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HomeMy WebLinkAboutS13-99 (2) JULY, 2007 IN REVIEWING THIS FILE, IT WAS DETERMINED THAT AN EXECUTED COPY OF THE AGREEMENT LISTED BELOW WAS NEVER RETURNED TO THE CLERK'S OFFICE. ALL THAT IS AVAILABLE IS THE ATTACHED DRAFT COPY OF THE AGREEMENT AND ITS SUPPORTING PAPERWORK. REFERENCE: ORDINANCE NO. S 13-99 PASSED: DECEMBER 15, 1999 SUBJECT: CITY OF ELGIN, ILLINOIS VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS (QUESTEK MANUFACTURING CORPORATION PROJECT) G` iOFE4.Ci City of Elgin Mayor :1, IIP Ed Schock Council Members Juan Figueroa Robert Gilliam Ruth Munson February 14 , 2000 John Walters Stuart Wasilowski Marie Yearman City Manager James M. Snyder Joyce A. Parker Holleb & Coff 55 E . Monroe Street, Suite 4100 Chicago, IL 60603 RE : Questek Manufacturing Corporation Bond Transaction with the City of Elgin Dear Jim: Thank you for forwarding the bound transcript of documents relating to the above referenced matter. A review of this transcript and of my file indicates that I never received back from you an executed copy of the Memorandum of Agreement attached to the Bond Ordinance as Exhibit A. Enclosed is a copy of my December 16, 1999 correspondence to you forwarding the Memorandum of Agreement executed in duplicate by the city. Please return one fully executed Memorandum of Agreement to me as soon as possible . I have enclosed an additional copy of the Memorandum of Agreement for your convenience . Very truly yours, William A. Cogley Corporation Counsel WAC/nr Enclosure cc : Loni Mecum 150 Dexter Court • Elgin, IL 60120-5555 • Phone 847/931-6100 • Fax 847/931-5610 • TDD 847/931-5616 ® Printed on recycled paper SPEED MESSAGE , TO FROM 4-tic CZTel, A)),t/ //)-\.1..e-.t..6,-,---- SUBJECT 2i 1/-,0-^'1V-.,.0 f` y ('7 ,,t,.,.f%,s " , -^CJ i ` / / 304(11 DATE -�..Q�Lf�'t �� f/ N 7 (L ..0 �f4,-,--4/ ' 7 off ,� z.., , S l ? / y y _A 7-1'°-1=) (. r. ' U f ,/11 -tin . 2 ii /., ,/,?<, /427 a....e.1.,..e„ 6.)-.,,,,e67. ,-....,.,„ (0,...g....... I - � 10_,etr) e ( r? `Cic 1 qoz,....1-.4 i t' . t.1:44'0-1 6 7 P(0 4)72:L'64 .ii/ -. e -- 4-vel 0.1 SIGNED /1 cf''?' gli WilsonJones® WHITE-ORIGINAL CANARY-DUPLICATE 44-900•Duplicate • ORDINANCE NO. S13-99 AN ORDINANCE SETTING A PUBLIC HEARING ON AND AUTHORIZING THE ISSUANCE AND SALE OF ITS CITY OF ELGIN, ILLINOIS VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS (QUESTEK MANUFACTURING CORPORATION PROJECT) SERIES 1999, IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $4,300,000 AND CONFIRMING THE SALE THEREOF; AUTHORIZING THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT, A TRUST INDENTURE, A BOND PURCHASE AGREEMENT AND RELATED DOCUMENTS; AUTHORIZING THE DISTRIBUTION OF A PRELIMINARY OFFERING MEMORANDUM AND AN OFFERING MEMORANDUM; AND RELATED MATTERS. WHEREAS, the City of Elgin, Illinois, a municipality and a home-rule unit of government duly organized and validly existing under the Constitution and the laws of the State of Illinois (the "Issuer"), has a population of more than 25,000, and, in accordance with the provisions of Section 6(a) of Article VII of the 1970 Constitution of the State of Illinois, the Issuer is a home rule unit of government, and, as such, may exercise any power or perform any function pertaining to its government and affairs; and WHEREAS, as a home rule municipality the Issuer is authorized and empowered to issue industrial development revenue bonds and to lend the proceeds thereof for the purpose of financing, in part, the costs of the acquisition, purchase, construction, reconstruction, improvement, betterment or extension of industrial projects; and WHEREAS, the Issuer has indicated its intention to issue its revenue bonds for the purposes of financing the costs of a project, the land and building portion of such project to be owned and leased by Quest Properties, L.L.C., a Delaware limited liability company ("Quest") and operated by Questek Manufacturing Corporation, an Illinois corporation (the "Company," and collectively with Quest, the "Borrower"), such project to consist of a portion of the costs of land, an approximately 60,000 square foot building to be located in the Northwest Business Park By Wispark at Randall Road and Galvin Drive in Elgin, Illinois and the purchase of certain related equipment, for use in the Company's business as a manufacturer of custom electronic and electromechanical assemblies and to pay a portion of the costs of issuance.; and WHEREAS, the Issuer wishes to finance the costs of the Project, to pay interest during the acquisition, construction and installation of the Project, and to pay the costs of issuance of such revenue bonds of the Issuer, by the sale and issuance of its revenue bonds, and by authorizing such actions as might be required to implement such stated intentions; and WHEREAS, pursuant to and in accordance with the provisions of the Constitution and the laws of the State of Illinois, the Issuer is now prepared to issue and sell its City of Elgin, Illinois Variable Rate Demand Industrial Development Revenue Bonds (Questek Manufacturing Corporation Project) Series 1999 (the "Bonds"); and WHEREAS, the Issuer has available and hereby allocates to the Bonds, an amount not to exceed $4,300,000 of its private activity bond volume cap allocation; and WHEREAS, the Bonds shall be secured by the Indenture (as hereinafter defined) and, except to the extent payable from Bond proceeds or income from the temporary investment thereof, be payable solely from the revenues and receipts and other amounts received by the Issuer pursuant to the Loan Agreement (as hereinafter defined), the Note (as hereinafter defined) and the other sources identified in the Indenture; and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Loan Agreement dated as of December 1, 1999, by and between the Issuer and the Borrower(the "Loan Agreement"); and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Trust Indenture (the "Indenture") dated as of December 1, 1999, from the Issuer to American National Bank and Trust Company of Chicago, a national banking association, as trustee, and its successors in trust and its assignees (the "Trustee"), and to designate the Trustee in connection therewith; and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Bond Purchase Agreement dated December 22, 1999 (the "Bond Purchase Agreement") among the Issuer, the Borrower and Banc One Capital Markets, Inc., a Delaware corporation, as underwriter(the "Underwriter"); and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the preparation and distribution of a Preliminary Offering Memorandum (the "Preliminary Offering Memorandum") and the preparation and distribution of an Offering Memorandum (the "Offering Memorandum") in connection with the issuance of the Bonds; and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Arbitrage Regulation Agreement and Certificate dated December 22, 1999 (the "Arbitrage Agreement") among the Issuer, the Borrower and the Trustee; and WHEREAS, the Issuer has caused to be prepared for and presented before the City Council of the Issuer forms of the following documents which the Issuer proposes to approve the terms of or enter into: 1. The Loan Agreement; 2. The Trust Indenture; 3. The Bond Purchase Agreement; 4. The Arbitrage Agreement; 5. The Bonds; and 6. This Bond Ordinance; 7 WHEREAS, the City Council of the Issuer hereby finds and determines that the issuance of the Bonds for the stated purposes is necessary for the welfare of the government and affairs of the Issuer, is a proper public purpose and is in the public interest; and WHEREAS, the Borrower has caused a notice of public hearing with respect to the plan of financing the costs of the Project through the issuance of the Bonds to be published in the Chicago Tribune, a newspaper of general circulation in the City of Elgin, Illinois and the Elgin Courier News, pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), on December 6, 1999, and the Fiscal Services Manager or a designee of the Mayor will conduct said public hearing on December 20, 1999; NOW, THEREFORE, Be It Ordained by the City Council of the City of Elgin, Illinois, as follows: Section 1. That the City Council of the Issuer hereby finds that all of the recitals contained in the preambles to this Ordinance are full, true and correct, and does incorporate them into this Ordinance by this reference. Section 2. That the Issuer does hereby authorize and approve the financing of the costs of the acquisition, construction and installation of the Project through the issuance of the Bonds in accordance with the terms of the Loan Agreement and the Indenture, and does hereby determine that the Project is a project that is authorized to be financed with bonds, and that the financing of the acquisition, construction and installation of the Project is in furtherance of the public purposes of the Issuer; and that the Issuer hereby approves the plan of finance of the costs of the Project through the issuance of the Bonds and authorizes the Fiscal Services Manager or a designee of the Mayor to conduct the public hearing on December 20, 1999, as described in the aforesaid notice of public hearing which is hereby incorporated by reference and authorizes the Mayor to approve the issuance of the Bonds, which approval shall be considered the public approval required by Section 147(f) of the Code. Section 3. That the Issuer is hereby authorized to enter into the Loan Agreement with the Borrower in substantially the same form now before the City Council of the Issuer; that the form, terms and provisions of the Loan Agreement be, and they hereby are, in all respects approved; that the Mayor of the Issuer be, and hereby is, authorized, empowered and directed to execute, and the City Clerk of the Issuer be, and hereby is, authorized, empowered and directed to attest and to affix the official seal of the Issuer to, the Loan Agreement in the name, for and on behalf of the Issuer, and thereupon to cause the Loan Agreement to be delivered to the Borrower, such Loan Agreement (as executed) to provide for the loan of the proceeds of the Bonds to the Borrower and the use of such proceeds for the acquisition, construction and installation of the Project, to pay interest during the acquisition, construction and installation of the Project and to pay a portion of the costs of issuing the Bonds, in the manner and with the effect therein provided, such Loan Agreement to be in substantially the same form now before the City Council of the Issuer or with such changes and revisions therein as the officer executing the Loan Agreement on behalf of the Issuer shall approve, his execution thereof to constitute conclusive evidence of such approval of any and all changes or revisions therein from the form of the Loan Agreement now before the City Council of the Issuer; that from and after the execution and delivery of the Loan Agreement, the officers and employees of the Issuer are hereby authorized, 3 empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Loan Agreement as executed; and that the Loan Agreement shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Loan Agreement shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section 4. That the Issuer is hereby authorized to enter into the Indenture with the Trustee in substantially the same form now before the City Council of the Issuer; and the form, terms and provisions of the Indenture be, and they hereby are, in all respects approved; that the Mayor of the Issuer be, and hereby is, authorized, empowered and directed to execute, and the City Clerk of the Issuer be, and hereby is, authorized, empowered and directed to attest and to affix the official seal of the Issuer to, the Indenture in the name, for and on behalf of the Issuer, and thereupon to cause the Indenture to be delivered to the Trustee, and the Indenture shall constitute an assignment and pledge for the security of the Bonds