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HomeMy WebLinkAboutKNK Enterprises LLC-9/20/2010EDIT "A" MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT (hereinafter "Agreement") between the CITY OF WATERLOO, IOWA, (hereinafter "Issuer") and KNK ENTERPRISES, L.L.C., a limited liability company organized and existing under the laws of the State of Iowa (hereinafter `Borrower"). STATEMENT OF UNDERSTANDING WHEREAS, the Issuer and Borrower acknowledge that Midwestern Disaster Area Revenue Bonds issued by Issuer are subject to Section 265 of the Internal Revenue Code of 1986, as amended. RECITALS WHEREAS, the Issuer is authorized and empowered by Chapter 419 of the Code of Iowa, as amended, (hereinafter "Act") to issue Midwestern Disaster Area revenue bonds or notes and loan the proceeds from the sale of said bonds or notes to one or more parties to be used to defray all or a portion of the cost of acquiring, constructing, and improving land, buildings and improvements for a "project," as that term is defined in the Act, specifically including a project which is suitable for a purpose that is eligible for financing from Midwestern Disaster Area bonds authorized under the federal Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-185, together with any other financing necessary or desirable in connection with such purpose; and WHEREAS, the Issuer proposes to issue Midwestern Disaster Area revenue bonds in an amount not to exceed $10,000,000 (hereinafter `Bonds") and to loan to Borrower the proceeds from the sale of the Bonds to enable borrower to finance a portion of the cost of approximately 8 acres of land and an existing 54,000 square foot building thereon, improving said existing building, and constructuing and improving an additional 30,000 square foot building (the "Project"), all of which are to be located at 1411 Flammang Drive, Waterloo, Iowa, and to pay the costs of issuing the Bonds; and WHEREAS< the Project will be owned and operated by Borrower, and WHEREAS, the City Council has indicated their willingness to proceed with and effect the financing as an inducement to Borrower to locate the Project in or within eight (8) miles of City and the City has advised Borrower that, subject to due compliance with all requirements of law and the obtaining of all necessary consents and approvals of any and all kind or manner to consummate this transaction and realize the Project, the Issuer will issue and sell its Bonds in an amount sufficient to finance a portion of the cost of the Project and to pay costs of issuing the Bonds NOW, THEREFORE, based upon the foregoing premises and the agreements and representations contained herein, it is hereby agreed between the Issuer and Borrower: 1. UNDERTAKINGS ON THE PART OF THE ISSUER. The Issuer represents, covenants and agrees as follows: (a) Subject to the Issuer's fmal approval of the terms, conditions and documentation relating to the issuance of the Bonds, that it will authorize, or cause to be authorized, the issuance {00950187.DOC} 1 and sale of an issue of its Bonds, pursuant to the terms of the Act as then in force, in an aggregate principal amount sufficient to finance a portion of the cost of the Project, which cost, including the costs of issuing the Bonds, is presently estimated not to exceed $10,000,000. (b) That it will cooperate with Borrower to issue the Bonds upon mutually agreeable terms, and it will adopt, or cause to be adopted, such proceedings and authorize the execution of such documents as may be necessary or advisable for the authorization, issuance and sale of the Bonds and the financing of a portion the Project as aforesaid, and the entering into a mutually acceptable Loan Agreement with the Borrower with respect to the Project, all as shall be authorized by law and mutually satisfactory to the Issuer, Counsel to the Issuer (as hereinafter defined) and the Borrower. (c) That it will take or cause to be taken such other acts and adopt such further proceedings as may be required to implement the aforesaid undertakings or as it may deem appropriate in pursuance thereof. 