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HomeMy WebLinkAboutPR 14597: EDC/RHORER-MONIOTTTE INVESTMENTS, LLC D/B/A DESELLE-MAGGARD CORP.~i interoffice MEMORANDUM To: From: Date:. Subject: Mayor, City Council, and City Manager" Mark T. Sokolow, City Attorney ~f-j_,~( ~~.C.~ March 7, 2008 ! ~~ P. R. No. 14597; Council Meeting March 11, 2008 .Attached is P. R. No. 14597 approving a First Amendment to the Economic Incentive Contract & Loan Agreement between the City of Port Arthur Section 4A Economic Development Corporation and Rhorer- Moniotte Investments, L.L.C., dba Desselle-Maggard Corporation (DMC). When I reviewed the resolution and documents prepared by Guy Goodson, I noticed the following language under DMC's Amended Performance Goals and Schedule: 7.3 January 1, Achieve performance of 25 full time, 2009 ~permaneht employees; annualized payroll of $728,000. DMC shall receive credit toward this milestone for employees transferred from the Orange, TX facility. The Facility consisting of a building of at least 69,000 and improvements on the real property complying with the Park's covenants and restrictions shall be constructed, and DMC shall submit all documentation necessary for the City to issue a certificate of occupancy for the Facility. I contacted Mr. Goodson and he indicated that the performance schedule was prepared by Mr. Batiste. I discussed this matter with Mr. Batiste, and he concurred that the following language should not be in the agreement, to wit: "DMC shall receive credit toward this milestone for employees transferred from .the Orange; TX facility." I also added "square feet" after 69,000. Therefore, the proposed changes are as follows: z.pr1459"]_memo 3 January 1, Achieve performance of 25 full time, 2009 permanent employees; annualized payroll of $728,000. ~MC~r~i i ~~a; r a 1, i F~ fi €d-~ u~the 9 ang€, 'T'~ =r The Facility consisting of a building of at least 69,000 square feet and improvements on the real property complying with-the Park's covenants and restrictions shall be constructed, and DMC shall submit all documentation necessary for the City to issue a certificate of occupancy for the Facility. Mr. Batiste will be contacting the company and will inform the Board of 'the changes that he is recommending so that if the Council and the EDC Board concur, the First Amendment will not contain this _ language. MTS:ts Attachment cc: Guy Goodson Floyd Batiste z.pr1459"]_memo P.R. No. 14597 03/07/08 mts RESOLUTION NO. A RESOLUTION APPROVING A FIRST AMENDMENT TO ECONOMIC INCENTIVE CONTRACT AND LOAN AGREEMENT BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION & RHORER-MONIOTTE INVESTMENTS, L.L.C. D/B/A DESSELLE-HAGGARD CORPORATION WHEREAS, Rhorer-Moniotte Investments, L.L.C., d/b/a Desselle-Haggard Corporation ("DMC"), is a Louisiana limited liability company which is expanding its business operations with the assistance of the City of Port Arthur Section 4A Economic Development Corporation (the "PAEDC"), which has agreed to provide DMC with a conditional grant and real property in the Port Arthur Business Park (the "Park") in exchange for DMC's promise to create full-time permanent jobs in Port Arthur, Texas; and WHEREAS, the PAEDC agreed to subordinate its Deed of Trust for its conditional incentive grant of $500,000 and conveyance of real property in the Park in the aggregate amount of EIGHT HUNDRED TEN THOUSAND AND 00/100 DOLLARS ($810,000.00) to a senior lien in favor of the Grow Port Arthur Fund in the amount of TWO MILLION AND 00/100 DOLLARS ($2,000,000.00) to be administered and serviced by the National Development Council Grow America Fund, Inc.; and z.pr1459"1_edc_dnc_amendment4 WHEREAS, due to the expansion of its project from a 50,000 square foot building and improvements (the "Facility") to a 69,000 square foot building and improvements (the "Revised Facility"), the cost of the Facility has increased; and WHEREAS, DMC has agreed tb execute a First Amendment to Economic Incentive Contract & Loan Agreement (attached hereto as Attachment "A") to amend or 'restate the original Economic Incentive. Contract & Loan Agreement and has further agreed to execute a Renewal, Extension and Modification Agreement (attached hereto as Exhibit "A" to the First Amendment to Economic Incentive Contract and Loan Agreement) to the Deed of Trust to the PAEDC which reflects the agreements for PAEDC to subordinate its lien to the lien at Wachovia Bank, N.A; and WHEREAS, DMC has negotiated interim and permanent financing through Wachovia Bank,. N.A. in the amount of THREE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($3,400,000.00) from Wachovia Bank, N.A. for construction of the Revised Facility in lieu of funding through the Grow Port Arthur Fund and has requested that the PAEDC execute a Subordination and Priority Agreement in favor of Wachovia Bank, N.A.; and WHEREAS, ,.PAEDC has agreed to. the execution of the Subordination Agreement and° Priority Agreement (the "Subordination Agreement") (attached hereto as Exhibit "B" to N611185 Page 2 the First Amendment to Economic Incentive Contract & Loan Agreement) in exchange for amended performance by DMC which includes the construction of 'the Revised Facility, amendment in certain performance goals and schedules with the continued _.- commitment of the'PAEDC to fund an amount not to exceed FIVE -- HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000.00) in costs for the construction of the Revised Facility and conveyance of real property in the Park; ahd WHEREAS, DMC has provided status reports as required by the Original Agreement; and WHEREAS, Original Agreement was executed by the PAEDC on March 8, 2007; and WHEREAS, PAEDC has authorized this First Amendment to Economic Incentive Contract & Loan Agreement between PAEDC and DMC at its specially scheduled meeting of Wednesday, March 5, 2008; and s e611185 Page 3 WHEREAS, the City :Attorney and the CEO of the EDC concur that there should be changes in the DMC's Amended Performance Goals and Schedules, .under January 1, 2009, as follows: 7. January 1, Achieve performance of 25 full time, 2009 permanent employees; annualized payroll of $728, 000. nnnr >1 i i .a'r r F~~r€a f rt,o nr~rTe~~v F o~~~ The Facility consisting of a building of at least 69,000 square feet and improvements on the real property complying with the Park's covenants and restrictions shall be constructed, and DMC shall submit all documentation necessary for the City to issue a certificate of occupancy for the Facility. and WHEREAS, this First Amendment to the Original Agreement is- being presented to the Port Arthur City Council for approval, with the additional changes as recommended by the City Attorney and Floyd Batiste, CEO of the EDC.. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: Section 1. That the facts and opinions in the preamble are true and correct. y611185 Page4 Section 2. That the City of Port Arthur Section 4A Economic Development Corporation is herein authorized to enter into the First Amendment to Economic Incentive Contract & Loan Agreement with DMC, with the changes to DMC's Amended - -- - Performance Goals and Schedule as delineated below: - 7.3 January I, Achieve performance of 25 full time, 2009 permanent employees; annualized payroll of $728, 000. nnrtr ~h=i ~ ,~' t-owa ~ the ~m~ ~ e-stone {er emFley~s t~dnaf€n°-d € om -the 9 aF~ge-, my f= slit-. ~_ The Facility consisting of a building of at least 69,000 square feet and improvements on the real property complying with'the Park's covenants and restrictions. shall be constructed, and -DMC shall submit all documentation necessary for the City to issue a certificate of occupancy for the .Facility. Section 3. That a.copy of the caption of the Resolution be spread upon the Minutes of the City Council. READ, ADOPTED AND APPROVED on this day of A.D., 2008, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor Councilmembers Y-611185 Paee 5 NOES: Mayor ATTEST: City Secretary APPROVED: Floyd Batiste, PAEDC CEO , APPROVED AS TO FORM: /`~ ~?~--L~- City Attorney APPROVED AS TO THE AVAILABILITY OF FUNDS Director of Finance 4 @bl l l ffi - Page G t ATTACHMENT "A" to the-First Amendment ,.. FIRST: AMENDMENT TO ECONOMIC INCENTIVE CONTRACT Bc LOAN AGREEMENT BETWEIN CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION & RHORER-MONIOTTE INVESTMENTS, L.L.C. DB/A,DESSELLE-HAGGARD CORPORATION The Economic Incentive Contract & Loan Agreement (the "Otiginal Agreement") between the City of Port Arthur Section 4A Economic Development Corporation (`PAEDC") and Rhorer-Mottiotte Investments, L.L.C. d/b/a Desselle-Maggazd Corporation ("DMC") dated March 8, 2007 is hereby amended to revise the promised performance by DMC, to revise the Performance Goals and Schedule and to amend the subordinated Deed of Trust lien of the PAEDC. The Original Agreement is modified "and amended by this First Amendment to Economic Incentive Contract & Loan Agreement (the "First Amendment"), and except as specified herein, all terms, conditions, performance obligations, covenants and agreements of DMC or PAEDC as specified in [he Original Agreement ate ratified and affirmed, and each party covenants and represents that there are no defaults in the Original Agreement. I. Amendment to Executive Sutnmarv. The Executive Summary is amended and restated to read as follows: EXECUTIVE SUMMARY Rhorer-Moniotte Investments, L.L.C., doing business as Desselle-Haggard Corporation ("DMC") is a Louisiana limited liability company authorized to transact and transacting business in Texas. DMC's business includes: (a) the selling of new and/or used control valves, pumps, regulators, filtration equipment, test instruments, UPS systems, flame arrestors, steam traps, tank vents, valve actuators, analyzers, flow meters, transmitters, gages, process control computers and related instrumentation to industrial uses and processes (collectively the "equipment"); (b) repairing, servicing, balancing, and maintaining such equipment, and (c) providing fee based services such as consulting, training and education related to the equipment and the industrial uses of [he equipment, process performance monitoring and reviews in connection with such equipment sold and installed by DMC and others (the "Services°). Current market demand for the Services that DMC provides in the geographic service azea extending from Lake Charles, Louisiana and North Louisiana to Houston, Texas (the `Service Area") has caused DMC to initiate an expansion of its operations to Port Arthur, Texas. The City of Port Arthur Section 4A_Economic Development Corporation ("PAEDC") will assist DMC with the expansion of its operations by providing conditional Grant Funds and real property in the Port Arthur Business Pazk ("Pazk") in exchange for DMC's promise to create fuiltime permanent jobs in Port Arthur, Texas. Currently, DMC -has operations in Baton Rouge, Louisiana and Orange, Texas. The Baton Rouge location will remain in operation. DMC's operation in Orange, Texas will move to Port Arthur, Texas, allowing DMC to operate its business froth the geographic center of the Service Area. The City of Port Arthur Section 4A Ewnomic Development Corporation ("PAEDC") is granting DMC ten (10) acres of land id the Park (the "Real Property"), with an estimated fair mazket value of $310,000, plus a $500,000 conditional grant towazds the construction of a building and improvements in the Pazk (the "PAEDC Grant"). -DMC plans to design and build at least a 69,000 square foot building and improvements (the "Facility") in order to start operations in the Pazk by the end of 2008. Wachovia Bank, N.A. will be providing a THREE MILLION FOUR HUNDRED THOUSAND AND NO/100OLLAR ($3,400,000) loan to DMC towards the construction of the building and improvements in the Park. In return for the PAEDC Grant, DMC promises to cause S5,670,000 to be distributed in Port Arthur, Texas in payroll over [he five-year term of the Agreement, as measured by IItS Forms W-2 and W3, and all related benefits paid to each employee listed on [he payroll. DMC wilLfulfill this total payroll promise by establishing 65 full-time, permanent