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HomeMy WebLinkAbout35-Community Development CITY OF SAN BER'" .RDINO nEQUEST ~ JR COUNCIL ACTION From: .-:., ,- I:. . :-. '.' l" ,.,.....- Kenneth J. Herrlerson, D:ired:or' ;,.: .;, SUbject: ...._n... .__ . . . '- "'r-, APPRJVAL OF SM1\LL BUSINESS umN ~ BETWEEN CITY AND C.X. ~ Dept: Canummity Develcpnent , . ' t.. _ ~ ~,_ _' ~, ...F '_'::'" Date: December 22, 1989 Synopsis of Previous Council action: None. Recommended motion: AJX)PI' RESOIIJI'ION LtHA ~t.~:1 Contact person: Ken HerdersonjNestor Nazario Phone: 5065 Supporting data attached: staff Report Ward: 1 FUNDING REQUIREMENTS: Amount: $25,000 Source: (Acct. No.) To be Created (Acct. DescriPtion) EDP IDAN FUND Finance: Council Notes: Aoenda Item No. 35 CITY OF SAN BERtt....tRDINO - REQUEST ~ JR COUNCIL ACTION STAFF REPORT oescriDtion of CatlDanv C.K. Manufacturin;J is a sole proprietorship owned am operated by Mr. Ran:3all Corey. '!he CaIpany has been in existence for four (4) years ani is currently located at 248 S. Sierra Way, suite "E", San Bemardino. '!he product am senrice offered by the CaIpany is cabinets, doors, win::lows am mJldi.n;Js for buildin;J contractors am its main contractor, circuit city, am installation of salle. Mr. Corey has approxilnately seventeen (17) years of experience as a cabinet maker. He has received trainin;J at IDs Angeles Trade Tech- nical College am worked as an apprentice at Boyer I s custom Cabinet am Furniture Center. Prior to startin;J his company, he worked as a cabinet maker ani then as a foreman, both at cabinet making companies. '!he CaIpany works primarily in the San Bemardino area ani currently receives numerous contracts with in::lepen:lent buildin;J contractors . lWaunt and PurDose of Loan '!he Calpany is requestin;J a loan in the annmt of $25,000 for the follCMin;J purposes: 1. Notes Payable (Equipnent Catpany) : 2. Taxes: 3. Workirq Capital: Total : $ 5,000 $10,000 $10.000 $25.000 Rate and '1'enn '!he loan of $25,000 will be for a pericxi of eight (8) years at a interest rate of six percent (6%). Collateral '!he CaIpany is offerin;J personal property (real estate) worth approxilnately $69,000 ($49,000 real estate mJrtgage): $35,000 worth of furniture am fixtures, am: business equipnent worth approxilnately $23,000. Job Creation within the last two (2) mJnths, the Calpany has hired two (2) new errployees to a current level of six (6) errployees. '!he Can'pany anticipates hirin;J another five (5) errployees within the next five (5) years. 12/21/89 75-0264 C.R. ~ Staff Report COntinued... Paqe -2- Reccmnendation '!he Ecx:mc:.mic Developnent Program Ccmnittee (EDPC) has reviewed am evaluated this reques for financial assistance. '!he initial ~1U.erdation by the EDPC was for the client to provide addi- tional collateral, reduce debt service am reduce the total finan- cial assistance requested fran $35,000 to $25,000. SUbsequently, staff has verified that all conlitions set forth by the EDPC are in place am action reccmnerrli.rg approval of this small business loan application in the ancunt of $25,000 is bei.n:J recommended to the Mayor am Camlon Council. I recommend adoption of the resolution. ~f4At:l_ KnJ/NN/lab/3598 attachments 12/22/89 1 RESOLUTION NUMBER 2 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING AND DIRECTING THE EXECUTION OF A SMALL BUSINESS LOAN AGREEMENT 3 BETWEEN THE CITY OF SAN BERNARDINO AND C.K. MANUFACTURING. 4 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS: 5 6 7 section 1. The Mayor of the City of San Bernardino is hereby authorized to execute, on behalf of the City of San Bernardino, a loan 8 agreement with C.K. Manufacturing, which loan agreement is 9 attached hereto as Exhibit "1" and is incorporated herein by 10 reference as though fully set forth at length. The agreement 11 provides for the loaning of funds from the small business loan 12 program in the amount of $25,000.00. 13 14 15 16 17 18 Section 2. The authorizations to execute the above referenced agreement is rescinded if the parties to the agreement fail to execute same within sixty (60) days of the passage of this resolution. I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and Common Council of the City of San meeting thereof, held on the , 1990, by the following vote to IIII .1 RESOLUTION O. fHE CITY OF SAN BERNARDINO AUTHORIZING THE EXECUTION OF A SMALL BUSINESS LOAN AGREEMENT WITH C.K. MANUFACTURING. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AYES: councilpersons NAYES: ABSENT: CITY CLERK The foregoing resolution is hereby approved this day of , 1990. W.R. HOLCOMB, MAYOR City of San Bernardino Approved as to form and legal content: JAMES F. PENMAN, City Attorney (' I ,.#If :::J /, BY: ~~~ /'iI~~ /. (/' KJH/lab/3599 2-21-89 .2 " CITY OF SAN BERNARDINO COMMUNITY DEVELOPMENT DEPARTMENT "Economic Development Program" (IDB-Financed) BORROWER: RANDALL A. AND WENDY L. COREY, dba: C.K. MANUFACTURING PROJECT TITLE: BUSINESS EXPANSION PROJECT ADDRESS: 248 SOUTH SIERRA WAY. SUITE "E" SAN BERNARDINO, CA 92408 LOAN IS NUMBER 89-10 DEPARTMENT CONTRACTS. OF COMMUNITY DEVELOPMENT KJH/lab/0256 EXHIBIT "I" section Number SECTION I S101. S102. S103. S104. S105. SECTION II S201. S202. S203. S204. r TABLE OF QQl!~~l!~Jl (IDB-Financed) Title PARTIES, TERMS, CONDITIONS PRECEDENT AND INDEPENDENT STATUS Parties to the Agreement Representatives of the Parties and Service of Notices Term of this Agreement Conditions Precedent Independent Contractor Status of the Borrower PURPOSE OF AGREEMENT AND LOAN, LOAN TERMS, AND PROMISSORY NOTE Purpose of the Agreement Purpose of the Loan Terms of the Loan Promissory Note SECTION III REPRESENTATIONS AND COVENANTS OF BORROWER, AND DEFAULT S301. S302. S303. SECTION IV S401. S402. S403. S404. Representations of the Borrower Covenants of the Borrower Default REPORTS, RECORDS AND AUDITS Reporting Requirements Maintenance of Records Audits and Inspections Validity of Financial Documentation Submissions i Paqe 2 2 3 3 3 4 4 4 5 6 7 9 10 11 11 12 section Number 5405. 5406. SECTION V 5501. 5502. 5503. 5504. 5505. 5506. 5507. 5508. 5509. 5510. 5511. 5512. 5513. 5514. 5515. 5516. 5517. TABLE OF CONTENTS (Cont...) (lOB-Financed Agreement) Title Paqe Release of Funds from Escrow 12 Reconveyance Fee 12 GENERAL TERMS AND CONDITIONS Indemnification and Insurance Requirements 12 14 14 14 14 15 16 16 17 17 17 17 Plan Prohibition Against Assignment Limitation of Corporate Acts Amendments and Waivers Compliance with 5tatutes and Regulations Conflict of Interest Political Activity Prohibited Lobbying Prohibited Installation of Financial Assistance 5ign Press Releases Discrimination Prohibited Nondiscrimination, Equal Employment Practices, and Affirmative Action Employment Opportunities for Business 17 and Lower Income Persons Participation of Minorities, Women and 19 5mall Businesses Captions 19 Effect of Legal Judgment 19 Choice of Law Governing this Agreement 19 ii Section Number 5518. 5519. SECTION VI 5601. 