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S9-98 t July 30,.4 July 30, 1998 ORDINANCE NO. S 9-9 8 AN ORDINANCE authorizing the Modification, Amendment and Reissuance of $3,800,000 principal amount Economic Development Revenue Bond (Elgin Corrugated Box Company Project), Series 1995, issued by the City of Elgin, Illinois (the "Issuer"); authorizing the execution and delivery of a Modification Agreement with American National Bank and Trust Company of Chicago, as Bondholder and as Fiscal Agent, and Elgin Corrugated Box Company; approving related documents; authorizing the execution and delivery of related documents; and prescribing other matters related thereto. WHEREAS, the City of Elgin, Illinois (the "Issuer") is a home rule unit of government under Section 6(a) of Article VII of the 1970 Constitution of the State of Illinois and is authorized under Ordinance No. S2-80 adopted by the City Council of the Issuer on February 13, 1980, as supplemented and amended by Ordinance No. S4-84 adopted by the City Council of the Issuer on November 26, 1984, and by Ordinance No. S1-85 adopted by the City Council of the Issuer on February 25, 1985 (said ordinances collectively being the "Enabling Ordinance") to issue revenue bonds to finance the "Project Costs" of "Economic Development Projects"; and WHEREAS, the Issuer has previously issued its $3,800,000 principal amount Economic Development Revenue Bond (Elgin Corrugated Box Company Project), Series 1995 (the "Bond"), the proceeds of which were loaned to Elgin Corrugated Box Company, an Illinois corporation (the "Borrower"), and used by the Borrower to acquire land within the boundaries of the Issuer and to construct, improve and equip a manufacturing facility thereon (the "Project"); and WHEREAS, the Bond was initially purchased by and is now owned and held by American National Bank and Trust Company of Chicago (the "Bondholder"), which also acts as fiscal agent (the "Fiscal Agent") for the Bond pursuant to the Bond Issuance and Security Agreement dated as of April 1, 1995 (the "Bond Agreement") by and between the Issuer and the Bondholder and Fiscal Agent; and WHEREAS, it is now proposed that the Issuer, the Bondholder, the Fiscal Agent and the Borrower enter into a Modification Agreement dated as of July 1, 1998 (the "Modification Agreement") to reduce the rate of interest payable on the Bond, which reduction will or may cause a "reissuance" of the Bond for federal income tax purposes, and the Issuer desires to authorize and approve such "reissuance"; and WHEREAS, pursuant to the requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), a public hearing for which there was reasonable public notice has been held by the Issuer concerning the change in interest rate on the Bond and reissuance of the Bond; and WHEREAS, there have been prepared and presented to this meeting the following documents: 1. The form of the Modification Agreement; 2. The Bond Agreement and copies of the Loan Agreement, the Mortgage, the Promissory Note (each as defined in the Bond Agreement) and the Bond which are being modified and amended by the Modification Agreement; NOW, THEREFORE, Be and It is Hereby Ordained by the City Council of the City of Elgin, Illinois, as follows: Section 1. Defined Terms. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Bond Agreement as modified by the Modification Agreement. Section 2. Incorporation of Recitals. The foregoing recitals are hereby found to be true and accurate and are hereby incorporated into this Ordinance. Section 3. Approval of Reissuance; Terms of Bond. The Issuer hereby approves the reduction of the interest rate on the Bond provided for in the Modification Agreement, and to the extent required by the Internal Revenue Code of 1986, as amended (the "Code"), the Issuer hereby approves the "reissuance" of the Bond. Except as otherwise provided in this Ordinance or in the Bond Agreement as modified and amended by the Modification Agreement, the Bond bears interest as provided in this paragraph. Upon execution and delivery of the Modification Agreement, the Bond shall bear interest at a variable rate, which rate shall be equal to the product of (i) seventy-seven and two-tenths percent (77.2%) times (ii) the Base Rate (as hereinafter defined) from time to time in effect minus 50 basis points (77.2% x (Base Rate - 0.5%). Interest on the Bond shall be computed as if a calendar year consisted of three hundred sixty (360) days and charged on a daily basis, and shall be payable on the last day of the month in which the Bond is dated, and on the last day of each calendar month thereafter until the principal sum of such Bond is paid. The Bond bears interest at three percent (3%) in excess of the rate from time to time payable on principal on any overdue principal and premium and (to the extent that such interest shall be legally enforceable) on any overdue installment of interest until paid. During any period that American National Bank and Trust Company of Chicago or any other "bank" as defined in Section 581 of the Code is the registered owner of the Bond (as hereafter defined), if the Tax Rate (as hereafter defined) is greater or less than thirty-five percent (35%), the rate of interest on the Bond shall be the rate of interest equal to the Base Rate multiplied by (a) the difference between one hundred percent (100%) and the then applicable Tax Rate and (b) 1.188, such interest rate to fluctuate accordingly with any changes from time to time in the Tax Rate. The term "Tax Rate" as used herein is the tax rate at which a bank would be taxed for federal income tax purposes pursuant to applicable provisions of the Code or any future United States - 2 - internal revenue or similar law if its taxable income were in the highest tax bracket specified by the Code or such law. The Bond bears interest from and after the date of a Determination of Taxability (as defined in the Bond Agreement) at a variable rate, which rate shall be equal to the Base Rate from time to time in effect. The "Base Rate" shall be the interest rate from time to time announced by American National Bank and Trust