employees, over a five (5) yeaz period. The jobs will be high quality jobs, with competitive wage and.benefits. If DMC breaches this agreement, then the PAEDC Grant, minus any credits earned, will automatically convert to a loan made by the PAEDC to DMC, as liquidated damages and in lieu of any other damages (the "Loan"). The Loan will have a three yeaz term, starting on the date of DMC's bleach,. and an interest rate of ten percent (10%). At [he same tirne that PAEDC conveys the Real Property, DMC will, execute a deed of tmst to secure this loan in the event of a default by DMC. PAEDC may place DMC in default and foreclose on the property if DMC fails to perform its obligations under the Loan. DMC will earn credits to reduce the duration of this Agreement or to reduce liquidated damages in the event of a breach. Stazting on the effective date of the Agreement, DMC will receive $I.00 in credit for each $7.00 in payroll. To keep the PAEDC informed on its progress, DMC agrees to send PAEDC status reports, every three months for the fast yeaz and every six months thereafter, until issuance of a close out report. If DMC fails to timely submit a status report, then PAEDC shall place DMC on notice of its default, and DMC will forfeit its credits accruing during any reporting period for which it did not issue a status report if it fails to provide [he status report within fifteen (15) days after receipf of [he notice of default issued by PAEDC. DMC has provided all reports required under its Performance Goals and Schedule. DMC has agreed to amendments to its promised performance and revisions to the Performance Goals and Schedule. 2. Amendment or Restatement of Original AiTreemert. The following sections of the Original Agreement are amended and restated to read as follows: (a) Section 5(a)(4): As to the subordinate lien of the PAEDC in the Deed of Trust (Exhibit `B" to the Original Agreement"): (4) . The Deed of Trust (Exhibit "B"} for the benefit of PAEDC shall constitute a second lien, junior in priority to a deed of tmst on the same land and improvements for the benefit of WACHOVIA BANK,NA who is lending DMC THREE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($3,400,000) for construction of building and real property improvements; however, in no case shall the senior -lien exceed THREE MILLION FOUR HUNDRED THOUSAND NO/100 DOLLARS ($3,400,000) plus any and all amounts advanced by Wachovia Bank, N.A. for insurance, taxes, repairs or otherwise, plus interest and costs of collection or enforcement or protection of the rights of Wachovia-Bank, N.A. in the event that PAEDC terminates the funding and ends the Agreement as permitted under paragraph 8, then the senior lien amount wiU increase to the amount of the Grant Funds not paid to DMC by PAEDC, not to exceed the aggregate amount of THREE MILLION NINE HUNDRED THOUSAND Dollazs ($3,900,000). R610869~ ~ Paget (b) Section 5(b1(1): The Facility will be at least 69,000 squaze feet and improvements oh the Real Property. (c) Section 5(b)(31: DMC will use its best efforts to hire Port Arthur, Texas, residents to the .maximum extent feasible to work at the Facility and shall track and report actual performance as a percent of total employees. (d) Performance Goals and Schedule: The Performance Goals and Schedule is amended as included below: DMC'S AMENDED PERFORMANCE GOALS AND SCHEDULE ate C1~al 7.1 June 30, 2008 Issue a status report to PAEDC'S Chief Executive Officer ("CEO") for the period from April 30, 2007 to May 31, 2008. 7.2 Dec. 31, 2008 Issue a status report to PAEDC'S Chief Executive Officer ("CEO") for the period from June 1, 2008 to November 30, 2008. , 7.3 January 1, 2009 Achieve performance of 25 full time, permanent employees; annualized payroll of I $728,000. DMC shall receive credit towazd this milestone for employees transferred from the Orange, TX facility. The Facility consisting of a building of at least 69,000 and improvements on the real property complying with the Park's covenants and restrictions sltall be constructed, and DMC shall submit all documentation necessary for the City to issue a certificate of occupancy for the Facility. 7.4 Feb. 1, 2009 Provide verification that certificate of occupancy has been issued, by the City, execute bills paid affidavits to evidence full payment of all contractors, subcontractors and materialmen providing labor, material or specially fabricated goods for the Facility and report of status of disbursement on Wachovia Bank loan. ' 7.5 June 30, 2009 Issue a Status report to PAEDC'S Chief Executive Officer ("CEO") for the period ending December 1, 2008 to May 31, 2009 7.6 Sept. 15, 2009 Achieve performance of 30 full time, permanent employees; annualized payroll of $873,600 7.7 Dec. 31, 2009 Issue a status reDOrt to PAEDC'S Chief Executive Officer (`CEO") for the period from June 1, 2009 to November 30 ,2009. 7.8 Iune 30, 2010 Issue a status report to PAEDC'S Chief Executive Officer ("CEO") for the ~ period from December 1, 2009 to May 31 ,2010. 7.9 Scpt. 15, 2010 Achieve performance of 45 full time, permanent employees; annualized payroll of $1,310,400 i 7.10 Dec. 31, 2010 Issue a status report to PAEDC'S Chief Executive Officer {"CEO") for the period from June 1, 2010 to November 30, 2010. ,4fi1Og69 Page 3 7.11 June 30, 2011 Issue a status reoort to PAEDC'S Chief Executive Officer ("CEO") for the period from December 1, 2010 to May 31, 2011, ~ 7.12 Sept. 15, 2011 Achieve perfdrmance of 55 full time, permanent employees; annualized payroll of $1,601,600 7.13 Dec. 31, 2011 ` Issue a status reoort to PAEDC'S Chief Executive Officer ("CEO") for the period from June 1, 2011 to November 30, 2011. 