issued thereunder of the revenues and receipts to be received by the Issuer pursuant to the Loan Agreement and the promissory note of the Borrower delivered thereunder (the "Note") and an assignment and pledge of the other rights, title and interest of the Issuer in and to the Loan Agreement and the Note, as described in the Indenture (with the exception of certain rights to receive certain payments, to indemnity and other retained rights as specified in the Indenture), such Indenture to be in substantially the form now before the City Council of the Issuer or with such changes and revisions therein as the officer executing the Indenture on behalf of the Issuer shall approve, his execution thereof to constitute conclusive evidence of such approval of any and all changes or revisions therein from the form of Indenture now before the City Council of the Issuer; that from and after the execution and delivery of the Indenture, the officers and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Indenture as executed; and that the Indenture shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Indenture shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section 5. That American National Bank and Trust Company of Chicago, Chicago, Illinois, is hereby designated as Trustee, Paying Agent and Registrar with respect to the Bonds. Section 6. That the Issuer is hereby authorized to enter into the Bond Purchase Agreement with the Borrower and the Underwriter in substantially the same form now before the City Council of the Issuer and any supplement thereto that is necessary to sell the Bonds; that the form, terms and provisions of the Bond Purchase Agreement in the name, for and on behalf of the Issuer, and thereupon to cause the Bond Purchase Agreement to be delivered to the Borrower and the Underwriter, such agreement to provide for the issuance of the Bonds in the aggregate principal amount of not to exceed $4,300,000, such Bond Purchase Agreement to be in substantially the same form now before the City Council of the Issuer or with such changes and revisions therein as the officer executing the Bond Purchase Agreement on behalf of the Issuer shall approve, his execution thereof to constitute conclusive evidence of such approval of any and all changes or revisions therein from the form of Bond Purchase Agreement now before the City Council of the Issuer; that from and after the execution and delivery of the Bond Purchase Agreement, the officers and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to 4 carry out and comply with the provisions of the Bond Purchase Agreement as executed; and that the Bond Purchase Agreement shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Bond Purchase Agreement shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section 7. That the form of the Bonds now before the City Council of the Issuer, subject to appropriate insertions and revisions in order to comply with the provisions of the Indenture (as executed and delivered) be, and the same hereby are, approved; that the Bonds shall be executed in the name, for and on behalf of the Issuer with the manual or facsimile signature of its Mayor and attested with the manual or facsimile signature of its City Clerk and the official seal of the Issuer shall be impressed or imprinted thereon; that the Mayor of the Issuer shall cause the Bonds, as so executed and attested, to be delivered to the Trustee for authentication; and that when the Bonds shall be executed on behalf of the Issuer in the manner contemplated by the Indenture and this Ordinance in the aggregate principal amount of not to exceed $4,300,000,they shall represent the approved forms of Bonds of the Issuer. The Bonds, including but not limited to the principal of, premium, if any, interest thereon and any expenses related thereto, shall be limited obligations of the Issuer, payable solely and only from the revenues and receipts derived by the Issuer pursuant to the Loan Agreement and shall be otherwise secured as provided in the Indenture in the Loan Agreement. The Bonds shall not in any respect be a general obligation of the Issuer, nor shall they be payable in any manner from funds of the Issuer raised by taxation. The Bonds shall state that they do not constitute an indebtedness of the Issuer or a loan of credit thereof within the meaning of any constitutional or statutory provision. Nothing in this Ordinance, the Loan Agreement, the Indenture, the Arbitrage Agreement, or the form of the Bonds (hereinafter referred to collectively as the "Financing Documents") or in any document or agreement required hereby and thereby, shall be construed as an obligation or commitment by the Issuer to expend any of its funds other than (i) the proceeds derived from the sale of the Bonds, (ii) the revenues and receipts derived from the Loan Agreement and (iii) any monies arising out of the investment or reinvestment of said proceeds, income, revenues, receipts or monies. Section 8. That the sale of the Bonds in the aggregate principal amount of not to exceed $4,300,000 at a purchase price of 100% of the principal amount thereof and accrued interest, if any, to the date of delivery, is hereby approved and confirmed, and that no member of the City Council for the Issuer or any officer of the Issuer is in any manner interested, either directly or indirectly, in his own name or in the name of any other person, association, trust or corporation, in the Loan Agreement, the Indenture or the Bond Purchase Agreement. Section 9. That the preparation and distribution of the Preliminary Offering Memorandum by the Underwriter is hereby approved, and the preparation and distribution of the Offering Memorandum by the Underwriter is hereby approved. Section 10. That the Issuer is hereby authorized to enter into the Arbitrage Agreement with the Trustee and the Borrower in substantially the same form now before the City Council of the Issuer; and the form, terms and provisions of the Arbitrage Agreement be, and they hereby are, in all respects approved; that the Mayor of the Issuer be, and hereby is, authorized, empowered and directed to execute, and the City Clerk of the Issuer be, and hereby is, 5 authorized, empowered and directed to attest and to affix the official seal of the Issuer to, the Arbitrage Agreement in the name, for and on behalf of the Issuer; that from and after the execution and delivery of the Arbitrage Agreement, the officers and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Arbitrage Agreement as executed; and that the Arbitrage Agreement shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Arbitrage Agreement shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section 11. That the Mayor, the City Clerk and any other applicable officer or employee of the Issuer be, and each of them hereby is authorized and directed to execute, attest, seal and deliver any and all documents and certificates, to do any and all things deemed necessary to effect the issuance and sale of the Bonds and the execution and delivery of the Loan Agreement, the Indenture, the Bond Purchase Agreement and such other instruments (including financing statements), and to perform the obligations and duties of the Issuer hereunder and thereunder, all as shall be necessary and desirable to carry out the intent and purposes of this Ordinance, including the preambles hereto. Section 12. That all acts of the City Council of the Issuer and the members, officers, agents and employees of the Issuer that are in conformity with the intent and purposes of this Ordinance, whether heretofore or hereafter taken or done, be, and the same are hereby, in all respects, ratified, confirmed and approved. Section 13. That the Issuer hereby elects to have the provisions of Section 144(a)(4) of the Code apply to the Bonds. Section 14. That the Issuer hereby allocates an amount not to exceed $4,300,000 of municipal private activity bond volume cap to the Bonds. Section 15. That the Mayor of the Issuer is hereby authorized to execute, and the Clerk of the Issuer is hereby authorized to attest a Memorandum of Agreement with the Borrower in substantially the form of such agreement appended to this Ordinance as Exhibit A. The Issuer hereby declares its intent to assist the Borrower under Treasury Regulation Section 1.150-2 to reimburse any expenditures made on costs of the Project prior to the issuance of the Bonds with the proceeds of the Bonds. Section 16. That the provisions of this Ordinance are hereby declared to be separable, and if any section, phrase or provision shall for any reason be declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases and provisions of this Ordinance. Section 17. That a full, true and complete copy of this Ordinance shall be printed or published promptly after passage in pamphlet form by authority of the City Council of the Issuer. Section 18. That all ordinances, resolutions, or parts thereof, in conflict herewith are hereby superseded to the extent of such conflict; and that this Ordinance shall be in full force and 6 effect immediately and forthwith upon its passage, approval and publication in pamphlet form as aforesaid. s/ Ed Schock Ed Schock, Mayor Presented: December 15 , 1999 Passed: December 15 , 1999 Vote : Yeas 7 Nays 0 Recorded: December 16, 1999 Published: December 16, 1999 Attest : s/ Dolonna Mecum Dolonna Mecum, City Clerk ORDINANCE NO. S 13-99 AN ORDINANCE SETTING A PUBLIC HEARING ON AND AUTHORIZING THE ISSUANCE AND SALE OF ITS CITY OF ELGIN, ILLINOIS VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS (QUESTEK MANUFACTURING CORPORATION PROJECT) SERIES I999, IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $4,300,000 AND CONFIRMING THE SALE THEREOF; AUTHORIZING THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT, A TRUST INDENTURE, A BOND PURCHASE AGREEMENT AND RELATED DOCUMENTS; AUTHORIZING THE DISTRIBUTION OF A PRELIMINARY OFFERING MEMORANDUM AND AN OFFERING MEMORANDUM; AND RELATED MA I FERS. WHEREAS, the City of Elgin, Illinois, a municipality and a home-rale unit of government duly organized and validly existing under the Constitution and the laws of the State of Illinois (the "Issuer"), has a population of more than 25,000, and, in accordance with the provisions of Section 6(a) of Article VII of the 1970 Constitution of the State of Illinois, the issuer is a home rule unit of government, and, as such, may exercise any power or perform any function pertaining to its government and affairs; and WHEREAS,as a home rule municipality the Issuer is authorized and empowered to issue industrial development revenue bonds and to lend the proceeds thereof for the purpose of financing, in part, the costs of the acquisition, purchase, construction, reconstruction, improvement,betterment or extension of industrial projects; and WHEREAS, the Issuer has indicated its intention to issue its revenue bonds for the purposes of financing the costs of a project, the land and building portion of such project to be owned and leased by Quest Properties, L.L.C., a Delaware limited liability company ("Quest") and operated by Questek Manufacturing Corporation, an Illinois corporation (the "Company," and collectively with Quest, the `Borrower"), such project to consist of a portion of the costs of Iand, an approximately 60,000 square foot building to be located in the Northwest Business Park By Wispark at Randall Road and Galvin Drive in Elgin, Illinois and the purchase of certain related equipment,for use in the Company's business as a manufacturer of custom electronic and electromechanical assemblies and to pay a portion of the costs of issuance.; and WHEREAS, the Issuer wishes to finance the costs of the Project, to pay interest during the acquisition, construction and installation of the Project, and to pay the costs of issuance of such revenue bonds of the Issuer, by the sale and issuance of its revenue bonds, and by authorizing such actions as might be required