5602. KJH/lab/0257 TAb~E OF CONTENTS (Continued...) (IDB-Financed Agreement) Title Prohibition of Legal Proceedings Rights and Remedies ENTIRE AGREEMENT Complete Agreement Number of Pages and Attachments Execution (Signature) Page ATTACHMENTS Attachment I -- Employment Action Plan Attachment II -- Insurance Requirements iii Paqe 19 19 19 20 21 AGREEMENT NUMBER 89-10 (lOB-Financed) BETWEEN THE CITY OF SAN BERNARDINO AND 'DIU RANDALL A. AND WENDY L. COREY, dba: C. K. MANUFACTURING (RELATING TO) THE PROJECT WORKING CAPITAL FOR CUSTOM CABINETS AND FURNITURE ------------------------------------------------------------------ THIS City of San "City", and hereinafter AGREEMENT is made and entered into by and between the Bernardino, a municipal corporation, hereinafter call RANDALL A. AND WENDY L. COREY, dba: C.K. MANUFACTURING called the "Borrower". !:I~~~~~~~H WHEREAS, the City has entered into a Grant Agreement with the United States Department of Housing and Urban Development, hereinafter called the Grantor, pursuant to Title I of the Housing and Community Development Act of 1974, as amended, hereinafter referred to as HCDA, to address the community development needs of the City; and WHEREAS, the Community Development Department, hereinafter called the "CDD" , has been designated by the City to provide for proper planning, coordination and administration of the City's pro- grams as described in the City's Grant Agreement with the Grantor, and of certain projects funded by the City; and WHEREAS, the CDD cooperates with private individuals and organizations, other agencies of the City and agencies of other governmental jurisdictions in carrying out certain functions and programs which are its responsibility; and WHEREAS, the Small Business Revolving Loan Fund program has been established by the City as part of a City of San Bernardino Economic Development Program ("EDP"), and has been approved by the San Bernardino Mayor and Common Council; and WHEREAS, the project which is the subject of this agreement meets the requirements of the above described program; and WHEREAS, Borrower has applied to the City for a loan to help finance the project; and WHEREAS, the City is willing to lend monies to the Borrower on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of and in reliance upon the foregoing and upon the covenants, agreements, representations and warranties herein contained, the City and the Borrower agree as follows: SMALL BUSINESS LOAN ~REEMENT lOB-Financed Page -2- SECTION I. PARTIES. TERM. CONDITIONS PRECEDENT. AND INDEPENDENT STATUS S101. Parties to the Aqreement. The parties to this Agreement are: 1) The City of San Bernardino, a municipal corporation, having its principal office at 300 North "0" Street, San Bernardino, California 92418. 2) The Borrower, RANDAIJ.. A. AND WENDY L. COREY, dba: C.K. MANUFA<;TURING' having its principal address at 248 SOUTH SIERRA WAY SUITE "E", SAN BERNARDINO, CA 92408 The Borrower is (a) SOLE PROPRIETORSHIl> (fictitious name enterprise, individual, California Corporation/general partnership/limited partnership.) S102. Representatives of the Parties and Service of Notices. The representatives of the respective parties who are authorized to administer this Agreement and to whom formal notices, demands and communications shall be given are as follows: 1) The representative of the City shall be, unless other- wise stated in the Agreement: Hr. Kenneth J. Henderson, Director community Development Department 300 North "0" street, Fifth Floor San Bernardino, CA 92418-0001 2) The representative of the Borrower shall be: HR. RANDAIJ.. A. COREY IHRS. WENDY L. COREY dba: C.K. MANUFACTURING 248 SOURTH SIERRA WAY, SUITE "E" SAN BERNARDINO, CA 92408 3) Formal notices, demands and communications to be given hereunder by either party shall be made in writing and may be effected by personal delivery or by registered or certified mail, postage prepaid, return receipt reques- ted and shall be deemed communicated as of the date of mailing. 4) If the name of the person designated to receive the notices, demands or communications or the address of such person is changed, written notice shall be given, in accord with this section, within five (5) working days of said change. SMALL BUSINESS LOAN ,REEMENT lOB-Financed Page -3- S103. Term of this Aqreement. This Agreement shall remain in full force and effect from the date of execution by Borrower of the Promissory Note, until such time as said Promissory Note is paid according to its terms, subject to the provisions of S303 herein. S104. Conditions Precedent. A. Prior to the execution of this Agreement, the Borrower shall submit to the City for approval in writing an Affirmative Action Program Plan in accordance with Section 512 herein. B. In the event that Borrower is a corporation, then prior to the execution of this Agreement, the Borrower shall provide the City with copies of the following documents: 1) Borrower's Articles of Incorporation, and all amendments thereto, as filed with the Secretary of State. 2) Borrower's By-Laws, and all amendments thereto, as adop- ted by the Borrower and properly attested. 3) Resolutions or other corporate actions of the Borrower's Board of Directors, properly attested or certified, which specify the.name(s) of the person(s) authorized to obligate the Borrower and execute contractual documents. 4) Certificate of Good Standing from California Secretary of State. C. In the event that Borrower is a partnership, then prior to the execution of this Agreement, the Borrower shall provide the City with copies of the Borrower's Partnership Agree- ment, and evidence of filing thereof with appropriate filing official. D. In the event the Borrower is an individual doing business under fictitious name, a copy of the Fictitious Name state- ment and evidence of the proper filing thereof. 8105. Independent Contractor status of the Borrower. The parties agree that the Borrower is an independent con- tractor and that no employees of the Borrower have been, are, or shall be employees of the City by virtue of this Agreement, and the Borrower shall so inform each employee organization and each employee who is hired or retained by it. SMALL BUSINESS LOAN lOB-Financed Page -4- ,REEMENT SECTION II. PURPOSE OF AGREEMENT AND LOAN. LOAN TERMS. AND PROMISSORY NOTE S201. PurDose of the Aareement. The purpose of this Agreement is to provide TWENTY-FIVE THOUSAND AND 00/100--------------------------------------------00LlJURS ($ 25.000.00 ) of EDP funds to be loaned by the City to the Borrower, hereinafter called the "Loan", for the purpose and under the terms and conditions set forth herein. S202. PurDose of the Loan. The purpose of the Loan is to provide financial assistance to enable the Borrower to: OBTAIN WORKING CAPITAL: ELIMINATE TAX LIABILITIES: REDUCE NOTES PAYABLE- (of $7.500):, $10.000.00 $10.000.00 $ 5.000.00 $25.000.00 S203. Terms of the Loan. A. The City agrees to lend the Borrower, and the Borrower agrees to borrow from the City, an amount not to exceed TWENTY-FIVE THOUSAND AND 00/100--------------00LlJURS, ($ 25.000.00 ), such transaction hereinafter referred to as the "Loan". The Loan is to be evidenced by, and made against delivery of a Promissory Note executed by the Borrower, hereinafter called the "Note" and by this reference incorporated herein. B. The Note shall (i) be dated as of the closing, (ii) bear interest on the unpaid principal at the rate of SIX PERCENT ( 6'Z. ) per annum, (iii) be for a term of EIGHT (8 ) years, and (d) provide for payment of the principal amount thereof and the interest thereon in NINTY-SIX --------- RMALL BUSINESS LOAN lOB-Financed Page -5- REEMENT (96 ) equal monthly installments of THREE-HUNDRED. TWENTY-EIGHT AND 00/100--------------------------------___________________ DOLLARS ($ 328.54 ), each including principal and interest, and continuing until said principal and interest are paid in full. C. Each monthly installment shall be applied first to the payment of interest then accrued to the date the payment is received, and the balance, if any, to the reduction of the principal. 