all Persons, including, without limitation, the City and HUD, having any claim against
the Custodian by reason of the transactions contemplated hereby shall look only to the funds and
accounts held by the Custodian hereunder for the payment or satisfaction thereof except as
otherwise provided herein.
All payments to be made by the Custodian under and pursuant to this Indenture shall be
made only to the extent that the Custodian shall have received sufficient income and proceeds in
accordance with the terms of this indenture, and the Custodian shall have no duty to advance its
own funds.
Under no circumstances shall the Custodian be liable in its individual capacity for the •
obligations evidenced by the City Note or any Obligor Note.
Whenever in the administration of its duties under this Indenture, the Custodian shall deem
it necessary or desirable that a matter be provided or established prior to taking or suffering any
action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed), shall be deemed to be conclusively proved and established by the certificate of the
Authorized Representative of the City (with the concurrence of HUD to the extent required herein)
and such certificate shall be full warranty to the Custodian for any action taken or suffered under the
provisions of this Indenture upon the faith thereof, but in its discretion the Custodian may, in lieu
thereof, accept other evidence of such matter or may require such additional evidence as to it may
seem reasonable.
The recitals, statements and representations by the City contained in this Indenture or in the
City Note shall be taken and construed as made by and on the part of the City and not by the
Custodian, and the Custodian does; not assume, and shall not have, any responsibility or obligation
for the correction of any thereof.
Page 22 - Indenture of Trust and Custod Agreement
Notwithstanding anything to the contrary contained herein or in any of the Security, the
Custodian shall have no duty or obligation to any Obligor or any holder of a City Note in either its
fiduciary or individual capacity and shall not be answerable hereunder to the City or HUD for
anything other than its own negligence or willful misconduct.
SECTION 7.06. Reliance on Requisition, Etc. The Custodian may act on any requisition,
resolution, notice, telegram, request, consent, waiver, certificate, direction, statement, affidavit,
voucher, bond, or other paper or document which it in good faith believes to be genuine and to have
been passed or signed by the proper Persons or to have been prepared and furnished pursuant to any
of the provisions of the City Note; and the Custodian shall be under no duty to make any
investigation as to any statement cnntainerl in any such 'instrument but may accept the same as
conclusive evidence of the accuracy of such statement.
SECTION 7.07. Construction of Ambiguous Provisions. The Custodian may construe any
ambiguous or inconsistent provisions of the City Note, and any such construction by the Custodian
I
shall be bi upon HT ID and the City.
SECTION 7.08. Resignation of Custodian. The Custodian may resign and be discharged
of the trusts created by the City Note by written resignation filed with the City and HUD no fewer
than 60 days before the date when it is to take effect. Such resignation shall take effect only upon
the appointment of a successor Custodian by the City but with the consent of HUD. If no successor
Custodian shall have been appointed within 45 days of giving notice as aforesaid, the resigning
Custodian may petition a court of competent jurisdiction for the appointment of a successor
Custodian, and which court may thereupon appoint such successor Custodian. The Custodian may
not resign as custodian of the Security without the consent of HUD, which consent shall not be
unreasonably withheld.
SECTION 7.09. Removal of Custodian. The City (but only prior to a default by the City
hereunder and with the consent of HUD) may on 30 days written notice given to the Custodian,
remove the Custodian or any successor thereto, and may appoint a successor thereto, which
successor shall be a bank or trust company meeting the requirements set forth herein.
SECTION 7.10. Appointment of Successor Custodian. If the Custodian or any successor
Custodian resigns or is removed (other than pursuant to Section 7.09 hereof) or dissolved, or if its
property or business is taken under control of any state or federal court or administrative body, a
vacancy shall forthwith exist in the office of the Custodian, and the City with the consent of HUD
shall appoint a successor. If the City fails to make such appointment within 60 days after the date
notice of resignation is filed, HUD may do so.
SECTION 7.11. Qualification of Successor. A successor Custodian shall be a national
bank with trust powers or a bank and trust company or a trust company, in each case having a
combined capital, surplus and undivided profits of at least $100,000,000, subject to supervision or
examination by federal or state authority, if there be one able and willing to accept the trust on
reasonable and customary terms. If such bank or trust company publishes a report of condition at
least annually, pursuant to law or to the requirements of any supervising or examining authority
above referred to, then for the purpose of this subsection the combined capital and surplus of such
bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Custodian shall cease to be eligible
Page 23 - Indenture of Trust and Custodii n Agreement
in accordance with the provisions of this section, the Custodian shall resign immediately in the
manner and with the effect specified in Section 7.08 hereof
SECTION 7.12. Instruments of Succession. Any successor Custodian shall execute,
acknowledge and deliver to the City and HUD an instrument accepting such appointment
hereunder; and thereupon such successor Custodian, without any further act, deed or conveyance,
shall become fully vested with ally the estates (including the Trust Estate), properties, rights, powers,
trusts, duties and obligations of its predecessor in the trust hereunder, with like effect as if originally
named Custodian herein. The Custodian ceasing to act hereunder shall pay over to the successor
Custodian all money held by it hereunder; and, upon request of the successor Custodian, the
ceasing u s
Ctwosing to act and the city, shall execute and deliver an instrument transferring to the
Custodian vv...
successor Custodian all the estates (including the Trust Estate), properties, rights, powers and trusts
hereunder of the Custodian ceasing to act. The City and HUD shall be provided with a copy of each
instrument mentioned herein.
SECTION 7.13. Merger of Custodian. Any corporation into which any Custodian
hereunder may be merged or with which it may be consolidated, or to which it sells all or
substantially all of its corporate trust business, or any corporation resulting from any merger or
consolidation to which the Custodian hereunder shall be a party, shall be the successor Custodian
under the City Note, without the execution or filing of any paper or any further act on the part of the
parties hereto, anything herein to the contrary notwithstanding. Notice of such merger, sale, transfer
or consolidation shall be given to the City and HUD. If such corporation fails to be eligible to serve
as Custodian under Section 7.11 hereof, then the Custodian must comply with the resignation
procedures set forth in, Section 7.08 hereof.
SECTION 7.14. Preservation and Inspection of Documents. All documents maintained by
the Custodian under the provisions of this Indenture shall be retained in its possession and shall be
subject at all reasonable times to the inspection of the City and HUD and its agents and
representatives duly authorized in writing, at reasonable hours and under reasonable conditions.
SECTION 7.15. Certification of Custodian. The Custodian certifies that deposits held by
it in cash are insured by the Federal Deposit Insurance Corporation.
ARTICLE VIII
MODIFICATION OF THIS INDENTURE AND THE SECURITY
SECTION 8.01. Limitations. This Indenture and the Security shall not be modified or
amended in any respect subsequent to the initial issuance of a City Note, except as provided in and
in accordance with and subject to the provisions of this Article VIII. The Custodian shall not be
obligated to enter into or consent to any Supplemental Indenture or any modification, alteration,
amendment or supplement to any Security which affects the duties, liabilities and immunities of the
Custodian hereunder or the rights of the Custodian under Article VIII hereof. The Custodian shall
have no duty or obligation with respect to any amendment of the Security unless it shall have actual
notice thereof and shall have consented in writing to the imposition of any such duty or obligation.
i
Page 24 - Indenture of Trust and Custodian Agreement
SECTION 8.02. Supplemental Indentures with Consent of HUD. The City shall not enter
into, and the Custodian shall not consent to, any amendment, change or modification of this
Indenture without the written approval or consent of HUD so long as the City Note is outstanding.
SECTION 8.03. Effect of Supplemental Indenture. Upon the execution and delivery of any
Supplemental Indenture pursuant to the provisions of this Article VIII, this Indenture shall be, and
be deemed to be, modified and amended in accordance therewith, and the respective rights, duties
and obligations under this Indenture of the City, the Custodian and HUD shall thereafter be
determined, exercised'land enforced under this Indenture subject in all respects to such
modifications and amendments.
SECTION 8.04. Consent of the City. No Supplemental Indenture shall become effective
unless and until the City shall have consented thereto in writing.
SECTION 8.05. Amendment of Security with Consent of HUD. The City shall not enter
i a nd the Custodian not consent to, any amendment, change or modification of the Security
without the written approval or consent of HUD so long as the portion of the City Note for which
such Security is held, is Outstanding.
ARTICLE IX
DISCHARGE OF INDENTURE
SECTION 9.01. Discharge of Indenture. The City Note shall be paid by the City in
accordance with the Fiscal Agency Agreement. If the portion of the City Note allocable to any
Obligor Note has been 1 paid in full in accordance with the Fiscal Agency Agreement and the related
Obligor Note also has been paid in full, and the City shall also have paid or cause to be paid all
other sums payable hereunder allocable thereto, then and in that case, at the election of the City
(evidenced by a certificate of the City, filed with the Custodian, signifying the intention of the City
to discharge that portion of the City Note), and notwithstanding that the City Note shall not have
been surrendered for payment, that portion of the City Note and the pledge of the Trust Estate, and
all covenants, agreements and other obligations of the City under that portion of the City Note shall
cease, terminate, become void and be completely discharged and satisfied. In such event, upon the
request of the City, th& Custodian shall cause an accounting for such period or periods as may be
requested by the City to be prepared and filed with the City and shall execute and deliver to the City
all such instruments as may be necessary or desirable to evidence such discharge and satisfaction,
and the Custodian shall pay over, transfer, assign or deliver all money or securities or other property
held by it pursuant to that potion of the City Note to the City.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture either the City or the Custodian is named or referred to, such reference
shall be deemed to include the successors or assigns thereof, and all the covenants and agreements
in the City Note contained by or on behalf of the City or the Custodian shall bind and inure to the
benefit of the respective successors and assigns thereof whether so expressed or not.
Page 25 - Indenture of Trust and Custodian Agreement
SECTION 10.02. Limitation of Rights to Parties and HUD: Nothing in the City Note
expressed or implied is intended or shall be construed to give to any Person other than the City, the
Custodian, and HUD, any legal or equitable right, remedy or claim under or in respect of the City
Note or any covenant, condition or provision therein or herein contained, and all such covenants,
conditions and provisions are and shall be held to be for the sole and exclusive benefit of the City,
the Custodian and HUD.
SECTION 10.03 Waiver of Notice. Except as otherwise provided herein, whenever in this
in the City Note the giving of notice by mail or otherwise is required, the giving of such notice may
be :waived i wr iti ng by the Person entitled to receive such notice and in any such case the giving or
receipt of such notice shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
SECTION 10.04. Severability of Invalid Provisions. If any one or more of the provisions
contained in this Indenture shall for any reason be held to be invalid, illegal or unenforceable in any
respect, then such provision or provisions shall be deemed severable from the remaining provisions
contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any
other provision of this Indenture, a nd this Indenture shall be construed as if such invalid or illegal or
unenforceable provision had never contained herein. The City hereby declares that it would
have entered into this Indenture and each and every other Section, paragraph, sentence, clause or
phrase hereof irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses
or phrases of this Indenture may be held illegal, invalid or unenforceable.
SECTION 10.05. Notices. Any notice to or demand upon the following parties shall be
given by first class mail, return receipt requested, as set forth below, or to such other addresses as
may from time to time be furnished, effective upon the receipt of notice thereof given as provided
for in this Section 10.05.
If to the City: The City of Yakima — Office of Community and Economic Development
and the Department of Finance and Budget
129 North Second Street
Yakima, Washington 98901
Attn: Bill Cook (CED) /RM Anson (Finance)
Copy to: Mr. Raymond Paolella
Yakima City Attorney
200 South Third Street
Yakima, WA 98901
If to the Custodian: JPMorgan Chase Bank
c/o 1301 Fifth Avenue, Suite 3410
Seattle, Washington 98101
Attn: HUD 108 Administration
Copy to: JPMorgan Chase Bank
600 Travis Street
Suite 1150
Page 26 - Indenture of Trust and Custodian Agreement
Houston, Texas 77002
Attn: Kathy Graves
If to the Fiscal Agent: JPMorgan Chase Bank
Chase MetroTech Center, Floor 3
Brooklyn, New York 11245
If to HUD: United States Department of
Housing and Urban Development
451 Seventh Street S.W.
Washington, D.C. 20410
Attention: Director, Financial Management Division
II Office of the Assistant Secretary
for Community Planning and Development
If to an Obligor: At the notice address therefore under the related Loan Agreement
SECTION 10.07. Applicable Provisions of Law. This Indenture shall be governed by and
construed in accordance with the laws of the United States of America and in the absence of
controlling federal law, in accordance with the laws of the State; provided, that the authority of the
City shall be governed by Washington law.
SECTION 10.08. Execution in Several Counterparts. This Indenture may be executed in any
number of counterparts and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts, or as many of them as the City and the Custodian shall preserve
undestroyed, shall together constitute but one and the same instrument.
IN WITNESS ;WHEREOF THE CITY OF YAKIMA, WASHINGTON has caused this
Indenture to be signed' in its name by the City Manager, and JPMORGAN CHASE BANK, in
acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate
name by its duly authorized signatory all as of the day and year first above written.
CITY OF YAKIMA, WASHINGTON
By:
Title: City Manager
JPMORGAN CHASE BANK
By: /l/ ,a‘gra■'
Title: Au'' orized Sig1�ry
Page 27 - Indenture of Trust and Custodian Agreement
03/25/2003 23:11 5755534 PAGE 02
Houston, Texas 77002
Attn: Kathy Graves
If to the Fiscal Agent: JPMorgan Chase Bank
Chase ■etroTech Center, Floor 3
Brooklyn, New York 11245
If to HUD: United States Department of
• Housing and Urban Development
451 Seventh Street S.W.
Washington, D.C. 20410
Attention: Director, Financial Management Division
Office of the Assistant Secretary
for Community Planning and Development
If to an Obligor: At the notice address therefore under the related Loan Agreement
SECTION 10. Applicable Provisions of Law. This Indenture shall be governed by and
construed in accordance with the laws of the United States of America and in the absence of
controlling federal law, in accordance with the laws of the State; provided, that the authority of the
City shall be governed by Washington law.
SECTION 10':08. Execution in Several Counterparts. This Indenture may be executed in any
number of counterparts and each of such counterparts shall for all purposes be deemed to be an
original, and all suchlcounterparts, or as many of them as the City and the Custodian shall preserve
un.destroyed, shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, THE CITY OF YAKIMA. WASHINGTON has caused this
Indenture to be signed in its nam by the City Manager, and JPMORGAN CHASE BANK, in
acceptance of the tru created hereunder, has caused this Indenture to be signed in its corporate
name by its duly authorized signatory all as of the day and year first above written.
CITY OF YAKIMA, WASHINGTON
B 1
Title: City Manager
JPMORGAN CHASE BANK
//
{ By: ,li ��r f/
Title: u horized Sign • o
{
I
•
Page 27 - J.ndenturc of Trust and Custodian Agreement
J.P. Morgan Trust Company, National Association
Seattle, Washington
Proposal for
Fiscal Agency Services
City of Yakima, Washington, HUD 108 Loan Program
Each program to issue a Master Trust Indenture, each borrower under a separate series.
Acceptance Fee (Master): $1,250
Acceptance Fee (Initial Series) Waived
Payable at time of closing. To cover the study and consideration of the various documents
associated with the creation and funding of th loans; establishment of trust funds aind ar tc
communication and coordination with Issuers Counsel, Trustee's Counsel, HUD, investors and
any other necessary members of the working party.
Annual Administration Fee (Master): $1,500
Annual Administration Fee (Series Indentures) $1,000
(Breakdown $250.00 $750.00 )
•
Payable in advance at the time of each closing/funding. To cover the normal administrative
functions of the Trustee, including the processing of Revenues; maintenance of files and records,
tracking and ilenforcing any Indenture covenants; safekeeping of any security documents including
monitoring for expiration dates and re- filing deadlines; maintaining any funds and accounts
required under the indenture including a Construction or Acquisition Account.
Out of pocket costs including Trustee Legal Fees: At cost
The Law Offices of Michele G. Gangnes would represent Chase in the proposed transaction. Ms.
Michele G. Gangnes would have primary contact with the financing team on behalf of external
counsel and is the same person who would be reviewing and negotiating the language in the
documents.
Ms. Gangnes may be available upon request, under a separate agreement, to draft the trust
documents and assume a lead position in structuring each trust indenture and loan agreement.
A firm profile and references are available upon request.
SAMPLE LETTER - -- REQUEST FOR ADVANCE
U.S. Department'of Housing and Urban Development
Paul D. Webster, Director
Financial Management Division - Room 7180
451 .S eve T"1 t�"1 St SW
Washington, DC )
Dear Mr. Webster:
I
The [name of Borrower] hereby requests an advance in the amount of
$ under the Variable Fixed Rate ( "VFR ") Note (or
under Notes) guaranteed pursuant to Section 108 of the'Housing and
Community Development Act of 1974, as amended.
•
The amount to be, advanced under the Note(s) is $
Principal Due Date Advance Amount
1
2.
3.
4. •
5. p
(+iietc ),
Please wire transfer the advance using the following information:'
BORROWER '
•
AMOUNT
•
VARIABLE FIXED RATE NOTE NUMBER • .
•
1. Name of Bank •
2. Address of Receiving Bank
3. A.B.A. Number*
4. Borrower's Account Number
5. Account Name II
6. Bank Officiall to Contact •
7. Phone Number ;of Bank Official •
CORRESPONDENT BANK (If applicable)
1. Bank •
2. Address •
3. A.B.A. Identijfication*
4. Borrower's Ac Number •
5. Name of Account
*American Bankers Association number (9 digits)
This letter must) be signed by two officials with signatures on the
authorized signature card.
Note: If request letter is two pages or more, please include
requested amount)) and VFR Note number on each page.
•
II
ATTACHMENT 1
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
• LETTER. AGREEMENT FOR
SECTION 108 LOAN GUARANTEE PROGRAM
CUSTODIAL ACCOUNT
Name of Institutith (and Branch)
Street i i
State, L_,
Date:
[ ] This account is established for funds received by the Borrower under Note(s)
guaranteed by the United States Department of Housing and Urban Development (HUD) •
under the Section 108 Loan Guarantee Program. (Guaranteed Loan Funds Account)
[ ] This account i established for repayment of the Note guaranteed by HUD under the
Section 108 Loan Guarantee Program. (Loan Repayment Account)
[ ] This account is established as a debt service reserve under the Section 108 Loan
Guarantee Program. (Debt Service Reserve Account)
You are he authorized and requested to establish a custodial account to be
specifically designated:
it
Trustee of United States Department of Housing and Urban Development." All deposits
made in such account shall be subject to withdrawal therefrom by the Borrower named
below and shall also be subject to withdrawal therefrom by HUD. No agent of the
Borrower shall be 'authorized to withdraw funds from the account. You are also
authorized to pay H UD at any time, upon its written demand, which need not name a
specific amount, the entire amount in such account subject only to notice requirements
contained in applicable regulations governing this institution, but in no event to exceed
seven business day';s.
You are further authorized, upon the request of HUD, to refuse to honor any
instrument drawn upon or withdrawals from such account by parties other than HUD and
to change the name of the, aforesaid account to the "United States Department of Housing
and Urban Development." In no instance shall the funds in the custodial account be used
to offset funds which may have been advanced to, or on behalf of, the Borrower by the
custodian institution.
,..}This letter is submitted to you in duplicate. Please execute the duplicate copy of
the certification below, acknowledging existence the , st�.,��,.,, enco of such account, that d „��, so «�a� we may
present the copy signed by you to HUD.
Name of Borrower
By: [Signature]
Title
***************************************** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * **
The undersigned institution certifies to the United States Department of Housing and
Urban Development (HUD) that the account identified is in existence in this institution
under Account Number: , and agrees with the Borrower
named above and HUD to honor demands on such account in the manner provided in the
above letter, subject only to notice requirements contained in applicable regulations
governing this institution, but in no event to exceed seven business days. The
undersigned institution further agrees, upon the written request of HUD, to refuse to
honor any instruments drawn upon or withdrawals from such account by parties other
than HUD and to change the name of the aforesaid account to "United States Department
of Housing and Urban Development." In no instance shall the funds in the custodial
account be used to offset funds which may have been advanced to, or on behalf of, the
Borrower by the custodian institution. Deposits in this institution are insured by the
Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation, or the National Credit Union Administration:
Name of Institution
By (Signature and Title)
Date:
110
ATTACHMENT 2
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
LETTER AGREEMENT FOR
SECTION 108 LOAN GUARANTEE PROGRAM
CUSTODIAL INVESTMENT ACCOUNT
Name of Institution (and Branch)
Street
+ <,
C÷,-.-fr.' , 7; ( to
ley, ■_)LCLL ., z_Ap vu�
Date:
[ ] This account is established to hold obligations and their assignments, such obligations
having been purchased with funds from the Guaranteed Loan Funds Account.
(Guaranteed Lo Funds Investment Account)
[ ] This account is established to hold obligations and their assignments, such obligations
having been purchased with funds from the Loan Repayment Account. (Loan
Repayment Investment Account)
[ ] This account is established to hold obligations and their assignments, such obligations
having been purchased with funds from the Debt Service Reserve Account. (Debt
Service Reserve Investment ;Account)
You are hereby authorized and requested to hold obligations and assignments of
those obligations in trust for the United States Department of Housing and Urban
Development (HUD) in an account specifically designated:
Trustee of United States Department of Housing and Urban Development." All
obligations and assignments shall be subject to release to the Borrower named below and
shall also be subject to release to HUD. No agent of the Borrower shall be authorized to
release the obligations or assignments. You are also authorized to release the obligations
and assignments to HUD at any time, upon its written demand, which need not name
specific obligations and assignments, all obligations and assignments being held in such
account subject only to notice requirements contained in applicable regulations governing
this institution, but in no event to exceed seven business days.
You are further authorized, upon the request of HUD, to refuse to honor any
request for release of the obligations and assignments from such account by parties other
than HUD and to change'the name of the aforesaid account to the "United States
Department of Housing and Urban Development." In no instance shall the obligations in
this account be used to offset funds which may have been advanced to, or on behalf of,
the Borrower by the custodian institution.
This letteris submitted to you in duplicate. Please execute the duplicate copy of
the certification below, acknowledging the existence of such account, so that we may
present the copy signed by you to HUD.
Name of Borrower
By: [Signature]
Title
***************************************** * * * * * * * * * * * * * * * * * * * * * * * * * * * * * **
The undersigned institution certifies to the United States Department of Housing and
Urban Development (HUD) that the account identified is in existence in this institution
under Account Number: , and agrees with the Borrower
named above and HUD to honor requests for release on such account in the manner
provided in the above letter, subject only to notice requirements contained in applicable
regulations governing this institution, but in no event to exceed seven business days. The
undersigned institution further agrees, upon the written request of HUD, to refuse to
honor any request for release of the obligations and assignments from such account by
parties other than HUD and to change the name of the aforesaid account to "United States
Department of Housing and Urban Development." In no instance shall the obligations in
the account be used to offset funds which may have been advanced to, or on behalf of,
the Borrower by the custodian institution. Deposits in this institution are insured by the
Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation, or the National Credit Union Administration.
Name of Institution
•
By (Signature and Title)
Date:
,- "Y
� � DEPARTMENT OF FINANCE & BUDGET
G
, t 4 129 North Second Street
V Yakima, Washington 98901
= Date: March 26. 2003
U.S. Department of Housing and Urban Development
Paul D. Webster, Director
Financial Management Division -- Room #7180
451 Seventh Street, SW
Washington, D.C. 20410
Dear Mr. Webster:
The City of Yakima hereby requests an advance in the amount of $2,450,000 under the Variable Fixed Rate
( "VFR ") Note (or under Notes) guaranteed pursuant to Section 108 of the Housing and Community Development
Act of 1974, as amended.
The amount to be advanced under the Note(s) is $2,450,000
Principal Due Date Advance Amount Principal Due Date Advance Amount
08/01/04 $ 145,000 08/01/11 185,000
08/01/05 150,000 08/01/12 195,000
08/01/06 155,000 08/01/13 205,000
08/01/07 160,000 08/01/14 215,000
08/01/08 165,000 08/01/15 225,000
08/01/09 170,000 08/01/16 235,000
08/01/10 175,000 08/01/17 70.000
Total $2,450,000
Please wire transfer the advance using the following information:
Borrower: City of Yakima Amount: $2,450,000 Variable Fixed Rate Note Number:
B- 02 -MC -53 -0008
1) Name of Bank: 2) Address of Receiving Bank:
J.P. Morgan Chase Bank New York, NY
3) American Bankers Assoc. No.: 14) Borrower's Account No. 5) Account Name:
021- 000 -021 1 507831160 Chase -Sea Wire Account
I City of Yakima HUD 108 account
6) Bank Official to Contact: 1 7) Phone Number of Bank Official (713) 216 - 0868
Kathy Graves
r. Yakima
Correspondent Bank (if applicable) N/A
NI-Aronsa MI
Kim HUD advance Request Letter .LuF ehart
3/ -v-oos
1994
Customer Service (509) 575 -6080 • Finance (509) 575 -6070 • Information Systems (509) 575 -6098
1) Name of Correspondent Bank: 2) Address of Correspondent Bank:
� I
3) American Bankers Assoc. No.: 4) Borrower's Account No.: 5) Account Name:
This letter must be signed by two officials, with signature on the authorized signature card.
Signature: Signature:
Title: Title:
t eat'. �J� 1�� `� ,vs'1 Qr✓t.�- -12Q et(
Note: If request letter is two pages or more, please include requested amount and VFR Note number on each page.
Klm HUD Advance Request Letter.Lukehart.doc 3/27/2003
7/-
LOAN AGREEMENT
between
TRAIL WAGONS, INC.
and
THE CITY OF YAKIMA
17)
•
:.
LOAN AGREEMENT
THIS LOAN AGREEMENT (as supplemented or amended from time to time, and
including all documents and terms incorporated herein by reference, the "Agreement "), dated as of
March 24, 2003, is entered into by and between TRAIL WAGONS, INC., ( "Obligor "), a
Washington corporation, hereinafter called "Obligor" and THE CITY OF YAKIMA, a
Washington municipal corporation, hereinafter called "City" or "the City."
RECITALS
This Agreement is entered into upon the basis of the following facts and circumstances:
A. Obligor is a company that manufactures recreation vehicles. Obligor has requested a
loan from the City for funds to be used for working capital, to acquire vehicle chassis, and to retool
for its two new models of motor homes (the "Loan "). The Obligor's use of the funds is to be made
pursuant to this Agreement. Obligor's acquisition of vehicle chassis and retooling for its two new
models of motor homes, as well as current and future working capital needs, are to be funded with
proceeds of the Loan (defined in Section 1.1 below) to be made pursuant to this Agreement, and is
referred to herein collectively as the "Project."
- ' B. City has applied for and received a commitment from the United States Department
Y PP P
of Housing and Urban Development ( "HUD ") to guarantee a non - recourse note or notes (as
supplemented or amended from time to time, and together with any replacements thereof issued by
the City and guaranteed by HUD pursuant to the HUD Contract described below, the "City Note ")
to be issued by City to fund the Project, in accordance with Section 108 of the Housing and
Community Development Act of 1974, as amended (such Act and the federal regulations
promulgated under it are called the "Act "). The City Note is the subject of a Contract for Loan
Guarantee Assistance between the City and HUD (as supplemented or amended from time to time,
the "HUD Contract ") and certain Letter Agreements for Section 108 Guarantee Program Custodial
Account (as supplemented or amended from time to time, the "Letter Agreements ") among the
City, HUD and JPMorgan Chase Bank (hereinafter referred to, with any successors under such
agreement or successor agreement, as "Custodian "). City has also entered into an Indenture of
Trust and Custodial Agreement with the Custodian (as supplemented or amended from time to
time, together with any substitute in accordance with Section 7.2 below, the "Custodial
Agreement "), which provides for, among other things, the Custodian to hold certain security for the
City Note on behalf of HUD and for the establishment and management of certain accounts
pursuant to the HUD Contract and Letter Agreements. The HUD Contract is entered into pursuant
to an application submitted to HUD by the City dated November 14, 2002, a copy of which Obligor
has received and reviewed (as supplemented or amended from time to time, the "Application ").
The Application, HUD Contract, Letter Agreements and Custodial Agreement are incorporated
herein by this reference. Unless the context otherwise provides, capitalized terms used herein and
not otherwise defined shall have the meanings assigned to them in the HUD Contract or City Note,
as applicable.
Loan Agreement Page 1
I
C. The Department of Community and Economic Development ( "DCED ") is
responsible within The City of Yakima for making, subject to City Council approval, loans of funds
obtained from HUD by pledges of Community Development Block Grant ( "CDBG ") funds to be
made available to the City by HUD, pursuant to the Act. Unless the City otherwise notifies Obligor
in writing, the DCED shall be responsible for performance of the obligations of the City under this
Agreement and the other Loan Documents, and for oversight of performance of such agreements by
Obligor, and references hereinafter made to the City shall be deemed to mean the City, acting
through DCED.
D. The Loan shall be evidenced by this Agreement and by Obligor's Promissory Note
( "Obligor Note ") in the form attached hereto as Attachment A and hereby incorporated by
reference, and together with Obligor's other obligations under the Loan Documents. The Obligor
Note, this Agreement, and any other documents or instruments executed by Obligor in favor of City
• pursuant hereto, are collectively referred to herein as the "Loan Documents ". Where the context so
requires, to the extent that the Loan Documents provide that Obligor's obligations or duties are
determined by reference to any terms or provisions of documents incorporated by reference in any
of the Loan Documents, any reference to the "Loan Documents" shall include such terms or
provisions.
E. The Obligor's obligations under this Agreement and the other Loan Documents
shall be further secured by the assignment of certain additional collateral as required by HUD and
security interests in certain Reserves.
F. Obligor's obligations under this Agreement and the other Loan Documents shall be
unconditionally guaranteed under a Guaranty (defined in Section 1.4(b) of this Agreement),
executed by the Guarantor and delivered to the City as a material inducement to the City's
agreement to make the Loan in accordance with this Agreement. Obligor's obligations under this
Agreement and the other Loan Documents shall also be secured by a Deed of Trust, substantially in
the form of Attachment B hereto, (as supplemented or amended from time to time in accordance
with this Agreement, the "Deed of Trust ") given by Gateway Center Associates, L.L.C., on the
Gateway Center commercial property located in Yakima, Washington ( "Property "). Both the
Guaranty and the Deed of Trust shall be dated on or about the date hereof.
G. In order to stabilize, to the extent feasible, Obligor's interest obligation with respect
to the Loan at a rate equal to four percent (4 %) per annum, the City has transferred funds in the
maximum aggregate amount of Three Hundred Thirty Three Thousand and Three Hundred
Thirty Three Dollars ($333,333.00) derived solely from a EDI Grant made by HUD for such
purposes, to the Custodian, for deposit into the Loan Payment Reserve Account, to be used as an
interest subsidy on the Loan from time to time.
NOTICE: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
I EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT,
ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
Loan Agreement Page 2
NOW, THEREFORE, in consideration of the foregoing Recitals and the covenants,
conditions, representations and warranties contained herein, the parties hereto agree as follows:
ARTICLE I — THE LOAN
1.1 The Loan. In reliance upon Obligor's representations and warranties, and subject to
the terms and conditions contained in this Agreement and the other Loan Documents (including
without limitation, the HUD Contract, the Letter Agreements, and the Custodial Agreement), the
City hereby agrees to cause funds to be advanced to Obligor through the Custodian . (which
advances collectively shall constitute the "Loan ") in a maximum aggregate principal amount of
Two Million Four Hundred and Fifty Thousand Dollars ($2,450,000), solely for the purposes set
forth Section ., 2 below. T �•_ 1_ ll be �_ only 1 of 1 Ll_ f_.
LUILII in JCI.LlUil 1.2 UC1UW. Loan disbursements shall UC made o111y to the extent of available funds
received by the Custodian for such purposes through issuance by the City of the City Note, and
except with respect to the payment of interest from EDI Grant funds allocated for such purpose as
. more particularly described in Section 4.6(b) of this Agreement and the Custodial Agreement, the
City shall have no obligation to make disbursements to or for the benefit of Obligor for the Project
or otherwise, from any other source. Obligor shall have the right to receive Loan funds only
pursuant to the terms and conditions of this Agreement and in accordance with the Act.
—:72) 1.2 Purpose of Loan. Loan proceeds shall be used by Obligor to acquire vehicle
chassis, to retool for its two new models of motor homes, and for any current or future working
capital needs.
1.3 Loan Documentation: Interest.
(a) Loan Documentation. The Loan shall be evidenced by this Agreement and
by the Obligor Note, and together with Obligor's other obligations under the Loan Documents,
shall be secured by the Guaranty and the Deed of Trust, substantially in the form of Attachment C
hereto. The principal of and interest on this Loan shall be due and payable in accordance with the
terms set forth in the Obligor Note.
(b) Variable Rate. Obligor acknowledges and agrees that, as provided in the
Obligor Note, interest shall accrue on each advance of Loan funds from the date of the correlative
Advance under the City Note until repayment in full, at a rate or rates equal to the correlative
interest rate or rates on the City Note, as the same may change from time to time under the terms of
the City Note and HUD Contract.
Initially and continuing to the Conversion Date, interest shall accrue at a rate equal to twenty (20)
basis points (0.2 %) over the Applicable LIBO Rate. From and after the Conversion Date (whether
conversion to a fixed rate or rates is effected with the consent of Obligor or otherwise), each
F principal amount scheduled to become due on a particular date pursuant to the City Note shall bear
interest at a separate, stated rate, and the corresponding Obligor Principal Amount (as defined by
Loan Agreement Page 3
the Obligor Note) under the Obligor Note shall bear . interest at the same rate. Any principal of the
Loan or interest thereon, which is unpaid after the date when payment is due, shall bear interest at
the rate stated for amounts past due in the Obligor Note.
Obligor shall pay interest to City in accordance with the provisions of Paragraph 4.4 (b), below.
Obligor shall make all payments on behalf of City to the Custodian, as provided in the Loan
Documents.
(c) Consent to Conversion. So long as no default shall have occurred under this
Agreement and the other Loan Documents which has not been cured or waived in accordance with
the terms hereof and thereof, the City shall not request or consent to conversion of the interest rate
on the City Note to a fixed rate or rates, without the prior written consent of the Obligor. However,
Obligor acknowledges and agrees that under the HUD Contract, HUD will have the unilateral right
(with or without notice to or consent of the City and/or Obligor) to fix the interest payable on the
City Note.
1.4 Security.
(a) Personal Guaranty and Deed of Trust. The obligations of Obligor under the
Loan Documents at all times shall be secured by unconditional guarantee of payment and
performance (as supplemented or amended from time to time, the "Guaranty ") from Gary Lukehart
( "Guarantor "), substantially in the form of Attachment C hereto and fully incorporated herein. The
Guarantor will also cause Gateway Center Associates, L.L.C. ( "Gateway ") to execute a Deed of
Trust on the Property, as additional security for the Loan. The Property is more particularly
described on Attachment B and fully incorporated herein.
(b) Reserve Accounts. Obligor's obligations under the Loan Documents also
shall be secured by all funds and investments in all of the accounts now or hereafter established
under the Loan Documents, including without limitation, the Custodial Agreement, and specifically
including without limitation, the Debt Service Reserve Account and the Loan Repayment Account
(all accounts collectively referred to herein as the "Reserve Accounts "). Obligor hereby pledges to
the City, and grants the City a security interest in, all right, title and interest of Obligor in and to the
funds and investments now or hereafter in the Reserve Accounts, and all earnings thereon and
proceeds thereof (the "Collateral Assignments "). This Loan Agreement shall also constitute a
security agreement under RCW 62A.9A. Obligor and City will execute a Deposit Account
Control Agreement, substantially in the form of Attachment D hereto and fully incorporated
herein.
Obligor agrees that such funds and other assets shall constitute "cash collateral" as described in the
United States Bankruptcy Code. Obligor shall promptly take such actions as shall be reasonably
requested by the City or Custodian, and pay all fees and costs reasonably required in order to
perfect and continue perfection as a first priority lien and security interest, so long as the Loan
41v. remains outstanding, the City's security interest in such accounts, the funds and investments
therein, and the proceeds thereof. Obligor agrees that, in addition to all other rights and remedies
Loan Agreement Page 4
J
with respect to Reserve Accounts and otherwise under the Loan Documents, immediately upon
acceleration . of the balance owing on the Loan, whether upon an Event of Default or any other
circumstance permitting acceleration, the City shall have the absolute right, without notice or
demand, to apply all funds and assets pledged under this Section to amounts owing under the Loan
Documents, and for such purpose to liquidate or cause to be liquidated any investments in any
commercially reasonable manner, and irrevocably authorizes any Custodian, upon notice from the
City of an Event of Default or any other circumstance permitting acceleration, to comply with the
City's directions to so apply any or all such funds and assets and to liquidate investments for such
purpose.
