HomeMy WebLinkAboutR-2003-043 Yakima Cellars Winery Section 108 Loan (Yakima Commercial Development Loan Program amendment)RESOLUTION NO. R-2003- 43
A RESOLUTON 1) authorizing the City Manager to submit an application for a
$110,000 Section 108 Loan for the Yakima Cellars Winery to the U.,
S. Department of Housing and Urban Development (HUD) and 2)
amend the Yakima Commercial Development Loan Fund program
to establish maximum fees to the borrower of 2% or total actual fees
as determined solely by the City using its best efforts, whichever is
Less. All fees in excess of the above shall be paid by the City out of
the EDI grant.
WHEREAS, 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); and
WHEREAS, the grant award from HUD is conditioned upon submittal of a $4
million application to the HUD Section 108 loan guarantee program; and
WHEREAS, HUD has approved the conversion of EDI and 108 funds to
capitalize the Yakima Commercial Development Loan Fund; and
WHEREAS, the City has worked with the National Development Council in
developing the guidelines for the program that provides more flexibility and
opportunity for development; and
WHEREAS, the City has conducted two public hearings on November 26, 2002
and January 21, 2003 to hear comments on the City's Section 108 funded Commercial
Development Loan Fund; and
WHEREAS, the City Council, at their meeting on November 26, 2002, approved a
minimum loan amount of $100,000; and
WHEREAS, economic development is a priority for the City of Yakima, and the
City intends to approach economic development on an inclusive, comprehensive basis
which involves public, private and community-based efforts to achieve new investment
and redevelopment in the City; and
WHEREAS, under Section 108 of the Housing and Community Development Act
of 1974, federal loans are available for the purpose of funding economic development
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activities that will create new and stable jobs for low and moderate -income residents;
and
WHEREAS, a Yakima Commercial Development Loan fund will create three (3)
new full time equivalent jobs over the next 24 months;
NOW THEREFORE, BE IT RESOLVED by the. City Council of the City of
Yakima, Washington:
The City Manager is hereby authorized to submit an application for a $110,000
Section 108 loan for the Yakima Cellars Winery to the U. S. Department of Housing and
Urban Development (HUD)
ADOPTED BY THE CITY COUNCIL this 18th day of March, 2003
ATTEST:
City Clerk
ary Place, Mayor
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. /
For Meeting of March 18, 2003
ITEM TITLE. Resolution 1) authonzingsubmission of an application for a $110,000 Section 108
Loan for the Yakima Cellars Winery to the U S Department of Housing and
Urban Development (HUD), and 2) amending the Yakima Commercial
D velopment Loan to establish maximum fees to the borrower
SUBMITTED BY i lam Cook, Director of Community and Economic Development
CONTACT PERSON/TELEPHONE William Cook, CED Department (575-6113)
SUMMARY EXPLANATION
Attached is an analysis prepared by John Finke of the National Development Council of a loan
application for Section 108 funds for the Yakima Cellars Winery Yaloma Cellars is requesting
funding from the City of Yakima Commercial Development Loan Fund for working capital and
acquisition of equipment. The loan will allow the company to expand production and increase
employment by three (3) full time employees over the next 24 months.
Approval of this resolution will authonze submission of the loan application to the Seattle office of
HUD for review and approval .A request for Council approval to close on this loan will be
considered under a separate resolution following HUD approval of the proposed loan.
The Yakima Cellars loan, if approved for closing will be the third loan from the cities Section 108
funded. Yakima.Econornic Development Loan Fund for a total of $3,260,000
The Council Economic Development Committee met on March 3, 2003, and unanimously approved
submission of this loan request for Council approval
In addition, this resolution would amend the Yakima Commercial Development Loan Fund program
to establish maximum fees to the borrower of 2% or total actual fees as determined solely by the
City using its best efforts, whichever is less. All fees in excess of the above shall be paid by the
City out of the EDI grant.
Resolution X Ordinance . Contract Other (Specify) Application for Section
108 Loan Guarantee for Yakima Cellars
Funding Source N/A
APPROVED FOR SUBMITTAL.
ity Manager
STAFF RECOMMENDATION
BOARD/COMMISSION RECOMMENDATION
COUNCIL .ACTION
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CITY OF YAKIMA, WASHINGTON
RESOLUTION NO. R-2003-8 7
A RESOLUTION to approve the loan application and enter into a loan with
Julmar, L.L.C. to loan up to $110,000.00 from the Yakima Commercial
Development Loan Fund.
WHEREAS, the City of Yakima has set up the Yakima Commercial
Development Loan Fund; and
WHEREAS, the City has worked with the National Development Council to
develop the guidelines for a program to use the Commercial Development Loan
Fund; and
WHEREAS, Julmar, L.L.C., as an existing business located in a low income
area, has submitted an application for a loan from the Commercial Development
Loan Firnd, with the funds to be used to purchase equipment and working capital
needs for its business of manufacturing boutique wines and operating an wine
tasting room; and
WHEREAS, the City and the National Development Council have reviewed
this application andcorresponding collateral and guaranties for payment; and
WHEREAS, the City and the National Development Council have
determined that Ji,lmar's application meets the criteria for this type of' loan,
demonstrates a good plan for expanding its business, and possesses sufficient
collateral to back this loan in case of default ;
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
1. The City is empowered to loan to Julmar, L.L.C., the sum of $110,000.00
dollars from the City's Commercial Development Loan Fund. The loan
shall be evidenced by a Loan Agreement and a Promissory Note signed by
the City and the Borrower, and personal Guaranties signed by Patrick
Waber, Kari Zeutenhorst, Andrew Castrodale, Mark Maiocco, Robert
Villbrandt, Palmer Wright, Julia Robertson. These agreements are to be
substantially in the form as attached in Exhibit 1, Exhibit 2, and Exhibit
3, hereto.
