042495 EDA -, Official File Copy
CITY OF NEW HOPE
EDA AGENDA
EDA Regular Meeting #6 April 24, 1995
President Edward J. Erickson
Commissioner W. Peter Enck
Commissioner Pat La Vine Norby
Commissioner Gerald Otten
Commissioner Terri Wehling
1. Call to Order
2. Roll Call
3. Approval of Minutes of April 10, 1995
4. Motion Approving Lease Between Phoenix Manufacturing Corporation and the
EDA and Approving a Mutual Release Between Foremost, Inc. and the EDA
(Improvement Project No. 474)
5. Discussion Regarding Request by Universal Color, Inc. for GAP Financing Loan
for Acquisition of/Improvements to Kuppenheimer Building, 7700 42nd Avenue
North
6. Adjournment
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
HENNEPIN COUNTY, MINNESOTA 55428
Approved EDA Minutes April 10, 1995
Meeting //5
CALL TO ORDER President Erickson called the meeting of the Economic Development
Authority to order at 8:51 p.m.
ROLL CALL Present: Erickson, Enck, Otten, Norby
Absent: Wehling
Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald, Bellefuil
APPROVE MINUTES Motion was made by Commissioner Enck, seconded by Commissioner
Otten, to approve the EDA minutes of March 27, 1995. All present voted
in favor. Motion carried.
IMP. PROJECT 505 President Erickson introduced for discussion Item 4, Resolution Approving
Item 4 and Ratifying Awarding Contract for the Construction of Handicap
Accessible Twin Home at 7901-7909 51 st Avenue North (Improvement
Project 505).
EDA RES. 95-05 Commissioner Otten introduced the following resolution and moved its
Item 4 adoption: "RESOLUTION APPROVING AND RATIFYING AWARDING
CONTRACT FOR THE CONSTRUCTION OF HANDICAP ACCESSIBLE TWiN
HOME AT 7901 - 7909 51ST AVENUE NORTH". The motion for the
adoption of the foregoing resolution was seconded by Commissioner Enck,
and upon vote being taken thereon, the following voted in favor thereof:
Erickson, Enck, Otten; and the following voted against the same: Norby;
Absent: Wehling; whereupon the resolution was declared duly passed and
adooted, signed by the president which was attested to by the executive
director.
IMP. PROJECTS05 President Erickson introduced for discussion Item 5, Resolution
Item 5 Authorizing and Approving Sale of 7909 51st Avenue North to T. Jeff
Bangsberg (Improvement Project No. 505).
Mr. Bangsberg was in the audience and introduced himself.
Councilmember Norby welcomed Mr. Bangsberg as a neighbor. She
explained the reason she voted against the item is based on her philosophy
to not vote on anything she can see from the window of her house.
EDA RES. 95-06 Commissioner Enck introduced the following resolution and moved its
Item 5 adoption: "RESOLUTION AUTHORIZING AND APPROVING SALE OF 7909
51ST AVENUE NORTH TO T. JEFF BANGSBERG". The motion for the
adoption of the foregoing resolution was seconded by Commissioner Otten
and upon vote being taken thereon, the following voted in favor thereof:
Erickson, Enck, Otten; and the following voted against the same: Norby;
Absent: Wehling; whereupon the resolution was declared duly oassed and
adooted, signed by the president which was attested to by the executive
director.
5000 WINNETKA President Erickson introduced for discussion Item 6, Discussion Regarding
New Hope EDA April 10, 1995
Page 1
Item 6 Request for Condemnation to Provide Access to Landlocked Parcel at §000
Winnetka Avenue North.
The EDA did not favor the use of condemnation over private property to
give one party an advantage over another.
President Erickson advised against the City becoming involved in a dispute
between two property owners.
For the best interest of everyone concerned, staff was directed to
encourage Mr. Hoyt to work out an agreement for access to the parcel
between the current owners of the Jacobwith site.
Commissioner Enck questioned whether there would be a benefit to Mr.
Hoyt's property and the City to have access to 49th as opposed to
Winnetka Avenue. He noted there may be some benefits to the City. He
suggested referring them to a mediation service to promote dialogue and
reach an amicable compromise.
IMP. PROJECT 537 President Erickson introduced for discussion Item 7, Update on "Shop New
Item 7 Hope" City-Wide Retail Promotion (Improvement Project No. 537).
President Erickson reported that a meeting was held Friday, April 7, and
most retailers are excited about the idea.
Mr. Donahue questioned whether the EDA is comfortable with the program
to date and proposed expenditures. He stated another planning meeting
will be held to work out details and finalize the proposal by the end of the
month. He asked for confirmation from the EDA on the funding of
approximately $32,000 emphasizing that many of the expenses will be
borne on a one-time basis and will not need duplication next year. The
funds will be paid from existing EDA accounts and will not be property tax
dollars. Retailers will be contributing to defray the cost.
Commissioner Norby questioned the likelihood of contributions. Mr.
Donahue explained that an advertisement plan based of different levels of
participation will be offered to retailers.
The EDA unanimously expressed support of the "Shop New Hope"
campaign.
ADJOURNMENT Motion was made by Commissioner Enck, seconded by Commissioner
Norby, to adjourn the meeting. All present voted in favor. The New Hope
EDA adjourned at 9:00 p.m.
Respectfully submitted,
Valerie Leone
City Clerk
New Hope EDA April 10, 1995
Page 2
EDA
REQUF.~T FOR ACTION
Originating Department Approved for Agenda Agenda Section
City Manager EDA
Kirk McDonald , / Item No.
By: Management Assistant By: ~ 4
t'
MOTION APPROVING LEASE BETWEEN ~HOENIX MANUFACTURING CORPORATION AND
THE EDA AND APPROVING A MUTUAL RELEASE BETWEEN FOREMOST, INC. AND THE
EDA (IM. PROVEMENT PROJECT. NO. 474)
The following two documents have been prepared 'by the City Attorney for consideration by the"EDA:
1. A new lease between Phoenix Manufacturing Corporation and the EDA
2. A Mutual Release between Foremost, Inc. and the EDA
EDA approval for both documents is necessary and the City Attorney has indicated that a combined
motion for each action is acceptable.
In the attached letter the City Attorney summarizes what has transpired since the EDA last considered
this matter on March 27th. This lease is between the EDA and Phoenix Manufacturing, the owner of
the Foremost, Inc. assets. The major points of the lease include:
- lease period extends from 4/24/95 through 12/31/95 with no renewal option.
- lease rental of $20,020 (mount of 1995 real estate taxes) due on commencement date of lease.
- Phoenix Manufacturing to pay all operating expenses of building (insurance, maintenance,
utilities) and to correct any substandard building conditions.
- if lessee holds over after lease termination date, they will pay month to month rental with the
payment being equal to 1/12 of the current lease rent.
Hennepin County will classify the property as tax exempt for real estate taxes payable in 1996, however
if Phoenix extends its occupancy of the building into 1996, the City will pay the County a portion of
the rental received in lieu of taxes.
The release will terminate the foremost Lease prior to the 7/19/95 lease termination date, which will
allow the EDA to enter into a new lease with Phoenix Manufacturing. In consideration for the release,
the EDA would not pursue Foremost for the 1995 unpaid rent and Foremost will waive any and all
claims it has against the EDA connected with the ownership of the Foremost site. There will be no loss
to the EDA with this arrangement because Phoenix Manufacturing will be paying Foremost's unpaid
rental payment as part of their base rent under the new lease.
Staff recommends approval of a motion by the EDA approving both the new lease and the mutual
release.
MOTION BY ~ ~'~ SECOND BY
Review: Administration: Finance:
I RFA-O01
CORRICK & SONDRALL, P.A.
STEVEN A. SONDRALL ATTORNEYS AT LAW ~G~Ass~sT^NTs
MICHAEL R. LAFLEUR
MARTIN P. MALECHA Edinburgh Executive Office Plaza LAVONNE E. KESKE
SHARON D. DERBY
WILLIAM C. STRAIT 8525 Edinbrook Crossing
Suite #203
Brooklyn Park, Minnesota 55443
TELEPHONE {612) 425-5671
FAX (612) 425-5867
April 19, 1995
Mr. Kirk McDonald
Management Assistant
City of New Hope
4401 Xylon Avenue North
New Hope, MN 55428'
RE: Foremost Property/Lease to Phoenix Manufacturing Corporation
Our File No. 99.11090
Dear Kirk:
Please find enclosed for consideration at the April 24, 1995
Council meeting the following documents:
1. A new Lease between Phoenix Manufacturing Corporation and
the EDA.
2. A Mutual Release between Foremost, Inc. and the EDA.
We need EDA approval for both documents. A combined motion for
each is acceptable.
I will attempt to summarize what has transpired since the EDA last
considered this matter. Basically, Bill Marceau from Northland
Financial appeared befOre the EDA at its meeting on March 27, 1995.
Mr. Marceau represented to the EDA he was acting on behalf of
Phoenix Manufacturing Corporation to arrange an asset purchase of
the Foremost assets between the First National Bank of Glencoe and
Phoenix Manufacturing Corporation. Foremost's lease with the City
would constitute part of those assets.
The purchase arrangement involves the First National Bank of
Glencoe due to a replevin order said bank obtained against
Foremost, Inc. Foremost gave the bank a security interest in its
personal property as collateral on a loan. When a default occurred
on the loan, the First National Bank of Glencoe moved against the
personal assets of Foremost acquiring title to the assets in lieu
of the loan repayment.
Kirk McDonald
April 19, 1995
Page 2
Apparently, the ,relationships between Phoenix Manufacturing
Corporation, Northland Financial and Foremost, Inc. have completely
broken down since the March 2?th meeting. It is my understanding
Bill Marceau is totally detached from the transaction. As you
know, we are now dealing directly with the owner of Phoenix
Manufacturing Corporation, Tom Giebel. Mr. Giebel has purchased
directly from the First National Bank of Glencoe all personal
assets of Foremost, Inc. Mr. Giebel has also informed us that
Allen Fredendall will have no further involvement with any ongoing
business at the former Foremost property.
As a result, Mr. ~iebel is looking to the EDA for a new lease on
the property through the end of 1995.
The enclosed Lease document constitutes the agreement we recommend
between the EDA and Phoenix Manufacturing Corporation. The main
points it requires are as follows:
1. The lease term runs from April 24, 1995 through December
31, 1995. At this time the lease automatically
terminates with no renewal option.