8204. Promissory Note. A. The obligation of the City to make the Loan is subject to receipt by the City of the Note and, at the City's sole discretion, to the following additional conditions prece- dent: 1) The representations and warranties made herein by the Borrower shall be true and correct at the time of consideration by the Mayor and Common Council of the City of San Bernardino with the same effect as though made at the closing. 2) Receipt by the City from the Borrower of all executed documents in connection with this Agreement; satisfac- tory in form and substance to the city. 3) If matching funds constitute a part of this Agreement, then Borrower shall obtain matching funds in an amount equal to the amount of this loan and, as required by the City, deposit said matching funds into an account with N/ A Escrow Agency. 4) The City and the Borrower have mutually agreed to the terms and conditions as set forth in the Employment Action Plan, which is attached hereto as Attachment I and by this reference is incorporated herein. B. The Note is to be secured as follows: 1. REAL ESTATE (RESIDENTIAL) ESTIMATED "EQUITY" MARKET VALUE $20,000. 2. COMMERCIAL EQUIPMENT ESTIMATED VALUE $23,000. 3. PERSONAL GUARANTEE 4. FURNITURE AND FIXTURES (IF REQUIRED/REQUESTED) PLUS ADDITIONAL EQUIPMENT VALUED AT $35,000.00. C. Borrower shall have the right, without penalty, to prepay the Note together with the accrued interest thereon as of the date of such prepayment. SMALL BUSINESS LOAN ,REEHENT lOB-Financed Page -6- D. The Borrower acknowledges and agrees that the amount being provided under this loan shall be for a total of TWENTY-FIVE THOUSAND AND 00/100-----------------------------------------DOLLARS, ($ 25,000.00), and that no additional funds to cover addi- tional projects costs, anticipated or unanticipated, incur- red as a result of cost overruns or expenses in financing this project, are available under this Agreement. SECTION III. REPRESENTATIONS AND COVENANTS OF BORROWER. AND DEFAULT S301. Representations of the Borrower. To induce City to enter into this Agreement, Borrower cove- nants and represents to City that: 1) The execution, delivery and performance of the Note and this Agreement by Borrower have been duly authorized by Borrower. This Agreement constitutes a legal, valid and binding obligation of Borrower, enforceable in accord- ance with its terms. The execution and delivery of this Agreement and the note, and consummation of the transac- tions herein contemplated, will not conflict with, or result in a breach of, any of the terms, provisions or conditions of any. indenture, contract, instrument or agreement, including any partnership agreement, to which Borrower or any of its officers is a party. No appro- val, consent or authorization of any governmental authority is necessary for the execution, delivery or performance by the Borrower of this Agreement or of any of the terms and conditions. 2) Borrower has good and marketable title to the real pro- perty identified in S204B of this Agreement, located at 248 SOUTH SIERRA WAY, SUITE E , San Bernardino, California, and it is free and clear from all liens except as set forth herein: 23841 BOWL ROAD CRESTLIRE, CALIFORNIA 92325 3) Borrower is in compliance with all applicable statutes, laws, regulations, and executive orders of the United states of America and all states, foreign countries, other governmental bodies and agencies having jurisdic- tion over its business or properties, including (without limitation) all tax laws and Borrower has not received notice of any violation of such statutes, laws, regula- tions or orders which have not been remedied prior to the date of this Agreement. Borrower possesses all licenses, tradenames, trademarks, and permits as are required for conduct of its business without conflict with the rights of others. SMALL BUSINESS LOAN AGREEMENT IDB-Financed Page -7- D. There is not pending or threatened against Borrower, or any of its officers, any actions, suits, proceedings or investi- gations at law or in equity or before or by any federal, state, municipal or governmental department, commission, board, bureau, agency or instrumentality which, if deter- mined adversely, would be likely to have a materially ad- verse effect on the business or properties of Borrower. E. Each and every financial statement, document and record delivered by Borrower to the City in connection with this Agreement and the proposed transaction hereunder is a true and complete copy of said financial statement, document or record, and fairly and accurately reflects the information it purports to portray. There has been no change in the condition, financial or otherwise, of Borrower as shown in the financial statements dated SEPTEMBER 30. 1989 , except changes in the ordinary course of business, none of which, individually or in the aggregate, has been materially adverse. 8302. Additional Covenants of the Borrower. Borrower covenants and agrees that, from the date hereof, until payment in full on the Note and the interest thereon, that it will: 1) Pay the principal and interest on the Note according to its terms. 2) Pay any other amounts that may be due or become due and owing to the City under or pursuant to the terms of this Agreement or the Note. 3) Execute and deliver all instruments, and perform such acts, as the City may reasonably deem necessary or de- sireable to confirm and secure to the City all rights and remedies conferred upon the City by the terms of this Agreement and Note. 4) In the event that Borrower shall grant the City a se- curity interest in Real Property as collateral under S204(B) herein, then Borrower agrees to maintain at Borrower's sole expense a policy of title insurance coverage equal to the amount of the loan. 5) Give notice to the City of any event that constitutes an Event of Default as set forth in Section 303 of this Agreement or that would, with notice, or lapse of time or both, constitute an Event of Default under this Agreement. Notice shall specify the nature of such Event of Default. SMALL BUSINESS LOAN .REEMENT IDB-Financed Page -8- 6) Not enter into any agreement or other commitment the performance of which would constitute a breach of any of the covenants contained in this Agreement. 