Company of Chicago, Chicago, Illinois, as its base rate or equivalent rate of interest, which rate of interest at any time may not be the lowest rate charged by said bank. A change in the Base Rate shall be effective on the date of the announcement thereof. Except as expressly modified and amended by the Modification Agreement, the Bond, the Bond Agreement, the Loan Agreement, the Mortgage and the Promissory Note shall continue in full force and effect as originally executed and delivered, and the obligations of the Issuer under the Bond and each of the Bond Agreement and the Loan Agreement are and shall continue to be limited obligations of the Issuer as provided therein. The Bond and the interest and premium, if any, payable thereon are and shall remain limited obligations of the Issuer, payable solely and only from Revenues (as defined in the Bond Agreement), including revenues and receipts derived from and pursuant to the Loan Agreement, the Promissory Note, the Mortgage, the Assignment, the Security Agreement and the Environmental Indemnity Agreement (each as defined in the Bond Agreement), and shall not be or become an indebtedness or loan of credit of the Issuer or the State of Illinois rk within the purview of any constitutional or statutory provision. The Bond states on its face that it does not constitute such an indebtedness or loan of credit of the Issuer or the State of Illinois, but is payable solely from such Revenues. Section 4. Approval of Modification Agreement. The form, terms and provisions of the proposed Modification Agreement are in all respects approved, and the Mayor and the City Clerk of the Issuer are hereby authorized, empowered and directed to execute, acknowledge and deliver the Modification Agreement in the name and on behalf of the Issuer, and thereupon to cause the Modification Agreement to be executed, acknowledged and delivered by the Bondholder, Fiscal Agent and Borrower. The Modification Agreement, as executed and delivered, shall be in substantially the form now before this meeting and hereby approved, or with such changes therein as shall be approved by the officers of the Issuer executing the same, their execution thereof to constitute conclusive evidence of the Issuer's approval of any and all changes or revisions therein from the form of the Modification Agreement now before this meeting. From and after the execution and delivery of the Modification Agreement, the officers, agents and employees of the Issuer are 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 Modification Agreement as executed. Section 5. Delegation. The Mayor and City Clerk of the Issuer, for and on behalf of the Issuer, are hereby authorized, empowered and directed to do any and all things necessary to ellik effect the execution and delivery of the Modification Agreement, the performance of all obligations - 3 - of the Issuer under and pursuant to the Modification Agreement, and the performance of all other acts of whatever nature necessary to effect and carry out the authority conferred by this Ordinance and by the Modification Agreement. The Mayor and City Clerk of the Issuer are further authorized, empowered and directed, for and on behalf of the Issuer, to execute all papers, documents, certificates and other instruments that may be required in order to carry out the authority conferred by this Ordinance and by the Modification Agreement, or to evidence the said authority and its exercise. Section 6. Proceedings of the Issuer. The Mayor, City Clerk and other officers of the Issuer are hereby authorized, empowered and directed to prepare and furnish to the Bondholder, Fiscal Agent and Borrower certified copies of all proceedings and records of the Issuer relating to the Bond and the Modification Agreement, and such other affidavits and certificates as may be required to show the facts relating to the legality of the Bond, as modified and amended by the Modification Agreement, as such facts appear from the books and records in the officers' custody and control or as otherwise known to them. Section 7. Section 144(a)(4) Election. The Issuer hereby elects to have the provisions as to the $10,000,000 limit in Section 144(a)(4) of the Code applied to the Bond, and the Mayor and City Clerk of the Issuer are hereby authorized, empowered and directed to take any and all further action which may be required to implement and effectuate such election. Adoption of this Ordinance shall constitute the notation in the books or records of the Issuer required by Section 1.103-10(b)(2)(vi) of the Income Tax Regulations under the Code. r Section 8. Filing Form 8038. The Mayor and City Clerk of the Issuer are hereby authorized, empowered and directed to take any and all action which may be required to comply with the information reporting requirements of Section 149(e) of the Code, including, without limitation, the execution and filing of IRS Form 8038. Section 9. Expiration. This Ordinance and each of the provisions hereof and the approvals made and the powers and authorities granted hereunder shall expire and become null and void in the event that the Modification Agreement is not executed and delivered on or before August 30, 1998. Section 10. Severability. The provisions of this Ordinance are hereby declared to be severable 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 hereof. Section 11. Ratification. All prior actions of the Issuer, its Mayor, City Clerk, officers, officials, employees and agents taken with respect to the Bond and the terms and conditions of the Documents (as defined in the Modification Agreement), each as modified and amended by the Modification Agreement, are hereby ratified and approved. Section 12. Repealer. All ordinances and resolutions and parts thereof in conflict '' with the provisions of this Ordinance are, to the extent of such conflict, hereby repealed. - 4 - Section 13. This Ordinance shall be in full force and effect from and after its passage and approval. PASSED this 2 2nd day of July, 1998. APPROVED this 2 2nd day of July, 1998. VOTE: AYES 6 NAY 0 ABSENT 1 7</e*--- Mayor Attest: :013' .., A Clerk r - 5 -