HomeMy WebLinkAboutPR 14686: TEAM FABRICATORS, LLCP. R. No. 14686
04/18/08 gg/mts
RESOLUTION NO.
A RESOLUTION APPROVING AN ECONOMIC
INCENTIVE CONTRACT AND LOAN AGREEMENT
BETWEEN TEAM FABRICATORS, L.L.C. AND CITY OF
PORT ARTHUR SECTION 4A ECONOMIC
DEVELOPMENT CORPORATION
WHEREAS, the City Council deems it in the public interest to authorize the City of Port
Arthur Section 4A Economic Development Corporation to enter into an Economic Incentive
Contract and Loan Agreement with Team Fabricators, L.L.C. (the "Agreement"); and
WHEREAS, Germer Gertz, L.L.P. has indicated this as a Section 4A project and has
provide the Executive Summary ;and
WHEREAS, the EDC CEO Floyd Batiste has reviewed the financial information of
Team Fabricators, L.L.C. and of the guarantor Team Industries and recommends approval
thereof; and
WHEREAS, the starting wage will be $19.95 per hour which will be inserted into the
agreement; and
WHEREAS, the EDC incentive is $650,000 for the purchase of equipment; and
WHEREAS, Team Fabricators is agreeing to employ approximately 125 employees at an
annual total payroll of $4,824,375; and
WHEREAS, the milestone schedule will increase the employees so that by March 15,
2011, there will be approximately 125 employees and the yearly addition of employees as
delineated therein is annual increases; and
z.pr14686 edc
WHEREAS, the credits are as follows:
"Credits -Substitute Performance
Incentive Recipient may earn credits according to the following terms, to either
reduce the duration of this Agreement or reduce the amount of liquidated damages
in the event Incentive Recipient breaches the Agreement.
1) Starting on the effective date of the Agreement and for as long as Incentive
Recipient performs as specified in Section 5(b)(1) of this Agreement,
Incentive Recipient will receive a $1.00 credit for each $9.00 of payroll paid
to employees of Incentive Recipient. Payroll for both Port Arthur and non-
Port Arthur residents shall be credited (the "Payroll Credit"). The Payroll
Credit during the term of the Agreement shall not exceed Five Hundred
Twenty-Five Thousand Dollars ($525,000).
2) In addition to the credit provided in the paragraph 5(c)(1) above, Incentive
Recipient shall also receive a credit of $3,835 for Port Arthur residents
employed by Incentive Recipient and for which Incentive Recipient can
provide Internal Revenue Service Forms W-2 and/or W-3 for Port Arthur
employees working not less than six (6) months during any year (the "Port
Arthur Resident Credit"). The Port Arthur Resident Credit during the term of
the Agreement shall not exceed One Hundred Twenty-Five Thousand Dollars
($125,000)."
WHEREAS, Team Fabricators, L.L.C. has reviewed and approved the Agreement.
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.
Section 2. That the City of Port Arthur Section 4A economic Development Corporation
is herein authorized to enter into an Economic Incentive Contract and Loan Agreement with
Team Fabricators, L.L.C., and the President and Secretary of the City of Port Arthur Section 4A
Economic Development Corporation are authorized to sign the Agreement in substantially the
same form as attached hereto with Exhibits "A" "B" "C" "D" "E" "F" and "G" with the
insertion of starting wages at $19.95 per hour..
H619966
Page 2
Section 3. That a copy of this Resolution shall 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
NOES:
DECOKES "BOBBIE" PRINCE, MAYOR
ATTEST:
TERRI HANKS, ACTING CITY SECRETARY
APPROVED:
FLOYD BATISTE, EDC CEO
APPROVED AS TO FORM:
~~ ~~
MARK T. SOKOLOW, CITY ATTORNEY
H619966
Page 3
EXHIBIT "A"
to the Resolution
ECONOMIC INCENTIVE CONTRACT 8c LOAN AGREEMENT BETWEEN
CITY OF PORT ARTHUR SECTION 4A
ECONOMIC DEVELOPMENT CORPORATION
AND
TEAM FABRICATORS, L.L.C.
