HomeMy WebLinkAboutR-2003-042 Trail Wagons, Inc. (Gary & Mary Lukehart) Yakima Commercial Development LoanRESOLUTION NO. R-2003-42
A RESOLUTION to approve the loan application and enter into a loan with Trail
Wagons, Inc. to loan up to $3,000,000 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, Trail Wagons, Inc., as an existing recreational vehicle business
located in a low income area, has submitted an application for a loan from the
Commercial Development Loan Fund, with the funds to be used to purchase vehicle
chassis and re -tool its manufacturing equipment for two new models as well as
increase its working capital; and
WHEREAS, the City and the National Development Council have reviewed
Trail Wagon's application and corresponding collateral and guaranties for payment;
and
WHEREAS, the City and the National Development Council have
determined that Trail Wagon'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 Trail Wagons, Inc. the sum of $3,000,000
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, a personal Guaranty signed by Gary Lukehart
and Mary Lukehart, and a Deed of Trust given by Gateway Center
Associates, L.L.C. These agreements are in the form as attached in
Exhibit 1, Exhibit 2, and Exhibit 3.
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
Promissory Note, and any other agreement associated with this loan with
Trail Wagons, Inc. •
ADOPTED BY THE CITY COUNCIL THIS 18th day of March, 2003.
ATTEST:
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City Clerk
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LOAN AGREEMENT
between
TRAIL WAGONS, INC.
and
THE CITY OF YAKIMA
- .200 3 -V
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
December j 2003, is entered into by and between TRAIL WAGONS, INC., ("Obligor"), a
Washington corporation, hereinafter called "Obligor" and THE CITY OF YAKIMA, a
Washington municipal corporation, hereinafter called "City" or "the City." This Agreement
supercedes and fully replaces the Loan Agreement between the Obligor and City, entered into on
March 24, 2003.
RECITALS
This Agreement is entered into upon the basis of the following facts and circumstances:
A. Obligor is a company that manufactures recreation vehicles. Obligor has requested a
loan from the City in the amount of $475,722.00 for funds to be used for working capital, to acquire
vehicle chassis, and to retool for its two new models of motor homes (the "Loan"). The Obligor's
use of the funds is to be made pursuant to this Agreement. Obligor paying off bridge loans used to
start acquiring vehicle chassis and retooling for its two new models of motor homes, as well as
current and future working capital needs, are to be funded with proceeds of the Loan (defined in
Section 1.1 below) to be made pursuant to this Agreement, and is referred to herein collectively as
the "Project."
B. City has applied for and received a commitment from the United States Department
of Housing and Urban Development ("HUD") to guarantee a non-recourse note or notes (as
supplemented or amended from time to time, and together with any replacements thereof issued by
the City and guaranteed by HUD pursuant to the HUD Contract described below, the "City Note")
to be issued by City to fund the Project, in accordance with Section 108 of the Housing and
Community Development Act of 1974, as amended (such Act and the federal regulations
promulgated under it are called the "Act"). The City Note is the subject of a Contract for Loan
Guarantee Assistance between the City and HUD (as supplemented or amended from time to time,
the "HUD Contract") and certain Letter Agreements for Section 108 Guarantee Program Custodial
Account (as supplemented or amended from time to time, the "Letter Agreements") among the
City, HUD and JPMorgan Chase Bank (hereinafter referred to, with any successors under such
agreement or successor agreement, as "Custodian"). City has also entered into an Indenture of
Trust and Custodial Agreement with the Custodian (as supplemented or amended from time to
time, together with any substitute in accordance with Section 7.2 below, the "Custodial
Agreement"), which provides for, among other things, the Custodian to hold certain security for the
City Note on behalf of HUD and for the establishment and management of certain accounts
pursuant to the HUD Contract and Letter Agreements. The HUD Contract is entered into pursuant
to an application submitted to HUD by the City dated November 1.4, 2002, a copy of which Obligor
has received and reviewed (as supplemented or amended from time to time, the "Application").
The Application, HUD Contract, Letter Agreements and Custodial Agreement are incorporated
herein by this reference. Unless the context otherwise provides, capitalized terms used herein and
Loan Agreement
Page 1
not otherwise defined shall have the meanings assigned to them in the HUD Contract or City Note,
as applicable.
C. The Department of Community and Economic Development ("DCED") is
responsible within The City of Yakima for making, subject to City Council approval, loans of funds
obtained from HUD by pledges of Community Development Block Grant ("CDBG") funds to be
made available to the City by HUD, pursuant to the Act. Unless the City otherwise notifies Obligor
in writing, the DCED shall be responsible for performance of the obligations of the City under this
Agreement and the other Loan Documents, and for oversight of performance of such agreements by
Obligor, and references hereinafter made to the City shall be deemed to mean the City, acting
through DCED.
D. The Loan shall be evidenced by this Agreement and by Obligor's Promissory Note
("Obligor Note") in the form attached hereto as Attachment A and hereby incorporated by
reference, and together with Obligor's other obligations under the Loan Documents. The Obligor
Note, this Agreement, and any other documents or instruments executed by Obligor in favor of City
pursuant hereto, are collectively referred to herein as the "Loan Documents". Where the context so
requires, to the extent that the Loan Documents provide that Obligor's obligations or duties are
determined by reference to any terms or provisions of documents incorporated by reference in any
of the Loan Documents, any reference to the "Loan Documents" shall include such terms or
provisions.
E. The Obligor's obligations under this Agreement and the other Loan Documents
shall be further secured by the assignment of certain additional collateral as required by HUD and
security interests in certain Reserves.
F. Obligor's obligations under this Agreement and the other Loan Documents shall be
unconditionally guaranteed under a Guaranty (defined in Section 1.4(b) of this Agreement),
executed by the Guarantor and delivered to the City as a material inducement to the City's
agreement to make the Loan in accordance with this Agreement. Obligor's obligations under this
Agreement and the other Loan _ Documents shall_ also be secured by two Deeds of Trust,
substantially in the form of Attachments Band C hereto, (as supplemented or amended from time to
time in accordance with this Agreement, the "Deed of Trust") given by Chinook Business Park
LLC ("Chinook Business Park") on property located in Yakima, Washington ("Property"). A full
legal description of the properties is in Attachment D. The Guaranty and the Deeds of Trust shall
be dated on or about the date hereof.
NOTICE: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT,
ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
NOW, THEREFORE, in consideration of the foregoing Recitals and the covenants,
conditions, representations and warranties contained herein, the parties hereto agree as follows:
Loan Agreement Page 2
ARTICLE I — THE LOAN
1.1 The Loan. In reliance upon Obligor's representations and warranties, and subject to
the terms and conditions contained in this Agreement and the other Loan Documents (including
without limitation, the HUD Contract, the Letter Agreements, and the Custodial Agreement), the
City hereby agrees to cause funds to be advanced to Obligor through the Custodian (which
advances collectively shall constitute the "Loan") in a maximum aggregate principal amount of
Four Hundred Seventy -Five Thousand Seven Hundred Twenty -Two Dollars
($475,722.00) 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 pay off bridge loans
used to acquire vehicle chassis, to retool for its two new models of motor homes, and for any
current or future working capital needs.
1.3 Loan Documentation; Interest.
(a) . Loan Documentation. The Loan shall be evidenced by this Agreement and
by the Obligor Note, and together with Obligor's other obligations under the Loan Documents,
shall be secured by the Guaranty, substantially in the form of Attachment E and the Deeds of Trust,
substantially in the form of Attachments B and C hereto. The principal of and interest on this Loan
shall be due and payable in accordance with the termq 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 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.
Loan Agreement Page 3
Obligor shall pay interest to City in accordance with the provisions of Paragraph 4.4 (b), below.
Obligor shall make all payments on behalf of City to the Custodian, as provided in the Loan
Documents.
(c) Consent to Conversion. So long as no default shall have occurred under this
Agreement and the other Loan Documents which has not been cured or waived in accordance with
the terms hereof and thereof, the City shall not request or consent to conversion of the interest rate
on the City Note to a fixed rate or rates, without the prior written consent of the Obligor. However,
Obligor acknowledges and agrees that under the HUD Contract, HUD will have the unilateral right
(with or without notice to or consent of the City and/or Obligor) to fix the interest payable on the
City Note.
1.4 Security.
(a) Personal Guaranty and Deed of Trust. The obligations of Obligor under the
Loan Documents at all times shall be secured by an unconditional guarantee of payment and
performance (as supplemented or amended from time to time, the "Guaranty") from Gary Lukehart
and Mary Lukehart, husband and wife, ("Guarantor"), substantially in the form of Attachment E
hereto and fully incorporated herein. The Guarantor will also cause 1) Chinook Business Park,
LLC to execute two Deeds of Trust on the Property as additional security for the Loan. The
Property is more particularly described on Attachment D and fully incorporated herein.
(b) Reserve Accounts. Obligor's obligations under the Loan Documents also
shall be secured by all funds and investments in all of the accounts now or hereafter established
under the Loan Documents, including without limitation, the Custodial Agreement, and specifically
including without limitation, the Debt Service Reserve Account and the Loan Repayment Account
(all accounts collectively referred to herein as the "Reserve Accounts"). Obligor hereby pledges to
the City, and grants the City a security interest in, all right, title and interest of Obligor in and to the
funds and investments now or hereafter in the Reserve Accounts, and all earnings thereon and
proceeds thereof (the "Collateral Assignments"). This Loan Agreement shall also constitute a
security agreement under RCW 62A.9A. Obligor and City will execute a Deposit Account Control
Agreement, substantially in the form of Attachment F hereto and fully incorporated herein.
Obligor agrees that such funds and other assets shall constitute "cash collateral" as described in the
United States Bankruptcy Code. Obligor shall promptly take such actions as shall be reasonably
requested by the City or Custodian, and pay all fees and costs reasonably required in order to
perfect and continue perfection as a first priority lien and security interest, so long as the Loan
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
Loan Agreement Page 4
City's directions to so apply any or all such funds and assets and to liquidate investments for such
purpose.
(c) Rights of City With Respect to Security. Obligor irrevocably agrees that, to
the full extent permitted by applicable law, the City may realize upon any security for the Loan
either before, concurrently with, or after either (1) any action to realize upon any other form of
security (including without limitation the Deeds of Trust 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 Four Thousand Seven Hundred
Fifty -Seven and 22/100 Dollars ($4,757.22), representing one percent (1.0%) of the amount of the
Loan, payable directly to City upon and from the first disbursement of Loan funds hereunder. This
fee is in addition to Obligor's duty to pay City's costs and fees pursuant to Section 1.6 of this
Agreement
1.6 Obligor's Payment of Costs and Fees. Obligor shall pay to City or at City's
direction, as and when due, all other costs and fees of whatever nature incurred by City (whether or
not with recourse to the City) in connection with the Loan, including without limitation, fees and
costs incurred by the City pursuant to the HUD Contract and City Note (to be allocated on a pro
rata basis according to the total principal amount outstanding on the Obligor Note and the City
Note at the time fees or costs are incurred from time to time). The costs and fees payable by
Obligor shall include, without limitation, (i) any and all charges and costs billed by the Fiscal Agent
in respect of the City Note under the Amended and Restated Master Fiscal Agency Agreement
among HUD and The Chase Manhattan Bank (now known as JP Morgan Chase Bank) as Fiscal
Agent dated as of May 17, 2000, (ii) on and after the Conversion Date, any charges and costs in
respect of the City Note billed by the trustee under that _certain Trust Agreement by and between
HUD and JP Morgan Chase Bank, as Trustee, dated as of of January 1, 1995, as now and hereafter
amended and supplemented, and under any other trust agreement or similar instrument that may be
executed by HUD in connection with a public offering conducted with respect to notes guaranteed
by HUD under the Section 108 program (each such offering is referred to herein as a "Public
Offering") that involves the City Note, (iii) fees and costs of the Custodian in connection with the
Custodial Agreement and Letter Agreements; (iv) fees and costs of the City's outside counsel and
the Custodian's outside counsel; title insurance and escrow fees and costs in connection with
Closing. Obligor shall also pay the following: the fees described in Section 1.5; fees and costs of
the Custodian, if any, other than the initial set-up fee; and any fees or costs of the City's Outside
Counsel or Custodian's Outside Counsel incurred after the date of closing, including without
limitation, in connection with a Public Offering, and as may be incurred in case of breach or failure
to perform by Obligor or in case of any litigation arising in connection with this Agreement.
1.7 City Funds Not Obligated. The Loan will be made only from non -City funds that
the Custodian receives under the HUD Contract and City Note, and interest subsidy payments in
Loan Agreement Page 5
accordance with Section 4.4(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 right, in its
discretion, to declare all or any part of the principal balance owing on the Loan immediately due
and payable in the event that:
(a) HUD or any court of competent jurisdiction shall determine that the Loan or
the issuance of the City Note must be terminated, canceled, or rescinded for failure to comply with
the Act or other applicable law, or that for any reason any City Note cannot be issued or cannot be
guaranteed by HUD; or
(b) HUD shall notify the City that any or all of the City Note cannot be included
in the pool of notes for purposes of a scheduled Public Offering for any reason, and that HUD or
the holder of the City Note is not willing to allow the interim terms of the City Note to remain in
effect pending a later public offering, provided, that unless otherwise required by HUD or by the
effect of a court order, Obligor shall be allowed a period of ninety (90) days after notice to Obligor
thereof to seek to have such determination reversed or rescinded, or the effect thereof stayed, prior
to acceleration of all or any part of the principal balance. If any such stay is obtained, then the City
shall have the right to accelerate all or part of the principal balance immediately upon the lifting or
termination of such stay.
ARTICLE II — OBLIGOR'S, GUARANTOR'S, CHINOOK BUSINESS PARK'S
PROPERTIES', REPRESENTATIONS AND WARRANTIES
In order to induce City to make the Loan and enter into the HUD Contract, Obligor,
Guarantor and Chinook Business Park, LLC represent and warrant 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
Loan Agreement Page 6
on the Loan remain outstanding. These representations and warranties shall survive the execution,
delivery, and performance of the Loan Documents but shall terminate upon the satisfaction of all of
the obligations of Obligor under this Agreement and the other Loan Documents, subject to revival
after such satisfaction if any amount paid under the Loan Documents is recaptured in bankruptcy or
similar proceedings.
2.1 Organization of Obligor; Authority to Enter into Agreement. Obligor is a for profit
corporation, duly organized and validly existing pursuant to the laws of the State of Washington.
Obligor has the right and power to undertake the Project, and Obligor has full power and authority
to enter into this Agreement, to borrow money as contemplated herein, and to execute and perform
the provisions of the Loan Documents. The execution, delivery, and performance of this
Agreement and the other Loan Documents have been duly authorized by all necessary corporate
action, and no other action of Obligor or any other party is required for the execution, delivery, and
performance of this Agreement and the other Loan Documents. This Agreement and the other
Loan Documents constitute valid and binding obligations of Obligor, each enforceable in
accordance with their respective terms.
2.2 Nondiscrimination. During the performance of this Loan Agreement, neither
Obligor nor any party contracting with Obligor who would be paid with Loan funds under this
Loan Agreement shall discriminate on the basis of race, color, sex, religion, national origin, creed,
marital status, sexual orientation, gender identity, age, or the presence of any sensory, mental or
physical handicap in employment or application for employment or in the administration or
delivery of services or any other benefits under this Loan Agreement. The Obligor shall comply
fully with all applicable federal, state and local laws, ordinances, executive orders and regulations
that prohibit such discrimination. These laws include, but are not limited to, Chapter 49.60 of the
Revised Code of Washington, and Titles VI and VII of the Civil Rights Act of 1964.
2.3 No Litigation. There are no actions, suits, or proceedings pending, or to the
knowledge of Obligor threatened against or affecting Obligor in any court of law or in equity, or
before or by any governmental or municipal authority.
2.4 Guaranty. When Guarantor executes the Guaranty, it will not cause the Guarantor
to violate any existing contract to which they are a party.
2.5 Other Entities' Authority. Chinook Business Park, LLC is authorized to execute the
Deeds of Trust Hypothecation and the execution of such will not cause Chinook Business Park,
LLC to violate any existing contract to which it is a party.