7) Use the Loan proceeds only for the purposes stated in this Agreement and for no other purpose or purposes. 8) Observe all applicable federal, state and local statutes and regulations as well as City of San Bernardino Ordi- nances as further defined and set forth in Section 505 of this Agreement. 9) In the event that Borrower is a corporation, then Bor- rower shall do or cause to be done all things necessary to preserve and keep in full force and effect its corpo- rate existence, rights and franchises. 10) Not violate any laws, ordinances, governmental rules or regulations to which it is subject and not fail to ob- tain any licenses, permits, franchises or other govern- mental authorization necessary to conduct its business, which violation or failure to obtain might have a mate- rial adverse effect on the business, prospects, profits or condition (financial or otherwise) of Borrower. 11) Submit an Annual Employment Report on or before the fif- teenth (15th) day of June for the year(s) 1990-2000 . The Annual Employment Report shall de- tail Borrower's compliance with the Employment Action Plan, Attachment I attached hereto and by this reference incorporated herein, for the preceding twelve (12) month period. 12) Maintain adequate insurance with respect to the col- lateral and the (proprietorship, partnership or cor- porate) business which is the subject of this Agreement, with reputable insurance companies. The Borrower shall maintain insurance in such amounts and against such risks as is customary with companies in the same or similar business; in addition, said insurance cover- ages(s) shall be in accordance with the general insur- ance provisions of this Agreement as specified in S501(B) (5), including fire, hazard and general compre- hensive liability insurance, worker's compensation, con- struction/rehabilitation liability, to protect such bus iness and all property securing the City's loan. Said insurance shall be maintained throughout the term of this loan. The City shall be named as an additional insured, and the policy or policies shall not be subject to cancellation, reduction or nonrenewal without thirty (30) days prior written notification to the City Attor- ney by certified mail. SMALL BUSINESS LOAN ~REEMENT lOB-Financed Page -9- 13) Pay all indebteness and obligations promptly in accord- ance with normal terms and promptly pay and discharge or cause to paid and discharged all taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits or upon any of its property, real, personal or mixed, or upon any part thereof, re- spectively, before the same shall become in default. S303. Default. A. The entire unpaid principal of the Note, and interest then accrued thereon, shall become and be forthwith due and pay- able upon written demand by the city or the City's assigns, without any other notice or demand of any kind or any pre- sentment or protest, if anyone of the following events (herein called an "Event of Default") shall occur and be continuing at the time of such demand, whether voluntarily or involuntarily, or, without limitation, occurring or brought about by operation of law or pursuant to or in compliance with any judgment, decree or order of any court of any order, rule or regulation or any governmental body, provided however that such sum shall not be payable if Borrower's payments have been expressly extended by the City or the City's assigns. "Events of Default" shall include: 1) Payment of any installment of principal or interest on the Note is not paid when due and such payment remains unpaid for thirty (30) days. 2) Borrower fails to pay when due, or declared due, the obligations secured under this Agreement. 3) Borrower fails to perform or comply with any terms, conditions, or covenants as provided in this Agreement or in any instruments securing or related to this Agree- ment. 4) If any representation or warranty made by the Borrower in this Agreement shall prove to be untrue in any mate- rial respect, or if any report, financial statement or financial schedule or other instrument delivered under or pursuant to this Agreement or the transactions con- templated herein, to the City or to any other holder of the Note shall prove to be untrue in any material re- spect as of the date as of which made. 5) A court enters a decree or order for relief in respect of the Borrower in an involuntary case under any appli- cable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Borrower or for any substantial part of ~ . SMALL BUSINESS LOAN ZDB-Financed Page -10- ~EEMENT its property, or orders the winding up or liquidation of its affairs and such decree or order remains unstayed and in effect for a period of sixty (60) consecutive days. 6) The occurrence (i) of Borrower's becoming insolvent or bankrupt, or ceasing, being unable, or admitting in writing its inability to pay its debts as they mature, or making a general assignment for the benefit of, or entering into any composition or arrangement with credi- tors: (ii) of proceedings for the appointment of a re- ceiver, trustee or liquidator of Debtor, or of a sub- stantial part of its assets, being authorized or insti- tuted by or against it: or (iii) of proceedings under any bankruptcy, reorganization, readjustment of debt, insolvency, dissolution, liquidation or other similar law of any jurisdiction being authorized or instituted by or against the Borrower. 7) A cessation or substantial reduction of operations in the business which is the subject of this Agreement under circumstances indicative to the City of a lack of intention or ability to provide continuing employment and economic benefits for the area in which the business is located. 8) Failure to submit the Annual Employment Report referred to in 5302(12) within ninty (90) days of the scheduled due date for said Report. 9. The loss, theft, substantial damage, destruction, aban- donment, sale or encumbrance to or of any of the colla- teral securing payment of the Note, in any manner not fully covered by insurance, or the making of any levy, seizure or attachment thereof or thereon. B. If Borrower shall at any time default in making any payment of principal or interest on the Note, Borrower shall to the full extent permitted by law, pay to the City or other holder of the Note, in addition to any other amounts that may be due from Borrower to such holder, an amount equal to the reasonable costs and expenses incurred by such holder, in its efforts to protect its collateral, secure payment, or otherwise defend its interests hereunder in any judicial or administrative proceeding. SECTION IV. REPORTS. RECORDS AND AUDITS 8401. Reoortina Reauirements. A. At such times and in such forms as the City may require, there shall be furnished to the City such statements, I SHALL BUSINESS LOAN iREEMENT IDB-Financed Page -11- records, reports, data and information as the City may request pertaining to matters covered by this Agreement. B. Borrower will provide its financial and accounting state- ments to the City for the period ending DECEMBER 31. 