("INCENTIVE RECIPIENT")
IN'IZZODUC"TION ...............................................................
.. 1
.
............................................. .
AGREIII~NT TERM .......................................................................................................... .1
PAR'TIES ........................................................................................................................... .1
PROMISED PERFORMANCE ........................................................................................ 2
(A) PERFORMANCE BY PAEDC ................................................................................... .2
(B) PERFORMANCE BY INCENTIVE RECIPIENT ................................................................. .2
(C) CREDITS - SUBSTTTIJTE PERFORMANCE .................................................................... .3
PffitFORMANCE MILESTONB SCHEDULE .......................................................................... . 4
CONDTTIONAL OBLIGATIONS AND LIlVIITED LIABILITY OF PABDC ................................... . 6
LIQUIDATED DAMAGES FOR BRBACH OP AGREEMENT .................................................... . 6
RECORDS /INSPECTION ! PAEDC AUDIT .......................................................................... . 7
HOLD Hf~-ItMLFSS ............................................................................................................ . 8
SUBCONTRACTS .............................................................................................................. . 8
CONFLICT OF INTEREST /DISCLOSURE OBLIGATION ....................................................... . 9
NONDISCRIlViII~TATION /EMPLOYMENT /REPORTING ....................................................... . 9
LEGAL AUTHORITY ......................................................................................................... 10
NOTICE OF LEGAL OR REGULATORY CLAIMS .................................................................. 10
CHANGES AND AMENDMENTS ........................................................................................ 10
DEFAULT / TEIZII~IINATION ............................................................................................... 11
COMPLIANCE AUDI'fS ...................................................................................................... 12
ENVIRONMENTAL REQi]IItEMENT5 ................................................................................. 13
ORAL AND WRITTEN AGRFp1~1J'l'S /PRIOR AGREP.NIENTS .............................................. 13
VENUB ............................................................................................................................ 13
ADDRESS OF NOTICE AND COMMUI~IICATIONS ................................................................14
CAPTIONS ........................................................................................................................14
COMPLIANCB WITH FEDERAL, STATfi AND IACAL LAWS ................................................14
CONDITIONS PRECEDBNT ................................................................................................14
ATTORNEY APPROVALS ..................................................................................................14
AGREEMENT EXECUTION ................................................................................................15
Exhibit "A" Conditional Commercial Promissory Nate
Exhibit "13° Commercial Security Agreement
Exhibit "C" UCGl Financing Statement
Exhibit "D° Equipment List
Exlibit "E° Certification Regazding Lobbying
Exhubit "F" Guaranty Agreement
Exhibit "G" Compliance Statemuent
N618354
ECONOMIC INCENTIVE CONTRACT & LOAN AGREEMENT BETWEEN
CITY OF PORT ARTHUR SECTION 4A
ECONOMIC DEVELOPMENT CORPORATION
AND
TEAM FABRICATORS, L.L.C. ("INCENTIVE RECIPIENT")
INTRODUCTION
The Incentive Recipient is a Wisconsin Limited liability corporation and a wholly owned
subsidiary of Team Industries, Inc., a Wisconsin corporation, doing business in Part Arthur,
Texas. The Incentive Recipient intends to undertake the following business: the fabrication of
carbon stainless steel piping assemblies, piping modules, tanks and vessels for use by project
manufacturers in various industries including petrochemical, refining, food and beverage, pulp
and paper, chemical, pharmaceutical, industrial gas manufacturing, water and wastewater and
electric power plant generation. Plate and tank fabricating focus on specialty tanks and custom
metal commodities. Current market demands are such that Incentive Recipient plans to initiate
and/or expand the above-referenced business operations at its facility in Port Arthur. The City of
Port Arthur Section 4A Economic Development Corporation ("PAEDC") will assist Incentive
Recipient in this business endeavor by providing the hereinafter described conditional grant and/or
loan or other incentives in exchange for the promise by Incentive Recipient of creation of fulLtime
permanent jobs.