2. The City Manager is hereby designated as the official representative of
the City to act in connection with signing of the Loan Agreement, the
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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
TG,r1e, 17, 2003, is entered into by and between JULMAR, L.L.C., ("Obligor"), a Washington
limited liability company, 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 makes boutique red and white wines and operates a tasting room. Obligor
has requested a loan from the City for funds to be used for working capital and to acquire
equipment (the "Loan"). The Obligor's use of the funds is to be made pursuant to this Agreement.
Obligor's acquisition of equipment, as well as 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
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 secunty 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 teiiiis 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
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
rl The Loan shall be evidenced bythis A eement and by Olbi gor'.s Promis.so_ Note
L. ____.. _ _gr-�_ �--_ ry
("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, secured by
security interests granted by the Obligor to the City in its inventory, accounts receivable, supplies,
general intangibles, trademarks, trade names, copyrights, other personal property, and equipment
owned by the Obligor and an assignment of Obligor's interests under the two leases of the
leasehold real property (hereinafter collectively referred to as the "Security Agreements"). The
Obligor Note, this Agreement, the Security Agreements, 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 teinis 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
secunty 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 (defined in Section 1.4(b) of this Agreement) and delivered to the City as
a material inducement to the City's agreement to make the Loan in accordance with this
Agreement. The Guaranty 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 Nine Thousand One Hundred Sixty-six and 67/100 Dollars
($9,166.67) denved 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,
S EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT,
ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
Loan Agreement Page 2
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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 m 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
ONE HUNDRED and TEN THOUSAND DOLLARS and no/100 ($110,000.00), solely for the
purposes set forth in Section 1.2 below. Loan disbursements shall be made only 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 4.4(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.
1.2 Purpose of Loan. Loan proceeds shall be used by Obligor to acquire equipment for
operations and for 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 Security Agreements (as defined in 1.4(a)) and the Guaranty (as defined in
1.4(b)), substantially in the form of Attachment D 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
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
the Obligor Note) under the Obligor Note shall bear interest at the same rate. Any principal of the
Loan Agreement Page 3
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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 „h:ch has not bee..._ed...._ waived in accordanc.,e 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 pnor 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) Security Agreements. The obligations of Obligor under the Loan
Documents at all times shall be secured by the Obligor granting 1) a security interest in current and
after acquired inventory, accounts receivable, supplies, general intangibles, trademarks, trade
names, copyrights, other personal property, and equipment owned by the Obligor, as shown on
Attachment B and hereby incorporated by reference, and 2) an assignment of Obligor's interests
_ t Lease") � 1' the leasehold
,.1. ..1 .7 real property ("Property"),
,� �\ ,1.; .,+
under the two leases ("Assignment of Lease ) of the leasehold property ` Property ), subject
only to encumbrances listed on Attachment C and hereby incorporated by reference. The security
interests granted pursuant to the security agreement shall be perfected, to the extent possible, by
filing with the Department of Licensing of the State of Washington, by recording in the records of
Yakima County, or by taking possession of the collateral, and Obligor agrees to take all action
reasonably requested by the City or Custodian, and to pay all fees and costs reasonably required to
continue such perfection so long as the Loan or any of Obligor's other obligations under the Loan
Documents remain outstanding. Obligor hereby grants to the City a security interest in all current
and after-acquired inventory, accounts receivable, supplies, general intangibles, trademarks, trade
names, copyrights, other personal property, and equipment owned by the Obligor, including by not
limited to that hsted on Exhibit B, and fully incorporated herein and all accessions, attachments,
and modifications thereto, NONE OF WHICH THE OBLIGOR IS AUTHORIZED TO SELL,
LEASE OR OTHERWISE DISPOSE OF WITHOUT THE WRITTEN CONSENT OF
SECURED PARTY; all cash and non-cash proceeds of any of the foregoing, in whatever form
(including proceeds in the foirri of inventory, equipment or any other form of personal property),
including proceeds of proceeds; all books and records relating to the any of the foregoing
a RCW c� n n n
collateral. This Loan Agreement shall also constitute a security agreement under 62A.9A.
(b) Personal Guaranty. 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 Patrick Waber, Kari
Zeutenhorst, Andrew Castrodale, Mark Maiocco, Robert Villbrandt, Palmer Wright, Julia
Loan Agreement page 4
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Robertson ("Guarantor"), substantially in the form of Attachment D hereto and fully incorporated
herein.
(c) 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 E 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 secunty interest, so long as the Loan 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 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.
(d) Rights of City With Respect to Security. Obhgor 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
secunty (including without limitation the Assignment of Lease and/or Guaranty), or (2) any suit or
other proceeding on the Obligor Note, 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.
1.5 Loan Fee. Obligor shall pay to City a loan fee of Two Thousand and Two Hundred
Dollars ($2,200), representing two percent (2%) 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
Loan Agreement Page 5
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1.6 Obligor's Payment of Costs and Fees. Obligor shall also pay a fee of no more than
$500.00 per year for the Custodian's Fee, and any fees or costs of the City's Outside Counsel or
Custodian's Outside Counsel incurred after the date of closing, 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. Such fees, if they ever arise, cover the City's cost to hire counsel to enforce the
obligations in the event of Obligor's breach, failure to perform, or default. These are the same as
the attorney fee provisions in the Obligor Note.
1.7 City Funds Not Obligated. The Loan will be made only from non -City funds that
the Custodian a' under the TATO Contract and City NntP and interest suhcidy pay ents to
��fr a :is�otiiar`S rei�eiyes 7 � payments
accordance with Section 4.6(b) hereof will be made only from available funds under the EDI 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 nght, 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 effect of
Loan Agreement Page 6
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
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 REPRESENTATIONS AND WARRANTI S
In order to induce City to make the Loan and enter into the HUD Contract, Obligor
represents and warrants as set forth below in this Article II as of the 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 perfoiniance 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 limited
liability company, 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 Obhgor has full power
and authority to enter into this Agreement, to borrow money as contemplated herein, and to execute
and perforin 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 Nondiscnmination. 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, manta'
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 Assignment of Lease. Obligor is authorized to execute the Assignment of Lease for
the Property it leases, located at 10 N. 6th St. and 32 N. 2nd St., and the execution of such will not
Loan Agreement Page 7
cause Obligor to violate any existing contract to which it is a party, including but not limited to the
leases on the Property.