(c) Rights of City With Respect to Security. Obligor irrevocably agrees that, to
the full extent permitted by applicable law, the City may realize upon any security for the Loan
either before, concurrently with, or after either (1) any action to realize upon any other form of
security (ineluui lg without limitation the Deed of Trust and/or Guaranty), or (2) any suit or other
the Obligor gor N to each th a th status of proceeding on Lllc vu11�uL i olc, in each case without affecting the status of or waiving any rights
or remedies under the Loan Documents or with respect to any security. Obligor consents to any
and all actions that the City or Custodian may take to release, subordinate, accept substitution for,
modify, compromise, or waive any or all security with respect to the Loan, and Obligor agrees that
no such action shall impair any rights or remedies of the City or Custodian under the Loan
Documents. rr rr�� e /
"TimeA -�v Fine C*v
1.5 Loan Fee. Obligor shall pay to City a loan fee of Thifty Thousand / Dollars
(') - 5;51!), representing one percent (1 %) of the amount of the Loan, payable directly to City upon
\�� and from the first disbursement of Loan funds hereunder. This fee is in addition to Obligor's duty
to pay City's costs and fees pursuant to Section 1.6 of this Agreement
1.6 Obligor's Payment of Costs and Fees. Obligor shall pay to City or at City's
direction, as and when due, all other costs and fees of whatever nature incurred by City (whether or
not with recourse to the City) in connection with the Loan, including without limitation, fees and
costs incurred by the City pursuant to the HUD Contract and City Note (to be allocated on a pro
rata basis according to the total principal amount outstanding on the Obligor Note and the City
Note at the time fees or costs are incurred from time to time). The costs and fees payable by
Obligor shall include, without limitation, (i) any and all charges and costs billed by the Fiscal Agent
in respect of the City Note under the Amended and Restated Master Fiscal Agency Agreement
among HUD and The Chase Manhattan Bank (now known as JPMorgan Chase Bank) as Fiscal
Agent dated as of May 17, 2000, (ii) on and after the Conversion Date, any charges and costs in
respect of the City Note billed by the trustee under that certain Trust Agreement by and between
HUD and JPMorgan Chase Bank, as Trustee, dated as of January 1, 1995, as now and hereafter
amended and supplemented, and under any other trust agreement or similar instrument that may be
executed by HUD in connection with a public offering conducted with respect to notes guaranteed
by HUD under the Section 108 program (each such offering is referred to herein as a "Public
Offering ") that involves the City Note, (iii) fees and costs of the Custodian in connection with the
4 Custodial Agreement and Letter Agreements; (iv) fees and costs of the City's outside counsel and
the Custodian's outside counsel; title insurance and escrow fees and costs in connection with
Loan Agreement Page 5
Closing. Obligor shall also pay the following: the fees described in Section 1.5; fees and costs of
the Custodian, if any, other than the initial set -up fee; and any fees or costs of the City's Outside
Counsel or Custodian's Outside Counsel incurred after the date of closing, including without
limitation, in connection with a Public Offering, and as may be incurred in case of breach or failure
to perform by Obligor or in case of any litigation arising in connection with this Agreement.
1.7 City Funds Not Obligated. The Loan will be made only from non -City funds that
the Custodian receives under the HUD Contract and City Note, and interest subsidy payments in
..1, with Section 4.6(b) hereof will ma o nl y f rom ava il a bl e f and the EDI
ac�uivai wi�ii .�G�uun �+.5 i �u/ hereof w be made only from available funds under u,e .;L. Grant
Agreement. In accordance with RCW 35.21.735, the City Note, and any payments or obligations
under the HUD Contract and any documents or agreements relating thereto, including without
limitation this Loan Agreement shall be a valid claim only against and payable solely from, the
Accounts held by the Custodian and from the security pledged under the HUD Contract, and shall
not be an obligation of The City of Yakima or the State of Washington, and neither the faith and
credit nor the taxing power of the City or State or any municipal corporation or subdivision of the
State or any agency of any of the foregoing is pledged to the payment of principal, interest or
premium, if any, on the City Note or for any amounts due under the HUD Contract or any
documents or agreements relating thereto including without limitation this Agreement. Nothing
herein shall constitute a debt or indebtedness of the City payable from public funds within the
meaning of any constitutional or statutory limitation on the incurrence of debt. Obligor agrees and
acknowledges that this Agreement does not create any recourse to or claim upon the City's general
fund, or any other funds of the City, and Obligor hereby disclaims any such claim.
1.8 Application of Payments. So long as the City or the Custodian shall have received,
in immediately available funds, timely payments of interest and principal on the Obligor Note in
the amounts required, the City shall apply such payments to payment of interest on and the
principal of the City Note, as such interest and principal shall become due.
1.9 Acceleration on Certain Events. The City shall have the absolute right, in its
discretion, to declare all or any part of the principal balance owing on the Loan immediately due
and payable in the event that:
(a) HUD or any court of competent jurisdiction shall determine that the Loan or
the issuance of the City Note must be terminated, canceled, or rescinded for failure to comply with
the Act or other applicable law, or that for any reason any City Note cannot be issued or cannot be
guaranteed by HUD; or
•
(b) HUD shall notify the City that any or all of the City Note cannot be included
in the pool of notes for purposes of a scheduled Public Offering for any reason, and that HUD or
the holder of the City Note is not willing to allow the interim terms of the City Note to remain in
effect pending a later public offering, provided, that unless otherwise required by HUD or by the
1 effect of a court order, Obligor shall be allowed a period of ninety (90) days after notice to Obligor
thereof to seek to have such determination reversed or rescinded, or the effect thereof stayed, prior
to acceleration of all or any part of the principal balance. If any such stay is obtained, then the City
Loan Agreement Page 6
shall have the right to accelerate all or part of the principal balance immediately upon the lifting or
termination of such stay.
ARTICLE II — OBLIGOR'S. GUARANTOR'S. AND GATEWAY'S REPRESENTATIONS
AND WARRANTIES
In order to induce City to make the Loan and enter into the HUD Contract, Obligor and
Guarantor ..d Gateway d t t forth below w this Article II as of the a
..Jualalllor and .JaLGV1'ay represent arid warrant as see forth veiu v iii L.,, a�a�.a�. .i of ii.. date
hereof, as of the date of Closing, and at all times any of the principal of or interest on the Loan
remain outstanding. These representations and warranties shall survive the execution, delivery,
and performance of the Loan Documents but shall terminate upon the satisfaction of all of the
obligations of Obligor under this Agreement and the other Loan Documents, subject to revival after
such satisfaction if any amount paid under the Loan Documents is recaptured in bankruptcy or
similar proceedings.
2.1 Organization of Obligor: Authority to Enter into Agreement. Obligor is a for profit
corporation, duly organized and validly existing pursuant to the laws of the State of Washington.
Obligor has the right and power to undertake the Project, and Obligor has full power and authority
to enter into this Agreement, to borrow money as contemplated herein, and to execute and perform
- D the provisions of the Loan Documents. The execution, delivery, and performance of this
Agreement and the other Loan Documents have been duly authorized by all necessary corporate
action, and no other action of Obligor or any other party is required for the execution, delivery, and
performance of this Agreement and the other Loan Documents. This Agreement and the other
Loan Documents constitute valid and binding obligations of Obligor, each enforceable in
accordance with their respective terms.
2.2 Nondiscrimination. During the performance of this Loan Agreement, neither
Obligor nor any party contracting with Obligor who would be paid with Loan funds under this
Loan Agreement shall discriminate on the basis of race, color, sex, religion, national origin, creed,
marital status, sexual orientation, gender identity, age, or the presence of any sensory, mental or
physical handicap in employment or application for employment or in the administration or
delivery of services or any other benefits under this Loan Agreement. The Obligor shall comply
fully with all applicable federal, state and local laws, ordinances, executive orders and regulations
that prohibit such discrimination. These laws include, but are not limited to, Chapter 49.60 of the
Revised Code of Washington, and Titles VI and VII of the Civil Rights Act of 1964.
2.3 No Litigation. There are no actions, suits, or proceedings pending, or to the
knowledge of Obligor threatened against or affecting Obligor in any court of law or in equity, or
before or by any governmental or municipal authority.
2.4 Guaranty. When Guarantor executes the Guaranty, it will not cause the Guarantor
to violate any existing contract to which they are a party.
Loan Agreement Page 7
2.5 Gateway's Authority. Gateway is authorized to execute the Deed of Trust
Hypothecation and the execution of such will not cause Gateway to violate any existing contract to
which it is a party.
2.6 Title. Gateway is the owner in fee simple absolute of the Property and the Property
shall be subject to no liens or encumbrances except:
(a) Senior lien, if any;
(b) The Deed of Trust in favor of City securing the Loan;
(c) Special Exceptions Nos. 7 through 32 inclusive, as shown on schedule B of
the Commitment for Title Insurance issued by Pacific Northwest Title
insurance Company dated March 17, 2003, no. X- 180550 ( "Title
Commitment
(d) Liens for property taxes or assessments on the Property not yet due; and
•
2.7 • Covenants, Zoning, and Codes and Permits. Except as disclosed to the City in
writing, as of the date of Closing, the Property and its current and intended uses are in compliance
in all material respects with, and Gateway covenants that the Property and its uses will at all times
comply in all material respects with, all applicable zoning and land use codes, and other laws,
ordinances, and regulations applicable to the Property. Gateway has not received notice from any
regulatory body or agency of any actual or alleged noncompliance with any applicable law,
regulation, code, ordinance or permit affecting the Property.
2.8 Compliance With Documents. Obligor is and will remain in full compliance with
all of the terms and conditions of this Agreement and the other Loan Documents, and any and all
other material agreements, instruments or other documents affecting the Property, and no •
occurrence has or shall have occurred and be continuing, which, with the passage of time or the
giving of notice, or both; would constitute a default under any of the foregoing.
2.9 Taxes Are Paid. Obligor, Guarantor, and Gateway have filed all material tax returns
which are required and have paid or made provision for the payment prior to the last day on which
payment may be made without interest or penalty of all taxes which have or may become due
pursuant to said returns or pursuant to any assessments levied against the Obligor, Guarantor or
Gateway or its personal or real property by any taxing agency, federal, state or local, and Obligor,
Guarantor, and Gateway have withheld any paid over to proper authorities all withholding taxes
required by law. No due or overdue tax liability or lien has been asserted by the Internal Revenue
Service or other taxing agency, federal, state or local, and the Obligor, Guarantor, and Gateway
know of no basis for any such deficiency assessment or lien.
Loan Agreement Page 8
ARTICLE III — CONDITIONS PRECEDENT TO LOAN CLOSING
The City's obligation to perform its duties under this Agreement, including without
limitation causing disbursement of any funds, shall be subject to the full and complete satisfaction
of the following conditions precedent:
3.1. Documents. City shall have received fully executed originals of each of the
following, each of which shall have been duly authorized, executed (and acknowledged where
te ) ,d .d 1..., the ..t:.. thereto, ,1 4. 11 h form d h this Agreement,
appropriate) allu delivered u L11c paints L11G1eLV, and shall be in 1116 required by Ll alci <1C L,
with such modifications as may be approved by the City in accordance with the Ordinance: this
Agreement; the Obligor Note; the Guaranty; Gateway's Deed of Trust; the Deposit Account
Control Agreement; the Demand Note, the Collateral Assignments, and such other documents as
City shall reasonably request.
3.2 Evidence of Authority; Officer's Certificate. City shall have received evidence
satisfactory to it that Obligor and Gateway and the persons signing on behalf of the respective party
have the capacity and authority to execute and deliver Loan Documents on behalf of Obligor,
including, but not limited to, a copy of said party's charter, bylaws, or other operating agreement,
and appropriate resolutions authorizing the transactions contemplated hereby, all as certified by an
officer of Obligor as true, complete, and in full force and effect. City shall have received a
Certificate of said party, executed by said party's designated person(s), in a form and content
L'•'" acceptable to the City.
3.3 Insurance. The Obligor and Gateway shall have provided to the City evidence of
insurance coverage for Obligor's operations and for Gateway's Property.
3.4 Title Insurance; Other Confirmation of No Liens. Obligor shall have caused to be
furnished to the City, at Obligor's expense, from Chicago Title Insurance Company ( "Title
Company "), an ALTA 1970 Form Extended Coverage lender's policy of title insurance in the
amount of the maximum principal of the Loan, showing City as an insured mortgagee, that fee title
to the Property is vested in Gateway and that the Deed of Trust is a valid lien upon Gateway's
interest in the Property, subject only to such encumbrances and exceptions as may be explicitly
permitted by the Loan Documents, including Section 2.4 of this Agreement, and any others that
may be acceptable to City in its sole discretion. The title policy shall be Attachment E and fully
incorporated herein. The title policy shall be in form, and shall include the endorsements,
satisfactory to the City, shall limit exceptions for taxes limited to those not yet due and payable, and
shall show no additional exceptions or encumbrances, whether senior or junior to the Deed of Trust.
Finally, the City shall have received such other evidence reasonably requested and satisfactory to
the City that all security instruments, guaranties, and assignments contemplated by this Agreement
are in full force and effect and have the priority contemplated hereby.
,, 3.5 Legal Opinions.
Loan Agreement Page 9
(a) City shall have received a legal opinion, containing reasonable and
customary exclusions and qualifications, and in form and content reasonably satisfactory to City
and the City's outside counsel, from Obligor's counsel, who shall be satisfactory to City, to the
effect that:
(1) Obligor and Gateway are duly organized and validly existing and in
good standing as a for profit corporation or limited liability company in the State of Washington,
and has full power and authority to execute and deliver the Loan Documents and to perform all of
its obligations,
(2) The execution and delivery of the Loan Documents, Guaranty, and
Deed of Trust by Obligor, Guarantor, or Gateway do not, and the transactions contemplated by the
Loan Documents will not, violate any laws or regulations applicable to the respective parties and
will not conflict with and will not cause a default under (i) any provisions of the respective parties'
t L t. (ii1 + • t +
charter, bylaws or other governing documents, or e rr / any other material agreements, instruments,
judgments, decrees, orders or undertakings known to such counsel after reasonable inquiry by
which the respective parties are bound or to which the Gateway's Property is subject; and
(3) The Loan Documents have been duly authorized, executed, and
delivered by Obligor, Guarantor, and Gateway and constitute the legal, valid, binding obligations of
such party, enforceable in accordance with their terms.
.�..s
(b) The City shall have received such additional items as may be required
pursuant to the HUD Contract, including without limitation, an opinion of outside counsel to the
City.
3.6 Additional Conditions Precedent to Each Advance of Funds.
(a) The City shall have received such additional documents and further
assurances as it may reasonably request or which are required by HUD or any federal, state or
county regulatory agency.
(b) Obligor shall be in full compliance and shall not be in breach or default
under this Agreement or any of the other Loan Documents; provided, however, that City may, in its
discretion, elect to make advances notwithstanding the existence of Obligor's noncompliance or
default, and any advance so made shall be deemed to have been made pursuant to this Agreement
and secured by the Deed of Trust.
(c) Neither the Gateway's Property nor any part thereof shall have been
materially damaged, destroyed, condemned, or threatened with condemnation.
(d) The representations and warranties of Obligor, Guarantor, or Gateway
tj contained herein shall remain accurate in all material respects as of the date of the requested
disbursement.
Loan Agreement Page 10
\
(e) Neither HUD nor any court of competent jurisdiction shall have determined
that the issuance of the City Note or the making of the Loan must be terminated, canceled or
rescinded for failure to comply with the Act or other applicable law, or that for any reason any City
Note cannot be issued or cannot be guaranteed by HUD.
ARTICLE IV — LOAN DISBURSEMENTS AND REPAYMENTS: RESERVE ACCOUNTS
4.1 Initial Disbursement. Conditioned upon receipt of proceeds of the City Note and
satisfaction of all other applicable conditions to Loan disbursements under this Agreement, Loan
funds in the amount of Two Million Four Hundred Fifty Thousand Dollars ($2,450,000), or such
lesser amounts as requested by the Borrower, shall be disbursed on the date (the "Closing Date ") of
the Loan (the "Closing"), to be applied to related Closing costs, the Loan fee payable closing of the i,oan ttne dosing �, pp g to P' y�
the City in accordance with Section 1.5 of this Agreement, and other fees and costs due and payable
at Closing pursuant to Section 1.6 of this Agreement. Any funds not requested at initial Loan
closing, may be disbursed to Borrower at the request of no less than $100,000.00 per request, BUT
in no event shall the total amount requested exceed $2,450,000.00 at any time.
4.2 Costs Related to Public Offering.
_-:.::_i_
(a) On the Closing Date, the amount of Eighteen Thousand Seven Hundred and
Fifty Dollars ($18,750), out of the City Loan proceeds, shall be held in the Guaranteed Loan Funds
Account established by the Custodian under the Letter Agreements ( "Guaranteed Loan Funds
Account "), for the purpose of paying the costs to be incurred in connection with the Public
Offering, including without limitation trustee's fees and underwriters' fees and costs. Such funds
shall nonetheless be considered Outstanding under the Obligor Note. After the Conversion Date,
upon payment of all of such fees and costs allocable to the City Note, any remaining amount in the
Guaranteed Loan Funds Account shall be transferred to the Loan Repayment Account maintained
by the Custodian under the Letter Agreements ( "Loan Repayment Account "), and the next
deposit(s) required to the Debt Service Reserve Account in respect of principal under Section 4.6
below shall be reduced, dollar for dollar, by the amount of such transfer. In any event all amounts
remaining in the Guaranteed Loan Funds Account on September 1, 2013 shall be transferred to the
Loan Repayment Account unless otherwise agreed by HUD and the City. If the Obligor Note shall
be paid in full prior to the Conversion Date, the amount so withheld, and earnings thereon, shall be
applied as part of such prepayment of the Obligor Note and transferred to the Loan Repayment
Account to redeem the City Note.
(b) The City may elect, in its sole discretion, to waive the foregoing requirement in
subsection (a) upon receipt of evidence satisfactory to the City that the payment of such costs has
otherwise been duly provided for and that funds necessary to pay such costs will be available when
demanded by City. If the City so elects, Obligor shall execute a demand note ( "Demand Note "),
k:.,: substantially in the form of Exhibit E attached hereto, in favor of the City for an amount not
expected to exceed one percent (1 %) of the Loan amount. City shall give Obligor at least ten (10)
Loan Agreement Page 11
1 days written notice of its call for payment of the Demand Note. If Obligor fails to perform under
the Demand Note that shall be a breach of the Demand Note and an Event of Default, as defined in
section 6.1, and the City may use the remedies outlined in section 6.3, as well as any other remedies
available under the Loan Documents.
4.3 Delegation of Loan Administration. City may delegate administration of any or all
of the matters described in this Article IV to the Custodian in accordance with the provisions of the
HUD Contract, the City Note, and the Custodial Agreement. Upon execution of the Custodial
Agreement by the parties thereto Obligor shall provide the appropriate requests and inforniatioil to
the Custodian and to the City at such times and in such form as is provided in the Custodial
Agreement.
4.4 Debt Service Reserve Account.
(a) Monthly Deposits. Commencing in the first month disbursement of
principal of the City Note in respect of the Obligor Note is to be made, Obligor shall make monthly
installment payments to the Custodian for deposit in an account maintained by the Custodian for
the accumulation of funds for payments on the Obligor Note (the "Debt Service Reserve Account,"
which term shall include any related Debt Service Reserve Investment Account established under
the Custodial Agreement and Letter Agreements), in order that the Custodian shall have sufficient
,.. funds to make transfers to the Loan Repayment Account in payment of installments on the Obligor
Note as they come due (each such due date being an "Obligor Payment Date "). Funds in the Loan
Repayment Account shall be used to make payments on the City Note as they come due. Each
such monthly payment shall be due and payable, in immediately available funds, on the "Deposit
Day," which shall be the fifteenth (15th) day of the month, or if such day is not a Business Day,
then on the previous Business Day; subject to adjustment in respect of any Conversion Date.
Subject to the provisions of Section 4.4(b) hereof, each such payment shall be in an amount equal
to the actual interest accruing on the Obligor Note during the corresponding month, at the rate or
blended rate, as the case may be, then in effect (the "Interest Component "), plus one - twelfth
(1 /12th) of the total principal coming due on the Obligor Note on the next Obligor Payment Date
(the "Principal Component "); provided that the monthly payment obligation in respect of the
Interest Component shall be adjusted ratably in any month the Loan is not outstanding for the entire
month; and provided further, that the monthly payment obligation in respect of the Principal
Component shall be adjusted ratably during any period that fewer than twelve (12) Deposit Days
are scheduled to occur prior to the corresponding Obligor Payment Date in respect of principal of
the Obligor Note. Except as provided in Section 4.4(b) below, Obligor shall not be entitled to any
reductions in, or credits against, deposits to the Debt Service Reserve Account based upon interest
or earnings credited to the Debt Service Reserve Account (including any Debt Service Reserve
Investment Account).
(b) Interest Stabilization Payments and Subsidy. Obligor and the City intend,
4 notwithstanding the actual rate of interest payable on the Loan and Obligor Note from time to
time, that to the extent feasible, Obligor's monthly interest payment obligations shall be based
Loan Agreement Page 12
upon a deemed rate of interest equal to four percent (4.0 %) per annum. The actual interest
payable by Obligor shall be determined as follows:
(i) If the rate or blended rate, as the case may be, of interest on the
Loan and Obligor Note during any month is less than four percent (4.0 %) per annum as
calculated under Paragraph 1.3(b), above, Obligor shall pay to the Custodian on the
corresponding Deposit Day, for deposit into the Debt Service Reserve Account, an amount equal
to the interest payment calculated at four percent (4.0 %) per annum, notwithstanding that the
actual interest accruing on the Obligor 1 ) e 'during such period may be less.
(ii) If the actual rate of interest on the Loan and Obligor Note during
any month as calculated under Paragraph 1.3(b), above, exceeds four percent (4 %) per annum,
unless the Custodian shall have delivered to Obligor and City a Shortfall Notice (defined in this
Section, below), Obligor shall pay to the Custodian on the corresponding Deposit Day, interest at
a rate equal to four percent (4 %) per annum on the then- Outstanding principal balance of the
Loan and Obligor Note, and the Custodian shall look to other funds on deposit in the Debt
Service Reserve Account and the EDI Grant Loan Payment Reserve Account to pay the balance
of interest next scheduled to become due on the City Loan; provided, that the Custodian shall
exhaust funds on deposit in the Debt Service Reserve Account from time to time prior to making
any withdrawals from the EDI Grant Loan Payment Reserve Account to pay any portion of the
Interest Component of any monthly deposit; and provided further, that Custodian is not
authorized to and shall not withdraw from the EDI Grant Loan Payment Reserve Account for
such purposes, an aggregate amount greater than Three Hundred Thirty Three Thousand and
Three Hundred Thirty Three Dollars ($333,333.00).
(iii) If not less than five (5) Business Days prior to any Deposit Day the
Custodian determines that there shall or may be insufficient funds available in the Debt Service
Reserve Account and EDI Grant Loan Payment Reserve Account to pay the full amount of
principal and interest, as calculated under Paragraph 1.3(b), above, to become due on the City
Note on the next date such interest is required to be paid, taking into account the expected
payment of interest at a deemed rate of four percent (4.0 %) per annum required to be made by
Obligor on such Deposit Day and each subsequent Deposit Day scheduled to occur prior to the
corresponding Obligor Payment Date, the Custodian shall promptly deliver written notice (each,
a "Shortfall Notice ") to that effect to the Obligor (with a copy to the City). Upon receipt of any
such Shortfall Notice, and in any event, on or before the corresponding Deposit Day, the Obligor
shall pay to the Custodian, for deposit into the Debt Service Reserve Account, the full amount of
interest actually accruing on the Loan and Obligor Note during the corresponding month as
calculated under Paragraph 1.3(b), above. Obligor acknowledges and agrees that interest
stabilization payments made by Obligor in accordance with this Section 4.4(b) and deposited in
the Debt Service Reserve Account, together with the earnings thereon, if any, shall be held,
without right of withdrawal or reimbursement.
(c) Transfers Authorized; Crediting Payments on Obligor Note. The Custodian
is hereby irrevocably authorized to transfer funds from the Debt Service Reserve Account to the
Loan Agreement Page 13
Loan Repayment Account on each Obligor Payment Date, in the full amount due on the Obligor
Note on each such date. The Custodian is then authorized and directed to apply funds in the Loan
Repayment Account to the timely payment of amounts due on the City Note. Obligor's monthly
installment payments into the Debt Service Reserve Account shall not constitute payments under
the Obligor Note. Obligor shall be credited with the payment of interest and principal on the
Obligor Note only when and solely to the extent that funds shall be transferred to the Loan
Repayment Account under this Section 4.4(c). The Custodian is further irrevocably authorized by
Obligor to liquidate investments in the Debt Service Reserve Account, in the Custodian's
discretion, and without liability for any loss on any such liquidation, for the purposes described in
this Section 4.4(c). The authorization by Obligor in this Section 4.4(c) is in addition to, and not in
limitation of, the authorization in Section 1.4 above.
(d) Investment of Funds: Earnings Remain on Deposit. Funds in the Debt
Service Reserve Account shall be invested at the direction of City, but only in instruments that
mature (or are redeemable without penalty) within six (6) months and in any event no later than
five (5) Business Days before the next Obligor Payment Date, and that are guaranteed as to
payment of principal by the United States Government, or in money market funds that invest solely
in such instruments. All earnings in the Debt Service Reserve Account shall remain therein until
applied in accordance with this Agreement or until all amounts owing under the Loan Documents
have been paid in full. When all amounts owing under the Loan Documents have been paid in full,
then the remaining balance shall be disbursed to or upon the order of the City.
(e) Late Charge. If any deposit required to be made into the Debt Service
Reserve Account is not received within ten (10) days after the date when such deposit is due, in
addition to additional interest required to be paid in accordance with the Obligor Note, Obligor
agrees to pay a late charge equal to five percent (5.0 %) of the amount past due, as compensation to -
the City and Custodian for the staff time and resources required to handle such delinquencies, and
not as a penalty. Such late charges shall not be credited to the Debt Service Reserve Account or
Loan Repayment Account, but shall be retained by the City and /or Custodian. Late charges under
this Section are in addition to, and not in substitution for, the other remedies provided in the Loan
Documents.
4.7 Application of Payments. Any amounts transferred into the Loan Repayment
Account in accordance with this Agreement shall be applied first to accrued interest on the Obligor
Note, next to any premium then due, and the balance, if any, to reduction of principal.
Notwithstanding the foregoing, City or Custodian shall have the right, each in its respective
discretion, to apply funds available in the Debt Service Reserve Account to fees, costs,
reimbursements, and late charges then due under the Loan Documents prior to application of funds
against the Obligor Note.
Loan Agreement Page 14
ARTICLE V — OBLIGOR'S LOAN COVENANTS
Obligor covenants and agrees as follows:
5.1 General. From and after the date hereof and so long as any amount remains unpaid
on the Obligor Note, or for so long as any commitment exists to extend credit hereunder, Obligor
and Gateway covenants and agrees that:
(a) Obligor shall promptly pay principal, interest, and premium (if any)
pursuant to the Obligor Note as and when the same becomes due and payable, and make any and all
other payments and deposits required by the Loan Documents;
(b) Obligor shall preserve and keep in full force and effect its existence as a for
profit corporation under the laws of the State of Washington;
(c) Gateway shall maintain, preserve, and keep Gateway's Property in good
condition, ordinary wear and tear excepted, and from time to time make all necessary repairs,
renewals, and replacements.
5.2 Reserved
) 5.3 Compliance with Laws. Run its business in compliance with all material respects
with all applicable laws, ordinances, rules and regulations and executive orders of federal, state,
county or municipal governments or agencies now in force or which may be enacted hereafter.
5.4 Inspections. Upon written notification by City to Obligor, City and its
representatives shall have the right to inspect and copy Obligor's books and records relating to its
business. Without limiting the foregoing, Obligor shall permit City to examine and copy all books,
records and other papers relating to Obligor's use of the Loan proceeds and to Obligor's
compliance with this Agreement, the Act ,and applicable provisions of federal, state, and local laws,
ordinances, rules and regulations.
5.5 Notify City of Litigation or Complaints. Obligor shall promptly notify City in
writing of all litigation or threatened litigation involving its business or the Property, and any other
litigation that reasonably could have a material adverse - affect on the financial condition of Obligor,
and of all complaints or charges made by any governmental authority affecting Obligor.
5.6 Federal Regulations. Obligor acknowledges that the Loan is to be made with funds
received by the Custodian under the Section 108 program of the Act and that such funds are subject
to CDBG program regulations of HUD, and certain other federal laws and regulations.
Accordingly, Obligor agrees, represents, and warrants that Obligor shall comply with all applicable
requirements under HUD regulations for the CDBG program and under other laws and regulations
applicable to loans of such federal funds, including without limitation:
Loan Agreement Page 15
(a) Benefit to Low- and Moderate Income Individuals. Obligor's Project shall
benefit low- and moderate - income individuals (as defined by HUD) to the maximum extent
feasible. The Project shall result in the creation of at least one hundred and fifty new permanent
jobs (full -time equivalent). Obligor shall provide quarterly reports containing data required by the
City on the jobs created and the demographics of persons initially interviewed and hired for such
jobs, as set forth in Attachments G and H and fully incorporated herein. Obligor shall provide the
reports on January 15, April 15, July 15, and October 15 and shall continue to provide the reports
until one hundred and fifty full time equivalent permanent jobs are created (e.g. if two half time
positions are created, that counts for one full time equivalent position). If Obligor fails to submit
the report within fifteen days after the due date, the City may, in its sole discretion, increase the
interest rate on the Loan to the greater of the variable interest rate in effect (as set forth in section
1.3(b) above) or 12%. The City must give Obligor notice of its intent to increase the interest rate
under this section and ten days . to cure before increasing the interest rate. Once the City increases
the interest rate under this section, it shall remain at that level until Obligor submits its reports.
City retains the right to the increased interest paid and Obligor cannot offset the increased interest
against any future payments. _
(b) Nondiscrimination. No ° person shall on the grounds of race, color,
national origin, religion, or sex be excluded from participation in, be denied the benefits of, or be
subjected to discrimination under any program or activity funded in whole or in part with CDBG
—) funds. Obligor shall comply fully with all requirements of Title VI of the Civil Rights Act of 1964,
42 U.S.C. 2000d et seq., which provides that no person in the United States shall on the ground of
race, color, or national origin, be excluded from participation in, denied the benefits of, or be
subjected to discrimination under any program or activity receiving Federal financial assistance;
and with Department of Housing and Urban Development ( "HUD ") regulations implementing such
requirements, 24 C.F.R. Part 1.
Obligor shall comply with all applicable requirements and prohibitions of the
following: 24 C.F.R. Section 570.602, implementing the nondiscrimination requirements of Section
109 of the Act; HUD regulations under the Rehabilitation Act of 1973, as amended, 24 C.F.R. Part
8; HUD Regulations under the Americans with Disabilities Act; and HUD regulations under the
Age Discrimination Act of 1975, 42 U.S.C. Section 6101 et seq., at 24 C.F.R. Part 146.
No otherwise qualified handicapped individual in the United States shall, solely
because of handicap, be excluded from the participation in, be denied the benefits, or be subjected
to discrimination under any program or activity receiving Federal financial assistance.
(c) Conflict of Interest. Obligor shall ensure compliance with the provisions of
24 CFR Section 570.611, which provide generally that no officer, agent, employee, consultant, or
elected or appointed official of The City of Yakima or of any subrecipient receiving CDBG funds
who exercises or has exercised any functions or responsibilities with respect to activities assisted by
CDBG funds or who is in a position to participate in a decision- making process or gain inside
information with respect to these activities, shall obtain any financial interest or benefit from, or
have any financial interest in, the activity funded under this Loan Agreement or any contract or
Loan Agreement Page 16
.! subcontract or agreement with respect thereto or the proceeds thereof, for himself or herself or those
with whom he or she has business or immediate family ties; nor shall (s)he for one year after
completion of his or her tenure with the City or such subrecipient obtain or have any such financial
interest or benefit. Obligor shall incorporate in all such contracts or subcontracts a provision
prohibiting any conflict of interest prohibited by this subsection.
(d) Lobbying. Obligor hereby certifies and agrees as follows, in accordance
with 31 U.S.C. Section 1352, to the best of its knowledge and belief:
(1) No Federal appropriated funds have been paid or will be paid, by or
on behalf of Obligor, to any person for influencing or attempting to influence an officer or
employee of any agency, a member of Congress, an officer or employee of Congress, or an
employee of a member of Congress in connection with the awarding of any Federal contract, the
making of any Federal loan, the entering into of any cooperative agreement, and the extension,
continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or
cooperative agreement;
(2) If any funds other than Federal appropriated funds have been paid or
will be paid to any person for influencing or attempting to influence an officer or employee of any
agency, a member of Congress, an officer or employee of Congress, or an employee of a member of
D Congress in connection with this Federal loan, it will complete and submit Standard Form
"Disclosure Form to Report Lobbying," in accordance with its instructions; and
(3) It will require that the language of this Section be included in the
award documents for subawards at all tiers (including subcontracts, subgrants, and contracts under
grants, loans and cooperative agreements) and that all subrecipients shall certify and disclose
accordingly.
This certification is a material representation of fact upon which reliance was placed
when this transaction was made or entered into. Submission of this certification is made a
prerequisite for making or entering into this transaction by section 1352, title 31, U. S. Code. Any
person who fails to file the required certification shall be subject to a civil penalty of not less than
$10,000 and not more than $100,000 for each such failure.
•
(e) Economic Opportunities for Low- and Very Low - Income Persons. Obligor
shall comply, and cause all contractors and subcontractors to comply, with any and all applicable
provisions of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12
U.S.C. 1701u, the purpose of which is to ensure that employment and other economic opportunities
generated by Federal financial assistance for housing and community development programs shall,
to the greatest extent feasible, be directed toward low- and very low- income persons, particularly
those who are recipients of government assistance for housing. Obligor shall comply, and shall
require all contractors and subcontractors to comply, with all applicable provisions of regulations
issued pursuant thereto by the Secretary of HUD and set forth in 24 C.F.R. Part 135, and with all
applicable rules and orders of HUD issued thereunder.
Loan Agreement Page 17
(f) Records. Obligor shall maintain and make available to the City and HUD
all records reasonably required to demonstrate compliance with all of the requirements of this
Agreement, for at least four (4) years after full repayment of the Loan.
(g) Disclosures. Obligor represents, warrants, and agrees that it has provided
to City any and all disclosures required by the HUD Reform Act, 42 U.S.C. Section 3545, and
regulations thereunder, 24 CFR Part 4; that it will provide timely updated disclosures to City to
the extent required by such act and regulations; and that all such disclosures are and shall be .
complete and accurate.
(h) Prior Actions. Obligor represents and warrants that in all actions related to
the Project to date Obligor has complied with all requirements referred to in this Section 5.6.
(1) Indemnity. Obligor shall indemnify and hold harmless the City from any
loss, damage, expense, claim or demand resulting from Obligor's failure to comply with any federal
requirement to be complied with pursuant to this Agreement or failure to maintain adequate records
to demonstrate such compliance. Obligor shall indemnify and hold harmless the City from any
loss of value for Gateway's Property, including but not limited to any environmental or hazardous
waste issue. This provision shall survive expiration of this Agreement.
5.7 Reports. Obligor shall deliver to the City reports and information as City may
require for purposes of monitoring and evaluating the performance of the Obligor.
5.8 Liens or Claims of Liens. Obligor shall cause the Gateway to keep the Property free
from liens and encumbrances of all kinds, superior or inferior to the Deed of Trust, except for those
permitted pursuant to Section 2.4 above and any of the following:
(a) Liens for property taxes on the Property not yet due and payable;
(b) Mortgage
(c) Liens subordinate to the lien of the Deed of Trust, created after the date of
Closing with the prior written consent of the City, which consent shall not be unreasonably
withheld. The City consents to the Gateway refinancing its debt and taking a priority
position to this Deed of Trust, but only for the amount of debt that is superior to this Deed
of Trust.
If any claims of lien shall be asserted against the Property other than as permitted by this Section,
Obligor, regardless of any action that City may otherwise be authorized to take, shall obtain a
release and satisfaction of such lien claim, bond the lien claim, procure title insurance satisfactory
to City protecting City from any loss relating to such lien claim, or otherwise provide to City
'4: assurances and security satisfactory to City that the lien claim will be paid or satisfied not later than
•
ten (10) days after a judgment on the lien claim. If such a lien claim is not released or satisfied or a
Loan Agreement Page 18
bond or other security satisfactory to City provided within forty -five (45) days of written request
from City to Obligor, then the failure to do so shall allow the City to declare an Event of Default (as
defined in Section 6.1 below) regardless of whether such lien claim is or is not superior to the Deed
of Trust.
5.9 Political Activity. No portion of the Loan shall be used for any political activity or
to further the election or defeat of any candidate for public office or to influence the approval or
defeat of any ballot issue or legislation.
5.10 Further Actions. Obligor will at any time and from time to time upon request of
City take or cause to be taken any action, execute, acknowledge, deliver or record any further
documents, opinions, or other instruments or obtain such additional insurance as City is required to
do or obtain by HUD or other federal, state or county regulatory agency.
5.11 Payment of Compensation of Custodian. Obligor shall be responsible for and pay
the fees of the Custodian as provided under the Custodial Agreement. The Custodian's acceptance
fee, prorated first annual fee and counsel fees and expenses shall be disbursed to Custodian from
the Guaranteed Loan Funds Account at the time of initial Loan disbursement. The Custodian is
hereby authorized to withdraw from interest and /or investment earnings on the Debt Service
Reserve Account established pursuant to such Custodial Agreement up to the amount of its annual
fee and any other fees and expenses to which it is entitled) thereunder, and if such interest and /or
investment earnings are insufficient to pay in full the Custodian's fees and expenses, then upon
Custodian's notice thereof to Obligor, Obligor shall promptly pay the remaining amount of the
Custodian's fees and expenses directly to the Custodian.
5.12 Payment of Other Indebtedness. Obligor shall timely pay the principal, interest and
all other amounts due on any other indebtedness or liability now or hereafter owing by the Obligor
to any person and secured by the Property; provided, that nothing in this Section shall authorize
Obligor to make any payment from any funds or assets pledged to the City hereunder.
5.13 Transfer of Property. Obligor shall not cause or permit Gateway to transfer the
Property or any interest of Obligor therein, voluntary or involuntary, without the advance written
consent of the City, except for the creation of liens, encumbrances or leases that are expressly
permitted under the Loan Documents without the City's consent.
