Memorandum of Understanding [Valentine] - Nebraska Department of Economic Development and ACI Telecentrics Inc.
MEMORANDUM OF UNDERSTANDING (MOU)
VALENTINE
PROJECT DESCRIPTION
ACI Telecentrics, Inc., a national outbound telemarketing firm, has chosen three
(3) communities in Nebraska for their next major expansion. The three (3)
communities selected are Chadron, Ogallala and Valentine, Nebraska. ACI started
about ten years ago by two close friends, Gary Cohen and Rick Diamond. ACI
currently has 5 telemarketing call centers located in Minnesota, North Dakota
and South Dakota. ACI has successfully opened and operated these call centers
using various forms of economic development grants offered by the local
communities and states. ACI is a public company traded on the NASDAQ exchange
under the symbol ACIT. ACI's project involves the creation of 3 telemarketing
call centers: one in Chadron with 48 seats, one in Ogallala with 48 seats and
one in Valentine with 48 seats. In general, it plans to keep these call centers
available for Monday through Saturday 8:30 a.m. to 4:30 p.m. day shifts and
Monday through Friday 5:00 p.m. to 9:00 p.m. night shifts for such sixty (60)
months (except holidays).
BUSINESS: ACI Telecentrics, Inc., 3100 West Lake Street,
Suite 300
Minneapolis, MN 55416-4510 ("ACI")
DED: Nebraska Department of Economic Development.
PRIMARY LENDER: ACI themselves or a conventional lease company to
be determined.
CITIES: Chadron, Ogallala, and Valentine Nebraska.
OTHER: Keith County Economic Development Corporation and
Nebraska Northwest Development Corporation,
Valentine's Development Corporation
TERMS AND CONDITIONS (LOAN)
AMOUNT OF CDBG LOAN PROCEEDS: The amount to be loaned to ACI will be:
Chadron: $300,000 Performance based. Chadron's 50% portion will be coming from
their current reuse funds.
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Valentine: $200,000 Performance based. Valentine's 50% portion will be coming
from their current reuse funds or other local sources.
Ogallala: $200,000 Performance based. Ogallala's 50% portion will be coming from
other sources.
The other 50% portion for all communities will come from the State.
An additional $15,000 ($5,000 per community) is reserved for the audit and
administration costs. The total state award will be $100,000 Ogallala, $100,000
Valentine, $150,000 Chadron, and $15,000 Audit and Administrative costs.
USE OF LOAN PROCEEDS: All proceeds will be used for either new equipment
purchases or working capital.
INTEREST RATE AND LOAN TERMS: The loan will be Performance based.
LEASE: ACI will negotiate triple net leases (all Cities) with an initial term of
no less than ten (10) years.
VALENTINE will provide the following facility for lease as follows:
(i) The owner of the following property will lease (pursuant to a lease
agreement to be executed) to ACI the land and building they own that
is located at __________________
________________________________________ in Valentine.
(ii) The owner of such property will remodel such building in accordance
with the specifications set forth in an agreement to be signed by
ACI and such owner.
(iii) ACI will lease such land and remodeled building from such owner for
a monthly rental of $3,500, triple net, for a period of 10 years.
(iv) ACI may terminate the lease only as specifically provided for in
lease agreement.
(v) Such remodeled facility shall be completed and available for
occupancy by ACI by _______________, 1997.
As to facilities to be leased by ACI, ACI can select the general contractor and
the bidding process, with the intent to use local labor if competitively
available.
COLLATERAL SECURITY: The loan will be secured by the equipment purchased with
the Loan Proceeds.
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PERFORMANCE BASE CONDITION: ACI will meet the following performance based
requirements:
1. Assuming approval of the incentives under this MOU by May 20, 1997,
and that the facilities are available on time, ACI will establish
and open by April 30, 1998 three (3) telemarketing call centers: one
in Chadron with 48 seats, one in Ogallala with 48 seats and one in
Valentine with 48 seats. The parties will use their best efforts to
open all 3 call centers no later than April 30, 1998.
2. It will keep these 3 call centers staffed with its usual facility
manager and supervisory staff for a minimum of sixty (60) months
from the date each opens.
3. It will make available sufficient employment positions to fully
staff such call centers for such period of time, however, it does
not guarantee that such call centers will attain or remain fully
staffed, because the availability of labor and change in business
conditions and demand for services could adversely affect ACI's
ability to establish or to maintain fully staffed call centers.
Therefore, the failure to actually achieve or maintain such
employment to fully staff such call centers will not constitute a
failure to meet the performance based criteria.
4. It will guarantee that for such sixty (60) month period of time that
it will attain and maintain the call centers to at least fifty
percent (50%) capacity. This guarantee shall exist notwithstanding a
change in regular business conditions or demand for services. This
guarantee shall not exist if ACI's inability to perform or default
shall have been caused by an event or events beyond the control and
without the fault of ACI, including (without limitation) acts of
Government, embargoes, fire, flood, explosions, acts of God or a
public enemy, strikes, labor disputes, vandalism, civil riots or
commotions, or the inability to procure necessary raw materials,
supplies or equipment. This guarantee shall not exist to the extent
the employment positions are not attained or maintained due to the
unavailability of sufficient qualified personnel at the prevailing
wage. The determination of whether this guarantee has been met shall
be done in the following manner:
(a) ACI will attain and maintain for such sixty (60) months
24 FTE's in Chadron, 24 FTE's in Ogallala and 24 FTE's
in Valentine.