AGREEMENT TERM
E~FECrrvE DATE
1. This Economic Incentive Contract and Loan Agreement ("Agreement") is entered into
with an effective date of April _, 2008, but in no case later than May _, 2008, by and between
the PAEDC and Incentive Recipient.
TERMIlVATiON DATE
2. This Agreement expires the earlier of 2008, or 30 days after Team
Fabricators, L.L.C. either performs fully or breaches the Agreement, subject to earlier
termination or extension, voluntary or involuntary, as provided herein. The period from the
effective date of this Agreement through and including the expiration date of this Agreement as
provided in the previous sentence hereof, is sometimes referred to in this Agreement as the
"Term" of this Agreement.
PARTIES
3. City of Port Arthur Section 4A Economic Development Corporation {"PAEDC"},
located at 4173-39~' Street, Port Arthur, Texas, 77642, is a corporation. It is duly authorized to
do business in the State of Texas under Section 4A, Article 5190.6 V.T.C.A. (the "Development
Corporation Act of 1979") and duly authorized by Resolution of the City Council of the City of
Part Arthur to enter into this Agreement. As so authorized and as provided by the PAEDC
bylaws, the President and Secretary of the PAEDC Board have the authority to execute this
Agreement.
4. Team Fabricators, L.L.C. ("Incentive Recipient")
corporation and a wholly owned subsidiary of Team Industries,
The registered agent in Texas for the Incentive Recipient is _
,Texas 77
PROMISED PERFORMANCE
5. The parties agree to perform as follows.
(a) PER1FO1tMANCE BY PAEDC
PAEDC shall conditionally grant Incentive Recipient $650,000, subject to the
conditions and limitations herein, which Incentive Recipient is not required to pay
back unless Incentive Recipient breaches this Agreement. If Incentive Recipient
breaches this Incentive Agreement, then the grant will become a loan as provided
in the Conditional Commercial Promissory Note attached hereto as Exhibit "A".
ii. PAEDC will use its best efforts to pay invoices or reimburse Incentive Recipient
within forty-five (45) days of receipt for -the equipment capital outlays listed in
Exhibit "D".
HOWEVER, PAEDC WILL ONLY RELEASE FUNDS IN AN AMOUNT
EQUIVALENT TO EQUIPMENT FOR WHICH PAEDC HAS DULY EXECUTED
COLLATERAL SECURITY INTEREST. AS TO CAPITAL OUTLAYS, AS
HEREIN DESCRIBED, PAEDC WILL ONLY RELEASE FUNDS UPON RECEIPT
OF REQUIRED DOCUMENTATION OF THE PURCHASE, BY INCENTIVE
RECIPIENT OF SUCH CAPITAL EQUIPMENT AND MATERIALS FREE OF
ANY LIEN OR ENCUMBRANCE.
These payments are PAEDC's only obligations.
(b) P~oItHlvvc$ sY IxCENTIVE Ru~I>srr
(1} By the end of the Agreement term, Incentive Recipient promises to employ
approximately 125 employees at an annual total payroll of $4,824,375,' as
measured by Internal Revenue Service (IRS) forms W-2 and W-3.
(2) Incentive Recipient shall make a best effort to employ Port Arthur residents and as
hereinafter provided will receive additional credit for wages paid to Port Arthur
residents.
(3) Further, if the Loan or conditional Grant by PAEDC to Incentive Recipient is to be
secured additionally or alternatively by other collateral security agreements
' Payroll is based on 2080 hours per year and a starting wage of $ per hour, per Incentive Recipient's application.
1s a Wisconsin limited liability
Inc., a Wisconsin corporation.
at
1/618354 Page 2
including by not limited to a commercial security agreement as specified in Exlu'bit
"B" and filed of record with the Secretary of State for the State of Texas by a
Uniform Commercial Code filing as described in Exhibit "C", Incentive Recipient
will provide a detailed outlay of all equipment and material to be acquired and to
be secured by the collateral security agreement by providing an enumeration of
capital outlays as described on Exhibit "D".