ARTICLE VI — DEFAULT AND REMEDIES
6.1 Events of Default. Upon the occurrence of any of the following events and prior to
the complete cure thereof by Obligor in a manner satisfactory to the City, the City shall have the
right to declare an Event of Default hereunder, without notice or demand by City, except as
expressly provided in this Section:
I. ., 1i ; (a) Any failure to pay when due any deposit into the Debt Service Reserve Fund
in respect of principal or interest on the Obligor Note;
Loan Agreement Page 19
(b) Any failure to make a payment or deposit of money required by any of the
Loan Documents, other than amounts referred to in Section 6.1(a) above, that is not cured within
ten (10) clays of the due date of such payment or deposit (or within ten (10) days of demand in case
of amounts due on demand);
(c) Any transfer of the Gateway's Property or any interest therein, voluntary or
involuntary, contrary to Section 5.13 of this Loan Agreement;
(d) Any failure to comply with the terms of Section 5.8 of this Loan Agreement
(relating to lien claims) within the time period permitted by such Section;
(e) Any breach or nonperformance by Obligor of any provision of any of the
Loan Documents not included within any of Subsections (a) -(d) above that is not cured within sixty
(60) days after notice to Obligor of such breach or nonperformance, or such longer cure period as
may be permitted under the specific terms of the Loan Document; provided, however, that unless
HUD shall otherwise require, if (1) such breach or nonperformance is susceptible to cure but cannot
reasonably be cured within such cure period, (2) Obligor shall commence to cure such breach or
nonperformance within such cure period and shall thereafter diligently and expeditiously proceed to
cure the same, and (3) Obligor shall inform the City in writing of the status of the cure at the
_ expiration of such cure period and every thirty days thereafter, then such cure period shall be
extended for such time as is reasonably necessary for Obligor in the exercise of due diligence to
cure such breach or nonperformance;
(f) A petition in bankruptcy or for reorganization or for an arrangement under
any bankruptcy or insolvency law or for a receiver or trustee for any of Obligor's property is filed
by Obligor, or is filed against Obligor and is not dismissed within ninety (90) days, or if Obligor
makes an assignment for the benefit of creditors or becomes insolvent or unable to pay its debts as
they mature or any attachment or execution is levied against a substantial portion of the property of
Obligor and is not discharged within ninety (90) days, or if any law or court order shall require the
City, Custodian or any other party to refund or otherwise relinquish any portion of any amount paid
under the Obligor Note or this Agreement as a preference or for any other reason except refund of
duplicative payment;
(g) Any representation, warranty or disclosure made to City by Obligor, or
contained in any information submitted by Obligor to City or to any government agency in
connection with the Loan or the Property, proves to be materially false or misleading as of the date
when made or reaffirmed, whether or not such representation or disclosure appears in this
Agreement.
(h) Any default by Guarantor or Gateway of its obligations under the Guaranty.
Loan Agreement Page 20
6.2 Declaration of Event of Default. City's declaration of an Event of Default
hereunder shall be made by notice to Obligor pursuant to Section 7.15 of this Agreement and shall
be effective as provided therein.
•
6.3 Remedies.
(a) Upon declaring an Event of Default, City may, in addition to any other
remedies that City may have hereunder or under the Loan Documents or by law, at its option and
without prior demand or notice take any or aii of the following actions:
(1) Immediately terminate any further advances of Loan funds
hereunder and revoke any instructions to any third party holding any such funds;
(2) Cause the Custodian to stop making interest subsidy payments;
(3) Declare the Loan immediately due and payable in full;
(4) Foreclose under the Deed of Trust, judicially or nonjudicially;
(5 Apply any or all funds in the Reserve Accounts to amounts due
under the Loan Documents, whether by reason of acceleration or otherwise, and cause investments
-� in such accounts to be liquidated for such purpose; and
(6) Seek judicial appointment of a receiver.
(b) All remedies of City provided for herein and in any other Loan Documents
are cumulative and shall be in addition to all other rights and remedies provided by law. The
exercise of any right or remedy by City hereunder shall not in any way constitute a cure or waiver
of default hereunder or under any other Loan Document or invalidate any act done pursuant to any
notice of default, or prejudice City in the exercise of any of its rights hereunder or under any other
Loan Documents unless, in the exercise of said rights, City realizes all amounts owed to it under
such Loan Documents.
6.4 No Default Prior to Declaration. No default or Event of Default shall exist under
this Agreement or the Obligor Note until the same shall have been declared by the City or other
party authorized to make such declaration; provided, that failure to declare, or delay in declaring, a
default hereunder shall not constitute a waiver of any rights or remedies or excuse any failure by
Obligor to strictly comply with its obligations under all of the Loan Documents.
Loan Agreement Page 21
ARTICLE VII — MISCELLANEOUS
•
7.1 No Waiver. No waiver of any noncompliance or breach by Obligor hereunder shall
be implied from any failure by City to take action on account of such noncompliance or breach, and
no express waiver shall affect any breach or noncompliance other than as specified in the waiver.
Any waiver shall be operative only for the time and to the extent therein stated. Waivers of any
covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent
breach of the same covenant, term or condition. The consent or approval by City to, or of, any act
by Obligor requiring further consent or approval shall not be deemed to waive or render
unnecessary the consent or approval to, or of, any subsequent similar act.
7.2 Successors and Assigns; Delegation to Custodian: Changes in Custodian and
Custodial Agreement. This Agreement is made and entered into for the sole protection and benefit
of City, HUD, and Obligor, their successors and assigns, and no other person or persons shall have
any right of action hereunder. The terms hereof shall inure to the benefit of the successors and
assigns of the parties hereto; provided, however, that the Obligor's interest hereunder cannot be
assigned or otherwise transferred without the prior written consent of City. Obligor acknowledges
and agrees that City may assign to HUD or any custodian or trustee for HUD any or all of City's
rights under this Agreement and any of the Loan Documents and may direct that any payment or
performance be provided directly to HUD or such custodian or trustee, whether or not the Obligor
-) Note or this Agreement have been assigned. Obligor agrees that City may delegate to the
Custodian the right to make demands and give directions on behalf of City under the Loan
Documents, but that the scope of any such delegation shall be strictly limited to the terms of a
written instrument duly signed on behalf of the City. Obligor further acknowledges that the
Custodial Agreement may be modified or terminated, or a substitute Custodial Agreement
executed, or a successor Custodian appointed, in each case without the consent of Obligor so long
as the obligations of Obligor are not increased and the rights of the Obligor under the Loan
Documents are not adversely affected in any material respect. Except for minor modifications to
the Custodial Agreement not affecting Obligor, City agrees to give reasonable advance notice to the
Obligor of any action as described in the preceding sentence, and agrees in each case to provide a
copy of any modification or substitute Custodial Agreement to Obligor within fifteen (15) days
after the execution thereof.
7.3 No Defense Based on City Regulatory Actions. Obligor understands that (a) the
operations of Obligor are subject to numerous laws, regulations, ordinances and permits, including
those of City and other governmental bodies, and (b) the modification, interpretation, application,
or revocation of such laws, regulations, rules or permits could adversely affect economic return to
Obligor. Obligor has conducted its own investigation and relied on the advice of its own counsel
and experts as to all such matters in connection with Obligor's expanding its product line. Obligor
acknowledges that by entering into this Agreement the City does not make, and that the City
expressly disclaims, any representation or assurance whatever as to the availability, issuance or
continuation of any permits, approvals, or interpretations of any kind that may be required or
desired by Obligor or any other party in connection with its operations. Obligor agrees that
Loan Agreement Page 22
•
notwithstanding any regulatory action or omission of City affecting Obligor, no defense, offset or
reduction of liability shall be available to Obligor, at law or in equity.
7.4 Time. Time is of the essence of all provisions of the Loan Documents.
7.5 Entire Agreement: Amendments. This Agreement, the other Loan Documents, and
the documents, laws and regulations incorporated by reference herein constitute the entire
agreement of the parties hereto with respect to the Loan and supersede any prior agreements or
understandings, written or oral, with respect to the Loan. Obligor is not relying upon any promises,
representations or understandings, written or oral, in entering into the Loan Documents, other than
as expressly set forth in the Loan Documents. The obligations of Obligor under the Loan
Documents are not conditioned upon, and shall not be affected by, any other agreement,
understanding, performance or nonperformance by the City or any other party, and in any
proceeding to enforce any of Obligor's obligations under the Loan Documents, Obligor shall not be
entitled to assert, by way excuse, offset, counterclaim, grounds for equitable relief, or otherwise,
any actual or alleged action or inaction by or on behalf of the City except to the extent that any such
action or inaction is expressly required of the City by, and is made a condition of Obligor's
obligation by, the Loan Documents. No amendment, modification, or termination of any
provisions of this Agreement or of any of the Loan Documents shall in any event be effective
unless the same shall be in writing and signed by a duly authorized officer of City and by Obligor,
and no such writing shall be construed to modify, waive, or affect the terms of the Loan Documents
except to the extent that such document expressly so provides.
7.6 Headings. The article and section headings in no way define, limit, extend or
interpret the scope of this Agreement or of any particular article or section.
7.7 Number and Gender. When the context in which the words are used in this
Agreement indicate that such is the intent, words in the singular number shall include the plural and
vice - versa. References to any one gender shall also include the other gender if applicable under the
circumstances.
7.8 Validity. In the event that any provision of this Agreement shall be held to be
invalid, the same shall not affect in any respect whatsoever the validity of the remainder of this
Agreement.
7.9 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Washington, and The City of Yakima, except to the extent federal law
applies.
7.10 Survival. All agreements, representations and warranties made herein and in the
Obligor Note shall survive the execution and delivery of this Agreement and of the Loan
Documents and the making of the Loan hereunder and continue in full force and effect until the
obligations of Obligor hereunder and the indebtedness evidenced by the Obligor Note have been
Loan Agreement Page 23
fully paid and satisfied, and thereafter to the extent provided in the Loan Documents, regardless of
whether the Obligor Note is surrendered or marked as canceled or paid in full.
7.11 Venue and Forum. In the event that any legal action should be filed by either party
against the other, the venue and forum for such action shall be the Superior Court of the State of
Washington for the County of Yakima.
7.12 Attorney's Fees. In the event either party shall bring an action to enforce the terms
and conditions of this Agreement, the prevailing party shall be entitled to recover all of its costs and
expenses, including, but not limited to, reasonable attorney's fees as determined by the court.
7.13 Duplicate Originals: Counterparts. This Agreement shall be executed in duplicate
and each of the parties hereto shall receive an original. Each original shall constitute one and the
same agreement. This Agreement may be executed in counterparts, and each such counterpart shall
be deemed to be an original.
7.14 Construction. The Loan Documents shall be construed so as to conform to the
requirements of the HUD Contract and applicable federal laws and regulations. The Loan
Documents are the product of negotiation between the parties and therefore shall not be construed
strictly in favor of, or against, either party except as may be specifically provided in the Loan
Documents with respect to particular provisions thereof.
7.15 Notices. Any notice, demand or request required hereunder shall be given in
writing at the addresses set forth below by personal service, by facsimile transmission, or by first
class mail. The addresses may be changed by notice to the other party given in the same manner as
provided above. Notices personally served or sent be facsimile shall be effective when actually
received during normal business hours, and otherwise on the following Business Day. If notice is
given by mail, it shall be deemed received on the earlier of: (i) if by certified mail, the date of
receipt as shown on the return receipt, or (ii) three (3) days after its deposit in the U.S. mail.
If to Obligor: Trail Wagons, Inc.
607 East R St.
Yakima, Washington 98901
Attn:
fax:
If to City: Department of Economic and Community Development
City of Yakima
129 N. 2" Street
Yakima, Washington 98901
Attn: Director
fax: 509 - 576 -6792
Loan Agreement Page 24
IN WITNESS WHEREOF, Obligor. and City and Gateway have executed this Agreement
as of the date first written above . by and through their duly authorized representatives; Gateway
signs this Agreement solely as pertains to its covenants, representations, and warranties specifically
contained herein.
CITY:
THE CITY OF YAKIMA, a Washington municipal corporation
Print Name: R. A. Zais, Jr.
City Manager
ATTEST:
City of Yakima
129 North Second Street
Yakima, WA 98901
Karen Roberts, City Clerk
OBLIGOR:
TRAIL WAGONS, INC., a Washington corporation
1-4 .
• y.
Print Name: Gary Lukehart
Title: President
GATEWAY:
GAT N AY ASSOCIATES, L.L.C., a Washington limited liability company
� I ,
By.
Print Name:. ry Lukehart
Loan Agreement Page 25
. .,.
) Title:
blir
Loan Agreement Page 26
•
LIST OF ATTACHMENTS
Attachment A Form of Obligor Note
Attachment B Deed of Trust
Attachment C Guaranty
Attachment D Deposit Account Control Agreement
Attachment E Title Insurance for Property
Attachment F Demand Note
Attachment G Job Creation Summary Report
Attachment H Income Verification Form
C.1\ r�L IF.. NUJ :.. a6OOS ' ` TtS!( 0 .. n A reernent- final.dOC
Loan Agreement Page 27
CITY OF YAKIMA JOB CREATION SUMMARY FORM
•
OBLIGOR:
ADDRESS:
JOB TITLE /CATEGORY WAGE RATE HOURS /WEEK
$ per
$ per
$ per
n
r-
$ per
$ per
$ per
$ per
per
$ per
$ per
$ per
$ per
$ per
$ per
$ per
$ per
$ per
TOTAL JOBS CREATED:
In your business hours per week is considered full -time.
Signature _ Date
b . Name and Title
This is a confidential statement necessary to verify the need for public financial assistance for a business and is not
considered a public record. THANK YOU FOR YOUR ASSISTANCE
.
•
CITY OF YAKIMA EMPLOYEE INCOME VERIFICATION FORM
EMPLOYER:
EMPLOYEE NAME:
HOME ADDRESS:
Sex Male Female Job Title
Date of Birth / / Salary/Wage $
Head of How long employed
Household? Yes No here: Years Months
A. Please circle Full Time Part Time If part time # hours per week
Pi. Please circle the nuall,-,cr .r people living at u., residence. I FA. 1M4 SIZE 1 1 2 3 4 5 6 7 8 9 10 mare t
C. Please circle the number below which best describes the income for your household for the last 12
months. In calculating total income, include all of the following sources that apply.
• Wages, salaries, tips, etc. (covered by W -2) • Total IRA distributions, taxable amount
• Dividend income • Total pensions and annuities, taxable amount
• Taxable refunds, credits, or offsets of state and • Rental real estate, royalties, partnerships,
• Local income taxes • S corporations, trusts, etc.
� • Alimony received Farm income (or loss)
• Business income (or loss) • Unemployment compensation
• Capital gain (or loss) • Social Security benefits, taxable amount
• Other gains or losses • Other income (specify source)
INCOME $0- $23,050 _ $50,201- $54,200
$23,051 - $35,150 $54,201- $58,250
$35,151- $40,150 $58,251- $62,250
$40,151- $45,200 $62,251 - $66,250
$45,201 - $50,200 $66,251 or more
The following Race /Ethnicity information is optional. It will be used to determine the employment/hiring
benefits of Project Name. The information you provide will remain confidential and will not be made a part of your
permanent records.
Please check the appropriate box:
African American
American Indian/Native American
,Asian/Pacific Islander
Caucasian
Hispanic/Latino
Other
I hereby certify all of the above to be true and correct.
Signature _ Date
q;1 This is a confidential statement necessary to verify the need for public financial assistance for a business and is not
considered a public record. THANK YOU FOR YOUR ASSISTANCE
VARIABLE /FIXED RATE PROMISSORY NOTE
Yakima, Washington
$2,450,000
Marcha y � 2003
FOR VALUE RECEIVED, TRAIL WAGONS, INC., ( "Obligor"), a
Washington corporation, promises to pay to THE CITY OF YAKIMA,
V QTJT1\Tr_T( T T ("Payee"), Washington to 1 4, t
VV t 1wll laJ. t.1 1 ` 1 aye'- ), Q VY aJ 11111g1.V11 11.1 ui1i%i�ia1 corporation, or order, cal.
Yakima, Washington, at the time or times provided herein, the sum of Two
Million Four Hundred Fifty Thousand Dollars ($2,450,000.00), with interest as
provided herein.
REvIT A T S
This Note is given to evidence a loan (the 'Loan") made pursuant to the
Loan Agreement dated March 24, 2003 (as supplemented or amended from
time to time, the "Loan Agreement "), between the Obligor and the Payee. The
funds used by the Payee to make the Loan have been obtained by Payee
exclusively through loan proceeds from a loan evidenced by a Promissory Note
''-' in the total principal amount of $4,000,000 issued by the Payee (the "City
Note ") pursuant to Section 108 of the Housing and Community Development
Act of 1974 as amended (42 USC §5308) and 24 CFR 570.700, et seq.,
pursuant to which the Payee has entered into certain agreements, including,
but not limited to: (a) with the United States Department of Housing and Urban
Development ( "HUD "), a Contract for Loan Guarantee Assistance, (b) with HUD,
the Application for Loan Guarantee, , (c) with HUD and JPMorgan Chase Bank
(formerly known as The Chase Manhattan Bank), an Amended and Restated
Master Fiscal Agency Agreement, and (d) with JPMorgan Chase Bank, an
Indenture of Trust and Custodial Agreement which documents, as amended or
amended from time to time, may be referred to collectively as the "Master
Agreement "). The Obligor acknowledges and agrees that the Loan has been
made subject to all of the terms and conditions of the Master Agreement and
the City Note. Any capitalized terms not defined herein shall have the
meanings provided in the City Note, the Loan Agreement or the Master
Agreement as applicable.
AGREEMENT
NOW, in consideration of the Recitals and the covenants, conditions,
representations, and warranties contained here, the parties agree as follows:
fl 1. Variable Interest Rate. Loan advances made from time to time in
accordance with the terms of this Note and the Loan Agreement ( "Advance ")
shall bear interest from the date of the Advance and at the rates applicable
Promissory Note Page 1
to the corresponding Advances made under the City Note until repayment of
the loan is made in full. Initially, such interest shall accrue at a variable
interest rate on the unpaid principal balance of each Advance. The initial
variable interest rate for each Advance hereunder will be set on the date of
such Advance and will be equal to twenty basis points (0.2 %) above the
Applicable LIBO Rate (as hereinafter defined) and thereafter will be adjusted
monthly on the first day of each month (each, a "Reset Date ") to a variable
interest rate equal to twenty basis points (0.2 %) above the Applicable LIBO
Rate (such interest rate, as reset from time to time, the "Standard Note
D..+.."\ If t h e n....._. Tl.-.+ f +L, City Note L., + a 1-._.
1 \d Le �. 11 LLIG VVllvel s1V 11 LJQLe 1V1 the VlL l'w Le 110.) not VL.G occurred by 11111E
and one half years following the initial Advance thereunder, then the
variable interest rate hereunder will be equal to the variable interest rate on
the City Note set pursuant to the terms of Appendix A to the City Note. If
the Fiscal Agent does not receive notice of either a Negotiated Special
Interest Rate or 11V1Ue1 Determined e)pc.1dl Interest GJL 1 \d Le (as defined 111
1
Appenr1iv 1 1 1.111. 1L,' 1•Vll. 11 V L111. t LL r the City 71? n te) from 111 the Secretary or Holder , p Y ecve restily , `r
b l V V
the times specified in Appendix A to the City Note, then the Standard Note
Rate shall apply for the period to which such Negotiated Special Interest
Rate or Holder Determined Special Interest Rate would otherwise apply.
1.1. "LIBO Rate" for any given Business Day means, except in the case
s of manifest error, the interest rate per annum published on that day in
the Eastern Edition of The Wall Street Journal or any successor
publication ( "WSJ "), published by Dow Jones & Company, Inc., in the
section titled "Money Rates" (or any successor section) and opposite the
caption "London Interbank Offered Rates (LIBOR) -- three months" (or
any successor caption). If such rate does not appear in WSJ on a given
Business Day, for each interest period, the LIBO Rate shall be the
interest rate, converted to a bond - equivalent yield basis, for deposits in
U.S. dollars for three months which appears on Telerate Page 3750 or
such other page as may replace Page 3750 on that service or such other
service or services as may be nominated by the British Bankers'
Association for the purpose of displaying such rate (together, "Telerate
Page 3750 ") as of 11:00 a.m., London time, on the day (the
"Determination Date ") that is two London Banking Days preceding the
relevant Reset Date or Advance. If such :rate does not appear on Telerate
Page 3750 on such Determination Date, such rate shall be obtained
from the Reuters Screen ISDA Page as of 11:00 a.m., London time, on
such Determination Date. If, in turn, such rate does not appear on the
Reuters Screen ISDA Page on such Determination Date, the offered
quotation from each of four reference banks (expressed as a percentage
per annum) as of approximately 11:00 a.m., London time, on such
Determination Date for deposits in U.S. dollars to prime banks on the
London interbank market for a 3 -month period, commencing on the
(----)
Reset Date or date of such Advance, shall be obtained. If at least two
such quotations are provided, the LIBO Rate for such Reset Date or date
Promissory Note Page 2
of such Advance will be the arithmetic mean of the quotations, rounded
to five decimal places. If fewer than two such quotations are provided as
requested, the LIBO Rate for that Determination Date shall be the rate
for the most recent day preceding such Determination Date for which
the LIBO Rate shall have been displayed on Telerate Page 3750. The
LIBO Rate for any interest period shall be converted to a bond -
equivalent yield basis by multiplying such rate by the actual number of
days in such interest period and dividing that number by 180.
1 r) � -. 1._1 LIBO Rate" !1l ' +l-. + �.. +L,_ initial
1 .G. " A pplicable LIBO Ra e means: (1 with 11.J�.1Gl.L to Llll. initial
interest rate for the first Advance hereunder, the LIBO Rate two London
Banking Days before the date of such first Advance; (2) with respect to
the initial interest rate for any subsequent Advance made before the first
Reset Date, the interest rate borne by the first Advance; (3) with respect
to the initial interest t f bs Advance after the
L11G 1111 L1Q1 111 L1.11.JL laLl, for any subsequent AUV 0.111.E made alll..l Llle
first Reset Date, the LIBO Rate two London Banking Days before the
immediately preceding Reset Date; and (4) with respect to the
subsequent interest rate at any Reset Date for any Advance, the LIBO
Rate two London Banking Days before such Reset Date.
1.3. "London Banking Day" means any day in which dealings in
deposits in United States dollars are transacted in the London interbank
market.
2. Principal Amount. Prior to the Conversion Date, the aggregate amount of
Advances under this Note for each specified Principal Due Date under the
City Note shall be the Principal Amount to be paid by Payee on such
Principal Due Date (as assigned in accordance with the Master Agreement),
except to the extent such Principal Amount shall have been reduced by
prepayment before such Principal Due Date as provided herein.
3. Conversion Date. On the Conversion Date (whether conversion to a fixed
rate or rates is effected with the consent of the Obligor or otherwise), all
Advances owed by the Obligor under this Note with the same Principal Due
Date shall be aggregated into a single Principal Amount, which will accrue
interest at the fixed rate determined as provided in Appendix A to the City
Note. So long as no default shall have occurred under this Note and the other
Loan Documents which has not been cured or waived in accordance with the
terms hereof and thereof, the Payee shall not :request or consent to conversion
of the interest rate on the City Note to a fixed rate or rates, without the prior
written consent of the Obligor. However, Obligor acknowledges and agrees
that under the HUD Contract, HUD will have the unilateral right (with or
without notice to or consent of the Payee and /or Obligor) to fix the interest
payable on the City Note.
Promissory Note Page 3
4. Calculate Interest. Interest payable on or before the Conversion Date shall
be calculated based on a 360 -day year and the actual number of days
elapsed. Interest after the Conversion Date shall be calculated based on a
360 -day year consisting of twelve 30 -day months.
5. Payment of Principal and Interest. The principal of and interest on this Note
shall be due and payable at the same time correlative principal of and
interest on the City Note is due and payable. Such interest is due and
payable quarterly in arrears on February 1, May 1, August 1, and November
1, and such principal is due as set out on Exhibit 1 attached hereto and
incorporated herein by this reference. Payments of principal of and interest
on this Note shall be made to the Loan Repayment Account.
5.1. In order to ensure timely payment of such principal and interest,
commencing in the first month disbursement of principal of the City
Note in respect of this Note is to be made, Obligor shall make monthly
installment payments to the Custodian for deposit in an account
maintained by the Custodian for the accumulation of funds for
payments on this Note (the "Debt Service Reserve Account," which tel ill
shall include any related Debt Service Reserve Investment Account
established under the Custodial Agreement and Letter Agreements).
.....„._
Each such monthly payment shall be due and payable, in immediately
available funds, on the "Deposit Day," which shall be the fifteenth (15th)
day of the month, or if such day is not a Business Day, then on the
previous Business Day; provided that the Deposit Day in respect of any
Conversion Date shall be the day which is two Business Days prior to
the Conversion Date.
5.2. Subject to the provisions of the next section, each such payment
shall be in an amount equal to the actual interest accruing on this Note
during the corresponding month (the "Interest Component "), at the rate
or blended rate, as the case may be, then in effect, plus one - twelfth
(1/12th) of the total principal coming due on this Note on the next
scheduled principal payment date ( "Principal Component "); provided,
that the monthly payment obligation in respect of the Interest
Component shall be adjusted ratably during any month the Loan is not
outstanding for the entire month; and provided further, that the
Principal Component shall be adjusted ratably during any period that
fewer than twelve (12) Deposit Days are scheduled to occur prior to the
corresponding Obligor Payment Date (as such term is defined in the next
paragraph of this Note) in respect of a principal payment on this Note.
5.3. Except as provided in the next section, Obligor shall not be
0 entitled to any reductions in, or credits against, deposits required to be
made to the Debt Service Reserve Account based upon interest or
earnings credited to the Debt Service Reserve Account (including any
Promissory Note Page 4
Debt Service Reserve Investment Account). The Obligor hereby
irrevocably authorizes the Custodian to transfer funds from the Debt
Service Reserve Account to the Loan Repayment Account on each
Obligor Payment Date, in the full amount due on this Note on each such
date. Obligor's monthly installment payments into the Debt Service
Reserve Account shall not constitute payments under this Note. Obligor
shall be credited with the payment of interest on and the principal of
this Note only when and solely to the extent that funds shall be
transferred to the Loan Repayment Account in accordance with the
terms of the Loan Agreement and this -Vote. The Custodian is further
irrevocably authorized by Obligor to liquidate investments in the Debt
Service Reserve Account, in the Custodian's discretion, and without
liability for any loss on any such liquidation, for the purposes described
in this paragraph.
6. Interest Subsidy. Interest Stabilization Payments and Subsidy. Obligor and
the City intend, notwithstanding the actual :rate of interest payable on the
Loan and Obligor Note from time to time, that to the extent feasible,
Obligor's monthly interest payment obligations shall be based upon a
deemed rate of interest equal to four percent (4.0 %) per annum. The actual
interest payable by Obligor shall be determined as follows:
6.1. If the rate or blended rate, as the case may be, of interest on
the Loan and Obligor Note during any month is less than four
percent (4.0 %) per annum as calculated under Paragraph 1.3(b),
above, Obligor shall pay to the Custodian on the corresponding
Deposit Day, for deposit into the Debt Service Reserve Account, an
amount equal to the interest payment calculated at four percent
(4.0 %) per annum, notwithstanding that the actual interest
accruing on the Obligor Note during such period may be less.
6.2. If the actual rate of interest on the Loan and Obligor Note
during any month as calculated under Paragraph 1.3(b), above,
exceeds four percent (4 %) per annum, unless the Custodian shall
have delivered to Obligor and City a Shortfall Notice (defined in
this Section, below), Obligor shall pay to the Custodian on the
corresponding Deposit Day, interest at a rate equal to four percent
(4 %) per annum on the then - Outstanding principal balance of the
Loan and Obligor Note, and the Custodian shall look to other
funds on deposit in the Debt Service Reserve Account and the EDI
Grant Loan Payment Reserve Account to pay the balance of
interest next scheduled to become due on the City Loan; provided,
that the Custodian shall exhaust funds on deposit in the Debt
Service Reserve Account from time to time prior to making any
withdrawals from the EDI Grant Loan Payment Reserve Account to
pay any portion of the Interest Component of any monthly deposit;
Promissory Note Page 5
and provided further, that Custodian is not authorized to and
shall not withdraw from the EDI Grant Loan Payment Reserve
Account for such purposes, an aggregate amount greater than
Three Hundred Thirty Three Thousand and Three Hundred Thirty
Three Dollars ($333,333.00).
6.3. If not less than five (5) Business Days prior to any Deposit
Day the Custodian determines that there shall or may be
insufficient funds available in the Debt Service Reserve Account
and EDI Grant Loan Payment Reserve Account to pay the full
amount of principal and interest, as calculated under Paragraph
1.3(b), above, to become due on the City Note on the next date
such interest is required to be paid, taking into account the
expected payment of interest at a deemed rate of four percent
(4.0 %) per annum required to be made by Obligor on such Deposit
Day and each subsequent Deposit Day scheduled to occur prior to
the corresponding Obligor Payment Date, the Custodian shall
promptly deliver written notice (each, a "Shortfall Notice ") to that
effect to the Obligor (with a copy to the City). Upon receipt of any
such Shortfall Notice, and in any event, on or before the
corresponding Deposit Day, the Obligor shall pay to the
Custodian, for deposit into the Debt Service Reserve Account, the
full amount of interest actually accruing on the Loan and Obligor
Note during the corresponding month as calculated under
Paragraph 1.3(b), above. Obligor acknowledges and agrees that
interest stabilization payments made by Obligor in accordance
with this Section 4.4(b) and deposited in the Debt Service Reserve
Account, together with the earnings thereon, if any, shall be held,
without right of withdrawal or reimbursement.
7. Late Charge. If any deposit required to be made into the Debt Service Reserve
Account is not received within ten (10) days after the date when such deposit
is due, in addition to additional interest required to be paid in accordance
with this Note, Obligor agrees to pay a late charge equal to five percent (5.0 %)
of the amount past due, as compensation to Payee for the staff time and
resources required to handle such delinquencies, and not as a penalty. Such
late charges shall not be credited to the Debt Service Reserve Account or Loan
Repayment Account, but shall be retained by Payee. Late charges under this
Section are in addition to, and not in substitution for, the other remedies
provided in the Loan Documents.
8. Due Date. Anything herein to the contrary notwithstanding, all principal,
interest, fees, costs and other charges that Obligor is obligated to pay in
connection with this Note and the Loan shall be due and payable, in full, on
March 15, 2012.
Promissory Note Page 6
9. Security. This Note, together with other obligations of Obligor under the
Loan Documents is by security interests in the monies and investments
held in certain Reserves established in accordance with the Loan Agreement
and Master Agreement. This Note is further secured by an Unconditional
Guarantees of even date, executed and delivered by Gary Lukehart and
Mary Lukehart, husband and wife, (the "Guarantor ") and the deed of trust
given by Gateway Center Associates, L.L.C. on the property known as
Gateway Center in Yakima, Washington. All of the above security interests
are perfected, to the extent allowable under Washington law, by recording in
the records of Yakima County, Washington and by filing of financing
statements with the Washington State Department of Licensing or taking
possession of the collateral.
10. Prepayment. The principal hereof and any interest accrued hereon may
be prepaid, provided, however, that any prepayment shall not reduce the
principal payment required at any subse time until this Note is paid in
full, together with interest hereon, and provided, further:
10.1. On or before the Conversion Date, this Note may be prepaid in
whole or in part upon thirty (30) days prior written notice to the Payee
and with, and only with, the consent of HUD. Any prepayment of the
principal hereof shall be accompanied by all accrued interest thereon to
the date of prepayment, and partial prepayments shall be credited
against the Principal Amount last becoming due hereunder.
10.2. After the Conversion Date, this Note may be prepaid in whole or in
part at any time if the City Note allows, provided Obligor shall give
90 days prior written notice of its intention to make any prepayment.
Any prepayment shall be applied to the payments last becoming due
under this Note. No partial prepayment shall relieve the Obligor of the
obligation to make any future payments due after the date of any
prepayment. Any prepayment shall be in an amount not less than the
amount which is sufficient to defease the portion of the City Note
allocable to this Note or the portion hereof to be prepaid as provided in
the Master Agreement, including the requirement that Principal
Amounts under the City Note having the latest maturity must be
defeased before those with shorter maturities. If in the event of any
prepayment Payee incurs any costs, expenses, fees, charges, premiums
or losses, the Obligor shall pay such items upon demand in addition to
the principal and interest due hereunder.
10.3. Any prepayment by Obligor or any third party, or recovery from the
disposition of any collateral, after default shall constitute a prepayment
and be subject to all terms and conditions regarding prepayment.
Promissory Note Page 7
• _ 11. Default. In the event of any default by Obligor in any term or condition
of this Note, the Loan Agreement, the Deed of Trust, or any other document
executed in connection herewith, or in the event of any default by Guarantor
under the Guaranty, if any, in any event, which default is not cured as
permitted by the applicable document, the following may or shall occur.
11.1. Any interest rate subsidy for this Note shall cease.
11.2. The outstanding principal balance of the Loan and this Note shall
bear interest at the greater of the rate set as provided above or weive
percent (12 %) per annum.
11.3. The entire principal and accrued interest hereunder shall become
immediately due and payable without notice or demand at the option of
the Payee.
11.4. If Payee commences any action to enforce collection hereof or
foreclosure under any security document given in connection herewith
or therewith, the Obligor agrees to pay all costs and expenses incurred
by Payee, including but not limited to Payee's reasonable attorneys' fees.
11.5. Demand, protest, and notice of demand and protest are hereby
iY �✓ waived, and the Obligor, to the extent authorized by law hereby waives
any and all exemption rights which otherwise might apply to the
obligation evidenced by this Note, and /or any property covered by any
security document given in connection herewith.
12. The Obligor executes this Note as a principal and not as a surety.
ORAL AGREEMENTS, OR ORAL COMMITMENTS TO LEND MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A
DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
TRAIL AGONS, INC.
Gary Lu • -har , President
STATE OF WASHINGTON )
) ss:
County of Yakima
Promissory Note Page 8
I certify that I know or have satisfactory evidence that GARY LUKEHART
is the person who appeared before me, and said person acknowledged that he
signed this instrument, on oath, stated that he was authorized to execute the
instrument and acknowledged it as President of TRAIL WAGONS, INC., a
Washington corporation, to be the free and voluntary act of such party for the
uses and purposes mentioned in the instrument.
DATED: March 24, 2003.
EX
11 0 � TARY PUBLIC in and for the
( J � , i:1ate of Wash. _t•.
• \\ \ r � j siding at: ,J
\ 0111 UV Ill expires: ` — 7 /
ASSIGNMENT AND ACKNOWLEDGMENT:
The Payee hereby assigns to JPMorgan Chase Bank, as Trustee, with full
right of assignment for the benefit of HUD under that certain Indenture of
Trust and Custodial Agreement dated as of , 2003 and the
Master Agreement, all of its rights under the foregoing Promissory Note.
Dated this 24th day of March, 2003.
CITY OF YAKIMA
By:
R. A. Zais, Jr., City
Manager
Obligor hereby acknowledges the foregoing assignment and agrees to
recognize and render all performance to the Trustee and HUD as assignee of
the Promissory Note.
TRA.. WAGONS, INC., a
W.% gton corporation
Gary kehart, President
Promissory Note Page 9
•
,
Trail Wagons Amortization Schedule for-HUD 108 loan (assumes interest rate stays at 4% throughout the loan, which may not occur)
•
• amount of loan 2,450,000 Exhibit 1
•
— years to pay 10
interest rate 4% Assumes loan received 4/10/03
., Repayment- : `'. �; ,:' M '- ,: �, ' _ . , :- : = ,. •Q .-.
Month Principal . Cum Prfn Interest;- " -. "Payment;
1 3,402.78 2,446,597.22 22,866.67 26,269.44
2 20,416:67 2,426,180.56 97,863.89 118,280.56
3 20,416.67 2,405,763.89 97,047.22 117,463.89
•
4 20,416.67 2,385,347.22 96,230.56 116,647.22
5 20,416.67 2,364,930.56 95,413.89 115,830.56
6 20,416.67 2,344,513.89 94,597.22 115,013.89
7 20,416.67 2,324,097.22 93,780.56 114,197.22
8 20,416.67 2,303,680.56 92,963.89 113,380.56
9 20,416.67 2,283,263.89 92,147.22 112,563.89
10 20,416.67 2,262,847.22 91,330.56 111,747.22
• 11 20,416.67 2,242,430.56 90,513.89 110,930.56
12 20,416.67 2,222,013.89 89,697.22 110,113.89
13 20,416.67 2,201,597.22 88,880.56 109,297.22
14 20,416.67 2,181,180.56 88,063.89 108,480.56
15 20,416.67 2,160,763.89 87,247.22 107,663.89
16 20,416.67 2,140,347.22 86,430.56 106,847.22
17 20,416.67 2,119,930.56 85,613.89 106,030.56
18 20,416.67 2,099,513.89 84,797.22 105,213.89
•
19 20,416.67 2,079,097.22 83,980.56 104,397.22
20 20,416.67 2,058,680.56 83,163.89 103,580.56
21 20,416.67 2,038,263.89 82,347.22 102,763.89
22 20,416.67 2,017,847.22 81,530.56 101,947.22
23 20,416.67 1,997,430.56 80,713.89 101,130.56
24 20,416.67 1,977,013.89 79,897.22 100,313.89
25 20,416.67 1,956,597.22 79,080.56 99,497.22
26 20,416.67 1,936,180.56 78,263.89 98,680.56
27 20,416.67 1,915,763.89 77,447.22 97,86.3.89
28 20,416.67 1,895,347.22 76,630.56 97,047.22
29 20,416.67 1,874,930.56 75,813.89 96,230.56
30 20,416.67 1,854,513.89 74,997.22 95,413.89
31 20,416.67 1,834,097.22 74,180.56 94,597.22
32 20,416.67 1,813,680.56 73,363.89 93,780.56
33 20,416.67 1,793,263.89 72,547.22 92,963.89
34 20,416.67 1,772,847.22 71,730.56 92,147.22
35 20,416.67 1,752,430.56 70,913.89 91,330.56
36 20,416.67 1,732,013.89 70,097.22 90,51:3.89
37 20,416.67 1,711,597.22 69,280.56 89,697.22
38 20,416.67 1,691,180.56 68,463.89 88,880.56
39 20,416.67 1,670,763.89 67,647.22 88,06:3.89
40 20,416.67 1,650,347.22 66,830.56 87,247.22
41 20,416.67 1,629,930.56 66,013.89 86,430.56
42 20,416.67 1,609,513.89 65,197.22 85,613.89
43 20,416.67 1,589,097.22 64,380.56 84,797.22
44 20,416.67 1,568,680.56 63,563.89 83,980.56
45 20,416.67 1,548,263.89 62,747.22 83,163.89
46 20,416.67 1,527,847.22 61,930.56 82,347.22 .