2. The base rental is $20,020.00. Said amount constitutes
the 1995 real estate taxes levied against the property.
The entire rental payment is due on the commencement date
of the lease, April 24, 1995.
3. The lessee., Phoenix Manufacturing Corporation, will pay
all other operating expenses for the building such as all
public and private utility expenses, insurance premiums
and maintenance costs. The lessee agrees all substandard
conditions of the building will be brought up to minimum
code requirements at the lessee's expense. The EDA will
also be named as a loss payee on all insurance policies.
4. If the lessee holds over after the lease termination
date, our arrangement will revert to a month-to-month
rental arrangement with the monthly rental'payment equal
to 1/12 of the current base rent.
The other terms of the lease are boiler plate to a standard
commercial lease. If you need an explanation of any other terms,
please let me know and I will respond accordingly.
Kirk McDonald
April 19, 1995
Page 3
There are two issues which may need to be included in the lease
that are absent from the document enclosed, An indemnification and
hold harmless clause for hazardous substances and contamination
should be inserted in the lease protecting the EDA from exposure
based on a possible use of the property that could cause such a
problem, I have no reason to believe Phoenix Manufacturing
Corporation deals with hazardous substances, therefore ! doubt the
inclusion of this clause will be a problem for it. Also, Giebel
asked me about a reclamation provision which would allow them to
"gut" the building of any moveable fixtures or equipment upon the
lease termination. We provided this right to Foremost in our
previous lease, but it is not included in the enclosed document.
Mr. Giebel has questioned me about the inclusion of such a
provision. I informed him the EDA may be agreeable if it is still
our intent to demolish this building after the lease termination.
Of course, such a right would be agreeable only if it did not
increase demolition costs. This provision should be discussed at
the April 24 EDA meeting.
Regarding the mutual release with Foremost, Inc., we are in the
process of obtaining a signed release. It is currently being
reviewed by Foremost's attorney. Basically, the release will
terminate the Foremost Lease prior to the duly 19, 1995 lease
termination date. This will allow us to enter into a new lease
with Phoenix Manufacturing Corporation. In consideration for the
release, the EDA will not pursue Foremost for the 1995 unpaid rent.
This would be equal to $10,010.00. In further consideration for
our waiver of the rental payment, Foremost will also waive any and
all claims it has against the EDA or City connected with its
ownership of the Foremost property. This includes all claims
relative to contamination of the Foremost site by the adjacent
Electronic Industries property. The release and waiver of the
rental payment will essentially be a financial "wash" because
Phoenix Manufacturing will be paying Foremost's unpaid rental
payment as part of their base rent under the new lease.
I have also spoken with Tom May from the Hennepin County Assessor's
Office concerning the 1996 tax status for the property. I have
made arrangements for the property to be classified as tax-exempt
for real estate taxes payable in 1996. However, if Phoenix
Manufacturing Corporation extends its occupancy of the building
into the next year as a month-to-month tenancy, we will have to pay
'the County a portion of the rental received from Phoenix
Corporation in lieu of taxes. I am workin9 on receiving a letter
Kirk McDonald
April 19, 1995
Page 4
from the County Assessor's Office establishing this relationship
for the property. Hopefully I will be able to have that letter by
the April 24 meeting.
If you have any questions concerning this matter after reviewing
this ]etter, please do not hesitate to contact me.
Very tru]y yours,
Steven A. Sondrall
slw4
Enclosures
cc: Daniel J. Donahue
LEASE
THIS LEASE is made this day of , 1995,
by, and between the Economic Development Authority in and for the
City of New Hope (hereinafter "Lessor"), and Phoenix Manufacturing
Corporation, a Minnesota corporation (hereinafter "Lessee"). The
Lessor and the Lessee, used collectively herein, may be hereinafter
called the "Parties"
IT IS HEREBY AGREED, in consideration of the mutual covenants
and promises herein:
1. Leased Premises.
The Lessor, in consideration of the herein rents, covenants,
agreements, and stipulations to be paid, kept, and performed
by the Lessee does hereby lease and rent to the Lessee, and
The Lessee hereby agrees to lease, and to take, upon the
terms, and the conditions, hereinafter set forth, certain rea]
property, consisting of a Building, hereinafter called the
"Building", and Land, hereinafter called the "Land", known as
7526 42nd Avenue North in the City of New Hope, in the County
of Hennepin, in the State of Minnesota, and legally described
as follows'
Lot 5, Auditor's Subdivision No. 324, the adjacent
vacated alley, subject to street and utility easements,
Hennepin County, Minnesota.
hereinafter called the "Leased Premises"
2. Base Rent.
The Lessee agrees to pay the Lessor, beginning on the
commencement date of the Term, as hereinafter defined in
Paragraph 4, entitled "Term", of this Lease, a Base Rent,
hereinafter called "Base Rent", of Twenty Thousand and Twenty
Dollars ($20,020.00).
Said Base Rent shall be paid in full on the commencement date
of the term.
3. Additional Rent.
Wherever it is provided in this Lease that the Lessee is
required to make payment to the Lessor, such payment shat] be
deemed to be Additional Rent. Ali remedies applicable to the
nonpayment of rent shat] be applicable to nonpayment of
additional rent.
Notwithstanding the foregoing, such Additional Rent shall not
be deemed to be Base Rent.
4. Term.
The Term of this Lease shall commence April 24, 1995, and
terminate at midnight, December 31, 1995.
It is understood and agreed Lessee shat] have no option to
renew this lease.
5. Current Condition.
The Lessee acknowledges that the Lessee has had ample
opportunity to inspect the condition of the Leased Premises.
The Lessee takes the same in its present condition, "as is"
Before occupying the teased premises, Lessee further agrees to
make all repairs necessary to comply with any federal, state
or local building and zoning codes as determined by Lessor at
the sole cost of the Lessee.
6. Future Upkeep.
The Lessor shall have no responsibility for any maintenance,
repairs, or replacements to the Leased Premises, except only
as specified in Paragraph 12, entitled "Damage or Destruction
of Premises", and in Paragraph 21, entitled "Condemnation"
7. Maintenance and Repairs by Lessee.
Other than as provided in Paragraph 12, entitled "Damage or
Destruction of Premises", and in Paragraph 21, entitled
"Condemnation", the Lessee agrees, at its own expense, to keep
and maintain the Leased Premises.
This shall include, without limiting the generality of the
foregoing: foundations, structural components, walls, roofs,
HVAC systems, plumbing systems, electrical systems, floors,
exterior and interior doors, windows, and glass, all other
components of the building, driveways, walkways, and parking
areas.
All shall be in as good a state of operating condition and
repair as the same are turned over to the Lessee, in a clean,
safe, and sanitary condition, and in compliance with all
applicable laws and insurance regulations, excepting normal
and reasonable wear and tear and casualty.
8. Utilities.
The Lessee shall pay, and shall hold the Lessor free and
harmless from, all bills or assessments for lights, heat,
water, gas, sewer rentals or charges, and any other expenses
arising out of, or incidental to, the occupancy of said Leased
Premises.
9. Taxes and Assessments.
The Lessor acknowledges and agrees it shall pay all real
estate taxes and special assessments due against the leased
premises for the term of the lease.
10. Lessee's Improvements.
(a) Lessee's Options.
The Lessee, during the full Term of this Lease, shall have the
right, at any time, and from time to time, at its own, and
sole, expense and liability to place, or to install, within
the Building such leasehold improvements as the Lessee shall
desire.
(b) Ownership Upon Termination.
All such leasehold improvements made by the Lessee shall be.,
and shall remain, at the Lessor's option, at the time of
expiration, or other termination, of this Lease, the property
of the Lessor, without payment or offset. Otherwise such
leasehold improvements shall be removed by the Lessee, at the
Lessee's own expense. Any damage to the Leased Premises by
such removal shall be repaired, at the Lessee's own expense.
(c) Required Approvals.
The Lessee shall first obtain the prior written consent of the
Lessor, and of the Lessor's mortgagee(s), if any, for
improvements involving structural changes or external
appearance changes, including signs, or if the estimated cost
of improvements shall exceed Ten Thousand Dollars
($10,000.00).
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(d) Standards.
No such installation or construction shall violate any lawful
rule or regulation, plat, or zoning regulation, or other law,
ordinance, or regulation applicable thereto. All shall be done
and performed in a good and workmanlike manner.
(e) Costs.
All costs of any such improvements shall be paid by the
Lessee. The Lessee shall allow no liens for labor or materials
to attach to the Leased Premises by virtue thereof.
(f) Specifications Approval.
If the consent of the Lessor, or the Lessor's mortgagee(s), if
any, are required, as provided in this Paragraph, the Lessee
shall submit drawings, specifications, and cost estimates to
Lessor for approval. No work shall be commenced until the
Lessor has approved such drawings and specifications .in
writing.
11. Insurance.
The Lessee agrees to pay all of the premiums required during
the Term hereof, to provide, and to keep in force, the
following insurance coverage.
(a) Nature of Coverage.
(1) Fire and All Risk.
Fire and all risk insurance, in insurance company or
companies authorized to do business in the State of
Minnesota, in an amount not less than the full insurable
value of the Building and other improvements on said
property, and, in any event, with an agreed value
endorsement, with such endorsements and coverages as are
usual for first-class properties of the type of the
Leased Premises.
Such policy or policies shall name the Lessor as the loss
payee under all such policies.
(2) Commercial General Liability.
Commercial general liability insurance, providing
coverage on an "occurrence" rather than a "claims made"
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basis, which policy shall include coverage for bodily
injury, property damage, personal injury, contractual
liability and independent contractors, with combined
policy limits of not less than Two Million Dollars
($2,000,000), for injury or death in any one accident or
occurrence, including property damage, insuring the
Lessor and the Lessee.
(3) Rental Abatement and Business Interruption.
Rental abatement and business interruption insurance to
cover conditions set forth in Paragraph 13, entitled
"Abatement", for a minimum period of six (6) months.
(4) Inventory and Fixtures.
Proper insurance on all inventory and fixtures.
(b) Cancellation and Modification.
All such policies shall provide against cancellation or
material modification, except after thirty (30) days written
notice to the Lessee, and the Lessor.
(c) Commencement and Payment.
All policies provided hereunder shall be obtained by the
Lessee prior to the commencement of the Term hereof. Payments
of premiums shall be made by the Lessee.
(d) Increased Risk.
The Lessee shall not carry any stock of goods, nor do-anything
in, ,or about, the Leased Premises which will impair, or
invalidate, the obligation of any policy of insurance on, or
in reference to, the Leased Premises.