(4) Incentive Recipient shall use the Grant monies provided by the PAEDC exclusively
for the capital outlays that are not materially differentz from the list provided to
PAEDC by Incentive Recipient, a copy of which is attached as Exhibit "D". With
each invoice or request for reimbursement sent to PAEDC, Incentive Recipient will
provide a listing of the specific equipment, material or other capital outlays
requested for reimbursement and covenant that such request for reimbursement is
being made for the specific assets and that all such assets have been acquired by the
Incentive Recipient free of any lien or encumbrance. This will enable PAEDC to
verify compliance with the list in Exhibit "D".
(5) On demand by PAEDC and in response to Incentive Recipient's failure to achieve a
performance milestone, Incentive Recipient shall provide PAEDC with reasonable
assurances, proposed by Incentive Recipient and reasonably acceptable to PAEDC,
that it has both the intention and the capabilities to perform fully its contractual
obligations.
{c) C>~nrrs - SuBSTriv~ P~ol~-xcs
Incentive Recipient may earn credits according to the following terms, to either reduce
the duration of this Agreement or reduce the amount of liquidated damages in the event
Incentive Recipient breaches the Agreement.
(1) Starting on the effective date of the Agreement and for as long as Incentive
Recipient performs as specified in Section 5(b){1) of this Agreement, Incentive
Recipient will receive a $1.00 credit for each $9.00 of payroll paid to employees of
Incentive Recipient. Payroll for both Port Arthur and non-Port Arthur residents
shall be credited (the "Payroll Credit"). The Payroll Credit during the term of the
Agreement shall not exceed Five Hundred Twenty-Five Thousand Dollars
($525,000).
(2) In addition to the credit provided in the paragraph 5(c)(1) above, Incentive
Recipient shall also receive a credit of $3, 835 for Port Arthur residents employed
by Incentive Recipient and for which Incentive Recipient can provide Internal
Revenue Service Forms W-2 and/or W-3 for Port Arthur employees working not
less than six (6) months during any year (the "Port Arthur Resident Credit"). The
Port Arthur Resident Credit during the term of the Agreement shall not exceed One
Hundred Twenty-Five Thousand Dollars ($125,000).
s "Materially different" is defined as a change in the type of asset that changes the overall business plan in place at the
time that this contract was executed.
X618354 Page 3
(3) Total credits to the Incentive Recipient under the Agreement cannot exceed
Six Hundred Fifty Thousand Dollars ($b50,000).
(4) Incentive Recipient will forfeit any credits it earned during a period for which a
report is scheduled but Incentive Recipient fails to issue the report.
(5) Once Incentive Recipient has earned credits equal to $650,000, the conditional
Grant and all obligations to PAEDC shall terminate; however, no termination of
the obligations for a conditional Grant shall eliminate the obligations of Incentive
Recipient to PAEDC to repay the Conditional Commercial Promissory Note
described in Exhibit "A" nor to eliminate any obligations under any collateral
security agreements including by not limited to those described in Exhibit "B",
"CA and "D" which shall remain in full force and effect until the Note is paid in
full.
PERFORMANCE MII.ESTONE SCHEDULE
6. Although failure to achieve a performance milestone is not a breach of contract, a
failure is grounds for PAEDC to withhold further payments to Incentive Recipient and/or demand
reasonable assurances from Incentive Recipient that it can and will fully perform its contractual
obligations. Failure to provide such reasonable assurances following demand of PAEDC is a
breach of contract.
7. Incentive Recipient's performance milestones are contained in the table on the
following page.
N618354 Page 4
PERFORMANCE MILESTONE SCHEDULE
Dea li Milestone
(a) May 31, 2008 Issue a status report3 to PAEDC's Chief Executive Officex ("CEO") for the
period from the effective date of this Agreement to Apri130, 2008.
