HomeMy WebLinkAbout04- Economic Development Agency ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
REQUEST FOR COUNCIL ACTION
FROM: BARBARA J.LINDSETH SUBJECT: HARRIS'SECTION 108
Acting Director LOAN
DATE: January 26, 1995
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Synoasis of Previous Commission/Council/Committee Action(s):
On January 23, 1995,the Mayor and Common Council authorized the execution of a float loan agreement.
On December 5, 1994,the Mayor and Common Council approved the U.S.Department of Housing and Urban
Development(HUD)Section 108 Loan Application and a CDBG Business Retention Loan for the Hams'Department
Store Building Acquisition project;and authorized the Mayor and Acting Director to execute all necessary documents.
Further,that staff be authorized to submit said application to HUD.
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Recommended Motion(s):
(Manor and Common Council)
MOTION: RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO,CALIFORNIA,AUTHORIZING:(i)EXECUTION OF A CERTAIN HUD SECTION
108 LOAN AGREEMENT BY AND BETWEEN THE CITY OF SAN BERNARDINO AND
HARRIS;AND(ii)EXECUTION OF ANY NECESSARY DOCUMENTS TO PROCESS THE HUD
SECTION 108 LOAN
/✓a 6a,c"N,1211—Y
Administrator BARBARA J.LINDSETH
Acting Director
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Contact Person(s): Barbara J.Lindseth/Emil, Wong Phone: 5081
ProjectArea(s): Central City(CC) Ward(s): One ,1)
Supporting Data Attached: Staff Report•Resolution-,form of Section 108 Loan on File,HUD Authorization Ltr
FUNDING REQUIREMENTS: Amount: $7.350,000 Source: HUD Section 108 Loan
Budget Authority: Requested
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Council Notes:
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BJL:EMW:lag:01-30-Ol.cdc: � COUNCIL MEETING AGENDA
MEETING DATE: 01/30/1995
Agenda Item Number:
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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Harris' Company Section 108 Loan
Background
ound
The City has requested a HUD Section 108 Guaranteed Loan in the amount of$7,350,000 over a
term of twenty(20)years at HUD prevailing interest rates. The loan amount is based upon a
purchase price and an appraised value of$10,500,000 (70% loan to value ration). These funds
will be used to assist The Harris' Company, a major tenant, with the acquisition of the building
they currently occupy and lease, thus maintaining the economic viability of the mall. The use of a
CDBG Float Loan in the amount of$3,150,000 in conjunction with the Section 108 loan is
necessary to make this project viable. The combination of the two (2) loans will result in
significant savings to The Harris Company and a corresponding decrease in annual debt service as
compared with lease payments.
Analysis
The U.S. Department of Housing and Uroan Development (HUD) has completed its analysis and
made its decision relative to the approval of the Section 108 loan application request. Based upon
the HUD notice of approval of the loan(Notice of Approval letter is attached), it would be
appropriate at this time to proceed with the approval of a Section 108 Loan agreement between
the City and Harris'. A copy of the proposed agreement is on file and available for review.
The operating covenant for the Section 108 Loan and the float loan will have an initial term of
three (3) years and will be executed by Harris' for the benefit of the City and will contain as a
minimum the following provisions:
(a) if Harris' (i) ceases substantial store operations(subject to (c) below), or(ii) changes the
character of the merchandizing from that of the present quality, or(iii) relocates the
corporate and administrative offices to another site without the approval of the City, the
float loan would be due and payable and a draw will be made by the City on the letter of
credit.
(b) if the events set forth in(a) above do not occur, then those interest payments as made by
Harris', plus interest earnings thereon, held in the sinking fund shall be remitted to Harris'
as of the date of the float loan repayment in the form of a credit against principal due
under the float loan.
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BJL:EN1W:1ag:01-30-01.cdc: COUNCIL MEETING AGENDA
MEETING DATE: 01/30/1995
Agenda Item Number:
ECONOMIC DEVELOPI.�ENT AGENCY STAFF REPORT
Hams' Company Section 108 Loan
January 26, 1995
Page Number-2-
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(c) Harris' must unconditionally agree to maintain its operations in San Bernardino for the full
term of the three-year covenant subject only to casualty losses that result in the inability to
continue the operations at the store. Harris' must agree to maintain its operations in San
Bernardino for an additional period of two (2)years subject to (i) casualty losses that
result in the inability to continue the operations at the store and (ii) the continued
operations of all of the other majors. If the agreement is breached, any amounts on
deposit in the sinking fund account shall not be used to reduce the amount to be drawn
upon the letter of credit to repay the float loan but will be retained by the City.
Harris' will agree to a ten (10) year operating covenant with the following parameters:
Year 1 to 3: Absolute agreement to operate subject to the casualty loss exception
as set forth in(c) above.
Years 4 to 10: Casualty loss exception applies plus, all other majors must continue
to operate during this period. In addition Harris' must meet the
minimum sales levels for years six(6)i.u:vug-1,ten (10):
FYE 1/31/01 $27,500,000
FYE 1/31/02 $29,000,000
FYE 1/31/03 $30,500,000
FYE 1/31/04 $32,000,000
FYE 1/31/05 $33,500,000
HUD Section 108 Loan will be due and payable at option of the City(i) upon a breach of any
operating covenant that is then in effect; or(ii) upon a breach of any financial covenants then in
effect which were granted by Harris' Company pursuant to the HUD Section 108 loan documents
that are substantially similar to those as contained in existing bank documents previously executed
by Harris'. The financial covenants that will be in effect for the life of the HUD Section 108 Loan
are listed below:
Minimum Net Worth: $73,000,000
Ratio of Quick Assets to Current Liabilities: 1.0 to 1.0
Ratio of Current Assets to Current Liabilities: 2.0 to 1.0
Ratio of Total Liabilities to Tangible Net Worth: Not Exceeding 1.0 to 1.0
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BJL:EMW:lag:01-30-01.cdc: COUNCIL MEETING AGENDA
MEETING DATE: 01/30/1995
Agenda Item Number:
ECONOMIC DEVELOPiviENT AGENCY STAFF REPORT
Harris' Company Section 108 Loan
January 26, 1995
Page Number-3-
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Recommendation
Based upon HUD' s approval of the Section 108 Loan, it is appropriate to proceed with the
approval of the Section 108 Loan Agreement between the City and Harris' and authorize
execution of the agreement subject to changes as may be approved by the Mayor.
Staff recommends adoption of the attached resolution.
14 rXO
BARBARA J. LINDSETH,Acting Director
Economic Development Agency
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BJL:EMW:1ag:01-30-01.cdc: COUNCIL MEETING AGENDA
MEETING DATE: 01/30/1995
Agenda Item Number:
01/26/95 002
I
i
i
ay"`•• a0 rye HUD■■p�}yw� NOTIFICATI ON
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ar � U.S. i►aPari-ment of Housing and IITb3II Development
�'^�"� gtaahi:tgtoa, D.C. 0410
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ACTION: Loan GuaraILLut: Cvxsit=*nt, Flr=A Year 1994
Section 108 Loan Guarantee -Prcigram
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DESCRIFTIQU
. Loan guarantee assisUnuec 11as beer, approved for thr.
Iulluw1lig recipient in the stated amounts
Coagr.