12. Damage or Destruction of Premises.
If the Leased Premises are totally or partially destroyed by
storm, fire, lightning, earthquake, or other casualty, the
Lessor shall restore the Leased Premises to substantially the
same condition as before damaged, as speedily as practicable.
In all events such restoration shall be made within six (6)
months.
However, if the damage shall be so extensive that the same
cannot be reasonably repaired and restored within six (6)
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months from the date of casualty, or if the estimated cost of
restoration exceeds insurance proceeds received as a result of
such damage, then the Lessor may elect either to restore the
Leased Premises, or to notify the Lessee of the Lessor's
intent to cancel this Lease, by giving written notice to the
Lessee within thirty (30) days from the date of such casualty,
13, Abatement,
The Lessee's obligations to pay rent, including Base Rent and
Additional Rent, and to perform all of the other covenants and
agreements which the Lessee is bound to perform under the
terms of this Lease shall not terminate, abate, or be
diminished during the period that the Leased Premises, or any
part thereof, are untenantable, regardless of the cause of
such untenantability, it being the intent of the Parties that
this is a rent insured against.
If untenantability continues beyond six (6) consecutive
months, Base Rent and Additional Rent shall abate
proportionately to the area of the Leased Premises that are
untenantable.
14. Compliance with Laws.
The Lessee, in the use and the occupancy of the Leased
Premises, and in the conduct of the Lessee's business and
activities, shall, at its own cost and expense, secure and
maintain all necessary licenses and permits required for the
conduct of its business and activities,
The Lessee shall, at all times, comply with all laws and
ordinances, all lawful rules and regulations issued by any
legally constituted authority, and with the applicable orders,
regulations, and requirements of any board of fire
underwriters, making any modifications to the Leased Premises
required thereby.
The Lessee shall also observe all plat and deed restrictions
of record.
15. ~se.
Because the Lessor and the Lessee have negotiated a specific
rate of Base Rent, in reliance upon a particular use of the
Leased Premises, the Leased Premises may only be used for
sheet metal fabrication or purposes incidental thereto and for
no other Purpose,
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'1 i
1 6. Wast e.
The Lessee agrees not to do, nor to suffer, any waste to, or
upon, the Leased Premises.
17. Liens.
(a) Liens.
The Lessee agrees not to cause, suffer, nor permit any liens
to attach to, or to exist against, the Leased Premises, by
reason of any act or omission of the Lessee, or persons
claiming through the Lessee, by reason of the Lessee's failure
to perform any act required of the Lessee hereunder.
(b) Illegal Actions.
The Lessee shall not permit the Leased Premises to be used for
any illegal purpose.
(c) Lessee's Release from Obligation.
However, the Lessee shall not be required to pay, or to
discharge, any lien against the Leased Premises, so long as
(1) The Lessee has given the Lessor notice of the
Lessee's intent to contest such lien, and
(2) The Lessee is in good faith in contesting the
validity or amount thereof, and
(3) The Lessee has given to the Lessor such security as
the Lessor has reasonably requested to assure
payment of such lien and to prevent the sale,
foreclosure, or forfeiture of the Leased Premises
by reason of nonpayment.
(d) Satisfaction and Release.
On final determination of the lien, or claim of lien, the
Lessee will immediately pay any judgment rendered and all
costs and charges. The Lessee shall cause the lien to be
released or satisfied.
(e) Easements and Prescriptive Rights.
The Lessee will not use, or permit the use of, the Leased
Premises in any manner which would result, or would, with the
passage of time, result, in the creation of any easement or
Prescriptive right.
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t8. Lessor's Performance of Lessee's Duties.
(a) Lessee's Performance Default.
If the Lessee should default in the performance of any
covenant on the Lessee's part to be performed by virtue of any
provision of this Lease, the Lessor may, after ten (10) days'
notice (or, in the case of emergencies, reasonable attempt at
prior notice), perform the same for the account of the
Lessee.
(b) Lessor's Authority.
The Lessee hereby authorizes the Lessor to come upon the
Leased Premises for such purposes and, while on the Leased
Premises, to do all things reasonably necessary to accomplish
the correction of such default.
(c) Lessor's Expenditures.
If the Lessor, at any time, is compelled to pay, or elects to
pay, any sum of money, by reason of the failure of the Lessee,
after ten (10) days' notice, to comply with any provision of
this Lease, or if the Lessor is compelled to incur any
expense, including reasonable attorney's fees, in instituting,
prosecuting, or defending any action or proceeding instituted
by reason of any default of the Lessee hereunder, the sum or
sums so paid by the Lessor with all interest costs and
damages, shall be deemed to be Additional Rent hereunder.
(d) Lessee's Reimbursement.
The total of these, together with interest thereon, at the
rate of eight percent (8%) per annum, shall be due from the
Lessee to the Lessor on the first day of the month following
the incurring of such respective expense, except as otherwise
herein provided.
19. Condemnation.
(a) Termination of Lease.
In the event all of the Leased Premises, or such portion
thereof as will make the Leased Premises unusable for the
purposes of the Lessee, be condemned by any legally
constituted authority, for any public use or purpose, then in
either of said events, the Term hereby granted shall cease, at
the option of either the Lessor or the Lessee, upon thirty
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(30) days' written notice, from the time when possession
thereof is taken by said public authorities. Rent shall be
due and payable only for the period of the Term prior to said
condemnation.
(b) Recovery.
Such termination, however, shall be without prejudice to the
rights of either the Lessor or the Lessee, or both, to recover
compensation and damage caused by the condemnation from the
condemnor, except:
(1) Leasehold Value.
The Lessee shall have no rights for the value of its
leasehold, and
(2) Other Parties.
Neither the Lessee nor the Lessor shall have any rights
in any separate award made to the other Party by the
condemnor.
(c) Partial Condemnation.
In the event less than all of the Leased Premises are taken or
condemned for a public or quasi-public use, and the portion of
the Leased Premises not taken may be reasonably suitable for
the purposes of the Lessee by repair or restoration, this
Lease will not terminate.
(d) Lessor's Repair and Restoration.
The Lessor shall, in such event, promptly commence, and
diligently complete, the repair and restoration of the Leased
Premises, so that, upon completion, the Leased Premises will
constitute a complete architectural unit, with an appearance,
character, and commercial value as nearly as possible equal to
the value of the Leased Premises immediately prior to the
taking. However, the Lessor shall have no obligation to make
such repair and restoration if the estimated cost of such
exceeds the condemnation proceeds received by the Lessor.
(e) Rent Abatement.
There shall be an abatement of annual Base Rent and Additional
Rent after such taking, which shall be equal to the percentage
of total area of Leased Premises after the taking, as relates
to the total area of the Leased Premises immediately prior to
said taking thereunder, to the termination of this lease.
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20. Lessor Indemnified.
The Lessee agrees to indemnify, and save harmless, the Lessor
against, and from any and all, claims by, and on behalf of,
any persons, firms, or corporations, arising from the conduct
or management of, from any work or thing whatsoever done by,
or on behalf of, the Lessee in or about, or from the Lessee's
activities upon, or occupancy of, the Leased Premises during
the Term of this Lease.
The Lessee will further indemnify, and save the Lessor
harmless, against, and from, any and all claims arising during
the Term of this Lease from the condition of, or events
occurring upon, any street, curb, or sidewalk adjoining the
Leased Premises, or any passageway or spaces therein or
appurtenant thereto, or arising from any breach or default on
the part of the Lessee in the performance of any covenant or
agreement on the part of the Lessee to be performed pursuant
to the terms of this Lease, or from any act or negligence of
the Lessee, or any of its agents, contractors, servants,
employees, licensees, or invitees, or arising from any
accident, injury, or damage whatsoever caused to any person,
firm, or corporation, occurring during the Term of this Lease,
in or about the Leased Premises, or upon or under the
sidewalks and the Land adjacent thereto, and from and against
all costs, reasonable and necessary attorney's fees, expenses,
and liabilities incurred in, or about, any such claim, action,
or proceeding brought thereon.
In case any claim, action, or proceeding be brought against
the Lessor by reason of any such claim, action, or proceeding,
the Lessee, upon notice from the Lessor, covenants to resist
or defend such claim, action, or proceeding by counsel
reasonably satisfactory to the Lessor.
21. Inspection of Premises.
The Lessee agrees to permit the Lessor and the Lessor's
agents, to come upon, and to inspect, the Leased Premises, at
all reasonable times.
The Lessee further agrees to permit the Lessor and the
Lessor's agents, to come upon the Leased Premises if necessary
to perform any act which the Lessee has failed to perform, as
provided elsewhere in this Lease.
10
!1 I
22. Default.
(a) Definition.
If one or more of the following events, hereinbefore, and
hereinafter, called "Default", shall happen, and be
continuing, a condition of Default, herein referred to as
"Default", shall exist, namely:
(1) Untimely Payment.
Default shall be made in the punctual payment of any rent
herein agreed to be paid, and such Default shall continue
for a period of ten (10) days after written notice is
given by the Lessor to the Lessee of such Default;
(2) Assignment.
The Lessee makes an assignment for the benefit of
creditors;
(3) Bankruptcy or Credit Relief.
The Lessee files a petition in bankruptcy, prays for
relief under the Federal Bankruptcy Law, or makes an
assignment for the benefit of creditors;
(4) Attachment or Execution.
An attachment or execution is levied upon the Lessee's
property in, or interest under, this Lease, which is not
satisfied or released, nor the enforcement thereof stayed
or superseded by an appropriate proceeding within thirty
(30) days thereafter;
(5) Involuntary Bankruptcy or Reorganization.
An involuntary petition in bankruptcy, or for
reorganization or arrangement under the Federal
Bankruptcy Law is filed against the Lessee, and such
involuntary petition is not withdrawn, dismissed, stayed,
or discharged within sixty (60) days from the filing
hereof;
(6) Receiver or Trustee.
A Receiver or a Trustee is appointed for the property of
the Lessee, or of the Lessee's business or assets, and
the order or decree appointing such Receiver or Trustee
shall have remained in force undischarged or unstayed for
thirty (30) days after the entry of such order or decree;
(7) Abandoned Premises or Failure to Open.
The Lessee shall abandon the Leased Premises, and/or the
Lessee shall fail to be open for business for six (6)
consecutive business days for regular hours;
(8) Continued Failure.