to implement such stated intentions; and WHEREAS, pursuant to and in accordance with the provisions of the Constitution and the laws of the State of Illinois, the Issuer is now prepared to issue and sell its City of Elgin, LU:ZT 6661-ST-J3 za'd 0062 L08 ZT2 Q Illinois Variable Rate Demand Industrial Development Revenue Bonds (Questek Manufacturing Corporation Project) Series 1999(the "Bonds"); and WHEREAS, the Issuer has available and hereby allocates to the Bonds, an amount not to exceed S4,300,000 of its private activity bond volume cap allocation; and WHEREAS, the Bonds shall he secured by the Indentuure (as hereinafter defined) and, except to the extent payable from Bond proceeds or income from the temporary investment thereof, be payable solely from the re-venues and receipts and other amounts received by the Issuer pursuant to the Loan Agreement (as hereinafter defined), the Note (as hereinafter defined) and the other sources identified in the indenture; and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Loan Agreement dated as of December 1, 1999, by and between the Issuer and the Borrower(the"Loan Agreement"); and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Trust Indenture (the"Indenture") dated as of December 1, 1999, from the Issuer to.American National Bank and Trust Company of Chicago, a national banking association,as trustee, and its successors in trust and its assignees (the "Trustee"), and to designate the Trustee in connection therewith; and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Bond Purchase Agreement dated December 22, 1999 (the "Bond Purchase Agreement") among the Issuer, the Borrower and Banc One Capital Markets,Inc., a Delaware corporation, as underwriter(the "Underwriter"); and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the preparation and distribution of a Preliminary Offering Memorandum (the "Preliminary Offering Memorandum") and the preparation and distribution of an Offering Memorandum (the "Offering Memorandum")in connection with the issuance of the Bonds; and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Arbitrage Regulation Agreement and Certificate dated December-22, 1999 (the `'Arbitrage Agreement") among the Issuer, the Borrower and the Trustee; and WHEREAS, the Issuer has caused to be prepared for and presented before the City Council of the Issuer forms of the following documents which the Issuer proposes to approve the terms of or enter into: 1. The Loan Agreement; 2. The Trust Indenture; 3. The Bond Purchase Agreement; 4. The Arbitrage Agreement; 5. The Bonds; and 6. This Bond Ordinance; 2 20'd 0062 LOG ZZ� Lh_zT 666i-SI-��Q • WHEREAS,the City Council of the Issuer hereby finds and determines that the issuance of the Bonds for the stated purposes is necessary for the welfare of the government and affairs of the Issuer,is a proper public purpose and is in the public interest; and WHEREAS, the Borrower has caused a notice of public hearing with respect to the plan of financing the costs of the Project through the issuance of the Bonds to be published in the Chicago Tribune, a newspaper of general circulation in the City of Elgin, Illinois and the Elgin Courier News,pursuant to Section 147(f) of the Internal Revenue Code of 1986,as amended (the "Code"), on December 6, 1999, and the Fiscal Services Manager or a designee of the Mayor will conduct said public hearing on December 20, 1999; NOW, THEREFORE, Be It Ordained by the City Council of the City of Elgin,Illinois, as follows: Section I. That the City Council of the Issuer hereby finds that all of the recitals contained in the preambles to this Ordinance are full, true and correct,and does incorporate them into this Ordinance by this reference. Section 2. That the Issuer does hereby authorize and approve the financing of the costs of the acquisition, construction and installation of the Project through the issuance of the Bonds in accordance with the terms of the Loan Agreement and the Indenture, and does hereby determine that the Project is a project that is authorized to be financed with bonds, and that the financing of the acquisition, construction and installation of the Project is in furtherance of the public purposes of the Issuer; and that the Issuer hereby approves the plan of finance of the costs of the Project through the issuance of the Bonds and authorizes the Fiscal Services Manager or a designee of the Mayor to conduct the public hearing on December 20, 1999, as described in the aforesaid notice of public hearing which is hereby incorporated by reference and authorizes the Mayor to approve the issuance of the Bonds, which approval shall be considered the public approval required by Section 147(f)of the Code. Section 3. That the Issuer is hereby authorized to enter into the Loan Agreement with the Borrower in substantially the same form now before the City Council of the Issuer; that the form, terms and provisions of the Loan Agreement be, and they hereby are, in all respects approved; that the Mayor of the Issuer be, and hereby is, authorized, empowered and directed to execute, and the City Clerk of the Issuer be, and hereby is, authorized, empowered and directed to attest and to affix the official seal of the Issuer to, the Loan Agreement in the name, for and on behalf of the Issuer,and thereupon to cause the Loan Agreement to be delivered to the Borrower, such Loan Agreement (as executed) to provide for the loan of the proceeds of the Bonds to the Borrower and the use of such proceeds for the acquisition, construction and installation of the Project, to pay interest during the acquisition, construction and installation of the Project and to pay a portion of the costs of issuing the Bonds, in the manner and with the effect therein provided, such Loan Agreement to be in substantially the same form now before the City Council of the Issuer or with such changes and revisions therein as the officer executing the Loan Agreement on behalf of the Issuer shall approve, his execution thereof to constitute conclusive evidence of such approval of any and all changes or revisions therein from the form of the Loan Agreement now before the City Council of the Issuer; that from and after the execution and delivery of the Loan Agreement, the officers and employees of the Issuer are hereby authorized, 3 be'd 0062 LOG ZT2 8b:zti 666T-ST-J2Q empowered and directed to do all such aeti and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Loan Agreement as executed; and that the Loan Agreement shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Loan Agreement shall be plated in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section 4. That the Issuer is hereby authorized to enter into the Indenture with the Trustee in substantially the same form now before the City Council of the issuer; and the form, terms and provisions of the Indenture be, and they hereby are, in all respects approved; that the Mayor of the Issuer be, and hereby is, authorized, empowered and directed to execute, and the City Clerk of the Issuer be, and hereby is, authorized, empowered and directed to attest and to affix the official seal of the Issuer to, the Indenture in the name, for and on behalf of the Issuer, and thereupon to cause the Indenture to be delivered to the Trustee, and the Indenture shall constitute an assignment and pledge for the security of the Bonds issued thereunder of the revenues and receipts to be received by the Issuer pursuant to the Loan Agreement and the promissory note of the Borrower delivered thereunder (the "Note") and an assignment and pledge of the other rights, title and interest of the Issuer in and to the Loan Agreement and the Note, as described in the Indenture (with the exception of certain rights to receive certain payments, to indemnity End other retained tights as specified in the Indenture), such Indenture to be in substantially the form now before the City Council of the Issuer or with such changes and revisions therein as the officer executing the Indenture on behalf of the Issuer shall approve, his execution thereof to constitute conclusive evidence of such approval of any and all changes or revisions therein from the form of Indenture now before the City Council of the Issuer; that from and after the execution and delivery of the Indenture, the officers and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Indenture as executed; and that the Indenture shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Indenture shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section.5. That American National Bank and Trust Company of Chicago, Chicago, Illinois,is hereby designated as Trustee, Paying Agent and Registrar with respect to the Bonds. Section 6. That the Issuer is hereby authorized to enter into the Bond Purchase Agreement with the Borrower and the Underwriter in substantially the same form now before the City Council of the Issuer and any supplement thereto that is necessary to sell the Bonds; that the form, terms and provisions of the Bond Peeehase Agreement in the name, f'r and on behalf of the Issuer, and thereupon to cause the Bond Purchase Agreement to be delivered to the Borrower and the Underwriter, such agreement to prcvide for the issuance of the Bonds in the aggregate principal amount of not to exceed $4,300,000, such Bond Purchase Agreement to be in substantially the same form now before the City Council of the Issuer or with such changes and revisions therein as the officer executing the Bond Purchase Agreement on behalf of the Issuer shall approve, his execution thereof to constitute conclusive evidence of such approval of any and all changes or revisions therein from the form of Bond Purchase Agreement now before the City Council of the Issuer; that from and after the execution and delivery of the Bond Purchase Agreement, the officers and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to 4 SO'd C�062 LO8 ZZ2 6l7 T 666T-ST-Dal carry out and comply with the provisions of the Bond Purchase Agreement as executed; and that the Bond Purchase Agreement shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Bond Purchase Agreement shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section 7. That the form of the Bonds now before the City Council of the Issuer, subject to appropriate insertions and revisions in order to comply with the provisions of the Indenture (as executed and delivered) be, and the same hereby are, approved; that the Bonds shall be executed in the name, for and on behalf of the Issuer with the manual or facsimile signature of its Mayor and attested with the manual or facsimile signature of its City Clerk and the official seal of the Issuer shall be impressed or imprinted thereon; that the Mayor of the Issuer shall cause the Bonds, as so executed and attested, to be delivered to the Trustee for authentication; and that when the Bonds shall be executed on behalf of the Issuer in the manner contemplated by the Indenture and this Ordinance in the aggregate principal amount of not to exceed$4,300,000,they shall represent the approved forms of Bonds of the Issuer. The Bonds,including but not limited to the principal of, premium, if any, interest thereon and any expenses related thereto, shall be limited obligations of the Issuer, payable solely and only from the revenues and receipts derived by the Issuer pursuant to the Loan Agreement and shall be otherwise secured as provided in the Indenture in the Loan Agreement. The Bonds shall riot in any respect be a general obligation of the Issuer, nor shall they be payable in any manner from funds of the Issuer raised by taxation. The Bonds shall state that they do not constitute an indebtedness of the Issuer or a loan of credit thereof within the meaning of any constitutional or statutory provision. Nothing in this Ordinance, the Loan Agreement, the Indenture, the Arbitrage Agreement, or the form of the Bonds (hereinafter referred to collectively as the "Financing Documents") or in any document or agreement required hereby and thereby, shall be construed as an obligation or commitment by the Issuer to expend any of its funds other than (i) the proceeds derived from the sale of the Bonds, (ii) the revenues and receipts derived from the Loan Agreement and (iii) any monies arising out of the investment or reinvestment of said proceeds, income,revenues,receipts or monies. Section 8. That the sale of the Bonds in the aggregate principal amount of not to exceed S4,300,000 at a purchase price of 100% of the principal amount thereof and accrued interest, if any,to the date of delivery, is hereby approved and confirmed, and that no member of the City Council for the Issuer or any officer of the Issuer is in any manner interested, either directly or indirectly, in his own name or in the name of any other person, association, trust or corporation, in the Loan Agreement,the Indenture or the Bond Purchase Agreement. Section 9. That the preparation and distribution of the Preliminary Offering Memorandum by the Underwriter is hereby approved, and the preparation and distribution of the Offering Memorandum by the Underwriter is hereby approved. Section 10. That the Issuer is hereby authorized to enter into the Arbitrage Agreement with the Trustee and the Borrower in substantially the same form now before the City Council of the Issuer; and the form, terms and provisions of the Arbitrage Agreement be, and they hereby are, in all respects approved; that the Mayor of the Issuer be, and hereby is, authorized, empowered and directed to execute, and the City Clerk of the Issuer be, and hereby is, 5 90'd 0062 L08 2S 2 OS:2Z 666Z-SZ-�3Q authorized, empowered and directed to attest and to affix the official seal of the Issuer to, the Arbitrage Agreement in the name, for and on behalf of the Issuer; that from and after the execution and delivery of the Arbitrage Agreement, the officers and employees of the Issuer are hereby authorized,empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Arbitrage Agreement as executed;and that the Arbitrage Agreement shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Arbitrage Agreement shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the issuer. Section 11. That the Mayor, the City Clerk and any other applicable officer or employee of the Issuer be, and each of them hereby is authorized and directed to execute, attest, seal and deliver any and all documents and certificates, to do any and all things deemed necessary to effect the issuance and sale of the Bonds and the execution and delivery of the Loan Agreement, the Indenture, the Bond Purchase Agreement and such other instruments (including financing statements), and to perform the obligations and duties of the Issuer hereunder and thereunder, all as shall be necessary and desirable to carry out the intent and purposes of this Ordinance, including the preambles hereto. Section 12. That all acts of the City Council of the Issuer and the members, officers, agents and employees of the Issuer that are in conformity with the intent and purposes of this Ordinance, whether heretofore or hereafter taken or done, be, and the same are hereby, in all respects, ratified,confirmed and approved. Section 13. That the Issuer hereby elects to have the provisions of Section 144(a)(4) of the Code apply to the Bonds. Section I4. That the Issuer hereby allocates an amount not to exceed $4,300,000 of municipal private activity bond volume cap to the Bonds. Section 15. That the Mayor of the Issuer is hereby authorized to execute, and the Clerk of the Issuer is hereby authorized to attest a Memorandum of Agreement with the Borrower in substantially the form of such agreement appended to this Ordinance as Exhibit A. The Issuer hereby declares its intent to assist the Borrower under Treasury Regulation Section 1.150-2 to reimburse any expenditures made on costs of the Project prior to the issuance of the Bonds with the proceeds of the Bonds. Section 16. That the provisions of this Ordinance are hereby declared to be separable, and if any section, phrase or provision shall for any reason be declared to be inva_'id, such declaration shall not affect the validity of the remainder of the sections,phrases and provisions of this Ordinance. Section 17. That a full, true and complete copy of this Ordinance shall be printed or published promptly after passage in pamphlet form by authority of the City Council of the Issuer. Section 18. That all ordinances, resolutions, or parts thereof, in conflict herewith are hereby superseded to the extent of such conflict;and that this Ordinance shall be in full force and 6 LO'd 0062 2,08 ZTc TS:ET 666T-ST-aSQ effect immediately and forthwith upon its passage, approval and publication in pamphlet form as aforesaid. 7 80'd 0062 LOB ZT2 ES:ET 666T-ST-83G Presented, passed, approved and recorded by the City Council of the City of Elgin, Illinois,this 15th day of December, 1999. Approved: Mayor [SEAL] Attest: City Clerk Ayes: Nays: Absent or Not Voting: 8 60'd 0062 L08 2T� ES:ET 666T-ST-JBC STATE OF ILLINOIS ) )SS COUNTY OF ) CERTIFICATION OF MINUTES AND ORDINANCE I, the undersigned, do hereby certify that I am the duly qualified and acting City Clerk of the City of Elgin, Illinois (the "Issuer"), and as such official I am the keeper of the official journal of proceedings, books, records, minutes and files of the Issuer and of the City Council thereof. I do further certify that the foregoing is a full, true and complete transcript of that portion of the minutes of the meeting of said City Council held on the 15th day of December, 1999, insofar as the same relates to the adoption of Ordinance Number - entitled: AN ORDNANCE SETTING A PUBLIC HEARING ON AND AUTHORIZING THE ISSUANCE AND SALE OF ITS CITY OF ELGIN, ILLINOIS VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS (QUESTEK MANUFACTURING CORPORATION PROJECT) SERIES 1999, IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $4,300,000 AND CONFIRMING THE SALE THEREOF; AUTHORIZING THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT, A TRUST INDENTURE, A BOND PURCHASE AGREEMENT AND RELATED DOCUMENTS; AUTHORIZING THE DISTRIBUTION OF A PRELIMINARY OFFERING MEMORANDUM AND AN OFFERING MEMORANDUM; AND RELATED MA VIERS. a true, correct and complete copy of which said ordinance as adopted at said meeting appears in the foregoing transcript of the minutes of said meeting. I do further certify that the deliberations of said City Council on the adoption of said ordinance were taken openly, that the vote on the adoption of said ordinance was taken openly, that said meeting was held at a specified time and place convenient to the public, that notice of said meeting was duly given to all of the news media requesting such notice, and that said meeting was called and held in strict compliance with the provisions of the Open Meetings Act of the State of Illinois, as amended, and that said City Council has complied with all of the provisions of said Act and with all of the procedural rules of said City Council in the adoption of said ordinance. I do further certify that said ordinance was published in pamphlet form on the day of December, 1999,by authority of said City Council, 9 £S:ET 666T-ST-J3i OT 'd 0062 L08 ZIP IN WITNESS WHEREOF, I hereunto affix my official signature and the seal of the City of Elgin,this 15th day of December, 1999. City Clerk (SEAL) 10 6058765v5 II 'd 0062 L08 ZIP 2S:ZI 666I-SI-33Q r MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT is by and among the City Elgin, Illinois (the"Issuer"), Questek Manufacturing Corporation, an Illinois corporation (the "Company") and Quest Properties, L.L.C., a Delaware limited liability company ("Quest," and collectively with the Company,the"Borrower"). 1. Preliminary Statement.Among the matters of mutual inducement which have resulted in this Agreement are the following: (a) The Issuer is authorized as a home rule municipality in accordance with the Constitution of the State of Illinois to issue industrial revenue bonds for the purpose of financing, in whole or in part, the cost of the acquisition, purchase, construction, reconstruction, improvement,betterment or extension of any industrial project and to enter into a loan agreement with the Borrower pursuant to which the proceeds of such industrial revenue bonds may be lent to the Borrower to finance the costs of the acquisition, construction and equipping of such an industrial project. (b) The Borrower wishes to obtain satisfactory assurance from the Issuer that the proceeds of the sale of such industrial revenue bonds of the Issuer will be made available to it for the purposes of financing a portion of the costs of the Project,the land and building portion of such Project to be owned by Quest and leased to and operated by the Company, such Project to consist of the acquisition of land, the construction of an approximately 60,000 square foot building to be located in the Northwest Business Park By Wispark at Randall Road and Galvin Drive in Elgin, Illinois and the purchase certain related equipment, for use in the Company's Exhibit A ZZ'd 006� L08 ET bS:ET 666T-ST-Dal business as a manufacturer of custom electronic and electromechanical assemblies(the"Project") and to pay a portion of the costs of issuance. (c) Subject to the conditions contained herein and the due compliance with all requirements of law,the Issuer, by virtue of such statutory authority as may now or hereafter be conferred, will issue and sell its industrial revenue bonds in an amount not to exceed $4,300,000 (the "Bonds")to finance the costs of the Project. (d) The Borrower has presented the Issuer with evidence of its intention to reimburse itself for expenditures relating to the Project which it may pay from funds which are not proceeds of the Bonds. (e) The Bonds shall be limited obligations of the Issuer payable solely out of the revenues and receipts derived from the trust estate established under the Indenture of Trust pursuant to which the Bonds are to be issued;the Project shall be financed by means of a loan of the proceeds of the Bonds to the Borrower,and the Borrower shall agree to make payments in an amount sufficient to pay the principal and purchase price of,and premium, if any,and interest on,the Bonds. No holder of any of the Bonds shall have the right to compel any exercise of the taxing owner of the Issuer,and the Bonds shall not constitute an indebtednesss or a loan of credit of the Issuer within the meaning of any constitiutional or statutory provision. 2. Undertaking on the Part of the Issuer. Subject to the conditions above stated, the Issuer agrees as follows: (a) That it will authorize the issuance and sale of the Bonds. 2 ET'd 0062 L08 2T2 bS:ZT 666T-ST-��Q 4' (b) That it will, at the proper time and subject in all respects to the prior advice, consent and approval of the Borrower,execute such documents as may be necessary and advisable for the authorization, issuance, and sale of the Bonds as aforesaid, and that it will enter into a loan agreement whereby the Borrower will pay to or on behalf of the Issuer such sums as shall be sufficient to pay the principal and interest and redemption premium, if any, on the Bonds as and when the same shall become due and payable. c{ } The Issuer hereby declares its intent to assist the Borrower under Treasury Regulations Secfion 1.150-2 to reimburse any expenditures made on costs of the Project prior to the issuance of the Bonds with proceeds of the Bonds. The closing of the Bonds in regards to the project is subject to sufficient volume cap allocation. The Issuer agrees to apply from its 1999 volume cap allocation an amount not to exceed$4,300,000 for such purpose. 