2.5 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 Obligor 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. Obligor 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.
2.6 Compliance With Documents. Obligor is and will remain in full compliance with
all of the terms and c o ditions 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.
2.7 Taxes Are Paid. Obligor has filed all material tax returns which are required and
has 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 or its personal or real property by any taxing
agency, federal, state or local, and Obligor has 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 knows of
no basis for any such deficiency assessment or lien.
ARTICLE 11 I — 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
appropriate) and delivered by the parties thereto, and shall be in foiiii required by this Agreement,
with such modifications as may be approved by the City in accordance with the Ordinance: this
Agreement; the Obligor Note; the Guaranty; Assignment of Lease; the Deposit Account Control
Agreement; the Demand Note, the Collateral Assignments; current financial statements for
Obligor; current financial statements for each Guarantor, 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 the persons signing on behalf of the Obligor have the capacity and
authority to execute and deliver Loan Documents, including, but not limited to, a copy of the
Loan Agreement Page 8
charter 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, executed by the Obligor's designated person(s), in a
form and content acceptable to the City.
3.3 Insurance. Obligor shall have provided to the City evidence of insurance coverage
for Obligor's operations.
3.4 Trade Name. City shall have received proof that Obligor has registered its trade
e
name "Yakima Cellars Winery" under either federal or state trade name registration.
3.5 Legal Opinions.
(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 is duly organized and validly existing and in good standing
as a limited liability company in the State of Washington, and has full power and authonty to
execute and deliver the Loan Documents and to perform all of its obligations;
(2) The execution and delivery of the Loan Documents and Security
Agreements by Obligor do not, and the transactions contemplated by the Loan Documents will not,
violate any laws or regulations applicable to the Obligor and will not conflict with and will not
cause a default under (i) any provisions of Obligor's governing documents, or (ii) any other material
agreements, instruments, judgments, decrees, orders or undertakings known to counsel after
reasonable inquiry by which the parties are bound or to which the Property is subject; and
(3) The Loan Documents have been duly authorized, executed, and
delivered by Obligor and constitute the legal, valid, binding obhgations, enforceable in accordance
with their terns.
(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.
Loan Agreement Page 9
(b) Obligor shall be in full compliance and shall not be in breach or default
under Agreement of the other Loan Documents; provided, however, City may, in its
this Agreement tlV 11 l�.11 l� or any of ...i other Documents; •• � that --J
discretion, elect to make advances notwithstanding the existence of Obligors noncompliance or
default, and any advance so made shall be deemed to have been made pursuant to this Agreement
and secured by the Assignment of Lease.
(c) Neither Obligor's Property nor any part thereof shall have been materially
damaged, destroyed, condemned, or threatened with condemnation.
(d) The representations and warranties of Obligor contained herein shall remain
accurate in all material respects as of the date of the requested disbursement.
(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
fL_ -_J_ ._ the amount o f One LT,,, -,.-re T. en Ti-�r�„c�-d Dollars ($i 1n 000 nm amromts
unds 111 the 1I11UUII1 of .J11G Hundred 1 V11 aLLvu.�uuu Dollars `W a iv,vvv.vv), or such lesser u.a.v.......v
as requested by the Borrower, shall be disbursed on the date (the "Closing Date") of closing of the
Loan (the "Closing"), to be applied to related Closing costs, the Loan fee payable to the City in
accordance with Section 1.5 of this Agreement. Any funds not requested at initial Loan closing,
may be disbursed to Borrower at the request of no less than $20,000.00 per request, BUT in no
event shall the total amount requested exceed $110,000.00 at any time.
4.2 Costs Related to Public Offering.
(a) On the Closing Date, the amount of Eight Hundred and Twenty Five Dollars
($825.00), 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 underwnters' 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
ll f-._.. a the Repayment Account toned the Custodian under
Account snail be transferred to Loan maintained by �,�., vu��vu.u..
the Letter Agreements ("Loan Repayment Account"), and the next deposit(s) required to the Debt
Service Reserve Account in respect of principal under Section 4.4 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
Loan Agreement Page 10
•
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"),
substantially in the form of Attachment F 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)
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 theappropriate requests and information 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
pnncipal 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 teiiii 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
annual 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
Loan Agreement Page 11
occur pnor to the corresponding Obligor Payment Date in respect of principal of the Obligor Note.
Except as provided m Section 4.4(b) below, Obligor shall not be entitled to any reductions m, 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,
notwithstanding the actual rate of interest payable on the Loan and Obligor Note from time to
feasible Obligor's
monthly interest
+ obligations
hall based
time, that to the extent feasible, 1JU11��,1. � i.r li cic�l, payment sllnl! 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:
(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 uiiuca Paragraph ,1apu 1.3tuj, above, Obligor shallu pay to she 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.
(n) 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 corresponding r:eposit Day, interest at
U41V VV �, Obligor shall pay to the Custodian on the corresponding vuuaai�, i.vYv.�i� Luy, 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 Nine Thousand and One Hundred Sixty-six and
76/100 Dollars ($9,166.67).
(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
Loan Agreement Page 12
•
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 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.
4.5 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.
Loan Agreement Page 13
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 Load Documents prior to application of rums
against the Obligor Note.
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
covenants and agrees that:
(a) Obligor shall promptl-y" pay pnnct ai> 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
limited liability company under the laws of the State of Washington;
(c) Obligor shall maintain, preserve, and keep its Property in good condition,
and from time to time repairs, renewalc and
ordinary wear and tear excepted, �uiie. make all necessary -------..»---, --__»
replacements, as required under its leases.
5.2 Compliance with Laws. Run its business in compliance with all matenal 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.
5.3 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 peinnt 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, rales and regulations
5.4 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 matenal adverse affect on the financial condition of Obligor,
and of all complaints or charges made by any governmental authority affecting Obligor.
5.5 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.