The Lessee shall fail to perform or observe any other
covenant, agreement, or condition to be performed or kept
by the Lessee under the terms and provisions of this
Lease, and such failure shall continue for ten (10) days
after written notice thereof has been given to the Lessee
by the Lessor unless the Lessee shall have commenced
corrective action within such ten (10) days, and
thereafter diligently completes the same;
(9) Death of Lessee.
The death of the Lessee may, at the sole option of the
Lessor, be the basis for termination of this Lease
(b) Optional Actions.
In the event such condition of Default shall exist, then, and
in any such event, the Lessor shall have the right, at the
option of the Lessor, then, or at any time thereafter, while
such Default or Defaults shall continue, to elect either of
the following actions:
(1) Cure Default.
To cure Such Default or Defaults at the Lessor's own
expense, without prejudice to any other remedies which
the Lessor might otherwise have, any payment made, or
expenses incurred by the Lessor in curing such default,
with interest thereon at eight percent (8%) per annum to
be, and to become, Additional Rent, to be paid by the
Lessee, with the next installation of rent falling due
thereafter, or
12
(2) Re-entrance.
To re-enter the Leased Premises, without notice,
dispossess the Lessee, and anyone claiming under the
Lessee, by summary proceedings or otherwise, remove their
effects, take complete possession of the Leased Premises,
and elect to take either of the following actions:
(A) Terminate Lease.
To declare this Lease forfeited and the Term ended,
or
(B) Continue Lease with Reservations.
To elect to continue this Lease in full force and
effect, but with the right, at any time thereafter,
to declare this Lease forfeited and the Term ended.
In such re-entry, the Lessor may remove all persons from
the Leased Premises. The Lessee hereby covenants, in such
event, for the Lessee, and all others occupying the
Leased Premises under the Lessee, to peacefully yield up
and surrender the Leased Premises to the Lessor.
(c) Recovers Upon Forfeit.
Should the Lessor declare this Lease forfeited, and the Term
ended, the Lessor shall be entitled to recover from the Lessee
the following amounts:
(1) Rent.
The rent and all other sums due and owing by the Lessee
to the date of such termination;
(2) Costs.
The costs of curing all of the Lessee's Defaults existing
at, or prior to, the date of termination; and
(3) Value.
The worth as of the termination of the Lease, in an
amount equal to the then value of the excess, if any, of
the aggregate of rent reserved in this Lease for the
balance of the Term, over the then reasonable rental
value of the Leased Premises for the balance of the Term.
13
(d) Recovery Upon Conditional Continuation.
Should the Lessor, following Default as aforesaid, elect to
continue this Lease in full force, the Lessor shall use its
best efforts to rent the Leased Premises on the best terms
available for the remainder of the Term hereof, or for such
longer or shorter period as the Lessor shall deem advisable.
The Lessee shall remain liable for payment of all rentals and
other charges and costs imposed on the Lessee herein, in the
amounts, at the time, and upon the conditions as herein
provided. However, the Lessor shall credit against such
liability of the Lessee all amounts received by the Lessor
from such reletting, after first reimbursing the Lessor for
all costs incurred in curing the Lessee's Defaults, in
re-entering, preparing, and refinishing the premises for
reletting, and in reletting the Leased Premises.
(e) Written Notice Required.
No re-entry by the Lessor, nor any action brought by the
Lessor to remove the Lessee from the Leased Premises, shall
operate to terminate this Lease, unless the Lessor shall give
written notice of termination to the Lessee, in which event
the Lessee's liability shall be as above provided. No right or
remedy granted to the Lessor herein is intended to be
exclusive of any other right or remedy hereunder, or now or
hereafter, existing in law or in equity or by statute.
(f) Lessee's Waiver.
In the event of termination of this Lease, the Lessee waives
any and all rights to redeem the Leased Premises, either given
by any statute now in effect, or hereinafter enacted.
(g) Holding Over.
Any holding over by the Lessee after the termination of this
Lease shall create a tenancy from month to month, on the same
terms and conditions, and at the same rent as herein provided
applicable during the Term hereof.
23. Interest.
All payments required to be paid by the Lessee under the
provisions of this Lease shall bear interest at a rate of
either of the following rates in the following circumstances:
14
(a) Corporate.
Twelve percent (12%) per annum, if the Lessee is a
oorporation: or
(b) Noncorporat e.
The highest rate allowed by Minnesota Statutes Section
334.011, if the Lessee is other than a corporation.
Interest shall begin to accrue five (5) days after the due
date of each payment, and shall continue until the date
actually paid by the Lessee
24. Late Fee.
The Lessee hereby agrees that, in addition to interest and all
other amounts due the Lessor hereunder, the Lessee will pay to
the Lessor a late fee, herein referred to as a "late fee",
equal to five percent (5%) of any payment which has not been
paid within five (5) days after its due date, without notice
or demand.
25. Condition of Premises Upon Termination.
Upon termination of this Lease, for any reason, the Lessee
covenants and agrees to remove all of the Lessee's personal
property, including, at the option of the Lessor, fixtures and
equipment installed by the Lessee upon the Leased Premises.
The Lessee shall repair any damage caused by the removal
hereof and shall leave the Leased Premises in as good and
clean condition as at the commencement of this Lease,
excepting normal and reasonable wear and tear and usage.
26. Successors and Assigns.
The obligations and responsibilities shall be binding upon,
and the rights and benefits shall inure to, the successors and
assigns of the Parties hereto. However, the liabilities of
any successor to the interest of the Lessor hereunder shall be
limited to the performance of those obligations which arise
and accrue during the period of ownership of the Leased
premises by any such successor.
15
27. Notice.
(a) Delivery.
Any notices or inquiries regarding this Lease shall be
delivered:
To the Lessor:
Daniel d. Donahue
Executive Director
EDA in and for the City of New Hope
4401Xylon Avenue
New Hope, MN 55428
To the Lessee:
Thomas Giebel
or to such other addresses as the Parties may designate, in
writing.
(b) Delivery.
Notice may be given by registered or certified mail, return
receipt requested. In those circumstances, the date of service
shall be the date on which notice is deposited in a United
States Post Office, properly stamped and addressed. In all
other methods of mailing, notice shall be deemed to be served
when received.
28. Oral Agreements.
It is expressly agreed between the Lessor and the Lessee that
there is no verbal understanding or agreement which in any way
changes the terms, covenants, and conditions herein set forth.
It is also expressly agreed between the Lessor and the Lessee
that no modification of this Lease, and no waiver of any of
its terms and conditions, shall be effective unless made in
writing and duly executed by the authorized officers of the
necessary Party or Parties.
16
29. Waiver.
The failure of the Lessor or of the Lessee to insist, in one
or more instances, upon the strict performance of the Lessee
or of the Lessor of any of the provisions of this Lease shall
not be construed as a waiver of any future breach of such
provisions.
Receipt by the Lessor of rent, with the knowledge of the
breach of any provisions hereof, shall not be deemed a waiver
of such breach.
30. Warranties of Lessee.
The Lessee warrants to, and for the benefit of, any mortgagee
of the Leased Premises that, as of the date of execution of
this Lease, it neither has, nor claims, any defense to this
Lease, nor any offset against the rentals payable or other
obligations required of the Lessee hereunder.
The Lessee further warrants that it has not paid any rental in
advance for a period of more than one (1) month, and covenants
that it will not, without such mortgagee's written consent, at
any time during the Term hereof, prepay any rental for a
period longer than one (1) month.
31. Carding.
The Lessor may card the Leased Premises "For Rent" or "For
Sale" ninety (90) days before the termination of this Lease.
The Lessor may enter the Leased Premises at reasonable hours
to exhibit same to prospective purchasers, tenants, and
mortgagees, to make repairs required of the Lessor under the
terms hereof, or to make repairs to the Lessor's adjoining
property.
32. Landlord and Tenant.
This contract shall create the relationship of landlord and
tenant between the Lessor and the Lessee. No estate shall Pass
out of the Lessor.
33. Time of Essence.
Time is of the essence of this Agreement.
17
34. Lessor's Consent.
In all matters referred to in this Lease, where the Lessor's
consent or approval is required, the Lessor agrees that the
Lessor will not unreasonably withhotd its consent or approval.
35. Legal Expense.
The Lessee covenants and agrees to pay, and to indemnify the
Lessor against, all reasonable legal costs and charges,
including attorney's fee, lawfully and reasonably incurred in
obtaining possession of the Leased Premises after Default by
the Lessee, or upon expiration or earlier termination of the
Term of this Lease, or, in enforcing any covenant or agreement
of the Lessee herein contained.
The Lessor covenants and agrees to pay all reasonable legal
costs and charges, including attorney's fees, lawfully and
reasonably incurred in enforcing any covenant or agreement of
the Lessor herein contained.
36. Title of Lessor.
The Lessor expressly covenants and agrees that, as of the
commencement date of the Term of this Lease, the Lessor will
be the owner of the fee simple title to the Lease Premises.
The Lessor further covenants that the Lessee, on paying the
rent, and upon observing and performing all other terms and
conditions contained in this Lease, shall have quiet and
peaceful possession thereof.
37. Waiver of Certain Claims.
The Lessor and the Lessee hereby waive any claims which may
arise in the Lessor's or the Lessee's favor against the other
Party hereto during the Term of this Lease, or any renewal or
extension thereof, for any loss or damage to any of the
Lessor's or the Lessee's property located within, upon, or
constituting a part of the Leased Premises hereunder, which
toss or damage is covered by a valid and collectible fire and
extended coverage insurance policy or policies, to the extent
that such loss or damage is recoverable under said insurance
or policies.
The Lessor and the Lessee further agree to notify the Lessor's
and the Lessee's own insurance company or companies, which
18
have issued, or will issue, to the Lessor and to the Lessee,
fire and extended insurance policies for the Leased Premises,
or anythin9 located therein, and to have said policies
properly endorsed, if necessary, to prevent the invalidation
of said insurance coverage by reason of this mutual waiver.
The Lessee shall keep in force, at all times, adequate
coverage of its fixtures, personal property, and other
"contents" located upon the Leased Premises.
38. Governing Law.
This Lease shall be performed, construed, and enforced in
accordance with the laws of the State of Minnesota.
39. Captions.
The captions used in this Lease are for convenience only, and
shall not have any bearing or meaning with respect to the
content or context of this Instrument.
40. Holding Over.
If the Lessee remains in possession of the Leased Premises
after expiration of the Term hereof, with the Lessor's
acquiescence, and without any express agreement of the
Parties, the Lessee shall be a tenant at will at the then
rent.