47 20,416.67 1,507,430.56 61,113.89 81,530.56
48 20,416.67 1,487,013.89 60,297.22 80,71:3.89
49 20,416.67 1,466,597.22 59,480.56 79,897.22
50 20,416.67 1,446,180.56 58,663.89 79,080.56
51 20,416.67 1,425, 763.89 57, 847.22 78,26:3.89
52 20,416.67 1,405,347.22 57,030.56 77,447.22
53 20,416.67 1,384,930.56 56,213.89 76,630.56
54 20,416.67 1,364,513.89 55,397.22 75,813.89
55 20,416.67 1,344,097.22 54,580.56 74,997.22
56 20,416.67 1,323,680.56 53,763.89 74,180.56
57 20,416.67 1,303,263.89 52,947.22 73,363.89
58 20,416.67 1,282,847.22 52,130.56 72,547.22
59 20,416.67 1,262,430.56 51,313.89 71,730.56
as of 3/25/03
■
,
•
Trail Wagons Amortization Schedule for HUD 108 loan (assumes interest rate stays at 4% throughout the loan, which may not occur)
60 20,416.67 1,242,013.89 50,497.22 70,913.89
\ 61 20,416.67 1,221,597.22 49,680.56 70,097.22
62 20,416 :67 1,201,180.56 48,863.89 69,280.56
63 20,416.67 1,180,763.89 48,047.22 68,463.89
64 20,416x67 1,160,347.22 47,230.56 67,647.22
65 20,416 :67 1,139,930.56 46,413.89 66,830.56 •
66 20,416:67 1,119,513.89 45,597.22 66,013.89
67 20,416.67 1,099,097.22 44,780.56 65,197.22
68 20,416.67 1,078,680.56 . 43,963.89 64,380.56
69 20,416:67 1,058,263.89 43,147.22 63,563.89
70 20,416.67 1,037,847.22 42,330.56 62,747.22
71 20,416.67 1,017,430.56 41,513.89 61,930.56 .
72 20,416 67 997,013.89 40,697.22 61.113.89
73 20,416.67 976,597.22 39,880.56 60,297.22
74 20,416.67 956,180.56 39,063.89 59,480.56
75 20,416.67 935,763.89 38,247.22 58,663.89
76 20,416.67 915,347.22 37,430.56 57,847.22
77 20,416.67 894,930.56 36,613.89 57,030.56
78. 20,416.67 874,513.89 35,797.22 56,213.89
79 20,416.67 854,097.22 34,980.56 55,397.22
80 • 20,416.67 833,680.56 34,163.89 54,580.56
81 20,416.6( 813,263.89 33,347.22 53,763.89
82 20,416.67 792,847.22 32,530.56 52,947.22
83 20,416.67 772,430.56 31,713.89 52,130.56
84 20,416.67 752,013.89 30,897.22 51,313.89
85 20,416.67 731,597.22 30,080.56 50,497.22
86 20,416.67 711,180.56 29,263.89 49,680.56 .
87 20,416.67 690,763.89 28,447.22 48,863.89
88 20,416.67 670,347.22 27,630.56 48,047.22
89 20,416.67 649,930.56 26,813.89 47,230.56
—1.^* 90 20,416.67 629,513.89 25,997.22 46,413.89
\ 91 20,416.67 609,097.22 25,180.56 45,597.22
/) 92 20,416.67 588,680.56 24,363.89 44,780.56
=' 93 20,416.67 568,263.89 23,547.22 43,963.89
94 20,416.67 547,847.22 22,730.56 43,147.22
95 20,416.67 527,430.56 21,913.89 42,330.56
96 20,416.67 507,013.89 21,097.22 41,513.89
97 20,416.67 486,597.22 20,280.56 40,697.22
98 20,416.67 466,180.56 19,463.89 39,880.56 •
99 20,416.67 445,763.89 18,647.22 39,063.89 •
100 20,416.67 425,347.22 17,830.56 38,247.22
101 20,416.67 404,930.56 17,013.89 37,430.56
102 20,416.67 384,513.89 16,197.22 36,613.89
103 20,416.67 364,097.22 15,380.56 35,797.22
104 20,416.67 343,680.56 14,563.89 34,980.56
105 20,416.67 323,263.89 13,747.22 34,163.89
106 20,416.67 302,847.22 12,930.56 33,347.22
107 20,416.67 282,430.56 12,113.89 32,530.56
108 20,416.67 262,013.89 11,297.22 31,713.89
109 20,416.67 241,597.22 10,480.56 30,897.22
110 20,416.67 221,180.56 9,663.89 30,080.56
111 20,416.67 200,763.89 8,847.22 29,263.89
112 20,416.67 180,347.22 8,030.56 28,447.22
113 20,416.67 159,930.56 7,213.89 27,630.56
114 20,416.67 139,513.89 6,397.22 26,813.89
115 20,416.67 119,097.22 5,580.56 25,997.22
116 20,416.67 98,680.56 4,763.89 25,180.56
117 20,416.67 78,263.89 3,947.22 24,363.89
118 20,416.67 57,847.22 3,130.56 23,547.22
119 20,416.67 37,430.56 2,313.89 22,730.56
120 20,416.67 17,013.89 1,497.22 21,913.89
121 17,013.89 - 680.56 17,694.44
I Total 8,385,533.33
V
as of 3/25/03
•
UNCONDITIONAL GUARANTY
PARTIES: City: The City of Yakima, a Washington municipal
corporation
Borrower: Trail Wagons, Inc., a Washington corporation
Guarantor: Gary Lukehart and Mary Lukehart, husband
and wife
RECITALS: Concurrent with this Guaranty, City and Obligor have
entered into a Loan Agreement and Promissory Note in the
amount of $2,450,000.00. Obligor is refinancing of its line of
credit, paying the closing costs for the Loan, paying on -going
operating costs as they accrue in the future with the proceeds
from the Loan. The undersigned has agreed to enter into this
Unconditional Guaranty of all Borrower's obligations
thereunder.
AGREEMENT:
As an inducement and in consideration of any and all contemporaneous or future
financial accommodations by City to Borrower, the undersigned Guarantor,
unconditionally guarantees the prompt payment when due and at all times
thereafter of any and all existing, contemporaneously incurred and future
indebtedness and liability of every kind (including all extensions, renewals and
modifications thereof), absolute or contingent, however created or evidenced,
owing from Borrower to City plus such interest as may accrue thereon. Credit
may be granted by City to Borrower from time to time without further
authorization of or notice to Guarantor.
Guarantor agrees to pay City all expenses of every kind including, without
limitation, any and all fees and expenses incurred by it on account of the services
Guaranty Page 1
\ l
of any attorney employed or retained by it, including in -house counsel, in
protecting or defending City's interest and in attempting to collect all or any part
of such indebtedness and in enforcing this guaranty, with or without suit. Every
immediate and successive assignee of any part of such indebtedness guaranteed
hereby shall have the right to enforce all agreements and obligations contained in
this guaranty for its own benefit as fully as if named herein, but City shall
nevertheless have the right to enforce this guaranty for its own benefit as to so
much of the liability guaranteed as has not been assigned.
Guarantor waives notice of (a) the acceptance of this guaranty; (b) any and all
indebtedness of any kind covered by the guaranty; and (c) any and all demands,
nonpayments or other defaults in respect of such indebtedness.
If more than one person or legal entity signs this Unconditional Guaranty, all
references to "Guarantor" herein shall bind each of the undersigned jointly and
severally.
The liability of Guarantor under this guaranty shall be continuing and shall
remain in full force and effect as long as Borrower is or may be indebted to City
"' on account of any indebtedness covered by the guaranty. It shall not be affected
`� in any way by (and the City is hereby expressly authorized to make without notice
to anyone) any sale, pledge, surrender, compromise, release, acceleration,
discharge, renewal, extension, substitution, exchange or modification of any kind
whatsoever of all or any part of the indebtedness covered by the guaranty, or of
all or any part of the security or collateral given to secure such indebtedness,
including the release or addition of other guarantors. In addition, such liability
of Guarantor shall not be affected in any way by the failure or invalidity of or any
defect in any security or collateral given to secure such indebtedness. No exercise
or non - exercise, waiver, change, impairment or suspension by City of any right or
remedy given it by this Unconditional Guaranty or by Borrower and no dealings
by City with Borrower or any other person shall in any way affect any of the
obligations of Guarantor hereunder or any security furnished by Guarantor, now
or hereafter, or give Guarantor any recourse against City. The obligations of
Guarantor to City hereunder are independent of Borrower's obligations and a
separate action or actions may be brought and prosecuted by City against
Guarantor, whether or not such action or actions are also brought against
Borrower, other guarantors or any security granted to City.
Guarantor waives and agrees not to assert or otherwise take advantage of (a) any
right which it may have to require City to proceed against Borrower or any other
fr person, firm or corporation or to proceed against or exhaust any security held by
Guaranty Page 2
.
it at any time or to pursue any other remedy in its power; (b) any defense which
it may have in the nature of statute of limitations in any action hereunder or for
the collection of any indebtedness or the performance of any obligation guaranteed
hereby; (c) any defense which it may have by reason of incapacity, lack of
authority, or lack of shareholder or other approvals relating either to Borrower or
Guarantor or the failure of City to file or enforce a claim against the estate (either
in administration, bankruptcy, or other proceeding) of Borrower or of any other
or others; (d) any lack of demand, protest and notice of any kind including,
without limitation, notice of the existence, creation or incurring of new or
additional indebtedness or of any action or non-action on the part of Borrower,
City, any endorser, creditor of Borrower or Guarantor under this or any other
agreement, or any person whomsoever, in connection with any obligation or
evidence of indebtedness held by City as collateral or in connection with any
indebtedness guaranteed hereby; (e) any defense which is may have based upon
an election of remedies by City; and (f) any duty which City may have to disclose
to Guarantor any facts which it may now or hereafter know about Borrower, it
being understood and agreed that Guarantor is fully responsible for being and
keeping informed of the financial condition of Borrower and of all circumstances
bearing on the risk of non - payment of any indebtedness guaranteed hereby.
Until all indebtedness of Borrower to City is paid in full, Guarantor shall have no
right of subrogation and waives any right which it may otherwise have to enforce
any remedy whatsoever which City may have against Borrower and any benefit of
or right to participate in realization or any security now or hereafter granted to
City.
With or without notice to Guarantor, City may, in its sole discretion and at any
time and from time to time and in such manner and upon such terms as it
considers fit, apply any or all payments or recoveries from Borrower, Guarantor,
any other guarantor or source, or from any security granted to City, under this or
any other agreement, in such manner and order or priority as City may determine,
to any indebtedness of Borrower to City, whether or not such indebtedness is
guaranteed hereby or is otherwise secured or is due at the time of such
application.
For consideration as recited above, Guarantor subordinates any and all
indebtedness of Borrower to Guarantor to any and all indebtedness of Borrower
to City. If City so requests, any such indebtedness of Borrower to Guarantor shall
be collected and received by Guarantor as trustee for City and paid to City on
account of Borrower's indebtedness to it, without reducing or affecting
Guarantor's liability under any of the provisions of this guaranty.
Guaranty Page 3
1
This guaranty is in addition to and independent of any other guaranties at any
time in effect with respect to all or any part of Borrower's indebtedness to City and
may be enforced regardless of the existence of any such other guaranties which
shall continue to remain in full force and effect.
No provision of this guaranty or any right or remedy of City hereunder can be
waived nor can Guarantor be released from its obligations hereunder except in
writing duly executed by an authorized officer of City. Should any one or more
provisions of this guaranty be determined to be illegal or unenforceable, all other
provisions shall nevertheless be effective.
This g arantc7 s hall b con s t r u e d andl performed accor t the laws of the State
o f W Guarantor irrevocably submits to the jurisdiction of any state or
federal court sitting in Yakima County, Washington, in any action or proceeding
brought to enforce or otherwise arising out of or relating to this guaranty and
irrevocably waives to the fullest extent permitted by law any objection which it
may have now or hereafter to venue or any claim that such forum is an
inconvenient forum.
EXECUTED this 24th day of March, 2003.
. OMAPAW-_
Gary Lukehart
-A d_
Mary Lulahart
F: \CLIENTS \DAB \YAKIMA \Trailwagons \TW guaranty.doc
Guaranty Page 4
•
• Return Address: this ^enT� r; to
be i opy of •
origina . ,, �ment.
• Donald A. Boyd
Halverson & Applegate, P.S. •
P.O. Box 22730 •
Yakima, WA 98907 -2715
•
DEED OF TRUST HYPOTHECATION
Grantor:
1. GATEWAY CENTER ASSOCIATES, L.L.C. •
Borrower(s):
1. TRAIL WAGONS, INC.
This document is certified 10
Beneficiary: b e a true and correct GORY d
.�. •—� y. .i :.�. meat.
1. THE CITY OF / I�
Trustee:
• 1. FIDELITY TITLE COMPANY
Legal Description:
1. Parcel A: •
Lots 2 and 7 of Amended Plat of Yakima Gateway Center, Lots 1 -7,
inclusive, recorded in Volume "EE ", Page 11, records of Yakima
County, Washington.
2. Parcel B:
Lot 3, Amended Plat of Yakima Gateway Center, Lots 1 -7,
inclusive, recorded in Volume "EE ", Page 11, records of Yakima
County, Washington, and that part of Lot 5, Plat of Yakima
Gateway Center, Lots 1 -7, inclusive, recorded in Volume "EE ",
Page 11, records of Yakima County, Washington, described as
follows:
Commencing at the Northwest corner of said Lot 3,
also being the Southwest corner of Said Lot 5; thence
South 89°12'10" East along the line between said Lots
•
•
•
3 and 5, a distance of 25.0 feet; thence North
61 °28'22" East along the line between said Lots 3 and
5, a distance of 134.14 feet to the point of beginning;
thence South 28 °31'38" East 24.0 feet; thence North
61 °28'22" East 25.26 feet; thence North 28 °31'38"
West 24.0 feet; thence South 61 °28'22" West 25.26
feet to the point of beginning.
3. Parcel C:
Lots 4 and 5 of Amended Plat of Yakima Gateway Center, Lots 1 -7,
inclusive, recorded in Volume "EE ", Page 11, records of Yakima
County, Washington.
EXCEPT commencing at the Northwest corner of Lot 3, of Plat of
Yakima Gateway Center, Lots 1 -7, inclusive, recorded in Volume
"EE ", Page 11, records of Yakima County, Washington, also being
the Southwest corner of said Lot 5, thence South 89°12'10" East
along the line between said Lots 3 and 5, a distance of 25.0 feet;
thence North 61 °28'22" East along the line between said Lots 3
and 5, a distance of 134.14 feet to the point of beginning; thence
South 28 °31'38" East 24.0 feet; thence North 61 °28'22" East 25.26
feet; thence North 28 °31'38" West 24.0 feet; thence South
61 °28'22" West 25.26 feet to the point of beginning.
Assessor's Property Tax Property Tax Parcel Number(s):
191318- 44401, 191318- 44402, 191318 - 44409, 191318 - 44410, and
191319 - 11510.
THIS DEED OF TRUST ( "Deed of Trust ") is made on this 24th day of
March, 2003, by GATEWAY ENTER ASSOCIATES, L.L.C., Grantor, whose
address is 1 1"97'8` , WA 9890 FIDELITY TITLE COMPANY,
Trustee, whose address is 406 N. 2 St., Yakima, WA, 98901, and THE CITY
OF YAKIMA, Beneficiary, whose address is 129 N. 3 St, Yakima, WA 98901.
Recital
Borrower has signed a loan agreement ( "Loan Agreement ") and
promissory note ( "Promissory Note ") with the Beneficiary, dated on or about the
_ � date hereof. The Grantor is g
g ivin this Deed of Trust in consideration of
accommodations made or to be made by Borrower.
WITNESSETH:
Grantor hereby bargains, sells and conveys to Trustee in Trust,
with po of sale, the follo d real property in Yakima Couu
rim nt
with power l..l Vl V 1V, the following 111 UV�JV11 VliU l Val 1 /1 V l.� in 1 1 >llll VV U ll L,' ,
Washington:
which real property is not used principally for agricultural or farming purposes,
together with all the tenements, hereditaments, and appurtenances now or
hereafter thereunto belonging or in any wise appertaining, and the rents,
issues and profits thereof.
This deed is for the purpose of securing performance of the
Borrower's Loan Agreement herein contained, and payment of the sum of TWO
MILLION FOUR HUNDRED FIFTY DOLLARS ($2,450,000.00) with interest, in
accordance with the terms of a Promissory Note of even date herewith, payable
to Beneficiary, and made by Borrower, and all renewals, modifications and
extensions thereof, and also such further sums as may be advanced or loaned
by Beneficiary to Borrower, or any of their successors or assigns, together with
interest thereon at such rate as shall be agreed upon.
To protect the security of this Deed of Trust, Grantor covenants
and agrees:
1. To keep the property in good condition and repair; to permit no
waste thereof; to complete any building, structure or improvement being 41, or about to be built thereon; to restore promptly any building, structure or
improvement thereon which may be damaged or destroyed; and to comply with
all laws, ordinances, regulations, covenants, conditions and restrictions
affecting the property.
2. To pay before delinquent all lawful taxes and assessments upon
th ty; keep the t. free a 1a... f 11 t h e L arge l
Lill. proper" 4
propert 'co LV 111.� Llll. p1Vpl..iL . 111.1. and of all other %iiai�l.S, iiL.iiS, or
encumbrances impairing the security of this Deed of Trust.
3. To keep all buildings now or hereafter erected on the property
described herein continuously insured against loss by fire or other hazards in
an amount not less than the total debt secured by this Deed of Trust. All
policies shall be held by the Beneficiary, and be in such companies as the
Beneficiary may approve and have loss payable first to the Beneficiary as its
interest may appear and then to the Grantor. The amount collected under any
insurance policy may be applied upon any indebtedness hereby secured in
such order as the Beneficiary shall determine. Such application by the
Beneficiary shall not cause discontinuance of any proceedings to foreclose this
Deed of Trust. In the event of foreclosure, all rights of the Grantor in insurance
policies then in force shall pass to the purchaser at the foreclosure sale.
4. To defend any action or proceeding purporting to affect the
security hereof or the rights or powers of Beneficiary or Trustee, and to pay all
costs and expenses, including cost of title search and attorney's fees in a
reasonable amount, in any such action or proceeding, and in any suit brought
by Beneficiary to foreclose this Deed of Trust.
5. To pay all costs, fees and expenses in connection with this Deed
of Trust, including the expenses of the Trustee incurred in enforcing the
obligation secured hereby and Trustee's and attorney's fees actually incurred,
g Y Y Y
as provided by statute.
6. Should Grantor fail to pay when due any taxes, assessments,
insurance premiums, liens, encumbrances, or other charges against the
pr 1 rrein described, Beneficiary m p ay th ca and the
amount so paid, with interest at the rate set forth in the note secured hereby,
shall be added to and become a part of the debt secured in this Deed of Trust.
IT IS MUTUALLY AGREED THAT:
1. In the event any portion of the property is taken or damaged in
an eminent domain proceeding, the entire amount of the award or such portion
thereof as may be necessary to fully satisfy the obligation secured hereby, shall
'" ) be paid to Beneficiary to be applied to said obligation.
*4'r
2. By accepting payment of any sum secured hereby after its due
date, Beneficiary does not waive its right to require prompt payment when due
of all other sums so secured or to declare default for failure to so pay.
3. The Trustee shall reconvey all or any part of the property
covered by this Deed of Trust to the person entitled thereto, on written request
of the Beneficiary, or upon satisfaction of the obligation secured and written
request for reconveyance made by the Beneficiary or the person entitled
thereto.
4. Upon default by Borrower in the payment of any indebtedness
secured hereby or in the performance of any agreement contained herein, all
i ts sums secured hereby shall immediately become clue and payable at the option
such event and upon written request of Beneficiary,
of the Beneficiary. In suc p q
Trustee or trustee's authorized agent, shall sell the trust property, in
accordance with the Deed of Trust Act of the State of Washington, (as
amended), at public auction to the highest bidder. Any person except Trustee
may bid at Trustee's sale. Trustee shall apply the proceeds of the sale as
f o li ows: ( 1 t
(1) o the expense of the sale, including reasonable �'l�e Trii ' �vfee fee n
` 1� Y V11V V sa V, i 1V1lAUlllg a 1 VaSVllalJlli 11 UwJ lt. �. S 1V�.. an
attorney's fee; (2) to the obligation secured by this deed of Trust; (3) the
surplus, if any, shall be distributed to the persons entitled thereto or shall be
t ks filing fee) with the clerk the of deposited (less L.ler '
clerk's llllllg fei,, with Llle clli rt� of Llle superior court of thh
e
county in which sale takes place.
5. Trustee shall deliver to the purchaser at the sale its deed,
without warranty, which shall convey to the purchaser the interest in the
property which Grantor had or had the power to convey at the time of his
execution of this Deed of Trust, and such as he may have acquired thereafter.
Trustee's deed shall recite the facts showing that the sale was conducted in
compliance with all the requirements of law and of this Deed of Trust, which
recital shall be prima facie evidence of such compliance and conclusive
evidence thereof in favor of bona fide purchasers and encumbrancers for value.
6. The power of sale conferred by this Deed of Trust and by the
Deed of Trust Act for the State of Washington in not an exclusive remedy;
Beneficiary may cause this Deed of Trust to be foreclosed as a mortgage.
7. In the event of the death, incapacity, disability or resignation of
Trustee, Beneficiary shall appoint in writing a successor trustee, and upon the
recording of such appointment in the mortgage records of the county in which
this Deed of Trust is recorded, the successor trustee shall be vested with all
- powers of the original trustee. The trustee is not obligated to notify any party
hereto of pending sale under any other Deed of Trust or of any action or
proceeding in which Grantor, Trustee or Beneficiary shall be a party unless
such action or proceeding is brought by the Trustee.
8. This Deed of Trust applies to, inures to the benefit of, and is
binding not only on the parties hereto, but on their heirs, devisees, legatees,
administrators, executors, successors and assigns. The term Beneficiary shall
mean the holder and owner of the note secured hereby, whether or not named
as Beneficiary herein.
Gatev :y Center Associates, L.L.C.
STATE OF WASHINGTON )
) ss:
County of )
On this day personally appeared before me GARY LUKEHART, to me
known to be a member of GATEWAY CENTER ASSOCIATES, L.L.C. as
described above and who executed the within and foregoing instrument, and
acknowledged that he signed the same as his free and voluntary act and deed,
for the uses and purposes therein mentioned.
GIVEN under my hand and official seal this 24th day of March, 2003.
0,4
,. . op,1 AIRY PUBLIC in and for the
�' ► • : ate of Washi :t.
/ _T f Residing at % iI
I t 0 z= 0 My commi /n expires: 6�
t i
1
•
REQUEST FOR FULL RECONVEYANCE
Do not record. To be used only when note has been paid.
TO: TRUSTEE
The undersigned is the legal owner and holder of the note and all other
indebtedness secured by the within Deed of Trust. Said note, together with all
other indebtedness secured by said Deed of Trust, has been fully paid and
satisfied; and you are hereby requested and directed, on payment to you of any
sums owing to you under the terms of said Deed of Trust, to cancel said note
above mentioned, and all other evidences of indebtedness secured by said Deed
C Trust delivered to herewith, + tb, 'h the Deed trust, and of 11 uS� ucilvereu �� you together with tiie sai Deeu of , aii to w
reconvey, without "warranty, to the parties designated by the terms of said Deed
of Trust, all the estate now held by you thereunder.
Dated this day of March, 2003.
Mail reconveyance to:
•
(11.
= ..: ■ ■. ■vr% ■ a— J $ LeIP L1IL.I 1 1 IIVVII/- 111111rC I 03/24/2003
aocuc .i (509)965 - 2090 FAX (509)966 - 3454 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION -
Conover Insurance, Inc . (Y) ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE
IZ S N. 50th Ave. HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR
ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
IP.O. Box 10088 -
Yakima, WA 98909 - 1088 INSURERS AFFORDING COVERAGE
1 3 Gateway Center Associates, LLC INSURERA: Transcontinental Insurance Co
�? C/0 Management Northwest, Inc. IN$uRER B:
- 3810 196th St. SW, Suite 12
INSURER C •
Lynnwood, WA 98036 INSURER D.
I INSURER E.
COVERAGES
L I R
THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITMSTANOING
A NY REQUIREMENT. TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED C=
MAY PERTAIN. THE INSURANCE AFFORDED,BY THE POLICIES DESCRIBED HEREIN IS SUBJECT' TO ALL THE TERMS. EXCLUSIONS AND CONDITIONS OF j,C
POLICIES. AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
IN$ TYPE OF INSURANCE T E V
POLICY NUMBER POLICY EFFE 1 POLICY EXPIRATION'
DATE, LMM /DDLYY) DATE jMM/DD/YY} LIMIT$
I GENERAL LIABILITY 1M CAA70797 0 - r ,000
�! 05/01/2003. 1
EACHOCCURRENCE S 1,000,01
X COMMERCIAL GENERAL LIAB41TY FIRE DAMAGE (Any ono first) S 100,0(
CLAIMS MADE OCCUR MEO EXP (Any one pwcoN $ 10 01
:A
PERSONAL a AOV INJURY 5 1,000,0(
' GENERAL AGGREGATE S 2,000,01
GENII AGGREGATE LIMIT APPLIES PER•
PRODUCTS • COMPrOP AGG 5 2 • 000 - 0(
• o .. F PRO f1
.
11 I ) I JE( :T 1 1 i I i
AUTOMOBILE LIAR LITY t 1 I
7 COMBINED SINGLE LIMIT
ANY AUTO • (Ea LKC�fSen,) 5
ALL OWNED AUTOS
90OLLY INJURY S
SCHEDULED AUTOS I (Per person
HIRED AUTOS
9OO INJU
NON OWNED AUTOS ( ?ar eccideILY n, S
PROPERTY DAMAGE
E LIABILITY
IPe�acanero S
.--
/ / / /// AUTO ONLY . EA ACCIOENT 5
ANY AUTO
�1 OTHER THAN EA ACC 5
1 AUTO ONLY:
_ AGO S
EX CESS LIABILITY EACH OCCURRENCE $
OCCUR 1 CLAIMS MADE I AGGREGATE S
S
DEDUCTIBLE 3
RETENTION S '-"
1036478787 S
WORKERS COMPENSATION AND A I Eq
O H-
EMPLOYERS - LIABILITY 140P
E L. EACH ACCIDENT 3
E.L. DISEASE - EA EMPLOYEE S
E.L. DISEASE - POLICY LIMIT S
0TH R
Bui dings 05/01/2002 05/01/2003 See Below
52,500 deductible
SCRIPTION OP OPERATION $rLOCATIONS /VEHICLESIEXCLUSIONS ADDED BY ENDORSEMENT /SPECIAL PROVISIONS
ildings located at; 110 N. Fair Ave_, Yakima, WA - S528,000; 128 N. Fair Ave., Yakima, WA -
,483,000; 6 N. Fair Ave., Yakima, WA - 5915,000.
RTIFICATE HOLDER j I ADDITIONAL. INSURED; rNSURER LETTER: CANCELLATION
EHOULD ANY OE THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE E
EXPIRATION DATE THEREOF. THE I$$UING COMPANY WILL ENDEAVOR TO MAIL
10 DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT,
BUT FAILURE TO MAIL SUCH NOTICE SMALL IMPOSE NO OBLIGATION OR LIAR "_TTY
Or ANY KIND UPON THE COMPANY. ITS AQENTS OR REPRESENTATIVES,
as Named Insured AUTHORIZED REPRESENTAnVE
David LaRiviere/TRACIS 4 42.-4
)RD 25 -S (7197) ®ACORD CORPORATION 19$9
„ „� �� ` - vu� 1I L.Jl\rli'I 1J'U770OJY J' f . YJ� C1C
"'J ∎�'. . . • •`r' a..- VE 1..1r1L.1EL.11 II IlvNunilovt,C I 03/24/2003
I TROQUCEa (509)965 FAX (509)966 - 3454 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION
Conover Insurance, Inc . (Y) ONLY AND CONFERS NO iR1GHTS UPON THE CERTIFICATE
125 N. SOth Ave. . HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND OR
ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.
EP.O. Box 10088
Yakima, WA 98909 - 1088 INSURERS AFFORDING COVERAGE
) ( ' Trail Wagons Inc. ` INSURER A Admiral c/o American E &S Ins_ Brokers
P. 0. Box 2589 wsuAeme. St. Paul Fire & Marine
Yakima, WA 98907 INSURER C:
INSURER 0.
INSURER E• —'
1
COVERAGES
THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING
ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR
MAY PERTAIN. THE INSURANCE AFFORDED BY Ti E POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH
TR DAT (MM/OD/1i DAT
POLICIES AGGREGATE LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
rNSR TYPE OF INSURANCE POLICY N UMBER POLIC'V EFFECTIVE ROUCY EXWAAYION J
E (MMIq(7/:1 ! LIMITS
GENERAL LIABILITY 4031 G1 03/01/2003 03/01/2004 EACH OCCURRENCE $ 1,000,01
X COMMERCIAL GENERAL LIABILITY ` FIRE DAMAGE (Any one lira) S 100
1 CLAIMS MADE I X 1 OCCUR MED EXP (Any ono pavan) $ 5,0(
A
PERSONAL& AOV INJURY $ 1 , 000,0f
; GENERAL AGGREGATE 5 2 , 000, 0(
GENII_ AGGREGATE OMIT APPLIES PER: PRODUCTS . COMP/OP AGG S 2,000,0(
f Pgo- r
PCLI : ( I JECT
1 I LU(. I
AUTOMOBILE UABILIT'Y I I
•
COMBINED SINGLE LIMIT
— ANY AUTO (Ea accidanp 5
ALL OWNED AUTOS
SCHEDULED AUTOS BODILY INJURY s
(Per person)
HIRED AUTOS
BODILY INJURY 5
NON•OWNED AUTOS • (P9( OCC�denl)
PROPERTY DAMAGE 5
_ -�” (Per acc.deni)
,,,, E LIABILITY AUTO ONLY - EA ACCIDENT 5
�--- r ANY AUTO
OTHER THAN EA ACC 5
• AUTO ONLV AGG 5
EXCESS LIABILITY EACH OCCURRENCE $
1 OCCUR 1 1 CLAIMS MADE AGGREGATE S
�5
DEDUCTIBLE
5
'
RETENTION 3
5
WORKERS COMPENSATION AND TORY LIM 7S 1 1 ER
EMPLOYERS' LIABILITY
E.L. EACH ACCIDENT S
El. DISEASE - EA EMPLOYEE 5
• E L. DISEASE - POLICY UMIT 5
CK08403446 10/31/2002 10/31/2003 See below
Buirdings
3 $2,500 deductible
S SCRIPTION OF OPERATIONSILOCATON$NEH,CL ES/EXCLUSIONS ADDED BY ENDORSEMENT/SPECIAL PROVISIONS
Biding located at 607 E. R" Street, Yakima, WA - S2,534,832 & building located at 605 E. "R" Street,
kima, WA - 51,500,000.
ERTIFICATE HOLDER 1 1 ADDITIONAL INSURED; INSURER LETTER: CANCELLATION
SHOULD ANY OF THE A BOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE
EXPIRATION DATE THEREOF. THE ISSUING COMPANY WILL ENDEAVOR TO MAIL
10 DAYS WRITTEN NOTICE TO .THE CERTIFICATE HOLDER NAMED TO THE LEFT,
i BUT FAILURE TO MAIL SUCH NOTICE SHALL IMPOSE NO OBLIGATION OR LIABIL
t., OF ANY r(INp UPON THe COMPANY, ITS AGENTS OR REPRESENTATIVES.
Mme A$ Named Insured Above AUTHORIZED REPRESENTATIVE / /��`� /
[7
•
David LaRiviereRACIS t `Jl I
ORD 25 -S (7197) ()ACORD CORPORATION 1988
•
-
BYLAWS
or
LUKEI'IART MANAGEMIENT CO, INC.
ARTICLE I
Registered Office and Registered Agent
The registered office of the corporation shall be located in the state of Washington
at such place as may be fixed from time to time by the Board of Directors upon filing of
such notices as may be required by law, and the registered agent shall have a business
office identical with such registered office. Any change in the registered agent or
registered office shall be effective upon filing such change with the office of the Secretary
of State of the state of Washington.
ARTICLE lI
Shareholders' Meetings
Section 1. Annual Meetings. The annual meeting of the shareholders of this
corporation, for the purpose of election of directors and for such other business as may
come before it, shall be held at the registered office of the corporation, or such other place
as may be designated by the notice of the meeting, on the third Wednesday of January of
each and every year, at 10:00 a.m., but in case such day shall be a legal holiday, the
meeting shall be held at the same hour and place on the next succeeding day not a
holiday.
Section 2. Special Meetings. Special meetings of the shareholders of this
corporation may be called at any time by the_iaolders of ten percent (10 %)of the voting
shares of the corporation, or by the President, or by a majority of the Board of Directors.
No business shall be transacted at any special meeting of shareholders except as is
specified in the notice calling for said meeting. The Board of Directors may designate any
place as the place of any special meeting called by the President or the Board of Directors,
and special meetings called at the request of shareholders shall be held at such place as
may be determined by the Board of Directors and placed in the notice of such meetings.
Section 3. Notice of Meetings. Written notice of annual or special meetings of
shareholders stating the place, day, and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called, shall be given by the
Secretary or persons authorized to call the meeting to each shareholder of record entitled
BYLAWS - 1
3651- cAdata\corptbylaws\lukeh art.management.co.inc.
•
•
•
to vote at the meeting. Such notice shall be given not less than ten (10) nor more than
sixty (60) days prior to the date of the meeting, except that notice of a meeting to act on
an amendment to the Articles of Incorporation; a Plan of Merger or share exchange; a
proposed sale, lease, exchange or other disposition of all or substantially all of the assets
of the corporation other than in the usual or regular course of business; or the dissolution
of the corporation shall be given no fewer than twenty (20) days nor more than sixty (60)
days before the meeting date. Notice may be transmitted by: mail, private carrier or
personal delivery; telegraph or teietype; or telephone, wire or wireless equipment which
transmits a facsimile of the notice. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail addressed to the shareholder at his or her
address as it appears on the stock transfer books of the corporation.
Section 4. Waiver of Notice. Notice of the time, place, and purpose of any
meeting may be waived in writing (either before or alter such meeting) and will be waived
by any shareholder by his or her attendance thereat in person or by proxy, unless the
shareholder at the beginning of the meeting objects to holding the meeting or transacting
•
business at the meeting. Any shareholder so waiving shall be bound by the proceedings
of any such meeting in all respects as if due notice thereof had been given.
•
Section 5. Quorum and Adjourned Meetings. A majority of the outstanding
' shares of the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. A majority of the shares represented
at a meeting, even if less than a quorum, may adjoum the meeting from time to time
without further notice. At such reconvened meeting at which a quorum shall be present
or represented, any business may be transacted which might have been transacted at the
. meeting as originally notified. The shareholders present at a duly organized meeting may
continue to transact business at such meeting and at any adjoumment of such meeting
(unless a new record date is or must be set for the adjourned meeting), notwithstanding
the withdrawal of enough shareholders from either meeting to leave less than a quorum.
Section 6. Proxies. At all meetings of shareholders, a shareholder may vote by
proxy executed in writing by the shareholder by his or her duly authorized attomey in
fact. Such proxy shall be filed with the Secretary of the corporation before or at the time
of the meeting. No proxy shall be valid after eleven (11) months from the date of its
execution, unless otherwise provided in the proxy.
Section 7. Voting Record. After fixing a record date for a shareholders' meeting,
the corporation shall prepare an alphabetical list of the names of all shareholders on the
record date who are entitled to notice of the shareholders' meeting. The list shall be
arranged by voting group, and within each voting group by class or series of shares, and
show the address of and number of shares held by each shareholder. A shareholder,
shareholder's agent, or a shareholder's attorney may inspect the shareholders list,
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•
1
— i
beginning ten (10) days .prior to the shareholders' meeting and continuing through the
meeting, at the cor principal office or at a place identified in the meeting notice
in the city where the meeting will be held during regular business hours and at the
shareholder's expense. The shareholders' list shall be kept open for inspection during
such meeting or any adjournment.
Section 8. Voting of Shares. Except as otherwise provided in the Articles of
these Bylaws, !.. � �.; of record shall have }�r. ' } at
incorporation or in ,t iese By�aws, every shareholder o� record shall have the right at every
shareholders' meeting to one vote for every share standing in his or her name on the .
books of the corporation. If a quorum exists, action on a matter, other than election of
directors, is approved by a voting group of shareholders if the votes cast within the voting
group favoring the action exceed the votes cast within the voting group opposing the
action, uniess the Articles of incorporation or the Washington Business Corporation Act
require a greater number of affirmative votes.