3. Undertakings on the part of the Borrower. Subject to the conditions above stated,the Borrower agrees as follows: (a) That it will use all reasonable efforts to find one or more purchasers for the Bonds, • (b) That contemporaneously with the delivery of the Bonds it will enter into a loan agreement with the Issuer under the terms of which the Borrower will obligate itself to pay to the Issuer sums sufficient in the aggregate to pay the principal of and interest and redemption premium,if any, on the bonds as an when the same shall become due and payable. (c) The Borrower will also agree in such Loan Agreement to pay all 3 VT'd 0062 L08 ZZS SS:ZT 666Z-Sti-��Q reasonable fees and expenses in connection with the Bonds. 4, General Provisions. (a) All commitments of the Issuer under Paragraph 2 hereof and of the Borrower under Paragraph 3 hereof are subject to the condition that on or before 365 days from the date hereof (or such other date as shall be mutually satisfactory to the Issuer and the Borrower), the Issuer and the Borrower shall have agreed to mutually acceptable terms and conditions of the loan agreement and of the Bonds and such other instruments or proceedings relating to the Bonds. The decision not to approve or agree to any term or condition of any document or not to take any action prior to issuance of the Bonds shall rest solely within the complete discretion of the parties to this Agreement. (b) If the events set forth in(a)of this Paragraph 4 do not take place within the time set forth or any extension thereof and the Bonds in an amount not exceeding the amount stated above are not sold within such time, the Borrower agrees that it will reimburse the Issuer for all reasonable and necessary direct out-of-pocket expenses which the Issuer may incur at the Borrower's req est or as a result of arising out of this Agreement including, but not limited to, the payment of ttorney and other consultant fees arising from the execution of this Agreement and the performance by the Issuer of its obligations hereunder, and this Agreement shall thereupon terminate. (c) The closing of the Bonds in regard to the Project is subject to sufficient volume cap allocation, The Issuer agrees to apply an amount not to exceed $4,300,000 of such allocation in 1999 for such purpose and the Borrower shall be responsible for locating and 4 ST 'd 0062 L09 2T2 9S:ZT 666T-ST-03Q 9I 'd 1d101 assigning additional volume cap to the Issuer from other municipalities or agencies. If neessary or desirable, the Issuer agrees to assign any cap allocation made pursuant to this Agreement to an issuer with sufficient allocation. IN WITNESS WHEREOF, the parties hereto have entered into Agreement by their officers thereunto duly authorized as of the 15'"day of December, 1999. CITY OF ELGIN,ILLINOIS Mayor Al UST: City Clerk QUESTEK MANUFACTURING CORPORATION By: A ITEST: QUEST PROPERTIES,L.L.C. By: ATTEST: 5 6060735v2 9S:rT 666T-ST-Dal 9T'd 0062 LOS ZIP aU July 28 , 2000 MEMORANDUM TO: Loni Mecum, City Clerk FROM: William A. Cogley, Corporation Counsel SUBJECT: Memorandum of Agreement with Questek Manufacturing Corporation Attached for the City Clerk' s files is the fully executed Memorandum of Agreement with Questek Manufacturing Corporation. \AXIV WAC nr Attachment MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT is by and among the City Elgin, Illinois (the "Issuer"), Questek Manufacturing Corporation, an Illinois corporation (the "Company") and Quest Properties, L.L.C., a Delaware limited liability company ("Quest," and collectively with the Company, the"Borrower"). 1. Preliminary Statement. Among the matters of mutual inducement which have resulted in this Agreement are the following: (a) The Issuer is authorized as a home rule municipality in accordance with the Constitution of the State of Illinois to issue industrial revenue bonds for the purpose of financing, in whole or in part, the cost of the acquisition, purchase, construction, reconstruction, improvement, betterment or extension of any industrial project and to enter into a loan agreement with the Borrower pursuant to which the proceeds of such industrial revenue bonds may be lent to the Borrower to finance the costs of the acquisition, construction and equipping of such an industrial project. (b) The Borrower wishes to obtain satisfactory assurance from the Issuer that the proceeds of the sale of such industrial revenue bonds of the Issuer will be made available to it for the purposes of financing a portion of the costs of the Project,the land and building portion of such Project to be owned by Quest and leased to and operated by the Company, such Project to consist of the acquisition of land, the construction of an approximately 60,000 square foot building to be located in the Northwest Business Park By Wispark at Randall Road and Galvin Drive in Elgin, Illinois and the purchase certain related equipment, for use in the Company's business as a manufacturer of custom electronic and electromechanical assemblies (the"Project") and to pay a portion of the costs of issuance. (c) Subject to the conditions contained herein and the due compliance with all requirements of law, the Issuer, by virtue of such statutory authority as may now or hereafter be conferred, will issue and sell its industrial revenue bonds in an amount not to exceed $4,300,000 (the "Bonds")to finance the costs of the Project. (d) The Borrower has presented the Issuer with evidence of its intention to reimburse itself for expenditures relating to the Project which it may pay from funds which are not proceeds of the Bonds. (e) The Bonds shall be limited obligations of the Issuer payable solely out of the revenues and receipts derived from the trust estate established under the Indenture of Trust pursuant to which the Bonds are to be issued; the Project shall be financed by means of a loan of the proceeds of the Bonds to the Borrower, and the Borrower shall agree to make payments in an amount sufficient to pay the principal and purchase price of, and premium, if any, and interest on,the Bonds. No holder of any of the Bonds shall have the right to compel any exercise of the taxing owner of the Issuer, and the Bonds shall not constitute an indebtednesss or a loan of credit of the Issuer within the meaning of any constitiutional or statutory provision. 2. Undertaking on the Part of the Issuer. Subject to the conditions above stated, the Issuer agrees as follows: (a) That it will authorize the issuance and sale of the Bonds. 2 (b) That it will, at the proper time and subject in all respects to the prior advice, consent and approval of the Borrower, execute such documents as may be necessary and advisable for the authorization, issuance, and sale of the Bonds as aforesaid, and that it will enter into a loan agreement whereby the Borrower will pay to or on behalf of the Issuer such sums as shall be sufficient to pay the principal and interest and redemption premium, if any, on the Bonds as and when the same shall become due and payable. (c) The Issuer hereby declares its intent to assist the Borrower under Treasury Regulations Section 1.150-2 to reimburse any expenditures made on costs of the Project prior to the issuance of the Bonds with proceeds of the Bonds. The closing of the Bonds in regards to the project is subject to sufficient volume cap allocation. The Issuer agrees to apply from its 1999 volume cap allocation an amount not to exceed $4,300,000 for such purpose. 3. Undertakings on the part of the Borrower. Subject to the conditions above stated,the Borrower agrees as follows: (a) That it will use all reasonable efforts to find one or more purchasers for the Bonds. (b) That contemporaneously with the delivery of the Bonds it will enter into a loan agreement with the Issuer under the terms of which the Borrower will obligate itself to pay to the Issuer sums sufficient in the aggregate to pay the principal of and interest and redemption premium, if any, on the bonds as an when the same shall become due and payable. (c) The Borrower will also agree in such Loan Agreement to pay all 3 reasonable fees and expenses in connection with the Bonds. 4. General Provisions. (a) All commitments of the Issuer under Paragraph 2 hereof and of the Borrower under Paragraph 3 hereof are subject to the condition that on or before 365 days from the date hereof (or such other date as shall be mutually satisfactory to the Issuer and the 1 Borrower), the Issuer and the Borrower shall have agreed to mutually acceptable terms and conditions of the loan agreement and of the Bonds and such other instruments or proceedings relating to the Bonds. The decision not to approve or agree to any term or condition of any document or not to take any action prior to issuance of the Bonds shall rest solely within the complete discretion of the parties to this Agreement. (b) If the events set forth in(a) of this Paragraph 4 do not take place within the time set forth or any extension thereof and the Bonds in an amount not exceeding the amount stated above are not sold within such time, the Borrower agrees that it will reimburse the Issuer for all reasonable and necessary direct out-of-pocket expenses which the Issuer may incur at the Borrower's request or as a result of arising out of this Agreement including, but not limited to, the payment of attorney and other consultant fees arising from the execution of this Agreement and the performance by the Issuer of its obligations hereunder, and this Agreement shall thereupon terminate. (c) The closing of the Bonds in regard to the Project is subject to sufficient volume cap allocation. The Issuer agrees to apply an amount not to exceed $4,300,000 of such allocation in 1999 for such purpose and the Borrower shall be responsible for locating and 4 assigning additional volume cap to the Issuer from other municipalities or agencies.eement If neessary or desirable, the Issuer agrees to assign any cap allocation made pursuant to this Agr to an issuer with sufficient allocation. IN WITNESS WHEREOF, the parties hereto have entered into Agreement by their officers thereunto duly authorized as of the 15th day of December, 1999. CITY OF ELGIN, ILLIN IS Mayor ATTEST: 96-4-7,,tz me -. City Clerk QUEST N ACTURING CORP N By: /AI ATTEST: QUEST R R tS, L.L.C. By: iftlobwh /Iy► rriV ATTEST: 5 6060735v2 ORDINANCE NO. S13-99 AN ORDINANCE SETTING A PUBLIC HEARING ON AND AUTHORIZING THE ISSUANCE AND SALE OF ITS CITY OF ELGIN, ILLINOIS VARIABLE RATE. DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS (QUESTEK MANUFACTURING CORPORATION PROJECT) SERIES 1999, IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $4,300,000 AND CONFIRMING THE SALE THEREOF; AUTHORIZING THE EXECUTION AND DELIVERY OF A LOAN AGREEMENT, A TRUST INDENTURE, A BOND PURCHASE AGREEMENT AND RELATED DOCUMENTS; AUTHORIZING THE DISTRIBUTION OF A PRELIMINARY OFFERING MEMORANDUM AND AN OFFERING MEMORANDUM; AND RELATED MATTERS. WHEREAS, the City of Elgin, Illinois, a municipality and a home-rule unit of government duly organized and validly existing under the Constitution and the laws of the State of Illinois (the "Issuer"), has a population of more than 25,000, and, in accordance with the provisions of Section 6(a) of Article VII of the 1970 Constitution of the State of Illinois, the Issuer is a home rule unit of government, and, as such, may exercise any power or perform any function pertaining to its government and affairs; and WHEREAS, as a home rule municipality the Issuer is authorized and empowered to issue industrial development revenue bonds and to lend the proceeds thereof for the purpose of financing, in part, the costs of the acquisition, purchase, construction, reconstruction, improvement, betterment or extension of industrial projects; and WHEREAS, the Issuer has indicated its intention to issue its revenue bonds for the purposes of financing the costs of a project, the land and building portion of such project to be owned and leased by Quest Properties, L.L.C., a Delaware limited liability company ("Quest") and operated by Questek Manufacturing Corporation, an Illinois corporation (the "Company," and collectively with Quest, the "Borrower"), such project to consist of a portion of the costs of land, an approximately 60,000 square foot building to be located in the Northwest Business Park By Wispark at Randall Road and Galvin Drive in Elgin, Illinois and the purchase of certain related equipment, for use in the Company's business as a manufacturer of custom electronic and electromechanical assemblies and to pay a portion of the costs of issuance.; and WHEREAS, the Issuer wishes to finance the costs of the Project, to pay interest during the acquisition, construction and installation of the Project, and to pay the costs of issuance of such revenue bonds of the Issuer, by the sale and issuance of its revenue bonds, and by authorizing such actions as might be required to implement such stated intentions; and WHEREAS, pursuant to and in accordance with the provisions of the Constitution and the laws of the State of Illinois. the Issuer is now prepared to issue and sell its City of Elgin, ICorporationllinois VariableProj Rate ) S Demandries1999 Indust(thriBonal Developmentds"); d Revenue Bonds (Questek Manufacturing ectee " an WHEREAS, the Issuer has available and hereby allocates to the Bonds, an amount not to exceed $4,300,000 of its private activity bond volume cap allocation; and WHEREAS, the Bonds shall be secured by the Indenture (as hereinafter defined) and, except to the extent payable from Bond proceeds or income from the temporary investment thereof, be payable solely from the revenues and receipts and other amounts received by the Issuer pursuant to the Loan Agreement (as hereinafter defined), the Note (as hereinafter defined) and the other sources identified in the Indenture; and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Loan Agreement dated as of December 1, 1999, by and between the Issuer and the Borrower(the "Loan Agreement"); and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Trust Indenture (the "Indenture") dated as of December 1, 1999, from the Issuer to American National Bank and Trust Company of Chicago, a national banking association, as trustee, and its successors in trust and its assignees (the "Trustee"), and to designate the Trustee in connection therewith; and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Bond Purchase Agreement dated December 22, 1999 (the "Bond Purchase Agreement") among the Issuer, the Borrower and Banc One Capital Markets, Inc., a Delaware corporation, as underwriter(the "Underwriter"); and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the preparation and distribution of a Preliminary Offering Memorandum (the "Preliminary Offering Memorandum") and the preparation and distribution of an Offering Memorandum (the"Offering Memorandum") in connection with the issuance of the Bonds; and WHEREAS, it is now necessary, desirable and in the best interests of the Issuer to authorize the execution and delivery of a Arbitrage Regulation Agreement and Certificate dated December 22, 1999 (the "Arbitrage Agreement") among the Issuer, the Borrower and the Trustee; and WHEREAS, the Issuer has caused to be prepared for and presented before the City Council of the Issuer forms of the following documents which the Issuer proposes to approve the terms of or enter into: 1. The Loan Agreement; 2. The Trust Indenture; 3. The Bond Purchase Agreement; 4. The Arbitrage Agreement; 5. The Bonds; and 6. This Bond Ordinance; 2 WHEREAS, the City Council of the Issuer hereby finds and determines that the issuance of the Bonds for the stated purposes is necessary for the welfare of the government and affairs of the Issuer, is a proper public purpose and is in the public interest; and WHEREAS, the Borrower has caused a notice of public hearing with respect to the plan of financing the costs of the Project through the issuance of the Bonds to be published in the Chicago Tribune, a newspaper of general circulation in the City of Elgin, Illinois and the Elgin Courier News, pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), on December 6, 1999, and the Fiscal Services Manager or a designee of the Mayor will conduct said public hearing on December 20, 1999; NOW, THEREFORE, Be It Ordained by the City Council of the City of Elgin, Illinois, as follows: Section 1. That the City Council of the Issuer hereby finds that all of the recitals contained in the preambles to this Ordinance are full, true and correct, and does incorporate them into this Ordinance by this reference. Section 2. That the Issuer does hereby authorize and approve the financing of the costs of the acquisition, construction and installation of the Project through the issuance of the Bonds in accordance with the terms of the Loan Agreement and the Indenture, and does hereby determine that the Project is a project that is authorized to be financed with bonds, and that the financing of the acquisition, construction and installation of the Project is in furtherance of the public purposes of the Issuer; and that the Issuer hereby approves the plan of finance of the costs of the Project through the issuance of the Bonds and authorizes the Fiscal Services Manager or a designee of the Mayor to conduct the public hearing on December 20, 1999, as described in the aforesaid notice of public hearing which is hereby incorporated by reference and authorizes the Mayor to approve the issuance of the Bonds, which approval shall be considered the public approval required by Section 147(f) of the Code. Section 3. That the Issuer is hereby authorized to enter into the Loan Agreement with the Borrower in substantially the same form now before the City Council of the Issuer; that the form, terms and provisions of the Loan Agreement be, and they hereby are, in all respects approved; that the Mayor of the Issuer be, and hereby is, authorized, empowered and directed to execute, and the City Clerk of the Issuer be, and hereby is, authorized, empowered and directed to attest and to affix the official seal of the Issuer to, the Loan Agreement in the name, for and on behalf of the Issuer, and thereupon to cause the Loan Agreement to be delivered to the Borrower, such Loan Agreement (as executed) to provide for the loan of the proceeds of the Bonds to the Borrower and the use of such proceeds for the acquisition, construction and installation of the Project, to pay interest during the acquisition, construction and installation of the Project and to pay a portion of the costs of issuing the Bonds, in the manner and with the effect therein provided, such Loan Agreement to be in substantially the same form now before the City Council of the Issuer or with such changes and revisions therein as the officer executing the Loan Agreement on behalf of the Issuer shall approve, his execution thereof to constitute conclusive evidence of such approval of any and all changes or revisions therein from the form of the Loan Agreement now before the City Council of the Issuer; that from and after the execution and delivery of the Loan Agreement, the officers and employees of the Issuer are hereby authorized, 3 empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Loan Agreement as executed; and that the Loan Agreement shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Loan Agreement shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section 4. That the Issuer is hereby authorized to enter into the Indenture with the Trustee in substantially the same form now before the City Council of the Issuer; and the form, terms and provisions of the Indenture be, and they hereby are, in all respects approved; that the Mayor of the Issuer be, and hereby is, authorized, empowered and directed to execute, and the City Clerk of the Issuer be, and hereby is, authorized, empowered and directed to attest and to affix the official seal of the Issuer to, the Indenture in the name, for and on behalf of the Issuer, and thereupon to cause the Indenture to be delivered to the Trustee, and the Indenture shall constitute an assignment and pledge for the security of the Bonds issued thereunder of the revenues and receipts to be received by the Issuer pursuant to the Loan Agreement and the promissory note of the Borrower delivered thereunder (the "Note") and an assignment and pledge of the other rights, title and interest of the Issuer in and to the Loan Agreement and the Note, as described in the Indenture (with the exception of certain rights to receive certain payments, to indemnity and other retained rights as specified in the Indenture), such Indenture to be in substantially the form now before the City Council of the Issuer or with such changes and revisions therein as the officer executing the Indenture on behalf of the Issuer shall approve, his execution thereof to constitute conclusive evidence of such approval of any and all changes or revisions therein from the form of Indenture now before the City Council of the Issuer; that from and after the execution and delivery of the Indenture, the officers and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Indenture as executed; and that the Indenture shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Indenture shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section 5. That American National Bank and Trust Company of Chicago, Chicago, Illinois, is hereby designated as Trustee, Paying Agent and Registrar with respect to the Bonds. Section 6. That the Issuer is hereby authorized to enter into the Bond Purchase Agreement with the Borrower and the Underwriter in substantially the same form now before the City Council of the Issuer and any supplement thereto that is necessary to sell the Bonds; that the form, terms and provisions of the Bond Purchase Agreement in the name, for and on behalf of the Issuer, and thereupon to cause the Bond Purchase Agreement to be delivered to the Borrower and the Underwriter, such agreement to provide for the issuance of the Bonds in the aggregate principal amount of not to exceed $4,300,000, such Bond Purchase Agreement to be in substantially the same form now before the City Council of the Issuer or with such changes and revisions therein as the officer executing the Bond Purchase Agreement on behalf of the Issuer shall approve, his execution thereof to constitute conclusive evidence of such approval of any and all changes or revisions therein from the form of Bond Purchase Agreement now before the City Council of the Issuer; that from and after the execution and delivery of the Bond Purchase Agreement, the officers and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to 4 carry out and comply with the provisions of the Bond Purchase Agreement as executed; and that the Bond Purchase Agreement shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Bond Purchase Agreement shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section 7. That the form of the Bonds now before the City Council of the Issuer, subject to appropriate insertions and revisions in order to comply with the provisions of the Indenture (as executed and delivered) be, and the same hereby are, approved; that the Bonds shall be executed in the name, for and on behalf of the Issuer with the manual or facsimile signature of its Mayor and attested with the manual or facsimile signature of its City Clerk and the official seal of the Issuer shall be impressed or imprinted thereon; that the Mayor of the Issuer shall cause the Bonds, as so executed and attested, to be delivered to the Trustee for authentication; and that when the Bonds shall be executed on behalf of the Issuer in the manner contemplated by the Indenture and this Ordinance in the aggregate principal amount of not to exceed $4,300,000,they shall represent the approved forms of Bonds of the Issuer. The Bonds, including but not limited to the principal of, premium, if any, interest thereon and any expenses related thereto, shall be limited obligations of the Issuer, payable solely and only from the revenues and receipts derived by the Issuer pursuant to the Loan