(b) July 15, 2008 Issue a status report to PAEDC'S Chief Executive Officer ("CEO") for the
period of April 1, 2008 -June 30, 2008.
(c) Sept. I5, 2008 Achieve performance of 35 full-time, permanent employees;
annualized payroll of $1,089,375.00
(d) Oct. 15, 2008 Issue a status report to PAEDC'S Chief Executive Officer ("CEO") for the
period from July 1, 2008 to September 30, 2008.
(e} Feb. 28, 2009 Issue a status report' to PAEDC'S Chief Executive Officer {"CEO") for the
period from October 1, 2008 to January 31, 2009
(f) Mar. 15, 2009 Achieve performance of 25 full time, permanent employees; annualized
payroll of $1,037,500.00
(g) Aug. 31, 2009 Issue a status report to PAEDC'S Chief Executive Officer (CEO") for the
period from February 1, 2009 to July 31, 2009.
(h) Feb. 28, 2010 Issue a status report to PAEDC'S Chief Executive Officer (CEO") for the
period from August 1, 2009 to January 31, 2010.
(i) Mar. 15, 2010 Achieve performance of 25 full time, permanent employees; annualized
payroll of $1,037,500.(}0
(j) Aug. 31, 2010 Issue a status report to PAEDC'S Chief Executive Officer (CEO") for the
period from February 1, 2010 to July 31, 2010.
(k) Feb. 28, 2011 Issue a status report to PAEDC'S Chief Executive Officer (CEO") for the
period from August 1, 2010 to January 31, 2011.
(1) Mar. 15, 2011 Achieve performance of 20 full time, permanent employees; annualized
payroll of $830,000.00
(m) Aug. 31, 2011 Issue a status report to PAEDC'S Chief Executive Officer (CEO") for the
period from February 1, 2011 to July 31, 2011.
3 Status reports shall include copies of invoices and check payments for assets purchased with PAEDC funds during the
reporting period, quarterly balance sheets, quarterly profit and loss statements, and employee reports. As to job creation
performance, interim status reports shall include documentation substantiating the accuracy of such reports, including,
for example, 941 payment reports, Texas Workforce Commission reports, or other such reports confirming total jobs,
payroll and other relevant information. Address on IItS Forms W-2 and W-3 is appropriate for interim reporting of Port
Arthur residents hired. The reporting objective is to include documentation necessary for PABDC to ver' said report
without further outside inquiry.
4 All February status reports shall also include identity of all shareholders who own more than five percent (5%) of the
company. Year end reports shall be substantiated with IRS Forms W-2 and W-3.
H618354 Page 5
(n) Feb. 28, 2012 Issue a status report to PAEDC'S Chief Executive Officer {CEO") for the
period from August 1, 2011 to January 31, 2012.
(o) Mar. 15, 2012 Achieve performance of 20 full time, permanent employees; annualized
payroll of $830,000.00
(p) Aug. 31, 2012 Issue a status report to PAEDC'S Chief Executive Officer (CEO") for the
period from February I, 2012 to July 31, 2012.
(q} Aug. 31, 20135 Close out report for presentation to the PAEDC Board at its August 2013
meeting.
PAEDC'S CONDITIONAL OBLIGATIONS AND LII~IITED LIABILITY
8. It is expressly understood and agreed by the parties hereto that the PAEDC funding
obligations herein are contingent upon the actual receipt of adequate sales tax revenue funds to
meet the PAEDC's liabilities under this Agreement. If adequate funds are not available to make
payments under this Agreement, the PAEDC shall notify Incentive Recipient in writing within a
reasonable time after such fact is reasonably determined by the PAEDC Board of Directors. The
PAEDC, at its sole option, may then terminate this Agreement without further liability. In the
event of such termination by the PAEDC, the PAEDC may, at its sole option, immediately cease
all further funding, if any, required by this Agreement and the PAEDC shall not be liable to
Incentive Recipient or to any third parties for failure to make payments to Incentive Recipient
under the terms and conditions of this Agreement.