Section 9. Record Date. For the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders, or any adjournment thereof, or entitled
to receive payment of any dividend, the Board of Directors may fix in advance a record
date for any such determination of shareholders, such date to be not more than seventy
-,,.) (70) days prior to the date on which the particular action requiring such determination of
- shareholders is to be taken. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to
receive payment of a dividend, the day before the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall apply
to any adjournment thereof, unless the Board of Directors fixes a new record date, which
it must do if the meeting is adjoumed more than one hundred twenty (120) days after the
date is fixed for the original meeting.
ARTICLE III
Directors
Section 1. General Powers. All corporate powers shall be exercised by or under
the authority of, and the business and affairs of the corporation shall be managed under
the direction of, the Board of Directors, except as otherwise provided by the laws under
which this corporation is formed or in the Articles of Incorporation.
C Section 2. Number. The number of directors of the corporation shall be two (2).
The number of directors can be increased or decreased from time to time by amending this
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Section 2, provided that the number shall be not less than one (1) nor more than three (3)
directors, the specific number to be set by resolution of the Board of Directors or the
shareholders; and provided further that no decrease shall shorten the term of any
incumbent director.
Section 3. Tenure and Qualifications. Each director shall hold office until the
next annual meeting of shareholders. Despite the expiration of a director's term, the
director continues to serve until the director's successor shall have been elected and
qualified or until there is a decrease in the number of directors. Directors need not be
residents of the state or shareholders of the corporation.
Section 4. Election. The directors shall be elected by the shareholders at their
annual meeting each year; and if, for any cause, the directors shall not have been elected
at an annual meeting, they may be elected at a special meeting of shareholders called for
that purpose in the manner provided by these Bylaws.
Section 5. Vacancies. In case of any vacancy in the Board of Directors, including
a vacancy resulting from an increase in the number of directors, the Board of Directors,
a majority of the remaining directors if they do not constitute a quorum, or the shareholders
may fill the vacancy.
Section 6. Resignation. Any director may resign at any time by delivering written
notice to the Board of Directors, its chairperson, the President or the Secretary of the
corporation. A resignation shall be effective when the notice is delivered unless the notice
specifies a later effective date.
Section 7. Removal of Directors. At a meeting of shareholders called expressly
for that purpose, the entire Board of Directors, or any member thereof, may be removed,
with or without cause, by a vote of the holders of a majority of shares then entitled to vote
at an election of such directors. A director may not be removed if the number of votes
sufficient to elect the director under cumulative_ voting is voted against the directors
removal.
Section 8. Meetings.
(a) The annual meeting of the Board of Directors shall be held
immediately after the annual shareholders' meeting at the same place as the annual
shareholders' meeting or at such other place and at such time as may be determined by
the directors. No notice of the annual meeting of the Board of Directors shall be
necessary.
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(b) Special meetings may be called at any time and place upon the call
of the President, Secretary, or any two (2) directors. Notice of the time and place of each
special meeting shall be given by the Secretary, or the persons calling the meeting, by
mail, private carrier, radio, telegraph, telegram, facsimile transmission, personal
communication by telephone or otherwise at least two (2) days in advance of the time of
the meeting. The purpose of the meeting need not be given in the notice. Notice of any
special meeting may be waived in writing or by telegram (either before or after such
meeting) anIA will UG waived b any director by attendance thereat.
(c) Regular meetings of the Board of Directors shall be held at such place
and on such day and hour as shall from time to time be fixed by resolution of the Board of
Directors —No notice_ofregu1ar meeti ofthe Bnard of Directors_shalLbe necessary. _
(d) At any meeting of the Board of Directors, any business may be
transacted, and the board may exercise all of its powers.
Section 9. Quorum and Voting.
(a) A majority of the directors presently in office shall constitute a quorum,
but a lesser number may adjoum any meeting from time to time until a quorum is obtained,
and no further notice thereof need be given.
(b) If a quorum is present when a vote is taken, the affirmative vote of a
majority of the directors present at the meeting is the act of the Board of Directors.
Section 10.' Compensation. By resolution of the Board of Directors, the directors
may be paid their expenses, if any, of attendance at each meeting of the Board of
Directors and may,', be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation therefor.
Section 11. Presumption of Assent. A director of the corporation who is present
at a meeting of the Board of Directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless:
(a) The director objects at the beginning of the meeting, or promptly upon
the director's arrival, to holding it or transacting business at the meeting;
(b) The director's dissent or abstention from the action taken is entered
in the minutes of the meeting; or
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(c) The director delivers written notice of the director's dissent or
abstention to the presiding officer of the meeting before its adjournment or to the
corporation within a reasonable time after adjournment of the meeting.
The right of dissent or abstention is not available to a director who votes in favor of the
action taken.
Section 12. Committees. The Board of Directors, by resolution adopted by a
majority of the full Board of Directors, may designate from among its member one or more
committees, each of which must have two or more members and, to the extent provided
in such resolution, shall have and may exercise all the authority of the Board of Directors,
except t I-have_the autbority-ta: authorize-or_approve a
distribution except according to a general formula or method prescribed by the Board of
Directors; approve or propose to shareholders action that the Washington Business
Corporation Act requires to be approved by shareholders; fill vacancies on the Board of
Directors or on any of its committees; amend any Articles of Incorporation not requiring
shareholder approval; adopt, amend or repeal Bylaws; approve a plan of merger not
requiring shareholder approval; or authorize or approve the issuance or sale or contract
for sale of shares, or determine the desigration and relative rights, preferences and
..„,) limitations of a class or series of shares, except that the Board of Directors may authorize
a committee, or a senior executive officer of the corporation, to do so within limits
specifically prescribed by the Board of Direc :ors.
ARTICLE IV
Special Measures for Corporate Action
Section 1. Actions by Written Consent. Any corporate action required or
permitted by the Articles of Incorporation, Bylaws, or the laws under which this corporation
is formed, to be voted upon or approved at a duly called meeting of the directors,
committee of directors, or shareholders, may be_ accomplished without a meeting if one or
more unanimous written consents of the respective directors or shareholders, setting forth
the actions so taken, shall be signed, either before or after the action taken, by all the
directors, committee members, or shareholders, as the case may be. Action taken by
unanimous written consent is effective when the last director or committee member signs
the consent, unless the consent specifies a later effective date. Action taken by
unanimous written; consent of the shareholders is effective when all consents are in
possession of the corporation, unless the consent specifies a later effective date.
Section 2. Meetings by Conference Telephone. Members of the Board of
Directors, members of a committee of directors, or shareholders may participate in their
I} respective meetings by means of a conference telephone or similar communications
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\ 1
equipment by means of which all persons participating in the meeting can hear each other
at the same time; participation in a meeting by such means shall constitute presence in
person at such meeting. •
ARTICLE V
Officers
Section 1. Officers Designated. The officers of the corporation shall be a
president, one or more vice presidents (the number thereof to be determined by the Board
of Directors), a secretary, and a treasurer, each of whom shall be appointed by the Board
of Directors. Such-ether efficers-a; d- assistant-efficers
be appointed by the Board of Directors. Any two or more offices may be held by the same
person.
The Board of Directors may, in its discretion, elect a chairperson of the Board of
Directors; and, if a chairperson has been elected, the chairperson shall, when present,
preside at all meetings of the Board of Directors and the shareholders and shall have such
other powers as the board may prescribe.
Section 2. Election. Qualification and Term of Office. Each of the officers shall
be appointed by the Board of Directors. None of said officers need be a director, unless
required by an appropriate resolution or other policy enunciation by the Board of Directors.
The officers shall be appointed by the Board of Directors at each annual meeting or the
Board of Directors. Except as hereinafter provided, each of said officers shall hold office
from the date of his or her election until the next annual meeting of the Board of Directors
and until his or her successor shall have been duly elected and qualified.
Section 3. Powers and Duties.
(a) President. The PresidenLshall be the chief executive officer of the
corporation and, subject to the direction and control of the Board of Directors, shall have
general charge and supervision over its property, business, and affairs. He or she shall,
unless a chairperson of the Board of Directors has been elected and is present, preside
at meetings of the shareholders and the Board of Directors.
(b) Vice President. In the absence of the President or his or her inability
to act, the senior Vice President shall act in his or her place and stead and shall have all
the powers and authority of the President, except as limited by resolution of the Board of
Directors. '
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(c) Secretary. The Secretary shall: (1) keep the minutes of the
shareholders' and of the Board of Directors' meetings in one or more books provided for
that purpose; (2) see that all notices are duly given in accordance with the provisions of
these Bylaws or as required by law; (3) be custodian of the corporate records and of the
seal of the corporation and affix the seal of the corporation to all documents as may be
required; (4) keep a register of the post office address of each shareholder which shall be
furnished to the Secretary by such shareholder; (5) sign with the President, or a Vice
"dent certificates f .+4...r.... f the aon +h issuance nn .
of , h have k
President, certificates IVI shares of U IG corporation, llIlei,ssua,IVe Vi vv,,, , shall ,pa i,ave,.,ee, n
authorized by resolution of the Board of Directors; (6) have general charge of the stock
transfer books of the corporation; and (7) in general perform all duties incident to the office
of secretary and such other duties as from time to time may be assigned to him or her by
_t Ple_sidertt_or by the Board of Ditectors. _ _ _ _
(d) Treasurer. Subject to the direction and control of the Board of
Directors, the Treasurer shall have the custody, control, and disposition of the funds and
securities of the corporation and shall account for the same; and, at the expiration of his
or her term of office, he or she shall tum over to his or her successor all property of the
corporation in his or her possession.
Section 4. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretaries, when authorized by the Board of Directors, may sign with the President, or
a Vice President, certificates for shares of the corporation, the issuance of which shall
have been authorized by resolution of the Board of Directors. The Assistant Treasurers
shall, respectively, if required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as the Board of Directors
shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall
perform such duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
Section 5. Removal. The Board of Directors shall have the right to remove any
officer whenever in its judgment the best interests of the corporation will be served
thereby.
Section 6. Vacancies. The Board of Directors shall fill any office which becomes
vacant with a successor who shall hold office for the unexpired term and until his or her
successor shall have been duly elected and qualified.
Section 7. Salaries. The salaries of all officers of the corporation shall be fixed
by the Board of Directors.
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ARTICLE VI
Share Certificates
Section 1. Issuance, Form and Execution of Certificates. No shares of the
corporation shall be issued unless authorized by the board. Such authorization shall
include the maximum number of shares to be issued, the consideration to be received for
each share, the value of noncash consideration and a statement that the board has
determined that such consideration is adequate. Certificates for shares of the corporation
shall be in such form as is consistent with the provisions of the Washington Business
Corporation Act and shall state:
(a) The name of the corporation and that th corpor is organized
under the laws of this state;
(b) The name of the person to whom issued; and
(c) The number and class of shares and the designation of the series, if
any, which such certificate represents. They shall be signed by two officers of the
corporation, and the seal of the corporation, if any, may be affixed thereto. Certificates
may be issued for fractional shares. No certificate shall be issued for any share until the
consideration established for its issuance has been paid.
Section 2. Transfers. Shares may be transferred by delivery of the certificate
therefor, accompanied either by an assignment in writing on the back of the certificate or
by a written power of attomey to assign and transfer the same, signed by the record holder
of the certificate. The Board of Directors may, by resolution, provide that beneficial owners
of shares shall be deemed holders of record for certain specified purposes. Except as
otherwise specifically provided in these Bylaws, no shares shall be transferred on the
books of the corporation until the outstanding certificate therefor has been surrendered to
the corporation.
Section 3. Loss or Destruction of Certificates. In case of loss or destruction of
any certificate of shares, another may be issued in its place upon proof of such loss or
destruction and upon the giving of a satisfactory indemnity bond to the corporation. A new
certificate may be issued without requiring any bond when, in the judgment of the Board
of Directors, it is proper to do so.
t
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ARTICLE VII
Books and Records
Section 1. Books of Accounts, Minutes and Share Register. The corporation
shall keep as permanent records minutes of all meetings of its shareholders and Board of
Directors, a record of all actions taken by the shareholders or Board of Directors without
a meeting, and a record of all actions t b a committee of the Board of Directors
exercising the authority of the Board of Directors on behalf of the corporation. The
corporation shall maintain appropriate accounting records. The corporation or its agent
shall maintain a record of its shareholders, in a form that permits preparation of a list of the
names and addresses of all shareholders, in alphabetical order by class of shares showing
the number and class of shares held by each. The corporation shall keep a copy of the
following records at its principal office: the Articles or Restated Articles of Incorporation
and all amendments to them currently in effect; the Bylaws or Restated Bylaws and all
amendments to them currently in effect; the minutes; of all shareholders' meetings, and
records of all actions taken by shareholders without a meeting, for the past three (3)
years; its financial 'statements for the past three (3) years, including balance sheets
showing in reasonable detail the financial condition of the corporation as of the close of
..)
each fiscal year, and an income statement showing the results of its operations during
_ each fiscal year prepared on the basis of generally accepted accounting principles or, if
not, prepared on a basis explained therein; all written communications to shareholders
generally within the past three (3) years; a list of the names and business addresses of
its current directors and officers; and its most recent annual report delivered to the
Secretary of State of Washington.
Section 2. Copies of Resolutions. Any person dealing with the corporation may
rely upon a copy of any of the records of the proceedings, resolutions, or votes of the
Board of Directors or shareholders, when certified by the President or Secretary.
ARTICLE_VIJI .
Corporate Seal
The Board of Directors may provide for a corporate seal which shall have inscribed
thereon the name of the corporation, the year and state of incorporation and the words
"corporate seal."
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ARTICLE IX
Amendment of Bylaws
Section 1. ',; By the Shareholders. These Bylaws may be amended, altered, or
repealed at any regular or special meeting of the shareholders if notice of the proposed
alteration or amendment is contained in the notice of the meeting.
Section 2. By the Board of Directors. These Bylaws may be amended, altered,
or repealed by the affirmative vote of a majority of the whole Board of Directors at any
regular or special meeting of the board.
ARTICLE X
Fiscal Year
The fiscal year of the corporation shall be set by resolution of the Board of
Directors.
ARTICLE XI
Rules of Order
The rules contained in the most recent edition of Robert's Rules of Order, Newly
Revised, shall govem all meetings of shareholders and directors where those rules are not
inconsistent with the Articles of Incorporation, Bylaws, or special rules of order of the
corporation.
FECTIVE • ' OPT D by Board of Directors this 21' day of August, 2001.
GARY D. L • . HART • 1-- M - UKEHA
Ik tj
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CONSENT TO ACTIONS OF
BOARD OF DIRECTORS AND SHAREHOLDERS OF
LUKEHART MANAGEMENT CO., INC. •
(WITHOUT A MEETING)
Pursuant to RCW 236.07.040 and 23B.07.060, 23B.08.210 and 23B.08.230, the
undersigned, being! all of the shareholders. and directors of LUKEHART MANAGEMENT CO.,
INC., a Washington corporation (the "Corporation "), acting without a meeting, DO HEREBY
UNANIMOUSLY ADOPT the following resolutions and DO HEREBY UNANIMOUSLY CONSENT to
th taking of the actions therein set forth:
WHEREAS, the, Corporation is a member of Trail Wagons/Chinook Properties, LLC., a
Washington limited liability company, that is borrowing $4000,000.00 from Wells Fargo Bank,
National Association, for permanent financing of the manufacturing facilities located on Tax Parcel
Nos. 191307 -34401 and 34403, now, therefore, it is hereby
RESOLVED, That the President of the Corporation, GARY 0. LUKEHART, withoutthe necessity
of any other countersignature, shall have full authority to execute any and all necessary
documentation required to complete the loan transaction, including, without limitation, the execution
of the loan agreement, promissory notes, financing statements. deeds cf trust and such other loan
documents as may be reasonably required to consummate the loan transaction: and be it
FURTHER RESOLVED, That the Board of Directors hereby approves of ail actions of the
President of the Corporation and authorizes the President to bind the Corporation in all respects
with regard to signing the loan documentation in connection with the referenced loan transaction.
The execution of this Consent shall constitute a written waiver of any notice
required by the Washington Business Corporation Act and this Corporation's Articles of
Incorporation and Bylaws.
DATED this day of August, 2001.
Shareholders /Directors;._.
GARY ID. LUKEHART
•
• (-4142&41/Al
AMY M.; KEHART
CONSENT TO ACTIONS OF BOARD OF DIRECTORS /SHAREHOLDERS •
3651 -c:\ data\ corp \resoNukenart.management.co.inc.
Washington Secretary of State - Corporations: Search Detail , Page 1 of 2
f -' AM REE
Corporations Menu 1 Corporations Fr—
corpor_ations Corporations Division - Registration Data Search
Registration
Renewal TRAIL WAGONS, INC.
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Master License Service UBI Number 600 187 807
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Information in the Secretary of State's Online Corporations Database is updated Month
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of Washington nor any agency, officer, or employee of the State of Washington warran
accuracy, reliability, or timeliness of any information in the Public Access System and s
be liable for any losses caused by such reliance on the accuracy, reliability, or timeline!
such information. While every effort is made to ensure the accuracy of this information
portions may be incorrect or not current. Any person or entity who relies on informatio
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Washington Secretary or State
520 Union Avenue 50, PO BOX 40220, OLYMPiA WA 96504-0220
(360) 002-4151 Privacy Policy
•
•
•
•
http://www.secstate.wa.gov/corps/search_detail.aspx?narne.TlAIL+WAGONS%2c-FINC.86... 3/24/03
John S. Moore J. Jay Carroll Metiner G. Kimel
i elikanje IVlloore & Shore, PS. Morris G. Shore Mark E. Fickes Travis W. Misfeldt
a t t e m e s a t law w George F. Velikanje Douglas L. Federspiel Garon K. Jones
Y Alan D. Campbell Brendan V. Monahan James S. Elliott
VMS James C. Carmody Kevan T. Montoya Sarah L. Wixson
Carter L. Field Nancy L. Livingston
March 24, 2003
HAND DELIVERED
THE CITY OF YAKIMA
c/o Donald A. Boyd, Esq.
HALVERSON i & APPLEGA T E, P.S.
311 North Fourth Street
Yakima, Washington 98901
Re: The City of Yakima Loan to Trail Wagons, Inc.
Ladies and Gentlemen:
We have acted as counsel to Trail Wagons, Inc., a Washington corporation (the
"Obligor ") and Gateway Center Associates, L.L.C., a Washington limited liability
company, in connection with that certain loan being made by The City of Yakima
to Obligor from funds obtained from the United States Department of Housing
and Urban Development ( "HUD ") to fund the Project described in that certain
Loan Agreement between The City of Yakima and Trail Wagons, Inc. In such
capacity, we have reviewed the following documents (the "Loan Documents ");
1. Loan Agreement dated March 24, 2003;
2. Variable Fixed Rate Promissory Note (the "Note "), dated March 24,
2003, in the original principal amount of up to $3,000,000.00;
3. Demand Note dated March 24, 2003;
4. Deed of Trust dated March 24, 2003;
5. Unconditional Guaranty dated March 24, 2003;
6. Deposit Account Control Agreement;
7. City of Yakima Employee Income Verification Form; and
405 East Lincoln Avenue P.O. Box 22550 Yakima, WA 98907 (509) 248 -6030 fax (509) 453 -6880 www.vmslaw.com
•
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1, SA REED, Secretary of State of the State of Washington and custodian of its seal,
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CERTIFICATE OF EXISTENCE /AUTHORIZATION
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State of Washington and was issued a Certificate of Formation
ei in Washington on May 29, 2001. ti ® 1 I FURTHER CERTIFY that as of the date of thus certificate, no cancellation (
® has been filed, and that the limited liability company is duly authorized to
tE
l transact business in the limited liability company form in the State of Washington. Eli ti
®1 $ .STA Tt o (E
■■■■ ■■■■ Date: August 22, 2001 tli
• oil � ' ■" ' � '' ' ti-+ "' Given under my hand and the Seal of the State (
® l • ■ °- " ':_ 2.:::. of 1 at Olympia the State Capital (®
.
c (i
` 1889 89 C E.
® LT� —
S Re�, Secretary of State El
411 di Y ® �11 Y®YUOM I�tII 1l aVia 'N) a 1 Y®�fY®Nlf l ® ® ® varri li O MirtiMini Wa Iiiiiftffl
U.'
1
r
4
4
AMENDMENT TO SF e9F c" 9/''41/ r '% ti
CERTIFICATE or FORMATION �
T qq; - o � 1
TRAIL WAGONS /CHINOOK PROPERTIES , LLC.
U[31 ":O. 602 124 455
Pursuant to RCW 25.15.075 of the Washington Limited Liability Company Act (Revised
Code of Washington, Ch. 25.15), the undersigned company hereby submits the following
amendment to the company's Certificate of Formation.
1. The name of the company is: TRAIL WAGONS /CHINOOK PROPERTIES, L.L.c.
2. The original Certificate of Formation was filed in the Office of the Secretary of State
of the State of Washington on May 29, 2001.
3. The text of the amendments as adopted are as follows:
, D
ARTICLE IV
Period of Duration
The LLC shall exist until December 31, 2014, from and after the date
of filing of this Certificate of Formation with the Secretary of State of the
state of Washington, unless dissolved earlier in accordance with the
agreement of the members or according to law, whichever occurs first.
ARTICLE V
Management
The management of the LLC shall be vested in one or more managers
as provided in the Limited Liability Company Operating Agreement.
•
4. Except as expressly provided above, all of the remaining terms and conditions of
the Certificate of Formation shall remain in full force and effect.
5. This Certificate of Amendment will be effective upon filing.
CERTIFICATE OF AMENDMENT 1
3651- cAdataVlc\amend\ trail magons.chinook.properties.11c
•
DATED this day of August, 2001.
TRAIL W ONS/CHINOOK PROPERTIES, L.L.C.
VII II1114 \
ary kehart, Manager
D
•
•
CERTIFICATE OF AMENDMENT 2
3651-cAdatalc1amend\trail.wagons.c.hinook.properties.11c
•
-
•
� J FILED
/�
SECRETARY OF STATE
•
MAY 2001
•
F FORMATION
OF WASHINGTON
.CERTIFICATE O
OF
TRAIL WAGONS/CHINOOK PROPERTIES, LLC.
THE UNDERSIGNED hereby execute the following Certificate of Formation.for the
purpose of forming a limited liability company under the Washington Limited Liability
C ompany Art (Revi.seri Code of Wa Ch. 25.15).
ARTICLE 1
Name
The name of this limited liability company is TRAIL WAGONS/CHINOOK PROPERTIES,
L.L.C. (the "LLC').
ARTICLE II
Registered Office and Agent
registered office is 1901 North Fourth
A. The street address of the LLC's initial re
9
Street, Yakima, Washington 98901.
B. GARY D. LUKEHART is the LLC's initial registered agent at such office.
ARTICLE III
Principal Place of Business
The street address of this LLC's principal place of business is 1901 North Fourth
Street, Yakima, Washington 98901.
ARTICLE IV
Period of Duration
The LLC shall exist perpetually, from and after the date of filing of this Certificate
of Formation with the Secretary of State of the state of Washington, unless dissolved
earlier in accordance with the agreement of the members or according to law.
• CERTIFICATE OF FORMATION 1
3651 -c:\ data\lIc\ cert\trail.wagons.chinook.properties
� l
l ARTICLE V
Initial Managers
Management of the LLC is vested in one manager who shall serve until the election
and qualification of his successor(s) in the manner specified in an agreement of the
members, to wit:
GARY D. LUKEHART
1901 Nor th Fourth Street
Yakima, Washington 98901
ARTICLE VI
Manager Liability
A manager of the LLC shall not be personally liable to the LLC or its members for
monetary damages for conduct as a manager, except for liability of the manager for (i) acts
or omissions that involve intentional misconduct or a knowing violation of the law by the
manager, (ii) conduct which violates Section 6.05 of the Washington Limited Liability
Company Act, pertaining to unpermitted distributions to members or loans to managers,
or (iii) any transaction from which the manager will personally receive a benefit in money,
property or services to which the manager is not legally entitled. If the Washington Limited
Liability Company Act is amended to authorize limited liability company action further
eliminating or limiting the personal liability of managers, then the liability of a manager of
the LLC shall be eliminated or limited to the fullest extent permitted by the Washington
Limited Liability Company Act, as so amended. Any repeal or modification of the foregoing
paragraph by the members of the LLC shall not adversely affect any right or protection of
a manager of the LLC existing at the time of such repeal or modification.
ARTICLE VII
Indemnification
The company shall indemnify each manager as against all liability, damage or
expense resulting from the fact that such person is or was a manager, to the maximum
extent and under mall circumstances permitted by law; except that the LLC shall not
indemnify a manager against liability, damage or expense resulting from the manager's
gross negligence.
DATED this._ day of May, 20S .
GARY D. L EHART, Executor
1901 North Fourth Street
Yakima, Washington 98901
CERTIFICATE OF FORMATION 2
3651 -c:\ data\ I1c\ cert\traif.wagons.chinook.properties
•
•
• CONSENT TO APPOINTMENT AS REGISTERED AGENT
•
1, GARY D. LUKEHART, hereby consent to serve as registered agent in the state of
Washington for the following limited liability company: TRAIL WAGONS /CHINOOK PROPERTIES,
L.L.C. 1 understand!, that as agent of the limited liability company, it will be my responsibility
to accept service of process in the name of the limited liability company; to forward all mail
license renewals to the appropriate members of the limited liability company; and to
immediately notify the Office of the Secretary of State of my resignation or of any change
in th address of the registered office of the limited liabili y c f which 1 am agent
DATED this 5 day of , 2001.
l]H A LUKEHA 11, r rt9e 11
Registered Address:
1901 North Fourth Street
Yakima, Washington 98901 .
•
CERTIFICATE OF FORMATION 3
3651 -c:\ data\i Ic\ cert\trail.wagons.chinook.properties
•
•
•
•
CERTIFIED COPY OF RESOLUTIONS
OF BOARD OF DIRECTORS OF
TRAIL WAGONS, INC..
I, MARY M. LUKEHART, do hereby certify that I am the duly elected and qualified
Secretary and the keeper of the records of TRAIL WAGONS, INC., a corporation organized
and existing under the laws of the state of Washington (the "Company'), and that the
following is a true and correct copy of certain resolutions duly adopted by unanimous
action of the Board of Directors of the Company in accordance with the law and Bylaws of.
the Corporation, dated as of March 24, 2003, and that such resolutions are now in full
• force and effect.
RESOLVED, That it is hereby found, determined and declared as
follows:
A. That the Company is hereby authorized to borrow from THE CITY
OF YAKIMA (the "Lender') up to $3,000,000.00 to be used for working capital,
to acquire vehicle chassis, and to retool for Company's two new models of
motor homes(the "Loan "). Company's acquisition of vehicle chassis and
retooling for its two new models of motor homes, as well as current and
future working capital needs, are to be funded with proceeds of the Loan (the
"Project "), the funds for the Project to be guaranteed by the United States
Department of Housing and Urban Development ( "HUD ").
B. Company's obligations under the Loan Documents (as defined
in that certain Loan Agreement between Company and The City of Yakima
dated March , 2003, shall be secured by a Deed of Trust given by
Gateway Center Associates, L.L.C., on the Gateway Center commercial
property located in Yakima, Washington ( "Property").
C. The Board of Directors of the Company has determined that it
is in the best interests of the Company to enter into this loan transaction with
The City of Yakima and hereby authorizes GARY D. LUKEHART, the Chairman
of the Board of Company, to execute the Loan Agreement and all other
documents necessary to consummate this loan transaction, including the
Variable Fixed Rate Promissory Note and Demand Note, without the
necessity of any other countersignature.
D. The Board of Directors of Company hereby approves of all
actions of the Chairman of the Board of the Company and authorizes the
Chairman of the Board to bind the Company in all respects with regard to
signing the loan documentation in connection with the Project.
IN WITNESS WHEREO I have subscribed my nam he ; day of March, 2003.
M R M. EHART, Secretary
CERTIFIED COPY OF RESOLUTIONS OF BOARD -1
3651 -c:\ data\ corp\ resol \trail.wagons.city.of.yakima
•
SUBSCRIBED AND SWORN TO b- • e e this ay of March, 2003. .
ii
( ° q---)--- " X 7 .0 (print name)
, _ s\ . OTARY B(JBLI in and for t - t- -
((c �. _. `C `L� residing a �. _e.� .. .
i� k� -� , ,, _ y appointor nt expires • i
D •
•
M ,i
•
CERTIFIED COPY OF RESOLUTIONS OF BOARD - 2
3651 -c:\ data \corp \resol \trail.wagons.city of.yakima
•
•
AUTHORIZATION FOR LIMITED LIABILITY COMPANY •
TO SECURE LOAN
AND
INCUMBENCY CERTIFICATE
[GATEWAY CENTER ASSOCIATES, L.L.C.]
'
DATE: March , 2003
Name of Limited Liability Company:
GATEWAY CENTER ASSOCIATES, L.L.C., a limited liability company formed underthe laws
of the state of Washington(hereafter the "LLC;')
Property: This authorization relates to certain real property described on Exhibit A attached hereto
(the `Property').
Authorization:
The undersigned Manager of LLC has determined it is in the best interests of the LLC
to secure a loan to TRAIL WAGONS, INC., a Washington corporation, with the Property.
Manager does hereby approve and authorize the Property to be used for the purpose
of securing said loan of up to Three Million Dollars ($3,000,000.00) to Trail Wagons,
Inc. The undersigned further authorizes GARY D. LUKEHART, as the authorized Member
of the LLC, without the necessity of any other countersignature, to execute any and all
documentation necessary to obtain the loan, including executing mortgages, deeds of
trusts or other necessary documents.
Incumbency Certificate:
The members of the LLC are:
GARY D. LUKEHART (37% voting membership interest)
MARY M. LUKEHART (37% voting membership interest)
GATEWAY CENTER YAKIMA, INC. (1% voting membership interest)
LUKEHART FAMILY TRUST (25% nonvoting membership interest)
Executed as of the date and year first above written.
GAT CENTER YAKIMA, INC., •� ROVED BY VOTING MEM: E - OF LLC:
Man l `. la
vigh, Ar■ I
Ga D. Lukeha , esident t -''"1L[1 REI =`
By Aft t.i , , '
Lukehart, Secretary GAR KEHAR
G • Y CENTER YAKIM ,
-Y " �a� s
N D. Lukehart, P sident •
�/jj
Lukeh , Secretary
AUTHORIZATION /INCUMBENCY CERTIFICATE •
3651 -c \ data \Ilc\resol\gateway. center . associates
■ _ -, `
COMMITMENT Order No: X- 180550 , •
- --) EXHIBIT. " A"
Parcel A:
Lots 2 and 7 of AMENDED PLAT OF YAKIMA GATEWAY CENTER, Lots 1 -7, inclusive, recorded in
Volume "EE" of Plats; Page 11,. records of Yakima County, Washington.
,...r....-1 ' 0.
rac� u.
Lot 3, AMENDED PLAT OF YAKIMA GATEWAY CENTER, Lots 1 -7, inclusive, recorded in Volume "EE"
of Plats, Page 11, records of Yakima County, Washington, and that part of Lot 5, Plat of Yakima Gateway
Center Lots 1 -7, as recorded in Book "EE" of Plats, Page 11, records of Yakima County, Washington,
described as follows:
Commencing at the Northwest comer of said Lot 3, also being the Southwest comer of said Lot 5;
thence South 89 °12'10" East along the line between said Lots 3 and 5, a distance of 25.00 feet;
thence North 61 °28'22" East along the line between said Lots 3 and 5, a distance of.134.14 feet to the
point of beginning;
thence South 28 °31'38" East 24.00 feet;
thence North 61°28'22" East 25.26 feet,
- thence North 28 °31'38" West 24.00 feet;
D thence South 61 West 25.26 feet to the point of beginning.
Parcel C:
Lots 4 and 5 of AMENDED PLAT OF YAKIMA GATEWAY CENTER, Lots 1 -7, inclusive, recorded in
Volume "EE" of Plats, Page 11, records of Yakima County, Washington.
EXCEPT commencing at the Northwest comer of Lot 3, Plat of Yakima Gateway Center Lots 1 -7, as
recorded in Book "EE" of Plats, Page 11, records of Yakima County, Washington, also being the
Southwest comer of said Lot 5,
thence South 89 °12'10" East along the line between said Lots 3 and 5, a distance of 25.00 feet
thence North 61 °28'22" East along the line between said Lots 3 and 5, a distance of.134.14 feet to the
point of beginning.
thence South 28 °31'38" East 24.00 feet
thence North 61°28'22" East 25.26 feet
thence North 28 °31'38" West 24.00 feet;
thence South 61°28'22" West 25.26 feet to the point of beginning.
END OF EXHIBIT "A"
��,,
~= ;Washington Secretary of State - Corporations: Search Detail Page 1 of 2
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F, STATE
ii'•.
p
4 ' 1 1889 t
STATE of WASHINGTON SECRETARY of STATE
1, Ralph Munro, Secretary of State of the State of Washington and custod % of its seal
hereby certify that
AMENDMENT TO CERTIFICATE OF FORMATION
of
GATEWAY CENTER ASSOCIATES, L.L.C.
a Washington Limited Liability Company
was /were filed for record in this office on the date indicated
below.
U B I Number: 601 585 646
Date: December 1, 1994
Given under my hand and the seal of the State
of Washington, at Olympia, the State Capitol.
_ h VMS
Ralph Munro, Secretary of State
2- 499971 - 6
SSF 6 -A
'. 4 SC4ti
n • ..
x-
63.-
i 1 my
o
FILED
CTA7c AP wARIMATBN
DEC 1 1994 W"`,"
r
CERTIFICATE OF AMENDMENT ;hir'H i�UNNO
TO �� ^ ^v n °TATE
CERTIFICATE OF FOIRMATION G.1
OF
GATEWAY CENTER ASSOCIATES, L.L.C. W El'
to
Pursuant to the provisions of RCW 25.15.075, the undersigned
hereby adopts the following Certificate of Amendment to Certificate
of Formation of Gateway Center Associates, L.L.C. (the "Company "):
1. The name of the Company is Gateway Center Associates,
T T n
L.L. li
2. The Certificate of Formation is amended to add the
following Section V:
, . V.
The management of the Company is vested in one or
more managers.
DATED November g`f , 1994.
GATEWAY CENTER ASSOCIATES, L.L.C.
Its � 1^ C
Inager
By
Its Manager
0038618.01
November 21, 1994
.. V• 1V MAID -ANF CtIr 11�c1IKVIIMPAI .cll�IIM II I ® V•�cll�•®�JV.��V�.�:VI IV�IV•��JV�VI IIuID.�.VI .
1
STATE of `WASHINGTON
...STwr " - -_ Eg
.: f88`� ;...''
SECRETARY of ` ./
E
ED
t® EP
...v i SA- �WE , Secretary of State ,o the ✓Late J I7440N ;NZ YVn and custoa1an ,of 11V ,seal,
hereby issue thi J
E®
AMENDMENT TO CERTIFICATE OF FORMATION t
c
to i
E
GATEWAY CENTER ASSOCIATES, L.L.C.
• a Washington Limited Liability Company
6
. ... _.,)
was filed for record in this office on the date indicated below. Eli
1
41 5
a I
El UBI Number: 601 585 646 Date: March 02, 2001
1
•
1 ti
\'a
�.� .y.'I.. .i I -� x . 11
I.1
\: - 1 1'1 ,: ( - *', 11 I ,-
, I ,; -: Given under my hand and the Seal of the State E
"-:(.5, i ; _ Y of Washington at Olympia, the State Capital Eg
5
5
®1 Sam R Secretary — Str � te 4999 1 6
la fit . G l
n MrreilI NW r1 nIm dnmVln n�n�m�lNM WW ® r it i mmin.m�rl r rears.
. .
t '
FILED
SECRETARY OF STATE •.
MAR .0 - 2 . 2001
•
AMENDMENT TO STATE OF WASHINGTON
CERTIFICATE OF FORMATION
OF
GATEWAY CENTER ASSOCIATES, L.L.C.
UBI NO. 601 585 646# �q°, l( l I (P
Pursuant to RCW 25.15.075 of the Washington Limited Liability Company Act (Revised Code of
Washington, Ch. 25.15), the undersigned company hereby submits the following amendment to
the company's Certificate of Formation.
1. The ie i ai e of the company mpai ny is: GATEWAY CENTER ASSOCIATES, L.1 .Ci.
2. The original Certificate of Formation was filed in the Office of the Secretary of State of the
State of Washington on November 14, 1994.
3. The text of the amendments as adopted are as follows: •
IV
The Company shall exist perpetually, from and after the date of filing of this
Certificate of Formation with the Secretary of State of the state of Washington,
unless dissolved earlier in accordance with the agreement of the members or
according to law.
•
4. Except as expressly provided above, all of the remaining terms and conditions of the
Certificate of Formation shall remain in full force and effect.
5. This Certificate of Amendment will be effective upon filing.
DATED this 18 th day of December, 2000.
GATEWAY CENTER ASSOCIATES, L.L.C.
By: Gaf tv Center Ya • ' • a, 1 i s, Manager
By:_ \'
Gary D. Lukehart, Pre'ent‘'
B I ' �_ L
Mary . Lukehart, Secretary
CERTIFICATE OF AMENDMENT
3651 -c:\ data \IIc\ amend \gateway.center.associates
CONSENT IN LIEU OF MEETING
OF MEMBERS AND MANIAGER OF
GATEWAY CENTER ASSOCIATES, L.L.C.