&C Mient Dj*trict _ s unt
fan Bzra�rdino, rA 40, 42 $7,350,000-00
This information is eligible for rele"Fa to the' recipient on
F'AU�xLi lilGiiL3GHT5: SrC ion 100 fundiz will be -loaned to Bar-_ c
Storas to acguiro the pc%:�p44�ty they now lease. :
lxhi3 project will brazeiit low- and MCdfs2te-!=q=e persons
through the creation and/or ratRntion o= jobs.
RECIPIENT CONTACT: Laura Hann-Land2
Development 5p6cla ist, Derelocment
Depart.-neat
Phone: (9n9? 384-�0�31
J♦
4
E C O N O M I C D E V E L O P M E N T A G E N C Y
OF THE CITY OF SAN BERNARDINO
MEMORANDUM
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TO: Mayor and Common Council
FROM: Timothy C. Steinhaus
Agency Administrator
SUBJECT: HUD SECTION 108 LOAN AGREEMENT
DATE: January 26, 1995
COPIES: Shauna Clark; James Penman; Rachel Clark
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Attached you will find a draft copy of the Hud Section 108 Loan Agreement as
companion to the Mayor and Common Council Agenda Item for Harris' to be heard
on Monday, January 30, 1995 at 9:00 a.m.
If you have any questions, please give me a call.
Timothy C. Steinhaus
Agency Administrator
TCS:bl:2008A
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HUD SECTION 108 LOAN AGREEMENT
THIS HUD SECTION 108 LOAN AGREEMENT is dated as of the
day of January, 1995 (the "Agreement" ) by and between the CITY OF
SAN BERNARDINO, a municipal corporation (the "City" ) and HARRIS'
(the "Borrower") . The City and the Borrower are sometimes
hereinafter referred to as a "Party" and collectively as the
"Parties" .
R E C I T A L S
A. WHEREAS, the City has entered into a Contract For
Loan Guarantee Assistance ( "Contract" ) with the United States of
America through its Department of Housing and Urban Development
( "HUD" ) pursuant to Section 108 of the Housing and Community
Development Act of 1974, as amended (the "Act" ) ;
B. WHEREAS, Borrower desires to borrow up to the
maximum principal amount of Seven Million Three Hundred Fifty
Thousand Dollars ($7, 350, 000) (the "Loan" ) from the City for the
purpose of financing Borrowers' acquisition of a retail building
(the "Project" ) located at 300 North "E" Street, San Bernardino,
California 92416 (the "Site" ) ;
C. WHEREAS, the City desires to make the Loan to
Borrower, on the terms and conditions set forth herein and subject
to Borrowers' adherence to the terms and conditions imposed on the
City under the Contract;
D. WHEREAS, the City has made a determination that the
Project, to which the proceeds of the Loan are to be applied
pursuant to this Agreement is a Section 108 eligible special
economic development activity benefiting low and moderate income
persons; and
E. WHEREAS, the City has made a determination that the
Loan is appropriate to carry out a special economic development
project .
NOW, THEREFORE, the Parties agree as follows :
1 . LOAN BY THE CITY.
The City agrees, subject to the terms and conditions of this
Agreement and in consideration of the representations, covenants
and obligations of Borrower contained in this Agreement, to loan to
Borrower, in one or more disbursements, up to the maximum sum of
Seven Million Three Hundred Fifty Thousand Dollars ($7, 350, 000) to
be used solely for the purposes described below and so long as such
purposes constitute Section 108 eligible special economic
development activities .
2 . NOTE; INTEREST.
Prior to any disbursement of any Loan proceeds to Borrower
hereunder, Borrower shall execute and deliver to the City a
Promissory Note (the "Note" ) in the form of Exhibit "A" attached
hereto, which Note sets forth the interest rate, the date and other
terms and conditions of the Loan. The Note shall be dated by
Borrower as of the date of its execution and, upon receipt of the
Note, the City shall insert the Maturity Date (as defined below)
therein. The Loan shall accrue interest as of the date on which
Loan proceeds are first disbursed to Borrower by the City as
provided herein, and ending (except as to interest at the "Default
Rate" , as defined in the Note) on that date which is twenty (20)
years after the date of the Note, at (a) the rate per annum equal
to the London Interbank Offered Rate or (b) the rate per annum
equal to the United States Treasury Department' s Fixed Rate
Program, as elected by the Borrower. Borrower shall make semi-
annual payments over a period of ten (10) years ( "Maturity Date" )
based on a twenty (20) year amortization schedule provided by HUD
as of the date of funding the Loan. Interest payments shall
commence on 1, 1995 . On the Maturity Date, the entire
unpaid principal balance of the Loan, plus all accrued and unpaid
interest thereon, and any other amounts payable by Borrower under
the terms of this Agreement and the Note shall be due and payable .
All payments, including any prepayments or funds received upon
acceleration pursuant to Section 3 below, shall be applied first
toward costs of collection and late charges, if any, then toward
accrued and unpaid interest and then toward the unpaid principal
balance under the Note . As used herein, "Term" shall mean the
period of time commencing with the date of the Note and terminating
on the date when Borrower has repaid the entire outstanding
principal balance and accrued interest on the Loan.
If a payment of interest not timely made remains overdue for
a period of ten (10) days after the same becomes due and payable,
Borrower, without notice or demand by the City or any other holder
of the Note, shall pay a late charge in an amount equal to five
percent (5 9,5) of the delinquent interest owing (the "Late Charge" ) .
Borrower agrees that an amount equal to the Late Charge is a
reasonable estimate of the damage to the City or other holder of
the Note in the event of late payment of interest due hereunder.
3 . ACCELERATION.
The entire principal balance of the Loan and all accrued and
unpaid interest thereon shall be due and payable on the Maturity
Date; provided, however, that the entire principal balance of the
Loan and all accrued and unpaid interest thereon shall, at the
election of the City and upon notice to Borrower thereof (except
with respect to Non-Curable Defaults as defined in Section 15 (A)
(1) below) , become immediately due and payable without presentment,
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demand, protest or other notice of any kind, all of which are
hereby waived by Borrower, upon the occurrence of any Event of
Default as set forth in Section 15 .
4 . LOAN REPAYMENT; VOLUNTARY PREPAYMENT; MANDATORY PREPAYMENT.
At any time after the disbursement of the Loan proceeds,
Borrower may prepay all or a portion of the unpaid principal amount
of the Loan and any or all accrued interest thereon, subject to:
(i) its payment of any and all prepayment penalties; and (ii) its
compliance with the following procedure. In the event Borrower
wishes to prepay (a "Voluntary Prepayment" ) all or any portion of
the unpaid principal amount of the Loan and accrued interest
thereon, Borrower shall deliver at least ten (10) days written
notice (the "Prepayment Notice" ) to the City of such election which
Prepayment Notice shall identify (i) the date such prepayment is to
occur (the "Prepayment Date" ) , (ii) the total principal to be paid,
(iii) the total accrued interest to be paid; and (iv) the total
prepayment penalties to be paid.
It is acknowledged by the Parties that the City may require
prepayment (a "Mandatory Prepayment" ) (either in whole or in part)
of the Loan at any time by delivery of written notice (the "Notice
of Mandatory Prepayment" ) to Borrower. The Notice of Mandatory
Prepayment shall set forth (i) the date such prepayment is to occur
(the "Required Prepayment Date" ) , (ii) the total principal to be
paid, and (iii) the total accrued interest to be paid. The Notice
of Mandatory Prepayment shall be delivered to Borrower at least ten
(10) days prior to the Required Prepayment Date .