7.14 Tune 30, 2011 Achieve performance of 65 full time, permanent employees; annualized payroll of $1,892,800 7.15 Dec. 31, 2011, Prepare a Close Out Report for presentation to the PAEDC Board at the eazlier of or thirty (30) within 30 days of DMC fully meeting its performance agreement or the PAEDC's days after December 2011 meeting. The PAEDC Board will determine if performance is DMC fully complete. performs. (e) Amendment to Exhibit "B" Deed of Trust: DMC agrees to execute a Renewal, Extension and Modification Agreement to the Deed of Trust attached hereto as Exhibit "A" which shall reflect the agreements of PAEDC to provide that its Deed of Trust lien shall constitute a second lien, junior in priority to the Deed of Trust for the benefit of Wachovia Bank, N.A. in the principal amount of THREE MILLION-FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($3,400,000.00). The Deed of Trust in favor of Wachovia Bank, N.A. plus any and. all amounts advanced by Wachovia Bank, N.A. for insurance, taxes, repairs or otherwise, plus interest and costs of collection or enforcement ar protection of-the rights of Wachovia Bank, N.A. (f) Modification of Option to Repurchase the Facility. PAEDC agrees notwithstanding the provision of pazagraph 1 of Exhibit "D" of the Original Agreement under CONDITIONS OF SALE, the PAEDC shall not have an option to repurchase the Facility until after February 1, 2009, and the failure of DMC [o meet the covenants and conditions of this Amendment and/or the Original Agreement. 3. Execution of Subordination Aereemem. PAEDC agrees to execute the Subordination and Priority Agreement (the "Subordination Agreement") attached hereto as Exhibit "B" in favor of Wachovia Bank, N.A. 4. Incorporation of Executive Summary. Pazagraph 5 of the Original Agreement is modified to include a reference to the EXECUTIVE SUMMARY as a pazt of the Original Agreement for all purposes and constitutes promise performance by DMC and/or PAEDC as the case may be in accordance with the Original Agreement. 5. Oral and Written Aereements /Prior A¢reements. Paragraph 43 of the Original Agreement is modified to include a reference to this Amendment as a part of the Original Agreement for all purposes and constitutes and is made a part of the Original Agreement and constimtes promised performances by DMC in accordance with [his Amendment. A610669 Page 4 ATTORNEY APPROVALS APPROVED AS TO FORM: VERIFIED AS CONSISTENT WITH CITY COUNCIL RESOLUTION: Guy N. Goodson General Counsel for PAEDC Resolution Number: Mark T. Sokolow, City Attorney R610869 ~ Page 5 AMENDMENT EXECUTION CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION SIGNED AND AGREED TO on the _ day of , 2008. President, Keith Daws, Sr. Secretary Witness Witness BROKER-MONIOTTE IIQVE.STMENTS, L.L.C. .SIGNED AND AGREED TO on the _ day of , 2008. Rborer-Moniotte Investments, L.L.C., d/b/a Desselle-Maggard Corporation, ' a Louisiana limited liability company By: Charles H. Moniotie, Manager Witness N610gb9 , Page 6 EXHIBIT "A RENEWAL, EXTENSION AND MODIFICATION AGREEMENT STATE OF TEXAS § § KNOW ALL MEN BY THESE PRESENTS: COUNTY OF JEFFERSON § -That Rhorer-Moniotte Investments, L.L.C. d/b/a Desselle-Maggard Corporation (the "Borrower"), being legally obligated to pay the outstanding principal balance set forth in that certain Conditional Commercial Promissory Note (the "Indebtedness" and/or "Note") dated March 8, 2007, in the original principal sum of EIGHT HUNDRED TEN THOUSAND AND 00/100 DOLLARS ($810,006.00), bearing interest at the rate therein specified and payable as therein provided to the order of Port Arthur Section 4A Economic Development Corporation, an economic development corporation (the "Lender"), said Indebtedness being secured by a Deed of Trust (the "Deed of Trust") of even date therewith and filed for record under County Clerk's File No. in the Real Property Records of Jefferson Couhty, Texas, reference being made to the Deed of Tmst and the record thereof for all purposes, creating liens upon and against certain real property located in Jefferson County, Texas, hereinafter described, together with liens upon the improvements and fixtures therein described, said property being described in Exhibit "A", attached hereto and made a part hereof by this reference (the "Property"); WHEREAS, Borrower, has requested that Lender modify the Deed of Trust to subordinate the Deed of Trust Iien of Lender to Wachovia Bank, N.A. and to otherwise renew, extend and carry forward the subordinate and junior lien on the Property and all existing security interests securing payment of the Indebtedtess; and WHHREAS; Lender has agreed to modify, renew and extend the Indebtedness and to execute a subordination agreement (the "Subordinatioti Agreement") in favor of Wachovia Bank, N.A.; . NOW, THEREFORE, in consideration of the renewal, extension and modification by Lender of its Deed of Trust lien to secure payment of the Indebtedness as hereinafter set forth; Borrower and Lender agree as follows: Lender agrees to subordinate its Deed of Trust lien on the Property to that certain prior Deed of Trust lien dated , 2008, and recorded at ,for the benefit of Wachovia Bank, N.A. which Deed of Trust shall be senior and priority to the liens created by the Deed of Trust of Borrower to Lender in an amourit not to exceed THREE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS- ($3,400,000.00) in principal plus any and all amounts advanced by Wachovia Bank, IQ.A. for insurance, taxes, repairs or otherwise, plus interest and cost of collection or enforcement of protection of the rights of R!achovia Bank, N.A. All past due principal and interest shall bear interest from date of maturity until paid at the rate of fifteen percent (15.