1989 and annually thereafter during term of this Agreement, but not later than three (3) months following the expiration of any such period, and at each other time and in such form as the City may prescribe. S402. Maintenance of Records. A. Records, in their original form, shall be maintained in accordance with the requirements prescribed by the Grantor and the City with respect to all matters covered by this Agreement. Such records shall be retained for a period of six (6) years after termination of this Agreement and after all other pending matters are closed. "Pending Matters" in- clude, but are not limited to, an audit, litigation, or other actions involving records. The City may, at its dis- cretion, take possession of and retain said records. B. Records in their original form pertaining to. matters covered by this Agreement shall at all times be retained within the City of San Bernardino, or some other location specifically authorizing in writing by the Director of Community Develop- ment, unless authorization to remove them is granted in writing by the City. S403. AUdits and Inspections. A. At any time during normal business hours and as often as the Grantor, the u.S. Comptroller General, Auditor General of the State of California or the City may deem necessary, the Borrower shall make available to the City for examination, all of its records with respect to all matters covered by this Agreement. The City, Auditor General of the state of California, Grantor, and the U.S. Comptroller General shall have the authority to audit, examine and make excerpts or transcripts from records, including all contracts, invoices, materials, payrolls, records of personnel, conditions of employment and other data relating to all matters covered by this Agreement. B. The City shall have the authority to make physical inspec- tions and to require such physical safeguarding devices as locks, alarms, safes, fire extinguishers, sprinkler system, etc., to safeguard property and/or equipment funded or secu- red by this Agreement. Notwithstanding such inspection authority, Borrower is soley responsible for the provision of security and for the safe guarding of the business and its property. SMALL BUSINESS LOAN ~REEMENT lOB-Financed Page -12- S404. Validity of Financial Documentation SUbmissions. Financial reports required to be prepared and submitted by the Borrower to the City shall be accurate and correct in all respects. S405. Release of Funds from Escrow. A. All loan proceeds shall be deposited into an escrow account with an escrow company designated by the city. Disbursement of funds shall be jointly authorized by the Borrower and the city. Each disbursement shall be in accordance with 5202 "Purpose of the Loan" and shall be properly supported by invoices, vouchers, executed payrolls, time records or other documentation evidencing an expenditure and/or encumbrance of funds. B. The costs associated with the loan such as escrow fees, credit reports (TRW) , title reports, or other similar costs shall be delineated in the escrow instructions and disbursed from the loan proceeds upon opening of the escrow account. S406. Reconvevance Fee In the event that real property is used to secure this Loan, then Borrower agrees to pay any costs incident to title re- conveyance, including, if applicable, trustee's fees, attor- ney fees, document preparation fees, recording fees or any other related expenses. SECTION V. GENERAL TERMS AND CONDITIONS 8501. Indemnification and Insurance Reauirements. A. Indemnification: The Borrower undertakes and agrees to defend, indemnify and hold harmless the City and any and all of the City's offi- cers, agents, employees, assigns, and successors in interest from and against all suits and causes of action, claims, cost of litigation, damage or liability of any nature what- soever, for death or injury to any person, including Bor- rower's employees and agents, or damage or destruction to any property of either party hereto or third persons in any manner arising by reason of or incident to the performance of this Agreement on the part of the Borrower or subborrower any tier whether or not contributed to by any act or ommis- sion, active or passive, negligent or otherwise, except for the sole negligence of the City, or the sole negligence of any of the City's officers, agents or employees. City ap- SMALL BUSINESS LOAN ~REEMENT lOB-Financed Page -13- proval of the Borrower's performance, or failure to object, shall be no defense to Borrower concerning its undertaking herein to defend and indemnify City and others. B. Insurance: 1) The Borrower shall provide and maintain at its own ex- pense throughout the term of this Agreement the insur- ance requirements specified herein. Evidence of insur- ance shall be submitted for approval by the City. The City special endorsement forms, referenced hereto and incorporated by reference, are the preferred form of evidence of insurance. Alternatively, Borrower may submit two (2) certified copies of the full policy con- taining the appropriate cancellation notice language and additional insured/loss payee language as specified. 2) No release of funds from the Escrow Account shall be made to the Borrower until such time as the Borrower has complied with all insurance and bonding requirements under this Agreement. The City's Additional Insured Endorsement form, or a form approved by the City, stat- ing that the Borrower is so insured, must accompany any demand for funds unless said form has been previously submitted and approved by the City. (Certification of insurance shall be procured, filed and approved in strict compliance with City rules and regulations.) 3) With respect to the interests of the City, such insur- ance shall not be cancelled, reduced in coverage or limited or non-renewed, except after thirty (30) days written notice by receipted delivery has been given to the Office of the City Attorney, City Hall, 300 North "0" street, San Bernardino, CA 92418-0001. Policies of insurance and fidelity bonds, except for policies cover- ing Worker's Compensation and Employees' and Volunteer's Owned and/or Leased Vehicles, shall name the City as an Additional Insured and said endorsements or other evi- dence of insurance shall so indicate. Fidelity bonds shall name the City as loss payee or additional insured. In the event of any cancellation, non-renewal, reduction or limitation of coverage, or notice that such will be effected, City may, but is not required to, obtain insu- rance to protect its interests, in which event the cost thereof shall be reimbursed by Borrower forthwith. Any failure to forthwith reimburse such expense shall con- stitute an Event of Default. 4) The City reserves the right at any time during the term of this Agreement to change the amounts and types of insurance required hereunder by giving Borrower ninty (90) days written notice. ~ SMALL BUSINESS LOAl .