2.6 Title. Chinook Business Park, LLC is the owner in fee simple absolute of the
Property, as listed below from Attachment D. The Property shall be subject to no liens or
encumbrances except:
(a) Parcel 1— 607 East R. St. (parcels 191307-34004, 191318-21001)
Loan Agreement Page 7
(1) The Deed of Trust in favor of City securing the Loan;
(b) Parcel 2 —.716 North 40t Ave. (parcel 181315-43013)
(1) The Deed of Trust in favor of City securing the Loan;
2.7 Covenants, Zoning, and Codes and Permits. Except as disclosed to the City in
writing, as of the date of Closing, the Property and its current and intended uses are in compliance
in all material respects with, and Chinook Business Park, LLC's Properties 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. Chinook
Business Park, LLC has not received notice from any regulatory body or agency of any actual or
alleged noncompliance with any applicable law, regulation, code, ordinance or permit affecting the
Property.
2.8 Compliance With Documents. Obligor is and will remain in full compliance with
all of the telins and conditions of this Agreement and the other Loan Documents, and any and all
other material agreements, instruments or other documents affecting the Property, and no
occurrence has or shall have occurred and be continuing, which, with the passage of time or the
giving of notice, or both, would constitute a default under any of the foregoing.
2.9 Taxes Are Paid. Obligor, Guarantor, and Chinook Business Park LLC have filed all
material tax returns which are required and have paid or made provision for the payment prior to
the last day on which payment may be made without interest or penalty of all taxes which have or
may become due pursuant to said returns or pursuant to any assessments levied against the Obligor,
Guarantor, Chinook Business Park, LLC or its personal or real property by any taxing agency, fed-
eral, state or local, and Obligor, Guarantor, and Chinook Business Park, LLC have withheld any
paid over to proper authorities all withholding taxes required by law. No due or overdue tax
liability or lien has been asserted by the Internal Revenue Service or other taxing agency, federal,
state or local, and the Obligor, Guarantor, and Chinook Business Park, LLC know of no basis for
any such deficiency assessment or lien.
ARTICLE III — CONDITIONS PRECEDENT TO LOAN CLOSING
The City's obligation to perform its duties under this Agreement, including without
limitation causing disbursement of any funds, shall be subject to the full and complete satisfaction
of the following conditions precedent:
3.1 Documents. City shall have received fully executed originals of each of the
following, each of which shall have been duly authorized, executed (and acknowledged where
appropriate) and delivered by the parties thereto, and shall be in form 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; Chinook Business Park, LLC's two Deeds of Trust;
Loan Agreement Page 8
the Deposit Account Control Agreement; the Assignment; the Demand Note; 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 Chinook Business Park, LLC and the persons signing on behalf
of the respective party have the capacity and authority to execute and deliver Loan Documents on
behalf of Obligor, including, but not limited to, a copy of said party's charter, bylaws, or other
operating agreement, and appropriate resolutions authorizing the transactions contemplated hereby,
all as certified by an officer of Obligor as true, complete, and in full force and effect. City shall
have received a Certificate of said party, executed by said party's designated person(s), in a form
and content acceptable to the City.
3.3 Insurance. The Obligor, Chinook Business Park, LLC shall have provided to the
City evidence of insurancecoverage for Obligor's operations, for Chinook Business Park, LLC's
Property.
3.4 Title Insurance; Other Confirmation of No Liens. Obligor shall have caused to be
furnished to the City, at Obligor's expense, from Stewart Title Guaranty Company ("Title
Company"), an ALTA 1970 Form Extended Coverage lender's policy of title insurance in the
amount of the maximum principal of the Loan, showing City as an insured mortgagee, that fee title
to the Property is vested in Chinook Business Park, LLC and that the Deeds of Trust are a valid
first lien upon Chinook Business Park, LLC's interest in the Property, subject only to such
encumbrances and exceptions as may be explicitly permitted by the Loan Documents, including
Section 2.4 of this Agreement,. and any others that may be acceptable to City in its sole discretion.
The title policy shall be Attachment G and fully incorporated herein. The title policy shall be in
form, and shall include the endorsements, satisfactory to the City, shall limit exceptions for taxes
limited to those not yet due and payable, and shall show no additional exceptions or encumbrances,
whether senior or junior to the Deed of Trust. Finally, the City shall have received such other
evidence reasonably requested and satisfactory to the City that all security instruments, guaranties,
and assignments contemplated by this Agreement are in full force and effect and have the priority
contemplated hereby.
3.5 Legal Opinions.
(a) City shall have received a legal opinion, containing reasonable and
customary exclusions and qualifications, and in form and content reasonably satisfactory to City
and the City's outside counsel, from Obligor's counsel, who shall be satisfactory to City, to the
effect that:
(1) Obligor and Chinook Business Park, LLC are duly organized and
validly existing and in good standing as a for profit corporation or limited liability company in the
State of Washington, and have full power and authority to execute and deliver the Loan Documents
and to perform all of their obligations;
(2) The execution and delivery of the Loan Documents, Guaranty,
Deeds of Trust, and Assignment by Obligor, Guarantor and Chinook Business Park, LLC do not,
Loan Agreement Page 9
and the transactions contemplated by the Loan Documents will not, violate any laws or regulations
applicable to the respective parties and will not conflict with and will not cause a default under (i)
any provisions of the respective parties' charter, bylaws or other governing documents, or (ii) any
other material agreements, instruments, judgments, decrees, orders or undertakings known to such
counsel after reasonable inquiry by which the respective parties are bound or to which Chinook
Business Park, LLC's Property is subject; and
(3) The Loan Documents have been duly authorized, executed, and
delivered by Obligor, Guarantor and Chinook Business Park, LLC, and constitute the legal, valid,
binding obligations of such party, enforceable in accordance with their terms.
(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 HUD or any
federal, state or county regulatory agency requires further assurances as it may reasonably request
or which.
(b) Obligor shall be in full compliance and shall not be in breach or default
under this Agreement or any of the other Loan Documents; provided, however, that City may, in its
discretion, elect to make advances notwithstanding the existence of Obligor's noncompliance or
default, and any advance so; made shall be deemed to have been made pursuant to this Agreement
and secured by the Deeds of Trust.
(c) Neither Chinook Business Park, LLC's Property nor any part thereof shall
have been materially damaged, destroyed, condemned, or threatened with condemnation.
(d) The representations and warranties of Obligor, Guarantor and Chinook
Business Park, LLC 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 and Subsequent Disbursement.
(a) Conditioned upon receipt of proceeds of the City Note and satisfaction of all
other applicable conditions to Loan disbursements under this Agreement, Loan funds in the amount
Loan Agreement Page 10
of Four Hundred Seventy-five Thousand, Seven Hundred and Twenty-two Dollars ($475,722.00)
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, and other fees and costs due and payable at Closing pursuant to Section 1.6 of this
Agreement.
4.2 Costs Related to Public Offering.
(a) On the Closing Date, the amount of Three Thousand Five Hundred Sixty -Seven
and 92/100 Dollars ($3,567.92), out of the City Loan proceeds, shall be held in the Guaranteed
Loan Funds Account.established by the Custodian under the Letter Agreements ("Guaranteed Loan
Funds Account"), for the purpose of paying the costs to be incurred in connection with the Public
Offering, including without limitation trustee's fees and underwriters' fees and costs. Such funds
shall nonetheless be considered Outstanding under the Obligor Note. After the Conversion Date,
upon payment of all of such fees and costs allocable to the City Note, any remaining amount in the
Guaranteed Loan Funds Account shall be transferred to the Loan Repayment Account maintained
by the Custodian under the Letter Agreements ("Loan Repayment Account"), and the next
deposit(s) required to the Debt Service Reserve Account in respect of principal under Section 4.4
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 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 H 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 the appropriate 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.
Loan Agreement Page 11
(a) Monthly Deposits. Commencing in the first month disbursement of
principal of the City Note in respect of the Obligor Note is to be made, Obligor shall make monthly
installment payments to the Custodian for deposit in an account maintained by the Custodian for
the accumulation of funds for payments on the Obligor Note (the "Debt Service Reserve Account,"
which term shall include any related Debt Service Reserve Investment Account established under
the Custodial Agreement and Letter Agreements), in order that the Custodian shall have sufficient
funds to make transfers to the Loan Repayment Account in payment of installments on the Obligor
Note as they come due (each such due date being an "Obligor Payment Date"). Funds in the Loan
Repayment Account shall be used to make payments on the City Note as they come due. Each
such monthly payment shall be due and payable, in immediately available funds, on the "Deposit
Day," which shall be the fifteenth (15th) day of the month, or if such day is not a Business Day,
then on the previous Business Day; subject to adjustment in respect of any Conversion Date.
Subject to the provisions of Section 4.4(b) hereof, each such payment shall be in an amount equal
to the actual interest accruing on the Obligor Note during the corresponding month, at the rate or
blended rate, as the case may be, then in effect (the "Interest Component"), plus one -twelfth
(1/12th) of the total principal coming due on the Obligor Note on the next Obligor Payment Date
(the "Principal Component"); provided that the monthly payment obligation in respect of the
Interest Component shall be adjusted ratably in any month the Loan is not outstanding for the entire
month; and provided further, that the monthly payment obligation in respect of the Principal
Component shall be adjusted ratably during any period that fewer than twelve (12) Deposit Days
are scheduled to occur prior to the corresponding Obligor Payment Date in respect of principal of
the Obligor Note. Except as provided in Section 4.4(b) below, Obligor shall not be entitled to any
reductions in, or credits against, deposits to the Debt Service Reserve Account based upon interest
or earnings credited to the Debt Service Reserve Account (including any Debt Service Reserve
Investment Account).
(b) Interest Stabilization Payments and Subsidy. Obligor and the City intend,
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:
(i) If the rate or blended rate, as the case may be, of interest on the
Loan and Obligor Note during any month is less than four percent (4.0%) per annum as
calculated under Paragraph 1.3(b), above, Obligor shall pay to the Custodian on the
corresponding Deposit Day, for deposit into the Debt Service Reserve Account, an amount equal
to the interest payment calculated at four percent (4.0%) per annum, notwithstanding that the
actual interest accruing on the Obligor Note during such period may be less.
(ii) If the actual rate of interest on the Loan and Obligor Note during
any month as calculated under Paragraph 1.3(b), above, exceeds four percent (4%) per annum,
unless the Custodian shall have delivered to Obligor and City a Shortfall Notice (defined in this
Section, below), Obligor shall pay to the Custodian on the corresponding Deposit Day, interest at
a rate equal to four percent (4%) per annum on the then -Outstanding principal balance of the
Loan and Obligor Note, and the Custodian shall look to other funds on deposit in the Debt
Service Reserve Account and the EDI Grant Loan Payment Reserve Account to pay the balance
Loan Agreement Page 12
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 shallnot withdraw from the EDI Grant Loan Payment Reserve Account for
such purposes, an aggregate amount greater than Thirty -One Thousand Seven Hundred Fourteen
and 80/100 Dollars ($31,714.80).
(iii) If not less than five (5) Business Days prior to any Deposit Day the
Custodian determines that there shall or may be insufficient funds available in the Debt Service
Reserve Account and EDI Grant Loan Payment Reserve Account to pay the full amount of
principal and interest, as calculated under Paragraph 1.3(b), above, to become due on the City
Note on the next date such interest is required to be paid, taking into account the expected
payment of interest at a deemed rate of four percent (4.0%) per annum required to be made by
Obligor on such Deposit Day and each subsequent Deposit Day scheduled to occur prior to the
corresponding Obligor Payment Date, the Custodian shall promptly deliver written notice (each,
a "Shortfall Notice") to that effect to the Obligor (with a copy to the City). Upon receipt of any
such Shortfall Notice, and in any event, on or before the corresponding Deposit Day, the Obligor
shall pay to the Custodian, for deposit into the Debt Service Reserve Account, the full amount of
interest actually accruing on the Loan and Obligor Note during the corresponding month as
calculated under Paragraph 1.3(b), above. Obligor acknowledges and agrees that interest
stabilization payments made by Obligor in accordance with this Section 4.4(b) and deposited in
the Debt Service Reserve Account, together with the earnings thereon, if any, shall be held,
without right of withdrawal or reimbursement.
(c) Transfers Authorized; Crediting Payments on Obligor Note. The Custodian
is hereby irrevocably authorized to transfer funds from the Debt Service Reserve Account to the
Loan 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
Loan Agreement Page 13
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 theamount 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.
Notwithstanding the foregoing, City or Custodian shall have the right, each in its respective
discretion, to apply funds available in the Debt Service Reserve Account to fees, costs,
reimbursements, and late charges then due under the Loan Documents prior to application of funds
against the Obligor Note.
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,
Chinook Business Park, and Trail Wagons/Chinook Properties covenant and agree that:
(a) Obligor shall promptly pay. principal, interest, and premium (if any)
pursuant to the Obligor Note as and when the same becomes due and payable, and make any and all
other payments and depositsrequired by the Loan Documents;
(b) Obligor shall preserve and keep in full force and effect its existence as a for
profit corporation under the laws of the State of Washington;
(c) Chinook Business Park, LLC shall maintain, preserve, and keep its'
Property in good condition, ordinary wear and tear excepted, and from time to time make all
necessary repairs, renewals, and replacements.
5.2 Reserved
5.3 Compliance with Laws. Run its business in compliance with all material respects
with all applicable laws, ordinances, rules and regulations and executive orders of federal, state,
county or municipal governments or agencies now in force or which may be enacted hereafter.
Loan Agreement Page 14
5.4 Inspections. Upon written notification by City to Obligor, City and its
representatives shall have the right to inspect and copy Obligor's books and records relating to its
business. Without limiting the foregoing, Obligor shall permit City to examine and copy all books,
records and other papers relating to Obligor's use of the Loan proceeds and to Obligor's
compliance with this Agreement, the Act ,and applicable provisions of federal, state, and local laws,
ordinances, rules and regulations.
5.5 Notify City of Litigation or Complaints. Obligor shall promptly notify City in
writing of all litigation or threatened litigation involving its business or the Property, and any other
litigation that reasonably could have a material adverse affect on the financial condition of Obligor,
and of all complaints or charges made by any governmental authority affecting Obligor.
5.6 Federal Regulations. Obligor acknowledges that the Loan is to be made with funds
received by the Custodian under the Section 108 program of the Act and that such funds are subject
to CDBG program regulations of HUD, and certain other federal laws and regulations.
Accordingly, Obligor agrees, represents, and warrants that Obligor shall comply with all applicable
requirements under HUD regulations for the CDBG program and under other laws and regulations
applicable to loans of such federal funds, including without limitation:
(a) Benefit to Low- and Moderate Income Individuals. Obligor's Project shall
benefit . low- and moderate -income individuals (as defined by HUD) to the maximum extent
feasible. The Project shall result in the creation of at least one hundred and fifty new permanent
jobs (full-time equivalent). Obligor shall provide quarterly reports containing data required by the
City on the jobs created and the demographics of persons initially interviewed and hired for such
jobs, as set forth in Attachments I and J and fully incorporated herein. Obligor shall provide the
reports on January 15, April 15, July 15, and October 15 and shall continue to provide the reports
until one hundred and fifty full time equivalent permanent jobs are created (e.g. if two half time
positions are created, that counts for one full time equivalent position). If Obligor fails to submit
the report within fifteen days after the due date, the City may, in its sole discretion, increase the
interest rate on the Loan to the greater of the variable interest rate in effect (as set forth in section
1.3(b) above) or 12%. The City must give Obligor notice of its intent to increase the interest rate
under this section and ten days to cure before increasing the interest rate. Once the City .increases
the interest rate under this section, it shall remain at that level until Obligor submits its reports.
City retains the right to the increased interest paid and Obligor cannot offset the increased interest
against any future payments.