There shall be no renewal by operation, or by law, of this
Lease.
41, Cumulative Rights.
All rights, powers, and privileges conferred hereunder upon
the Parties shall be cumulative but not restricted to those
given by law.
42. Memorandum of Lease.
The Lessor hereby agrees, at the Lessor's sole cost, to
prepare and record a Memorandum of Lease at the location where
the deed of title to the Leased Premises is of record. The
recording of the Memorandum of Lease shall be done on, or
before, the date this Lease commences.
19
43. Number and Gender.
Wherever appropriate to the sense of this Lease, the singular
number shall include the Plural, and vice versa.
Wherever appropriate to the sense of this Lease, the masculine
pronoun shall include the feminine and the neuter, the
feminine shall include the masculine and the neuter, and the
neuter shall include the masculine and the feminine.
44. Severability.
If any part, or portion, of this Lease shall be adjudicated by
a court of competent jurisdiction to be unlawful, this Lease
shall remain in effect, and in force, as if that part, or
portion, were no longer a part of this Lease.
IN WITNESS WHEREOF, the Part~es hereto have caused this
Instrument to be duly executed as of the day and year first above
written.
LESSEE: PHOENIX MANUFACTURING LESSOR: ECONOMIC DEVELOPMENT
CORPORATION AUTHORITY IN AND FOR CZTY OF
NEW HOPE
by by
Its Edward J. Erickson,
Its President
by by
Its Daniel J. Donahue,
Its Executive O~rector
c:\ w p51\chh\ phoen'ix.lea
20
MUTUAL RELEASE
WHEREAS, the Economic Development Authority in and for the
City of New Hope (EDA) is the fee owner of certain real estate
known as 7526 42nd Avenue North, New Hope, Minnesota (the
Property), having purchased the Property from Allen V. Fredendall
and Kathleen M. Fredendall (collectively the Fredendalls), and
WHEREAS, by Lease Agreement dated July 19, 1993 (Lease), the
EDA leased the Property to Foremost, Inc., a Minnesota corporation
(Foremost), for a two year term ending July 19, 1995, and
WHEREAS, under the Lease Foremost agreed to pay certain real
estate taxes for the Property, including paying by February 1st,
1995 its pro-rata share of the real estate taxes due and payable in
the year 1995, and
WHEREAS, the parties wish to terminate the Lease and mutually
release each other from claims involving the Property and the
Lease.
NOW, THEREFORE, in consideration of their mutual agreements
and covenants, the parties agree as follows:
1. The Lease is terminated as of the 15th day of April,
1995.
2. The EDA waives and releases all legal and equitable
claims it may have against Foremost and the Fredendalls under the
Lease for non-payment by Foremost of the pro-rata share of the real
estate taxes for the Property due and payable in 1995.
3. Foremost and the Fredendalls release the EDA and the City
of New Hope, and waive their rights to proceed against the EDA and
the City of New Hope, for all affirmative actions, errors or
omissions of the EDA and the City of New Hope relating to the
Property during any period of time the Fredendalls or Foremost were
the fee owners or Lessees of the Property, and including any
actions to be taken by the EDA or the City in the future regarding
the Property.
Dated: , 1995. FOREMOST, INC.
By
Its
EDA
' REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda Section
City Manager EDA
.~..4-24-95
Kirk McDonald ,/' ~ Item No.
By'. Management Assistant By~/"]/~ 5
DISCUSSION REGARDING REQUEST BY/UNIVERSAL COLOR, INC. FOR GAP FINANCING
LOAN FOR ACQUISITION OF/IMPROV]TMENTS TO KUPPENHEIMER BUILDING, 7700 42ND
AVENUE NORTH
The owners of Universal Color, Inc. will be present at the April 24th EDA meeting to request
consideration for a gap financing loan for the acquisition of the Kuppenheimer Building located at 7700
42nd Avenue North and related building improvements. Universal Color, Inc. has been located in New
Hope for 15 years and is presently leasing space at the Autohaus site at 7709 42nd Avenue. Universal
Color has been trying to locate a suitable building for purchase in New Hope along 42nd Avenue for
the last several years. The Kuppenheimer business is located directly across 42nd Avenue (north) from
the Autohaus/Universal Color site and Kuppenheimer has determined that they will not be renewing their
lease with the owner of the building, which expires at the end of July, 1995. Universal's lease with
Autohaus expires on November 30, 1995, and Autohaus has indicated they do not wish to extend the
lease. Therefore, Universal Color is pursuing acquisition of the Kuppenheimer building so that they
can remain in New Hope where their customer base is established.
Per the enclosed letter, Universal Color has negotiated a purchase agreement and has obtained a bank
commitment, as well as a commitment for the SBA (Small Business Administration) portion of the loan.
However, the SBA loan program is limited to providing financing for up to 90% of the appraised value
of the property and the building improvements necessary do not add to the appraised value of the
building. The total use of funds (for land/building acquisition, building improvements, equipment
purchase, etc) are $764,250. However, with the bank and SBA commitments and owners equity of
$75,600, a gap of $140,000 in the source of funds remains. This is the loan amount Universal Color
is requesting that the EDA consider. (The EDA provided Autohaus a $187,500 loan in 1991, and over
3/4 of that loan has now been repaid.)
One benefit to the City if Universal Color completed the acquisition would be additional employment,
as they would add five new full-time positions in the next two years. A future planned improvement
to the building would be a drive-up window for photo drop off/pick up. The acquisition would eliminate
the possibility of a vacant building on 42nd Avenue and the move would also allow Autohaus to
complete their improvements to the front of their property, as originally planned.
.qtaff iR Reelcin~ direction from the I~.F)A on how to nroceed with thi.~ renue.~t
MOTION BY SECOND BY
· U0 '- ' /
Review: Administration: Finance:
RFA-O01 ltl
Universal Co/or Inc.
Quality Photofinishing
April 20, 1995
Mr Dan Donahue
Mr. Kirk McDonald
City of New Hope
4401 Xylon Avenue North
New Hope, MN 55428-4898
RE: UNIVERSAL COLOR, INC.
Dear Messrs. Donahue and McDonald:
Thank you for taking the time to meet with us recently to discuss our proposed
acquisition of the Kuppenheimer building located at 7700 - 42nd Avenue North.
We intend to purchase this property and relocate our business into this facility.
We have made a great deal of progress toward completing the purchase. A
purchase agreement has been negotiated, we have obtained a commitment from
our bank and we have a commitment from the Certified Development Company
for the SBA portion of the loan. The problem we have encountered has been
with the appraised value of the property in that it is not sufficient to support the
amount of financing needed to complete the project under the SBA 504 loan
program.
The SBA 504 loan program is limited to providing financing for up to 90
percent of the appraised value of the property. The improvements required to
make the building suitable for Universal's business are significant on a cost
basis, but do not necessarily add to the appraised value of the building.
Therefore, We are requesting a loan from the New Hope Economic
Development Authority which will help bridge the "gap" in the financing
structure. We are requesting a loan in the amount of $140,000 to be amortized
over 20 years with a ten year balloon. To demonstrate Universal's commitment
to the project, we as owners are contributing $75,000 on a personal basis and
are also pledging all other assets of the corporation as additional security for the
loan.
7701 42nd Avenue North, Minneapolis, MN 55427
Phone (612) 535-6435 · 1-800-325-6774 · FAX (612) 535-0163
Mr. Dan Donahue
Mr. Kirk McDonald
April 20, 1995
Page 2
Universal Color has been a corporate resident of New Hope for the last 15
years. It is a clean business and one that provides a valuable service to both the
consumers and other businesses in the City and the surrounding area. Universal
Color currently has 12 full-time employees. As a result of this project, we
anticipate adding 5 full-time positions within the next two years. As a part of
the building improvements, Universal is proposing to add a drive-up window
for customers to use when dropping off or picking up film. This feature will
... benefit disabled and elderly citizens as well as parents with children and the
general public.
In addition to the items listed above, there are other advantages for the
community associated with the completion of this project. With Universal
Coldr moving out of the Autohaus building, the owner of that building will then
have the ability to complete the renovation of its property according to its
obligation to the City. Also, the tenant of the subject property (Kuppenheimer)
has a lease on the property through July of 1995. They have already indicated
to the owner of the building that they do not intend to renew that lease.
Therefore, if this project is not completed there would be a vacant building in
an area of high visibility in the City.
Universal Color's lease expires on November 30, 1995. Autohaus has indicated
that it does not wish to extend the lease. We have been looking for a new site
within the City of New Hope for the last five years and have not been able to
find a building suitable for our needs until this building became available.
Taking both of these situations into consideration, we would probably have to
look outside of New Hope if we are not able to buy the Kuppenheimer building.
This is not what we want to do (which is indicated by the amount of time we
have waited for a New Hope location) because our customer base is established
in this area and it would hurt our business to move out of the area.
Mr. Dan DonahUe
Mr. Kirk McDonald
April 20, 1995
Page 3
We sincerely appreciate your consideration of this request. Time is of the
essence in that the closing date is May 31, 1995. We did not approach the
EDA sooner because this funding gap did not arise until we recently received
the appraisal. We will be available at the meeting of the Economic
Development Authority on Monday, April 24th. Please let me know if we can
provide any additional information prior to that meeting.
". Sincerely,
UNIVERSAL COLOR, INC.
Paul C. Anderson Michael E. Diederichs
President Vice President
7700 PARTNERSHIP, L.L.P.
UNIVERSAL COLOR, INC.
NEW HOPE, MINNESOTA
USES AND SO URCES OF FUNDS
USES OF FUNDS
Land and Building Acquisition $ 467,500
Building Improvements 155,600
Equipment Purchase 85,000
Soft Costs/Contingency 46,900
SUBTOTAL $ 755,000
SBA Debenture Fees 9,250
TOTAL USES OF FUNDS $ 764.2~0
SOURCES OF FUNDS
Bank $ 269,750
SBA 504 ' 279,000
City of New Hope 140,000
Owners' Equity 75,500
TOTAL SOURCES OF FUNDS
' Includes SBA Debenture Pricing
Quality Commercial & Industrial Construction for 80 years
5010 HILLSBORO AVENUE NORTH · MINNEAPOLIS, MINNESOTA 55428 · 612/535-1481
March 7, 1995
Mr. Paul Anderson
President
Universal Color, Inc.