2. UNDERTAKINGS ON THE PART OF THE BORROWER The Borrower represents, covenants and agrees as follows: (a) It will cooperate with the Issuer to sell the Bonds in an aggregate principal amount as above stated; provided, however, that the terms of the Bonds and of the sale and delivery thereof shall be mutually satisfactory to the Issuer and the Borrower. (b) Except as otherwise permitted by Treasury Regulation 1.150-2, Internal Revenue Service Notice 2010-10 and other applicable interpretations, it has not, prior to the date sixty (60) days prior to the declaration of official intent by Issuer, acquired or commenced construction of the Project, or any part thereof to be reimbursed or refinanced with proceeds of the Bonds, and has not paid or incurred any costs related thereto which will be paid or reimbursed from the proceeds of the Bonds, when and if issued. (c) Contemporaneously with the sale of the Bonds it will execute a Loan Agreement with the Issuer under the terms of which the Borrower will obligate itself to pay to the Issuer sums sufficient in the aggregate to pay the principal of, interest and redemption premium, if any, on the Bonds as and when the same shall become due and payable, such instrument to contain other provisions required by law and such other provisions as shall be mutually acceptable to the Issuer and the Borrower. (d) It will take such further action and adopt such further proceedings as may be required to implement its aforesaid undertakings or as it may deem appropriate in pursuance thereof. {00950187.DOC} 2 3. GENERAL PROVISIONS. (a) All commitments of the Issuer under paragraph 1 hereof and of the Borrower under paragraph 2 hereof are subject to the condition that on or before December 31, 2011, (or such other date as shall be mutually satisfactory to the Issuer and the Borrower), the Issuer and the Borrower shall have agreed to mutually acceptable terms for the Bonds and of the sale and delivery thereof, and mutually acceptable terms and conditions of the documents referred to in paragraph 2 and the proceedings referred to in paragraphs 1 and 2 hereof. (b) Whether or not the events set forth in (a) of this paragraph take place within the time set forth or any extension thereof, the Borrower agrees that it will reimburse the Issuer for all reasonable and necessary direct out-of-pocket expenses which the Issuer may incur, including but not limited to, legal fees, printing and publication costs and filing fees arising from the execution of this Agreement and the performance, or preparation to perform by the Issuer of its obligations hereunder, or done at the request of the Borrower and pay such other fees as Issuer may impose. (c) All commitments of the Issuer hereof are further subject to the conditions that the Issuer, and its elected and appointed officials, shall in no event incur any liability for any act or omission hereunder, and that the Bonds described herein shall not constitute an indebtedness of the Issuer within the meaning of any constitutional or statutory provision and shall not constitute nor give rise to a pecuniary liability of the Issuer or a charge against its general credit or taxing powers. (d) Preparation of all resolutions, agreements, instruments, certificates or other documents in final form for adoption and execution shall be the sole responsibility of Bond Counsel, subject to review of Ahlers & Cooney, P.C., Counsel to the Issuer. (e) The execution of this Memorandum of Agreement by the Issuer is not intended to nor does it create a binding commitment on the part of the Issuer to proceed with the issuance of the Bonds. It is further understood that the issuance of the Bonds is subject to further review by the City Council of the Issuer and compliance with all provisions of the Act and the Code, including the holding of a public hearing with respect thereto, and the receipt by Borrower of an allocation of Midwestern Disaster Area bonds from the Iowa Finance Authority and such determination and designation as may be required with respect to the Bonds. (h) The rights and obligations of Borrower may be assigned only with the prior written consent and approval of the Issuer (i) This Memorandum of Agreement may be executed in any number of original counterparts, all of which evidence only one Agreement, and only one of which need be produced for any purpose. {00950187.DOC) [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 3 [SIGNATURE PAGE TO MEMORANDUM OF AGREEMENT] IN WITNESS WHEREOF the parties hereto have entered into this Memorandum of Agreement by their officers thereunto duly authorized as of the 4h day of September, 2010. (Corporate Seal) AI"1'hST: SU HARES, City Clerk {00950187.DOC} CITY OF W .RLOO, IOWA By ERNEST G. CLARK, ayor KNK ENTERPRISES, L.L.C.