(b) Nondiscrimination. No person shall on the grounds of race, color,
national origin, religion, or sex be excluded from participation in, be denied the benefits of, or be
subjected to discrimination under any program or activity funded in whole or in part with CDBG
funds. Obligor shall comply fully with all requirements of Title VI of the Civil Rights Act of 1964,
42 U.S.C. 2000d et seq., which provides that no person in the United States shall on the ground of
race, color, or national origin, be excluded from participation in, denied the benefits of, or be
subjected to discrimination under any program or activity receiving Federal financial assistance;
and with Department of Housing and Urban Development ("HUD") regulations implementing such
requirements, 24 C.F.R. Part 1.
Loan Agreement Page 15
Obligor shall comply with all applicable requirements and prohibitions of the
following: 24 C.F.R. Section 570.602, implementing the nondiscrimination requirements of Section
109 of the Act; HUD regulations under the Rehabilitation Act of 1973, as amended, 24 C.F.R. Part
8; HUD Regulations under the Americans with Disabilities Act; and HUD regulations under the
Age Discrimination Act of 1975, 42 U.S.C. Section 6101 et seq., at 24 C.F.R. Part 146.
No otherwise qualified handicapped individual in the United States shall, solely
because of handicap, be excluded from the participation in, be denied the benefits, or be subjected
to discrimination under any program or activity receiving Federal financial assistance.
(c) Conflict of Interest. Obligor shall ensure compliance with the provisions of
24 CFR Section 570.611, which provide generally that no officer, agent, employee, consultant, or
elected or appointed official of The City of Yakima or of any subrecipient receiving CDBG funds
who exercises or has exercised any functions or responsibilities with respect to activities assisted by
CDBG funds or who is in a position to participate in a decision-making process or gain inside
information with respect to these activities, shall obtain any financial interest or benefit from, or
have any financial interest in, the activity funded under this Loan Agreement or any contract or
subcontract or agreement with respect thereto or the proceeds thereof, for himself or herself or those
with whom he or she has business or immediate family ties; nor shall (s)he for one year after
completion of his or her tenure with the City or such subrecipient obtain or have any such financial
interest or benefit. Obligor shall incorporate in all such contracts or subcontracts a provision
prohibiting any conflict of interest prohibited by this subsection.
(d) Lobbying. Obligor hereby certifies and agrees as follows, in accordance
with 31 U.S.C. Section 1352, to the best of its knowledge and belief:
(1) No Federal appropriated funds have been paid or will be paid, by or
on behalf of Obligor, to any person for influencing or attempting to influence an officer or
employee of any agency, a member of Congress, an officer or employee of Congress, or an
employee of a member of Congress in connection with the awarding of any Federal contract, the
making of any Federal loan, the entering into of any cooperative agreement, and the extension,
continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or
cooperative agreement;
(2) If any funds other than Federal appropriated funds have been paid or
will be paid to any person for influencing or attempting to influence an officer or employee of any
agency, a member of Congress, an officer or employee of Congress, or an employee of a member of
Congress in connection with this Federal loan, it will complete and submit Standard Form
"Disclosure Form to Report Lobbying," in accordance with its instructions; and
(3) It will require that the language of this Section be included in the
award documents for subawards at all tiers (including subcontracts, subgrants, and contracts under
grants, loans and cooperative agreements) and that all subrecipients shall certify and disclose
accordingly.
Loan Agreement Page 16
This certification is a material representation of fact upon which reliance was placed
when this transaction was made or entered into. Submission of this certification is made a
prerequisite for making or entering into this transaction by section 1352, title 31, U. S. Code. Any
person who fails to file the required certification shall be subject to a civil penalty of not less than
$10,000 and not more than $100,000 for each such failure.
(e) Economic Opportunities for Low- and Very Low -Income Persons. Obligor
shall comply, and cause all contractors and subcontractors to comply, with any and all applicable
provisions of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12
U.S.C. 1701u, the purpose of which is to ensure that employment and other economic opportunities
generated by Federal financial assistance for housing and community development programs shall,
to the greatest extent feasible, be directed toward low- and very low-income persons, particularly
those who are, recipients of government assistance for housing. Obligor shall comply, and shall
require all contractors and subcontractors to comply, with all applicable provisions of regulations
issued pursuant thereto by the Secretary of HUD and set forth in 24 C.F.R. Part 135, and with all
applicable rules and orders of HUD issued thereunder.
(f) Records. Obligor shall maintain and make available to the City and HUD
all records reasonably required to demonstrate compliance with all of the requirements of this
Agreement, for at least four (4) years after full repayment of the Loan.
(g) Disclosures. Obligor represents, warrants, and agrees that it has provided
to City any and all disclosures required by the HUD Reform Act, 42 U.S.C. Section 3545, and
regulations thereunder, 24 CFR Part 4; that it will provide timely updated disclosures to City to
the extent required by such act and regulations; and that all such disclosures are and shall be
complete and accurate.
(h) Prior Actions. Obligor represents and warrants that in all actions related to
the Project to date Obligor has complied with all requirements referred to in this Section 5.6.
(1) Indemnity. Obligor shall indemnify and hold harmless the City from any
loss, damage, expense, claim or demand resulting from Obligor's failure to comply with any federal
requirement to be complied with pursuant to this Agreement or failure to maintain adequate records
to demonstrate such compliance. Obligor shall indemnify and hold harmless the City from any
loss of value for Chinook Business Park, LLC's Property, including but not limited to any
environmental or hazardous waste issue. This provision shall survive expiration of this Agreement.
5.7 Reports. Obligor shall deliver to the City reports and information as City may
require for purposes of monitoring and evaluating the performance of the Obligor.
5.8 Liens or Claims of Liens. Obligor shall cause the Chinook Business Park, LLC to
keep the Property free from liens and encumbrances of all kinds, superior or inferior to the Deed of
Trust, except for those permitted pursuant to Section 2.4 above and any of the following:
(a) Liens for property taxes on the Property not yet due and payable;
Loan Agreement Page 17
(b) Mortgage
(c) Liens subordinate to the lien of the Deed of Trust, created after the date of
Closing with the prior written consent of the City, which consent shall not be unreasonably
withheld.
If any claims of lien shall be asserted against the Property other than as permitted by this Section,
Obligor, regardless of any action that City may otherwise be authorized to take, shall obtain a
release and satisfaction of such lien claim, bond the lien claim, procure title insurance satisfactory
to City protecting City from any loss relating to such lien claim, or otherwise provide to City
assurances and security satisfactory to City that the lien claim will be paid or satisfied not later than
ten (10) days after a judgment on the lien claim. If such a lien claim is not released or satisfied or a
bond or other security satisfactory to City provided within forty-five (45) days of written request
from City to Obligor, then the failure to do so shall allow the City to declare an Event of Default (as
defined in Section 6.1 below) regardless of whether such lien claim is or is not superior to the Deed
of Trust.
5.9 Political Activity. No portion of the Loan shall be used for any political activity or
to further the election or defeat of any candidate for public office or to influence the approval or
defeat of any ballot issue or legislation.
5.10 Further Actions. Obligor will at any time and from time to time upon request of
City take or cause to be taken any action, execute, acknowledge, deliver or record any further
documents, opinions, or other instruments or obtain such additional insurance as City is required to
do or obtain by HUD or other federal, state or county regulatory agency.
5.11 Payment of Compensation of Custodian. Obligor shall be responsible for and pay
the fees of the Custodian as provided under the Custodial Agreement. The Custodian's acceptance
fee, prorated first annual fee and counsel fees and expenses shall be disbursed to Custodian from
the Guaranteed Loan Funds Account at the time of initial Loan disbursement. The Custodian is
hereby authorized to withdraw from interest and/or investment earnings on the Debt Service
Reserve Account established pursuant to such Custodial Agreement up to the amount of its annual
fee and any other fees and expenses to which it is entitled thereunder, and if such interest and/or
investment earnings are insufficient to pay in full the Custodian's fees and expenses, then upon
Custodian's notice thereof to Obligor, Obligor shall promptly pay the remaining amount of the
Custodian's fees and expenses directly to the Custodian.
5.12 Payment of Other Indebtedness. Obligor shall timely pay the principal, interest and
all other amounts due on any other indebtedness or liability now or hereafter owing by the Obligor
to any person and secured by the Property; provided that nothing in this Section shall authorize
Obligor to make any payment from any funds or assets pledged to the City hereunder.
5.13 Transfer of Property. Obligor shall not cause or permit Chinook Business Park,
LLC to transfer the Property or any interest of Obligor therein, voluntary or involuntary, without
the advance written consent of the City, except for the creation of liens, encumbrances or leases that
are expressly permitted under the Loan Documents without the City's consent.
Loan Agreement Page 18
ARTICLE VI — DEFAULT AND REMEDIES
6.1 Events of Default. Upon the occurrence of any of the following events and prior to
the complete cure thereof by Obligor in a manner satisfactory to the City, the City shall have the
right to declare an Event of Default hereunder, without notice or demand by City, except as
expressly provided in this Section:
(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);
(c) Any transfer of the Chinook Business Park, LLC's Property or any interest
therein, voluntary or involuntary, contrary to Section 5.13 of this Loan Agreement;
(d) Any failure to comply with the terms of Section 5.8 of this Loan Agreement
(relating to lien claims) within the time period permitted by such Section;
(e) Any breach or nonperformance by Obligor of any provision of any of the
Loan Documents not included within any of Subsections (a) -(d) above that is not cured within sixty
(60) days after notice to Obligor of such breach or nonperformance, or such longer cure period as
may be permitted under the specific terms of the Loan Document; provided, however, that unless
HUD shall otherwise require, if (1) such breach or nonperformance is susceptible to cure but cannot
reasonably be cured within such cure period, (2) Obligor shall commence to cure such breach or
nonperformance within such cure period and shall thereafter diligently and expeditiously proceed to
cure the same, and (3) Obligor shall inform the City in writing of the status of the cure at the
expiration of such cure period and every thirty days thereafter, then such cure period shall be
extended for such time as is reasonably necessary for Obligor in the exercise of due diligence to
cure such breach or nonperformance;
(f) A petition in bankruptcy or for reorganization or for an arrangement under
any bankruptcy or insolvency law or for a receiver or trustee for any of Obligor's property is filed
by Obligor, or is filed against Obligor and is not dismissed within ninety (90) days, or if Obligor
makes an assignment for the benefit of creditors or becomes insolvent or unable to pay its debts as
they mature or any attachment or execution is levied against a substantial portion of the property of
Obligor and is not discharged within ninety (90) days, or if any law or court order shall require the
City, Custodian or any other party to refund or otherwise relinquish any portion of any amount paid
under the Obligor Note or this Agreement as a preference or for any other reason except refund of
duplicative payment;
(g) Any representation, warranty or disclosure made to City by Obligor, or
contained in any information submitted by Obligor to City or to any government agency in
Loan Agreement Page 19
connection with the Loan or the Property, proves to be materially false or misleading as of the date
when made or reaffirmed, whether or not such representation or disclosure appears in this
Agreement.
(h) Any default by Guarantor or Chinook Business Park or Gary Lukehart 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 Deed of Trust, judicially or nonjudicially;
(5 Apply any or all funds in the Reserve Accounts to amounts due
under the Loan Documents, whether by reason of acceleration or otherwise, and cause investments
in such accounts to be liquidated for such purpose; and
(6) Seek judicial appointment of a receiver.
(b) All remedies of City provided for herein and in any other Loan Documents
are cumulative and shall be in addition to all other rights and remedies provided by law. The
exercise of any right or remedy by City hereunder shall not in any way constitute a cure or waiver
of default hereunder or under any other Loan Document or invalidate any act done pursuant to any
notice of default, or prejudice City in the exercise of any of its rights hereunder or under any other
Loan Documents unless, in the exercise of said rights, City realizes all amounts owed to it under
such Loan Documents.
6.4 No Default Prior to Declaration. No default or Event of Default shall exist under
this Agreement or the Obligor Note until the same shall have been declared by the City or other
party authorized to make such declaration; provided, that failure to declare, or delay in declaring, a
default hereunder shall not constitute a waiver of any rights or remedies or excuse any failure by
Obligor to strictly comply with its obligations under all of the Loan Documents.
Loan Agreement Page 20
ARTICLE VII — MISCELLANEOUS
7.1 No Waiver. No waiver of any noncompliance or breach by Obligor hereunder shall
be implied from any failure by City to take action on account of such noncompliance or breach, and
no express waiver shall affect any breach or noncompliance other than as specified in the waiver.
Any waiver shall be operative only for the time and to the extent therein stated. Waivers of any
covenant, term, or condition contained herein shall not be construed as a waiver of any subsequent
breach of the same covenant, term or condition. The consent or approval by City to, or of, any act
by Obligor requiring further consent or approval shall not be deemed to waive or render
unnecessary the consent or approval to, or of, any subsequent similar act.
7.2 Successors and Assigns; Delegation to Custodian; Changes in Custodian and
Custodial Agreement. This Agreement is made and entered into for the sole protection and benefit
of City, HUD, and Obligor, their successors and assigns, and no other person or persons shall have
any right of action hereunder. The terms hereof shall inure to the benefit of the successors and
assigns of the parties hereto; provided, however, that the Obligor's interest hereunder cannot be
assigned or otherwise transferred without the prior written consent of City. Obligor acknowledges
and agrees that City may assign to HUD or any custodian or trustee for HUD any or all of City's
rights under this Agreement and any of the Loan Documents and may direct that any payment or
performance be provided directly to HUD or such custodian or trustee, whether or not the Obligor
Note or this Agreement have been assigned. Obligor agrees that City may delegate to the
Custodian the right to make demands and give directions on behalf of City under the Loan
Documents, but that the scope of any such delegation shall be strictly limited to the terms of a
written instrument duly signed on behalf of the City. Obligor further acknowledges that the
Custodial Agreement may be modified or terminated, or a substitute Custodial Agreement
executed, or a successor Custodian appointed, in each case without the consent of Obligor so long
as the obligations of Obligor are not increased and the rights of the Obligor under the Loan
Documents are not adversely affected in any material respect. Except for minor modifications to
the Custodial Agreement not affecting Obligor, City agrees to give reasonable advance notice to the
Obligor of any action as described in the preceding sentence, and agrees in each case to provide a
copy of any modification or substitute Custodial Agreement to Obligor within fifteen (15) days
after the execution thereof.
7.3 No Defense Based on City Regulatory Actions. Obligor understands that (a) the
operations of Obligor are subject to numerous laws, regulations, ordinances and permits, including
those of City and other governmental bodies, and (b) the modification, interpretation, application,
or revocation of such laws, regulations, rules or permits could adversely affect economic return to
Obligor. Obligor has conducted its own investigation and relied on the advice of its own counsel
and experts as to all such matters in connection with Obligor's expanding its product line. Obligor
acknowledges that by entering into this Agreement the City does not make, and that the City
expressly disclaims, any representation or assurance whatever as to the availability, issuance or
continuation of any permits, approvals, or interpretations of any kind that may be required or
desired by Obligor or any other party in connection with its operations. Obligor agrees that
notwithstanding any regulatory action or omission of City affecting Obligor, no defense, offset or
reduction of liability shall be available to Obligor, at law or in equity.
Loan Agreement Page 21
7.4 Time. Time is of the essence of all provisions of the Loan Documents.
7.5 Entire Agreement Amendments. This Agreement, the other Loan Documents, and
the documents, laws and regulations incorporated by reference herein constitute the entire
agreement of the parties hereto with respect to the Loan and supersede any prior agreements or
understandings, written or oral, with respect to the Loan. Obligor is not relying upon any promises,
representations or understandings, written or oral, in entering into the Loan Documents, other than
as expressly set forth in the Loan Documents. The obligations of Obligor under the Loan
Documents are not conditioned upon, and shall not be affected by, any other agreement,
understanding, performance or nonperformance by the City or any other party, and in any
proceeding to enforce any of Obligor's obligations under the Loan Documents, Obligor shall not be
entitled to assert, by way 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 contexts in which the words are used in this
Agreement indicate that such is the intent, words in the singular number shall include the plural and
vice -versa. References to any one gender shall also include the other gender if applicable under the
circumstances.
7.8 Validity. In the event that any provision of this Agreement shall be held to be
invalid, the same shall, not affect in any respect whatsoever .the validity of.the_remainder of. this
Agreement.
7.9 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Washington, and The City of Yakima, except to the extent federal law
applies.