Agreement and shall be otherwise secured as provided in the Indenture in the Loan Agreement. The Bonds shall not in any respect be a general obligation of the Issuer, nor shall they be payable in any manner from funds of the Issuer raised by taxation. The Bonds shall state that they do not constitute an indebtedness of the Issuer or a loan of credit thereof within the meaning of any constitutional or statutory provision. Nothing in this Ordinance, the Loan Agreement, the Indenture, the Arbitrage Agreement, or the form of the Bonds (hereinafter referred to collectively as the "Financing Documents") or in any document or agreement required hereby and thereby, shall be construed as an obligation or commitment by the Issuer to expend any of its funds other than (i) the proceeds derived from the sale of the Bonds, (ii) the revenues and receipts derived from the Loan Agreement and (iii) any monies arising out of the investment or reinvestment of said proceeds, income, revenues, receipts or monies. Section 8. That the sale of the Bonds in the aggregate principal amount of not to exceed $4,300,000 at a purchase price of 100% of the principal amount thereof and accrued interest, if any, to the date of delivery, is hereby approved and confirmed, and that no member of the City Council for the Issuer or any officer of the Issuer is in any manner interested, either directly or indirectly, in his own name or in the name of any other person, association, trust or corporation, in the Loan Agreement, the Indenture or the Bond Purchase Agreement. Section 9. That the preparation and distribution of the Preliminary Offering Memorandum by the Underwriter is hereby approved, and the preparation and distribution of the Offering Memorandum by the Underwriter is hereby approved. Section 10. That the Issuer is hereby authorized to enter into the Arbitrage Agreement with the Trustee and the Borrower in substantially the same form now before the City Council of the Issuer; and the form, terms and provisions of the Arbitrage Agreement be, and they hereby are, in all respects approved; that the Mayor of the Issuer be, and hereby is, authorized, empowered and directed to execute, and the City Clerk of the Issuer be, and hereby is, 5 authorized, empowered and directed to attest and to affix the official seal of the Issuer to, the Arbitrage Agreement in the name, for and on behalf of the Issuer; that from and after the execution and delivery of the Arbitrage Agreement, the officers and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Arbitrage Agreement as executed; and that the Arbitrage Agreement shall constitute, and hereby is made, a part of this Ordinance, and a copy of the Arbitrage Agreement shall be placed in the official records of the Issuer, and shall be available for public inspection at the office of the City Clerk of the Issuer. Section 11. That the Mayor, the City Clerk and any other applicable officer or employee of the Issuer be, and each of them hereby is authorized and directed to execute, attest, seal and deliver any and all documents and certificates, to do any and all things deemed necessary to effect the issuance and sale of the Bonds and the execution and delivery of the Loan Agreement, the Indenture, the Bond Purchase Agreement and such other instruments (including financing statements), and to perform the obligations and duties of the Issuer hereunder and thereunder, all as shall be necessary and desirable to carry out the intent and purposes of this Ordinance, including the preambles hereto. Section 12. That all acts of the City Council of the Issuer and the members, officers, agents and employees of the Issuer that are in conformity with the intent and purposes of this Ordinance, whether heretofore or hereafter taken or done, be, and the same are hereby, in all respects, ratified, confirmed and approved. Section 13. That the Issuer hereby elects to have the provisions of Section 144(a)(4) of the Code apply to the Bonds. Section 14. That the Issuer hereby allocates an amount not to exceed $4,300,000 of municipal private activity bond volume cap to the Bonds. Section 15. That the Mayor of the Issuer is hereby authorized to execute, and the Clerk of the Issuer is hereby authorized to attest a Memorandum of Agreement with the Borrower in substantially the form of such agreement appended to this Ordinance as Exhibit A. The Issuer hereby declares its intent to assist the Borrower under Treasury Regulation Section 1.150-2 to reimburse any expenditures made on costs of the Project prior to the issuance of the Bonds with the proceeds of the Bonds. Section 16. That the provisions of this Ordinance are hereby declared to be separable, and if any section, phrase or provision shall for any reason be declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases and provisions of this Ordinance. Section 17. That a full, true and complete copy of this Ordinance shall be printed or published promptly after passage in pamphlet form by authority of the City Council of the Issuer. Section 18. That all ordinances, resolutions, or parts thereof, in conflict herewith are hereby superseded to the extent of such conflict; and that this Ordinance shall be in full force and 6 effect immediately and forthwith upon its passage, approval and publication in pamphlet form as aforesaid. Schock Ed Schock, Mayor Presented: December 15, 1999 Passed: December 15 , 1999 Vote : Yeas 7 Nays 0 Recorded: December 16, 1999 Published: December 16 , 1999 Attest : s/ Dolonna Mecum Dolonna Mecum, City Clerk o • E ,f` c`'� ' Agenda Item No. ' , City of Elgin iI 4'1TTD EFLti December 2 , 1999 TO: Mayor and Members of the City Council FROM: Joyce A. Parker, City Manager SUBJECT: Request from Questek Manufacturing Corporation for the City' s 1999 Annual Industrial Revenue Bond Authority PURPOSE The purpose of this memorandum is to present to the Mayor and members of the City Council a request from Questek Manufacturing Corporation for $4 . 3 million of the year 1999 Industrial Revenue Bond (IRB) authority. BACKGROUND On January 8, 1999, the City had approved a Memorandum of Agreement with MG Capital LLC authorizing $4 .3 million in 1999 IRB capacity. MG Capital has recently advised the City that it no longer intends to pursue the project, thereby providing the City an opportunity to reallocate the IRB authority. The City has just recently received a request regarding the availability of IRBs for business expansion from Questek Manufacturing Corporation. The request is for $4 . 3 million of the City' s 1999 IRB capacity. Questek is currently located at 330 Corporate Drive, Elgin. Bond proceeds will be used for the purchase of land, the construction of a building and the purchase and installation of production equipment . Legal, financial and other costs will also be paid by the proceeds . In order to avoid the loss of the $4 . 3 million State of Illinois IRB capacity, this project must be approved by the City Council and a Memorandum of Agreement must be authorized prior to December 31, 1999 . In addition, a TEFRA public hearing must be held prior to the bond sale . The approval of the project and the Memorandum of Agreement for the project can occur at the December 15, 1999 regular City Council meeting. The notice for the TEFRA hearing must be published 14 days prior to the date of the hearing. As a result, the hearing could occur no sooner than December 20 , 1999 . In order to avoid a special City Council meeting to conduct the public hearing, staff is requesting that the City' s Fiscal Services Manager be authorized to conduct the TEFRA public hearing on behalf of the City at an appropriate time and place. Questek Manufacturing Corporation December 2 , 1999 Page 2 Background on the Project Questek Manufacturing was founded in 1985 and has been manufacturing in the Elgin area since 1988 . The products of the company include wire lead assembling, printed circuit board assemblies, power supplies, automobile electrical components and miscellaneous other made-to-order electrical/electronic assemblies . When Questek first moved to Elgin, it employed 20 people (three office/professional, one supervisory, 12 full-time and four seasonal entry-level manufacturing) . As the company grew, the Elgin employment grew. By 1995, the company had revenues over $4 million and employed over 120 people. In 1995, the company lost a sizable piece of business to a competitor who manufactured in Mexico. At that time, the customer for that work represented 65% of the sales and 80% of the employment . That customer told Questek that they would eventually be losing the rest of his business as well . In response, Questek set up a manufacturing operation in Mexico in 1996 . As a result, they were able to retain that large customer. Also as a result, that customer has consolidated his U.S. suppliers from four down to one, and that one is Questek in Elgin. Presently, 30 of the people employed in Elgin serve that customer alone, making product that was previously made by others elsewhere . All segments of the business face heavy competition from foreign sources, especially China (and the rest of eastern Asia) and Mexico. Questek seeks to improve the competitiveness of the Illinois manufacturing operation so that it can be more competitive and grow the business in the U. S. They plan on doing this by expanding and modernizing the manufacturing operations to provide improved capabilities and efficiencies. This project includes the following components : 1 . More space - to accommodate additional equipment - to implement product-focused manufacturing cells - to provide better organization and more efficient material flow - to help attract new clients by showing them "available capacity" 2 . Reorganize manufacturing process from traditional equipment based departments to product-focused cells (a.k.a. focused factories) . - Traditionally, manufacturing has been organized around the equipment . That equipment was organized into departments, each of which operated its own type of equipment . Machines were "changed over" to accommodate different products . Production was batched to make the • Questek Manufacturing Corporation December 2 , 1999 Page 3 most of each set-up. All products would pass through all departments. A given product would take weeks to make it through the process. - A product-focused cell organizes the factory around the products . Each cell produces one product from start to finish. All operations required to produce that product are contained in close proximity within the cell . A given unit of product takes hours to make it through the process . - Compared to equipment-based departments, product-focused cells provide shorter lead times, lower scrap, reduced changeover costs, better quality (because of better communication throughout the process, fewer changeovers, and greater individual accountability) , greater inventory accuracy, and reduced material handling. However, since they are based on dedicated machines, they typically require more capital and more space . 3 . New Equipment - to implement product-focused cells - to improve efficiencies in existing processes - to provide new process capabilities 4 . New injection molds and other product-related tooling and fixturing to improve quality and lower costs . 5 . New work stations and conveyoring - to improve operator efficiency - to reduce material handling - to improve flexibility of the factory - to implement the product-focused cells 6 . A better physical environment for the employees in order to better attract and retain professional and manufacturing employees . COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED None . WV/L.