The amount of principal and accrued interest set forth in the
Prepayment Notice to be prepaid and the amount of principal and
accrued interest set forth in the Notice of Mandatory Prepayment to
be prepaid shall constitute an amount owing by Borrower to the
City, under this Agreement as of the Prepayment Date and the
Required Prepayment Date, respectively.
Borrower hereby agrees and understands that the prepayment of
the Note shall not relieve Borrower of the duty to comply with the
terms and conditions set forth in the Contract or the covenants
described in Sections 10 and 11 herein, and such obligations and
covenants shall remain in full force and effect pursuant to their
terms .
5 . CONDITIONS TO THE CITY FUNDING THE LOAN.
The obligation of the City to make any disbursement of Loan
proceeds under this Agreement shall be expressly subject to the
following conditions :
A. The execution of this Agreement by the City and Borrower.
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B. Borrower' s adherence to the obligations imposed on the
City under the Contract .
C. Receipt by the City of the executed Note.
D. Receipt by the City from the Borrower of such documents,
certifications and opinions of counsel as are reasonably required
by the City, in form and substance satisfactory to the City,
evidencing (i) that this Agreement, the Note and all other
documents given or executed in connection herewith are duly and
validly executed by and on behalf of and constitute the valid and
enforceable obligation of the Borrower thereunder, pursuant to the
respective terms of each of such documents, and (ii) that the
execution and delivery of the Agreement, the Note and all other
documents executed, or given hereunder or in connection herewith
and the performance by the Borrower thereunder will not breach or
violate any partnership agreement, articles of incorporation, any
by-law restriction, or any law or governmental regulation nor, to
the best of its knowledge, constitute a breach of or default under
any instrument or agreement to which Borrower or any of its general
partners may be a party, and (iii) such other matters as are
reasonably required by the City.
E. The availability to the City of allocated but undrawn
Section 108 funds in an amount sufficient to fund the respective
disbursements of the Loan.
F. If necessary, receipt of environmental clearance for the
Project .
G. No uncured Event of Default shall have occurred.
H. [Reserved]
I . No stop notice or mechanics' lien shall have been filed
unless discharged as provided by law.
J. Borrower shall have provided to the City, in form
satisfactory to the City, copies of good standing certificates from
the California Secretary of State, certifying that Borrower is duly
qualified and in good standing.
K. Borrower shall have provided to the City, in form
satisfactory to the City, certified copies of (i) the by-laws of
Borrower, (ii) a resolution of the board of directors of Borrower
approving, on behalf of Borrower, this Agreement and the other
documents executed by Borrower in connection herewith, and (iii) a
certificate of the Secretary or an Assistant Secretary of Borrower
certifying the names and true signatures of the officers authorized
to sign this Agreement on behalf of Borrower, and the other
documents to be delivered by it hereunder. .
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L. Borrower and not a subsidiary corporation or a limited or
general partnership shall retain ownership of the Project at the
Site during the term that the Loan is outstanding.
6 . OBLIGATION OF BORROWER UNCONDITIONAL.
The obligation of Borrower to repay the Loan and all accrued,
interest thereon shall be absolute and unconditional, and until
such time as all of the outstanding principal of and interest on
the Note shall have been fully paid, Borrower agrees that it :
A. Will use the funds solely for the purposes set forth
below; and
B. Will not terminate or suspend any payment or obligations
under this Agreement, the Note, or any other document executed
hereunder or in connection herewith for any cause, including
without limitation, any acts or circumstances that may constitute
failure of consideration, commercial frustration of purpose, or any
duty, liability or obligation arising out of or in connection with
this Agreement or any document executed hereunder or in connection
herewith.
7 . PURPOSES OF LOAN.
Borrower covenants to use the proceeds of the Loan solely for
purposes of financing Section 108 eligible activities and paying
Section 108 eligible costs incurred in connection with the
acquisition of the Site. The Loan proceeds may not be used for,
and Borrower hereby covenants that it shall not use such proceeds
for, any ineligible purchases and expenditures under the Section
108 Loan Guaranty Program. In no event shall Borrower use or
otherwise invest the proceeds of the Loan except as expressly
provided in this Agreement . Notwithstanding anything to the
contrary herein, provided that Borrower uses the Loan proceeds in
accordance with this Agreement, nothing herein shall restrict
Borrower from borrowing other funds necessary for the completion of
the Project .
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8 . OPERATING COVENANTS .
Borrower shall adhere to a twenty (20) year operating
covenant with the following parameters :
Years 1 to 20 :
(a) Borrower' s absolute agreement to comply with the
terms and conditions set forth in the Contract;
(b) Borrower' s performance of any and all financial
covenants then in effect which were granted by Borrower pursuant to
the HUD Section 108 loan documents that are substantially similar
to those as contained in existing bank documents previously
executed by Borrower;
(c) Borrower and not a subsidiary corporation or a
limited or general partnership shall retain ownership of the store;
and
(d) Borrower shall meet the following financial
covenants :
Minimum Net Worth: $75, 000, 000
Ratio of Quick Assets
to Current Liabilities 1 . 0 to 1 . 0
Ratio of Current Assets
to Current Liabilities 2 . 0 to 1 . 0
Ratio of Total Liabilities
to Tangible Net Worth: Not to Exceed
1 . 0 to 1 . 0
Years 1 to 3 :
(a) Borrower' s absolute agreement to maintain its
operations within the City subject only to casualty losses that
result in the inability to continue operations at the store
("Casualty Losses" ) ;
(b) in the event Borrower ceases substantial store
operations (subject to Casualty Losses) , or changes the character
of the merchandizing from that of its present quality, or relocates
its corporate and administrative offices to another site without
the City' s prior written approval, the Loan shall be immediately
due and payable; and
(c) if the events set forth in (b) above do not occur,
then those interest payments made by Borrower shall be remitted to
Borrower as of the date of the Loan repayment in the form of a
credit against principal due under the Loan.
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Years 4 and 5 :
Borrower agrees to maintain its operations in San
Bernardino for an additional period of two (2) years subject to (i)
Casualty Losses that result in the inability to continue the
operations at the store and (ii) the continue operations of all of
the other major department stores within the Carousal Mall . If
this Operating Covenant is breached, any amounts paid by Borrower
to the City shall be retained by the City.
The Loan shall be due and payable at the option of the
City upon a breach of any Operating Covenant that is then in
effect, or upon a breach of any financial covenants then in effect
which were granted by Borrower pursuant to the HUD Section 108 loan
documents that are substantially similar to those as contained in
existing bank documents previously executed by Borrower.
9 . ADDITIONAL COVENANTS OF BORROWER.
As additional consideration for the making of the Loan by the
City, Borrower covenants as follows :
A. Compliance with Laws . Borrower shall, during the Term,
comply with all applicable federal, state, and local laws,
ordinances, regulations and directives as they pertain to the
performance of this Agreement . This Agreement is subject to and
incorporates the terms of the Act and 24 Code of Federal
Regulations, Chapter V, Part 570, and all amendments or successor
laws, regulations or guidelines thereto (collectively, the "Laws,
Regulations and Guidelines" ) . Borrower understands that the
Project, or that portion thereof funded by the Loan (in the event
the entire Project is not funded by the Loan) , must comply at all
times during the Term with one or more of the three broad national
objectives set forth in 24 CFR 570 . 208 and Borrower covenants that
it will cooperate with the City and HUD, as reasonably necessary,
to maintain compliance therewith. Borrower further understands and
agrees that unless HUD has determined that the Project has received
appropriate environmental review and clearance, no Loan proceeds
shall be disbursed hereunder until compliance with environmental
review and clearance procedures set forth at 24 CFR Part 58 .