Loan Agreement Page 14
•
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:
(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 three 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 arid 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 three full time
equivalent peiihanent 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 ongin, 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 Depaitnient 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 discnmination 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 or of any sub -recipient receiving CDBG funds who
exercises or has exercised any functions or responsibilities with respect to activities assisted by
Loan Agreement Page 15
•
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
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 sub -recipient 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
officer ply Congress, an employee of
agency, a member of Congress, an or employee of or u�. �a��r...,..� of a member ��
Congress in connection with this Federal loan, it will complete and submit Standard Foliii
"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 sub -awards at all tiers (including subcontracts, sub -grants, and contracts under
grants, loans and cooperative agreements) and that all sub -recipients shall certify and disclose
accordingly.
This certification is a matenal 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
11 and to lc with and all applicable
Shall Comply, and cause all contractors subcontractors comply, ��.�.� any 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
Loan Agreement Page 16
•
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.
(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 5.5.
(i) 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 Property, including but not limited to any environmental or hazardous waste issue.
This provision shall survive expiration of this Agreement.
5.6 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.
5.7 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.
5.8 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.
5.9 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
Loan Agreement Page 17
•
Custodian's notice thereof to Obligor, Obligor shall promptly pay the remaining amount of the
Custodian's fees and expenses directly to the Custodian.
.
5.10 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 or personal property pledged under the Security
Agreement; provided, that nothing in this Section shall authorize Obligor to make any payment
from any funds or assets pledged to the City hereunder.
5.11 Transfer of Property. Obligor shall not cause or permit the transfer of its Property or
personal property pledged under the Security Agreement or any interest of Obligor therein,
voluntary or involuntary, without the advance wntten 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 REMEDTFS
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:
(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;
(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) days of the due date of such payment or deposit (or within ten (10) days of demand in case
of amounts due on demand);
Transfer of collateral?
(c) Any breach or nonperfoiuiance by Obligor of any provision of any of the
Loan Documents not included within any of Subsections (a) -(b) above that is not cured within sixty
(60) days after notice to Obligor of such breach or nonperformance, or such longer cure penod as
may be permitted under the specific tetras 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 penod, (2) Obligor shall commence to cure such breach or
nonperformance within such Cure period and shall thereafter diligently and expeditiously piuVcud to
cure the same, and (3) Obligor shall inform the City in wnting of the status of the cure at the
expiration of such cure period and every thirty days thereafter, then such cure penod shall be
extended for such time as is reasonably necessary for Obligor in the exercise of due diligence to
cure such breach or nonperformance;
Loan Agreement Page 18
s
(d) 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;
(e) 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 property pledged under the Security Agreements, proves to be
materially false or misleading as of the date when made or reaffiriiied, whether or not such
representation or disclosure appears in this Agreement.
(f)
Any default by Guarantor of its obligations under the Guaranty.
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 all 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 Assignment of Lease, 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.
Loan Agreement Page 19
•
(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.
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 _ _,_ _ c tt a + term � condition. The consent or approval by City to or of any act
oreaeii of !ii' J0.111e lov'dia11L, term yr iv11u1Lav11. 111 consent vi u��avv sa vy vary �v, va of, uaay 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 nght 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 wntten 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
perforrria_n_ce 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 nght 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 wntten instrument
behalf
if cObligor further Custodial Agreement may
duly signed on cenair of the City. 1u1 L11er acknowledges that the Custodial 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
Loan Agreement Page 20
•
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 penults 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
i1117Lw1L11JLauu111g any regulatory action u1 omission 0l lolly u1c1.L111g 'u11g'u1, 110 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, perfoiniance 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 of 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.
Loan Agreement Page 21
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.
7.110 Sl_{i y l val 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
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 deteunined by the court.
7.13 Duplicate Onginals; 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 confoini 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:
Julmar,
Inc W. tht.t /Nod Su; i c
w A, 99b2
Loan Agreement Page 22
•
If to City:
Yakima, Washington 9890_
Attn:
fax:
Department of Economic and Community Development
City of Yakima
129 N. 2nd Street
Yakima, Washington 98901
Attn: Director
fax: 509-576-6792
IN WITNESS WHEREOF, Obligor and City have executed this Agreement as of the date
first written above by and through their duly authorized representatives.
CITY:
THE CITY OF YAKIMA, a Washington municipal corporation
By:. �i�i 6/
Name.
Name. A. Zais Jr.
City Manager
c\kt:4\'"--4104, P
OBLIGOR:
JULMAR, L.L.C., a Washington limited liability company
By:
Print
Title:
Mc 'ut
V.'/(,5n4�,
Loan Agreement Page 23
a
•
LIST OF ATTACHMENTS
Attachment A Folin of Obligor Note
Attachment B Equipment and Personal Property List
Attachment C Assignment of Lease
Attachment D Guaranty
Attachment E Deposit Account Control Agreement
Attachment Demand
Note
Attachment G Job Creation Summary Report
Attachment H Incorne Verification Form
f:\clients\dab\yakima\julmar - 102\loan documents \final\loan agreement- ver 4a.doe
5/29/2003 2:30 pmdab"
Loan Agreement Page 24
}
•
VARIABLE/FIXED RATE PROMISSORY NOTE
Yakima, Washington
�utie / 9 ,2003
110,000.00
FOR VALUE RECEIVED, JULMAR, L.L.C., ("Obligor"), a Washington
corporation, promises to pay to THE CITY OF YAKIMA, WASHINGTON ("Payee"),
a Washington municipal corporation, or order, at Yakima, Washington, or atpthe time times provided herein the sum o Onee Hundred Ten Thousand Dollars
Y �
(S110,000.00), with interest as provided herein.