7.10 Survival. All agreements, representations and warranties made herein and in the
Obligor Note shall survive the execution and delivery of this Agreement and of the Loan
Documents and the making of the Loan hereunder and continue in full force and effect until the
obligations of Obligor hereunder and the indebtedness evidenced by the Obligor Note have been
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.
Loan Agreement Page 22
7.11 Venue and Forum. In the event that any legal action should be filed by either party
against the other, the venue and forum for such action shall be the Superior Court of the State of
Washington for the County of Yakima.
7.12 Attorney's Fees. In the event either party shall bring an action to enforce the terms
and conditions of this Agreement, the prevailing party shall be entitled to recover all of its costs and
expenses, including, but not limited to, reasonable attorney's fees as determined by the court.
7.13 Duplicate Originals; Counterparts. This Agreement shall be executed in duplicate
and each of the parties hereto shall receive an original. Each original shall constitute one and the
same agreement. This Agreement may be executed in counterparts, and each such counterpart shall
be deemed to be an original.
7.14 Construction. The Loan Documents shall be construed so as to conform to the
requirements of the HUD Contract and applicable federal laws and regulations. The Loan
Documents are the product of negotiation between the parties and therefore shall not be construed
strictly in favor of, or against, either party except as may be specifically provided in the Loan
Documents with respect to particular provisions thereof.
7.15 Notices. Any notice, demand or request required hereunder shall be given in
writing at the addresses set forth below by personal service, by facsimile transmission, or by first
class mail. The addresses may be changed by notice to the other party given in the same manner as
provided above. Notices personally served or sent be facsimile shall be effective when actually
received during normal business hours, and otherwise on the following Business Day. If notice is
given by mail, it shall be deemed received on the earlier of: (i) if by certified mail, the date of
receipt as shown on the return receipt, or (ii) three (3) days after its deposit in the U.S. mail.
If to Obligor:
If to City:
Trail Wagons, Inc..
607 East R St.
Yakima, Washington 98901
Attn: Gary Lukehart
fax: 509-574-3891
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 and Chinook Business Park and Trail
Wagons/Chinook Properties have executed this Agreement as of the date first written above by and
through their duly authorized representatives; Chinook Business Park and Trail Wagons/Chinook
Properties sign this Agreement solely as pertains to their covenants, representations, and warranties
specifically contained herein.
Loan Agreement Page 23
CITY:
THE CITY OF YAKIMA, a
Washington municipal corporation
By:
R. A. Zais, Jr., City Manager
OBLIGOR:
TRAIL WAGONS, INC., a
Washington corporation
G Lukehart, President
CHINOOK BUSINESS PARK, LLC, a
Was . ' : on limited liability company:
Gam+ ukehart
By:
Title:
Loan Agreement Page 24
FIRST AMENDED VARIABLE/FIXED RATE PROMISSORY NOTE
Yakima, Washington $2,395,000.00
January 5 , 2004
FOR VALUE RECEIVED, TRAIL WAGONS, INC., ("Obligor"), a Washington
corporation, and THE CITY OF YAKIMA, WASHINGTON ("Payee"), a Washington
municipal corporation, hereby amend and modify that Variable/Fixed Rate
Promissory Note dated July 23 2003 executed in thee principal amount of
$2,395,000.00, as follows:
Paragraph 8. of the Note dated July 23, 2003 is amended to
provide that the "Due Date" for final payment under the Note,
iii%riidiiig all priiiclpar,''riruciCSt, icca, vaso -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.
To the extent not specifically amended hereby, the terms and conditions of the Note
dated July 23, 2003 shall remain in full force and effect.
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.
STATE OF WASHINGTON
ss:
County of Yakima
TRAIL WAGONS, INC.
Gary Lukehart, President
I certify that I know or have satisfactory evidence that GARY LUKEHART is.
the person who appeared before me, and said person acknowledged that he signed
this instrument, on oath, stated that he was authorized to execute the instrument
and acknowledged. it as President of TRAIL WAGONS, INC., a Washington
Promissory Note
Page 1
corporation, to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.
DATED: January , 2004.
NOTAR P ' BLIC in and for the
State of Was ington
Residing at:
My appointm xpires: 9
ASSIGNMENT AND ACKNOWLEDGMENT:
The Payee hereby assigns to JPMorgan Chase Bank, as Trustee, with full
right of assignment for the benefit of HUD under that certain Indenture of Trust
and Custodial Agreement dated as of , 2003 and the
Master Agreement, all of its rights under the foregoing Amended Promissory Note.
Dated this day of January, 2004.
CITY OF YAKIMA
By:
R. A. Zais, Jr., City Manager
Obligor hereby acknowledges the foregoing assignment and agrees to
recognize and render all performance to the Trustee and HUD as assignee of the
Promissory Note dated July 23; 2003, as amended.
TRAI
W. hi
WAGONS, INC., a
on corporation
By:
Promissory Note
Gary Lu': ehart, President
Page 2
corporation, to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.
DATED: January , 2004.
NOTARY PUBLIC in and for the
State of «Tashington
Residing at:
My appointment expires:
ASSIGNMENT AND ACKNOWLEDGMENT:
The Payee hereby assigns to JPMorgan Chase Bank, as Trustee, with full
right of assignment for the benefit of HUD under at certain Indenture of Trust
and Custodial Agreement dated as of c 2.9' , 2003 and the
Master Agreement, all of its rights under the foregoing Amended Promissory Note.
Pir
Dated this.6 day of January, 2004.
CITY OF YAKIMA
R. A. Zais' Jr. City Manager
er
Obligor hereby acknowledges the foregoing assignment and agrees to
recognize and render all performance to the Trustee and HUD as assignee of the
Promissory Note dated July 23, 2003, as amended.
TRAIL WAGONS, INC., a
Washington corporation
By:
Gary Lukehart, President
Promissory Note Page 2
LIST OF ATTACHMENTS
Attachment A Form of Obligor Note
Attachment B Deed of Trust — Boise -Cascade Property
Attachment C Deed of Trust - Kern Property
Attachment D Legal Description
Attachment E Guaranty
Attachment F Deposit Account Control Agreement
Attachment G Title Insurance for Property
Attachment H Demand Note
Attachment I Job Creation Summary Report
Attachment J Income Verification Form
Loan Agreement Page 25
Attachment A
See attached Obligor Note
Loan Agreement Page 26
FIRST AMENDED VARIABLE/FIXED RATE PROMISSORY NOTE
Yakima, Washington
January, 2004
FOR VALUE RECEIVED, TRAIL WAGONS, INC., ("Obligor"), a Washington
corporation, and THE CITY OF YAKIMA, WASHINGTON ("Payee"), a Washington
municipal corporation, hereby amends and modify that Variable/Fixed Rate
Promissory Note dated December 24, 2003 executed in the principal amount of
$475,729.00 as follows:
$475,000.00
1.
The principal amount loaned pursuant to the Loan Agreement
dated December 24, 2003 (as supplemented or amended from
time to time, the "December Loan Agreement"), between the
Obli111.,1: - _+l> D o. Four Hundred Seventy_Fi ��e. Thousand
gor allu line i. ayee-io 1 V...1 i. ua ul.,u w��....,.a ��'
and no/100 Dollars ($475,000.00).
2. The Recitals under the Note dated December 24, 2003 are
amended to provide that 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 $475,000.00 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.
3. Paragraph 8. of the Note dated December 24, 2003 is amended
to provide that the "Due Date" for final payment under the
Note, including 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.
To the extent not specifically amended hereby, the terms and conditions of the Note
dated December 24, 2003 shall remain in full force and effect.
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.
TR4L TAGONS INC.
B
Promissory Note
Gary • kehart, President
Page 1
STATE OF WASHINGTON )
) ss:
County of Yakima )
I certify that I know or have satisfactory evidence that GARY LUKEHART is
the person who appeared before me, and said person acknowledged that he signed
this instrument, on oath, stated that he was authorized to execute the instrument
and acknowledged it as President TR AIT WAGONa INr a Washington
V1111V Y11V lAU of VL al..• 1��.J, INC., � gtVn
corporation, to be the free and voluntary act of such party for the uses 'and purposes
mentioned in the instrument.
DATED: January , 2004.
NOTARY ' : LIC in and for the
State of Was ington
Residing at: e�
My appointor t xpires: 9-;0•Z ,V-(90 7
ASSIGNMENT AND ACKNOWLEDGMENT:
The Payee hereby assigns to JPMorgan Chase Bank, as Trustee, with full
right of assignment for the benefit of HUD under that certain Indenture of Trust
and Custodial Agreement dated as of , 2003 and the
Master Agreement, all of its rights under the foregoing Amended Promissory Note.
Dated this __ day of January, 2004.
CITY OF YAKIMA
By:
R. A. Zais, Jr., City Manager
Promissory Note Page 2
STATE OF WASHINGTON )
) ss:
County of Yakima )
I certify that I know or have satisfactory evidence that GARY LUKEHART is
the person who appeared before me, and said person acknowledged that he signed
this instrument, on. oath, stated that he was authorized to execute the instrument
and acknowledged it a7President of TRAIL WAGONS, INC., a Washington
corporation, to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.
DATED: January , 2004.
NOTARY PUBLIC in and for the
State of Washington
Residing at:
My appointment expires:
ASSIGNMENT AND ACKNOWLEDGMENT:
The Payee hereby assigns to JPMorgan Chase Bank, as Trustee, with full
right of assignment for the benefit of HU under at certain Indenture of Trust
and Custodial Agreement dated as of Q2411 , 2003 and the
Master Agreement, all of its rights under the foregoing Amended Promissory Note.
Dated this 3 day of January, 2004.
CITY OF YAKIMA
By��?
R. A. Zais, Jr., City Manager
Promissory Note Page 2
Obligor hereby acknowledges the foregoing assignment and agrees to
recognize and render all performance to the Trustee and HUD as assignee of the
Promissory Note dated December 24, 2003, as amended.
TRAIL WAGONS, INC., a
Washi gton corporation
\ ,
By:.11\nlialk A _411120
GarlR
ikehart, President
Promissory Note Page 3
VARIABLE/FIXED RATE PROMISSORY NOTE
Yakima, Washington $475,722.00
December on 2003
FOR VALUE RECEIVED, TRAIL WAGONS, INC., ("Obligor"), a Washington
corporation, promises to pay to THE CITY OF YAKIMA, WASHINGTON ("Payee"),
a Washington municipal corporation, or order, at Yakima, Washington, at the time
or times provided herein, the sum of Four Hundred .Seventy -Five Thousand
Seven
Hundred Twenty -Two Dollars ($475,722.00), with interest as provided herein.
RECITALS
This Note is given to evidence a loan (the "Loan") made pursuant to the Loan
Agreement dated December �g2003 (as supplemented or amended from time to
time, the "December 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 $475,722.00 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 December 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 December 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 is
Promissory Note Page 1
made in full. Initially, such interest shall accrue at a variable interest rate on the
unpaid principal balance of each Advance. The initial variable interest rate for each
Advance hereunder will be set on the date of such Advance and will be equal to
twenty basis points (0.2 %) above the Applicable LIBO Rate (as hereinafter defined)
and thereafter will be adjusted monthly on the first day of each month (each, a
"Reset Date") to a variable interest rate equal to twenty basis points (0.2 %) above
the Applicable LIBO Rate (such interest rate, as reset from time to time, the
"Standard Note 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
' �..� L L L 77 1 7 7 7 the
interest rate hereunder will be equal to the variable interest rate on the
City Note set pursuant to the terms of Appendix A to the City Note. If the Fiscal
Agent does not receive notice of either a Negotiated Special Interest Rate or Holder
Determined Special Interest Rate (as defined in Appendix A to the City Note) from
the Secretary or Holder, respectively, by the times specified in Appendix A to the
City Note, then the Standard -Note Rate shall apply for the period to which such
Negotiated Special interest Rate or Holder Determined Special Interest Rate would
otherwise apply.
1.1 "LIBO Rate" for any given Business Day means, except in the case of
manifest error, the interest rate per annum published on that day in the Eastern
Edition of The Wall Street Journal or any successor publication ("WSJ"), published
by Dow Jones & Company, Inc., in the section titled "Money Rates" (or any
successor section) and opposite the caption "London Interbank Offered Rates
(LIBOR) -- three months" (or any successor caption). If such rate does not appear in
WSJ on a given Business Day, for each interest period, the LIBO Rate shall be the
interest rate, converted to a bond -equivalent yield basis, for deposits in U.S. dollars
for three months which appears on Telerate Page 3750 or such other page as may
replace Page 3750 on that service or such other service or services as may be
nominated by the British Bankers' Association for the purpose of displaying such
rate (together, "Telerate Page 3750") as of 11:00 a.m., London time, on the day (the
"Determination Date") that is two London Banking Days preceding the relevant
Reset Date or Advance. If such rate does not appear on Telerate Page 3750 on such
Determination Date, such rate shall be obtained from the Reuters Screen ISDA
Page as of 11:00 a.m., London time, on such -Determination Date. If, in turn, such
rate does not appear on the Reuters Screen ISDA Page on such Determination Date,
the offered quotation from each of four reference banks (expressed as a percentage
per annum) as of approximately 11:00 a.m., London time, on such Determination
Date for deposits in U.S. dollars to prime banks on the London interbank market for
a 3 -month period, commencing on the Reset Date or date of such Advance, shall be
obtained. If at least two such quotations are provided, the LIBO Rate for such Reset
Date or date of such Advance will be the arithmetic mean of the quotations, rounded
to five decimal places. If fewer than two such quotations are provided as requested,
the LIBO Rate for that Determination Date shall be the rate for the most recent day
preceding such Determination Date for which the LIBO Rate shall have been
Promissory Note Page 2
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 "Applicable LIBO 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.
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
Promissory Note Page 3
the City Note is due and payable. Such interest is due and payable quarterly in
arrears on February 1,, May 1, August 1, and November 1, and such principal is due
as set out on Exhibit 1 attached hereto and incorporated herein by this reference.
Payments of principal of and interest on this Note shall be made to the Loan
Repayment Account.
5.1 In order to ensure timely payment of such principal and interest,
commencing in the first month disbursement of principal of the City Note in respect
of this Note is to be made, Obligor shall make monthly installment payments to the
Custodian for deposit in an account maintained by the Custodian for the
accumulation offunds 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 due and payable, in immediately available funds, on
the "Deposit Day," which shall be the fifteen (i5th) day of -the month, or if such day
is not a Business Day, then on the previous Business Day; provided that the Deposit
Day in respect of any Conversion Date shall be the day which is two Business Days
prior to the Conversion Date.
5.2 Subject to the provisions of the next section, each such payment shall
be in an amount equal to the actual interest accruing on this Note during the
corresponding month (the "Interest Component"), at the rate or blended rate, as the
case may be, then in effect, plus one -twelfth (1/12th) of the total principal coming
due on this Note on the next scheduled principal payment date ("Principal
Component"); provided, that the monthly payment obligation in respect of the
Interest Component shall be adjusted ratably during any month the Loan is not
outstanding for the entire month; and provided further, that the Principal
Component shall be adjusted ratably during any period that fewer than twelve (12)
Deposit Days are scheduled to occur prior to the corresponding Obligor Payment
Date (as such term is defined in the next paragraph of this Note) in respect of a
principal payment on this Note.
5.3 Except as provided in the next section, Obligor shall not be entitled to
any reductions in, or credits against, deposits required to be made to the Debt
Service Reserve Account based upon interest or earnings credited to the Debt
Service Reserve Account (including any 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 December Loan Agreement and this Note. The Custodian is further
Promissory Note Page 4
irrevocably authorized by Obligor to liquidate investments in the Debt Service
Reserve Account, in the Custodian's discretion, and without liability for any loss on
any such liquidation, for the purposes described in this paragraph.
