ACI Telecentrics Inc. Contracts
Sample Business Contracts
Memorandum of Understanding - Nebraska Department of Economic Development and ACI Telecentrics Inc.
MEMORANDUM OF UNDERSTANDING (MOU)
PROJECT DESCRIPTION
ACI Telecentrics, Inc., a national outbound telemarketing firm, has chosen two
(2) communities in Nebraska for their next major expansion, and plans to choose
a third community in Nebraska. The two (2) communities selected are Chadron and
Ogallala, 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 the third community to be determined (herein called
"TBD") 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 TBD Nebraska.
Other: Keith County Economic Development Corporation and Nebraska
Northwest Development Corporation, TBD 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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TBD: $300,000 (or whatever negotiated) Performance based. TBD'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, $150,000
Chadron, $15,000 Audit and Administrative costs, and whatever negotiated with
TBD community.
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.
OGALLALA will provide the following facility for lease as follows:
(i) Keith County Economic Development Corporation (KCEDC) will construct
a commercial building upon the Keith County Industrial Site which
will contain approximately 12,000 square feet.
(ii) ACI agrees to lease 7,000 sq.. feet of office space in said
commercial building. The building and such office space will be in
accordance with the specifications set forth in a separate letter
between ACI and KCEDC. Such space will be completed and made
available for occupancy by ACI by April 30, 1998.
(iii) ACI will pay a monthly rental of $4,200, triple net, for a period of
10 years.
(iv) ACI may terminate the lease prior to the expiration of such 10
years, in which case no further rent will accrue, but if ACI
terminates the lease prior to the expiration of 10 years, ACI shall
pay KCEDC damages in the amounts set forth below:
(a) $100,000 if the lease is terminated during the first 5
years of the lease;
(b) $90,000 if the lease is terminated during the sixth year
of the lease;
(c) $80,000 if the lease is terminated during the seventh
year of the lease;
(d) $70,000 if the lease is terminated during the eighth
year of the lease;
(e) $60,000 if the lease is terminated during the ninth year
of the lease;
(f) $50,000 if the lease is terminated during the tenth year
of the lease.
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However, no such damages will be due or payable if ACI terminates
the lease because the Ogallala community could not provide adequate
FTEs as described in paragraph 4 below.
CHADRON will provide the following facility for lease as follows:
(i) Mr. and Mrs. Bill Barth will lease (pursuant to a lease agreement to
be executed) to ACI the land and building they own that is located
at 300 W. 2nd St. in Chadron.
(ii) The Barths will remodel such building in accordance with the
specifications set forth in an agreement to be signed by ACI and the
Barths.
(iii) ACI will lease such land and remodeled building from the Barths 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 July 1, 1997.
TBD will provide the following facility for lease as follows:
(i) TBD's Development Corporation (DC) will acquire that certain land
and building as designated by ACI having at least 6,000 useable
square feet of office building space and parking access for at least
40 cars immediately adjacent to the site.
(ii) DC will remodel such building in accordance with the specifications
set forth in a letter to be signed by ACI and DC. DC will pay for
$200,000 of such remodel costs. ACI will pay for any remodel costs
in excess of this.
(iii) ACI will lease such land and remodeled building from DC for a
monthly rental not to exceed $4,200, triple net, for a period of 10
years.
(iv) ACI may terminate the lease at any time after 5 years without
penalty or further rent accrual if the TDB community cannot provide
adequate FTEs as described in paragraph 4 below.
(v) Such remodeled facility shall be completed and available for
occupancy by ACI by April 30, 1998.
As to all 3 of the above facilities, ACI can select the general contractor and
the bidding process, with the intent to use local labor if competitively
available.
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COLLATERAL SECURITY: The loan will be secured by the equipment purchased with
the Loan Proceeds.
TBD: ACI shall continue to use its reasonable best efforts to identify a city to
become the TBD, provided, however, that if DED and ACI cannot identify, and
agree to and with, by February 28, 1998, a city in Nebraska to become the TBD,
then TBD will drop out of the mutual obligations and requirements of this MOU
and the MOU shall continue to apply for the other two cities as if there had
only been an agreement for the two cities. In such a case, no funding for TBD
will be due from DED or any other source and no default or non-performance will
be considered to have occurred by ACI. TBD will be considered identified if, and
only if, a city meeting at least as favorable labor market, facilities
availability, facility rental, and economic incentive package as Chadron or
Ogallala can be identified and agreed to.
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
TBD 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 to the extent that a force majeure
prevents it from meeting or maintaining such positions. 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 TBD.
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(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 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 TBD (24 x 2,080 x 5 years), then ACI
will 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 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
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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 TBD 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 TBD portion shall be forgiven.
GUARANTORS: ACI will be the obligor on the loan.
SOURCES AND USES OF FUNDS:
Uses of ACI and/or Chadron
Funds CDBG Lender City Reuse Ogallala TBD Total
----- -------- -------- -------- -------- -------- ----------
Equipment $200,000 $200,000 $ 75,000 $ 50,000 $ $525,000
Equipment or
Working Cap 150,000 150,000
Working Cap 200,000 200,000 75,000 50,000 525,000
CDBG Admin 15,000 15,000
-------- -------- -------- -------- -------- ----------
TOTAL $415,000 $400,000 $150,000 $100,000 $150,000 $l,215,000
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
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Project #97-ED- 008
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.
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.
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LOCATION OF PROJECT: ACI will agree to keep such call centers in Chadron,
Ogallala, and TBD, 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.
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 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.
____________________________________________ ________________________________
Chadron's Chief Elected Official or Designee Business Official or Designee
____________________________________________ ________________________________
Title Title
____________________________________________ ________________________________
Date Date
____________________________________________ ________________________________
TBD Chief Elected Official or Ogallala's Chief Elected
Designee Official or Designee
____________________________________________ ________________________________
Title Title
____________________________________________ ________________________________
Date Date
____________________________________________ ________________________________
DED Official or Designee Lender Official or Designee
____________________________________________ ________________________________
Title Title
____________________________________________ ________________________________
Date Date
____________________________________________ ________________________________
Dawes County Reuse Fund Keith County Economic
Official or Designee Development Corporation
Official or Designee
____________________________________________ ________________________________
Title Title
____________________________________________ ________________________________
Date Date
TBD Development Corporation Official or Designee
____________________________________________
Title
____________________________________________
Date