7701 42nd. Avenue North
New Hope, MN 55427
Dear Paul:
As discussed, I have prepared a preliminary estimate for the work
discussed during our meeting. My estimate includes allowances for the
following:
· Permit, plans and engineering.
General conditions and contingence allowance.
Space planning/interior design services.
Demolition.
Dumpster service, trucking and cleanup.
Supervision, rough and finish carpentry.
Parking lot patching, seal coating and striping.
Concrete walk at east side of building.
Building and pylon signing.
Neon lighting at roof edge.
Floor cutting and replacement for plumbing work.
Steel stud/gyp, bd. partition walls.
3-0 x 6-8 hollow core flush doom.
Replacement of front glass with thermopane.
Installation of driveup window.
Borrowed lites at offices.
Epoxy/urethane floor coating for production area.
New carpet for retail area.
Vinyl base.
New paint on interior wails.
Repair ceiling tile as required.
Repaint exterior trim.
Blinds for front glass.
Install owners sinks and floor drains for production equip.
Electrical - Drop cords for equip., additional lighting & misc.
New HYAC equipment.
Modification of existing sprinkling system.
General contractors fee.
We would estimate the total cost for the above work to be/(+,-)$142,400.00
Please keep in mind that this is a preliminary estimate based upon early '"
discussions concerning the scope of work to be performed, however, if the
scope of work does not vary significantly from that indicated in our
discussions, I would not expect final costs to'vary more than 5% from the
above estimate. -
Should you require any additional information at this time, please do not
hesitate to call.
( Thank you for the opportunity to be considered as your general contractor
for your upcoming project.
Sincerely,
Ed Sorgatz
FAX/COPY
:.:::::::::::.: !:!:i:!:il '
ii'":::....
Bmoidyn
7575 Brooklyn Boulevard 551-87th Lane NE
Brooklyn Park, MN 55443 Blaine, MN 55434
(612) ~66-1600 (612) 784-0598
April 14, 1995
Paul Anderson and
Michael Diederichs
c/o Universal Color Inc.
7701 42nd Avenue North
New Hope, MN 55427
Gentlemen:
Based upon the financial information furnished and the
representations which you have made to Marquette Bank, N.A., a
national banking association (the "Bank"), the Bank has approved an
advance (the "Loan") to a partnership formed by Paul Anderson and
Michael Diederichs pursuant to Minnesota Statutes (hereinafter the
"Borrower"), subject to the terms and conditions herein set forth:
1. Loan Amount. The Bank will loan to Borrower a principal
amount (the "Loan Amount") not exceeding the lesser of the
following:
A. Initial Loan of $671,000.00, reduced to $377,500.00 (the
"Permanent Loan Amount") on the First Adjustment Date (as
hereinafter defined). Reduction shall occur due to the
disbursal of U.S. Small Business Administration Section
504 loan proceeds; or
B. An amount equal to 50% of the appraised value of the real
estate and improvements to the real estate (the "Real
Property"), equipment and fixtures taken as security for
the Loan (the "Property"), pursuant to the terms of this
commitment, as appraised by the Bank or its appraisers.
2. Advancement of the Loan...AmQunt. The Loan Amount will be
advanced and disbursed only pursuant to the terms and
conditions of this Commitment. The Bank shall not be
obligated to advance any portion of the Loan Amount unless and
until the Borrower has complied with all terms and conditions
for advancement of the Loan Amount as specified in this
Commitment Letter and/or documents executed pursuant to this
Commitment (the "Loan Documents").
Page 2
3. SBA Section.. 504 Program. Marquette Bank, N.A., a national
banking association, would be unable to make the loan
discussed herein for the acquisition of the Real Property and
Property without having the secondary or junior lien permanent
financing to be provided by the U.S. Business Administration
under its Section 504 Program. Therefore, if for any reason,
the U.S. Small Business Administration does not approve the
Borrower's application for a Section 504 loan on terms and
conditions acceptable to the Bank in its sole discretion, this
commitment to finance shall be deemed null and void.
4. Promissory Not~. The Borrower's obligation to repay the Loan
Amount shall be evidenced by a Promissory Note. The Note
shall provide for payment of interest during the term of the
Note. Interest on the Initial Loan Amount as disbursed by the
Bank shall be calculated on the basis of actual number of days
elapsed in a 360-day year equal to 1.50 percentage points in
excess of the Prime Rate of interest as published in the
Midwest Edition of the Wall' Street Journal on the date the
Note is executed. Interest accrued shall be paid monthly and
the first monthly payment shall be due and payable no later
than thirty (30) days following the date the Note is executed
and on the same day of each month thereafter until the "First
Adjustment Date" which shall be the date of disbursal of the
Small Business Administration Section 504 proceeds. The First
Adjustment Date shall not in any event be later than November
30, 1995. On the First Adjustment Date, all accrued and
unpaid interest shall be paid in full. The Loan Amount
outstanding on the First Adjustment Date shall not exceed the
Permanent Loan Amount as hereinbefore defined. The Permanent
Loan Amount together with interest as hereinafter described,
shall be amortized as of the First Adjustment Date and the
Permanent Loan Amount shall be paid in monthly installments of
principal and interest based upon a 20 year amortization. If
the basis for calculation of interest changes on the Second,
Third and/or Fourth Adjustment Date, as hereinafter defined,
the monthly payment shall also be adjusted to provide for the
continued amortization of the Permanent Loan Amount over the
remainder of the original 20 year term. The first monthly
payment of the amortized Permanent Loan Amount shall be due
and payable on the first day of the first month following the
First Adjustment Date. All payments shall be applied first to
accrued interest and then in reduction of principal. Payments
shall be due on the first day of each month thereafter until
the 10th anniversary of the First Adjustment Date. On the
10th anniversary date, the entire remaining Permanent Loan
Amount and all accrued and unpaid interest shall be paid in
full. The Payment then due is a balloon payment. Interest on
the Permanent Loan Amount shall be calculated and shall accrue
at the following rate:
A. Until the third anniversary of the First Adjustment Date
the interest rate shall be fixed at a rate equal to 1.50
percentage points in excess of the Prime Rate of interest
Page 3
as published in the Midwest Edition of the Wall Street
Journal on the First Adjustment Date;
B. The rate of interest shall be adjusted and fixed on the
3-year anniversary (the "Second Adjustment Date") of the
First Adjustment Date and the new rate established on
said anniversary date shall be equal to 1.50 percentage
points in excess of the Prime Rate of interest as
published in the Midwest Edition of the Wall Street
Journal on the Second Adjustment Date;
C. The rate of interest shall be again adjusted and fixed on
the 6-year anniversary (the "Third Adjustment Date") of
the First Adjustment Date and the new rate established on
said anniversary date equal to 1.50 percentage points in
excess of the Prime Rate of interest as published in the
Midwest Edition of the Wall Street Journal on the Third
Adjustment Date; and
D. The rate of interest shall be again adjusted and fixed on
the 9-year anniversary (the "Fourth Adjustment Date") of
the First Adjustment Date and the new rate established on
said anniversary date equal to 1.50 percentage points in
excess of the Prime Rate of interest as published in the
Midwest Edition of the Wall Street Journal on the Fourth
Adjustment Date.
The Note shall provide that if any installment is paid more
than 15 days after the due date thereof, the Borrower agrees
to pay a late payment charge of 5% of the installment to cover
the expense of collection. The Note shall further provide
that it may be prepaid in full or in part on any regular
scheduled payment date upon giving of not less than 30 days
prior written notice of intention to do so to the Bank. No
penalty shall be charged for prepayment.
5. Real Estate.Mortgage a~ Security. The obligation to advance
the Loan Amount is conditioned upon evidence of marketable
title to the Real Property in Borrower's name and upon the
filing in favor of the Bank of a Mortgage and Assignment of
Rents and Security Agreement and Fixture Financing Statement
(hereinafter referred to as the "Mortgage") against the Real
Property and all improvements thereon, heretofore or hereafter
made to secure repayment of the Note. The Mortgage securing
the Note shall be a first mortgage. The Real Property given
as security for the Loan Amount is commonly known as 7700 42nd
Avenue North, New Hope, MN 55427.
6. Title, The Bank shall receive a commitment, in form and
substance satisfactory to the Bank, issued by Guaranty Title,
Inc. (the "Title Company") committing to the issuance of a
policy of title insurance for the Mortgage which:
A. Names the Bank to be insured in an amount equalling the
Loan Amount.
Page 4 .
B. Insures the Mortgage for the Loan Amount to be a valid
first lien on the Real Property, including access
thereto.
C. Is free from exception for:
(1) Matters which will be disclosed by survey or
inspection.
(2) Mechanics', cOntractors' or materialmen's liens and
lien claims.
(3) Rights and claims of parties in possession (other
than the Borrower).
(4) Easements, or claims of easements not shown by the
public records.
(5) Special assessments.
(6) Other exceptions not approved by the Bank.
The Bank shall also have received an endorsement to such
commitment stating its effective date to be the date of the
Closing and such other endorsements as Bank may reasonably
require.
7. Improvements.. Borrower has represented to the Bank that the
Loan Amount will be used to acquire and make improvements to
the Real Property, including specifically the remodeling of
the Real Property, along with the acquisition of the Property
necessary and incidental to the operation of a photo
processing laboratory (collectively the "Improvements"). Due
to the fact that there will be construction taking place, the
following are required:
A. All construction plans, specifications and contracts are
subject to prior approval by the Bank and the Borrower's
rights in the same shall be assigned to the Bank as
additional collateral.
B. The Bank must be furnished with evidence that the
construction and all improvements will be completed in a
timely manner in compliance with all applicable zoning
and building laws, ordinances, and regulations and that
certificates and permits have been or will be properly
issued for the Improvements and their use.
C. Evidence satisfactory to the Bank assuring the
availability of all necessary utilities (i.e. water,
sewer, natural gas, electricity - letters from utility
companies and appropriate municipal authorities will
suffice).
Page 5
D. Survey in accordance with the requirements of this
Commitment Letter.
E. Builder's risk and liability insurance policies written
by companies and in amounts acceptable to the Bank.
F. A copy of the building permit must be provided to the
Bank.
G. Prior approval by the Bank of any and all change orders.
The Borrower shall provide cash for any change order
which would result in any increased cost of construction
over the accepted contracts, plus bids and
specifications.