RECITALS
This Note is given to evidence a loan (the "Loan") made pursuant to the Loan
Agreement dated ' 'e j , 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 $4,000,000.00 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:
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 to the
corresponding Advances made under the City Note until repayment of the loan
Promissory Note Page 1
•
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
1, hereunder c i et r,!�
be 1 date
such
for each Advance will set t, on Illll, UCl lie of s Ut.11 f U YQlll.e and will be
equal to twenty basis points (U.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 Rate"). If the Conversion Date for the
City Note has not occurred by nine and one half years following the initial
Advance thereunder, then the variable interest ra4e hereunder will be equal
qU1 VV
the variable interest rate on the City Note set pursuant to the terms of Appendix
A + +1-.,, City Note. If +l Fiscal, Agent
.+ .7 ++, t
A, to the lJ1Uy irvl,c, !1 the •'1sc ClR 11C�G1zG floes �E'J receive notice )1 either a
Negotiated Special Interest Rate or Holder Determined Special Interest Rate (as
rlofinAr1 in _Appendix A to the City Nnte) from the SPrrPtary nr Nn1r1Pr,
1' l- �-- the �-- _fie -- Appendix __,a___ A �_ 1i.., City- Not, then the
respectively, by i,Iii; l.iiiiY�.di' specified 111 11iJYvil'u'iX 11 to the 'vii,y Note, i,iic:il
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 "T_,T_BO 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 -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 hanks (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 of such Advance will be the
Promissory Note Page 2
•
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.
1.2. "C1pp1L aUJle 1.1)0 Rate" means. (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 made after the 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
an
u incorporated herein
erefiluy this
reference. Payments of principal of and interest on this Note shall be made to
the I -.pan Repayment Account.
5.1 in order to ensure. timely payment of principal and interest,
commencing m the first month disbursement f r cl al of the Note principal e City 1VOte 111
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 term shall include any related Debt
Service Reserve Investment Account established under the Custodial
Agreement and Letter Agreements). Each such monthly payment shall be
thie and nay able in immediately available funds, onthe "Deposit Day,"
r �.�� , D"
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 annual
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
r -g- 1 p principal payment
on this Note.
5.3. Except as provided in the next section, Obligor shall not be 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
Promissory Note Page 4
•
Debt Service Reserve Account (including any 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 T Agreement aiid this dote. 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
t Interest Stabilization
Payments
and Subsidy.
/11_7�� and the
Inl.erest Subsidy. InLeresl, Stabilization Subsidy. Obligor 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) of the Loan
Agreement, 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
Promissory Note Page 5
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 umVu t greater than a lice
Thousand and One Hundred Sixty-six Dollars and 67/100 ($9,166.67).
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 y, Paragraph M_,l (h of
the o, A -_eev_ ssu
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 mauls l it (lhlionr nn ciirh Denn.git nay and Parh siihsPni1ent Tlpnncit.
J�b _ r '--J a r
Day scheduled to occur prior to the correspondingObligor d:yiii a_.ii'v
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)
of the Loan Agreement.. 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 m 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 July
15, 2013.
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 security interests in inventory,
accounts receivable, supplies, general intangibles, trademarks, trade names,
copyrights, other personal property, and equipment owned by the Obligor and an
assignment of Obligor's interests under the two leases of the leasehold real
property, a pledge of the members' interests in the Obligor company, and an
Unconditional Guaranty of even date, executed and delivered by Patrick Waber,
Kari Zeutenhorst, Andrew Castrodale, Mark Maiocco, Robert Villbrandt, Palmer
Wright, Julia Robertson, (the "Guarantor"). All of the above security interests
are perfected, to the extent allowable under Washington law, by recording in the
records of Yakima County, Washington, 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 subsequent 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 clue 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.
Promissory Note Page 7
•
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,
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 twelve 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 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.
JULMAR, L.L.C.
By:
Its
Promissory Note Page 8
•
STATE OF WASHINGTON )
) ss:
County of Yakima )
I certify that I know or have satisfactory evidence that
is the person who appeared before me, and said person acknowledged that he signed
this instrument, on oath, stated th�(p}/J}� he was authorized to execute the instrument
and it /J /_ f U T T T C STT 7
acknowledged as i ��_ fi_ of J���•l�A�., �,,�,,�,_� a yyagningtnn
limited liability company, to be the free and voluntary act of such party for the uses
and purposes menti ed in the instrument.
DATED:
,003.
(1
TARY PUBLIC in and for the
tate of Wash'
Residing at: ice_
My appoint )ent expires:
NT4ND 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 i'rhe /7 , 2003.
CITY OF YAKIMA
By: �+ i€ 7 J)y
R. A. Zais, Jr., City -Manager
ck.l.kus; dot,
Obhgor hereby acknowledges the foregoing assignment and agrees to
recognize and render all performance to the Trustee and HUD as assignee of the
Promissory Note.