~REEMENT lOB-Financed Page -14- 5. The Borrower shall maintain minimum insurance coverages prescribed in Attachment II of this Agreement, which by this reference is incorporated herein. S502. Prohibition Aqainst Assiqnment. A. The Borrower shall not assign this Agreement, nor assign or transfer any interest or obligation in this Agreement (whe- ther by assignment or novation) without prior written con- sent of the city. No part of the property securing this Agreement shall be assigned or transferred (except sales of inventory in the ordinary course of business), nor shall such property be pledged, without the prior written consent of city. B. The Borrower shall not enter into any agreement with any other party under which such other party shall become the recipient of claims due or to become due to the Borrower from the City without prior written consent of the city. S503. Limitation of CorDorate Acts. In the event that Borrower is a corporation then the Bor- rower shall not amend its Articles of Incorporation or By- Laws, move to dissolve, transfer any assets derived from funds provided under this Agreement, or take any other steps which may materially affect its operations within the per- formance of this Agreement without first notifying the City in writing. The Borrower shall notify the City immediately in writing of any change in the Borrower's corporate name. 8504. Amendments and Waivers. This Agreement may not be changed or amended orally, and no waiver hereunder may be oral, but any change or amendment hereto or any waiver hereunder must be in writing and signed by the party or parties against whom such change, amendment, or waiver is sought to be enforced. S505. ComDliance with statutes and Requlations. A. The Borrower warrants and certifies that in the performance of this Agreement, it shall comply with all applicable staa- tutes, rules, regulations and orders of the United states, the state of California, the County and City of San Bernar- dino, including laws and regulations pertaining to labor, wages, hours and other conditions of employment and the City'S anti-discrimination provisions and Affirmative Action Plan which by this reference is incorporated herein. Bor- rower further warrants and certifies that it shall comply with new, amended, or revised laws, regulations, and/or procedures that apply to the performance of this Agreement, upon being provided notice thereof. SMALL BUSINESS LOAN ~REEMENT lOB-Financed Page -15- Borrower covenants that the Davis-Bacon Act as amended, the Contract Work Hours and Safety Standards Act, and the Cope- land "Anti-Kickback Act" shall be a part of all construction contracts awarded by the Borrower pursuant to this Agreement and all subcontracts thereto. 8506. Conflict of Interest. A. The Borrower covenants that none of its directors, officers, employees, or agents shall participate in selecting subcon- tractors, or administering subcontracts supported (in whole or in part) by federal funds where such person is a direc- tor, officer, employee or agent of the subcontractor, or where such person knows or should have known that: 1) A member of such person's immediate family, or partner, or organization has a financial interest in the subcon- tract~ 2) The subcontractor is someone with whom such person has negotiated or is negotiating any prospective employment, or~ 3) The participation of such persons would be prohibited by the California Political Reform Act, California Govern- ment Code Section 87100 et seg., if such person were a public officer, because such person would have a "finan- cial or other interest" in the subcontract. B. Definitions: 1) The term "immediate family" includes, but is not limited to, those persons related by blood or marriage, such as husband, wife, father, mother, brother, sister, son, daughter, father-in-law, motherin-Iaw, brother-in-law, son-in-law and daughter-in-law. 2) The term "financial or other interest" includes, but is not limited to: (a) Any direct or indirect financial interest in the specific contract, including a commission or fee, a share of the proceeds, prospect of a promotion or future employment, a profit, or any other form of financial reward. (b) Any of the following interests in the subcontracting entity: partnership interest or other beneficial interest of five percent (5%) or more of the stock~ employment in a managerial capacity~ or membership on the board of directors or governing body. This provision shall not apply to serving on the board or governing body of a non-profit corporation for which no salary is paid or other compensation. . SMALL BUSINESS LOAN .REEMENT IDB-Financed Page -16- C. The Borrower further covenants that no officer, director, employee or agent shall solicit or accept gratuities, fa- vors, or anything of monetary value, from an actual or po- tential subcontractor, supplier, a party to a subagreement, (or persons who are otherwise in a position to benefit from the actions of any officer, employee or agent). D. The Borrower shall not subcontract with a former director, officer, or employee within a one (1) year period following the termination of the relationship between said person and the Borrower. E. Prior to obtaining the City's approval of any subcontract, the Borrower shall disclose to the City any relationship, financial or otherwise, direct or indirect, of the Borrower or any of its officers, directors or employees of their im- mediate family with the proposed subcontractor and its offi- cers, directors or employees. F. For further clarification of the meaning of any of the terms used herein, the parties agree that references shall be made to the guidelines, rules and laws of the City of San Bernar- dino, state of California, and federal regulations regarding conflict of interest. G. The Borrower warrants that it has not paid or given and will not payor give to any third person any money or other con- sideration for obtaining this Agreement. H. The Borrower covenants that no member, officer, employee of Borrower shall have any interest, direct or indirect, in any contract or subcontract of the proceeds thereof for work to be performed in connection with this project during hiS/her tenure as such employee, member or officer or for one (1) year thereafter. I. The Borrower shall incorporate the foregoing subsections of this section into every agreement that it enters into in connection with this project and shall substitute the term "Subcontractor" for the term "Borrower" and "Sub-contractorll for "Subcontractorll. S507. Political Activitv Prohibited. None of the funds, materials, property or services provided directly or indirectly under this Agreement shall be used for any partisan political activity, or to further the elec- tion or defeat of any candidate for public office. 8508. LObbvinq Prohibited. None of the funds provided under this Agreement shall be used for any purpose designed to support or defeat any pend- ing legislation or administrative regulation. SMALL BUSlNES8 LO~' ~REEMENT lOB-Financed Page -17- 8509. Installation of Financial Assistance Plan. The Borrower shall install, or cause to be installed, for public display upon the project premises a sign, with design approved by City, identifying the Borrower as receiving financial assistance from the city, if such a sign is re- quested by the Director of Community Development Department. 