8. Security Aqreement. As security for the Loan Amount, the
Borrower agrees to furnish, execute and deliver to the Bank,
or cause to be furnished, executed and delivered to the Bank
at the time of Closing in form and substance satisfactory to
the Bank, the following:
A. A Security Agreement and Financing S~atement granting to
the Bank a first priority security interest as respects
the Loan Amount covering all of the Borrower's machinery,
equipment, furniture and fixtures and all other tangible
personal property, whether then owned or thereafter
acquired by the Borrower or whether purchased or leased
which are used or installed at the Real Property or
elsewhere.
B. A Security Agreement and Financing Statement in form
satisfactory to the Bank granting to the Bank a first
priority security interest to secure the Loan Amount in
all of the Borrower's accounts receivable, contract
rights, chattel paper, inventory, general intangibles,
instruments, patent rights and such additional documents
as relate thereto or shall be acquired by the terms of
said Security Agreement as the same may relate to the
Real Property or elsewhere.
Financing statements as appropriate shall be executed in
connection with evidencing the security interests and priority
of the Bank.
9. Life Insurance. The Borrower shall cause to be assigned to
the Bank for such period of time as any portion of the loan
amount remains outstanding insurance policies insuring the
lives of Paul Anderson and Michael Diederichs each
respectively for a term of not less than the term of the Loan
and with death benefit amounts of not less than $200,000.00
each. Further, until the First Adjustment Date, the Borrower
shall cause to be assigned to the Bank additional insurance
policies insuring the lives of Paul Anderson and Michael
Diederichs each respectively with death benefit amounts of not
Page 6 ·
less than $100,000.00 each. This additional insurance
requirement shall terminate on the First Adjustment Date.
10. Taxes and SDecial Assessments on the. Property. All delinquent
and current real estate taxes, levied special assessments and
all special assessments yet to be levied for improvements
which prior to the Closing have been authorized by any
governmental unit or agency which are commenced or for which
a construction contract has been entered into prior to the
Closing shall have been paid as of the date of Closing on the
Real Estate taken as security for the Loan Amount.
11. SurveY. The Borrower shall furnish to the Bank a survey
prepared by a surveyor registered with the State of Minnesota
acceptable to the Bank which has been certified to the Bank
and to the Title Company, showing the following items:
A. The location of all improvements on the Real Property.
B. The location of all improvements on adjoining properties
which may tend, by reason of location, to encroach on the
Real Property.
C. Ail easements and servitude to which the Real Property is
subject.
D. The total square foot area of the Real Property.
E. The location of all streets fronting the Real Property
and the indication whether said streets are public or
private.
F. All appurtenant easements.
12. Assianment of Leases and.Rents. The Borrower shall submit all
leases of the Real Property, including specifically, the Lease
to be entered into by Borrower and Universal Color Inc., a
Minnesota corporation, to the Bank and the Bank shall have
approved and have found the leases to be satisfactory in form
and content. All leases shall be submitted as executed or
intended to be executed. Any leases not heretofore executed
shall be submitted to the Bank for approval prior to its
execution. The Borrower shall assign its interest in said
leases and the rent on said leases by an Assignment of Leases
and Rents satisfactory in form and content to the Bank. Any
said Lease shall contain a provision by which the tenant
agrees to indemnify and hold Bank, its officers, directors,
agents or employees harmless from any and all claims asserted
against Bank, its officers, directors, agents or employees,
regarding environmental degradation or hazardous waste located
at, on or under the Real Property, which may or may not have
been as a result of the actions or inactions of tenant. Said
provision shall also obligate tenant to execute a hazardous
Page 7
waste indemnity agreement to the Bank in a form and substance
acceptable to the Bank.
13. Guaranties. Based upon a review of the financial information
furnished and your application, the following named
corporation and individuals are acceptable guarantors and
shall execute a guaranty of the Loan Amount by a separate
agreement acceptable to the Bank:
Universal Color Inc., a Minnesota corporation
Paul Anderson
Michael Diederichs
The guaranty of Universal Color Inc., a Minnesota corporation,
shall be supported by such documentation evidencing corporate
authority as the Bank deems appropriate.
14. Secured Guaranty. As security for the corporate Guaranty
above-mentioned, Universal Color Inc., a Minnesota
corporation, the "Corporate Guarantor", shall furnish, execute
and deliver to the Bank, or cause to be furnished, executed
and delivered to the Bank at the time of Closing in a form
satisfactory to the Bank, the following:
A. A Security Agreement and Financing Statement granting to
the Bank a second priority security interest, subordinate
only to the existing first priority security interest of
Bank, as respects the guaranty of the Loan Amount
covering all of the Corporate Guarantor's machinery,
equipment, furniture and fixtures and all other tangible
personal property, whether then owned or thereafter
acquired or whether purchased or leased which are used or
installed at the Real Property or elsewhere.
B. A Security Agreement and Financing Statement in form
satisfactory to the Bank granting to the Bank a second
priority security interest, subordinate only to the
existing first priority security interest of Bank, to
secure the guaranty of the Loan Amount in all of the
Corporate Guarantor's accounts receivable, contract
rights, chattel paper, inventory, general intangibles,
instruments, patent rights and such additional documents
as relate .thereto or shall be acquired by the terms of
said Security Agreement as the same may relate to the
Real Property or elsewhere.
Financing Statements as appropriate shall be executed in
connection with evidencing the security interests and priority
of the Bank.
15. Borrower.and CorpQrate Guara~tQr Authority and Limitations.
A. Borrower and Corporate Guarantor acknowledge and agree
with Bank that it shall be an event of default under the
Loan Documents if Borrower and Corporate Guarantor
Page
collectively permit the ratio (expressed as a percentage)
of Cash Flow to Debt Service for the Real Property and
Property, as of the last day of any fiscal year, to be
less than 125%.
(1) For purposes of this subsection, the following
terms shall have the following meanings:
a. "Cash Flow": for each fiscal year, and
calculated in accordance with GAAP, the net
total of:
i. Plus Net Income or Minus Net Loss,
ii. Plu~ depreciation,
iii. Plus amortization of intangible assets,
iv. Plus interest expense,
v. P!u~ rent paid by Corporate Guarantor to
Borrower pursuant to a Lease for the Real
Property,
vi. Plus other non-cash charges,
vii. Minus other non-cash credits, and
viii. Minus shareholder and/or owner
distributions.
b. "Debt Service": the sum of (i) interest
expense incurred for the preceding fiscal
year, Ri~s (ii) all principal payments paid or
payable during the preceding fiscal year on
indebtedness of the Borrower and the Corporate
Guarantor with maturities in excess of one
year.
c. "GAAP": generally accepted accounting
principles set forth in the opinions and
pronouncements of the Accounting Principles
Board of the American Institute of Certified
Public Accountants and statements and
pronouncements of the Financial Accounting
Standards Board or in such other statements by
such other entity as may be approved by a
significant segment of the accounting
profession, which are applicable to the
circumstances as of any date of the
determination.
Page 9
B. Subject to review and approval by the Bank of the
organizational documents of the Borrower. The Borrower
shall in addition furnish an opinion of legal counsel
evidencing:
(1) The Borrower is duly organized as a general
partnership or a limited liability partnership
under the laws of the State of Minnesota.
(2) As to the legality of the transaction.
(3) That no aspect of the loan will result in a
violation of any options or restrictions or
applicable usury law.
Said opinion shall further state the name and address of
each partner of the Borrower and shall identify the
percentage interest owned by each. Such further consents
and resolutions signed by appropriate parties shall be
provided as required by counsel for the Bank.
C. Subject to review and approval by the Bank of the
Articles of Incorporation and By-Laws of the Corporate
Guarantor. The Borrower shall in addition cause to be
furnished an opinion of legal counsel evidencing:
(1) The Corporate Guarantor is duly organized as a
corporation under the laws of the State of
Minnesota.
(2) As to the legality of the transaction.
(3) That no aspect of the loan and/or guaranty by
Corporate Guarantor will result in a violation of
any options or restrictions or applicable usury
law.
Said opinion shall further state the name and
address of each shareholder and/or officer of the
Corporate Guarantor and shall identify the
percentage interest and/or shares owned by each.
Such further consents and resolutions signed by
appropriate parties shall be provided as required
by counsel for the Bank.
D. So long as any portion of the Loan Amount is outstanding,
the Corporate Guarantor shall:
(1) Maintain a net worth of not less than $150,000.00;
and
(2) Evidence a net profit on each annual financial
statement furnished to Bank; and
Page 10
(3) Evidence on all annual financial Statements a debt
to worth ratio not to exceed 1.90:1.
E. The Borrower and Corporate Guarantor shall further
covenant and agree and a Loan Agreement shall be executed
between the Bank and Borrower and Corporate Guarantor
which provides that until the borrowing pursuant to this
Commitment and thereafter so long as any indebtedness
remains outstanding under the Loan, the Borrower and
Corporate Guarantor will not without the prior written
consent of the Bank:
(1) Purchase, sell, acquire or otherwise voluntarily
transfer any of its business interests or make any
material change in its capital structure or general
business objects or purposes. Purchases of capital
assets of less than $25,000.00 shall be deemed
exempt from this provision.
(2) Enter into any merger, reorganization or
consolidation, or sell, lease, transfer or dispose
of all, substantially all, or any material part of
its assets, except in the ordinary course of its
business.
(3) Guaranty, endorse or otherwise become secondarily
liable for or upon the obligations of others,
except by endorsement for deposit in the ordinary
course of business.
(4) Become or remain obligated for any indebtedness for
borrowed money or for any indebtedness incurred in
connection with the acquisition of any property,
real or personal, tangible or intangible, except:
(i) Indebtedness to Bank.
(ii) Current trade, utility or non-extraordinary
accounts payable arising in the ordinary
course of Borrower's or corporate guarantor's
business.
(iii) As permitted with the written consent of the
Bank.
(5) Purchase or otherwise acquire or become obligated
for the purchase of all or substantially all of the
assets or business interest of any person, firm or
corporat ion, or any shares of stock of any
corporation, trusteeship or association, or in any
other manner effectuate or attempt to effectuate an
expansion of present business by acquisition
without the written consent of Bank.
Page 11
(6) Declare any distributions to partners of the
Borrower and/or shareholders of the Corporate
Guarantor in excess of debt service limitations and
partnership or corporate expense except with the
specific written consent of the Bank.
(7) Affirmatively pledge or mortgage any of its assets,
whether now owned or hereafter acquired, or create
or permit to exist any lien, security interest or
encumbrance thereon, except to the Bank, unless
previously authorized in writing by the Bank.