B. Jobs . Borrower covenants and agrees that it shall make
a good faith effort to offer permanent jobs, on a first priority
basis, to individuals residing within a five (5) mile radius of the
Project . A map depicting said 5-mile radius is attached hereto as
Exhibit "B" .
Borrower further covenants and agrees that at least fifty-one
percent (510) of all permanent jobs (exclusive of development and
construction jobs) created by that portion of the Project funded by
the Loan will be held by, or will be available to, low and moderate
income persons and will provide training for any jobs requiring
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special skills or education. "Low and moderate income person" is
defined by 24 CFR 570 . 3 (r) as a member of a family having a family
income equal to or less than the Section 8 lower income limit
established by HUD and furnished to the Borrower by the City at the
request of Borrower. Jobs will be considered to be available to
low and moderate income persons for purposes of this Section 9 (B)
only if (i) special skills that can only be acquired with
substantial training or work experience or education beyond high
school are not a prerequisite to fill such jobs, or Borrower agrees
to hire unqualified persons and provide training; and (ii) Borrower
takes actions to ensure that low and moderate income persons
receive first consideration for filling such jobs . In connection
with and in furtherance of the foregoing, Borrower has prepared (i)
a listing by job title of the permanent jobs anticipated to be
created, indicating which jobs will be available to low and
moderate income persons, which jobs require special skills or
education, and which jobs are part-time, if any, a copy of which
listing is attached hereto as Exhibit "C" , and (ii) a description
of actions to be taken by Borrower to ensure that low and moderate
income persons receive first consideration for such jobs, which
description is attached hereto as Exhibit "D" .
In satisfying the requirements of this Section 9 (B) , Borrower
shall require that each prospective low and moderate income
employee complete a Prospective Employee Questionnaire in the form
attached hereto as Exhibit "E" , certifying that his or her family
income does not exceed the income limits applicable to such
prospective employee at the time of such prospective employee' s
application, as such limits may hereafter be established from time
to time in accordance with 24 CFR 570 . 3 and set forth on such
Questionnaire, which Questionnaires shall be submitted by Borrower
to the City accompanied by an Annual Facility Employment Survey in
the form attached hereto as Exhibit "F" (incorporating the data
compiled by Borrower) , upon the earlier of (i) sixty (60) days
after the expiration of twelve (12) months from the date first
written above (and sixty (60) days after the expiration of each
subsequent 12-month period until the filling of all jobs created by
the Project funded by the Loan) , or (ii) sixty (60) days following
the filling of all jobs created by the Project funded by the Loan,
and a certification by Borrower as to those jobs filled by low and
moderate income persons and which applicants were hired.
Notwithstanding anything to the contrary hereinabove, once the
Borrower has completed its initial hiring of permanent employees,
Prospective Employee Questionnaires are not required to thereafter
be submitted on behalf of the Borrower and the hiring data (except
for the data compiled as of the completion of its initial hiring of
permanent employees) for the Borrower need not thereafter be
included in any Annual Facility Employment Survey submitted to the
City. The data compiled as of the completion of the initial hiring
by the Borrower will be analyzed in order to determine compliance
with the 51% hiring requirement specified hereinabove .
-8-
In addition to the Questionnaires and Survey delivered to the
City as provided above, Borrower shall establish and maintain, for
a five (5) year period after satisfaction of the reporting
requirements set forth in this Section 9 (B) , such records as
necessary to enable the City to determine whether Borrower has met
the requirements of this Section 9 (B) , including, without
limitation, (i) a listing by job title of the permanent jobs
filled, and which jobs of those were available to low and moderate
income persons, and (ii) a description of how first consideration
was given to such persons for those jobs, including what hiring
process was used, which low and moderate income persons were
interviewed for a particular job, and which low and moderate income
persons were hired.
C. Affirmative Action. During the Term, Borrower shall take
affirmative action to ensure that the Project shall provide equal
employment and career advancement opportunities for minorities and
women and, to the greatest extent feasible, to provide
opportunities for training and employment of lower income persons
residing within the area of the Project . In furtherance of the
foregoing Borrower shall, prior to the commencement of operations,
deliver to the City a list, reasonably acceptable to the City,
setting forth affirmative steps taken by Borrower, or to be taken
by Borrower, to assure that minority business and women' s business
enterprises are offered an equal opportunity to obtain or compete
for contracts and subcontracts as sources of supplies, equipment,
construction and services . Such affirmative steps may include, but
are not limited to, technical assistance open to all businesses but
designed to enhance opportunities for these enterprises and special
outreach efforts to inform them of contract opportunities . Such
steps shall not include preferring any business in the award of any
contract or subcontract solely or in part on the basis of race or
gender.
Borrower shall deliver to the City semiannually, prior to
April 30 and October 31 of each fiscal year, a report summarizing
the nature of the businesses with which Borrower has entered into
contracts and subcontracts in connection with the Project during
the preceding six (6) month period ending March 31 or September 30 ,
as applicable . The obligation of Borrower to deliver the report
specified in this Section 9 (C) shall expire upon delivery of the
report summarizing the last contracts and subcontracts entered into
by Borrower in connection with the Project and to be paid in whole
or in part with Loan proceeds .
D. Covenant to Perform Services . Borrower shall, during the
Term, perform services consistent with the goals and objectives set
forth in the City of San Bernardino Section 108 Loan Program
Statement of Objectives and Projected Use of Funds, as adopted
during the Term by the Mayor and Common Council of the City of San
Bernardino, which Statement is incorporated herein by this
reference.
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E. Financial Statement . Borrower shall provide annual
financial statements to the City within thirty (30) days after such
financial statements have been presented to Borrower in final form.
F. Other Reports . Upon seventy-two (72) hours written
notice, at any reasonable time until all jobs for the portion of
the Project funded by the Loan have been filled, Borrower shall
prepare and submit to the City, in addition to the books and
records described above, all additional reports and any financial,
program progress, monitoring, evaluation or other reports required
by HUD or the City or its representatives as they relate to the
Project or this Agreement . Borrower shall ensure that its
employees, agents, officers, and board members furnish such
information, which in the reasonable judgment of City
representatives, may be relevant to a question of compliance with
this Agreement or HUD directives, or with the effectiveness,
legality and achievements of the Section 108 Loan Program as they
relate to the Project or this Agreement . Borrower shall retain all
existing records and data relating to the Project for a five (5)
year period after the expiration of the Term. In the event any
litigation, claims or audit is started before the expiration of
said 5-year period, said books and records shall be retained until
all litigation, claims or audit findings involving said books and
records have been resolved.
G. Indemnification. From and after the date that the City
disburses any Loan proceeds to Borrower, Borrower agrees to and
does hereby indemnify, defend and save harmless the City and its
respective agents, officers and employees from and against any and
all liability, expense, including defense costs and legal fees of
counsel acceptable to the City, and claims (collectively, "Claims" )
for damages of any nature whatsoever, including, but not limited
to, bodily injury, death, personal injury or property damage,
arising from or connected with the Project (except to the extent
caused by the gross negligence or wilful misconduct of the City or
its agents or employees) , and including any workers, compensation
suits, liability or expense arising from or in connection with
services performed on behalf of Borrower by any person pursuant to
this Agreement .