9. The PAEDC shall not be liable, in Agreement or otherwise, to Incentive Recipient, or
to any person or entity claiming by or through Incentive Recipient, for any expense, expenditure
or cost incurred by or on behalf of Incentive Recipient related to the project made the basis of this
Agreement. The PAEDC's sole liability/obligations, if any, shall be to Incentive Recipient and
shall be limited to the obligations detailed in Section 5(a) of this Agreement.
10. Incentive Recipient shall not ase the funds herein for any purpose(s) other than that
specifically disclosed herein and as further disclosed within that certain application made by or on
behalf of Incentive Recipient, which application is incorporated herein for all purposes.
11. Funds granted by the PAEDC hereunder shall not be utilized by Incentive Recipient
for repayment of costs, expenditures or expenses incurred prior to the date of this Agreement.
LIQUIDATED DAMAGES FOR BREACH OF AGREEMENT
12. In the event Incentive Recipient fails to perform its obligations under this Agreement,
following notice thereof from PAEDC and thirty-day (30-day) opportunity to cure the same, the
PAEDC grant, minus any credits earned, will automatically convert to a loan (liquidated
damages), effective on the day of breach, as agreed by Incentive Recipient in the executed
5 All February status reports shall also include identity of all shareholders who own more than five percent (5%) of the
company. Year end reports shall be substantiated with IRS Forms W-2 and W-3.
X618354 Page 6
Conditional Commercial Promissory Note attached hereto as Exhibit "A." Following such
conversion to a loan as aforesaid, the PAEDC, at its sole option, may terminate its remaining
funding obligations, if any, detailed in Section 5 herein. Further, the PAEDC shall be entitled to
recover its reasonable and customary attorney's fees and court costs incurred in collection of said
obligation and such remedies as are provided at law or in equity.
13. It is expressly understood and agreed by the parties that any right or remedy shall not
preclude the exercise of any other right or remedy under this Agreement or under any provision
of law, nor shall any action taken in the exercise of any right or remedy be deemed a waiver of
any other rights or remedies. Failure to exercise any right or remedy hereunder shall not
constitute a waiver of the right to exercise that or any other right or remedy at any time.
RECORDS /INSPECTION /PAEDC AUDIT
14. Incentive Recipient must establish and maintain sufficient records, as reasonably
determined by the PAEDC, to account for the expenditure and utilization of funds received by
Incentive Recipient from PAEDC under the terms and conditions of this Agreement.
15. Incentive Recipient shall maintain records of the receipt and disposition of all funds
provided hereunder as necessary to allow the PAEDC to audit and verify proper utilization of said
funds in compliance with this Agreement and the representations and warranties contained herein
and in Incentive Recipient's application. Incentive Recipient shall provide reports of utilization of
said funds, as reasonably requested by the PAEDC, and upon termination of this Agreement.
16. Upon ten-day (10-day} advance notice, Incentive Recipient shall give the PAEDC, or
any of its duly authorized representatives, access to and right to examine all books, accounts,
records, reports, files and other papers, things or property belonging to or in use by Incentive
Recipient. Such rights to access shall continue as long as the records are maintained by Incentive
Recipient. Incentive Recipient agrees to maintain such records in an accessible location. All
information obtained by the PAEDC, or its duly authorized representatives, shall be regarded as
the confidential business information of Incentive Recipient and the PAEDC shall take reasonable
measures to grotect such information from disclosure to third parties; however, PAEDC is subject
to the requirements of the Texas Open Meetings Act and Open Records Act (Tex.Gov.Code, 551
& 552). Incentive Recipient agrees that disclosures to the public required by the Texas Open
Meetings Act, Texas Open Records Act, or any other legal requirement will not expose PAEDC
(or any party acting by, through or under PAEDC} to any claim, liability or action by Incentive
Recipient (or any party working by, through or under).