Date: December 18, 2000
Pursuant to the Washington Limited Liability Company Act, the undersigned, being
the Manager and all of the Members entitled to vote at meetings of the Members of GATEWAY
CENTER ASSOCIATES, L.L.C., a Washington limited liability company (hereinafter referred
to as "Company"), by this instrument in lieu of a meeting of the Manager and Members
of the Company, hereby consent to the adoption of the following resolutions:
WHEREAS, the Company filed its Certificate of Formation with the Washington
Secretary of State on November 14, 1994; and
WHEREAS,; the Certificate of Formation states the latest date upon which
Company is to dissolve is December 31, 2015; and
WHEREAS, Washington state law now allows for a limited liability company
to have a perpetual existence, and the Company desires to takes the actions
necessary to have a perpetual existence; and
WHEREAS, the Members and Manager of the Company entered into a Limited
Liability Agreement on November 14, 1994. This Agreement was amended
on December 19, 1997 (hereinafter referred to as "Amended Operating
Agreement") in order to include requirements requested bya lender in order
to obtain financing; now, therefore,
BE IT NOW RESOLVED, That so as to be consistent with the spirit and intent
of the loan documents and consistent with changes in applicable Washington
state law, the Company Manager and Members shall change the duration
of the existence of the Company so it shall not automatically dissolve on a
specific date, but shall have perpetual existence.
WHEREAS, the Amended Operating Agreement provides for the dissolution
of the Company upon the dissociation of any member, upon written agreement
of all members, but no later than December 31, 2015; and
WHEREAS, the Members and Managerwish to maximize the duration of the
Company's existence; now, therefore,
IT IS RESOLVED FURTHER, That so as to be consistent with the spirit and
intent of the loan documents and consistent with changes in applicable
CONSENT IN LIEU OF MEETING 1
29378 /3-c:\ data\ Ic\ resol \gateway.center.associates
Washington state law, the Company shall be dissolved only upon the written
agreement of the Manager and all Members.,
WHEREAS, the Amended Operating Agreement provides that GATEWAY
CENTER YAKIMA, INC., a Washington corporation (hereinafter referred to as
"Corporation'), be the sole Manager during the term of the loan. The
Corporation has a one percent (1%) ownership interest in the Company for
the sole purpose of complying with the terms of loan covenants forthe National
Capital Funding Corp term loan hereinafter described; and
WHEREAS, even though the Corporation owns a membership interest in the
Company, by virtue of a special allocation agreed upon by the Members, no
income o loss w as attributed to the Corporation for calenrlaryears 1998, 1 999
and 2000 for purposes of federal income taxes; and
WHEREAS', GARY D. LUKEHART and MARY M. LUKEHART each own forty -nine
and one -half percent (49.5 %) of the Company; and
WHEREAS, the loan documents provide that GARY D. LUKEHART and MARY
M. LUKEHART are be allowed to transfer sorne or all of their membership
interests in the Company to certain family members or to estate planning
vehicles established for the benefit of certain family members; and
WHEREAS, GARY D. LUKEHART and MARY M. LUKEHART have expressed a
desire to transfer a nonvoting ownership interest in the Company to an
irrevocable trust they have established for their descendants; now, therefore,
IT IS RESOLVED FURTHER, That the ownership interests and capital
organization shall be reallocated so that ten percent (10 %) of the same shall
be voting membership interests and ninety percent (90% %) shall be nonvoting
interests, which shall be owned as follows:
is ... _:. .': :.._'.' �
-., . .. _ � u(}TING�_ < -,:�_ ; :: ,,�:_ � � �
....— .'.. ;. >; > EMBERSHiPNTERESTS -'
Gateway Center
Yakima, Inc. 1.0 % 0.0%
Gary D. Lukehart 4.5% 45.0%
Mary M. Lukehart 4.5% 45.0%
It ) TOTAL 10% _ 90.%
CONSENT IN LIEU OF MEETING 2
29378/3 -c: \d ataUlc\resol\gateway. center.associates
WHEREAS, GARY D. LUKEHART and MARY M. LUKEHART have expressed a
desire to each transfer twelve and one -half percent (12.5 %) of nonvoting
interests in the Company to an irrevocable trust they have established fortheir
descendants known as the LUKEHART FAMILY TRUST (hereafter the "Trust"); •
now, therefore,
IT IS RESOLVED FURTHER,. That after GARY D. LUKEHART and MARY M.
LUKEHART complete the transfers to the Trust, the Trust will own twenty-five
percent (25 %) of the Company in the form of nonvoting interests; and the
ownership of the Company shall be as follovvs:
•
• V
Tl _
. ..... . ... ;..
X.
� :•• � � �■ e a urn.:ra rcar rc. .:�• �.rt' rs�aR C�
i; ':: -a.., :.: ;;r: -`F %; :, '.':��r.. i - : •. : �`.': ' -_.i _.., :iil �iiYE1 Li��i.i�r' L.a�L�.? `-'. Ji' -d .':, _.; == �'iCi- ;'._Vie r ; 'n_t, ➢ r.:5 %r:ar' ;, s.- •;rt - <` . ->
Gateway Center
Yakima, Inc. 1.0% 0.0%
Gary D. Lukehart 4.5% 32.5%
Mary M. Lukehart 4.5% 32.5%
Lukehart Family Trust 0.0% 25.0%
TOTAL 10% 90 %
WHEREAS, the loan documents provide that if the lender and the lender's
attorneys are provided with notice of a transfer from GARY D. LUKEHART or
MARY M. LUKEHART to a qualified family member or qualified estate planning
vehicle, then the consent of the lender is not required before such a transfer
can take place; now, therefore,
IT IS RESOLVED FURTHER, That the Manager shall give notice to the lender
and the lender's attorneys of the intent of GARY D. LUKEHART and MARY M.
LUKEHART to each give twelve and one -half percent (12.5 %) of their
nonvoting interests in the Company to the Trust. The notice shall be sent via
facsimile machine, certified mail return receipt requested, or by a nationally
recognized overnight courier to the parties listed below:
Lender:
National Capital Funding Corp.
7000 Central Parkway, Suite 650
J
Atlanta, Georgia 30328
Attn: James A. Dunbar
CONSENT IN LIEU OF MEETING 3
29378/3 -c: \da taV lc\ resol \gateway.center.associates
_ I
Lender's Attorneys:
Powell, Goldstein, Frazer, and Murphy, LLP
191 Peachtree Street, N.E.
Sixteenth Floor
Atlanta, Georgia
Attn: Jonathan R. Shits, Esq.
IT IS RESOLVED FURTHER That a copy of this Resolution be placed in the
records of the Company and that, specifically, a copy of the same be attached
to the amended Operating Agreement of the Company for the purpose of
clarifying the various matters referred to h ere i n.
Executed as of the date and year first above written.
GAR UKEHART, Member
pa,
MA M. It EHART, Member
GAT AY CENTER YAKIMA, INC. , Manager
Ga AD. Lukehart, Pres' ent
B & �� Ud
Y� 72)•
ary ukehart, Secretary
CONSENT IN LIEU OF MEETING 4 .
29378 /3 -c:\ data\ lc\ resollgateway.center.associates
•
AMENDMENT TO
LIMITED LIABILITY COMPANY AGREEMENT
OF
GATEWAY CENTER ASSOCIATES, L.L.C.
THIS AMENDMENT TO LIMITED LIAl3ILITY COMPANY AGREEMENT
( "Amendment ") is made and entered into effective as of December / 9 , 1997, by and among
the persons whose signatures appear on the signature page hereof.
Wr7`°vn SSE. n
WHEREAS, effective November 14, 1994, the persons whose signatures appear on the
signature page hereof executed that certain Limited Liability Company Agreement of Gateway
Center Associates, L.L.C. (the "Agreement ");
WHEREAS, the Company is about to enter into a loan transaction (the "Loan ") wherein
m the Company will borrow from National Funding Corp. ( "Lender") the sum of Nine Million
Seven Hundred Thousand Dollars ($9,700,000);
WHEREAS, Gateway Center Yakima, Inc., a Washington corporation (the
"Corporation "), has become a member of the Company, and the members desire that the
Corporation be the Manager of the Company; and
WHEREAS, the parties to the Agreement now desire to amend the Agreement in certain
respects.
NOW, THEREFORE, the parties hereto agree that the Agreement shall be and is hereby
amended as follows:
1. Article I, Definitions, shall be and is hereby amended by deleting the definition of
"Managers" and substituting the following therefore:
"Managers" or "Manager" means Gateway Center Yakima, Inc., a Washington
corporation (the "Corporation ").
2. Article I, Definitions, shall be and is hereby amended by deleting the definition of
"Affiliate" and substituting the following therefore:
"Affiliate" means any person or entity other than the Company (i) which owns
beneficially, directly or indirectly, more than ten percent (10 %) of the outstanding
voting interests of the Company, or which is otherwise in control of the
Corporation whether directly or indirectly through one or more intermediaries, (ii)
1
150703.01
of which ed ene
more than ten percent (10 % of the outstandi voti are
own bficially, directly or indirectl by any person or entity described securities in
clause (i) above, or (iii) which is controlled by or under common control of any
person or entity described in clause (i) above; provided that for the purposes of
this definition the term "control" and "controlled by" shall have the meanings
assigned to them in Rule 405 under the Securities Act of 1933, as amended.
3. Article III, Business and General Powers of the Company shall be amended by
deleting the same and substituting the following therefore:
The nature of the business of the Company and the purposes for its
organization and existence shall be limited solely to the following business and
activities: (a) to acquire, own, operate and hold the Project (as the term "Project"
is defined in the Agreement); (b) to perform the obligations of the Company
under the Agreement and any agreements or instruments in connection with any
of the matters contemplated by this Article ill; and (c) to engage in any lawful act
or activity and to exercise any powers permitted to limited liability companies
under the laws of the State of Washington that are related or incidental to the
foregoing and necessary, convenient or advisable to accomplish any of the matters
contemplated by this Article III.
4. ARTICLE V shall be and is hereby amended by adding at the end thereof the
following new provision:
•
5.10 Applicable Period Provisions. Notwithstanding anything to the
contrary contained in this Article V or any other provision of the
Agreement, during the Applicable Period (hereinafter defined) there shall
be no Manager other than the Corporation.
5. Article XVII, Miscellaneous Provisions, shall be amended by adding at the end
thereof the following new provisions:
17.12 Restrictions Applicable To Certain Actions. Notwithstanding
anything to the contrary contained in any other provision of the Agreement or this
Amendment, the following provisions shall apply during the Applicable Period:
(a) the Company shall not, without the affirmative vote of all of the members,
including the Manager, institute proceedings to be adjudicated a bankrupt or
insolvent or consent to the institution of a bankruptcy or insolvency proceeding
against it or file a petition or consent to a petitiion seeking a reorganization or
relief under any applicable federal law or state law relating to bankruptcy or
insolvency or consent to the appointment of a receiver, liquidator, signee, trustee,
sequester (or other similar official) of the Company or a substantial part of its
property or make any assignment for the benefit of creditors or admit in writing
its ability to pay its debts generally as they become due or take any corporate
action in furtherance of any such action; (b) the Company shall not dissolve or
liquidate in whole or in part; (c) the Company shall not consolidate or merge with
any third party or sell or substantially all of its assets to any third party other than
2
150703.01
as required or permitted under the loan documents; and (d) the Company shall not
- ) amend, alter, change or repeal any provision contained in Article III of the
Agreement or in this Section 17.12. As used herein, the term "Applicable Period"
shall mean and refer to that period of time during which the Loan is outstanding.
17.13 Separateness. Notwithstanding anything to the contrary contained
in any other provision of the Agreement or this Amendment, the Company shall at
all times observe the requirements set forth in the Agreement and the applicable
legal requirements for the recognition of the Company as a legal entity separate
from any other person or entity, without limitation, the following: (a) the
Company shah correct any known misunderstanding regarding its separate
identity; (b) the Company shall maintain its accounts, books, and corporate
records separate from any other person or entity; (c) the Company shall maintain
its books, records, resolutions and agreements as official records; (d) the
Company shall not co- mingle its funds or assets with those of any other person or
entity and shall hold its assets in its own name; (e) the Company shall conduct its
business in its name; (0 the Company shall maintain its financial statements,
accounting records and other entity documents separate from any other person or
entity; provided that the Company may be included in any consolidated financial
statement of any Affiliate in accordance with applicable accounting rules; (g) the
Company shall pay its own liabilities and expenses out of its own funds and
assets; (h) the Company shall not incur, create or assume indebtedness of any kind
...
except as contemplated or permitted in the loan documents; (i) the Company shall
not assume or guarantee or become obligated for the debts of any other person or
entity or hold out its credit as being available to satisfy the obligations of any
other person or entity; (j) the Company shall not acquire obligations of its
Members or Affiliates; (k) the Company shall hold and identify itself as a separate
and distinct entity under its own name and shall not hold out or identify itself as a
division or a part of any other person or entity; (1) the Company shall not make
any loans or advances to any person or entity (excluding any advances made by
the Company pursuant to its indemnification obligations contained in its
Operating Agreement, if any); (m) the Company shall not identify its Members or
Affiliates as a division or a part of the Company; (n) the Company shall maintain
adequate capital in light of its contemplated business activities; (o) the Company
shall not enter into or become a party to any transaction with its Members or
Affiliates except in the ordinary course of its business and under terms which are
fair and are no less favorable to it than would be obtained in a comparable arm's
length transaction with an unrelated third party; (p) the Company shall allocate
fairly and reasonably any overhead for shared office space and use separate
stationary, invoices and checks; (q) the Company shall not engage in any business
activity other than the ownership and operation of the Project as set forth in
Article III above; (r) the Company shall observe all limited liability company
formalities; and (s) the Company shall not pledge its assets for the benefit of any
other entity except as required or permitted in the loan documents.
‘
w'7
3
150703.01
6. Exhibit A to the Agreement is hereby amended to read as follows:
NAMES & ADDRESSES INITIAL CAPITAL UNITS PERCENTAGE
OF MEMBERS, CONTRIBUTION INTEREST
Gary Lukehart An undivided one -half 49.5 49.5%
interest in the project
Mary Lukehart An undivided one -half 49.5 49.5%
interest in the project
Gateway Center, Inc. NA 1.0 1.0%
7. Effective Date. This Amendment shall become effective, if at all, only at such
time as the Company has entered into the Loan; provided, if the Loan has not closed on or before
January 30, 1998, this Amendment shall be of no further force or effect.
8. Except as amended herein, the Agreement shall remain in full force and effect
Executed by the undersigned Members as of the date first above written.
,
YAKIMA
! �'i ► ,.7J� GATEWAY, CENTER, INC.,
Gary L ehart a Washington t •rporation
ary L keh.G Gary L .• hart, President
SHD ASSOCIATES, a Washington general
Partnership
By: - 7 /Lib
Scott Shanks, General Partner
By: = /!�
Michael Hess, General Partner
By: 'c
Mack DuBose, General Partner
4
150703.01
••
LIMITED LIABILITY COMPANY AGREEMENT
i )
OF
GATEWAY CENTER ASSOCIATES, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT ( "Agreement") is made
and entered into effective as of November 14, 1994, by and among
the Persons whose signatures appear on the signature page hereof.
ARTICLE I.
DEFINITIONS
The following terms used in this Agreement shall have the
following meanings (unless otherwise expressly provided herein):
"Act" means the Washington Limited Liability Company Act.
"Affiliate" means, with respect to any Person, (i) any other
Person directly or indirectly controlling, controlled by, or under
common control with such Person, (ii) any Person owning or
controlling more than fifty percent (50 %) of the outstanding voting
interests of such Person, (iii) any officer, director, or general
-- partner of such Person, or (iv) any Person who is an officer,
director, general partner, trustee, member, or holder of more than
• fifty percent (50 %) of the voting interests of any Person described
in clauses (i) through (iii). For purposes of this definition, the
term "controls," "is controlled by," or "is under common control
with" shall mean the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Capital Account" means the capital account determined and
maintained for each Unit Holder pursuant to Section 8.3.
"Capital Contribution" means any contribution to the capital
of the Company in cash or property by a Member whenever made.
"Certificate of Formation" means the certificate of formation
pursuant to which the Company was formed, as originally filed with
the office of the Secretary of State on November 14, 1994, and as
amended from time to time.
"Code" means the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent superseding federal revenue
laws.
"Company" means "Gateway Center Associates, L.L.C."
- Nii.; )
0038490.02
November 21, 1994- -5:09 pm — 1 —
"Company Minimum Gain" has the same meaning as the term
"partnership minimum gain" in Regulation Sections 1.704- 2(b)(2)
and 1.704-2(d).
"Construction Loan" means that certain loan for $8,050,000
from Seattle Mortgage Company to the Company for construction of
the Project.
"Deficit Capital Account" means with respect to any Unit
Holder, the deficit balance, if any, in such unit Holder's Capital
Account as of the end of the taxable year, after giving effect to
1.11C 1V11VW . f7 l_,( �1l5Sdd6�
(a) credit to such Capital Account any amount that such
Unit Holder is obligated to restore to the Company under Regulation
Section 1.704- 1(b)(2)(ii)(c), as well as any addition thereto
pursuant to the next to last sentences of Regulation Sections
1.7n4-2(g)(1) and (i) ( ; and
(b) debit to such Capital Account the items described in
Regulation Sections 1.704 -1 (b) (2) (ii) (d) (4) , (5) and (6) .
This definition of is intended to comply with the provisions of
Regulation Sections 1.704- 1(b)(2)(ii)(d) and 1.704 -2, and shall be
interpreted consistently with those provisions.
"Distributable Cash" means, with respect to any fiscal period,
all cash received by the Company, less the sum of the following, to
the extent paid or set aside by the Company: (a) all principal and
interest payments on indebtedness of the Company and other sums
paid or payable to lenders; (b) all cash expenditures necessary for
the normal operation of the Company's business other than payment
of the Fixed Management Fee and Percentage Management Fee; and (c)
Reserves.
"Entity" means any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust,
business trust, cooperative or association or any other
organization that is not a natural person.
"Fixed Management Fee" means the fee payable to SHD
Associates in accordance with Sections 5.7.1 and 10.5.
"Guaranty" means the guaranty of the Construction Loan by the
partners of SHD Associates.
"Guaranty Release" means the absolute and complete release of
the partners of SHD Associates from any and all liability under the
Guaranty.
A4 �
"Lukeharts" means Gary and Mary Lukehart.
"Majority Interest" means, at any time, more than fifty
percent (50 %) of the then outstanding Units held by Members.
0038490.02
November 21, 1994- -5:09 pm — 2 —
"Management Fee" means the Fixed Management Fee and
Percentage Management Fee payable, to SHD Associates for its
services as Manager hereunder.
"Managers" means Gary Lukehart and the SHD Manager and any
other Person who may become a substitute or additional Manager as
provided in Article 5.
"Member" means each Person who owns a Membership Interest in
the Company and is entitled to all rights and privileges conferred
on a Member by this Agreement and executes a counterpart of this
11 greemen1- as a Member a nd Person eQ on o m a
rsc why hereafter h o a
each 'G�1J �11 •llY be—
1Je a
Member. To the extent a Manager has purchased a Membership
Interest in the Company, it will have all the rights of a Member
with respect to such Membership Interest, and the term "Member" as
used herein shall include a Manager to the extent it has purchased
a Membership interest in the Company. If a Member acquires a
Nonvoting Interest, such Member shall have all the rights of Q
Member with respect to such Nonvoting :Interest.
"Membership Interest" means all of a Member's share in the Net
Profits, Net Losses, and other tax items of the Company and
distributions of the Company's assets pursuant to this Agreement
and the Act and all of a Member's rights to participate in the
management or affairs of the Company, :including the right to vote
on, consent to or otherwise participate in any decision of the
) Members.
"Member Minimum Gain" has the same meaning as the term
"partner nonrecourse debt minimum gain" in Regulation
Section 1.704 -2(i).
"Member Nonrecourse Deductions" has the same meaning as the
term "partner nonrecourse deductions" in Regulation Sections
1.704-2(i)(1) and (2) . The amount of Member Nonrecourse Deductions
for a Company fiscal year shall be determined in accordance with
Regulation Section 1.704- 2(i)(2).
"Net Profits" and "Net Losses" shall mean the income, gain,
loss, deductions and credits of the Company in the aggregate or
separately stated, as appropriate, determined in accordance with
the accounting principles described in Section 9.5.
"Nonrecourse Deductions" has the meaning set forth in
Regulation Section 1.704- 2(b)(1). The amount of Nonrecourse
Deductions for a Company fiscal year shall be determined pursuant
to Regulation Section 1.704 -2(c).
"Nonrecourse Liability" has the meaning set forth in
Regulation Section 1.704- 2(b)(3).
"Nonvoting Interest" means a Unit Holder's share of Net
Profits, Net Losses, and other tax items of the Company and
distributions of the Company's assets pursuant to this Agreement
0038490.02
November 21, 1994- -5:09 pm — 3 —
and the Act, but shall not include any right to participate in the
- management or affairs of the Company, including, the right to vote
on, consent to or otherwise participate in any decision of the
Members. •
"Nonvoting Interest Owner" means the owner of a Nonvoting
■
Interest who is not a Member.
"Percentage Management Fee" means the fee payable to SHD
Associates in accordance with Sections 5.7.2 and 10.5.
"Percentage Interest" t" 4- +- a-.. TT, 4 Holder
1. +a �ci. cs �. means with a.ii r 2�upcC a.. to any vaa.L v i oiucr
the percentage determined based upon the ratio that the number of
Units held by such Unit Holder bears to the total number of
outstanding Units.
"Person" means any individual or Entity, and the heirs,
executors, 1ra legal i l• -- J
CXel.: ll l.Vt r�l, administrators, tegat representatives, successors, and
assigns of such "Person" where the context so requires.
"Project" means the property commonly known as Gateway Plaza
Shopping Center in Yakima, Washington and more particularly
described on Exhibit C attached hereto.
"Regulations" includes proposed, temporary and final Treasury
regulations promulgated under the Code and the corresponding
sections of any regulations subsequently issued that amend or
supersede such regulations.
"Reserves" means, with respect to any fiscal period, funds set
aside or amounts allocated during such period to reserves which
shall be maintained in amounts deemed sufficient by the SHD
Manager, so long as there is an SHD Manager and by the sole Manager
thereafter, for working capital and to pay taxes, insurance, debt
service or other costs or expenses necessary for the operation of
the Company's business.
"SHD Associates" means SHD Associates, a Washington general
partnership, the partners of which are Scott Shanks, Michael Hess,
and Mack DuBose as of the date hereof.
"SHD Cost Overrun" means an increase in the cost of the
Project of more than fifty thousand dollars ($50,000) caused by the
negligence of SHD Associates or its Affiliate.
"SHD Delay" means a delay of greater than ninety (90) days in
completion of, the Project caused by the negligence of SHD
Associates or its Affiliate.
"SHD Manager" means SHD Associates and its partners Scott
Shanks, Michael Hess and Mack DuBose, each of whom has the
It authority to act on its behalf.
0038490.02
November 21, 1994 - -5:09 pm — 4 —
•
"Unit Holder" means a Person who is a Member or who holds an
Nonvoting Interest but is not a Member.
"Units" means the equity units issued to any Member under this
Agreement as reflected in attached Exhibit A, as amended from time
to time.
ARTICLE II.
FORMATION OF COMPANY
•
2.1 Formation. The Company was formed on November 14, 1994,
u ovc' " i ^ and filing l i n ^f the Certificate of Form with the
t iI 33 k11 111113 V 1 the JLL V L
office of the Secretary of State of Washington in accordance with
and pursuant to the Act.
2.2 Name. The name of the Company is "Gateway Center
Associates, L.L.C."
2.3 Principal Place of Business. The principal place of
business of the Company shall be 120 West Dayton, Suite D9,
Edmonds, WA 98020. The Company may locate its places of business
at any other place or places as the Managers may from time to time
deem advisable.
•
2.4 Registered Office and Registered Agent. The Company's
initial registered agent and the address of its initial registered
office in the State of Washington are as follows:
Name Address
RSC Corporation 1201 Third Avenue, Suite 3400
Seattle, WA 98101 -3034
The registered office and registered agent may be changed by the
Managers from time to time by filing an amendment to the
Certificate of Formation.
2.5 Term. The term of the Company shall be from November 14,
1994, through December 31, 2015, unless the Company is earlier
dissolved in accordance with either Article 14 or the Act.
ARTICLE III.
BUSINESS AND GENERAL POWERS OF COMPANY
The business of the Company shall be to develop the Project,
carry on any lawful business or activity which may be conducted by
a limited liability company organized under the Act, and exercise
all other powers necessary to or reasonably connected with the
Company's business which may be legally exercised by limited
liability companies under the Act.
0038490.02
November 21, 1994 - -5:09 pm • — 5 —
•
\ ARTICLE IV.
) NAMES_ AND ADDRESSES OF MEMBERS
The names and addresses of the Members are set forth on
attached Exhibit A, as amended or restated from time to time.
ARTICLE V.
RIGHTS AND DUTIES OF MANAGERS
5.1 Management. The business and affairs of the Company
shall be managed by the Managers. Except as otherwise expressly
provided in this Agreement, the Managers shall have full and
complete authority, power and discretion to manage and control the
business, affairs and properties of the Company, to make all
decisions regarding those matters and to perform any and all other
acts or activities customary or incident to the management of the
Company's business. Unless authorized) to do so by this Agreement
or by the Managers, no Member, employee UL other agent of the
Company shall have any power or authority to bind the Company in
any way, to pledge its credit or to render it liable for any
purpose. At any time when there is more than one Manager, any one
Manager may take any action permitted to be taken by the Managers
only upon the approval of all the Managers. Without limiting the
generality of the foregoing, the Managers shall have power and
authority, on behalf of the Company:
5.1.1 to acquire property from any Person as the Managers
may determine, and the fact that a Manager or a Member is an
Affiliate of such Person shall not prohibit the Manager from
dealing with that Person;
5.1.2 to borrow money from banks, other lending
institutions, financial institutions, the Managers, Members, or
Affiliates of the Manager or Members on such terms as the Managers
deem appropriate, and in connection therewith, to hypothecate,
encumber and grant security interests in the assets of the Company
to secure repayment of the borrowed sums. No debt shall be
incurred by or on behalf of the Company except by the Managers;
5.1.3 to purchase liability and other insurance to
protect the Company's property and business:
5.1.4 except as provided in Section 7.2 with respect to
substantially all of the assets of the Company, to acquire,
improve, manage, charter, operate, sell, transfer, exchange,
encumber, pledge or dispose of any real or personal property of the
Company;
5.1.5 to make all investment decisions for the Company,
including temporary investment of any Company funds in time
deposits, short -term governmental obligations, commercial paper or
other short -term investments;
4
0038490.02
November 21, 1994- -5:09 pm — 6 —
-. 5.1.6 to execute instruments and documents, including
) without limitation, checks, drafts, :notes and other negotiable
instruments, mortgages or deeds of trust, security agreements,
financing statements, documents providing for the acquisition,
mortgage or disposition of the Company's property, assignments,
bills of sale, leases, partnership agreements, operating agreements
of other limited liability companies, and any other instruments or
documents necessary, in the opinion of the Manager, to the business
of the Company;
c 5.1.7 to employ accountants, legal counsel, managing
agents or other experts to perform services for the Company and to
compensate them from Company funds;
5.1.8 to enter into any and all other agreements with any
other Person for any purpose, in such form as the Managers may
approve;
5.1.9 from time to time to open bank accounts in the name
of the Company, and the Managers shall be the sole signatory
thereon, unless the Managers determine otherwise; and
5.1.10 to do and perform all other acts as may be
necessary or appropriate to the conduct of the Company's business.
5.2 Number and Election of Managers. Until such time as SHD
Associates has received the Management Fee and is released from the
° Guaranty, the Company shall have two Managers, one of whom shall be
SHD Associates. Each of the partners of SHD Associates shall have
the authority to act on its behalf. The other Manager shall be
chosen by the affirmative vote of the holders of a Majority
Interest. At such time as SHD Associates has received the Fixed
Management Fee, received the Percentage Management Fee and has been
released from the Guaranty, the SHD Manager shall resign as Manager
and shall not be replaced. Thereafter, the Company shall have only
one Manager chosen by the affirmative vote of the holders of a
Majority Interest.
5.3 Resignation. Any Manager of the Company may resign at
any time by giving written notice of resignation to each Member of
the Company. The resignation of any Manager shall take effect upon
receipt by all Members of notice thereof or at such later time as
shall be specified in such notice. The resignation of a Manager
who is also a Member shall not affect the Manager's rights as a
Member and shall not constitute a withdrawal of a Member.
5.4 Removal. At a meeting called expressly for that purpose,
a Manager may be removed at any time, with or without cause, by the
affirmative vote of the holders of a majority of the Units held by
Members entitled to select such Manager; provided, however, that
until SHD Associates is paid its :Fixed Management Fee and
41) Percentage Management Fee in full and is relieved from the
Guaranty, the SHD Manager cannot be removed as Manager. The
removal of a Manager who is also a Member shall not affect the
0038490.02
November 21, 1994- -5:09 pm — 7 —
•
Manager's rights as a Member and shall not constitute the
disassociation of a Member.
5.5 Vacancies. Any vacancy .occurring for any reason in the
number of Managers shall be filled by the affirmative vote of the
holders of a majority of the Units held by Members entitled to
select such Manager, except that should a vacancy occur with
respect to the SHD Manager, SHD shall be entitled to appoint a
successor Manager until such time as the Fixed Management Fee and
Percentage Management Fee have been paid in full and the partners
of SHD Associates have been released from the Guaranty.
5.6 Compensation. Except as otherwise provided herein, the
Managers shall not be compensated as such; provided, however, that
this provision shall not prohibit any Manager Affiliate from
receiving compensation from the Company for other services provided
to the Company. The Managers shall be reimbursed by the Company
for reasonable out-of-pocket expenses incurred by ...11G Managers in
connection with the Company's business, including without
limitation expenses incurred in the organization of the Company and
the placement of the Units.
5.7 SHD Associates Management Fee_. Notwithstanding anything
to the contrary herein contained, SHD Associates shall receive a
Fixed Management Fee and a Percentage Management Fee for serving as
a Manager of the Company.
5.7.1 Fixed Management Fee. SHD Associates shall be
paid a fee from Distributable Cash in the amount of Three Hundred
Twenty Five Thousand Dollars ($325,000) in accordance with Section
10.5. If the Fixed Management Fee is not paid within one (1) year
from the date hereof, any unpaid balance shall thereafter accrue
interest at the rate charged SHD Associates (or an Affiliate of SHD
Associates if SHD Associates has no outstanding debt) by its
primary bank, plus two percent (2 %). However, no interest shall
accrue for the duration of any SHD Delay. Should there be an SHD
Cost Overrun, interest charges shall be tolled for one (1) month
for each $50,000 in SHD Cost Overrun.
5.7.2 Percentage Management Fee. SHD Associates
shall be paid a fee from Distributable Cash in the amount of
fifteen percent of Distributable Cash as provided in Section 10.5.
5.8 Duty of Care Owed to Company. Each Manager shall perform
his duties as Manager in good faith and in a manner he reasonably
believes to be in the best interests of the Company. A Manager who
so performs his duties as Manager shall not have any liability to
the Company or to the Members by reason of being or having been a
Manager of the Company. The Managers do not, in any way, guarantee
the return of the Members' Capital Contributions or a profit for
the Members from the operations of the Company. The Managers shall
not be liable to the Company or to any Member for any loss or
damage sustained by the Company or any Member, unless the loss or
0038490.02
November 21, 1994- -5:09 pm — 8 -
damage shall have been the result of fraud, deceit, gross
negligence, willful misconduct or a wrongful taking by the Manager.
5.9 Right to Rely on the Manager. Any Person dealing with
the Company may rely without duty of further inquiry upon a
certificate signed by any Manager as to the identity and authority
of any Manager or other Person to act on behalf of the Company or
any Member.
ARTICLE VI.
MEETINGS OF MEMBERS
6.1 Annual Meeting. The Members shall hold an annual meeting
on the third Tuesday of November of each and every year, or at such
other time as shall be determined by the Members, for the purpose
of the transaction of such business as may come before the meeting.
6.2 Special Meetings. Special meetings of the Members, for
any purpose or purposes, may be called by any Manager or by Members
holding at least ten percent (10 %) of the total number of Units
held by all Members.
6.3 Place of Meetings. The Manager or the Members may
designate any place, either within or outside the state of
'''" Washington, as the place of meeting for any meeting of the Members.
If no designation is made, the place of meeting shall be the
"""' principal office of the Company specified in Section 2.3. The
place of a special meeting shall be determined by the Person
calling the special meeting. The place of the annual meeting shall
be determined by the Managers.
6.4 Notice of Meetings. Written notice stating the place,
day and hour of the meeting and, in the case of a special meeting,
the purpose or purposes for which the meeting is called shall be
delivered not fewer than ten (10) nor more than fifty (50) days
before the date of the meeting, either personally or by mail, by or
at the direction of the Manager or the Members calling the meeting,
to each Member entitled to vote at such. meeting. If mailed, such
notice shall be deemed to be delivered two calendar days after
being deposited in the United States Mail, addressed to the Member
as specified in Section 16.1, with postage thereon prepaid.
6.5 Record Date. For the purpose of determining Members
entitled to notice of or to vote at any meeting of Members or any
adjournment thereof, or Members entitled to receive payment of any
distribution, the date on which notice of the meeting is mailed or
the date on which the resolution declaring such distribution is
adopted, as the case may be, shall be the record date for such
determination of Members. When a determination of Members entitled
to vote at any meeting of Members has been made as provided in this
fi .
Section, such determination shall apply to any adjournment thereof.
0038490.02
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•
6.6 Quorum. All of the holders of outstanding Units
represented in person or by proxy shall constitute a quorum at any
meeting of Members. The Members present at a duly organized
meeting may continue to transact business until adjournment,
notwithstanding the withdrawal during such meeting of that number
of Units whose absence would cause less than a quorum.
6.7 Manner of Acting. The affirmative vote of all Members
represented at a meeting at which a quorum is present shall be the
act of the Members, unless the vote of a greater percentage is
required by this Agreement or the Act.
6.8 Proxies. At all meetings of Members a Member may vote in
person or by proxy executed in writing by the Member. Such proxy
shall be filed with the Managers before or at the time of the
meeting. No proxy shall be valid after eleven (11) months from the
date of its execution, unless otherwise provided in the proxy.
6.9 Action by Members Without a Meeting. Action required or
permitted to be taken at a meeting of Members may be taken without
a meeting if the action is evidenced by one or more written
consents describing the action taken, executed by all Members
entitled to vote thereon and delivered to the Managers for
inclusion in the Company's records. Action taken under this
Section 6.9 is effective when all Members entitled to vote thereon
have signed such consents, unless such consents specify a different
effective date. The record date for determining Members entitled to
take action without a meeting shall be the date the first Member
signs a consent.
6.10 Waiver of Notice. When any notice is required to be
given to a Member, a waiver thereof in writing signed by the Member
entitled to such notice, whether before, at, or after the time
stated therein, shall be equivalent to the giving of such notice.
ARTICLE VII.
RIGHTS OF MEMBERS
7.1 Approval of Sale of All Assets. The Company shall not
sell, exchange or otherwise dispose of all, or substantially all,
of its assets without the affirmative vote of the Majority
Interest; provided that, if within three (3) years from the date
hereof SHD Associates has not been paid the Management Fee and been
released from the Guaranty, the SHD Manager may cause the Company
to sell all, or substantially all, of its assets without the
affirmative vote of the Majority Interest and without the approval
of the other Manager.
7.2 Inspection of Records. Upon reasonable request, each
Member shall have the right to inspect and copy at such Member's
expense, during ordinary business hours, the records required to be
maintained by the Company pursuant to Section 11.5.
0038490.02
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7.3 No Priority and Return of Capital. Except as expressly
- >. provided in Article 9 or 10, no Unit Holder shall have priority
over any other Unit Holder, either as to the return of Capital
Contributions or as to Net Profits, Net Losses or distributions;
provided, that this Section 7.4 shall not apply to loans made by a
Member to the Company.
7.4 Withdrawal of Member. Except as expressly permitted in
this Agreement, no Member shall voluntarily resign or otherwise
withdraw as a Member if upon such resignation or withdrawal there
would only be one person left as a Member. Unless otherwise
approved by Meyers holding a Majority Inter a Member w In
resigns or withdraws shall be entitled to receive only those
distributions to which such Person would have been entitled had
such Person remained a Member (and only at such times as such
distribution would have been made had such Person remained a
Member). Except as otherwise expressly provided herein, a
re or w *hdrawing Member shall become a Nonvoting Interest
Owner.
ARTICLE VIII.
CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS
8.1 Members' Initial Capital Contributions. The Members
shall contribute the assets shown opposite their respective names
on Exhibit A as their initial Capital Contributions. The Members
agree that the fair market value of such assets are as set forth in
such exhibit.
8.2 Additional Contributions. The Lukeharts shall be
required to make such additional Capital Contributions as shall be
determined by the SHD Manager from time to time to be reasonably
necessary to pay any expenses, losses or liabilities of the Company
and /or to complete development of the Project. The SHD Manager
shall give written notice to Lukeharts specifying the amount of any
required additional Capital Contribution and the reason additional
capital is needed. The Lukeharts shall pay to the Company such
additional Capital Contribution within ten (10) days of the date
notice is given. In the event the Lukeharts do not contribute the
full amount requested, SHD Associates may, in its discretion, loan
to the Company the amount of the shortfall. The amount loaned
shall be repaid to SHD Associates as provided in Section 10.5 with
interest at the rate set forth in Section 5.7. Nothing contained
in this Section 8.2 is or shall be deemed to be for the benefit of
any Person other than the Members, Managers and the Company, and no
such Person shall under any circumstances have any right to compel
any actions or payments by the Members.