H. Audit by State and Federal Agencies . Borrower agrees that
in the event this Agreement or the Loan is subjected to audit,
monitoring or other inspections by appropriate state and federal
agencies, it shall be responsible for complying with such
inspections and paying, on behalf of itself and the City, the full
amount of the liability to the funding agency resulting from such
inspections in the event such liability results from a failure by
Borrower to satisfy applicable law or its obligations under this
Agreement .
I . Program Evaluation and Review. Borrower shall, during
regular business hours, allow City authorized personnel to inspect
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and monitor its facilities and program operations as they relate to
the Project or this Agreement, including the interview of
Borrower' s staff and program participants, as reasonably required
by the City during the Term.
J. Hazardous Materials . Borrower covenants and agrees that,
during its ownership and/or occupancy of the Site, it shall not
(i) deposit "Hazardous Materials" (as defined below) in, on or upon
the Site, or (ii) knowingly permit the deposit of Hazardous
Materials in, on or upon the Site, and Borrower hereby assumes any
and all liability arising in connection with any such deposit of
Hazardous Materials; provided, that this sentence shall not be
construed or understood to prohibit Borrower from allowing
Hazardous Materials to be brought upon the Site so long as they are
materials which are customary and common to the normal course of
business in the operation of a retail department store so long as
such materials are used, stored and disposed of in accordance with
all applicable governmental restrictions . Borrower agrees to
indemnify, defend and hold the City harmless from and against any
Claims respecting the presence of Hazardous Materials in, on or
upon the Site to the extent such Hazardous Materials are brought
thereon by or on behalf of Borrower, its employees, agents or
contractors .
For purposes of this Agreement, the term "Hazardous Materials"
means, without limitation, gasoline, petroleum products,
explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances, polychlorinated biphenyls or
related or similar materials, asbestos or any other substance or
material as may now or hereafter be defined as a hazardous or toxic
substance by any federal, state or local environmental law,
ordinance, rule or regulation, including, without limitation, (i)
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act (42 U. S .C. Section 6901, et sec . ) , (ii) the
Federal Water Pollution Control Act (33 U.S .C. Section 1251, et
s_eec . ) , (iii) the Clean Air Act (42 U.S.C. Section 7401, et sec . ) ,
(iv) the Resource Conservation and Recovery Act, as amended by the
Hazardous and Solid Waste Amendments of 1984 (42 U. S . C.
Section 6902 , et se g. ) , (v) the Toxic Substances Control Act (15
U.S.C. Section 2601-2629) , (vi) the Hazardous Materials
Transportation Act (49 U.S .C. Section 1801, et sue. ) , (vii) the
Carpenter-Presley Tanner Hazardous Substance Account Act (CA Health
& Safety Code Section 25300, et sect. ) , (viii) the Hazardous Waste
Control Law (CA Health & Safety Code Section 25100, et sees . ) , (ix)
the Porter Cologne Water Quality Control Act (CA Water Code
Section 13000, et se . ) , (x) the Safe Drinking Water and Toxic
Enforcement Act of 1986, (xi) the Hazardous Materials Release
Response Plans and Inventory (CA Health & Safety Code
Section 25500, et sec . ) , (xii) the Air Resources Law (CA Health &
Safety Code Section 39000, et sees . ) , or (xiii) in any of the
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regulations adopted and publications; promulgated pursuant to the
foregoing.
K. Insurance. Borrower shall procure and maintain at
Borrower' s expense and until such time as Borrower has repaid the
entire outstanding principal balance and accrued interest on the
Loan, the following insurance against claims for injuries to
persons or damages to property which may arise from or in
connection with the development and operation of the Project by the
Borrower, and its agents, representatives, employees or
subcontractors .
(1) COMPREHENSIVE GENERAL LIABILITY: $1, 000, 000 combined
single limit for each occurrence ($2 , 000, 000 General Aggregate) for
bodily injury, personal injury and property damage, including
products and completed operations coverage .
The City, its officials and employees are to be covered as
additional insureds as respects : liability arising out of
activities performed by or on behalf of the Borrower; premises
owned or used by the Borrower; and products and completed
operations of the Borrower.
(2) AUTOMOBILE LIABILITY: $1, 000, 000 combined single
limit; per accident for bodily injury and property damage covering
owned, non-owned and hired vehicles.
(3) Workers Compensation as required by the California Labor
Code and Employers Liability limits of $1, 000, 000 per accident .
(4) "All Risk" Property Insurance covering the full cost of
all improvements and equipment constructed or purchased under the
terms of this Agreement, including as applicable, builder' s risk
protection during the course of any construction.
Any self-insurance program by Borrower and any self-insured ,
retention must be separately approved by City.
Each insurance policy shall be endorsed to state that coverage
shall not be canceled by either Party, reduced in coverage or in
limits except after (30) days prior written notice has been given
to City.
Acceptable insurance coverage shall be placed with carriers
admitted to write insurance in California or carriers with a rating
of or equivalent to A- (viii) by A.M. Best & Company. Any
deviations from this rule shall require specific approval in
writing.
Borrower shall furnish the City with certificates of insurance
and with original endorsements effecting coverage as required
above, naming the City and the County as additional insureds . The
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certificates and endorsements for each insurance policy are to be
signed by a person authorized by that insurer to bind coverage on
its behalf . Borrower shall be permitted to satisfy the insurance
requirements set forth in this Section 9 (K) pursuant to a blanket
policy of insurance maintained by Borrower so long as the coverage
under such blanket policy satisfies the coverage requirements
specified hereinabove and names the City and the County as
additional insureds .
Failure on the part of Borrower to procure or maintain the
insurance coverage required above shall constitute a material
breach of this Agreement by Borrower pursuant to which the City
shall be entitled to all rights and remedies under this Agreement
as specified in Sections 15 (B) and (C) below. No modification or
waiver of the insurance requirements set forth herein shall be made
without the prior written approval of the Mayor of the City or any
other officer or agent of the City designated in writing by the
Mayor.
L. Federal Lobbyist Requirements . The Borrower is
prohibited by the Department of Interior and Related Agencies
Appropriations Act, known as the Byrd Amendments and HUD' s 24 Code
of Federal Regulations (CFR) 87 (the "Federal Lobbyist
Requirements" ) , from using federally appropriated funds for the
purpose of 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 grant, loan or cooperative agreement, and any
extension, continuation, renewal, amendment or modification of said
documents .
The Borrower must certify in writing that it is familiar with
the Federal Lobbyist Requirements and that all persons and/or
subcontractors acting on behalf of the Borrower will comply with
the Federal Lobbyist Requirements .
Failure on the part of the Borrower or persons/subcontractors
acting on behalf of the Borrower to fully comply with the Federal
Lobbyist Requirements shall constitute a material breach of this
Agreement by the Borrower upon which the City may declare
immediately due and payable all outstanding principal and all
accrued and unpaid interest on the Loan. In addition, the Borrower
may be subject to civil action.
M. Other Requirements . Borrower shall, during the Term,
comply with all other applicable requirements of a subrecipient of
Section 108 funds including without limitation compliance with the
Lead Based Paint Poisoning Prevention Act (42 U. S. C. 4831 (b) ) , and
any other applicable laws including any laws respecting relocation,
displacement and federal labor standards requirements .