%) per annum, or to the maximum extent allowed by ]aw (whichever is less) as may hereafrer be in effect, payable on demand after maturity. Except as provided in the instruments securing the Indebtedness, as renewed, extended and/or modified- by this Agreement (hereinafrer collectively referred to as the "Security Documents"), in the event of default in the payment of any part of the principal amount or interest on the Indebtedness as and when due, or in the event of default in the performance of any covenant, condition or agreement contained in any of the condition or agreement contained in any of the Security Documents, then Lender shall have the unconditional right, without presentment, demand, notice, notice of intent to accelerate, notice of acceleration or other action, to declare the unpaid balance of the principal amount of the Indebtedness, together with accrued and unpaid interest thereon, at once due and payable and to foreclose each lien securing the payment thereof, either under any power of sale contained in such documents or agreement or by court proceedings, as such holder may elect. Default (a) under any other written agreement between Borrower and Lender, or (b) with respect to any indebtedness of Borrower to Lender when due, or {c) in the performance of any other obligation incurred in connection with any indebtedness for money borrowed by Borrower, if the effect of such default is to accelerate the maturity of such indebtedness or to permit the holder thereof to cause such indebtedness to become due before the stated maturity, or (d) in the payment upon maturity of any other obligation incurred in connection with any indebtedness for any .money borrowed by Borrower,. including but not limited to the indebtedness of Borrower to Wachovia Bank, N.A., constitutes a default under this Agreement and under the Indebtedness, as renewed, extended, and modified. Notwithstanding anything contained herein or in any other separate security agreement or other document executed heretofore, herewith or hereafrer in connection with or related to this credit obligation (as defined or described in 12 C.F.R. 227, Regulation AA, promulgated by the Federal Reserve Board), the security for this credit obligation shall not extend to any non-possessory security interest in household goods (as defined in said Regulation AA) other than a purchase money security interest, and no waiver of any notice contained herein or therein shall be construed under any circumstances to extend to any waiver of notice prohibited by Regulation AA. In no event shall the Security Documents secure payment of any debt that applicable law would prohibit. Ail agreements and transactions between holder of the Indebtedness and Borrower, whether now existing or hereafrer arising, whether contained herein or in any other instmment, and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of the maturity of the Indebtedness, prepayment, demand for payment or otherwise, .shall the amount contracted far, charged or received by holder herewith from Borrower for the use, forbearance, or detention of the principal amount of interest thereon, which remains unpaid from time to time, exceed the X61n15 Page 2 maximum amount permissible under applicable law, it particularly being the intention of the parties hereto to conform strictly to the laws of the State of Texas and of the United States of America, whichever is applicable 'Any`interest payable nnder`th'e Indebtedness'~or utider any other instrument'relating to the loan evtdericed`heieby that is iti excess of the legal maxunum under applicable~law'shail, in the event"of acceleration of mattirity,prepayment; demand for payment or otherw5se `~be atrtomatically, as of the date of such' acceleration; prepayment, demand or otherwis'e,~applied:fo a reduction of the principal amount and not to the payment of interest, or if such'ei:cessive interest exceeds the unpaid balance ofth~e principal amount, such excess shall be refutided to Borrower. To the extent permitted by apphcable7aw, determination of the legal maximum amount of interest shall afall -trines lie made' by amortizing,~protating, allocating and'spreadmg m'equal parts during the period of the full. stated term of the loan, all interest at any time contracted for, charged or received from Borrower in connection with the loan, soy that the actual rate of interest on account`'of such indebtedness is uniform throughout the term thereof. Br,~,r The Borrower hereby modifies, renews and extends all liens on all collateral security the repayment of the Indebtedness and the Lsdeb[edne`ss :uritil'the indebtedness as so modified, r .,ry f .fit' renewed and extended has been fully paid and agree that'siich modificafion, extension or rearrangement shall in no manner affect or impair the Indebtedness or` the lien or liens securing the same and that lien or liens shall not in `any manner be waived. The Borrower hereby acknowledges the validity and continuation of the liens in the Security Documents and any security agreements as security for the payment of the Indebtedness as herein modified and rearranged. - ':,.. , _ ., :. It is the intention of the parties that this modification, renewal and extension of the Indebtedness should in its entirety conform to the Indebtedness together with the changes as set forth herein. The purpose of this instrument is simply to modify, renew and extend the time of payment of the Indebtedness and to carry forward all-liens securing the-same, which are acknowledged by Borrower to be valid and subsisting,'and the Borrower further agrees that all terms and provisions of the Indebtedness and of the instrument or instruments creating or fixing the lien or liens securing the same shall be and remain in full force and effect as therein written, except as otherwise expressly provided herein. ' '' PURSUANT TO THE PRECEDING PARAGRAPH EXCEPT `AS SPECIFIED IN THIS AGREEMENT, ALL DUTIES, OBLIGATIONS,'COVENANTS,"CONDITIONS AND AGREEMENTS SET FORTH IN THAT CERTAIN ECONOMIC INCENTIVE CONTRACT AND LOAN AGREEMENT BETWEEN THE PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION AND ABRAHAM MFG.,. INC. ARE RATIFIED AND AFFIRMED. x?>'~. .