- FINANCIAL IMPACT Questek has paid the $2, 500 IRB application fee . Furthermore, all costs pertaining to the IRB issuance will be borne by the Questek Manufacturing Corporation. Speer Financial, Inc . found Questek to be financially sound. The IRB project will enhance their business and retain a viable corporate citizen in the City. Speer finds this a worthwhile project and recommends that the City proceed with the inducement resolution. Questek Manufacturing Corporation December 2 , 1999 Page 4 The Internal Revenue Code stipulates that all transactions related to the IRB process must be completed prior to the end of this calendar year. WitleeLEGAL IMPACT The industrial revenue bond cap volume for 1999 proposed to be utilized for this transaction has previously been allocated by the City in a Memorandum of Agreement between the City and MG Capital LLC executed January 8, 1999 . Such agreement does not expire until January 8 , 2001 . MG Capital must provide the City an original executed termination agreement providing for the termination of the existing Memorandum of Agreement and releasing the City from any and all obligations of the memorandum of agreement before the City proceeds with the proposed Questek Manufacturing bond transaction. ALTERNATIVES 1 . Authorize Questek to use $4 . 3 million of the City' s IRB capacity. 2 . Deny the request by Questek to utilize $4 . 3 million of the City' s 1999 IRB capacity. RECOMMENDATION It is recommended that an inducement resolution be adopted for Questek Manufacturing Corporation in the amount of $4 . 3 million in Industrial Revenue Bonds and that the City of Elgin Fiscal Services Manager be authorized to conduct the TEFRA public hearing at an appropriate time and place . R ectfully submitted, lil J ce . Parker City Manager RHM:amp Attachments PUBLIC FINANCE CONSULTANTS SINCE 1954 InSPEER FINANCIAL, INC. KEVIN W.McCANNA DAVID F.PHILLIPS LARRY P.BURGER DANIEL D.FORBES BARBARA L.CHEVALIER PRESIDENT SR.VICE PRESIDENT VICE PRESIDENT S ICE PRESIDENT VICE PRESIDENT December 6, 1999 The Honorable Ed Schock and Members of City Council City of Elgin 150 Dexter Court Elgin, IL 60120 Dear Mayor and Council: Pursuant to the request of the City, Speer Financial, Inc. has reviewed the industrial revenue bond application, and supporting documentation including unaudited financial reviews, of Questek Manufacturing Corporation and Quest Properties, LLC, (the "Company"). The financial reviews are on a calendar year basis and are prepared by the Company. The Company employs an outside accountant, currently Eric J. Fernandez & Company, to prepare tli Company's tax returns and assist in accounting advice. Questek Manufacturing Corporation is applying for City approval of$4,300,000 industrial revenue bonds. The purchaser is expected to be Banc One Capital Markets, Inc. through American National Bank in Elgin, Illinois. Bond counsel is Holleb & Coif. Proceeds will be used for the purchase of 4.86 acres of land located in the Northwest Business Park (Wispark), Randall Road, construction of a new 60,000 square foot building and for the purchase and installation of new product equipment at a cost of approximately $4,025,000. Additional legal, financial and other costs, in the amount of$275,000, will also be paid by the proceeds. The Company has been manufacturing its products in Elgin since 1988. The products of the Company include wire lead assemblies, printed circuit board assemblies, power supplies, automotive electrical components and miscellaneous other made to order electrical/electronic assemblies. The Company states that all segments of their business face heavy competition from foreign sources. The Company is seeking to improve the competitiveness of their Illinois manufacturing operation by expanding and modernizing to provide improved capabilities and efficiencies. The product distribution area was primarily the U.S., but is increasingly international. Some 88 employees work for the Company, of whom 64 live in Elgin. The current average employee salary is $270 per week for labor, $540 per week for clerical and $850 per week for supervisory. The yearly payroll is approximately $1,500,000 plus $330,000 to a temporary labor agency. With the new building and equipment, an increase of 19 new jobs is expected, with 14 being permanent full-time, 1 permanent part-time and 4 seasonal/temporary. Of the 19 positions, 2 will be clerical, 15 labor, 1 supervisory and 1 management. This will increase payroll an estimated 20%. The benefit to the City of the bond issue is job retention,job creation and approximately $12,000 annually in property taxes. SUITE 3435.55 EAST MONROE STREET•CHICAGO,ILLINOIS 60603•(312)346-3700•FAX(312)346-8833 SUITE 500.531 COMMERCIAL STREET•WATERLOO,IOWA 50701•(319)291-2077•FAX(319)291-6787 • SPEER FINANCIAL, INC. Financial Analysis As the accompanying table indicates, Questek Manufacturing Corporation's financial position has remained relatively stable over the past five years. Sales revenues have been growing, with a 77% increase from 1994-1998. Net income as a percentage of sales has averaged 6.92%, ranging from 4.50% to 9.28%. Net income has fluctuated over the past years between a low of$138,743 in 1995 to $348,867 in 1998. In addition, cash, investments and accounts receivable have grown over the past five years. The Company's total assets have managed to grow 107.58% from 1994 to 1998. As assets increased steadily, liabilities have also increased by 207.67% over the same five years. Shareholders equity has grown 71%. The increase in balance sheet items indicates a financially sound and growing company. The $4,300,000 of bonds are to be amortized over twenty years. The bonds will pay interest at a floating rate with a weekly option to change to a fixed rate. Annual debt service at an average rate of 6% is some $250,000 to $475,000. The Company currently does not have any debt. A report of Dun& Bradstreet states that the Company received "an overall `good' credit appraisal". The new debt is expected to be secured by a mortgage on the building and a lien on the equipment purchased. Results of the past three years provide 1.2 times coverage for debt service for the first three years of the loan, which is expected to be $350,000 per year. Debt service for the remaining portion of the loan is expected to begin near $475,000 per year and decrease to $250,000 in the final year; cashflow for 1998 and partial 1999 each provide at least 1.0 times coverage for this highest amount. The income tax effect of the bond interest treatment should result in higher coverage ratios. Conclusion In summary, we find the Company, based on its unaudited financial information, to be financially sound. The IRB project will enhance their business and retain a viable corporate citizen in the City. We find this a worthwhile project and recommend that the City proceed with the inducement resolution. We would be pleased to discuss this with you. Sincerely, (om Kevin W. McCanna President KWM/sc Enclosure • OUESTEK MFG.CORP. Accountant's Review as of December 31 Partial as of July 31 1994 1995 1996 1997 1998 1999 ASSETS: Current Assets: Cash&Investments $ 776,716.02 $ 920,358.90 $ 1,049,689.23 $ 1,066,827.57 $ 1,638 660.65 $ 1,654,454.41 Account Receivable 209,051.46 182,913.61 481,890.36 328,275.67 428,260.63 502 983.32 Inventory at Cost 114,639.73 198,238.08 244,305.48 354,736.67 532,027.13 435,460.40 Other 910.00 955.38 3,543.70 3,562.91 33,562.91 3,562.91 Total Current Assets $ 1,101,317.21 $ 1,302,465.97 $ 1,779,428.77 $ 1,753,402.82 $ 2,632,511.32 $ 2,596,461.04 Fixed Assets: Leasehold Impr,Office,Engineer Manufacturing&Sales Equipment S 482,407.22 $ 567,897.35 S 634,857.39 $ 734,326.85 $ 773,415.49 $ 826.886.27 Prod.Tool Fix&Tooing Charge 36,561.08 38,832.31 40,760.07 56,238.34 56,238.34 161,497.34 Less:Accumulated Depreciation 8 Amortization (216,506.24) (275.165.59) (340,711.79) (420,034.59) (522,871.94) (572,481.17) Other Assets 12,192.88 6000.00 - 75,000.00 - - TOTAL ASSETS • $ 1,415,972.15 $ 1,640,030.04 $ 2,114,334.44 $ 2,198,933.42 $ 2,939,293.21 $ 3,012,363.48 LIABILITIES: Current Liabilities: Accounts Payables $ 70,652.36 $ 147.667.86 $ 190,413.00 $ 284,597.06 $ 208,838.78 $ 131,705.19 Accrued Withheld&Unemployment 2,824.03 3,605.19 4,116.38 1,331.83 1,779.03 253.76 Other Accrued Expenses 30,000.00 66,320.00 159.770.00 81,950.00 121,360.55 116,124.69 Wages Payable 72,381.47 75,034.94 95,144.01 94.575.51 187,239.74 106,109.62 Estimated Insurance Payable 6,517.08 32,200.00 36,000.00 68,034.00 92,076.40 107,991.23 Estimated Income Tax Payable 106,815.23 30,315.23 149,791.23 18,850.18 269,537.32 246,206.09 Reserved For Cont.Liabilities - 55,000.00 21,000.00 33,670.00 33,670.00 33,870.00 Total Current Liabilities $ 289,190.17 $ 410,143.22 $ 656,234.62 $ 583,008.58 $ 914,501.82 $ 742,060.58 Long-Term Liabilities: Deferred Comp Payable>12 nos. $ 89.300.00 $ 79,700.00 $ 79,700.00 $ 190,000.00 $ 250,000.00 $ 250,000.00 Total Long-Tenn Liabilities $ 89,300.00 $ 79,700.00 $ 79,700.00 $ 190,000.00 $ 250,000.00 $ 250,000.00 TOTAL LIABILITIES $ 378,490.17 $ 489,843.22 S 735,934.62 $ 773,008.58 $ 1,164,501.82 $ 992,060.58 SHAREHOLDERS EQUITY No Par Common Stock,Stated Value $ 362,470.00 $ 362,470.00 $ 362,470.00 $ 362,470.00 $ 362,470.00 $ 362,470.00 Retained Earnings 493,127.95 730,808.28 869,551.12 1,203,281.02 1,480,939.54 1 829,806.09 Net Pro6U(Loss) 237,680.33 138,742.84 333,729.90 277,658.52 348,866.55 245,511.51 Treasury Stock at Cost (55,796,30) (81,834.30) (187,351.20) (417,484.70) (417,484.70) (417,484.70) TOTAL SHAREHOLDERS EQUITY SI. 4,037 481.98 _$ 1,150,186.82 $ 1,378,399.82 $ 1,425,924.84 $ 1,774,791.39 $ 2,020,302.90 TOTAL SHAREHOLDERS EQUITY S.LIABILITIES $ 1,415,972.15 $ 1,640,030.04 $ 2,114,334.44 $ 2,198,933.42 $ 2,939,293.21 $ 3,012,363.48 r Annual Review Partial as of July 31 1994 t I 1995 1996 1997 1998 1999 SALES $ 2,561,618.47 $ 3,083,190.40 $ 4,043,995.69 S 3,876,672.72 $ 4,531,286.44 $ 2,474,863.88 Less:Cost of Goods Sold (1,402,107.66) (1,827,629.32) (2,505,434.77) (2,585,086.89) (3,190,032.67) (1,322,314.08) Less:Ending Inventory (127,369.73) (247.668.08) (305,960.48) (423,336.67) (625,914.27) - Less:Other Manufacturing Expenses - (523,608.44) (480.359.74) (681,847.72) (629,285.46) (535,945.40) Total Cost of Goods Sold $ 1,274,737.93 $ 2,103,569.68 $ 2,679,834.03 $ 2,823,597.94 $ 3,193,403.86 $ 1,858,259.48 GROSS PROFIT $ 1,286,880.54 $ 979,620.72 $ 1,364,161.66 $ 1,053,074.78 $ 1,337,882.58 $ 618.604.40 Less:Operating Expenses (907,762.27) (717,809.60) (894,089.98) (818,744 72) (998,379.14) (385,768.11) Total Other Income&Expenses 17,012.06 88,231.72 134,258.22 270,503.46 294,799.38 215,548.22 Allowance for Estimated Income Tax Expense (158,450.00) (211,300.00) (270,600.00) (227,175.00) (285,436.27) (200,873.00) • NET INCOME $ 237,680.33 $ 138,742.84 $ 333,729.90 $ 277,658.52 $ 348,866.55 $ 245,511.51 . ADJUSTMENT TO CASH: Add Depreciation and Amortiation $ 71,891.38 $ 67,522.67 $ 79,212.81 $ 95,739.69 $ 109,496.11 $ 54,202.40 s AVAILABLE FOR DEBT SERVICE S 309,571.71 $ 206,265.51 $ 412,942.71 5 373,398.21 $ 458.36266 $ 299,713.91 • e� PEER FINANCIAL,INC. December 15 , 1999 MEMORANDUM TO : Joyce A. Parker, City Manager le Corporation r FROM: William A. Cog ley, Pration Counsel SUBJECT: Questek Manufacturing Corporation Industrial Development Revenue Bond Transaction Attached is the ordinance providing for the Questek Manufacturing Corporation Industrial development Revenue Bond transaction. The ordinance is Item 8 on the Other Business portion of the regular City Council agenda. Also attached is a termination agreement between the City and MG Capital LLC providing for the termination of a memorandum of agreement previously entered into between the City and MG Capital . This termination agreement will enable the city to proceed with the reallocation of the industrial development revenue bond authority to Questek Manufacturing. I have prepared a resolution authorizing the city' s execution of this termination agreement . Please add the resolution and termination agreement to tonight ' s Other Business portion of the regular City Council agenda. w� v WAC nr Attachment cc : Loni Mecum, w/att . Raymond Moller, w/att .