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10 . BORROWER' S IMPROVEMENTS
Borrower shall, during the Term cause the following
improvements to be made to the Site in the amounts set forth below:
[To Be Determined]
11. DISCRIMINATION.
Borrower and the City agree that no person shall, on the
grounds of race, sex, creed, color, religion, national origin, or
age be excluded from participation in, be refused the benefits of,
or otherwise be subjected to discrimination in any activities,
programs, or employment supported by this Agreement . Borrower
shall comply with all applicable regulations set forth in 24 CFR
570 . 600-602 , including without limitation, the requirement that
Borrower comply with Title VI of the Civil Rights Act of 1964
(Public Law 88-352) and regulations at 24 CFR Part 1; Section 109
of the Act and the Age Discrimination Act of 1975 (42 U. S .C. 6101-
07) and Executive Order 11246 and the regulations issued pursuant
thereto (41 CFR Chapter 60) , if applicable; and the requirements of
the Americans With Disabilities Act (42 U.S.C. 12101-12213) .
12 . INDEPENDENT CONTRACTOR.
In their performance of this Agreement, the Parties will be
acting in an independent capacity and not as agents, employees,
partners, joint venturers, or associates of one another. The
employees or agents of one Party shall not be deemed or construed
to be the agents or employees of the other Party for any purpose
whatsoever, including workers' compensation liability. Borrower
shall bear the sole responsibility and liability for furnishing
workers' compensation benefits to any person for injuries arising
from or connected with services performed on behalf of Borrower
pursuant to this Agreement .
13 . ASSIGNMENT; ACCELERATION.
Notwithstanding anything which may be or appear to be herein
to the contrary, no purported assignment of this Agreement shall be
effective if such assignment would violate the terms, conditions
and restrictions of the Section 108 Loan Program or any other Laws,
Regulations and Guidelines applicable to this Agreement or such
assignment .
Borrower shall not assign this Agreement or any
performance or benefit under the terms of this Agreement, without
the prior written consent of the City, and any purported assignment
hereof shall be null and void and shall constitute a material
breach of this Agreement . In the event of a sale or transfer of
Project (other than an encumbrance of the Project for security
purposes) without an assignment of this Agreement approved in
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writing by the City, the City may, at its option, declare the
entire principal balance of the Loan and all accrued and unpaid
interest thereon immediately due and payable .
14 . FISCAL LIMITATIONS .
The United States of America through HUD, may in the future
place programmatic or fiscal limitations on Section 108 funds not
presently anticipated. Accordingly, the City reserves the right to
revise this Agreement in order to take account of actions affecting
HUD program funding. In the event of funding reduction in Section
108 funds to such a level that materially affects the ongoing
Section 108 activities of the City, the City may reduce or
eliminate, as necessary, the Loan in whole or in part .
15 . EVENTS OF DEFAULT AND REMEDIES.
A. Events of Default . The occurrence of any of the following
shall, after the giving of any notice described therein, constitute
an event of default ( "Event of Default" ) hereunder:
(1) The failure of Borrower to pay or perform any
covenant or obligation hereunder or under the terms of this
Agreement and/or the Note, without curing such failure within ten
(10) days after receipt of written notice of such default from the
City (or from any party authorized by the City to deliver such
notice as identified by the City in writing to Borrower) .
Provided, however, that a 60 day cure period shall apply to
technical defaults . Further provided, that the herein described
notice requirements and cure periods shall not apply to any Event
of Default described in Sections 15 (A) (2) through 15 (A) (6) below
(hereinafter, "Non-Curable Defaults" ) ;
(2) Any attempted assignment or transfer by Borrower not
in compliance with Section 13 above;
(3) The falsity of any material representation or breach \
of any material warranty made by Borrower under the terms of this
Agreement, the Note or any other document executed in connection
herewith;
(4) A determination by the City or HUD that use of the
Loan proceeds by Borrower does not constitute an eligible activity
under the Act, 24 CFR 570 . 200 et seq. , or other applicable
regulations;
(5) Borrower shall either (a) apply for or consent to
the appointment of a receiver, trustee, liquidator or custodian or
the like of its property, (b) fail to pay or admit in writing its
inability to pay its debts generally as they become due, (c) make
a general assignment for the benefit of creditors, (d) be
adjudicated a bankrupt or insolvent or (e) commence a voluntary
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case under the Federal bankruptcy laws of the United States of
America or file a voluntary petition or answer seeking an
arrangement with creditors or an order for relief or seeking to
take advantage of any insolvency law or file an answer admitting
the material allegations of a petition filed against it in any
bankruptcy or insolvency proceeding; or
(6) If without the application, approval or consent of
Borrower, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy, in
respect of Borrower, for an order for relief or an adjudication in
bankruptcy, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or the like of Borrower or of all or any
substantial part of Borrower' s assets, or other like relief in
respect thereof under any bankruptcy or insolvency law, and, if
such proceeding is being contested by Borrower, in good faith, the;
same shall (a) result in the entry of an order for relief or any
such adjudication or appointment, or (b) continue undismissed, or
pending and unstayed, for any period of ninety (90) consecutive
days .
B. Remedies . Upon the occurrence of an Event of Default
hereunder, the City may, in its sole discretion, take any one or
more of the following actions :
(1) By notice to Borrower (unless an Event of Default is
a Non-Curable Default as defined in Section 15 (A) (1) above in which
case no notice shall be required) , declare the entire principal
balance of the Loan then unpaid together with interest accrued
thereon immediately due and payable, and the same shall become due
and payable without further demand, protest or further notice of
any kind, all of which are expressly waived. Upon such
declaration, outstanding principal and (to the extent permitted by
law) interest shall thereafter bear interest ( "Default Interest" )
at the annual rate of interest equal to the lesser of (i) four ,
percent (4%) above the rate of interest announced from time to time
by Bank of America, Downtown San Bernardino Branch (or, in the
event that said bank is acquired or ceases operations, then, if
there is no successor bank, another established and financially
secure institutional lender selected by the City) , as its prime or
reference rate, or; (ii) the maximum rate of interest permitted to
be paid to the City pursuant to any applicable usury law, payable
from the date of such declaration until paid in full;
(2) Take action at law or in equity as may appear
necessary or desirable, in the sole discretion of the City, in
order to collect the amounts then due and thereafter to become due
hereunder and under the Note, and to enforce performance and
observance of any obligation, agreement or covenant of the Borrower
under this Agreement or under any other document executed in
connection herewith;
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(3) Take any and all actions and do any and all things
which are allowed, permitted or provided by law, in equity or by
statute to enforce and collect upon the Note, including without
limitation suing on the Note or foreclosing legally or judicially
on the Note;
(4) Upon the occurrence of an Event of Default which is
occasioned by Borrower' s failure to pay money under this Agreement,
the City may, but shall not be obligated to, make such payment from
Loan proceeds or other funds of the City. If such payment is made
from proceeds of the Loan or other funds of the City, Borrower
shall deposit with the City, upon written demand therefor, such sum
plus interest at the Default Rate. In either case, the Event of
Default with respect to which any such payment has been made by the
City shall not be deemed cured until such repayment (as the case
may be) has been made by Borrower. Until repaid, such amounts
shall have the security afforded disbursements under the Note;
and/or
(5) Upon the occurrence of an Event of Default described
in Section 15 (A) (6) or 15 (A) (7) hereof, the City shall be entitled
and empowered by intervention in such proceedings or otherwise to
file and prove a claim for the whole amount owing and unpaid on the
Loan and, in the case of commencement of any judicial proceedings,
to file such proof of claim and other papers or documents as may be
necessary or advisable in the judgment of the City and its counsel
to protect the interests of the City and to collect and receive any
monies or other property in satisfaction of its claim.
C. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the City is intended to be exclusive of any other
available remedy or remedies, but each such remedy shall be
cumulative and shall be in addition to every other remedy given
under this Agreement or now existing at law or in equity or by
statute; and may be exercised in such number, at such times and in
such order as the City may determine in its sole discretion. No
delay or omission to exercise any right or power upon the
occurrence of any Event of Default hereunder shall impair any such
right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as
often as may be deemed expedient by the City. In order to entitle
the City to exercise any right or remedy reserved to it under this
Agreement, no notice shall be required except as expressly provided
herein.
16 . DISBURSEMENT OF LOAN PROCEEDS .
Loan proceeds shall be disbursed by wire transfer (pursuant to
wiring instructions to be provided by Borrower) or check to
Borrower or to an escrow company to fund the acquisition of the
Site, and at such time as the City receives the required
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Section 108 funds from HUD, and provided that all the other
conditions set forth in Section 5 above have been satisfied.
17 . AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES.
Borrower agrees to pay or reimburse the City, upon demand by
the City, for all reasonable out-of-pocket costs incurred by the
City in connection with the enforcement of this Agreement, the
Note, including without limitation, reasonable attorneys' fees and
costs (i) if the City shall determine to utilize an attorney to
collect any sums due under this Agreement or any other documents
executed in connection with this Agreement following any default by
Borrower, or (ii) if the City becomes a party or otherwise appears
in any legal proceeding relating to this Agreement or any documents
issued hereunder or in connection herewith, or (iii) if there shall
be filed by or against Borrower any proceedings under any federal
or state bankruptcy or insolvency laws, whether the City is a
creditor in such proceeding or otherwise.
18 . CONFLICT OF INTEREST; NO INDIVIDUAL LIABILITY.
No official or employee of the City shall have any personal
interest, direct or indirect, in this Agreement, nor shall any
official or employee of the City participate in any decision
relating to this Agreement which affects such official' s or
employee' s pecuniary interest in any corporation, Partnership or
association in which such official or employee is directly or
indirectly interested. No official or employee of the City shall
be personally liable in the event of a breach of this Agreement by
the City.
19 . AMENDMENTS, CHANGES AND MODIFICATIONS.
This Agreement may not be amended, changed, modified, altered
or terminated without the prior written consent of the Parties .
20 . EXECUTION OF COUNTERPARTS .
This Agreement may be executed in several counterparts each of
which shall be an original and all of which shall constitute one
and the same document .
21 . NOTICES.
All notices to be given under this Agreement shall be in
writing and shall be delivered personally, by Federal Express or
other like overnight courier or by certified or registered United
States Mail, return receipt requested. Any notice shall be
effective upon delivery or refusal to accept delivery, if delivered
personally, one (1) day after deposit with the Overnight courier,
if delivered by Federal Express or other like Overnight courier,
and two (2) days after mailing, if delivered by certified or
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registered United States Mail . Notices to the Borrower shall be
sent to the following address :
Harris'
300 North "E" Street
San Bernardino, California 92416
Attn: Jorge Pont, President and CEO
With a copy to: McPeters, McAlearney, Shimoff & Hart
A Professional Corporation
615 Brookside Avenue, Suite B
P.O. Box 2084
Redlands, California 92373
Attn: Thomas H. McPeters, Esq.
Notices, reports and statements to the City shall be delivered
or sent to the following address :
City of San Bernardino
300 North "D" Street
San Bernardino, California 92418
Attn: Mayor
With a copy to: Sabo & Green, A Professional Corporation
201 North "E" Street, Suite 206
San Bernardino, California 92401
Attn: Timothy J. Sabo, Esq.
Each Party shall promptly notify the other Party of any
change (s) of address to which notice shall be sent pursuant to this
Agreement .
22 . SEVERABILITY.
The invalidity or unenforceability of any one or more
provisions of this Agreement will in no way affect any other
provision.
23 . INTERPRETATION.
Whenever the context requires, all words used in the singular
will be construed to have been used in the plural, and vice versa,
and each gender will include any other gender. The captions of the
paragraphs of this Agreement are for convenience only and do not
define or limit any terms or provisions . Time is of the essence in
the performance of this Agreement .
24 . NO WAIVER; CONSENTS .
Any waiver by the City must be in writing and will not be
construed as a continuing waiver. No waiver will be implied from
any delay or failure by the City to take action on account of any
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default of Borrower. Consent by the City to any act or omission by
Borrower will not be construed to be a consent to any other or
subsequent act or omission or to waive the requirement for the
City' s consent to be obtained in any future or other instance .
25 . GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
California.
26 . AUTHORITY AND ENFORCEABILITY.
The Borrower warrants and represents that its execution
hereof has been duly authorized, that the individual (s) executing
this Agreement are authorized to do so, and this Agreement
constitutes a legal, valid and binding obligation of Borrower. The
Borrower further agrees to provide such documentation and an
opinion of counsel, as requested by the City, with respect to such
authority and enforceability.
27 . LITIGATION AND COMPLIANCE.
To Borrower' s actual knowledge, there are no suits, other
proceedings or investigations pending or threatened against, or
affecting the business or the properties of Borrower (other than
those as have been previously disclosed in writing to the City)
which could materially impair its ability to perform its
obligations under this Agreement, nor is Borrower in violation of
any laws or ordinances which could materially impair Borrower' s
ability to perform its obligations under this Agreement .
28 . DEFAULT.
To Borrower' s actual knowledge, there are no facts now in
existence which would, with the giving of notice of the lapse of
time, or both, constitute an "Event of Default" hereunder, as
described in Section 15 .
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IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date and year first above written.
HARRIS'
By:
Jorge Pont
President and CEO
ATTEST:
By.
Title
CITY OF SAN BERNARDINO
By:
Tom Minor
Mayor
ATTEST:
By:
Title
SBEO\0001-43\DOC\2010
01\25\95 2:30
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EXHIBIT A
PROMISSORY NOTE
For value received, the undersigned, Harris' , whose address is 300
North "E" Street, San Bernardino, CA 92416 ( "Borrower" ) , promises
to pay to the order of the City of San Bernardino ( "City" ) , a
municipal corporation, at 300 North "D" Street, San Bernardino,
California 92418, Attention: Mayor (or at such other address as the
City may direct) , the principal sum of Seven Million Three Hundred
Fifty Thousand Dollars ($7, 350, 000) , or so much thereof as may be
advanced hereunder from time to time, on or before 1 2005
(the "Maturity Date" ) , together with interest on the outstanding
principal amount hereof at (i) the rate per annum equal to the
London Interbank Offered Rate, or (ii) the rate per annum equal to
the United States Treasury Department' s Fixed Rate Program, as
elected by the Borrower. Borrower shall make semi-annual payments
commencing on —1 1995 and continuing until the Maturity
Date based on a 20 year amotization schedule provided by HUD as of
the date of funding the Loan.