~ .. ' THE AGREEMENT FOR -THIS LOAN OR OTHER EXTENSION OF CREDIT DESCRIBED ABOVE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES, AND MAY NOT BE CONTRADICTED . BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. L f A611n5 - Page 3 STATE OF TEXAS § COUNTY OF § On this day of 2008, before me, a Notary Public in and for said County and State, personally appeared of who acknowledged that, with due authonzahon, he did. sign the foregomg tnstrument on behalf of and ~ that the same is his free act and deed individually.as such officer and the free act and deed of IN WITNESS WHEREOF, I have hereunto subscribed my name and affuced my official seal on the day and year aforesaid. * , Notary Public, State of Texas STATE OF TEXAS- § COUNTY OF § On this day of 2008, before me, a Notary Public in and for said County and Slate, personally appeared of who acknowledged that, with due authonzatton, he did sign the foregoing instrument on behalf of and that the same is his free act and deed individually as such officer,and the free act and deed of IN WITNESS WHEREOF, I have hereunto subscribed my name and affuced my official seal on the day and year aforesaid. Notary Public, State of Texas aaiu~s " Pege 5 STATE OF TEXAS COUNTY OF JEFFERSON On this day of 2008, before me, a Notary Public in and far said County and State, personally appeazed President of the PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION, who acknowledged that, with due authorization, he did sign the foregoing instrument on behalf of the PAEDC and that the same is his. free act and' deed individually as such officer and the free act and deed of the PAEDC. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on the day and year aforesaid. Notary Public, State of Texas STATE OF TEXAS § §. COUNTY OF JEFFERSON § On this day of , 2008, before me, a Notary Public in and for said County and State, personally appeared ,Secretary of the PORT ARTHUR SECTION- 4A ECONOMIC DEVELOPMENT CORPORATION, who acknowledged that, with due authorization, she did sign the foregoing instrument on behalf of the PAEDC and that the same is her free act and deed individually as such officer-and the free act and deed of the PAEDC. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal on the day and year aforesaid, Notary Public, State of Texas ®61 n IS pie 6 EXHIBIT "B" SUBORDINATIOIIT AND PRIORITY AGREEMENT Date: March , 2008 WHEREAS, the CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION and RHORER-MONIOTTE INVESTMENTS L.L.C. DOING BUSINESS AS DESSELLE-HAGGARD CORPORATION ("DMC") have entered into an Economic Incentive Contract & Loan Agreement at the Port Arthur Business Park that was approved by Resolution No. and later amended by Resolution No. , as to construct a building, and improvements in an approximately 10 acre site, in the Port Arthur Business Parkas described in Attachment "A' ;and WHEREAS, said agreement as amended provided a deed of trust subject to the senior lien of Wachovia Bank as the lending bank, said senior lien not to exceed $3,400,000.00 of indebtedness; and WHEREAS, the CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION has deeded this property to DMC with covenants and conditions as to maintenance of said property and compliance with the Deed Restrictions; and WHEREAS, a deed of trust was 51ed by the CTPI' OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION on said 10 acre site in the Port Arthur Business Park ,recorded in Clerk's File #2007016294; and WHEREAS, Wachovia Bank plans to lend to DMC a building loan of $3,400,000.00 to construct. a building and improvements on the 10 acre tract and obtain a fast lien security interest on the 10 acre site; and WHEREAS, Wachovia Bank will file a Deed of Trust and seourity document as Deed of Trust and Assignment of Rents to secure the loan for $3,400,000.00. Senior Lender. Wachovia Bank, National Association Address: 4000 Twin City Hwy. Groves, Texas 77619 Junior Lender: City of Port Arthur Section 4A Economic Development Corporation Address: 4173 39th Street Port Arthur, Texas 77642 Borrower: Rhorer-Moniotte Investments L.L.C. d!b/a . Desselle-Haggard Corporation Address: 19151 Highland Road Baton Rouge, Louisiana 70809 Property: Being a 10.00 acre tract or pazcel of land, a portion of Block 3 of the Port Arthur Economic Development Corporation Business Pazk Subdivision as recorded in Clerk's File No. 2005044721 ofthe Official Public Records of Real Property, County Clerk's Office, 7efferson County, Texas, as situated in and a part of the William McFaddin Survey, Abstract No. 416 of said County and being more pazticulazly described by metes and bounds on Exhibit "A" attached hereto and incorporated herein for all intents and purposes, and the following: (i) All those certain tracts of land in the City of Port Arthur, County of Jefferson, State of Texas described above (the "Land"); (ii) all buildings and improvements now or hereafter erected on the Land; (iii) all fixtures, machinery, equipment and other articles of real, personal or mixed property attached to, situated or installed in or upon, or used in the operation or maintenance of, the Land or any buildings or improvements situated thereon, whether or not such real, personal or mixed property is or shall be affixed to the Land; (iv) all building materials, building machinery and building equipment delivered on site to the Land during the course of, or in connection with, any construction, repair or renovation ofthe buildings and improvements situated or to be situated thereon; (v) all leases, licenses or occupancy agreements of all or any part of the Land and all extensions, renewals; and modifications thereof, and any options; rights of first refusal or guarantees relating thereto; all rents, income, revenues, security deposits, issues, pro&ts, awazds and payments of any kind payable under the leases or otherwise arising from the Land; (vi) all contract rights, accounts receivable and general intangibles relating to the Land or the use, occupancy, maintenance, construction, repair or operation thereof; all management agreements, franchise agreements, utility agreements . and deposits; all maps, plans, surveys and specifications; all warranties and a.simple subordination and priority agreement guaranties; all permits, licenses and approvals; and all insurance policies; (vii) all estates, rights, tenements, hereditaments, privileges, easements, and appurtenances of any kind benefiting the Land; all means of access to and from the Land, whether public or private; and all water and mineral rights; and (viii) all"Proceeds" of any of the_ above-described property, which term shall