6. Interest Subsidy. Interest Stabilization Payments and Subsidy. Obligor and
the City intend, notwithstanding the actual rate of interest payable on the Loan and
Obligor Note from time to time, that to the extent feasible, Obligor's monthly
interest payment obligations shall be based upon a deemed rate of interest equal to
four percent (4.0%) per annum. The actual interest payable by Obligor shall be
determined as follows:
6.1 If the rate or blended rate, as the case may be, of interest on the Loan
and Obligor Note during any month is less than four percent (4.0%) per annum as
calculated under Paragraph 1.3(b), above, Obligor shall pay to the Custodian on the
corresponding Deposit Day, for deposit into the Debt Service Reserve Account, an
amount equal to the interest payment calculated at four percent (4.0%) per annum,
notwithstanding that the actual interest accruing on the Obligor Note during such
period may be less.
6.2 If the actual rate of interest on the Loan and Obligor Note during any
month as calculated under Paragraph 1.3(b), above, exceeds four percent (4%) per
annum, unless the Custodian shall have delivered to Obligor and City a Shortfall
Notice (defined in this Section, below), Obligor shall pay to the Custodian on the
corresponding Deposit Day, interest at a rate equal to four percent (4%) per annum
on the then -Outstanding principal balance of the Loan and Obligor Note, and the
Custodian shall look to other funds on deposit in the Debt Service Reserve Account
and the EDI Grant Loan Payment Reserve Account to pay the balance of interest
next scheduled to become due on the City Loan; provided, that the Custodian shall
exhaust funds on deposit in the Debt Service Reserve Account from time to time
prior to making any withdrawals from the EDI Grant Loan Payment Reserve
Account to pay any portion of the Interest Component of any monthly deposit; 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 Thirty -One Thousand Seven Hundred Fourteen Dollars and
80/100 ($31,714.80).
6.3 If not less than five (5) Business Days prior to any Deposit Day the
Custodian determines that there shall or may be insufficient funds available in the
Debt Service Reserve Account and EDI Grant Loan Payment Reserve Account to
pay the full amount of principal and interest, as calculated under Paragraph 1.3(b),
above, to become due on the City Note on the next date such interest is required to
be paid, taking into account the expected payment of interest at a deemed rate of
four percent (4.0%) per annum required to be made by Obligor on such Deposit Day
and each subsequent Deposit Day scheduled to occur prior to the corresponding
Promissory Note Page 5
Obligor Payment Date, the Custodian shall promptly deliver written notice (each, a
"Shortfall Notice") to that effect to the Obligor (with a copy to the City). Upon
receipt of any such Shortfall Notice, and in any event, on or before the
corresponding Deposit Day, the Obligor shall pay to the Custodian, for deposit into
the Debt Service Reserve Account, the full amount of interest actually accruing on
the Loan and Obligor Note during the corresponding month as calculated under
Paragraph 1.3(b), above. Obligor acknowledges and agrees that interest
stabilization payments made by Obligor in accordance with this Section 4.4(b) and
deposited in the Debt Service Reserve Account, together with the earnings thereon,
if_�__ L_77 be held, 7 7 7 of 7 i i ,
any, shall held, without right withdrawal or reimbursement.
7. Late Charge. If any deposit required to be made into the Debt Service Reserve
Account is not received within ten (10) days after the date when such deposit is due, in
addition to additional interest required to be paid in accordance with this Note,
Obligor agrees to pay a"late charge equal to five percent (5:0%) of the amount past
due, as compensation to Payee for the staff time and resources required to handle such
delinquencies, and not as a penalty. Such late charges shall not be credited to the
Debt Service Reserve Account or Loan Repayment Account, but shall be retained by
Payee. Late charges under this Section are in addition to, and not in substitution for,
the other remedies provided in the Loan Documents.
8. Due Date. Anything herein to the contrary notwithstanding, all principal,
interest, fees, costs and other charges that Obligor is obligated to pay in connection
with this Note and the Loan shall be due and payable, in full, on September 1, 2012.
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 December Loan Agreement and
Master Agreement. This Note is further secured by an Unconditional Guarantees of
even date, executed and delivered by Gary Lukehart and Mary Lukehart, husband
and wife, (the "Guarantor"), the two deeds of trust given by Chinook Business Park,
LLC for property located in Yakima, Washington. All of the above security interests
are perfected, to the extent allowable under Washington law, by recording in the
records of Yakima County, Washington and by filing of financing statements with
the Washington State Department of Licensing or taking possession of the
collateral.
10. Prepayment. The principal hereof and any interest accrued hereon may be
prepaid, provided, however, that any prepayment shall not reduce the principal
payment required at any 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
Promissory Note Page 6
with, the consent of HUD. Any prepayment of the principal hereof shall be
accompanied by all accrued interest thereon to the date of prepayment, and partial
prepayments shall be credited against the Principal Amount last becoming due
hereunder.
10.2 After the Conversion Date, this Note may be prepaid in whole or in
part at any time if the City Note allows, provided Obligor shall give 90 days prior
written notice of its intention to make any prepayment. Any prepayment shall be
applied to the payments last becoming due under this Note. No partial prepayment
shall relieve the Obligor of the obligation to make any future payments due after
the date of any prepayment. Any prepayment shall be in an amount not less than
the amount which is sufficient to defease the portion of the City Note allocable to
this Note or the portion hereof to be prepaid as provided in the Master Agreement,
including the requirement that Principal Amounts under the City Note having the
latest maturity must he defeased before those with shorter maturities. If in the
event of any prepayment Payee incurs any costs, expenses, fees, charges, premiums
or losses, the Obligor shall pay such items upon demand in addition to the principal
and interest due hereunder.
10.3 Any prepayment by Obligor or any third party, or recovery from the
disposition of any collateral, after default shall constitute a prepayment and be
subject to all terms and conditions regarding prepayment.
11. Default. In the event of any default by Obligor in any term or condition of
this Note, the December 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.
Promissory Note : Page 7
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.
TRAIL WAGONS, INC.
r\
By
Gary ukehart, President
STATE OF WASHINGTON )
) ss:
County of Yakima )
I certify that I know or have satisfactory evidence that GARY LUKEHART is
the person who appeared before me, and said person acknowledged that he signed
this instrument, on oath, stated that he was authorized to execute the instrument
and acknowledged it as President of TRAIL WAGONS, INC., a Washington
corporation, to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.
DATED: December At, 2003.
Promissory Note
Y P : LIC in and for the
ate of Washin . n
Residing at:
My appoint.. • nt expires: 4/Z
Page 8
ASSIGNMENT AND ACKNOWLEDGMENT:
The Payee hereby assigns to JPMorgan Chase Bank, as Trustee, with full
right of assignment for the benefit of HD unde that certain Indenture of Trust
and Custodial Agreement dated as of a/ , 2003 and the
Master Agreement, all of its rights under the foregoing Promissory Note.
Dated thiso7y day of December, 2003.
CITY OF fikKI1 Izk
By:
R. A. Zais, Jr., City Manager
Obligor hereby acknowledges the foregoing assignment and agrees to
recognize and render all performance to the Trustee and HUD as assignee of the
Promissory Note.
TRAIL WAGONS, INC., a
Was s i ,._ on corporation
By:
ry Lukehart, President
Promissory Note Page 9
Attachment B
See attached Deed of Trust Hypothecation
Owned by: Chinook Business Park, L.L.C.
Address: 607 East R Street
Yakima, WA 98901
Parcel Nos.: 191307-34404 and 191318-21001
Legal Description: See Attachment D
Loan Agreement Page 27
Return Address:
Donald A. Boyd -
Carlson Boyd & Bailey PLiJC
230 South 2nd St., Suite 202
Yakima, WA 98907
This document is certified to
be a true and correct copy of
original document.
DEED OF TRUST HYPOTHECATION
Grantor:
1. CHINOOK BUSINESS PARK, LLC
Borrower(s):.
1. TRAIL WAGONS, INC.
Beneficiary:
1. THE CITY OF YAKIMA
Trustee:
1. FIDELITY TITLE COMPANY
Legal Description:
1. Portion of the Southeast 14 of the Southwest 1/4 of Section 7, and the
Northeast 1/4 of the Northwest 1/4 of Section 18, all in Township 13
North, Range 19, E.W.M.
2. Full legal description attached hereto as Exhibit A, page 8.
Assessor's Property Tax Parcel Number(s):
191307-34004
191318-21001
***********
THIS DEED OF TRUST ("Deed of Trust") is made on this . day of
December, 2003, by CHINOOK BUSINESS PARK, LLC., Grantor, whose address is
1901 North 4th St., Yakima, WA 98901; FIDELITY TITLE COMPANY; Trustee,
whose address is 406 N. 2nd St., Yakima, WA, 98901, and THE CITY OF YAKIMA,
Beneficiary, whose address is 129 N. 3rd St, Yakima, WA 98901.
1
Recital
Borrower has signed a loan agreement ("Loan Agreement") and promissory
note ("Promissory Note") with the Beneficiary, dated on or about the date hereof.
The Grantor is giving this Deed of Trust in consideration of accommodations made
or to be made by Grantee to Borrower.
WITNESSETH:
Grantor hereby bargains, sells and conveys to Trustee in Trust, with power of
sale, the following described real property in Yakima County, Washington:
See Exhibit A, attached.
which real property is not used principally for agricultural or farming purposes,
together with all the tenements, hereditaments, and appurtenances now or
hereafter thereunto belonging or in any wise appertaining, and the rents, issues
and profits thereof.
This deed is for the purpose of securing performance of the Borrower's Loan
Agreement herein contained, and payment of the sum of Four Hundred Seventy-five
Thousand Seven Hundred and Twenty-two Dollars ($475,722.00) with interest, in
accordance with the terms of a Promissory Note of even date herewith, payable to
Beneficiary, and made by Borrower, and all renewals, modifications and extensions
thereof, and also such further sums as may be advanced or loaned by Beneficiary to
Borrower, or any of their successors or assigns, together with interest thereon at
such rate as shall be agreed upon.
To protect the security of this Deed of Trust, Grantor covenants and agrees:
1. To keep the property in good condition and repair; to permit no waste thereof; to
complete any building, structure or improvement being built or about to be built
thereon; to restore promptly any building, structure or improvement thereon which
may be damaged or destroyed; and to comply with all laws, ordinances, regulations,
covenants, conditions and restrictions affecting the property.
2. To pay before delinquent all lawful taxes and assessments upon the property; to
keepthe property free and clear of all other charges, liens, or encumbrances
impairing the security of this Deed of Trust.
3. To keep all buildings now or hereafter erected on the property described herein
continuously insured against loss by fire or other hazards in an amount not less
than the full insurable value of the property. All policies shall be held by the
2
Beneficiary, and be in such companies as the Beneficiary may approve and have
loss payable to the Beneficiary as its interest may appear and then to the Grantor.
The amount collected under any insurance policy may be applied upon any
indebtedness hereby secured in such order as the Beneficiary shall determine. Such
application by the Beneficiary shall not cause discontinuance of any proceedings to
foreclose this Deed of Trust. In the event of foreclosure, all rights of the Grantor in
insurance policies then in force shall pass to the purchaser at the foreclosure sale.
4. To defend any action or proceeding purporting to affect the security hereof or the
rights or powers of Beneficiary or Trustee, and to pay all costs and expenses,
including cost of title search and attorney's fees in a reasonable amount, in any
such action or proceeding, and in any suit brought by Beneficiary to foreclose this
Deed of Trust.
5. To pay all costs, fees and expenses in connection with this Deed of Trust,
including the expenses of the Trustee incurred in enforcing the obligation secured
hereby and Trustee's and attorney's fees actually incurred, as provided by statute.
6. Should Grantor fail to pay when due any taxes, assessments, insurance
premiums, liens, encumbrances, or other charges against the property hereinabove
described, Beneficiary may pay the same, and the amount so paid, with interest at.
the rate set forth in the note secured hereby, shall be added to and become a part of
the debt secured in this Deed of Trust.
IT IS MUTUALLY AGREED THAT:
1. In the event any portion of the property is taken or damaged in an eminent
domain proceeding, the entire amount of the award or such portion thereof as may
be necessary to fully satisfy the obligation secured hereby, shall be paid to
Beneficiary to be applied; to said obligation.
2. By accepting payment of any sum secured hereby after its due date, Beneficiary
does not waive its right to require prompt payment when due of all other sums so
secured or to declare default for failure to so pay.
3. The Trustee _shall reconvey all or any part of the property covered by this Deed of
Trust to the person entitled thereto, on written request of the Beneficiary, or upon
satisfaction of the obligation secured and written request for reconveyance made by
the Beneficiary or the person entitled thereto.
4. Upon default by Borrower in the payment of any indebtedness secured hereby or
in the performance of any agreement contained herein, all sums secured hereby
shall immediately become due and payable at the option of the Beneficiary. In such
event and upon written request of Beneficiary, Trustee or trustee's authorized
agent, shall sell the trust property, in accordance with the Deed of Trust Act of the
State of Washington, (as amended), at public auction to the highest bidder. Any
3.
person except Trustee may bid at Trustee's sale. Trustee shall apply the proceeds of
the sale as follows: (1) to the expense of the sale, including a reasonable Trustee's
fee and attorney's fee; (2) to the obligation secured by this deed of Trust; (3) the
surplus, if any, shall be distributed .to the persons entitled thereto or shall be
deposited (less clerk's filing fee) with the clerk of the superior court of the county in
which sale takes place.
5. Trustee shall deliver to the purchaser at the sale its deed, without warranty,
which shall convey to the purchaser the interest in the property that Grantor had or
had the power to convey at the time of his execution of this Deed of Trust, and such
as he may have acquired thereafter. Trustee's deed shall recite the facts showing
that the sale was conducted in compliance with all the requirements of law and of
this Deed of Trust, which recital shall be prima facie evidence of such compliance
and conclusive evidence thereof in favor of bona fide purchasers and encumbrancers
for value.
6. The power of sale conferred by this Deed of Trust and by the Deed of Trust Act
for the State of Washington in not an exclusive remedy; Beneficiary may cause this
Deed of Trust to be foreclosed as a mortgage.
7. In the event of the death, incapacity, disability or resignation of Trustee,
Beneficiary shall appoint in writing a successor trustee, and upon the recording of
such appointment in the mortgage records of the county in which this Deed of Trust
is recorded, the successor trustee shall be vested with all powers of the original
trustee. The trustee is not obligated to notify any party hereto of pending sale
under any other Deed of Trust or of any action or proceeding in which Grantor,
Trustee or Beneficiary shall be a party unless such action or proceeding is brought
by the Trustee.
8. This Deed of Trust applies to, inures to the benefit of, and is binding not only on
the parties hereto, but on their heirs, devisees, legatees, administrators, executors,
successors and assigns. The term Beneficiary shall mean the holder and owner of
the note secured hereby, whether or not named as Beneficiary herein.
Chinon Business Park, LLC
STATE OF WASHINGTON )
) ss:
County of Yakima )
I certify that I know or have satisfactory evidence that Gary Lukehart
4
signed this instrument, on oath stated that he was authorized to execute the
instrument and .acknowledge it as the authorized member of Chinook Business
Park, LLC, a Washington limited liability company, to be the free and voluntary act
of such entity for the uses and purposes mentioned in the instrument.
DATED this day of December, 2003.
TARY PUBLIC in . nd for the
tate of
Residing at ,
My commission expires: -6/2..
5
EXHIBIT "A" TO DEED OF TRUST
FROM CHINOOK BUSINESS PARK, LLC TO CITY OF YAKIMA
(BOISE -CASCADE PROPERTY)
That portion of the Southeast 1/4 of the Southwest 14 of Section 7, and the
Northeast 1/4 of the Northwest 14 of Section 18, all in Township 13 North,
Range 19, E.W.M., lying Southwesterly of SR 82 as conveyed to the State of
Washington for highway by instrument recorded February 6, 1959, under.
Auditor's File No. 1757605, described as follows:
Commencing
thence South
feet;
thence North
thence North
thence North
thence North
thence North
thence South
thence South
thence South
thence North
thence North
at the Southwest corner of the Southwest '4 of said Section 7;
88°31'26" East along the South line of said Section 7, 1,833.07
76°50'00" East 118.62 feet to the Point of Beginning;
76°50'00" Eat 37.69 feet;
0°30'00" East 145.77 feet;
21°23'00" East 186.27 feet;
52°48'00" East 109.07 feet;
32°34'00" East 411.96 feet;
49°57'00" West 138.83 feet;
76°23'00" West 152.00 feet;
72°42'00" West 94.00 feet;
54°26'00" West 87.00 feet to the Point of Beginning.