Promissory Note Page 9
•
JULMAR, L.L.C., a
Was ig rpn limited �iabil' r compA
i 1 i 1 1 i I i i mill
,. I i/ .. 1J 1. ): () U V L. ' )
Promissory Note Page 10
��v.1
•
Exhibit 1
Estimated Principal Payable Schedule
Payment Date Principal interest Payment Balance
6/2/2003 $110,000.00
1 6/15/2003 0.00 84 39 84.39 110,000.00
2 7/15/2003 0.00 361.68 361.68 110,000.00
3 8/15/2003 750.00 361.68 1,111.68 109,250.00
4 9/15/2003 750 .00 359.21 1,109.21
,1Un.2w
108,500.00
5 10/15/2003 750.00 356.75 1,106.75 107, 750.00
6 11/15/2003 750.00 354.28 1,104.28 107,000.00
7 12/15/2003 750.00 351.82 1,101.82 106,250.00
8 1/15/2004 750.00 349.35 1,099.35 105, 500.00
9 2/15/2004 750 00 346.88 1,096.88 104,750.00
10 3/15/2004 750 00 344 42 1,094.42 104,000.00
11 4/15/2004 750.00 341.95 1,091 95 103,250.00
12 5/15/2004 750.00 339.49 1,089.49 102,500.00
13 6/15/2004 750.00 337 02 1,087.02 101,750.00
14 7/15/2004 750 00 334.55 1,084 55 101,000.00
15 8/15/2004 750 00 332 09 1,082.09 100,250.00
16 9/15/2004 750.00 329 62 1,079.62 99,500 00
17 10/15/2004 750 00 327.16 1,077.16 98,750.00
18 11/15/2004 750 00 324 69 1,074.69 98,000.00
19 12/15/2004 750.00 322.22 1,072.22 97,250 00
20 1/15/2005 750.00 319.76 1,069.76 96,500.00
21 2/15/2005 750.00 317.29 1,067.29 95,750.00
22 3/15/2005 750.00 314.83 1,064.83 95,000 00
23 4/15/2005 750.00 312.36 1,062.36 94,250 00
24 5/15/2005 750 00 309.89 1,059 89 93,500.00
25 6/15/2005 750.00 307 43 1,057.43 92,750.00
26 7/15/2005 750 00 304.96 1,054.96 92,000.00
27 8/15/2005 833.33 302.50 1,135.83 91,166.67
28 9/15/2005 833.33 299.76 1,133.09 90,333.33
29 10/15/2005 833.33 297.02 1,130 35 89,500.00
30 11/15/2005 833.33 294 28 1,127.61 88,666 67
31 12/15/2005 833.33 291.54 1,124 87 87,833 33
32 1/15/2006 833.33 288 80 1,122.13 87,000 00
33 2/15/2006 833.33 286 06 1,119.39 86,166.67
34 3/15/2006 833.33 283.32 1,116 65 85,333.33
35 4/15/2006 833 33 280 58 1,113 91 84,500 00
36 5/15/2006 833.33 277 84 1,111 17 83,666 67
37 6/15/2006 833 33 275 10 1,108.43 82,833 33
38 7/15/2006 833.33 272.36 1,105 69 82,000 00
39 8/15/2006 833.33 269.62 1,102 95 81,166.67
40 9/15/2006 833 33 266.88 1,100.21 80,333 33
41 10/15/2006 833 33 264.14 1,097 47 79,500.00
42 11/15/2006 833.33 261.40 1,094.73 78,666 67
43 12/15/2006 833.33 258 66 1,091.99 77,833.33
Promissory Note Page 11
•
44 1/15/2007 833 33 255 92 1,089.25 77,000.00
45 2/15/2007 833.33 253.18 1,086.51 76,166.67
46 3/15/2007 833.33 250.44 1,083.77 75,333 33
47 4/15/2007 833 33 247 70 1,081 03 74,500.00
48 5/15/2007 833 33 244 96 1,078.29 73,666.67
49 6/15/2007 833 33 242 22 1,075.55 72,833 33
50 7/15/2007 833 33 239 48 1,072 81 72,000.00
51 8/15/2007 916 67 236 74 1,153.40 71,083.33
52 9/15/2007 916 67 233 72 1,150 39 70,166.67
53 10/15/2007 916 67 230 71 1,147.37 69,250 00
54 11/15/2007 916 6�
� 10 0! 227 69 1_144 36 68 333 33
55 12/15/2007 916 67 224 68 1,141 35 67,416 67
56 1/15/2008 916 67 221 67 1,138 33 66,500 00
57 2/15/2008 916.67 218.65 1,135 32 65,583.33
58 3/15/2008 916 67 215 64 1,132 30 64,666 67
ire-, d /4 cinnno n9 R G27 797 F'')
1 Q R9 7Cn nn
J .7 `1./ I J/ G V U V J I V V I L I L V L 1,129.2 J V J,/ J 0. V V
_ 't _ � _ �� mayy(( � y3�� <[ <[�
6V 5/ 15/2008 J 16.67 209.6 1 1 , 126.28 62,833.33)
61 6/15/2008 916 67 206 60 1,123.26 61,916.67
62 7/15/2008 916.67 203 58 1,120.25 61,000.00
63 8/15/2008 916 67 200.57 1,117.23 60,083.33
64 9/15/2008 916 67 197 55 1,114.22 59,166.67
65 10/15/2008 916.67 194.54 1,111 21 58,250.00
/15� 0n 9 7 191.53
. 1n 19
66 11/ IJ/2v�8 � 1 .�� iii. 3 i, iv8 I� 57,333.33
67 12/15/2008 916 67 188 51 1,105.18 56,416 67
r•p 1 /.1512009 18� 50 1 902 16 55 500 0n
00 I/ IJ/GVV7 ..9/116.67 1 J.JV , 10 . 1 V JJ,JVV VV
69 2/15/2009 916 67 182 48 1,099 15 54,583 33
70 3/15/2009 916 67 179 47 1,096 14 53,666.67
71 4/15/2009 916 67 176 46 1,093 12 52,750 00
72 5/15/2009 916 67 173 44 1,090 11 51,833 33
73 6/15/2009 916 67 170 43 1,087 09 50,916 67
74 7/15/2009 916 67 167 41 1,084.08 50,000 00
75 8/15/2009 1,000 00 164 40 1,164.40 49,000 00
76 9/15/2009 1,000 00 161 11 1,161 11 48,000 00
77 10/15/2009 1,000 00 157 82 1,157 82 47,000 00
78 11/15/2009 1,000 00 154.54 1,154.54 46,000 00
79 12/15/2009 1,000 00 151.25 1,151.25 45,000 00
80 1/15/2010 1,000 00 147.96 1,147 96 44,000 00
81 2/15/2010 1,000 00 144 67 1,144 67 43,000.00
82 3/15/2010 1,000 00 141 38 1,141.38 42,000.00
83 4/15/2010 1,000 00 138.10 1,138 10 41,000 00
84 5/15/2010 1,000 00 134 81 1,134.81 40,000 00
85 6/15/2010 1,000 00 131 52 1,131.52 39,000.00
86 7/15/2010 1,000 00 128 23 1,128.23 38,000.00
87 8/15/2010 1,000 00 124 94 1,124.94 37,000 00
88 9/15/2010 1,000,00 121 66 1,121 66 36,000 00
89 10/51/2010 1,000 00 118 37 1,118.37 35,000.00
90 11/15/2010 1,000 00 115.08 1,115.08 34,000.00
91 12/15/2010 1,000 00 111.79 1,111 79 33,000 00
92 1/15/2011 1,000 00 108.50 1,108.50 32,000 00
93 2/15/2011 1,000 00 105 22 1,105.22 31,000.00
Promissory Note Page 12
•
94 3/15/2011