have the meaning given to it in the Uniform Commercial Code ofthe jurisdiction where this Deed of Trust is recorded (the "UCC"), whether cash or non-cash, and including insurance proceeds and condemnation awazds; and all replacements, substitutions and accessions thereof. Senior Licn Documents: -Deed of Trust, Assignment of Rents and Security Agreement dated February 27, 2008, by and between Rhorer-Moniotte Investments, L.L.C. and Wachovia Bank, National Association. Junior Lien Documents: Vendor's Lien retained in Deed dated April 18, 2007, executed by City of Port Arthur Section 4A Economic Development Corporation to Rhorer-Moniotte Investments, L.L.C., doing business as Desselle-Maggard Corporation, recorded under County Clerk's File Into. 2007016295 Official Public Records of Real Property ofJefferson County, Texas, and Deed of Trust executed by Rhorer-Moniotte Investments, L.L.C., doing business as Desselle-Maggazd Corporation to Guy Goodson, Trustee, dated April 18; 2007, filed for record on Apri126, 2007 and recorded under County Clerk's Fiie No. 2007016294 Official Public Records of Real Property of 7efferson County, Texas, for the benefit of Port Arthur 4A Ewnomic Development Corporation, given to secure the payment of one certain promissory note for the original sum of $810,000.00. Regardless of the frequency or manner of renewal, extension, change, or alteration of the notes, liens; or obligations held by Senior Lender or awed to Senior Lender by Borrower, Junior Lender subordinates all its liens and interests in or against any part of the Property and subordinates all liens and interests described in the Junior Lien Documents to (a) the liens and interests of Senior Lender in or against any part of the Property and (b) the liens described in the Senior Lien Documents. Regardless of the frequency or manner of renewal, extension, change, or alteration of the notes, liens, or obligations held by Senior Lender or owed Io Senior Lender by Borrower, Borrower, Senior Lender, and Junior Lender agree that the liens and interests described in the Senior Lien Documents are prior and superior to (a) the liens in favor of Junior Lender against all or any part of the Property, and (b) the liens described in the Junior Lien Documents, so that any foreclosure against any of the Property by Senior Lender or the owner or holder of any Gens or interests under any of the Senior Lien Documents or the obligations secured by the Senior Lien Documents shall foreclose and discharge all security interests, liens, and mortgages against any part of the Property securing any notes or obligations to. Junior Lender and any purchaser at any such foreclosure sale shall take title to the Property or part thereof purchased free of all security interests, liens, and mortgages securing any notes or obligations to Junior Lender, and free and clear of the liens described in the Junior Lien Documents. Borrower, Senior Lender, and Junior Lender agree to take all actions and execute all documents requested by Lender necessary for performance of this agreement. This agreement is performable in Jefferson County, Texas. Notwithstanding any other terms in this agreement, the principal amount advanced or paid under the Senior Lien Documents sha[1 not exceed a total of $3,400,000.00 in principal as to Property described in Exhibit "A". The foregoing maximum shall not apply to amounts other than principal, such as amounts advanced for insurance, taxes, repairs, or otherwise and shall not apply to interest or costs of collection or enforcement or protection of the rights of Senior Lender. Notwithstanding any other term in this agreement, Senior Lender agrees not to increase the maximum principal amount of the indebtedness secured by the Senior Lien Documents. Notwithstanding any other term in this agreement, the senior lien of Wachovia shall not affect the viability and enforceability of the covenants, easements, and restrictions as denoted in the Special Warranty Deed from the City of Por[_Arthur Section 4A Economic Development Corporation to DMC dated April 18, 2007, except to the extent the performance of such covenants, easements, and restrictions is secured by any of the junior Lender's rights under the Junior Lien Documents and further except that any repurchase option held by Junior Lender shall be subordinate to the- interests of Senior Lender and the liens granted by the Senior Lien Documents. ` Senior Lender agrees to give to the Junior Lender twenty days notice in writing before any foreclosure sale under the Senior Lien Documents. Junior Lender agrees to give to Senior Lender twenty days notice in writing as to any default by Borrower. DMC further agrees to provide the City of Port Arthur Section 4A Economic Development Corporation copies of all notices, fmancial statements, reports and other information provided to the Senior Lender, punctually-pay or cause to be paid the principal and interest to become due iir respect of the senior debt according to the terms thereof, perform all of its obligations under the Senior Lien Documents, immediately report to the City of Port Arthur Section 4A Economic Development Corporation any default by. DMC under the Senior Lien documents, immediately report to the City of Port Arthur Sectiori 4A Economic Development Corporation in writing-any taxes, judgment, materialman's or mechanic's lien on the Property and in the event the City of Port Arthur Section 4A Economic Development Corporation herein deems itself reasonably insecure in its ability to realize upon its junior lien in the Property, upon notice thereof to DMC, provide the Ciry of Port Arthur Section 4A Economic Development Corporation such additional collateral as may reasonably secure the position of the City of Port Arthur Section 4A Economic Development Corporation, subject to the rights and restrictions imposed on the Senior Lien Holder. The terms "Senior. Lien Documents" and "Junior Lien Documents" shall in each case refer to all renewals, modifications, and extensions of the "Senior Lien Documents" or "Junior Lien Documents" as the case maybe. This instrument shall bind, inure to the benefit of, and be exercised by successors in interests'of all parties. {SIGNATURE PAGES TO FOLLOW} BORRO~y'ER: Rhorer-Moniotte Investments, L.L.C., a Louisiana limited liability company, identified in Texas as Rhorer- Moniotte Investments, LLC By: CHARLES H. MONIOTTE, Manager THE STATE OF TEXAS } COUNTY OF JEFFERSON } BEFORE ME; the undersigned authority, on this day personally appeared Charles H. Moniotte, Manager of Rhorer-Moniotte Investments, L.L.C., a Louisiana limited liability company, [] known to me [] proved to me on the oath of or through to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed and in the capacity therein stated, both individually and onbehalf of Rhorer-Moniotte Investments, L.L.C. as the act and deed of said Rhorer-Moniotte Investments, L.L.C. GIVEN UNDER MY HAND AND SEAL OF OFFICE ON THIS DAY OF MARCH, 2008. NOTARY PUBLIC; STATE OF TEXAS SENIOR LEADER: WACHOVIA BANK, A'ATIONAL ASSOCIATION By: Its: THE STATE OF TEXAS } COUNTY OF JEFFERSON } BEFORE ME, the undersigned authority, on this day personally appeared of Wachovia Bank; National Association, ~ known to me [] proved to me on the oath of or through to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed and in the capacities therein stated, both individually and on behalf of Wachovia Bank, National Association as the act and deed of said Wachovia Bank, National Association. GIVEN UNDER MY HAND AND SEAL OF OFFICE ON THIS _ DAY OF MARCH, 2008. NOTARY PUBLIC, STATE OF TEXAS JUNIOR LENDER: THE STATE OF TEXAS } COUNTY OF JEFFERSON } CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION By: Its: By: Its: BEFORE ME, the undersigned authority, on this day personally appeared of City o f Port Arthur Section 4A Ewnomic Development Corporation, [] known to me [] proved to me on the oath of or ttuougn to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the same for the purposes and consideration therein expressed and in the capacities therein stated, both individually and on behalf of City of Port Arthur Section 4A Economic Development Corporation as the act and deed of said City of Port Arthur Section 4A Economic Development Corporation. GIVEN LTIDER MY HAND AND SEAL OF OFFICE ON THIS _ DAY OF MARCH, 2008. NOTARY PUBLIC, STATE OF TEXAS Exhibit A BEING A 10.00 ACRE TRACT OR PARCEL OF LAND, A PORTION OF BLOCK 3 OF THE PORT ARTHUR ECONOMIC DEVELOPMENT CORPORATION BUSINESS PARK SUBDMSION AS RECORDED IN CLERKS PILE NO. 2005044721 OF THE OFFICIAL PUBLIC RECORDS OF REAL PROPERTY, COUNTY CLERKS OFFICE, JEFFERSON COUNTY, TEXAS, AS SITUATED IN AND APART OF THE WILLIAM MCFADDIN SURVEY, ABSTRACT N0.416 OF SAID COUNTY AND BEING MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS; FOR LOCATIVE PURPOSES, COMMENCE AT A POINT LOCATED~ON THE WESTERLY LINE OF SPUA 93 (A K A WEST PORT ARTHUR ROAD) MARKING THE SOUTHEAST CORNER OF SAID BUSINESS PARK SUBDNISION; THENCE NORTH 27 DEG., 30 h9N., 14 SEC., WEST, ALONG THE SAID WESTERLY RIGHT OF WAY LINE OF SPUR 93 A DISTANCE OF 813.06 FEET TO A POINT LOCATED AT THE IN'I"ERSECTiON OF THE NORTH LINE OF SOUTH BUSINESS PARK DRNE WITH THE SAID WESTERLY RIGHT OF WAY LINE OF SPUR 93 MARKING THE SOUTHEAST CORNER OF SAID BLOCK 3; THENCE SOUTH 37 DEG., 29 MIN., 18 SEC., WEST, ALONG SAID NORTH RIGHT OF WAY LINE A DISTANCE OF 11132 FEET TO AN ANGLE POINT FOR CORNER; . THENCE SOUTH 86 DEG., 11 MIN., 09 SEC., WEST CONTINUING ALONG SAID NORTH RIGHT OF WAY LINE A DLSTANCE OF 6 L62 FEET TO A 1/2. STEEL ROD WITH CAP MARKED ARCENEAUX & GATES SET LOCATED ON THE WESTERLY LINE OF A LANDSCAPE EASEMENT PER SAID BUSINESS PARK PLAT MARKING THE SOUTHEAST CORNER AND PLACE OF BEGINNING OF THE HEREIN DESCRIBED TRACT OF LAND; THENCE SOUTH 86 DEG., 11 MIN., 09 SEC., WEST, CONTINUING ALONG SAID NORTH R1GHT OF WAY LINE WITH THE SOUTH LINE OF SAID BLOCK 3 AND THIS TRACT A DISTANCE OF 76.88 FEET TO A 1/2. STEEL ROD WCI'H CAP MARKED ARCENEAUX & GATES SET MARKING AN ANGLE POINT FOR CORNER AND POINT OF CURVATURE OF A CURVE TO THE RIGHT; THENCE CONTINUING ALONG SAID NORTH RIGHT OF WAY LINE AND SOUTH LINE OF BLOCK 3 WITH THE SOUTH LINE OF THIS TRACT AND SAID CURVE TO THE RIGHT HAV ING A RADR7S OF 485.00 FEET, A CENTRAL ANGLE OF 03 DEG., 48 MIN., 51 SEC., AN ARC DISTANCE OF 32.29 FEET, A CHORDDISTANCE OF 32.28 FEET AND A CHORD BEARING OF SOUTH 88 DEG., OS MIN., 32 SEC., WEST, TO A 1/2. STEEL ROD WII'FI CAP MARKED ARCENEAUIC & GATES SET MARKING AN ANGLE POIN'T' FOR CORNER AND POINT OF TANGENCY OF SAID CARVE; THENCE WEST (REFERENCE BEARING) CONTINUING ALONG SAID NORTH RIGHT OF WAY LINE AND SOUTH LINE OF BLOCK 3 WITH THE SOUTH LINE OF THIS TRACT A DISTANCE OF 694.03 FEET TO A 1/2. STEEL.ROD WCCH CAP MARKED ARCENEAUX & GATES SET MARKING THE SOUTHWEST CORNER OF THE HEREIN DESCRIBED TRACE OF LAND; THENCE NORTH, DEPARTING SAID NORTH RIGHT OF WAY LINE ALONG THE WEST LINE OF THIS TRACT A DISTANCE OF 591.66 FEET TO A 12. STEEL ROD WITH CAP MARKED ARCENEAUX & GATES SET LOCATED ON THE NORTH LINE OF SAID BLOCK 3 AND SOUTH LINE OF BLOCK 7 MARKING THE NORTHWEST CORNER OF THE HEREON DESCRIBED TRACT' OF LAND; THENCE EAST ALONG THE COMMON LOVE OF SAID BLOCK 3 AND BLOCK 7 WTl'H THE NORTH LINE OF THIS TRACT A DISTANCE OF 601.10 FEET TO A 1/2. STEEL ROD WITH CAP MARKED ARCENEAUX & GATES SET LOCATED ON THE WESTERLY LINE OF A 10 FEET WIDE P~'ELINE EASEMENT AND SAID LANDSCAPE EASEMENT MARKING THE NORTHEAST CORNER OF THE HEREIN DESCRIBED TRACT OF LAND; THENCE SOUTH 27 DEG., 30 MIN.,.. LA SEC., EAST, ALONG THE NORTHEASTERLY LINE OF THIS TRACT AND WESTERLY LINE OF SAID PIPELINE AND LANDSCAPE EASEMENTS A DISTANCE OF 435.78 FEET TO A 1/2: STEEL ROD WITH CAP MARKED ARCENEAUX & GATES. SEC MARKING AN ANGLE POINT FOR COILNER OF SAID LANDSCAPE EASEMENT AND THE HEREIN. DESCRIBED TRACT OF LAND; THENCE SOUTH 00 DEG., 11MIN., 19 SEC, EAST, ALONG THE WEST LINE OF SAID LANDSCAPE EASEMENT W177-I THE EAST LINE OF THIS TRACT A DISTANCE OF 198.94 FEET TO THE SOUTHEAST CORNER AND PLACE OF BEGINNING AND CONTAINING IN AREA 435,600 SQUARE FEET OR 10.00 ACRES OF LAND, MORE OR LESS.