8.3 Capital Accounts.
8.3.1 Maintenance of Capital Accounts. A separate
Capital Account shall be maintained for each Member, in accordance
with Regulation Section 1.704- 1(b)(2)(iv). Each Member's Capital
Account shall initially be credited with the amount shown on
0038490.02
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.
\ Exhibit A as such Member's Initial Capital Account. Thereafter,
each Member's Capital Account shall be increased by (1) the amount
of money contributed by such Member to the. Company; (2) the fair
market value of property contributed by such Member to the Company
(net of liabilities secured by such contributed property that the
Company is considered to assume or take subject to under Code
§752); (3) allocations to such Member of Net Profits; (4) special
allocations of income or gain, if any, to such Member, and (5) the
amount of any ,Company liabilities that are assumed by such Member,
as provided in Regulations Section 1.704- 1(b)(2)(iv)(c). Each
Member's Capital Account will be decreased by (1) the amount of
money distributed to such Member by the Company; (2) the f a i r
market value of property distributed to such Member by the Company
(net of liabilities secured by such distributed property that the
Member is considered to assume or take subject to under Code §752);
(3) allocations to such Member of Net Loss; (4) special
allocations, if any, of deductions or losses, to such Member; and
(5) the arnoount ^^f any 7 i 1. i 7 1 t i Qs�r of such Member that are asssu
,.�� ..ill 11a GJ V1 r'�11V 11 1'1G 11W 1 that
by the Company, as provided in Regulation Section 1.704 -
1 (b) (2) (iv) (c) .
8.3.2 Treatment of Capital Account on Transfer. In
the event of ,,sale or exchange of a Membership Interest in the
Company in compliance with the provisions of Article XV, the
Capital Account of the transferor shall become the Capital Account
- of the transferee to the extent it relates to the transferred
Membership Interest or Nonvoting Interest.
8.3.3 Method of Recording Capital Account
Transactions. The manner in which Capital Accounts are to be
maintained pursuant to this Section 8.3 is intended to comply with
the requirements of Code §704(b) and Treasury Regulations
promulgated thereunder. If in the opinion of the Company's
accountants the manner in which Capital Accounts are to be
maintained pursuant to the preceding provisions of this Section 8.3
should be modified in order to comply with Code §704(b) and the
Treasury Regulations thereunder, then notwithstanding anything to
the contrary contained in the preceding provisions of this
Section 8.3, the method in which Capital Accounts are maintained
shall be so modified; provided, however, that any change in the
manner of maintaining Capital Accounts shall not materially alter
the economic agreement between or among the Members.
8.3.4 Liquidation. Upon liquidation of the Company,
liquidating distributions will be made in accordance with
Section 14.3.
8.4 Withdrawal Rights. Except as otherwise permitted herein
or by the Act, a Member shall not be entitled to receive out of the
Company's property any return of its Capital Contribution, unless
and until all liabilities of the Company, except liabilities to
4 1)
Members on account of their Capital Contributions, have been paid
or there remains property of the Company sufficient to pay them.
In any case, no payment shall be made to any Member with respect to
0038490.02
November 21, 1994- -5:09 pm - 12 -
such Member's Capital Contribution except a payment made with the
- -) consent of all Members and all Managers.
ARTICLE IX.
ALLOCATIONS OF NET PROFITS AND LOSSES
9.1 Allocation of Net Profit and Loss - In General.
9.1.1 Allocation of Net Profit or Loss. After giving
effect to the special allocations set forth in Sections 9.2 and
9.3, the Net Profit and Net Loss for any fiscal year of the Company
=hall In= =1 1 nratcri among th -unit f-7n 1 ria in annnrdance with their
respective Percentage Interests.
9.1.2 Limitation. The Net Loss allocated to each
Member for any Company fiscal year pursuant to Section 9.1.1 shall
not exceed the maximum amount of Net Loss that can be so allocated
without H Member Deficit t r p i +- l co ,., -
W tl.11V4.. causing i lag ru li'.:aa aacuwGr to have a ucf ia:ia. �.aria..�i "-
i A... u aa �. at
the end of the fiscal year. All Net Losses in excess of the
limitation set forth in this Section 9.1.2 shall be allocated to
the other Unit Holders who do not have Deficit Capital Accounts in
proportion to their respective Percentage Interests.
9.2 Special Allocations. The following special allocations
shall be made for any fiscal year of the Company in the following
order:
,:t
'-' 9.2.1 Minimum Gain Chargeback. If there is a net
decrease in Company Minimum Gain during any Company fiscal year,
each Unit Holder shall be specially allocated items of Company
income and gain for such year (and, if necessary, subsequent years)
in an amount equal to such Unit Holder's share of the net decrease
in Company Minimum Gain, determined in accordance with Regulation
Sections 1.704 -2(f) and 1.704- 2(g)(2). The items to be so
allocated, and the manner in which those items are to be allocated
among the Unit Holders, shall be determined in accordance with
Regulation Sections 1.704 -2(f) and 1.704- 2(j)(2). This
Section 9.2.4 is intended to satisfy the minimum gain chargeback
requirement in Regulation Section 1.704 -2(f) and shall be
interpreted and applied accordingly.
9.2.2 Member Minimum Gain Chargeback. If there is a
net decrease in Member Minimum Gain during any Company fiscal year,
each Unit Holder who has a share of that Member Minimum Gain,
determined in accordance with Regulation Section 1.7042(i)(5),
shall be specially allocated items of Company income and gain for
such year (and, if necessary, subsequent years) in an amount equal
to such Unit Holder's share of the net decrease in Member Minimum
Gain, determined in accordance with Regulation Sections
1.704-2(i)(4) and 1.704-2(i)(5). The items to be so allocated, and
the manner in which those items are to be allocated among the Unit
Holders, shall be determined in accordance with Regulation Sections
1.704 2(h)(4) and 1.7042(j)(2). This Section 9.2.5 is intended to
satisfy the minimum gain chargeback :requirement in Regulation
0038490.02
November 21, 1994 - -5:09 pm - 13 -
Section 1.704- 2(i)(4) and shall be interpreted and applied
accordingly.
9.2.3 Qualified Income Offset. In the event that any
Unit Holder unexpectedly receives any adjustments, allocations, or
distributions described in Regulation Sections
1.704 -1(b) (2) (ii) (d) (4) , (5) or (6) , items of Company income and
gain shall be specially allocated to such Unit Holder in an amount
and in a manner sufficient to eliminate as quickly as possible, to
the extent required by Regulation Section 1.704 (1)(b)(2)(ii)(d),
the Deficit Capital Account of the Unit Holder (which Deficit
Capital Account shall be deteyri nevi as if all other ai 1 re i i ons
provided for in this Article 9 have been tentatively made as if
this Section 9.2.6 were not in this Agreement).
9.2.4 Nonrecourse Deductions. Nonrecourse Deductions
shall be allocated among the Unit Holders in accordance with their
respective P,a..caatage Interests.
9.2.5 Member Nonrecourse Deductions. Any Member
Nonrecourse Deductions shall be specially allocated among the Unit
Holders in accordance with Regulation Section 1.704 -2(i).
9.3 Corrective Allocations.
9.3.1 Allocations to Achieve Economic Agreement. The
allocations set forth in the last sentence of Section 9.1.2 and in
Section 9.2 are intended to comply with certain regulatory
requirements under Code Section 704(b).. The Members intend that,
to the extent possible, all allocations made pursuant to such
Sections will, over the term of the Company, be offset either with
other allocations pursuant to Section 9.2 or with special
allocations of other items of Company income, gain, loss, or
deduction pursuant to this Section 9.3.1. Accordingly, the Manager
is hereby authorized and directed to make offsetting allocations of
Company income, gain, loss or deduction under this Section 9.3.1 in
whatever manner the Manager determines is appropriate so that,
after such offsetting special allocations are made, the Capital
Accounts of the Unit Holders are, to the extent possible, equal to
the Capital Accounts each would have if the provisions of
Section 9.2 were not contained in this Agreement and all income,
gain, loss and deduction of the Company were instead allocated
pursuant to Section 9.1.1.
9.3.2 Waiver of Application of Minimum Gain
Chargeback. The Manager shall request from the Commissioner of the
Internal Revenue Service a waiver, pursuant to Regulation
Section 1.704- 2(f)(4), of the minimum gain chargeback requirements
of Regulation Section 1.704-2(f) if the application of such minimum
gain chargeback requirement would cause a permanent distortion of
the economic arrangement of the Partners, as reflected in
Section 9.1.
9.4 Other Allocation Rules.
0038490.02
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•
9.4.1 . General. Except as otherwise provided in this
Agreement, all items of Company income, gain, loss,. deduction, and
any other allocations not otherwise provided for shall be divided
among the Unit Holders in the same proportions as they share Net
Profits or Net Losses, as the case may be, for the year.
9.4.2 Allocation of Recapture Items. In making any
allocation among the Unit Holders of income or gain from the sale
or other disposition of a company asset, the ordinary income
portion, if any, of such income and gain resulting from the
recapture of cost recovery or other deductions shall be allocated
among tho89 Unit Holders who were previously allocated (or whose
predecessors -in- interest were .previously allocated) the cost
recovery deductions or other deductions resulting in the recapture
items, in proportion to the amount of such cost recovery deductions
or other deductions previously allocated to them.
4 4. 7, 3 l o t i E
o n of Qc NonrGi'.1111YCC iahilit a.
J . -i •J A 11VVab.lVll of LIaV Gi3S ta..vv L • 1.:.�
Solely for purposes of determining a Unit Holder's proportionate
share of the "excess nonrecourse liabilities" of the Company within
the meaning of Regulation Section 1.752- 3(a)(3), the Unit Holders'
interests in the Company's profits shall be as provided in 9.1.1.
9.4.4 Allocations in Connection with Varying
Interests. If, during a Company fiscal year, there is (i) a
77) permitted transfer of a Membership Interest or Nonvoting Interest
under this Agreement during a Company fiscal year or (ii) the
admission of a Member or additional Members, Net Profit, Net Loss,
each item thereof, and all other tax items of the Company for such
period shall be divided and allocated among the Unit Holders by
taking into account their varying interests during such fiscal year
in accordance with Code Section 706(d) and using any conventions
permitted by law and selected by the Managers.
9.5 Determination of Net Profit or Loss.
9.5.1 Computation of Net Profit or Loss. The Net .
Profit or Net Loss of the Company, for each fiscal year or other
period, shall be an amount equal to the Company's taxable income or
loss for such period, determined in accordance with Code
Section 703(a)'(and, for this purpose, all items of income, gain,
1088 or deduction required to be stated separately pursuant to Code.
Section 703(a)(1) shall be included in taxable income or loss) and
adjusted as follows:
9.5.1.1 Any income of the Company that is exempt
from federal income tax and not otherwise taken into account in
computing Net Profit of Net Loss shall be added to such taxable
income and subtracted from such taxable loss; and
9.5.1.2 Any expenditures of the Company described
in Code §705 (a) (2) (B) or treated as a Code §705 (a) (2) (B)
expenditure pursuant to Regulation Section 1.704- 1(b)(iv)(i), and
not otherwise taken into account in computing Net Profit of Net
0038490.02
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Loss shall be subtracted from such taxable income and added to such
taxable loss.
9.5.2 Adjustments to Net Profit or Loss. For purposes
of computing taxable income or loss on the disposition of an item
of Company property or for purposes of determining the cost
recovery, depreciation, or amortization deduction with respect to
any property, the Company shall use such property's book value
determined in accordance with Regulation Section 1.704 -1(b).
Consequently, each property's book value shall be equal to its
adjusted basis for federal income tax purposes, except as follows:
9.5.2.1 The initial book value of any property
contributed by a Member to the Company shall be the gross fair
market value of such property at the time of contribution;
9.5.2.2 In the discretion of the Managers, both of
which must agree, the book value of all Company properties may be
adjusted to equal their respective gross fair market values, as
determined by the Managers as of the following times: (1) in
connection with the acquisition of an interest in the Company by a
new or existing Member for more than a de minimis capital
contribution, (2) in connection with the liquidation of the Company
as defined in Regulation Section 1.704- (1)(b)(2)(ii)(g), or (3) in
connection with a more than de minimis distribution to a retiring
tl-- or a continuing Unit Holder as consideration for all or a portion
of such Unit Holder's interest in the Company. In the event of a
revaluation of' any Company assets hereunder, the Capital Accounts
of the Unit Holders shall be adjusted, including continuing
adjustments for depreciation, to the extent provided in Regulation
Section 1.704 - (1) (b) (2) (iv) (f) ; and
9.5.2.3 If the book value of an item of Company
property has been determined pursuant to this Section 9.5.2, such
book value shall thereafter be used, and shall thereafter be
adjusted by depreciation or amortization, if any, taken into
account with respect to such property, for purposes of computing
taxable income or loss.
9.5.3 Items Specially Allocated. Notwithstanding any
other provision of this Section 9.5, any items that are specially
allocated pursuant to Sections 9.2 or 9.3 shall not be taken into
account in computing Net Profit or Net Loss.
9.6 Mandatory Tax Allocations Under Code Section 704(c). In
accordance with Code Section 704(c) and Regulation Section 1.704 -3,
income, gain, loss and deduction with respect to any property
contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Unit Holders so as to take account
of any variation between the adjusted basis of such property to the
Company for federal income tax purposes and its initial book value
441m) computed in accordance with Paragraph (al of Section 9.5.2. Prior
to the contribution of any property to the Company that has a fair
market value that differs from its adjusted tax basis in the hands
0038490.02
November 21,1994- -5:09 pm — 16 -
of the contributing Member on the date of contribution, the
contributing Member and the Manager (or, if the contributing Member
is the Manager, a Majority Interest of the non - contributing
Members) shall agree upon the allocation method to be applied with
respect to that property under Regulation Section 1.704 -3, which
allocation method shall be set forth on attached Exhibit B, as
amended from time to time.
If the book value of any Company property is adjusted pursuant
to Paragraph (b) of Section 9.5.2, subsequent allocations of
income, gain, loss and deduction with respect to such property
shall talc= annnnnt of any variat jon be ween the adjusted basis n
such property for federal income tax purposes and its book value in
the same manner as under Code Section 704(c). The choice of
allocation methods under Regulation Section 1.704 -3 with respect to
such revalued property shall be made by the Manager and set forth
on attached Exhibit B, as amended from time to time.
Allocations pursuant to this Section 9.6 are solely for
purposes of federal, state, and local taxes and shall not affect,
or in any way be taken into account in computing, any Unit Holder's
Capital Account or share of Net Profit, Net Loss, or other items as
computed for book purposes, or distributions pursuant to any
provision of this Agreement.
) ARTICLE X.
DISTRIBUTIONS
10.1 Cash Distributions.
10.1.1 Nonlicuidatinq Distributions. Distributable
Cash, other than distributions in liquidation pursuant to
Section 10.1.2, shall, except as provided in Section 10.5, be made
to the Unit Holders quarterly in the same percentages that. Net
Profit and Net Loss are allocated under Article IX.
10.1.2 Distributions in Liquidation. Notwithstanding
Section 10.1.1, distributions in liquidation of the Company shall
be made in the manner set forth in Section 14.3(c).
10.2 Distributions in Kind. Non -cash assets, if any, shall be
distributed in a manner that reflects how cash proceeds from the
sale of such assets for fair market value would have been
distributed (after any unrealized gain or loss attributable to such
non -cash assets has been allocated among the Unit Holders in
accordance with Article 9).
10.3 Withholding; Amounts Withheld Treated as Distributions.
The Managers are authorized to withhold from distributions, or with
respect to allocations or payments, to Unit Holders and to pay over
to the appropriate federal, state or local governmental authority
any amounts required to be withheld pursuant to the Code or
provisions of applicable state or local law. All amounts withheld
pursuant to the preceding sentence in connection with any payment,
0038490.02
November 21, 1994 - -5:09 pm — 17 -
distribution or allocation to any Unit Holder shall be treated as
amounts distributed to such Unit Holder pursuant to this Article 10
for all purposes of this Agreement.
•
10.4 Limitation Upon Distributions. No distribution shall be
declared and paid unless, after the distribution is made, the
assets of the Company would be in excess of all 'liabilities
(excluding liabilities to Members on account of their
•
contributions) of the Company.
10.5 Cash Payments To SHD Associates. Notwithstanding
anything to the contrary contained herein, SHD Associates shah be
paid the following amounts until such time as the Fixed Management
Fee, as adjusted, is paid in full and the Guaranty Release is
received By SHD Associates:
•
10.5.1 Percentage Management. Fee. Fifteen percent (15 %)
of the Distributable Cash until the Guaranty Release is received by
SHD Associates, at which time the Percentage Management Fee shall
be reduced to Ten and Sixty Five One Hundredths percent (10.65 %)
for so long as SHD Associates remains a Manager. If the Fixed
Management Fee has not been paid in full and the Guaranty Release
received by SHD Associates within five (5) years from the date
hereof, the Percentage Management Fee shall increase to fifty
percent (50 %) 4pf the Distributable Cash. Such increase to fifty
-"") percent (50 %) shall not take place for the period of any SHD Delay
or, in the case of an SHD Cost Overrun, shall be delayed for one
(1) month for each $50,000 of SHD Cost Overrun. No amounts paid to
SHD Associates hereunder shall be applied to reduce the Company's
obligation to pay the Fixed Management Fee.
10.5.2 Fixed Management Fee.. SHD Associates shall, in
addition to the payments set forth in Section 10.5.1 above, receive
fifty percent (50 %) of the Distributable Cash remaining after
payment of the Percentage Management Fee until such time as the
Fixed Management Fee, the amount of any loans by SHD Associates to
the Company made pursuant to Section 8.2, and any applicable
interest have been paid in full. For each Ten Thousand Dollars
($10,000) loaned by SHD Associates to the Company under Section 8.2
SHD Associates shall be allocated an additional one percent (1 %)of
the Distributable Cash until the Fixed Management Fee, any loans to
the Company by SHD Associates and any related interest have been
paid in full; provided, however, that if SHD Associates' interest
in the Distributable Cash has been increased to fifty percent (50 %)
pursuant to Section 10.5.1, then such 50% interest shall be
increased by one percent (1 %) only for each $10,000 loaned in
excess of One Hundred Thousand Dollars ($100,000).
ARTICLE XI.
ACCOUNTING, BOORS, AND RECORDS
11.1 Accounting Principles. The Company's books and records
shall be kept, and its income tax returns prepared, under such
permissible method of accounting,. consistently applied, as the
0038490.02
November 21, 1994- -5:09 pm — 18 -
\ Managers determine is in the best interest of the Company and its
Members.
11.2 Interest on and Return of Capital Contributions. No
Member shall be entitled to interest on its Capital Contribution or
to return of its Capital Contribution, except as otherwise
specifically provided for herein.
11.3 Loans to Company. Nothing in this Agreement shall
prevent any Member from making secured or unsecured loans to the
Company.
11.4 Accounting Period. The Company's accounting period shall
be the calendar year.
11.5 Records, Audits and Reports. At the expense of the
Company, the Managers shall maintain records and accounts of all
a ' tures v f t C
operations and expenditures of the Company. At a minimum the
Company shall keep at its principal place of business the following
records:
11.5.1 A current list and past list, setting forth the
full name and last known mailing address of each Member, Nonvoting
Interest Owner and Manager;
..--....)
11.5.2 A copy of the Certificate of Formation and all
amendments thereto;
11.5.3 Copies of this Agreement and all amendments
hereto;
11.5.4 Copies of the Company's federal, state, and local
tax returns and reports, if any, for the three most recent years;
11.5.5 Minutes of every meeting of the members and any
written consents obtained from Members for actions taken by Members
without a meeting; and
11.5.6 Copies of the Company's financial statements for
the three most recent years.
11.6 Tax Matters Partner.
11.6.1 Designation. Managers, or if the Managers are
ineligible to serve then the Member with the largest interest in
Company profits, shall be the "tax matters partner" of the Company
for purposes of Code §6221 et seq. and corresponding provisions of
any state or local tax law.
11.6.2 Expenses of Tax Matters Partner;
Indemnification. The Company shall indemnify and reimburse the tax
II matters partner for all reasonable expenses, including legal and
' accounting fees, claims, liabilities, losses and damages incurred
in connection with any administrative or judicial proceeding with
0038490.02
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respect to the tax liability of the Unit Holders attributable to
) the Company. The payment of all such expenses shall be made before
any distributions are made to Unit Holders (and such expenses shall
be taken into consideration for purposes of determining
Distributable Cash) or any discretionary Reserves are set aside by
the Managers. Neither the tax matters partner nor any Member shall
have any obligation to provide funds for such purpose. The
provisions for exculpation and indemnification of the Manager set
forth in Section 5.9 of this Agreement shall be fully applicable to
the Member acting as tax matters partner for the Company.
11,6,3 Elections. Except as otherwise expres
provided to the contrary in this Agreement, all elections permitted
to be made by the Company under federal or state laws shall be made
by the Manager in his or its sole discretion.
11.7 Returns. The Managers shall cause the preparation and
timely filing of all tax and information returns required to be
filed by the Company pursuant to the Code and all other tax and
information returns deemed necessary and required in each
jurisdiction in which the Company does business. Copies of such
returns, or pertinent information therefrom, shall be furnished to
the Unit Holders within a reasonable time after the end of the
Company's fiscal year.
D ARTICLE XII.
LIMITATION OF LIABILITY; INDEMNIFICATION
12.1 Limitations of Liability. No Manager, Member, or
Affiliate of either shall be personally liable for any debts,
obligations, damages, or liabilities of the Company, except as
otherwise required by law; provided that Members shall be liable to
the Company only for their respective Capital Contributions and any
required contributions under Section 8_1 or 8.2. No Manager or
Member or Affiliate of either shall have liability to the Company
or its Members or Managers for monetary damages for conduct merely
as a Manager or Member, except for acts or omissions that involve
intentional misconduct, a knowing violation of the law, conduct
violating RCW 25._.605, or for any transaction from which the
Manager, Member, or Affiliate of either, will personally receive a
benefit in money, property or services to which the Manager,
Member, or Affiliate of either, was not legally entitled. If the
Act is hereafter amended to authorize Company action further
eliminating or limiting the personal liability of Members, then the
liability of a Manager or Member or Affiliate of either shall be
eliminated or limited to the full extent permitted by the Act, as
so amended. Any repeal or modification of the section shall not
adversely affect any right or protection of a Manager or Member, or
Affiliate of either, of the Company existing at the time of such
repeal or modification for or with respect to an act or omission of
such Manager, Member or Affiliate of either occurring prior to such
repeal or modification. No Manager, Member, or Affiliate either
; shall be liable, responsible or accountable in damages or otherwise
to the Company or the Managers or Members for any act or omission
0038490.02
November 21, 1994 - -5:09 pm — 20 -
by any such Person performed in good faith pursuant to the
authority granted to such Person by this Agreement or in accordance
with its provisions, and in a manner reasonably believed by such
Person to be within the scope of the authority granted to such
Person and in the best interest of the Company; provided that such
act or omission did not constitute fraud misconduct, bad faith or
gross negligence.
12.2 Powers. The Company shall have the following powers:
12.2.1 Power to Indemnify. The Company may indemnify
and hold harmi ess to the f u l l extent permitted by arpp 1 i nah 1 im law
each Person who was or is made a party to or is threatened to be
made a party to or is involved (including, without limitation, as
a witness) in any actual or threatened action, suit or other
proceeding, whether civil, criminal, administrative or
investigative, or in connection with any appeal relating thereto,
b reason of th fact that such Person is u h
j e A. that Su u...11 Pet sV�L 1S or was a 1 -1V�' 1�aler , Manager,
or Affiliate of either, or officer, employee or agent of the
company or, being or having been a Member, Manager, director,
officer, employee, agent, trustee, or in any other capacity of
another limited liability company or of a corporation, limited
partnership, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action or omission in an
official capacity or in any other capacity while serving as a
sy Member, Manager, officer, employee, agent, trustee or in any other
capacity, against all expense, liability and loss (including,
without limitation, attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts to be paid in settlement) actually
or reasonably incurred or suffered by such Person in connection
therewith. Such indemnification may continue as to a Person who
has ceased to be a Member, Manager, officer, employee, agent or
trustee of the Company or on its behalf and shall inure to the
benefit of such Person's heirs and personal representative,
provided that said Person has not been adjudged liable on the basis
that personal benefit was improperly received by said Person.
12.2.2 Power to Pay Expenses in Advance of Final
Disposition. Expenses incurred with respect to any claim, action,
suit or proceeding of the character described in Section 12.2.1 may
be advanced by the Company prior to the final disposition thereof
upon receipt of any undertaking by or on behalf of the recipient to
repay such amount unless it shall be ultimately determined that
said recipient is entitled to indemnification hereunder. The
rights of indemnification provided in this Article VII shall be in
addition to any rights to which any such Manager or other Person
may otherwise be entitled by contract or as a matter of law. Each
Person who shall act as a Manager of the Company or of any other
Company referred to in Section 12.2.1 shall be deemed to be doing
so in reliance upon the right of indemnification provided for
herein.
0038490.02
November 21, 1994- -5:09 pm - 21 -
12.2.3 Power to Purchase and Maintain Insurance. The
Company may purchase and maintain insurance on behalf of any. Person
who is or was a Member or Manager of the Company, or is or was
serving at the request of this Company as a Manager of another
limited liability company, or as an officer, director, partner or
agent of a corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against said Person and
incurred by said Person in such capacity, or arising out of said
Person's status as such, whether or not the Company would have the
power to indemnify said Person against such liability under the
provisions of this Article XII.
12.2 Limitations on Powers. No indemnification shall be
provided under this Article XII from or on account of acts or
omissions which are finally adjudged to be intentional misconduct
or a knowing violation of law, conduct adjudged to be in violation
of RCW 25. .605, any transaction with respect to which it was
finally i djudged that such Member Manager ; v d a benefit n
1111a11y au uu �.aia �. such 1.1G1lWGl or aia received ,.. ., � � .,
money property, or services to which such Member or Manager was
not legally entitled, or if indemnification is otherwise prohibited
by applicable law or subsection 12.3.2.2 below.
12.3 Indemnification of Members, Managers and Officers,
Employees and Agents.
- 12.3.1 Indemnification as Right. Every Person (and the
heirs and personal representatives of such Person) referred to in
"'"� Section 12.1, who has been wholly successful on the merits with
respect to any claim, action, suit or proceeding of the character
described in Section 12.1, shall be entitled to indemnification as
of right.
12.3.2 Other Requirements. Except as provided in
Section 12.3.1, any indemnification shall be made:
12.3.2.1 In the case of a claim, action, suit or
proceedings other than by or in the right of the Company to procure
a judgment in its favor, only if a majority of the Managers, acting
by a quorum, shall find, or independent legal counsel (who may be
the regular counsel of the Company) shall render an opinion, that
the Person to be indemnified acted in good faith in what such
Manager reasonably believed to be the best interests of the Company
or such other Entity, as the case may be, and, in addition, in any
criminal action or proceeding, had no reasonable cause to believe
that such Person's conduct was unlawful; and
12.3.2.2 In the case of a claim, action, suit or
proceeding by or in the right of the Company to procure a judgment
in its favor, only if a majority of the Managers, acting by a
quorum shall find, or independent legal counsel (who may be the
regular counsel of the Company) shall render an opinion, that the
Oi Person to be indemnified acted in good faith in what such Person
reasonably believed to be the best interests of the Company or such
other Company, as the case may be; provided, however, that no
0038490.02
November 21, 1994- -5:09 pm — 22 —
indemnification under this subsection 12.3.2.2 shall be made with
regard to (i) matters as to which any such Person shall be finally
adjudged to be liable for negligence or misconduct in the
performance of duty, or (ii) amounts paid, or expenses incurred, in
connection with the settlement of any such claim, action, suit or
proceeding, without approval of a court of competent jurisdiction.
For the purpose of Section 12.3.2.1, the termination of any
claim, action, suit or proceeding, civil, criminal or
administrative, by judgment, settlement (either with or without
court approval) or conviction, or upon a plea of guilty or of nolo
rnntende e or its equivalent, s ha11 n create a presuimpti nn that
a Person did not meet the standards of conduct set forth in such
section.
ARTICLE XIII.
ADDITIONAL MEMBERS
Additional Members may be admitted only on the unanimous
consent of the Members of the Company.
ARTICLE XIV.
DISSOLUTION AND TERMINATION
14.1 Dissolution. The Company shall be dissolved upon the
occurrence of any of the following events:
14.1.1 upon expiration of the term specified in
Section 2.5;
14.1.2 by the written agreement of all Members; or
14.1.3 upon the occurrence of any of the events
specified in Section 304 of the Act which causes the disassociation
of any Member,`unless -the business of the Company is continued with
the consent of all of the remaining Members within thirty (30) days
following the occurrence of such event,.
14.2 Allocation of Net Profit and Loss in Liquidation. The
allocation of Net Profit, Net Loss and other items of the Company
following the date of dissolution, including but not limited to
gain or loss upon the sale of all or substantially all of the
Company's assets, shall be determined in accordance with the
provisions of Articles 9 and 10 and shall be credited or charged to
the Capital Accounts of the Unit Holders in the same manner as Net
Profit, Net Loss, and other items of the Company would have been
credited or charged if there were no dissolution and liquidation.
14.3 Winding Up, Liquidation and Distribution of Assets. Upon
dissolution, the Managers shall immediately proceed to wind up the
affairs of the Company, unless the business of the Company is
continued as provided in Paragraph (c) of Section 14.1. The
Managers shall sell or otherwise liquidate all of the Company's
assets as promptly as practicable (except to the extent the
0038490.02
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Managers may determine to distribute any assets to the Unit Holders
- -) in kind) and shall apply the proceeds of such sale and the
remaining Company assets in the following order of priority:
14.3.1 To pay creditors, including Members and Managers
who are creditors, to the extent otherwise permitted by law,
including any amount owed to SHD Associates under Section 8.2, in
satisfaction of liabilities of the Company, other than liabilities
for distributions to Members;
14.3.2 Payment to SHD Associates of any amount of the
Fi xed Management Fee and the Percentage Management Fee remaining
unpaid, plus interest and adjustments; and
14.3.3 To establish any reserves that the Managers deem
reasonably necessary for contingent or unforeseen obligations of
the Company (such amount to be released and distributed as provided
in a
s Paragraph ( and (d) at the of such period as th
Paragraphs (c) and ( a e expiration V L.11 A Ul-1 V11 Vl period
Managers deemed advisable);
14.3.4 By the end of the taxable year in which the
liquidation occurs (or, if later, within ninety (90) days after the
date of such liquidation), to pay the balance to the Unit Holders
in proportion to the positive balances of their respective Capital
Accounts, as determined after taking into account all Capital
Account adjustments for the taxable year during which the
liquidation occurs (other than those made pursuant to this
Section 15.3.4').
14.4 No Obligation to Restore Negative Capital Account Balance
on Liquidation. Notwithstanding anything to the contrary in this
Agreement, upon a liquidation within the meaning of Regulation
Section 1.704 -1(b) (2) (ii) (g) , if any Unit Holder has a negative
Capital Account balance (after giving effect to all contributions,
distributions, allocations and other Capital Account adjustments
for all taxable years, including the year during which such
liquidation occurs), such Unit Holder shall have no obligation to
make any Capital Contribution to the Company, and the negative
balance of such Unit Holder's Capital Account shall not be
considered a debt owed by such Unit Holder to the Company or to any
other Person for any purpose whatsoever.
14.5 Termination. The Manager shall comply with any
applicable requirements of applicable law pertaining to the winding
up of the affairs of the Company and the final distribution of its
assets. Upon completion of the winding up, liquidation and
distribution of the assets, the Company shall be deemed terminated.
14.6 Certificate of Cancellation. When all debts, liabilities
and obligations have been paid and discharged or adequate
provisions have been made therefor and all of the remaining
property and assets have been distributed to the Unit Holders, the
Manager shall file a certificate of cancellation as required by
Section 203 of the Act. Upon filing the certificate of
0038490.02
November 21, 1994 - -5:09 pm — 24 —
.
\ cancellation, the existence of the Company shall cease, except as
) otherwise provided in the Act.
14.7 Return of Contribution Nonrecourse to Other Members.
Except as provided by law or as expressly provided in this
Agreement, upon dissolution each Unit .Holder shall look solely to
the assets of the Company for the return of its Capital
Contribution. If the property remaining after the payment or
discharge of liabilities of the Company is insufficient to return
the contributions of Members, no Unit Holder shall have recourse
against any other Unit Holder.
ARTICLE XV.
TRANSFERABILITY
15.1 General. Except as otherwise expressly provided in this
Agreement, neither a Member nor a Nonvoting Interest Owner shall
ha V C the right t o
15.1.1 sell, assign, transfer, exchange or otherwise
transfer for consideration, (collectively, "sell" or "sale "),
15.1.2 gift, bequeath or otherwise transfer for no
consideration whether or not by operation of law, except in the
case of bankruptcy (collectively "gift "), all or any part of its
-7) Membership Interest or Nonvoting Interest. Each Member and
Nonvoting Interest Owner hereby acknowledges the reasonableness of
the restrictions on sale and gift of Membership Interests and
Nonvoting Interests imposed by this Agreement in view of the
Company's purposes and the relationship of the Members and
Nonvoting Interest Owners. Accordingly, the restrictions on sale
and gift contained herein shall be specifically enforceable. In
the event that any Unit Holder pledges or otherwise encumbers any
of its Membership Interest or Nonvoting Interest as security for
repayment of a' liability, any such pledge or hypothecation shall be
made pursuant to a pledge or hypothecation agreement that requires
the pledgee or secured party to be bound by all the terms and
conditions of this Article XV.
15.2 First Refusal Rights.
15.2.1 A Unit Holder desiring to sell all or any portion
of its Membership Interest or Nonvoting_ Interest to a third party
purchaser shall obtain from such third party purchaser a bona fide
written offer to purchase such Interest, stating the terms and
conditions upon which the purchase is to be made and the
consideration offered therefor. Such Unit Holder shall give
written notice to the other Unit Holders and the Manager of its
intention to so transfer such Interest. Such notice shall set
forth the complete terms of the written offer to purchase and the
name and address of the proposed third party purchaser.
15.2.2 The other Unit Holders, shall, on a basis pro
rata to their Units or on a basis pro rata to the Units of those
0038490.02
November 21, 1994--5:09 pm — 25 -
remaining Unit Holders exercising . their first refusal rights, have
the first right to purchase all (but not less than all) of the
Interests proposed to be sold by the selling Unit Holder upon the
same terms and conditions stated in the notice given pursuant to
Section 15.2.1' by giving written notice to the other Unit Holders
and the Manager within ten (10) days after such notice from the
selling Unit Holder. The failure of a Unit Holder to so notify the
other Unit Holders and the Manager of its desire to exercise its
first refusal rights within said ten (10) day period as required by
this Section 15.2.2 shall result in the termination of such Unit
Holder's first refusal rights.
Within ten (10) days after expiration of the ten (10) day
period specified in the preceding paragraph, the Manager shall
notify those Unit Holders electing to exercise their first refusal
rights of any Units that the other Unit Holders did not elect to
purchase. Those Unit Holders exercising first refusal rights in
accordance with the 1 .,1 G ,,ding paragraph shall their notify the
Manager and the other purchasing Unit Holders whether they elect to
purchase such remaining Units, which shall be pro rata or allocated
in such other manner as the purchasing Unit Holders shall agree.
If no such notification is received by the Manager from any such
Unit Holders in accordance with this paragraph, no Unit Holder
shall have any further first refusal rights with respect to such
Units.
If Unit Holders have elected to purchase all of the Units
offered by the selling Unit Holder, the selling Unit Holder shall
sell such Units upon the same terms and conditions specified in the
notice required by Section 15.2.1, and the purchasing Unit Holders
shall have the right to close the purchase within thirty (30) days
after receipt of notification from the Manager that such Unit
Holders have elected to purchase the selling Unit Holder's Units.
If Unit Holders do not elect to purchase all of the Units
offered by the selling Unit Holder in accordance with this
Section 15.2, then the selling Unit Holder shall be entitled to
sell such Units to the third party purchaser in accordance with the
terms and conditions upon which the purchase is to be made as
specified in the notice under Section 15.2.1. However, if such
sale is not completed within thirty (30) days following expiration
of the other Unit Holders' first refusal rights under this
Section 15.2, then the selling Unit Holder shall not be entitled to
complete the sale to such third party purchaser and the selling
Unit Holder's Units shall continue to be subject to the rights of
first refusal set forth in this Section 15.2 with respect to any
proposed subsequent transfer.
15.2.3 Upon the purchase or the gift of a Membership
Interest or an Nonvoting Interest, and as a condition to
recognizing the effectiveness and binding nature of any sale or
411 gift and (subject to Section 15.3, below) substitution of a Person
. as a new Unit Holder, the Manager may require the transferring Unit
Holder and the proposed purchaser, donee or successor -in- interest,
0038490.02
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4
\ as the case may be to execute, acknowledge and deliver to the
) Manager such instruments of transfer, assignment and assumption and
such other agreementsand'to perform all such other acts that the
Manager may deem necessary or desirable to:
(i) constitute such Person as a Unit Holder;
(ii) confirm that the Person desiring to become a
Unit Holder, has accepted, assumed and agreed to be subject
and bound by all of the terms, obligations and conditions of
this Agreement (whether such Person is to be admitted as a new
Member or will merely he an Nonvoting Interest Owner)
(iii) maintain the status of the Company as a
partnership for federal tax purposes; and
(iv) assure compliance with any applicable state and
federal laws, in-11 A-Ing securities laws and regulations.