8510. Press Releases. In all communications with the press, television, radio or any other means of communicating with the general community, the Borrower shall make specific reference to the City of San Bernardino Community Development Department as the spon- soring agency of the project. S511. Discrimination Prohibited. No person shall on the grounds of race, religion, ancestry, color, national origin, sex, age, or physical handicap, be excluded from participation in, be denied the benefit of, or be subjected to discrimination under this program/project. For purposes of this Section, Title 24, Code of Federal Re- gulations Section 570.601(b) defines specific discriminatory actions which are prohibited and correction action which shall be taken in situations as defined therein. S512. Nondiscrimination. Eaual Emplovment Practices and Affirma- tive Action Proqram. The Borrower shall comply with the nondiscrimination and affirmative action provisions of the laws of the united States of America, the State of California, and the City. In performing this Agreement, the Borrower shall not discri- minate in its employment practices against any employee, or applicant for employment because of person's race, religion, ancestry, color, national origin, sex, age or physical handicap. Any subcontract entered into by the Borrower re- lating to this Agreement, to the extent allowed hereunder, shall be subject to the provisions of this paragraph. S513. EmploYment Opportunities for Business and Lower Income Persons. Any project/program funded in part or in whole with Com- munity Development funds shall comply with the following provisions (referred to as a section 3 clause:) 1) The work to be performed under this contract (Agreement) is on a project assisted under a program providing di- rect Federal financing assistance from the Department of Housing and Urban Development and is subject to the re- quirements of Section 3 of the Housing and Urban Deve- SMALL BUSINESS LOAN AGREEMENT - SHALL BUSINESS LOAN JREEMENT lOB-Financed Page -18- lopment Act of 1968, as amended, 12 USC 1701u. Section 3 requires that, to the greatest extent feasible, oppor- tunities for training and employment be given to lower income residents of the project area and contracts (agreements) for work in connection with the project be awarded to business concerns which are located in, or owned in substantial part by persons residing in the area of the project. 2) The parties to this contract (Agreement) will comply with the provisions of said Section 3 and the regula- tions issued pursuant thereto by the Secretary of Hous- ing and Urban Development set forth in Title 24 CFR, Part 135, and all applicable rules and orders of the Department issued thereunder prior to the execution of this contract (Agreement) certify and agree that they are under no contractual or other disability which would prevent them from complying with these requirements. 3) The Borrower will send to each labor organization or representative of workers with which he/she has a collective bargaining agreement or other contract or understanding, if any, a notice advising the said labor organization or worker's representative of its commitments under this Section 3 clause and shall post copies of the notice in conspicuous places available to employees and applicants for employment and training. 4) The Borrower will include this Section 3 clause in every subcontract for work in connection with the project and will, at the direction of the applicant for or recipient of Federal financial assistance, take appropriate action pursuant to the subcontract upon a finding that the sub- contractor is in violation of regulations issued by the Secretary of Housing and Urban Development, 24 CFR, Part 135. The Borrower will not subcontract with any subcon- tractor where it has notice of knowledge that the latter has been found in violation of regulations under Title 24, CFR 135 and will not let any subcontract unless the subcontractor has first provided it with a preliminary statement of ability to comply with the requirements of these regulations. 5) Compliance with the prov~s1ons of Section 3, the regula- tions set forth in Title 24 CFR, Part 135, and all ap- plicable rules and order of the Department issued there- under prior to the execution of the contract (Agreement) shall be a condition of the federal financial assistance provided to the project, binding upon the applicant or recipient for such assistance, its successors, and as- signs. Failure to fulfill these requirements shall subject the applicant or recipient, its contractors and subcontractors, its successors and assigns to those SMALL BUSINESS LOA}' ~REEMENT lOB-Financed Page -19- sanctions specified by the grant or loan agreement or contract through which federal assistance is provided, and to such sanctions as are specified by Title 24 CFR, Part 135. S514. ParticiDation of Minorities. Women and Small Businesses. To the fullest extent possible in the administration of this Agreement, Borrower agrees to provide opportunities for minorities, women and small businesses to participate in procurements under this Agreement. 8515. CaDtions. The section headings appearing herein shall not be deemed to govern, limit, modify or in any way affect the scope, mean- ing or intent of these conditions. 8516. Effect of Leqal Judament. Should any covenant, condition or provision herein contained be held to be invalid by final judgment in any court of com- petent jurisdiction, the invalidity of such covenant, condi- tion or provision shall not in any way affect any other co- venant, condition or provision herein contained. 8517. Choice of Law Governinq this Aqreement. This Agreement shall be governed by and construed in accord- ance with the laws of the State of California. 8518. Prohibition of Leqal Proceedinqs. The Borrower is prohibited from using Grant funds received under this Agreement, or funds realized as a result of this Agreement, for the purpose of instituting legal proceedings against the City or its official representatives. 8519. Riqhts and Remedies. In the event any party fails to perform, in whole or in part, any promise, covenant, or agreement herein, or should any representation made by it be untrue, any aggrieved party may avail itself to all rights and remedies, at law or equity, in the courts of law. Said rights and remedies are in addition to those provided for herein. 8ECTION VI. ENTIRE AGREEMENT. 