95 4/15/2011
96 5/15/2011
97 6/15/2011
98 7/15/2011
99 8/15/2011
100 9/15/2011
101 10/15/2011
102 11/15/2011
103 12/15/2011
104 1/15/2012
105 2/15/2012
106 3/15/2012
107 4/15/2012
108 5/15/2012
109 6/15/2012
110 7/15/2012
111 8/15/2012
112 9/15/2012
113 10/15/2012
114 11/15/2012
115 12/15/2012
116 1/15/2013
117 2/15/2013
118 3/15/2013
119 4/15/2013
120 5/15/2013
121 6/15/2013
122 7/15/2013
Grand Totals
1,000.00
1,000 00
1,000.00
1,000.00
1,000.00
1,083 33
1,083.33
1,083.33
1,083.33
1,083.33
1,083.33
1,083.33
1,083 33
1,083.33
1,083.33
1,083 33
1,083.33
1,083.33
1,083 33
1,083 33
1,083 33
1,083.33
1,083 33
1,083.33
1,083.33
1,083 33
1,083.33
1,083.33
1,083 33
110,000 00
101 93
98 64
95,35
92 06
88.78
85 49
81 93
78 36
74.80
71.24
67.68
64.12
60.55
56.99
53 43
4987
46.31
42.74
39 18
35 62
32 06
28 50
24.93
21 37
17 81
14.25
10.69
7.12
3.56
23,905.95
f:\clients\dab\yakima\ulmar - 102\loan documents \final\promissory note - ver 4a.doc
5/29/2003 3:07 pmdab
Promissory Note Page 13
1,101.93
1,098.64
1,095.35
1,092.06
1,088.-78
1,168.82
1,165.26
1,161.70
1,158.14
1,154.57
1.151.01
1,147.45
1,143.89
1,140.33
1,136.76
1,133.20
1,129.64
1,126.08
1,122.52
1,118.95
1,115.39
1,111.83
1,108.27
1,104.71
1,101.14
1,097 58
1,094.02
1,090.45
1,086.89
133, 905.95
30,000.00
29,000.00
28,000.00
27,000.00
26,000 00
24,916.67
23,833.33
22,750.00
21,666.67
20,583.33
19,500.00
18,416.67
17,333.33
16,250.00
15,166.67
14,083.33
13,000.00
11,916.67
10,833.33
9,750.00
8,666.67
7,583.33
6,500.00
5,416 67
4,333.33
3,250.00
2,166 67
1,083.34
0.00
•
DEMAND NOTE
Yakima, Washinton
$1,100.00
ril f , 2003
FOR VALUE RECEIVED, JULMAR, L.L.C., ("Obligor"), a Washington
limited liability company, promises to pay to THE CITY OF YAKIMA,
WASHINGTON ("City"), a Washington municipal corporation, or order, at Yakima,
�xT L_.,..-..+..... t the time herein, up to the sum of One Thousand One
VV t II111 .j' LVll, at b11G L1111 ri provided 1X') iu1, Y
Hundred Dollars ($1,100.00).
RECITALS
1. Obligor has signed a Loan Agreement, as of the date of this Note, with the
City to borrow One Hundred Ten Thousand Dollars ($110,000.00), which is
funded by the Housing and Urban Development ("HUD"). Obligor and the
City have executed other documents as part of the Loan Agreement ("Loan
Documents").
2. Under section 4.2 of the Loan Agreement, City can choose, in its own
discretion, to waive the requirement that the Obligor must set aside proceeds
from the Loan to pay the costs associated with a public offering of the HUD
Loan to the City.
3. City chooses to waive the above requirement and instead have Obligor give a
demand note to pay the costs associated with a public offering.
AGREEMENT
NOW, in consideration of the Recitals and the covenants, conditions,
representations, and warranties contained here, the parties agree as follows:
1. Obligor shall pay to City One Thousand One Hundred and no/100 Dollars
($1,100.00) in cash or equivalent within ten business days after City makes a
written demand under this Note. These funds shall be used solely for the costs
described in section 4.2 of the Loan Agreement.
2. City may only make a demand on this Note when HUD, or its agents, sell the
City Note in a public offering, as described in the Loan Documents.
3. Both parties intend that this Note be non-negotiable.
4. Demand, protest, and notice of demand and protest are hereby waived, and the
Obligor, to the extent authorized by law hereby waives any and all exemption
Demand Note Page 1
•
DEPOSIT ACCOUNT CONTROL AGREEMENT
THIS Deposit Account Control Agreement (as supplemented or amended from
time to time, and including all documents and terms incorporated herein by reference,
the "Agreement"), dated as of Jun / ,9 , 2003, is entered into by and
between JULMAR, L.L.C., a Washington limited liability company, hereinafter called
"Obligor", THE CITY OF YAKIMA, a Washington municipal corporation, hereinafter
called "City" or "the Pity", and JP1\11nROAN CSI ASE BAND, a New York banking
corporation, hereinafter called "Custodian.
RECITALS
Tele par ties enter into this Agreeuient upon the following facts and
circumstances:
A. City has entered into an agreement with the United States Department
of Housing and Urban Development ("HUD") for a Four Million Dollar ($4,000,000.00)
loan to capitalize the Yakima Commercial Development Loan Fund ("HUD Contract").
The City and Custodian have entered into the Indenture of Trust and Custodial
Agreement, whereby Custodian will manage the flow of funds from HUD to City in
order to disburse these funds to various borrowers, including Obligor, through loans
by the City ("Junior Loans") and from the Obligor to the City to HUD in order to repay
the Junior Loans.
B. Obligor and City have entered into a Loan Agreement and Promissory
Note, whereby Obligor is borrowing One Hundred and Ten Thousand ($110,000.00)
from the City's Yakima Commercial Development Loan Fund.