15.2.4 Any sale or gift of a Membership Interest or
Nonvoting Interest or admission of a Member in compliance with this
Article XV shall be deemed effective as of the last day of the
calendar month in which the remaining Members' consent thereto was
given, or, if no such consent was required pursuant to
Section 15.3, then on such date that the transferor and the
transferee both comply with Section 15.2.3. The transferring Unit
Holder hereby indemnifies the Company and the Manager against any
and all loss, damage, or expense (including, without limitation,
tax liabilities or loss of tax benefits) arising directly or
indirectly as a result of any transfer or purported transfer in
violation of this Article XV.
(e) Subject to Section 15.3, a Unit Holder may gift all
or any portion of its Membership Interest and Nonvoting Interest
(without regard to Section 15.2.1 and 15.2.2), provided, that the
donee complies! with Section 15.2.3 and further provided that the
donee is either such Unit.Holder's spouse, former spouse, or lineal
descendent (including adopted children). In the event of the gift
of all or any 'portion of a Unit Holder's Membership Interest or
Nonvoting Interest to one or more donees who are under twenty -one
years of age, one or more trusts shall be established to hold the
gifted interest(s) for the benefit of such donee(s) until all of
the donee(s) reach the age of at least 21 years.
15.3 Transferee Not Member in Absence of Consent.
15.3.1 Notwithstanding anything to the contrary in this
Article XV, if the sale or gift of a Member's Membership Interest
or Nonvoting Interest to a transferee or donee which is not a
Member immediately prior to the sale or gift is not approved in
writing by all of the other Members, in their sole discretion, then
the proposed transferee or donee shall have no right to participate
in the management of the business and affairs of the Company or to
0038490.02
November 21, 1994 - -5 :09 pm — 27 —
•
become a Member Such transferee or donee shall be merely a
Non - Voting Interest Owner.
15.3.2 Promptly following any sale or gift of a Member's
Nonvoting Interest which does not at the same time transfer the
balance of the rights associated with such Person's Membership
Interest, the Company shall purchase from such Person, and such
Person shall sell to the Company for a. purchase price of $10, all
such remaining rights and interests retained by such Person which
immediately prior to such sale or gift were associated with the
transferred Nonvoting Interest The acquisition by the Company of
such Person's rights shall not cause a dissolution of the Company
and such Person shall no longer be a Member
ARTICLE XVI ,.
INDEPENDENT ACTIVITIES OF MANAGERS AND MEMBERS
Any M ands M may engg in or p ossess a n into1- 1- i n
other business ventures of every nature and description,
independently or with others, including but not limited to, the
ownership, financing, management, employment by, lending to or
otherwise participating in businesses which are similar to the
business of the Company, and neither the Company nor any of the
Managers or 'Unit Holders shall have any right by virtue of this
Agreement in and to such independent ventures or to the income or
profits therefrom.
ARTICLE XVII.
MISCELLANEOUS PROVISIONS
17.1 Notices. Any notice, demand, or communication required
or permitted under this Agreement shall be deemed to have been duly
given if delivered personally to the party to whom directed or, if
mailed by registered or certified mail, postage and charges
prepaid, addressed (a) if to a Member, to the Member's address
specified on attached Exhibit 1, (b) if to the Company, to the
address specified in Section 2.3, and (c) if to the Managers, to
the address specified in Section 2.3. Except as otherwise provided
herein, any such notice shall be deemed to be given when personally
delivered or, if mailed, three (3) business days after the date of
mailing. A Member, the Company or the Managers may change its or
their address for the purposes of notices hereunder by giving
notice to the others specifying such changed address in the manner
specified in this Section 16.1.
17.2 Governing law and venue. This contract shall be
governed by and construed under the laws of the state of Washington
(without reference to its choice of laws rules, as if to be entered
into and performed wholly within the state of Washington by
residents of the state of Washington). Venue of any action arising
out of this Agreement shall be had in King County, Washington.
0038490.02.
November 21, 1994 - -5:09 pm - 28 -
17.3 Amendments. This Agreement may not be amended except by
the unanimous written agreement of all of the Members and the
Managers.
17.4 Construction. Whenever the singular number is used in
this Agreement and when required by the context, the same shall
include the plural and vice versa, and the masculine gender shall
include the feminine and neuter genders and vice versa.
17.5 Headings. The headings in this Agreement are inserted
for convenience only and shall not affect the interpretations of
this Agreement.
17.6 Waivers. The failure of any Person to seek redress for
violation of or to insist upon the strict performance of any
covenant or condition of this Agreement shall not prevent a
subsequent act, which would have originally constituted a
violation from having the effect of an original violation.
17.7 Rights and Remedies Cumulative. The rights and remedies
provided by this Agreement are cumulative and the use of any one
right or remedy shall not preclude or waive the right to use any or
all other remedies. Said rights and remedies are given in addition
to any other rights the parties may have by law, statute, ordinance
or otherwise.
v ) 17.8 Severability. If any provision or partial provision of
✓' this Agreement is determined to be unenforceable, it shall be
ineffective only with regard to those portions of it found to be
unenforceable, without in any way invalidating the remainder of
such provisions, or the remaining provisions of this Agreement,
except in the case where the unenforceability substantially
deprives one of the parties of the benefit of the transaction.
17.9 Heirs, Successors and Assigns. Each of the covenants,
terms, provisions and agreements herein contained shall be binding
upon and inure to the benefit of the parties hereto and, to the
extent permitted by this Agreement, their respective heirs, legal
representatives, successors and assigns.
17.10 Creditors. None of the provisions of this Agreement
shall be for the benefit of or enforceable by any creditors of the
Company.
17.11 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of
which shall constitute one and the same instrument.
Executed by the undersigned Members effective as of the date
first above written.
MEMBER:
,.�:.. • -
0038490.02
November 21, 1994- -5:09 pm — 29 -
.
- lifi l Gar uk
a , Luk art
MANAGER: SHD ASSOCIATES, a Washington
general partnership
Gantt C Anikc
Michael H s 7
Mack DuBose
•
•
•
i
0038490.02
November 21, 1994- -5:09 pm — 30 -
• u
• ) Member Information
USES
Gary Lukehart An undivided one half 50 50.0%
interest in the Project
Mary Lukehart An undivided one half 50 50.0%
interest in the Project
0038490.02
November 21, 1994 - -5:09 pm EXHIBIT A
509- 457 -2419 _VERSON LAW
) 401 P02 MAR 24 '03 13:56
•
US NORTH t$RdONt STREET
Poor oFFIcs SOX
YAMPAI% WASHING O N WWI
WI4LL Y 7r17 �E e1.,JA,RArJ rEE � NE eta
R
COMMITMENT FOR TITLE INSURANCE
SCHEDULE A
. Prepared for
HALVERSON A APPLEGATE, P.S. Title Examiner ZEB LILJA
311 NORTH 4TH STREET Order No: X-180550
YAKIMA, WA 98901 Your. GATEWAY CENTER
Attn: KIRSTEN PEDERSON
1. Effective Date: March 17, 2003 at 8:00 A.M.
2. Policy or Policies to be issued:
A. ALTA Owner's Policy Amount:
[ ] Standard [ ] Extended Premium:
Proposed insured: Tax:
Total:
Junior Mortgage Rate 1 Commercial Rate
6. ALTA Loan Policy Amount $3,000,000.00
[ ]Standard [ x ] Extended Premium: $2,600.00
Proposed insured: Tax: 205.40
Total: $2805.40
CITY OF YAKIMA
1 The estate or interest in the land which is covered by the Commitment is:
FEE SIMPLE ESTATE
4. Title to the estate or interest in the land is at the effective date hereof vested in:
GATEWAY CENTER ASSOCIATES, L.L.C., A WASHINGTON LIMITED LIABILITY COMPANY
5. The land referred to in this Commitment is in the State of Washington, County of Yakima and is
described as follows:
FOR LEGAL DESCRIPTION SEE EXHIBIT "A" ATTACHED HERETO.
•
509- 457 -2419 JUERSON LAW 4 01 P03 MAR 24 '03 13:56
ALTA COMMITMENT Order No X- 180550
SCHEDULE S
I. The following are the requirements to be complied with:
A. Instruments necessary to create the estate or interest to be insured, must be properly executed,
delivered, and duly filed for recorded.
B. Payment to or for the account of the grantors or mortgagors of the full consideration for the estate or
interest to be insured.
II. Schedule B of the policy or policies to be issued (as set forth in Schedule A) will contain exceptions to the
following matters, unless the same are disposed of to the satisfaction of the Company.
A. Defects, tiers, encumbrances, adverse claims or other matters. if any created, first appearing in the
public records or attaching subsequent to the effective date hereof but prior to the date the proposed
Insured acquires for value of record the estate or interest or mortgage thereon covered by this
Commitment.
G .. rins`
1. Rights or claims of parties in possession not shown by the public records.
2. Public or private easements, or claims of easements. not shown by the public records.
3. Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an
accurate survey or inspection of the premises.
4. Any lien, or right to a lien, for services, labor, or material heretofore or hereafter furnished, imposed by law
and not shown by the public records, or Liens under the Workmen's Compensation Act not shown by the
public records.
5. Rights of use, control or regulation by the united States of America, in the exercise of powers over
navigation; any prohibition or limitation on the use, occupancy or improvement of the land resulting from the
rights of the public or riparian owners to use any water which may cover the land.
6. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in acts authorizing the issuance
thereof: (c) water rights, claims or title to water.
7. Any service, installation, connection, maintenance, or construction charges for sewer, water, electricity, or
garbage removal.
8. General taxes : not now payable or matters relating to special assessments and special levies, if any.
preceding the same becoming a lien.
- 9. Indian tribal codes or regulations, Indian treaty or Aboriginal rights, including. but not Iimlted to, easements
of equitable servitude.
SPECIAL EXCEPTIONS.
General taxes for the year 2003, in the amount of $1,718.26.
Parcel No.191318 Levy Code: 331
Affects: Lot 2
2. General taxes for the year 2003, in the amount of $64,927.48.
Parcel No. 191318 -44402 Levy Code: 331
Affects: Lot 3 and portion of Lot 5
3, General taxes for the year 2003, in the amount of $1,32.1.53
Parcel No. 191318 -44409 Levy Code: 331
Affects: Lot 4
509- 457 -2419 I)ERSON LAW )41 01 PO4 MAR 24 '03 13:56
ALTA COMMITMENT Order No. X- 180550
4. General taxes for the year 2003, in the amount of $23,442.70.
Parcel No. 191318 -44410 Levy Code: 331
Affects: Lots 5, except a portion thereof
5. General taxes for the year 2003, in the amount of $18,091.43.
Parcel No. 191319 -11510 Levy Code: 331
Affects: Lot 7
.icy must ��. .,�,�/ from „K ,,,,1 I In n ng Personnel of Pacific
u. "Approval to issue this policy must be 1Jb}4>rI11G41 ��a�7ivri2$Cli $„'d0�tl � ,son
Northwest Title Insurance Company, Inc_, This commitment and any policies to be issued are
subject to any additional limitations, requirements or exceptions made by Pacific Northwest Title
Insurance Company, Inc.
7. Authority of 'the manager or managers of Gateway Canter Associates, LLC to execute the
is Evidence of t c .. of of the I mus be submitted.
�1'�I1 Mi�lna instruments, �Vluull� UI the current � /k+ni�g $ifi�,.a of a.t$ LrC must be L. ,ia�v..
8. Deed of Trust, Assignment of Rents and Security Agreement, to secure an indebtedness of
$9,700,000.00, and any interest, advances or other obligations secured thereby;
Dated: December 29, 1997
Recorded: December 29, 1997
Auditor's File No: 7039203
Grantor: Gateway Canter Associates L.L.C., a Washington Limited
Liability Company
Trustee: Valley Title Guarantee
Beneficiary: National Capital Funding Corp., a Delaware corporation
The beneficial interest under said Deed of Trust was assigned by Transfer and Assignment of
Mortgage and Assignment of Leases and Rents,
Dated: —
Recorded: November 3, 1998
Auditor's File 'Nos: 7085421 and 7085422
Assigned to: LaSalle National Bank
9. Present Assignment of Leases and Rents by Gateway Center Associates, L.L.C., a Washington
Limited Liability Company to National Capital Funding Corp., a Delaware corporation, recorded
December 29, 1997, under Auditor's File No. 7039204.
Transfer and Assignment of Mortgage and Assignment of Leases and Rents,
Dated: —
Recorded: November 3, 1998
Auditor's File No: 7085421 and 7085422
Assigned to: LaSalle National Bank
10. Financing Statement filed December 29, 1997, under Auditor's File No. 7039205, records of
Yakima County, Washington,
Debtor: Gateway Center Associates, L.L.C.
Secured Party: National Capital Funding Corp.
A Full Assignment was recorded August 13, 1998, under Auditor's File No. 7072329.
Assignee: LaSalle National Bank, as Trustee
iltkd
509- 457 -2419 LVERSON LAW `,401 P05 MAR 24 '03 13:56
•
ALTA COMMITMENT Order No. X- 180550
•
11. Terms and conditions of Unrecorded Leases In favor. of Sup$rcuts, Inc.; Ronald Bon lender and
Kathi Bonlender; Yakima MSA Limited Partnership and Tri -City Cleaners, Inc.
Affects: A portion of Parcel A
12. Terms and conditions of Lease in favor of State of Washington for Washington State Liquor Store
No, 007, as recorded Apr114, 1997, under Auditor's File No. 7005183.
Affects: A portion of Lot 7 •
13. Terms and conditions of Lease disclosed by "Memorandum of Lease" recorded January 28, 1997,
under Auditor's File No, 3167861, effective as of September 8, 1994, for a 20 year term by and
between Gary D. and Mary M. Lukehart as Landlord and Associated Grocers, Inc., as Tenant.
The Lessors' interest was assigned by "Assignment of Lease" recorded February 7, 1997, under
Auditor's File No. 3168850 to Gateway Center Associsdes
Affects: Parcel B
An Amended Memorandum of Lease was recorded September 9. 2002 under Auditor's File No.
7293462.
Matters affecting only the lessee's Interest are not further set forth herein.
14. Memorandum of Lease recorded June 21, 1995, under Auditor's File No. 3098018, disclosing
lease dated May 15, 1995, between Gateway Center Associates L.L.C., a Washington Limited
Liability Company and Officemax, Inc., an Ohio corporation.
Affects: Parcel C
15. Memorandum of Lease,
Recorded: March 9, 2001 •
Auditor's Fite No: 7206579
Lessor. Gateway Center Associates, L.L.C.
Lessee: Columbia Basin Pizza Hut, Inc.
Term expires: May 21, 2007 at 12:00 midnight
Affects: A portion of Lot 7
16. Terms and conditions of Agreement Regarding Common Area Maintenance Costs,
Recorded: September 19, 2002
Auditor's File No: 7293464
17. Terms and conditions of Restriction Agreement,
Recorded: September 19, 2002
Auditor's File No: 7293463
18. Terms and conditions of "Party Wall Agreement" between Lots 3 and 5, recorded February 7,
1997, under Auditor's File No. 3168849.
19. Covenants, conditions and restrictions contained on said Amended Plat of Yakima Gateway
Center, as follows:
a) Lots are subject to a cross drainage easement, over, across, and under all paved areas for the
benefit of said lots.
1111i,
509- 457 -2419 —. Lc/EPSON LAW _ .-- -- 401 P06 MAR 24 '03 13:57
•
•
ALTA COMMITMENT Order No. X- 180580
•
•
b) Ail lots created by this plat are subject to reciprocal non - exclusive access and parking
easements, as well as a maintenance agreement as to all shared facilities including but not
limited to parking, landscaping, and storm drainage facilities as constructed.
c) All driveway approaches are subject to the City of Yakima or Washington State Department of
Transportation approval and shall comply with the plat on record with the City of Yakima dated
March 18, 1994, as revised September 2, 1994.
d) This plat replaces all previously recorded plats for this property.
e) All buildings for which building permits are required shall require a certificate of occupancy
which shall not be granted by the City of Yakima until substantial completion of the Fair Avenue
Extension, including water and sewer main relocation.
f) All utility easements as shown hereon may be altered pursuant to a document separately
recorded containing as -built drawings showing placement of easements.
g) Ail public and private utilities shall be underground in the extent physically possible.
20. Terms and conditions of Operation and Easement Agreement between Dayton Hudson
Corporation and Gary D. Lukehart and Mary M. Lukehart, husband and wife, recorded October
12, 1994, under Auditor's File No. 3069539, records of Yakima County, Washington.
21. Various access, utility and slope easements as reserved in the dedication of the Amended Plat of
Yakima Gateway Center Lots 1 -7, inclusive, recorded in Volume "EE" of Plats, Page 11, records
of Yakima County, Washington, and delineated on the face thereof.
22. Waiver of all claims or damages against The City of Yakima and any other governmental authority
which may be occasioned to the adjacent land by the established construction, drainage and
maintenance of said dedicated roads and/or rights-at-way as set forth in the dedication and
supplemental dedications of said Plat recorded in Volume "EE" of Plats, Page 11, and under
Auditor's File Nos. 3137937 and 3137938, records of Yakima County, Washington. Said Waiver •
to be a covenant running with the land and binding upon the owners, their successors and
assigns.
23. Covenants, conditions and restrictions contained in Concomitant Agreement between Gary D.
Lukehart andWary M. Lukehart, husband and wife, and the City of Yakima contained in and made
a part of Ordinance No. 3341 recorded September 30, 1994, under Auditor's File No. 3068000,
records of Yakima County, Washington.
24. Covenants, conditions and restrictions contained in Ordinance No. 94-43 of the City of Yakima as
recorded September 30, 1994, under Auditor's File No. 3068001, records of Yakima County,
Washington.
•
25, Relinquishment of all existing, future or potential easements for access, light, view and air, and all
rights of ingress, egress and regress to, from and between said premises and the highway or
highways to be-constructed on lands conveyed by Deeds,
Auditor's File Nos: 1734525, 1753028, 1760319, 1779901, 1781845, 1783220,
1787460, 1798813 and 1853919
To: State of Washington
%kJ
509 - 457 -2419 PERSON LAW i401 607 MAR 24 '03 13:57
ALTA COMMITMENT Order No. X180550 •
26. Easement or right -of -way for electric transmission and distribution line disclosed by instrument
Auditor's File Nos: 20052, 1898933, 1434120, 1824573 and 1824806
Grantee: Pacific Power & Light Company, a corporation
27. Easement or right - of-way for electric transmission and distribution line disclosed by instrument
Recorded: September 16, 1996
Auditor's File No: 3153263
Grantee; Pacific Power & Light Company, a corporation
Affects: Portion of said premises 8 feet in width in Lot 3
28. Easement or right -of -way for electric transmission and distribution line disclosed by instrument
Recorded: September 18, 1996
Auditor's File No: 3153277
Grantee: Pacific Power & Light Company, a corporation
Affects: Portion of said premises 8 feet in width in Lot 3
29. Drainage easement reserved on the plat of Yakima Gateway Center, as follows:
Lots 1 and 7, inclusive, are subject to a cross drainage easement, over, across and under all
paved areas for the benefit of said Tots.
•
30. Easement affecting a portion of said premises and for the purposes hereinafter stated, as granted
by instrument
Recorded: April 21, 1995
Auditor's File No; 3091361
For Temporary construction easement to construct road approaches
In favor of. City of Yakima .
Affects: Portions of Lots 4, 5, 6 and 7
The temporary rights granted herein shall terminate upon completion of construction, but in no
event later than December 31. 1997, unless extended in writing by Grantors.
31. Easement affecting a portion of said premises and for the purposes hereinafter stated, as granted
by instrument
Recorded: November 8, 1995
Auditor's File No: 3114643
l=or. Utility easement
In favor of The City of Yakima
Affects: Portion of Lot 7
32. Easement affecting a portion of said premises and for the purposes hereinafter stated, as granted
by instrument
Recorded: September 18, 1996
Auditor's File No: 3153263
For: An under ground electric distribution line and appurtenances
In favor of: PacifiCorp, a corporation, d/b /a Pacific Power & Light Company
Affects: Portion of Lot 2 along strip of land 8 feet in width
33. Unrecorded easement for eight -inch water main crossing Easterly and Westerly across a portion
of said premises, disclosed by Survey recorded August 31, 1979, in Book 25 of recorded
Surveys, Page 6, records of Yakima County, Washington.
Affects: Parcel C
509- 457 -2419 ;LUERSON LAW )401 P08 MAR 24 '03 13:59
. ALTA COMMITMENT Order No. X- 180550
34. The following matters relating to ALTA Loan Policy coverage disposition of which will be
determined by an inspection, and survey, If necessary„ of the premises:
a. Question of survey.
b. Rights of persons in possession.
c. Material or labor liens.
NOTE: The result of our inspection will be furnished by supplemental report
3- of Yak, County pe Court Cause No. 7=2_01 A n
35. Pendency �: '. ��.:� jai -a- r�5� Superior �s��l 6 LJ4u�g � rr. 7
r �-v ,- r"aY�^�v, of Washington,
rgton
Department of Ecology, Plaintiff vs. (numerous named defendants), notice of which is given by Lis
Pendens recorded under Yakima County Auditor's File No. 2479271, being an action for the
determination of the rights to divert, withdraw, or otherwise make use of the surface waters of the
Yakima River Drainage Basin, In accordance with the provisions of Chapters 90.03 and 90.44
Revised Code of Washington. (Attorney for Plaintiff: Charles B. Roe, Jr., Senior Assistant
AS om.ey General)
NOTE: The above pending action will be shown on Schedule B, Part II, of the ALTA Mortgage
Policy, when;; issued, which schedule reflects matters of record which are subordinate to the Tien
of the insured Mortgage.
Abbreviated Legal:
Parcel A: Lots 2 and 7, AMENDED PLAT OF YAKIMA GATEWAY CENTER, "EE " -11
Parcel B: Lot 3 and ptn of Lot 5, AMENDED PLAT OF YAKIMA GATEWAY CENTER "EE" -11
_) Parcel C: Ptn of Lots 4 and 5, AMENDED PLAT OF YAKIMA GATEWAY CENTER, "EE " -11
NOTE: According to available information, property,address is:
8 NORTH FAIR AVENUE, YAKIMA, WA, 98901
110 NORTH FAIR AVENUE, YAKIMA, WA, 98901
120 NORTH FAIR AVENUE, YAKIMA,WA, 98901
128 NORTH FAIR AVENUE, YAKIMA, WA, 98901
END OF SCHEDULE B
NOTE: The legal description contained herein has been derived from information submitted with
the application and as available from the record title. Said description should be carefully
reviewed to assure it meets the intentions of the parties to this transaction.
NOTE: In the event this transaction fails to close, a cancellation fee will be charged to comply
with our Rate Schedule trued with the State Insurance Commissioner
THANK YOU FOR YOUR ORDER. IF WE MAY BE OF FURTHER ASSISTANCE, PLEASE
FEEL FREE TO GIVE US A CALL AT (509) 248-4442.
•
k1140110 .
509- 457 -2419 -- '1LUERSON LAW - - 401 P09 MAR 24 '03 13:58
• ALTA COMMITMENT Order No; X- 180550
EXHIBIT "A"
Parcel A:
Lots 2 and 7 of AMENDED PLAT OF YAKIMA GATEWAY CENTER, Lots 1 -7, inclusive, recorded in
Volume "EE" of Plats, Page 11, records of Yakima County, Washington.
Parcel 8:
Lot 3, AMENDED PLAT OF YAKtMA GATEWAY CENTER, Lots 1 -7, inclusive, recorded in Volume "EE"
of Plats, Page 11, records of Yakima County, Washington, and that part of Lot 5, Plat of Yakima Gateway
Center Lots 1 -7, as recorded in Book "EE" of Plats, Page 11, records of Yakima County, Washington,
described as follows:
Commencing at the Northwest comer of said Lot 3, also being the Southwest comer of said Lot 5;
thence South 89 °12'10" East along the line between said Lots 3 and 5, a distance of 25.00 feet
thence North 81 °28'22" East along the line between said Lots 3 and 5, a distance of 13414 feet to the
point of beginning;
thence South 28°31'38" East 24.00 feet;
thence North 61°28'22° East 25.26 feet;
thence North 28°31'38" West 24.00 feet;
thence South 61°28'22" West 25.26 feet to the point of beginning.
� • Parcel C:
Lots 4 and 5 of AMENDED PLAT OF YAKIMA GATEWAY CENTER, Lots 1 -7, inclusive, recorded in
Volume "EE" of Plats, Page 11, records of Yakima County, Washington.
EXCEPT commencing at the Northwest comer of Lot 3, Plat of Yakima Gateway Center Lots 1-7, as
recorded in Book "EE" of Plats, Page 11, records of Yakima County, Washington, also being the
Southwest comer of said Lot 5,
thence South 89°12'10" East along the line between said Lots 3 and 5, a distance of 25.00 feet;
thence North 61 °28'22" East along the rine between said Lots 3 and 5, a distance of 134.14 feet to the
point of beginning.
thence South 28 °31'38" East 24.00 feet;
thence North 61°28'22" East 25.28 feet
thence North 28 °31'38" West 24.00 feet;
thence South 61°28'22" West 25.26 feet to the point of beginning.
END OF EXHIBIT "A"
44.9td
,
509- 457 -2419 y 1LVERSON LAIC X 401 P12 MAR 24 '03 14:00
'Privacy Policy Notice
PURPOSE OF TUIS NOTICE
Title V of the Gramm - Leach- Bliley Act (GLBA) generally prohibits any financial institution, directly or
through its affiliates, from sharing nonpublic personal information about you with a nonaffiliated third
party unless the institution piovi des you with a notice of its privacy policies and practices, such as the type
of information that it collects about you and the categories of persons or entities to whom it may be
disclosed, In Compliance with the GL.BA, we are providing you with this document, which notifies you of
the privacy policies and practices of Valley Title Guarantee and its underwriters Pacific Northwest Title
and Stewart 'Title Guaranty Company.
e 11 n o n p u blic r ersonai information ab u t . fr the following :
aiaay collect nonpublic ,. about you from the a�iaiV l�l!►� .��IAiW.
Information we receive from you, such as on applications or other forms.
Information about your transactions we secure from our files, or from our affiliates or others,
Information we receive from a consumer reporting agency.
Information that we receive from others involved in your transaction, such as the real estate agent
or lender.
Unless it is specifically stated otherwise in an amended Privacy Policy Notice, no additional nonpublic
personal information will be collected about you.
We may disclose any of the above information that we collect about our customers or former customers to
our affiliates or to nonaffiliated third parties as permitted by law.
We also may disclose this information about our customers or former customers to the following types of
nonaffiliated companies that perform marketing services on our behalf or with whom we have joint
marketing agreements:
Financial service providers such as companies engaged in banking, consumer finance, securities
and insurance.
Non - financial companies such as envelope stuffers and other firtfil n ent service providers.
WE DO NOT DISCLOSE ANY NONPUBLIC PERSONAL ;INFORMATION ABOUT YOU WITH
ANYONE FOR ANY PURPOSE THAT IS NOT SPECIFICALLY PERMITTED BY LAW.
We restrict access to nonpublic personal information about you to those employees who need to know that
information in order to provide products or services to you. We maintain physical, electronic, and
procedural safeguards that comply with federal regulations to guard your nonpublic personal information.
•
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,...:„.4.1.t. ParcelView 1,0.3
,.. as i - h a l r lr:.i r a l p n l h m e t n t y
Yoko' Cpunly gepartmont pt Apimpment assessment of roal property
128 N 2np Strefit, Courthp448 Roam 112
) The Yakirna County Assessord
Yuma. WA i8951
°Mai doss not werrent
(509)574-1'00 Scale: 1 inch = 200 feet
Ch5a Set. 1/35/2003 1 43 15AM IN acOUracy.
4 l
---7T FidelityTitle Company
406 NORTH SECOND STREET • P.O. BOX 1682 • YAKIMA, WASHINGTON 98907
PHONE (509) 248 -6210 (800) 666 -8308 • FAX (509) 248 -2048
March 25, 2003
WIRE INSTRUCTIONS
BANK: KEY BANK OF WASHINGTON
102 E. Yakima Ave
Yakima, WA 98901
D ABA NUMBER:
ACCOUNT NAME: FIDELITY TITLE COMPANY
ESCROW TRUST ACCOUNT
NUMBER:
REF: ESCROW# 00057776
CALL: John Corning
ORDINANCE NO 2003- 03
AN ORDINANCE of the City of Yakima, Washington, approving and
authorizing a grant agreement, loan guarantee agreement and note and
related documents under Section 108 of the Housing and Urban
Development Act of 1974 as amended.
WHEREAS, the City of Yakima, Washington (the "City ") is authorized pursuant to its
charter and the laws of the State of Washington to carry out federally - assisted programs and
projects, including the use by the City of federal funds and funds made available through the
City with federal loan guarantee assistance for loans to private entities in furtherance of a public
and federal objective and purpose, and
WHEREAS, pursuant to Resolution No 2002 -144, adopted on November 26, 2002, the
City Council (the "Council ") approved the execution of an Application for Loan Guarantee from
the United States Department of Housing and Urban Development ( "HUD ") for an Economic
and Community Development Loan Fund in the amount of $4,000,000, and
WHEREAS, HUD is in the process of approving an EDI Grant in the amount of
$1,000,000 and a Section 108 loan guarantee assistance in the principal amount of $4,000,000,
and
WHEREAS, HUD will provide for the funding of a note issued by the City, the proceeds
of which will be used to fund the HUD loan to various borrowers, the borrowers will use such
money to fund their projects, and HUD will guarantee repayment of the note in the event of a
default by the borrowers under the HUD loan, subject to the City's pledge of future block grant
funds and security to be provided by the borrowers, and
WHEREAS, HUD is in the process of approving the City's application for loan
guarantee,
NOW, THEREFORE, BE IT ORDAINED BY the City of Yakima, Washington, as
follows
Section 1 Approval of Documents. The City hereby approves the following
agreements, in substantially the form as attached hereto as Exhibits A through C (1) EDI Grant
Agreement; (2) 108 Loan Guarantee Agreement; (3) Note, and (4) Custodial Agreement. The
above - listed agreements shall be amended only with the approval of the City
Section 2 Authorization of Documents. The Mayor, Assistant Mayor or City
Manager are hereby authorized to execute the documents listed in Section 1 and such other
documents as shall be related to and required by such documents Such officers and their Mayor
and her designee, and each of the other appropriate officers, agents and representatives of the
City are each hereby authorized and directed to take such steps, to do such other acts and things,
and to execute such letters, certificates, agreements, papers, financing statements, assignments or
instruments as in their judgment may be necessary, appropriate or desirable in order to carry out
the terms and provisions of, and complete the transactions contemplated by this ordinance
Section 3 City Obligations. Nothing herein or in any document approved hereunder
shall in any manner be construed to create a debt of the City payable from public funds within
the meaning of any constitutional or statutory limitation on the incurrence of debt, or to obligate
the City to pay or expend any funds for the contemplated financial assistance for the Project,
except for (1) security specified in the 108 Loan Guarantee Agreement; (2) the future Block
Grant Funds the City pledged under the Loan Guarantee Agreement; and (3) money or property
derived from the borrower in repayment of the loan.
Section 4 Prior Acts. All acts taken pursuant to the authority of this ordinance but
prior to its effective date are hereby ratified and confirmed.
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Section 5 Effective Date This ordinance shall be effective 30 days after its passage,
approval and publication as provided by law
PASSED by the City Council of the City of Yakima, Washington at a regular meeting
thereof, held this 21 ' of January, 2003
CITY OF YAKIMA, WASHINGTON
//7
Mary Place
Mayor
ATTEST City Clerk
APPROVED AS TO FORM.
City Attorney
First Reading N/A
Publication Date 1 - 24 - 2003
Effective Date 2 -23 -2003
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BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT r�
Item No. v�
For Meeting Of. January 21, 2003
ITEM TITLE. An ordinance approving and authorizing a grant agreement,
loan guarantee agreement, note, Custody Agreement and
related documents under Section 108 of the Housing and
Urban development Act of 1974 as amended.
SUBMITTED BY. ook, Director, Community &economic Department
Michael Morales, Grants Officer Y,✓
Tim Jensen, Treasury Services Officer - ls
CONTACT. Michael Morales, 575 -3533 `�
Tim Jensen, 575 -6070
SUMMARY EXPLANATION•
Background. The City of Yakima has been awarded a $1 million Economic
Development Initiative (EDI) grant from the U.S Department of Housing and Urban
Development (HUD) However, receipt of this grant is contingent upon the receipt of a
$4 million loan from HUD's Section 108 loan program. On November 26, 2002, at their
regular business meeting, Council approved Resolution No 2002 -144 which authorized
the execution of an Application for Loan Guarantee from HUD for an Economic and
Community Development Loan in the amount of $4 million.
If approved, the $4 million HUD loan will be combined with the $1 million EDI grant
and used to capitalize the Yakima Commercial Development Loan Fund. (Note: the City
has already received, and submitted to HUD, two commercial loan requests totaling $3,150,000
Once approved by HUD, the City will have final approval of any Section 108 loans issued to the
ultimate borrowers.)
Continued on following page
Resolution _ _ Ordinance x Contract Other
Contract
Funding Source
A. 'royal for Submittal. ._vl_I, • , .■
1i y Man.ger
STAFF RECOMMENDATION PASS ORDINANCE
BOARD RECOMMENDATION
COUNCIL ACTION Ordinance passed. ORDINANCE NO. 2003 -03
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Enclosed Ordinance City staff have been working with a consultant, Mr John Finke,
Director of The National Development Council, who has guided many cities through
the integral processes involved in the HUD Section 108 loan program. Mr Finke has
identified the following as agreements requiring approval by the City, HUD and the
trustee in order to execute this loan program.
1 Agreement for Economic Development Initiative grant assistance,
2. Contract for Section 108 Loan Guarantee Assistance from HUD,
3 The note for the Section 108 loan,
4. Custodial agreement for the funds.
The above documents are Included herein - in a substantially completed form - for
Council's consideration. The final documents will not be available until approved by
HUD, approval is expected in the near future (The final documents will contain the actual
project number assigned by HUD, the specific rate of interest, which will be the 3 month LIBOR
rate at the time of closing, plus 20 basis points, repayment terms, an estimate from the
application is attached to the Note, enclosed, and fees associated with the City's loan.)
These preliminary documents were received from HUD and from the Trustee Per Mr
Finke, the enclosed documents represent the most recent versions of the documents
issued by HUD and he anticipates no substantive changes in the final approved
documents Should HUD make a material change in a document, staff will bring it back
to Council for re- consideration.
The law firm of Preston, Gates and Ellis LLP has reviewed and approved the enclosed
documents and prepared the attached Ordinance If approved by Council, this
Ordinance authorizes the Mayor, Assistant Mayor or City Manager to execute these
documents in substantially the form as attached hereto at the time of closing with HUD
(Note: during the 2003 budget process, staff reported that a budget appropriation would be
developed for Council consideration once HUD had approved the City's application. Upon
further research of the mechanics of the Section 108 loan program, staff has determined that the
City is merely an administrator of the program. All cash transactions will occur between HUD,
the Custodian (JP Morgan) and the City- approved participants, thus, an appropriation is not
necessary for this program.)
Next Steps. (1) Once these documents have been approved by the City and HUD, loans to the
ultimate borrowers may be made from this newly created Commercial Loan Fund. Staff
anticipates that the two loans currently under review by HUD will be coming before Council for
final approval immediately after the Section 108 Loan program is approved. (2) The City's legal
counsel is required to provide a legal opinion as to the authority of the City to enter into these
agreements and to pledge its CDBG accounts as a loan loss guarantee. Preston, Gates and Ellis
is prepared to provide an affirmative opinion in this regard. (Note: In the event of default by a
commercial borrower, the $1 million grant funds and future Community Development Block
Grant funds are pledged to cover the required debt service. The City has no other obligation for
repayment of any loans, i.e. no local tax revenue or general fund revenues are pledged to HUD
for security on these Section 108 loans. )
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P`MENr� U.S. Department of Housing and Urban Development
, Washington, D C 20410 -7000
II
,. II Q
9 %44, D ows'
OFFICE OF ASSISTANT SECRETARY RECEIVED
FOR COMMUNITY PLANNING AND DEVELOPMENT
OCT 1 6 2002
OCT 2 1 2002
CITY Y : YAKIMA
The Honorable Mary Place COMMUNITY DEVEIOPMElV7
Mayor of Yakima
129 North Second Street, City Hall
Yakima, WA 98901
Dear Mayor Place
I am pleased to inform you that the City of Yakima's amendment request for the
Economic Development Initiative Grant No B- 98 -ED -53 -0048 in the amount of
$1,000,000 has been approved.
The amended application was scored in accordance with the criteria established in
the Notice of Funding Availability published in the Federal Register on April 30, 1998
The amendment request was determined to be competitive in accordance to the 1998
NOFA rating factors.
This letter evidences the Department of Housing and Urban Development's
obligation to provide EDI grant funds for the economic development loan "fund" or
program as described in your amended application. The terms and conditions of the
original grant approval remain in effect, as amended by this letter HUD execution of a
grant agreement for the EDI funds is conditioned upon HUD approval of a Section 108
loan guarantee application and issuance of a HUD loan guarantee for no less than
$4,000,000 In this case, due to the lapse of time since our original grant award and the
operation of 31 USC 1552(a), which sets government -wide limitations on the expenditure
of fixed -year appropriation accounts, amounts which are not properly drawn down under
your EDI grant agreement by September 30, 2005, will be canceled and unavailable for
disbursement to the City after such date
If you have any questions, please feel free to contact Donna J Batch, Economic
Development Specialist for the Northwest/Alaska Region. She can be reached at
(206) 220 -5150 ext. 3620
We look forward to working with you to assist economic development efforts
within the City's Renewal Community In particular, we are prepared to advise you
concerning the preparation of your final section 108 loan guarantee application and
request for section 108 loan guarantee documents
Sincerely,
V°------ 1 ta-1 'I ve. 1
Nelson R. Bregon
Deputy Assistant Secretary
for Grants Programs