F. It is anticipated that the total cost of the
Improvements, to be partially financed by the Loan
Amount, as summarized by Paragraph 7 herein, will not
exceed $755,000.00. The Bank's obligation to advance the
Loan Amount is conditioned upon:
(1) Borrower evidencing an equity position of not less
than 10% of the appraised value of the Real
Property and Property; and
(2) Bank receiving and approving, in its sole
discretion, commitments that Borrower has funding
sufficient to complete the Improvements, as
identified in Paragraph 7 herein, through Borrower
equity and the U.S. Small Business Administration
Section 504 Program.
16. R~stri~tion on Assumption. The Mortgage and all other
documents of security shall contain a restriction restricting
the Borrower from selling, assigning, conveying, mortgaging or
otherwise transferring the legal or equitable title in and to
any of the assets taken as security without the written
consent of the Bank.
17. Financial Information To.Be Maintained and Furnished. The
Borrower shall keep and maintain at all times, full, true and
accurate books of account, in sufficient detail to adequately
reflect correctly its business operations which books and
records relating thereto shall be open to inspection and
copying by the Bank or its representative during ordinary
business hours. The Borrower shall also furnish .such
financial statements, financial reports, credit reports and
information concerning the Borrower and its business operation
as the Bank may request and with such acknowledgments as the
Bank may specify. These specifications include the following:
A. The individual Guarantor and the Corporate Guarantor,
shall each respectively furnish annually while any
portion of the Loan Amount remains outstanding unaudited
financial statements prepared in accordance with accepted
accounting principles.
Page 12 '
B. Within one hundred twenty (120) days of the end of
Borrower's fiscal year, the Borrower shall furnish the
Bank a copy of its federal and state tax returns
certified by a partner of the Borrower as true and
correct and certified that all amounts due for federal
and state income taxes in connection with such returns
have been paid.
C. Within one hundred twenty (120) days of the end of the
Corporate Guarantor's fiscal year, the Corporate
Guarantor shall furnish the Bank a copy of its federal
and state tax returns certified by a principal and/or
officer of Universal Color Inc., a Minnesota corporation,
as true and correct and certified that all amounts due
for federal and state income taxes in connection with
such returns have been paid.
D. Prior to June 1st of each year commencing June 1, 1995,
the Borrower shall cause to be furnished by each
respective individual guarantor copies of their state and
federal tax returns certified by the respective guarantor
to be true and correct and certified by the respective
guarantor that all amounts due for federal and state
income taxes in connection with such returns have been
· ~ paid.
18. Cross Default. The Corporate Guarantor Universal Color Inc.,
a Minnesota corporation is currently indebted to Bank in the
approximate amount of $111,638.00, said indebtedness evidenced
by a note dated November 1, 1993. Should said Corporate
Guarantor default under any of the terms and/or cOnditions of
said note, or any other document executed in conjunction
therewith, said default shall constitute a default under the
terms and conditions of the Note and Loan Documents
contemplated herein.
19. Commitment Fee. The Borrower shall pay a commitment fee in
the amount of $3,775.00 in connection with the Loan Amount.
$1,887.50 shall be paid upon acceptance of this Commitment,
which portion shall be deemed earned by the Bank upon
acceptance of this Commitment by the Borrower. The balance of
the commitment fee shall be paid at the time of, and be deemed
earned upon, Closing.
20. General Conditions.
A. No Defaults. Misrepresentations. There shall be no
default in the performance of any undertaking or
agreement required to be performed by the application or
this commitment and the application. This commitment and
any information, representation or warranty contained
therein or furnished to the Bank in connection with the
Loan shall not contain any untrue statement or omit to
state any fact necessary to make the application, this
commitment or any such information, representation or
Page 13
warranty not misleading, it being intended by the
Borrower that the Bank in the making of the Loan shall
rely in ali. respects upon the truth and completeness of
the application, this commitment and such information,
representations and warranties.
B. Litiqation. There shall at the time of Closing be no
action, proceeding or investigation pending or threatened
(or any basis therefor) which involves the Real Property
and/or Property or the Borrower or which might materially
adversely affect the financial condition of the
Borrower, its properties or assets, or its ability to
perform obligations under the Loan documentation.
C. Survival of warranties .and Aqreements. Ail of the
representations, warranties and agreements made herein,
in the application for the Loan, or in connection with
the Loan shall survive the Closing and inure to the
benefit of the Bank, its successors and assigns.
D. NO Assignment. This Commitment is not assignable by the
Borrower.
E. Secondary Financin.q. The Borrower shall not obtain any
financing secured by the Real Property and/or Property
other than this Loan except as contemplated by the SBA
Section 504 Program referenced herein or as permitted by
the Bank in writing.
F. C~.dit Reports. The Borrower represents and warrants
that all credit information submitted or to be submitted
to the Bank is or will be, as the case may be, true and
correct, and the Borrower authorizes the Bank to make
such credit investigations and obtain such credit reports
and other financial information, written or oral,
respecting the Borrower's credit and financial position
as the Bank may deem necessary or desirable.
G. Righ~ to ~nspect. As long as this Commitment, or any
Loan pursuant thereto, is in force and effect, the Bank
shall have the right at all reasonable times to inspect
the collateral given as security for the Loan.
H. ChanGe in Condi~iQn. There shall have been no material
adverse change in the interim period from the date of the
application for the Loan to the Closing in the financial
condition or in the assets, net worth or credit standing
of the Borrower or any Guarantor.
I. Insurance. The Borrower shall evidence to the Bank
adequate insurance coverage on all collateral, the
amount, form and sufficiency of which shall be in the
discretion of the Bank, but which shall not be less than
the Loan Amount. The obligation for insurance shall be
Page 14
a continuing obligation for such period of time as any
portion of the Loan Amount remains outstanding.
J. Hazardous Substances. Prior to disbursement of the Loan
Amount, the Bank shall be furnished with such evidence as
it deems appropriate that the Real Property and ground
water under the Real Property is free from hazardous
substances and that no hazardous substances exist in any
building or buildings on the Real Property. For purposes
of this paragraph, the term "hazardous waste" and
"hazardous substances" shall inclUde but not be limited
to polychlorinated biphenyls, asbestos, and any other
chemical or substance determined to be hazardous to
health and/or the environment. At the time of Closing,
the Borrower and each respective Guarantor shall execute
a hazardous waste indemnity agreement to the Bank in a
form and substance acceptable to the Bank. Based upon
information currently available to the Bank, the Bank
will require a Phase I Environmental Audit of the Real
Property and, to the extent the Bank deems appropriate,
in its sole discretion, a Phase II Environmental Audit
may be required.
K. Submission of Documentation. All documents or other
evidence that must be approved by the Bank or its counsel
shall be submitted to the Bank not less than ten business
days prior to Closing in order that the Bank and the
Bank's counsel may determine the adequacy thereof.
L. Expenses. The Borrower shall pay all expenses incurred
by the Bank in connection with the consideration of the
application, the preparation and issuance of the
Commitment, the Closing of the Loan (whether or not the
Loan is closed), including attorneys' fees, independent
appraisers' fees, environmental and hazardous substance
inspection and investigation costs, survey costs,
inspection costs, credit report costs, mortgage
registration tax, recording and filing fees, escrow fees
and title insurance premiums and expenses. The Bank is
authorized to deduct from the Loan Amount all amounts
necessary to pay such expenses or to pay prior liens on
the Real Property or to establish good title thereto or
to complete improvements thereon and to pay such amounts
for such purposes.
M. Zoning. Borrower shall furnish within a reasonable time
prior to closing satisfactory evidence that all
applicable zoning ordinances, building and use
restrictions and codes, required building permits, and
any requirements with respect to licenses, permits and
agreements necessary for the lawful use and operation of
the Real Property have been issued and complied with.
The Real Property shall be in .compliance with all
subdivision requirements and constitute a separate tax
parcel. Evidence shall be provided to Bank that the Real
Page 15
Property is not in a 100 year flood plain as determined
by the FEMA. The Borrower shall also furnish the Bank
with a copy of a currently dated Certificate of
Occupancy.
N. Title to Equipment Acquired. Bank acknowledges that the
Loan Amount may be used to acquire assets and/or
equipment, title to which may be held by Borrower or
Universal Color Inc., a Minnesota corporation, provided
Bank receives a purchase money security interest in any
said assets and/or equipment.
21. Closing. This Loan must be closed within sixty (60) days of
Borrower's acceptance of this Commitment Letter or the Bank's
obligation hereunder shall terminate at its discretion and the
Borrower shall be liable for all actual costs and expenses
incurred.
22. Commitment Termination. This Commitment may, at the Bank's
option, be terminated by written notice to Borrower at the
above address if there is any change in the security or if the
application or any of the information, representations or
warranties contained therein, in this commitment or furnished
to the Bank in connection with the Loan, shall have contained
at the time made or furnished or at any time thereafter any
untrue statement or at any such time shall have omitted to
state any fact necessary to make the application or any such
information, representation or warranty not misleading, or if
the Borrower fails to deliver properly executed Loan
documents, or perform any of the terms, conditions or
agreements of the application or this Commitment, or if in the
reasonable judgment of the Bank any condition contained herein
cannot be fulfilled by the Commitment termination date, or in
the event of the filing by or against the Borrower of a
petition in bankruptcy or insolvency or for reorganization or
the appointment of a receiver or trustee or the making by the
Borrower of an assignment for the benefit of creditors or the
filing of a petition for arrangement by the Borrower, which is
not withdrawn or dismissed, cancelled and/or terminated within
sixty (60) days after the filing of the same or entry into the
same.
If the Commitment is terminated hereunder the Bank shall incur
no liability by reason thereof, and further, the Borrower
agrees to pay all costs and expenses incurred by the Bank in
connection with the Loan.
If the foregoing terms and conditions are acceptable to you, please
execute a copy of this letter and return the same to us by April
24, 1995, together with the sum of $1,887.50. In the event our
offer as contained herein is not accepted by April 24, 1995, our
offer is automatically terminated.
Page 16
Very truly yours,
MARQUET~BANK, N.A. an. ati~l
bankin~ a~sociat ion / ~/J
Enclosed is a check in the amount of $1,877.50 in accordance with
the foregoing paragraph 19. The undersigned accepts the foregoing
Letter of Commitment according to its terms and conditions.
Dated: .~//~'~ P u~l An~~e r~s%~~
Michael Diederichs
28~ b~p~bx54-~.el