Assessor's Property Tax Property Tax Parcel Number(s):
191307-34004
191318-21001
REQUEST FOR FULL RECONVEYANCE
Do not record. To be used only when note has been paid.
TO: TRUSTEE
The undersigned is the legal owner and holder of the note and all other
indebtedness secured by the within Deed of Trust. Said note, together with all
other indebtedness secured by said Deed of Trust, has been fully paid and satisfied;
and you are hereby requested and directed, on payment to you of any sums owing to
you under the terms of said Deed of Trust, to cancel said note above mentioned, and
all other evidences of indebtedness secured by said Deed of Trust delivered to you
herewith, together with the said Deed of trust, and to reconvey, without warranty,
to the parties designated by the terms of said Deed of Trust, all the estate now held
by you thereunder.
Dated this day of , 20_.
Mail reconveyance to:
F:\CLIENTS\DAB\YAKIMA\Trailwagons\final docs\Deed of Trust hypoth 401 E S St - final.doc
6
Attachment C
See attached Deed of Trust Hypothecation
Owned by: Chinook Business Park,
Address: 716 North 40th Ave.
Yakima, WA 98908
Parcel Nos.: 181315-43013
Legal Description: See Attachment D
Loan Agreement Page 28
Return Address:
Donald A. Boyd
Carlson Boyd & Bailey PT.T.0
230 South 2nd St., Suite 202
Yakima, WA 98907
This document is certified to
be a true and correct copy o f
original document.
DEED OF TRUST HYPOTHECATION
Grantor:
1. CHINOOK BUSINESS PARK, LLC
Borrower(s):
1. TRAIL WAGONS, INC.
Beneficiary:
1. THE CITY OF YAKIMA
Trustee:
1. FIDELITY TITLE COMPANY
Legal Description:
1. A portion of the Northwest 1/ of the Southwest 14 of the Southeast 1/
lying Westerly of North 40th Avenue, located within Yakima County,
Washington.
2. Complete legal description attached as Exhibit A, page 7, hereof.
Assessor's Property Tax Parcel Number(s):
181315-43013
***********
T4J
THIS DEED OF TRUST ("Deed of Trust") is made on this 7 day of
December, 2003; by CHINOOK BUSINESS PARK, LLC., Grantor, whose address is
1901 North 4th St., Yakima, WA 98901; FIDELITY TITLE COMPANY, Trustee,
whose address is 406 N. 2nd St., Yakima, WA, 98901, and THE CITY OF YAKIMA,
Beneficiary, whose address is 129 N. 3rd St, Yakima, WA 98901.
1
Recital
Borrower has signed a loan agreement ("Loan Agreement") and promissory
note ("Promissory Note") with the Beneficiary, dated on or about the date hereof.
The Grantor is giving this Deed of Trust in consideration of accommodations made
or to be made by Grantee to Borrower.
WITNESSETH:
Grantor hereby bargains, sells and conveys to Trustee in Trust, with power of
sale, the following described real property in Yakima County, Washington:
See Exhibit A, attached.
which real property is not used principally for agricultural or farming purposes,
together with all the tenements, hereditaments, and appurtenances now or
hereafter thereunto belonging or in any wise appertaining, and the rents, issues
and profits thereof.
This deed is for the purpose of securing performance of the Borrower's Loan
Agreement herein contained, and payment of the sum of Four Hundred Seventy-five
Thousand Seven Hundred and Twenty-two Dollars ($475,722.00) with interest, in
accordance with the terms of a Promissory Note of even date herewith, payable to
Beneficiary, and made by Borrower, and all renewals, modifications and extensions
thereof, and also such further sums as may be advanced or loaned by Beneficiary to
Borrower, or any of their successors or assigns, together with interest thereon at
such rate as shall be agreed upon.
To protect the security of this Deed of Trust, Grantor covenants and agrees:
1. To keep the property in good condition and repair; to permit no waste thereof; to
complete any building, structure or improvement being built or about to be built
thereon; to restore promptly any building, structure or improvement thereon which
may be damaged or destroyed; and to comply with all laws, ordinances, regulations,
covenants, conditions and restrictions affecting the property.
2. To pay before delinquent all lawful taxes and assessments upon the property; to
keep the property free and clear of all other charges, liens, or encumbrances
impairing the security of this Deed of Trust.
3. To keep all buildings now or hereafter erected on the property described herein
continuously insured against loss by fire or other hazards in an amount not less
than the full insurable value of the property. All policies shall be held by the
Beneficiary, and be in such companies as the Beneficiary may approve and have
2
loss payable to the Beneficiary as its interest may appear and then to the Grantor.
The amount collected under any insurance policy may be applied upon any
indebtedness hereby secured in such order as the Beneficiary shall determine. Such
application by the Beneficiary shall not cause discontinuance of any proceedings to
-----foreclose--this-Deed:-of Trust: Inthe-event of foreclosure, all rights of the Grantor in
insurance policies then in force shall pass to the purchaser at the foreclosure sale.
4. To defend any action or proceeding purporting to affect the security hereof or the
rights or powers of Beneficiary or Trustee, and to pay all costs and expenses,
including cost of title search and attorney's fees in a reasonable amount, in any
such action or proceeding, and in any suit brought by Beneficiary to foreclose this
Deed of Trust.
5. To pay all costs, fees and expenses in connection with this Deed of Trust,
including the expenses of the Trustee incurred in enforcing the obligation secured
hereby and Trustee's and attorney's fees actually incurred, as provided by statute.
6. Should Grantor fail to pay when due any taxes, assessments, insurance
premiums, liens, encumbrances, or other charges against the property hereinabove
described, Beneficiary may pay the same, and the amount so paid, with interest at
the rate set forth in the note secured hereby, shall be added to and become a part of
the debt secured in this Deed of Trust.
IT IS MUTUALLY AGREED THAT:
1. In the event any portion of the property is taken or damaged in an eminent
domain proceeding, the entire amount of the award or such portion thereof as may
be necessary to fully satisfy the obligation secured hereby, shall be paid to
Beneficiary to be applied to said obligation.
2. By accepting payment of any sum secured hereby after its due date, Beneficiary
does not waive its right to require prompt payment when due of all other sums so
secured or to declare default for failure to so pay.
3. The Trustee shall reconvey all or any part of the property covered by this Deed of
Trust to the person entitled thereto, on written request of the Beneficiary, or upon
satisfaction of the obligation secured and written request for reconveyance made by
the Beneficiary or the person entitled thereto.
4. Upon default by Borrower in the payment of any indebtedness secured hereby or
in the performance of any agreement contained herein, all sums secured hereby
shall immediately become due and payable at the option of the Beneficiary. In such
event and upon written request of Beneficiary, Trustee or trustee's authorized
agent, shall sell the trust proPerty, in accordance with the Deed of Trust Act of the
State of Washington, (as amended), at public auction to the highest bidder. Any
person except Trustee may bid at Trustee's sale. Trustee shall apply the proceeds of
3
the sale as follows: (1) to the expense of the sale, including a reasonable Trustee's
fee and attorney's fee; (2) to the obligation secured by this deed of Trust; (3) the
surplus, if any, shall be distributed to the persons entitled thereto or shall be
deposited (less clerk's filing fee) with the clerk of the superior court of the county in
which sale takes place.
5: Trustee shall deliver to the purchaser at the sale its deed, without warranty,
which shall convey to the purchaser the interest in the property that Grantor had or
had the power to convey at the time of his execution of this Deed of Trust, and such
as he may have acquired thereafter. Trustee's deed shall recite the facts showing
that the sale was conducted in compliance with all the requirements of law and of
this Deed of Trust, which recital shall be prima facie evidence of such compliance
and conclusive evidence thereof in favor of bona fide purchasers and encumbrancers
for value.
6. The power of sale conferred by this Deed of Trust and by the Deed of Trust Act
for the State of Washington in not an exclusive remedy; Beneficiary may cause this
Deed of Trust to be foreclosed as a mortgage.
7. In the event of the death, incapacity, disability or resignation of Trustee,
Beneficiary shall appoint in writing a successor trustee, and upon the recording of
such appointment in the mortgage records of the county in which this Deed of Trust
is recorded, the successor trustee shall be vested with all powers of the original
trustee. The trustee is not obligated to notify any party hereto of pending sale
under any other Deed of Trust or of any action or proceeding in which Grantor,
Trustee or Beneficiary shall be a party -unless such action or proceeding is brought
by the Trustee.
8. This Deed of Trust applies to, inures to the benefit of, and is binding not only on
the parties hereto, but on their heirs,devisees, legatees, administrators, executors,
successors and assigns. The term Beneficiary shall mean the holder and owner of
the note secured hereby, whether or not named as Beneficiary herein:
Chiho4k Business Park, LLC
STATE OF WASHINGTON )
) ss:
County of Yakima )
I certify that I know or have satisfactory evidence that Gary Lukehart
signed this instrument, on oath stated that he was authorized to execute the
4
instrument and acknowledge it as the authorized member of Chinook Business
Park, LLC, a Washington limited liability company, to be the free and voluntary act
of such entity for the uses and purposes mentioned in the, instrument.
DATED this 6_" Clay of December, 2003.
TARY P
State of
esiding at
y commissi• expires:�/Z f`
5
EXHIBIT "A" TO DEED OF TRUST
FROM CHINOOK BUSINESS PARK, LLC TO CITY OF YAKIMA
(KERNS PROPERTY)
That portion of the North 1/ of the Southwest 1/ of the Southeast 1/ of Section
15, Township 13 North, Range 18, E.W.M., lying West of North 40th Avenue,
as conveyed to Yakima County by Auditor's File No. 2252501.
Except the North 10 feet conveyed to Yakima County by deed rarnrded under
Auditor's File No. 399232 for road.
Situate in Yakima County, Washington.
REQUEST FOR FULL RECONVEYANCE
Do not record. To be used only when note has been paid.
TO: TRUSTEE
The undersigned is the legal owner and holder of the note and all other
indebtedness secured by the, within Deed of Trust. Said note, together with all
other indebtedness secured by said Deed of Trust, has been fully paid and satisfied;
and you are hereby requested and directed, on payment to you of any sums owing to
you under the terms of said Deed of Trust, to cancel said note above mentioned, and
all other evidences of indebtedness secured by said Deed of Trust delivered to you
herewith, together with the said Deed of trust, and to reconvey, without warranty,
to the parties designated by the terms of said Deed of Trust, all the estate now held
byyou thereunder.
Dated this day of , 20 .
Mail reconveyance to:
F:\CT.IFNTS\DAB\YAKIIvIA\Trailwagons\falai docs\Deed of Trust hypoth 401 E S St - final.doc
6
Return Address:
Donald A. Boyd
Carlson Boyd & Bailey PLLC
230 South 2nd St., Suite 202
Yakima, WA 98907
Ma document is certified to
be a true and correct copy of
original document.
DEED OF TRUST HYPOTHECATION
Grantor:
1. GARY LUKEHART AND MARY LUKEHART; husband and wife
Borrower(s):
1. TRAIL WAGONS, INC.
Beneficiary:
1. THE CITY OF YAKIMA
Trustee:
1. FIDELITY TITLE COMPANY
Legal Description:
1. A portion of the Northwest 1/4 of the Southwest 1/4 of the Southeast 14
lying Westerly of North 40th Avenue, located within Yakima County,
Washington.
2. Complete legal description attached as Exhibit A, page 7, hereof.
Assessor's Property Tax Parcel Number(s):
181315-43013
***********
THIS DEED OF TRUST ("Deed of Trust") is made on this day of
December, 2003, by GARY LUKEHART and MARY LUKEHART, husband and
wife, Grantor, whose address is 1901 North 4th St., Yakima, WA 98901; FIDELITY
TITLE COMPANY, Trustee, whose address is 406 N. 2nd St., Yakima, WA, 98901,
and THE CITY OF YAKIMA, Beneficiary, whose address is 129 N. 3rd St, Yakima,
WA 98901.
1
Recital
Borrower has signed a loan agreement ("Loan Agreement") and promissory
note ("Promissory Note") with the Beneficiary, datedon or about the date hereof.
The Grantor is giving this Deed of Trust in consideration of accommodations made
or to be made by Grantee to Borrower.
WITNESSETH:
Grantor hereby bargains, sells and conveys to Trustee in Trust, with power of
sale, the following described real property in Yakima County, Washington:
See Exhibit A, attached.
which real property is not used principally for agricultural or farming purposes,
together with allthe tenements, hereditaments, and appurtenances now or
hereafter thereunto belonging. or in any wise appertaining, and the rents, issues
and profits thereof.
This deed is for the purpose of securing performance of the Borrower's Loan
Agreement herein contained, and payment of the sum of Four Hundred Seventy-five
Thousand Seven Hundred and Twenty-two Dollars ($475,722.00) with interest, in
accordance with the terms of a Promissory Note of even date herewith, payable to
Beneficiary, and made by Borrower, and all renewals, modifications and extensions
thereof, and also such further sums as may be advanced or loaned by Beneficiary to
Borrower, or any of their successors or assigns, together with interest thereon at
such rate as shall be agreed upon.
To protect the security of this Deed of Trust, Grantor covenants and agrees:
1. To keep the property in good condition and repair; to permit no waste thereof; to
complete any building, structure or improvement being built or about to be built
thereon; to restore promptly any building, structure or improvement thereon which
may be damaged or destroyed; and to comply with all laws, ordinances, regulations,
covenants, conditions and restrictions affecting the property.
2. To pay before delinquent all lawful taxes and assessments upon the property; to
keep the property free and clear of all other charges, liens, or encumbrances
impairing the security of this Deed of Trust.
3. To keep all buildings now or hereafter erected on the property described herein
continuously insured against loss by fire or other hazards in an amount not less
than the full insurable value of the property. All policies shall be held by the
2
Beneficiary, and be in such companies as the Beneficiary may approve and have
loss payable to the Beneficiary as its interest may appear and then to the Grantor.
The amount collected under any insurance policy may be applied upon any
indebtedness hereby secured in such order as the Beneficiary shall determine. Such
application by the Beneficiary shall not cause discontinuanceofany proceedings to
foreclose this Deed of Trust. In the event of foreclosure, all rights of the Grantor in
insurance policies then in force shall pass to the purchaser at the foreclosure sale.
4. To defend any action or proceeding purporting to affect the security hereof or the
rights or powers of Beneficiary or Trustee, and to pay all costs and expenses,
including cost of title search and attorney's fees in a reasonable amount, in any
such action or proceeding, and in any suit brought by Beneficiary to foreclose this
Deed of Trust.
5. To pay all costs, fees and expenses in connection with this Deed of Trust,
including the expenses of the Trustee incurred in enforcing the obligation secured
hereby and Trustee's and attorney's fees actually incurred, as provided by statute.
6. Should Grantor fail to pay when due any taxes, assessments, insurance
premiums, liens, encumbrances, or other charges against the property hereinabove
described, Beneficiary may pay the same, and the amount so paid, with interest at
the rate set forth in the note secured hereby, shall be added to and become a part of
the debt secured in this Deed of Trust.
IT IS MUTUALLY AGREED THAT:
1. In the event any portion of the property is taken or damaged in an eminent
domain proceeding, the entire amount of the award or such portion thereof as may
be necessary to fully satisfy the obligation secured hereby, shall be paid to
Beneficiary to be applied to said obligation.
2. By accepting payment of any sum secured hereby after its due date, Beneficiary
does not waive its right to require prompt payment when due of all other sums so
secured or to declare default forfailure to so pay.
3. The Trustee shall reconvey all or any part of the property covered by this Deed of
Trust to the person entitled thereto, on written request of the Beneficiary, or upon
satisfaction of the obligation secured and written request for reconveyance made by
the Beneficiary or the person entitled thereto.