(b) An FTE shall mean 2,080 hours of paid employment over
365 days. For example, 2 persons working 1,040 hours
each over 365 days is one (1) FTE. One (1) person
working 2,600 hours over 365 days is 1.25 FTE's.
(c) The amount of FTEs may be measured and reviewed at least
annually. The final determination of FTE's shall be made
at the end of such sixty (60) months and shall be based
on whether over such entire period ACI provided such
minimums. For example, if at the end of such sixty (60)
months, ACI paid for 249,600 hours of work in Chadron
(24 x 2,080 x 5 years), 249,600 hours of work in
Ogallala, and 249,600 hours of work in Valentine (24 x
2,080 x 5 years), then ACI will
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have met the guarantee, regardless of when during such
sixty (60) months the hours were worked. Paid vacation
or other paid times off will be included as hours worked
in the FTE calculations. ACI will report to DED the
employment numbers quarterly.
(d) If the guarantee is met as to any call center, then the
performance based condition shall be considered met for
that City and for purposes of the Loan Proceeds that
relate to that City (whether the Loan Proceeds were from
State or local sources). The failure to meet the
guarantee in one or two Cities shall not affect whether
it is met in one or two other Cities.
(e) ACI will pay a beginning hourly wage of no less than
$6.00 per hour and an average hourly wage of no less
than $7.25 per hour (including commissions) for
employees who have completed at least 2,080 paid hours
of service with ACI.
(f) ACI will provide quality employment benefits in
Nebraska, as determined by ACI, with a probationary
period of no more than 90 days. The employment benefits
will include at least group health insurance 80% paid by
ACI for all full-time employees. The employment benefits
for salaried employees will contain additional benefits.
All employees will be eligible for the stock purchase
plan.
(g) At least fifty-one percent (51%) of the positions will
be made available to the LMI (low to moderate income)
category of individuals (as defined below). ACI shall
not be considered to be in breach of this condition if
insufficient qualified LMI personnel are available.
5. If ACI meets the performance based requirements, the Loan Proceeds
will be forgiven pro rata at least annually based on DED
verification of ACI's performance to such time. No interest will be
paid during such time and no interest will be due if the performance
based requirement is met. If the performance based requirements are
not met, then up to the entire Loan Proceeds will be due and payable
at the end of such sixty (60) month period, with interest accrued at
eight percent (8%) per annum on the due and payable portion from the
date the Loan Proceeds were first disbursed to or for ACI. The
portion of the Loan Proceeds to be forgiven will be zero if either
of requirements 1 through 3 above are not met. The portion of the
Loan Proceeds to be forgiven if requirement 4 above is not fully met
will be that percentage that the requirement was met as to each such
City. For example, if the requirement is fully met in Chadron and
Ogallala, but in Valentine only 149,760 hours were paid for, then
all of the Chadron and Ogallala portion of the Loan Proceeds shall
be forgiven, but only 60% (149,760 / 249,600) of the Valentine
portion shall be forgiven.
GUARANTORS: ACI will be the obligor on the loan.
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SOURCES AND USES OF FUNDS:
Uses of ACI and/or Chadron
Funds CDBG Lender City Reuse Ogallala Valentine Total
----- --------- ----------- ------------- ----------- ------------ -----------
Equipment $125,000 $200,000 $ 75,000 $ 50,000 $ $ 450,000
Equipment or
Working Cap 100,000 100,000 200,000
Working Cap 125,000 200,000 75,000 50,000 450,000
CDBG Admin 15,000 15,000
--------- ----------- ------------- ----------- ------------ -----------
TOTAL $365,000 $400,000 $150,000 $100,000 $100,000 $1,115,000
SUPPORT FUNDING: DED reserves the option to provide additional funds to any city
if their matching funds source is depleted. These funds will be repaid directly
to DED by respective city. The source of repayment would normally come from
local CDBG (ED) program income. The only acceptable cause of this depletion
shall be the city's local funding of eligible CDBG (ED) projects prior to
disbursement or drawdown of ACI's funds.
CITY REUSE: The Cities reuse funds are being committed to this project, and
being disbursed primarily as Performance based loans.
LENDER CONDITIONS:
TITLE INSURANCE: As needed per ACI's requirements, if any.
FLOOD INSURANCE: As needed per Cities requirements, if any.
LIABILITY INSURANCE: The Cities and DED will be listed as co-loss payees and
additional insurers under ACI's casualty insurance policy on the equipment
purchased with the Loan Proceeds.
PERFORMANCE LMI TARGETS: ACI shall use the Nebraska Job Service for their
recruiting of new employees to assist in the documentation of first
consideration being given to low and moderate income persons.