If a payment of interest not timely made remains overdue for a
period of ten (10) days after the same becomes due and payable,
Borrower, without notice or demand by the City or any other holder,
shall pay a late charge in an amount equal to five percent (50) of
the delinquent interest owing (the "Late Charge" ) . Borrower agrees
that an amount equal to the Late Charge is a reasonable estimate of
the damage to the City or other holder in the event of late payment
of interest under this Promissory Note .
This Promissory Note is made pursuant to the terms of the HUD
Section 108 Loan Agreement dated as of January _, 1995 (the
"Agreement" ) entered into between Borrower and the City.
Borrower shall, upon demand by the City, pay to the City, Mandatory
Prepayments (as hereinafter defined) of principal and interest at
such times and in such amounts as the City may determine from time
to time in its sole discretion. As used herein, "Mandatory
Prepayment" means a demand for prepayment by the City for the
partial or total prepayment of the principal and/or interest due on
the loan evidenced by this Promissory Note. In the event of any
Mandatory Prepayment, the City shall give Borrower ten (10) days
written notice prior to the date such prepayment is due .
Borrower shall also have the right to make optional prepayments, at
any time, subject to Borrower' s payment of any and all prepayment
penalties associated therewith, upon at least ten (10) days prior
written notice to the City.
Borrower agrees that it will still be liable for repayment of this
Promissory Note, even if the holder hereof does not follow the
Exh. A - Page 1
procedures of presentment, protest, demand, diligence, notice of
dishonor and of nonpayment, which requirements are hereby waived.
In the event of a default in the timely payment of principal and/or
interest on this Promissory Note, and/or upon the occurrence of an
Event of Default (as defined in the Agreement) , the City may,
subject to any applicable notice requirements set forth in the
Agreement and among other remedies, declare the unpaid balance
hereof, together with accrued interest hereon, to be immediately
due and payable. Upon such declaration, outstanding principal and
(to the extent permitted by law) interest shall thereafter bear
interest at the annual rate of interest (the "Default Rate" ) equal
to the lesser of (i) four percent (40) above the rate of interest
announced from time to time by Bank of America, Downtown San
Bernardino Branch (or, in the event that said bank is acquired or
ceases Operations, then, if there is no successor bank, another
established and financially secure institutional lender selected by
the City) , as its prime or reference rate, or (ii) the maximum rate
of interest permitted to be paid to the City pursuant to any
applicable usury law, payable from the date of such declaration
until paid in full .
It is the intention of Borrower and City to conform strictly to the
usury laws that are applicable to this Promissory Note . This
Promissory Note and any other agreements between Borrower and the
City are hereby expressly limited so that in no contingency or
event whatsoever shall the amount paid or agreed to be paid to the
City or the holder hereof exceed the maximum amount permissible
under applicable usury laws . If under any circumstances
fulfillment of any provision of this Promissory Note, the Agreement
or any other agreement between Borrower and the City shall involve
exceeding the limit of validity prescribed by the law, then the
obligation to be fulfilled shall be reduced to the limit of such
validity. All sums paid or agreed to be paid to the City or the
holder, to the extent permitted by applicable law, and to the
extent necessary to preclude exceeding the limit of validity
prescribed by law, shall be amortized, prorated, and allocated and
spread from the date of disbursement of the proceeds of this
Promissory Note until payment in full of this Promissory Note so
that the actual rate of interest on account of such indebtedness is
uniform throughout the term hereof .
Borrower is responsible for reimbursement to the City for all costs
incurred in connection with the enforcement of this Promissory
Note, including attorneys' fees and costs, whether or not suit is
filed, as is further provided in Section 15 of the Agreement .
This Promissory Note shall be construed in accordance with and
governed by the laws of the State of California. Borrower hereby
submits to personal jurisdiction in San Bernardino County,
California for the enforcement of Borrower' s obligations hereunder,
and waives any defense to such jurisdiction, including, without
Exh. A - Page 2
limitation, any defense based on venue or inconvenient forum.
Failure of the City to exercise any right or remedies hereunder
shall not constitute a waiver of any future or other default .
Amendments to this Promissory Note shall be in writing signed by
the party against whom such amendment is sought to be enforced.
DATED AS OF: 1995 .
HARRIS'
By:
Jorge Pont
President and Chief
Executive Officer
Exh. A - Page 3
EXHIBIT B
FIVE MILE RADIUS MAP
Exh. B - Page 1
EXHIBIT C
JOB GENERATION
HARRIS' BUILDING
Exh. C - Page 1
EXHIBIT D
ACTIONS TO ENSURE FIRST CONSIDERATION
OF LOW AND MODERATE INCOME PERSONS
The "Borrower" will implement the following comprehensive plan
designed to ensure first consideration of low and moderate income
persons or jobs created by the "Project" . The plan will consist of
the following actions which will insure early exposure of
employment opportunities to low and moderate income area residents :
(1) Coordination with manpower and economic development staff
of the City to insure local exposure of job opportunities
and requirements .
(2) Formal coordination with the local Private Industry
Council .
(3) Formal coordination with local Community Colleges and the
San Bernardino Unified School District Adult Education
Program to insure exposure and relate available jobs to
training programs .
(4) A comprehensive program to adequately advertise job
opportunities in local publications . A particular focus
will be publications serving low and moderate income
local households .
Exh. D - Page 1
EXHIBIT E
PROSPECTIVE EMPLOYEE QUESTIONNAIRE
HUD SECTION 108
DIRECT BENEFIT CERTIFICATION FOR ECONOMIC DEVELOPMENT
CERTIFICATION OF FAMILY SIZE AND INCOME
Family Size Family Income
1 $27, 950
2 31, 900
3 35, 900
4 39, 000
5 43 , 100
6 46, 300
7 49, 500
8 52 , 650
My current yearly family income is less than the income level shown
above for my family size . I understand this information is subject
to verification by authorized government officials .
Name -
Address :
Date :
Signature :
QUESTIONS BELOW TO BE ANSWERED BY EMPLOYER OR INTERVIEWER:
The person signing the certification was interviewed for employment
and not hired:
The person signing the certification was hired for employment :
He/She works hours per week.
Signature of interviewer :
THIS CERTIFICATION FORM MAY BE USED TO DOCUMENT DIRECT BENEFIT TO
LOW AND MODERATE INCOME INDIVIDUALS FOR JOB CREATION OR RETENTION
ACTIVITIES .
THE FAMILY INCOMES SHOWN ON THE ABOVE CERTIFICATION ARE APPLICABLE
FOR SAN BERNARDINO COUNTY AND ALL CITIES WITHIN THE COUNTY AS OF
JANUARY , 1995 .
Exh. E - Page 1
EXHIBIT F
CITY OF SAN BERNARDINO
ANNUAL FACILITY EMPLOYMENT SURVEY
Borrower Name :
Address :
Street
City State Zip
Telephone : (area code)
Employment Survey for period commencing
and ending
Permanent* Temporary*
Total number of employees
Total number of low and
moderate income employees
PLEASE ATTACH ALL PROSPECTIVE EMPLOYEE
QUESTIONNAIRES COMPLETED DURING THE PAST YEAR. THE
ANNUAL INCOME OF LOW AND MODERATE INCOME EMPLOYEES
SHOULD NOT EXCEED THE SECTION 8 LOWER INCOME LIMIT
AS DETERMINED BY HUD. REQUEST INCOME REQUIREMENT
DATA FROM THE COMMUNITY DEVELOPMENT COMMISSION.
Return to:
* All part-time employees must be reflected on a full-time
equivalence based upon total hours worked.
Exh. F - Page 1