8601. ComDlete Aqreement. This Agreement contains the full and complete Agreement bet- . SMALL BUSINESS LOAN .2REEMENT lOB-Financed Page -20- ween the two parties. No verbal agreement or conversation with any officer or employee of either party shall effect or modify any of the terms and conditions of this Agreement. S602. Number of Paqes and Attachments. This Agreement is executed in three (3) duplicate originals, each of which is deemed to be an original. This Agreement includes, TWENTY (~) pages and TWO ( 2 ) attachments which constitute the entire understanding and agreement of the parties. IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII IIII SMALL BUSINESS LOAN ~REEMENT lOB-Financed Page -21- IN WITNESS WHEREOF, the City of Borrower have caused this Agreement to authorized representatives on this ,19_ San Bernardino be executed by day of and thee their duly ATTEST: CITY OF SAN BERNARDINO city Clerk W.R. HOLCOMB, MAYOR City of San Bernardino (CORPORATION) BY Corporate President ATTEST: BY Corporate Secretary Approved as to form and legal content: (Witness) JAMES F. PENMAN City Attorney BY~ lf~ KJH/lab/0683 ATTACHMENT I "EMPLOYMENT ACTION PLAN" Economic Development Program Employment Action Plan statement of Borrower Borrower does hereby state that the funds resulting from the Loan Agreement entered into on behalf of the City of San Bernardino (hereinafter "city") and Borrower shall be used solely for furthering the purpose of the Economic Development Program (EDP). The purpose of EDP assistance is to benefit the low and moderate income residents of the City of San Bernardino through the creation and/or retention of jobs to said per- sons. Pursuant to the purpose of the EDP the Borrower agrees to comply with the following Employment Action Plan: Borrower understands and agrees that in order to deter- mine that said program purpose is being met, an Annual Employment Report shall be filed with the city. Borrower understands that failure to meet the objectives set forth in this Employment Action Plan or failure to comply with the requirements of filing the Annual Employment Report may result in the entire outstanding balance of the loan plus interest, being due upon written demand by the City, pursuant to Section 302 of the Loan Agreement and this Statement. KJH/lab/0254 Economic Development Program ATTACHMENT 1:1: 1:NSURANCE REQU1:REMENTS (Instructions for completing, executing and submitting Evidence of Insurance to the City of San Bernardino.) Insured: RANDALL A. ARD WENDY L. COREY, DBA: C.lt. HANUFACTORIHG (Contractor, Lessee, Permittee, Borrower, Etc.) Agreement/Reference No. 89-10 Date: A. 1:NSURED 1. To expedite completion of the insurance requirements, please give your insurance agent or broker a copy of the Insurance Requirements Sheet along with these instructions and en- dorsement forms. 2. If your agreement requires Workers' Compensation coverage and you have been authorized by the State of California to Self-insure Workers' Compensation, then a copy of the certificate from the State consenting to self-insurance will meet the evidence requirements. 3. All questions relating to insurance should be directed to the person or office ~esponsible for your contract, lease, permit, or other agreement. (See items 9 and 10 below.) B. 1:NSURANCE AGENT OR BROKER 1. Acceptable Evidence -- The appropriate City Special Endorse- ments are the preferred form of evidence. No modifications to the form are permitted. Alternatively, certified copies of the full policy containing additional insured and thirty (30) day cancellation notice language will be accepted subject to review by the City Attorney. Certificates, Verifications, Memoranda of Insurance and other non-binding documents submitted along are not acceptable as evidence of insurance. Binders are acceptable as interim evidence until policies are available. 2. Multiple Policies -- More than one (1) insurance policy may be required to comply with the insurance requirements. Endorsement forms appropriate to your insured's agreement, contract, lease or permit have been provided. 3. Signature -- Please have an authorized representative of the insurance company manually sign completed endorsement forms. Signatures must be originals as the City Attorney will not accept facsimile (rubber stamp, photocopy, etc.) or ini- tialed signatures. 1 INSURANCE REQUIREME: Attachment II continued... Page -2- 4. Underwriter -- The name and address of the insurance company underwriting the coverage must be noted on the endorsement form. In the case of syndicates or Subscription policies, indicate lead underwriters or managing agent and attach a schedule of subscribers, including their percent participa- tion. 5. Document Reference -- Include reference to either the specific City agreement (bid, contract, lease, etc.) or indicate that all such agreements are covered. C. INSURANCE REQUIREMENTS 1. Coverage and Limits -- The coverages and limits for each type of insurance are specified on the insurance requirement sheet. When coverage is on a scheduled basis, a separate sheet may be attached to the endorsement listing such scheduled locations, vehicles, etc., so covered. 2. Excess Insurance -- Endorsements to excess policies will be required when primary insurance is insufficient to comply with the requirements. 3. Additional Pages -- If there is insufficient space on the reverse side of the form to note pertinent information, such as inclusions, exclusions or specific provisions, etc., attach separate sheet$ and note this on the endorsement form. 4. Person to Contact -- Completed endorsements, correspondence and questions relating to the required insurance are to be directed to the following representatives: 5. Technical Assistance -- Improperly completed endorsements will be returned to your insured for correction. 6. Delay in sUbmitting properly completed endorsement forms may delay your insured's intended occupancy or operation. 7. Renewals -- For extensions or renewals of insurance policies which have the City's endorsement formes) attached, we will accept a renewal endorsement or a certificate (with an original signature) as evidence of continued coverage if it includes the statement that the insurance protection afforded the City of San Bernardino has been renewed under the same terms and conditions as previously approved. 2 INSURANCE REQUlREME Attachment II Contin~ed... Page -3- NAME RANDALL A. AND WENDY L. COREY, dba: C.K. HAHUFAC~B AGREEMENT/REFERENCE NUMBER The following coverages noted with an "X" are required with the Combined Single Limits (CSL) as noted on the right. Unless written exception is allowed by Risk Managment. All coverages must add the City as additional insured. Limits Worker's Compensation Employers Liability ( ) statutory $ 100.000 Commercial General Liability ( ) Broad Form Property Damage ( ) Personal Injury ( ) Broad Form Liability Endorsement ( ) Fire Legal Liability ( ) Garagekeepers Legal Liability ( ) Owned Automobiles ( ) Nonowned Automobiles ( ) Hired Automobiles ( ) $1.000.000 Automobile Liability (if auto is used for this contract.) Professional Liability (if applicable) $ $1.000.000 Property Insurance 90% value of buildina (Contents at 100% of value) ( ) Extended Coverage ( ) Vandalism and Malicious Mischief ( ) Business Interruption (90 days minimun) $ (All fixed costs plus payroll) ( ) Crime (inside and outside) ( ) Sprinkler Leakage ( ) Other $ 3 - ~ INSURANCE REQUIREKE: , Attachment II Contil..Jed... Page -4- Inland Marine: $ (total cost of goods in transit at anyone time) Comments: flab 0255 4