LMI individuals are defined as multi or single person families having incomes
equal to or less than income limits for their resident county(s). Income limits
are published in the CDBG Application Guidelines as well as other statewide and
federal guidelines. These income limits are based on the HUD estimates of median
family income for Fiscal Year 1996. As required by statute, the definition of
low income family is based on 80% of the median income for the area, with
adjustments for smaller and larger families, and the very low-income family
income limits are based on 50% of the median with adjustments for family size.
The 1987 HUD Act provision established minimum income limit standards based on
the State non-metropolitan median family income level. This provision increases
income limits for many non-metropolitan counties.
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CONDITIONS PRECEDENT TO DRAWDOWN OF CDBG LOAN FUNDS:
The Cities must submit the following prior to drawdown of CDBG funds:
1. The CDBG funds shall not be disbursed prior to Primary Lender's
or ACI's, but may be drawn simultaneously.
2. The Cities must submit documentation that all program income from
all previously awarded CDBG Awards, (if any), has been disbursed for
this project. No new CDBG funds will be drawn by the Cities from DED
until the expenditure of these funds is documented by the Cities and
confirmed by DED.
3. Compliance with environmental checklist.
4. Notification that no CDBG funds will be used during the
remodeling or construction phase. The CDBG funds can only be used as
indicated.
5. Copies of Cities executed loan closing documents.
6. Signing of the ED Contract between the Cities and DED.
GENERAL CONDITIONS
FINANCIAL REPORTING: ACI will furnish to the Cities and DED annual audited
financial statements including a balance sheet and income statement, within 120
days after the close of each fiscal year end (or within 30 days after such
statements are available, if later).
NO MATERIAL CHANGE: The CDBG Loan, the financial information of ACI and all
other features of the transaction will be represented in the application without
material adverse change.
DUE ON SALE: The total award(s) will be due and payable upon the sale and
transfer of the assets acquired with CDBG funds or upon the sale or transfer of
ACI from the present owners to others, unless otherwise approved in writing by
DED and the City. Said approval will not be unreasonably withheld.
LOCATION OF PROJECT: ACI will agree to keep such call centers in Chadron,
Ogallala, and Valentine, Nebraska for such sixty (60) months and shall further
agree to not move or relocate these 3 call centers to any other Nebraska
community or out of state for such sixty (60) months without obtaining the prior
written approval and consent of the Cities and DED. If a move is transacted, DED
or the Cities have the option to make full demand on all awarded CDBG funds. The
DED will use its best efforts to find ACI within the next 24 months another
suitable location for a fourth call center so as to enable ACI to meet the
employment and investment levels of LB775, Nebraska's Employment and Investment
Growth Act. This fourth call center is not a requirement that ACI must meet
under this MOU.
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WARRANTY OF REPRESENTATION: The Cities and ACI shall warrant that the CDBG
proceeds will be used as set forth in the MOU and that the information and
warranties contained in the application including the above LMI commitment,
listing by job title of those to be created; a justification for the number of
jobs to be created, a commitment that training will be provided for jobs created
requiring special skills or education and a description of the first
consideration process is accurate and will be, or has been, fulfilled by ACI.
PERFORMANCE REVIEW: The Cities are required to periodically review ACI's
performance in obtaining job creation goals. ACI is required to have each new
employee complete an Employee Certification Form. This form establishes the LMI
status, race, gender and handicap status of each employee. From this form ACI
and the Cities must complete Quarterly Job Creation forms. These reports must be
forwarded to the City and DED for review on a quarterly basis.
LOAN DOCUMENTATION & COSTS: ACI will be required to prepare all loan closing
documents, subject to the Cities and DED's approval, which all parties will use
their best efforts to complete within 15 days prior to scheduled loan closing
date. All documents submitted to DED by ACI or the Cities must be certified by
the Cities Attorney as copies of the original. Each party will pay their own
costs, expenses and legal fees. The loan closing documents shall include: LOAN
AGREEMENT, PROMISSORY NOTE, GENERAL SECURITY AGREEMENT, UCC FINANCING STATEMENT,
LEASE, ASSIGNMENT OF LEASE, and any other agreed upon necessary document.
PUBLIC ANNOUNCEMENTS: Any public announcement of this project will first be
coordinated with all parties to this MOU and NPPD and will be subject to ACI's
prior approval.
OTHER STIPULATIONS
CONTINGENT APPROVAL: All the terms and conditions herein contained are
contingent upon the following factors:
1. The signing of this MOU prior to DED's Project Review
Team favorable recommendation.
2. ACI cannot pay for the equipment to be acquired with the
funds covered under this MOU prior to receipt of the
Notice of Approval letter.
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IN WITNESS WHEREOF, the parties to this MOU have affixed their signatures on the
date specified below.
____________________________________________ ________________________________
Business Official or Designee Valentine Chief Elected Official
or Designee
____________________________________________ ________________________________
Title Title
____________________________________________ ________________________________
Date Date
____________________________________________ ________________________________
DED Official or Designee Lender Official or Designee
____________________________________________ ________________________________
Title Title
____________________________________________ ________________________________
Date Date
____________________________________________
Valentine Development Corporation
Official or Designee
____________________________________________
Title
____________________________________________
Date