C. Obligor's obligations under this Agreement and the other Loan
Documents are secured in part by Obligor's assignment of any interest it has in the
accounts with Custodian that are used to repay this loan ("Deposit Accounts").
D. The parties intend that this Agreement give the City control over any
interest Obligor may have in the Deposit Accounts, as set forth in RCW 62A.9A-314
and 62A.9A-104.
Deposit Account Control Agreement Page 1
•
AGREEMENT
1. City's Security Interest in Deposit Account. In order to secure Obligor's debt to
City pursuant to the collateral security arrangements between Obligor and City,
Obligor has assigned and granted to City a security interest in and lien upon the
Deposit Account, as well as any and all proceeds thereof, whether now or
hereafter existing ("Deposit Account Collateral").
2. Obligor's realings with Deposit . not
1n pr L`en
items drawn on or otherwise to withdraw or direct the disposition of funds from
the Deposit Account.
City' Right + (-live -elusive Tnstr'�ntions Qs to Tleposit Account City shall be
C.).
City's 1U1�11U to V11 V G 11111.11tO1 V V 1. U1V11U (A •.J UL 1. tJ v.JLU l.l.V .All U. tJ1 t,J ,Jlla Nl+
title for off this Agreement, +,. Custodi instructions to the
entitled, l.11.1G U, IUl purposes Ul this UU give Custodian. ills U1 .u.uiuilo as to the
withdrawal or disposition of any funds from time to time deposited to the
Deposit Account, or as to any other matters relating to the Deposit Account or
any of the Deposit Account Collateral, without Obligor's further consent.
Custodian agrees to comply with any such request from City without any further
consent from Obligor. Custodian is fully entitled to rely upon such instructions
from City even if such instructions are contrary to any instructions or demands
that Obhgut may give to Custodian.
4. Choice of Law and Venue. This Agreement shall be governed by the laws of the
state of Washington, without regard to any conflict of law provisions. Venue for
any action related to this Agreement shall be in Yakima County, Washington.
5. Entire Agreement; Amendments. This Agreement and the documents, laws and
regulations incorporated by reference herein constitute the entire agreement of the
parties and supercede any prior agreements or understandings, whether written or
oral. No amendment, modification, or termination of any provisions of this
Agreement shall be effective unless it is in writing and signed by a duly authorized
officer of City, Obligor, and Custodian, and no such writing shall be construed to
modify, waive, or affect the terms of this Agreement except to the extent that such
document expressly so provides.
6. Construction. The Agreement shall be construed to conform to the requirements of
the HUD Contract and applicable federal laws and regulations.
IN WITNESS WHEREOF, Obligor, City, and Custodian have executed this
Agreement as of the date first written above by and through their duly authorized
representatives.
Deposit Account Control Agreement Page 2
•
DEMAND NOTE
Yakima, Washin ton
$1,100.00
374
,100.00
74n f / , 2003
FOR VALUE RECEIVED, JULMAR, L.L.C., ("Obligor"), a Washington
limited liability company, promises to pay to THE CITY OF YAKIMA,
WASHINGTON ("City"), a Washington municipal corporation, or order, at Yakima,
'Washington, __ + + +l +,, 1, ro;,, to the gum of (Inc, Thousand One
VV ashington, au 411G time proviucu uei. �. up
Hundred Dollars ($1,100.00).
RECITALS
1. Obligor has signed a Loan Agreement, as of the date of this Note, with the
City to borrow One Hundred Ten Thousand Dollars ($110,000.00), which is
funded by the Housing and Urban Development ("HUD"). Obligor and the
City have executed other documents as part of the Loan Agreement ("Loan
Documents").
2. Under section 4.2 of the Loan Agreement, City can choose, in its own
discretion, to waive the requirement that the Obligor must set aside proceeds
from the Loan to pay the costs associated with a public offering of the HUD
Loan to the City.
3. City chooses to waive the above requirement and instead have Obligor give a
demand note to pay the costs associated with a public offering.
AGREEMENT
NOW, in consideration of the Recitals and the covenants, conditions,
representations, and warranties contained here, the parties agree as follows:
1. Obligor shall pay to City One Thousand One Hundred and no/100 Dollars
($1,100.00) in cash or equivalent within ten business days after City makes a
written demand under this Note. These funds shall be used solely for the costs
described in section 4.2 of the Loan Agreement.
2. City may only make a demand on this Note when HUD, or its agents, sell the
City Note in a public offering, as described in the Loan Documents.
3. Both parties intend that this Note be non-negotiable.
4. Demand, protest, and notice of demand and protest are hereby waived, and the
Obligor, to the extent authorized by law hereby waives any and all exemption
Demand Note Page 1
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.
5. 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,
Julmar, L.L.C.
'i r1 i 1 it i1 '
BY\
/ 1
It : 1\.-\
STATE OF WASHINGTON )
ss:
County of Yakima
/
I certify that I know or have satisfactory evidence that I -`-'-'1/--(:-/L-1/ 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 i�l//f,,���c_ of JULTIIAR, L.L.C., a
n
Washington hmfted liability company, to be the free and voluntary act of such party
for the uses and pur•oses mentioned in the instrument.
DATED:
2003.
NOTARY PUBLIC in and for the
State of Washin�
Residing at:
My appointm
on /
rnt expires:
CITY OF VAVTMA
By:
R. A. Zais, Jr., City lVlanager
f:\clients\dab\yakima\fulmar - 102\loan documents \final\demand note - ver 4a.doc
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Demand Note
Page 2
•
CPI'Y:
THE CITY OF YAKIMA, a Washington municipal corporation
By:
Print ame: R. A. Zais, Jr.
City Mana er
,4,1044/mi
OBLIGOR:
Julmar, L.L.C., a Washington limited liability company
By:
CJS
Y
Prim lathe: i etZ 1 1/ i A Au c. 1
Title:
CUSTODIAN:
JPMorgan Chase Bank, a New York banking corporation
By:
Print Name:
Title:
f:\clients\dab\yakima\julmar - 102\loan documents\final\bank control agmt.doc
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Deposit Account Control Agreement Page 3