4. Upon default by Borrower in the payment of any indebtedness secured hereby or
in the performance of any agreement contained herein, all sums secured hereby
shall immediately become due and payable at the option of the Beneficiary. In such
event and upon written request of Beneficiary, Trustee or trustee's authorized
agent, shall sell the trust property, in accordance with the Deed of Trust Act of the
State of Washington, (as amended), at publicauction to the highest bidder. Any
3
person except Trustee may bid at Trustee's sale. Trustee shall apply the proceeds of
the sale as follows: (1) to the expense of the sale, including a reasonable Trustee's
fee and attorney's fee; (2) to the obligation secured by this deed of Trust; (3) the
surplus, if any, shall be distributed to the persons entitled thereto or shall be
deposited (less clerk's filing fee) with the clerk of the superior court of the county in
which sale takes place.
5. Trustee shall deliver to the purchaser at the sale its deed, without warranty,
which shall convey to the purchaser the interest in the property that Grantor had or
had the power to convey at the time of his execution of this Deed of Trust, and such
as he may have acquired thereafter. Trustee's deed shall recite the facts showing
that the sale was conducted in compliance with all the requirements of law and of
this Deed of Trust, which recital shall be prima facie evidence of such compliance
and conclusive evidence thereof in favor of bona fide purchasers and encumbrancers
for value.
6. The power of sale conferred by this Deed of Trust and by the Deed of Trust Act
for the State of Washington in not an exclusive remedy; Beneficiary may cause this
Deed of Trust to be foreclosed as a mortgage.
7. In the event of the death, incapacity, disability or resignation of Trustee,
Beneficiary shall appoint in writing a successor trustee, and upon the recording of
such appointment in the mortgage records of the county in which this Deed of Trust
is recorded, the successor trustee shall be vested with all powers of the original
trustee. The trustee is not obligated to notify any party hereto of pending sale
under any other Deed of Trust or of any action or proceeding in which Grantor,
Trustee or Beneficiary shall be a party unless such action or proceeding is brought
by the Trustee.
8. This Deed of Trust applies to, inures to the benefit of, and is binding not only on
the parties hereto, but on their heirs, devisees, legatees, administrators, executors,
successors and assigns. The term Beneficiary shall mean the holder and owner of
the note secured hereby, whether or not named as Beneficiary herein.
4
STATE OF WASHINGTON )
) ss:
County of Yakima )
I certify that I know or have satisfactory evidence that Gary Lukehart
signedthis instrument, on oath acknowledged it to be the free and voluntary act for
the uses and purposes mentioned in the instrument.
DATED this c Iay of December, 2003.
rp TARY PT MT and for the
e of ,
siding at
y commis
STATE OF WASHINGTON
County of Yakima
) ss:
ion expires: Z
I certify that I know or have satisfactory evidence that Mary Lukehart
signed this instrument, on oath acknowledged it to be the free and voluntary act for
the uses and purposes mentioned in the instrument.
DATED thi
ay of December, 2003.
TARY PUBLIC 1 c and for the
tate of
Residing at
My commis on expires:
5
REQUEST FOR FULL RECONVEYANCE
Do not record. To be used only when note has been paid.
TO: TRUSTEE
The undersigned is the legal owner and holder of the note and all other
indebtedness secured by the within Deed of Trust. Said note, together with all
other indebtedness secured by said Deed of Trust, has been fully paid and satis_fi_ed;
and you are hereby requested and directed, on payment to you of any sums owing to
you under the terms of said Deed of Trust, to cancel said note above mentioned, and
all other evidences of indebtedness secured by said Deed of Trust delivered to you
herewith, together with the said Deed of trust, and to reconvey, without warranty,
to the parties designated by the terms of said Deed of Trust, all the estate now held
by you thereunder.
Dated this day of , 20_.
Mail reconveyance to:
F:\CLIENTS\DAB\YAKIMA\Trailwagons\final docs\Deed of Trust hypoth 401 E S St - final.doc
6
Attachment D
Legal Descriptions
BOISE -CASCADE PROPERTY:
That portion of the Southeast 1/4 of the Southwest 14 of Section 7, and the Northeast
1/4 of the Northwest 14 of Section 18, all in Township 13 North, Range 19, E.W.M.,
lying Southwesterly of SR 82 as conveyed to the State of Washington for highway
by instrument recorded February 6, 1959, under Auditor's File No. 1757605,
described as follows:
Commencing
thence South
thence North
thence North
thence North
thence North
thence North
thence South
thence South
thence South
thence North
thence North
at the Southwest corner of the Southwest -1/ of said Section 7;
88°31'26" East along the South line of said Section 7, 1,833.07 feet;
76°50'00" East 118.62 feet to the Point of Beginning;
76°50'00" Eat 37.69 feet;
0°30'00" East 145.77 feet;
21°23'00" East 186.27 feet;
52°48'00" East 109.07 feet;
32°34'00" East 411.96 feet;
49°57'00" West 138.83 feet;
76°23'00" West 152.00 feet;
72°42'00" West 94.00 feet;
54°26'00" West 87.00 feet to the Point of Beginning.
Assessor's Property Tax Parcel Number(s):
191307-34004
191318-21001
KERNS PROPERTY:
That portion of the North % of the Southwest 14
Township 13. North, Range 18, E.W.M., lying
conveyed to Yakima County by Auditor's File No.
Except the North 10 feet conveyed to Yakima
Auditor's File No. 399232 for road.
Situate in Yakima County, Washington.
Assessor's Property Tax Parcel Number(s):
181315-43013
of the Southeast 14 of Section 15,
West of North 40th Avenue, as
2252501.
County by deed recorded under
Loan Agreement Page 29
Attachment E
Guaranty Form
Loan Agreement Page 30
UNCONDITIONAL GUARANTY
PARTIES: City: The City of Yakima, a Washington municipal corporation
Borrower: Trail Wagons, Inc., a Washington corporation
Guarantor: Gary Lukehart and Mary Lukehart, husband and
wife
RECITALS: Concurrent with this Guaranty, City and Borrower have entered
into a Loan Agreement and Promissory Note to borrow Four
Hundred Seventy-five Thousand Seven Hundred and Twenty-
two Dollars ($475,722.00). Borrower is using the funds to
acquire new chassis, and retool its operations, paying the closing
costs for this advance under the loan agreement, and increasing
working capital with the proceeds from this advance. The
undersigned has agreed to enter into this Unconditional
Guaranty of all Borrower's obligations thereunder.
This Agreement supplements the Guaranty between the
Borrower, Guarantor, and City, entered into on July 23, 2003.
AGREEMENT:
As an inducement and in consideration of any and all contemporaneous or future
financial accommodations by City to Borrower, the undersigned Guarantor,
unconditionally guarantees the prompt payment when due and at all times thereafter
of any and all existing, contemporaneously incurred and future indebtedness and
liability of every kind (including all extensions, renewals and modifications thereof),
absolute or contingent, however created or evidenced, owing from Borrower to City plus
such interest as may accrue thereon. Credit may be granted by City to Borrower from
time to time without further authorization of or notice to Guarantor.
Guarantor agrees to pay City all expenses of every kind including, without limitation,
any and all fees and expenses incurred by it on account of the services of any attorney
employed or retained by it, including in-house counsel, in protecting or defending City's
interest and in attempting to collect all or any part of such indebtedness and in
enforcing this guaranty, with or without suit. Every immediate and successive
assignee of any part of such indebtedness guaranteed hereby shall have the right to
Guaranty Page 1
enforce all agreements and obligations contained in this guaranty for its own benefit as
fully as if named herein, but City shall nevertheless have the right to enforce this
guaranty for its own benefit as to so much of the liability guaranteed as has not been
assigned.
Guarantor waives notice of (a) the acceptance of this guaranty; (b) any and all
indebtedness of any kind covered by the guaranty; and (c) any and all demands,
nonpayments or other defaults in respect of such indebtedness.
If more than one person or legal entity signs this Unconditional Guaranty, all
references to "Guarantor" herein shall bind each of the undersigned jointly and
severally.
The liability of Guarantor under this guaranty shall be continuing and shall remain in
full force and effect as long as Borrower is or may be indebted to City on account of any
indebtedness covered by the guaranty. It shall not be affected in any way by (and the
City is hereby expressly authorized to make without notice to anyone) any sale, pledge,
surrender, compromise, release, acceleration, discharge, renewal, extension,
substitution, exchange or modification of any kind whatsoever of all or any part of the
indebtedness covered by the guaranty, or of all or any part of the security or collateral
given to secure such indebtedness, including the release or addition of other
guarantors. In addition, such liability of Guarantor shall not be affected in any way by
the failure or invalidity of or any defect in any security or collateral given to secure
such indebtedness. No exercise or non -exercise, waiver, change, impairment or
suspension by City of any right or remedy given it by this Unconditional Guaranty or
by Borrower and no dealings by City with Borrower or any other person shall in any
way affect any of the obligations of Guarantor hereunder or any security furnished by
Guarantor, now or hereafter, or give Guarantor any recourse against City. The
obligations of Guarantor to City hereunder are independent of Borrower's obligations
and a separate action or actions may be brought and prosecuted by City against
Guarantor, whether or not such action or actions are also brought against Borrower,
other guarantors or any security granted to City.
Guarantor waives and agrees not to assert or otherwise take advantage of (a) any right
which it may have to require City to proceed against Borrower or any other person,
firm or corporation or to proceed against or exhaust any security held by it at any time
or to pursue any other remedy in its power; (b) any defense which it may have in the
nature of statute of limitations in any action hereunder or for the collection of any
indebtedness or the performance of any obligation guaranteed hereby; (c) any defense
which it may have by reason of incapacity, lack of authority, or lack of shareholder or
other approvals relating either to Borrower or Guarantor or the failure of City to file or
enforce a claim against the estate (either in administration, bankruptcy, or other
proceeding) of Borrower or of any other or others; (d) any lack of demand, protest and
notice of any kind including, without limitation, notice of the existence, creation or
incurring of new or additional indebtedness or of any action or non -action on the part of
Guaranty Page 2
Borrower, City, any endorser, creditor of Borrower or Guarantor under this or any
other agreement, or any person whomsoever, in connection with any obligation or
evidence of indebtedness held by City as collateral or in connection with any
indebtedness guaranteed hereby; (e) any defense which is may have based upon an
election of remedies by City; and (f) any duty which City may have to disclose to
Guarantor any facts which it may now or hereafter know about Borrower, it being
understood and agreed. that Guarantor is fully responsible for being and keeping
informed of the financial condition of Borrower and of all circumstances bearing on the
risk of non-payment of any indebtedness guaranteed hereby.
Until all indebtedness of Borrower to City is paid in full, Guarantor shall have no right
of subrogation and waives any right which it may otherwise have to enforce any
remedy whatsoever which City may have against Borrower and any benefit of or right
to participate in realization or any security now or hereafter granted to City.
With or without notice to Guarantor, City may, in its sole discretion and at any time
and from time to time and in such manner and upon such terms as it considers fit,
apply any or all payments or recoveries from Borrower, Guarantor, any other
guarantor or source, or from any security granted to City, under this or any other
agreement, in such manner and order or priority as City may determine, to any
indebtedness of Borrower to City, whether or not such indebtedness is guaranteed
hereby or is otherwise secured or is due at the time of such application.
For consideration as recited above, Guarantor subordinates any and all indebtedness of
Borrower to Guarantor to any and all indebtedness of Borrower to City. If City so
requests, any such indebtedness of Borrower to Guarantor shall be collected and
received by Guarantor as trustee for City and paid to City on account of Borrower's
indebtedness to it, without reducing or affecting Guarantor's liability under any of the
provisions of this guaranty.
This guaranty is in addition to and independent of any other guaranties at any time in
effect with respect to all or any part of Borrower's indebtedness to City and may be
enforced regardless of the existence of any such other guaranties which shall continue
to remain in full force and effect.
No provision of this guaranty or any right or remedy of City hereunder can be waived
nor can Guarantor be released from its obligations hereunder except in writing duly
executed by an authorized officer of City. Should any one or more provisions of this
guaranty be determined to be illegal or unenforceable, all other provisions shall
nevertheless be effective.
This guaranty shall be construed and performed according to the laws of the State of
Washington. Guarantor irrevocably submits to the jurisdiction of any state or federal
court sitting in Yakima County, Washington, in any action or proceeding brought to
enforce or otherwise arising out of or relating to this guaranty and irrevocably waives
Guaranty Page 3
to the fullest extent permitted by law any objection which it may have now or hereafter
to venue or any claim that such forum is an inconvenient forum.
EXECUTED this -1--1-day of December, 2003.
Guaranty Page 4
Attachment F
Deposit Account Control Agreement Form
Loan Agreement Page 31
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 December cni , 2003, is entered into by and between
TRAIL WAGONS, INC., a Washington for profit corporation, hereinafter called
"Obligor", THE CITY OF YAKIMA, a Washington municipal corporation, hereinafter
called "City" or "the City", and JPNIORGAlN CHASE B/kNK, a New York 'oaniing
corporation, hereinafter called "Custodian." This Agreement modifies and amends the
Deposit Control Agreement between the Obligor and City, entered into on July 23,
2003.
RECITALS
The parties enter into this Agreement 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 $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 an agreement whereby City agreed to
loan up to $3,000,000.00 to Borrower from City's Yakima Commercial Development
Loan Fund. In July, 2003 Borrower and City entered into a Loan Agreement and
Promissory Note, whereby Obligor borrowed $2,395,000.00 of the agreed loan amount.
Borrower wishes to obtain an additional advance of $475,722.00 of the unadvanced
funds available from the $3,000,000.00 pursuant to a new loan (hereinafter referred to
as the "December 2003 Loan") to be evidenced by additional loan documents
("December 2003 Loan Documents").
C. The Obligor's obligations under the July Loan Agreement and related
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 the July 2003 loan ("July Loan
Deposit Account"). Obligor's obligations under both the July Loan Agreement and
related Loan Documents and the December 2003 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 the July 2003 Loan Deposit Account and any interest it has in the
Deposit Account Control Agreement page 1
accounts with Custodian that are used to repay the December 2003 Loan ("December
2003 Loan Deposit Account").
D. The parties intend that this Agreement give the City control over any
interest Obligor may have in the July 2003 Deposit Account and the December 2003
Deposit Account, as set forth in RCW 62A.9A-314.and 62A.9A-104.
AGREEMENT
i. City - 's Security- T1+cIc7+ i1Deposit Account. T. uiuei 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
July 2003 Deposit Account and the December 2003 Deposit Account, as well as
any and all proceeds thereof, whether now or hereafter existing ("Deposit
Account Collateral").-
2.
olateral").
2. Obligor's Dealings with Deposit Accounts. Obligor is not entitled to present
items drawn on or otherwise to withdraw or direct the disposition of funds from
the July 2003 Deposit Account and the December 2003 Deposit Account.
3. City's Right to Give Exclusive Instructions as to Deposit Accounts. City shall be
entitled, for purposes of this Agreement, to give Custodian instructions, as to the
withdrawal or disposition of any funds from time to time deposited to the July
2003 Deposit Account and the December 2003 Deposit Account, or as to any other
matters relating to the July 2003 Deposit Account and the December 2003
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 Obligor 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.
Deposit Account Control Agreement page 2
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.
CITY:
THE CITY OF VA-KMA, a
Washington municipal corporation
By: �.
R. A. 7a -is, •., City Manager
OBLIGOR:
TRAIL WAGONS, INC., a
Was ! on for profit corporation
By:
Print Name: (;' ra cZy L .) & E-1 IA R.
Title: CAA i /02M-67-1
CUSTODIAN:
JPMorgan Chase Bank, a. New York
banking corporation
By:
Print Name:
Title:
x/YakimalTrailwagons/Final Docs — Dec/bank control agmt - final
Deposit Account Control Agreement page 3
Attachment G
Title Policy
Loan Agreement Page 32
Prepared for:
1lALLEY r, rL.E GLJA ANT,
COMMITMENT FOR TITLE INSURANCE
SCHEDULE A
502 NORTH SECOND STREET
POST OFFICE BOX 1825
YAKIMA, WASHING ON 98907
PHONE (508) 248-4442
FAX (509) 575.1179
FIDELITY TITLE COMPANY Title Examiner: MURRAY SLAYE
406 NORTH 2ND STREET Order No: X-183921
YAKIMA, WA 98901 Your: TRAIL WAGONS
Attn:.JOHN CORNING
1. Effective Date: December 22, 2003 at 8:00 A:M.
2. Policy or Policies to be issued:
A. ALTA Owner's Policy Amount:
[ ] Standard [ ] Extended Premium:
Proposed insured: Tax:
Total:
Subdividers Rate
B. ALTA Loan Policy Amount: $475,722.00
[ ]Standard [ x ] Extended Premium: $756.00
Proposed insured: Tax: 59.72
Total: $815.72
CITY OF YAKIMA
3. The estate or interest in the land which is covered by the Commitment is:
FEE SIMPLE ESTATE
4. .Title to the estate or interest in the land is at the effective date hereof vested in:
GARY D. LUKEHART AND MARY LUKEHART, HUSBAND AND WIFE, AS TO PARCEL A; AND
CHINOOK BUSINESS PARK, L.L.C., A WASHINGTON LIMITED LIABILITY COMPANY, AS TO
PARCEL B
5. The land referred to in this Commitment is in the State of Washington, County of Yakima and is
described as follows:
FOR LEGAL DESCRIPTION SEE EXHIBIT "A" ATTACHED HERETO.
ALTA COMMITMENT Order No. X-183921
SCHEDULE B
I. The following are the requirements to be complied with:
A. Instruments necessary to create the estate or interest to be insured, must be properly executed,
delivered, and duly filed for recorded.
B. Payment to or for the account of the grantors or mortgagors of the full consideration for the estate or
interest to be insured.
II. Schedule B of the policy or policies to be issued (as set forth in Schedule A) will contain exceptions to the
following matters, unless the same are disposed of to the satisfaction of the Company.
A. Defects, liens, encumbrances, adverse claims or other matters, if any created, first appearing in the
public records or attaching subsequent to the effective date hereof- but prior to the date the proposed
Ins urari artnt_iire_s for value of record the estate Cr interest or mortgage thereon
covered by this
Commitment.
General Exceptions:
1. Rights or claims of parties in possession not shown by the public records.
2 • Pu thlir` or private easements, or claims -of -easements, not shown th b c
,........, by the public records.
3. Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an
accurate survey or inspection of the premises.
4. Any lien, or right to a lien, for services, labor, or material heretofore or hereafter fumished, imposed by law
and not shown by the public records, or Liens under the Workmen's Compensation Act not shown by the
public records.
5. Rights of use, control or regulation by the United States of America, in the exercise of powers over
navigation; any prohibition or limitation on the use, occupancy or improvement of the land resulting from the
rights of the public or riparian owners to use any water which may cover the land.
6. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in acts authorizing the issuance
thereof; (c) water rights, claims or title to water.
7. Any service, installation, connection, maintenance, or construction charges for sewer, water, electricity, or
garbage removal.
8. General taxes not now payable or matters relating to special assessments and special levies, if any,
preceding the same becoming a lien.
9. Indian tribal codes or regulations, Indian treaty or Aboriginal rights, including, but not limited to, easements
of equitable servitude.
SPECIAL EXCEPTIONS:
1. Charges, if any, due the Yakima Tieton Irrigation District for water supplied. Inquiry should be
made at the offices of said company relative to said charges.
Affects: Parcel A
2. It is our understanding that Gary D. Lukehart and Mary Lukehart, will execute the forthcoming
security instrument as members of Chinook Business Park, L.L.C., a Washington Limited Liability
Company, as to Parcel B described herein. If other signatories are to sign on behalf of said entity,
the proper resolutions and amendments should be submitted.
3. Easement or right-of-way for necessary canals, tunnels or other water conduits and for telephone
and transmission lines required in connection with the Tieton Irrigation Project, contained in
instruments of record.
Affects: Parcel A
4. Relinquishment of right of access to State Highway and of Tight, view and air, under terms of Deed.
to the State of Washington.
Recorded: December 23, 1969 and February 6, 1959
Auditor's File Nos: 2210056 and 1757605
Affects: Parcel B
ALTA COMMITMENT " Order No. X-183921
5. An nonexclusive easement 30 feet in width, granted by document, as attached.
Recorded: February 3, 1987
Auditor's File No: 2789195
In favor of: Yakima River Regional Greenway Foundation
Affects: Parcel B
6. Terms and conditions of Easement for Construction of Bank Protection along the Yakima River as
recorded February 11, 1948, under Auditor's File No. 1198333, including right to enter upon
adjacent lands for purposes relating thereto.
Affects: Parcel B
7. Easement to construct and maintain a channel change of mill pond inlet canal over and across
property of which real estate under search forms a part, granted to the State of Washington, by
instrument,
Recorded: January 4, 1960
Auditor's File No: 1804820
Affects: That portion of said premised located in Section 7, Parcel B
8. Easement or right-of-way for electric transmission and distribution line disclosed by instrument
Recorded: April 15, 1954
Auditor's File No: 1511365
Grantee: Pacific Power & Light Company, a corporation
Affects: Parcel B
9. Easement or right-of-way for electric transmission and distribution line disclosed by instrument
Recorded: October 25, 1970.
Auditor's File No: 2233562
Grantee: Pacific Power & Light Company, a corporation
Affects: That portion of said premises located in Section 7, Parcel B
10. Easement for road purposes 40 feet in width running along the Southwesterly side of SR 82 and
connecting with "R" Street, disclosed by instrument recorded February 6, 1959, under Auditor's.
File No. 1757605, records of Yakima County, Washington.
Affects: Parcel B
11. Right-of-way for Sandmeyer Ditch over an undisclosed portion of said premises as contained in.
Deed recorded July 8, 1902, in Volume 14 of Deeds, Page 389, records of Yakima County,
Washington.
Affects: Parcel B
12. Regulatory control by the State Supervisor of Flood Control through the establishment of a. Flood
Control Zone No. 9 inclusive within the boundaries thereof, these premises and other property as
Tying within a flood basin. Control being exercised by issuance of regulatory orders and permits
affecting the planning, construction, operation and maintenance of any structure of improvements,
public or private, to be erected or built, or to be reconstructed or modified.
(RCW 86.16.010 et seq.)
Affects: Parcel B
ALTA COMMITMENT Order No. X-183921
13. Pendency of Yakima County Superior Court Cause No. 77-2-01484-5, State of Washington,
Department of Ecology, Plaintiff vs. (numerous named defendants), notice of which is given by Lis
Pendens recorded under Yakima County Auditor's File No. 2479271, being an action for the
determination of the rights to divert, withdraw, or otherwise make use of the surface waters of the
Yakima River Drainage Basin, in accordance with the provisions of Chapters 90.03 and 90.44
Revised Code of Washington. (Attomey for Plaintiff: Charles B. Roe, Jr., Senior Assistant
Attorney General)
NOTE: As of the effective date of the commitment, the exceptions contained herein reflect
matters, if any, disclosed by a judgment and lien search against the vestees, contract vendees, if
any, and incoming purchasers, if any.
NOTE: General taxes for the year 2003 in the amount of $788.74, which have been paid.
Parcel No: 1 81 31 5-4301 3 Levy Code: 333
Affects: Parcel A described herein
NOTE: Drainage District No. 39 assessment for the year 2003 in the amount of $8.00, which has
been paid.
Affects: Parcel A described herein
NOTE: General taxes for the
Parcel No: 191307-34004
Affects:
NOTE: General taxes for the
Parcel No: 1 91 31 8-21 001
Affects:
year 2003 in the amount of $323.98, which have been paid.
Levy Code: 333
That portion of Parcel B described herein located in Section 7,
Township 13 North, Range 19, E.W.M.
year 2003 in the amount of $13,486.75, which have been paid.
Levy Code: 333
That portion of Parcel B described herein located in Section 18,
Township 13 North, Range 19, E.W.M., and other property
Abbreviated Legal:
Parcel A: Ptn of North 1/2 SW SE of Sec 15, Twn 13, Rg 18
Parcel B: Ptn of SW of Sec 7,. Twn 13, Rg 19 and ptn of NW of Sec 18, Twn 13, Rg 19
END OF SCHEDULE B
NOTE: The legal description contained herein has been derived from information submitted with
the application and as available from the record title. Said description should be carefully reviewed
to assure it meets the intentions of the parties to this transaction.
NOTE: In the event this transaction fails to close, a cancellation fee will be charged to comply
with our Rate Schedule filed with the State Insurance Commissioner
THANK YOU FOR YOUR ORDER. IF WE MAY BE OF FURTHER ASSISTANCE, PLEASE
FEEL FREE.TO GIVE US A CALL AT (509) 248-4442.
ALTA COMMITMENT Order No: X-183921
EXHIBIT "A"
Parcel A:
That portion of the North 1/2 of the Southwest 1/4 of the Southeast 1/4 of Section 15, Township 13 North,
Range 18, E.W.M., lying West of North 40th Avenue, as conveyed to Yakima County by Auditor's File No.
2252501,
EXCEPT the North 10 feet conveyed to Yakima County by deed recorded under Auditor's File No. 399232
for road.
Situate in Yakima County, Washington.
Parcel B:
That portion of the Southeast 1/4 of the Southwest 1/4 of Section 7, and the Northeast 1/4 of the
Northwest 1/4 of Section 18, all in Township 13 North, Range 19, E.W.M., Tying Southwesterly of SR 82 as
conveyed to the State of Washington for highway by instrument recorded February 6, 1959, under
Auditor's File No. 1757605, described as follows:
Commencing at the Southwest comer of the Southwest 1/4 of said Section 7;
thence South 88°31'26" East along the South line of said Section 7, 1,833.07 feet;
thence North 76°50'00" East 118.62 feet to the Point of Beginning;
thence North 76°50'00" East 37.69 feet;
thence North 0°30'00" East 14517 feet;
thence North 21°23'00" East 186.27 feet;
thence North 52°48'00" East 109.07 feet;
thence South 32°34'00" East 411.96 feet;
thence South 49°57'00" West 138.83 feet;
thence South 76°23'00" West 152.00 feet;
thence North 72°42'00" West 94.00 feet;
thence North 54°26'00" West 87.00 feet to the Point of Beginning.
Situate in Yakima County, Washington.
END OF EXHIBIT"A"
The sketch is for your aid in locating your land with reference to streets and other parcels. While it is believed to be
correct, the Company assumes no liability for any Toss occurring by reason of reliance thereon.
42408
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42407;
42411
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42409
42410
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PROFESSIONAL VIEW WEST
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The sketch is for your aid in locating your land with reference to streets and other parcels. While it is believed to be
correct, the Company assumes no liability for any loss occurring by reason of reliance thereon.
SECTION %8 TOWNSHIP /3 RANGE ! 9
YAKIMA COUNTY, WASHINGTON
ND DIRECT ACCESS '
TO 1-82 ALLOWED
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Privacy Policy Notice
PURPOSE OF THIS NOTICE
Title V of the Gramm -Leach -Bliley Act (GLBA) generally prohibits any financial institution, directly or
through its affiliates, from sharing nonpublic personal information about you with a nonaffiliated third
party unless the institution provides you with a notice of its privacy policies and
of information that it collects about you and the categories ofpractices, such be the type
disclosed. In Compliance with the GLBA, we are g �O� or entities to whom it may
thee privacyproviding you with this document, which notifies you of
policies and practices of Valley Title Guarantee and its underwriters Pacific Northwest Title
and Stewart Title Guaranty Company,
We may collect nonpublic personal information about you from the following sources:
Information we receive from you, such as on applications or other forms.
Information about your transactions we secure from our files, or from our affiliates or others.
Information we receive from a consumer reporting agency.
Information that we receive from others involved in your transaction, such as the real estate agent
or lender.
Unless it is specifically stated otherwise in an amended Privacy Policy Notice; no additional nonpublic
personal information will be collected about you.
We may disclose any of the above information that we collect about our customers or former customers to
our affiliates or to nonaffiliated third parties as permitted by law.
We also may disclose this information about our customers or former customers to the following types of
nonaffiliated companies that perform marketing services on our behalf or with whom we have joint
marketing agreements:
Financial service providers such as companies engaged in banking, consumer finance, securities
and insurance.
Non-financial companies such as envelope staffers and other fulfillment service providers.
WE DO NOT DISCLOSE ANY NONPUBLIC PERSONAL INFORMATION ABOUT YOU WITH
ANYONE FOR ANY PURPOSE THAT IS NOT SPECIFICALLY PERMITTED BY LAW.
We restrict access to nonpublic personal information about you to those employees who need to know that
information in order to provide products or services to you. We maintain physical, electronic, and
procedural safeguards that comply with federal regulations to guard your nonpublic personal information.
Attachment H
Demand Note Form
Loan Agreement Page 33
DEMAND NOTE
Yakima, Washington $4,757.00
December ply , 2003
FOR VALUE RECEIVED, TRAIL WAGONS, INC., ("Obligor"), a Washington
corporation, promises to pay to THE CITY OF YAKIMA; WASHINGTON ("City"), a
Washington municipal corporation, or order, at Yakima, Washington, at the time
provided heroin Lir, the sum Tour Thousand Seven Hundred a a Fifty-seven provided • .auv u herein, up to of i V u1 i 11V uLDQ11U AJG V Gll 11 U11lLi CU a11U 1' 11 Ly -sC V Cll
and 00/100 Dollars ($4,757.00).
RECITALS
1. As of the date of this Note, Obligor hassigneda- Loan Agreement with the
City to borrow Four Hundred Seventy-five Thousand Seven Hundred and Twenty-two
Dollars ($475,722.00), which is funded by the United States Department of
Housing and Urban Development ("HUD"). Obligor and the City have
executed other Loan Documents as part of the Loan Agreement.
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 up to Four Thousand Seven Hundred and Fifty-seven
and 00/100 Dollars ($4,757.00) 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 the 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.
STATE OF WASHINGTON
) ss:
County of Yakima
T ; ► WAGONS, INC. 0
By:
Gary Lukehart, President
I certify that I know or have satisfactory evidence that GARY LUKEHART is
the person who appeared before me, and said person acknowledged that he signed
this instrument, on oath, stated that he was authorized to execute the instrument
and acknowledged it as President of TRAIL WAGONS, INC., a Washington
corporation, to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.
DATED: December
Demand Note
1 /10TARY P : LIC in and for the
State of Washi.oy
Residing at:�
My appoin •' ent expires: l,1.-./Qy
Page 2
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 41
For Meeting Of: March 18, 2003
ITEM TITLE: Consideration of a resolution approving a loan application and authonzing
the City Manager to execute Loan Agreement and Promissory Note with
Trail Wagons, Inc in the amount of $3,000,000
SUBMITTED BY: I ael Morales, Grants Officer
CONTACT: Michael Morales, 575-3533
SUMMARY EXPLANATION:
Attached are the Resolution, Loan Agreement and Promissory Note for the $3,000,000 loan to
Trail Wagons, Inc Funding for the loan will come from the Economic Development Initiative
grant and Section 108 loan from the U S Department of Housing and Urban Development.
Trail Wagons, Inc, is a recreational vehicle manufacturer The loan request is for operating
capital in the amount of $3;000,000 Trail Wagons wiuse the ntroduct onoan of twonew for working
motor home
capital, the acquisition of chassis and to retool for the i
models Trail Wagons is located in the Renewal Community,, and their expansion will create 121
new full time manufacturing jobs within three years of loan closing. The majonty of these jobs
will be created within 18 months of loan closing.
In addition to the Loan Agreement and Promissory Note, the loan shall be evidenced by a
personal guaranty signed by Gary and Mary Lukehart, and a Deed of Trust given by Gateway
Center Associates, LLC.
The National Development Council (NDC) has reviewed the application and determined that
Trail Wagons' application meets the cntena 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.
Resolution _X_ Ordinance _ Contract Other Loan Agreement
Funding Source U.S. Department • ousin Urban Development -)96)-'
Approval for Submittal.
City Manager
STAFF RECOMMENDATION Staff recommends approval of the resolution.
BOARD RECOMMENDATION Economic Development Committee recommends approval
COUNCIL ACTION
1