17. All records pertinent to this Agreement shall be retained by Incentive Recipient at least
three years following the date of termination of this Agreement, whether said termination is a
result of default or whether said termination is a result of final submission of a close out report by
Incentive Recipient detailing its compliance with its obligations provided herein. Further, in the
event any litigation, claim or audit arising out of or related to this Agreement is instituted before
the expiration of the three (3) year period and extends beyond the three year period, the records
will be maintained until all litigation, claims or audit findings involving this Agreement and the
records made the basis of same have been resolved. Further, records relating to real property
k618354 Page 7
acquisition, including any long-term lease, shall be retained for a period equal to the useful life of
any asset purchased with PAEDC funds.
18. Incentive Recipient shall provide PAEDC with all reports necessary. for PAEDC
compliance with the Development Corporation Act.
19. It is expressly understood and agreed by the parties hereto that if Incentive Recipient
fails to submit to PAEDC in a timely and satisfactory manner any report required by this
Agreement, PAEDC may, at its sole discrerion, withhold further payments to Incentive Recipient
and/or demand assurances that Incentive Recipient can and will fully perform its contractual
obligations. If Incentive Recipient fails to provide adequate assurances then Incentive Recipient is
in breach, and any monies advanced by PAEDC automatically become a loan as herein provided.
If PAEDC withholds such payments, it shall notify Incentive Recipient in writing of its decision
and the reasons therefore. Payments withheld pursuant to this paragraph may be held by PAEDC
until such time as the delinquent obligations for which funds are withheld are fulfilled by
Incentive Recipient.
20. The PAEDC reserves the right, from time to time, to carry out field inspections/audits
to ensure compliance with the requirements of this Agreement. After completion of any such
audit, the PAEDC may provide Incentive Recipient with a written report of the audit findings. If
the audit report details deficiencies in its performance under the terms and conditions of this
Agreement, the PAEDC may establish requirements for the timely correction of any such
deficiencies by Incentive Recipient.
HOLD HARNII..ESS
21. INCENTIVE RECIPIENT AGREES TO HOLD HARMLESS THE PAEDC AND
THE CITY OF PORT ARTHUR FROM ANY AND ALL CLAIMS, DEMANDS, AND
CAUSES OF ACTION OF ANY HIND OR CHARACTER WHICH MAY BE ASSERTED BY
ANY THIRD PARTY OCCURRING, ARISING OUT OF OR IN ANY WAY RELATED TO
THIS AGREEMENT, THE PROJECT MADE THE BASIS OF THIS AGREEMENT, AND
THE UTILIZATION OF GRANT FUNDS PROVIDED BY THIS AGREEMENT, PROVIDED
THAT SUCH CLAIM, DEMAND OR CAUSE OF ACTION DOES NOT ARISE FROM ANY
FRAUD OR MISCONDUCT ON THE PART OF THE PAEDC OR THE CITY OF PORT
ARTHUR, OR ANY AGENT, EMPLOYEE OR REPRESENTATIVE OF EITHER.
SUBCONTRACTS
22. Incentive Recipient may not subcontract for performance credits described in this
Agreement without obtaining PAEDC's written approval, which may be withheld for any reason.
Incentive Recipient shall only subcontract for performance credits described in this Agreement
after Incentive Recipient has submitted a Subcontractor Eligibility Request, as specified by
PAEDC, for each proposed subcontract, and Incentive Recipient has obtained PAEDC's prior
written approval. Incentive Recipient, in subcontracting for any performances described in this
Agreement, expressly understands that in entering into such subcontracts, PAEDC is in no way
liable to Incentive Recipient's subcontractor(s).
X9618354 Paga 8
23. In no event shall PAEDC's prior written approval of a subcontractor's eligibility, be
construed as relieving Incentive Recipient of the responsibility for ensuring that the performances
rendered under all subcontracts are rendered so as to comply with all terms of this Agreement, as
if such performances rendered were rendered by Incentive Recipient. PAEDC's approval does
not constitute adoption, ratification, or acceptance of Incentive Recipient's or subcontractor's
performance hereunder. PAEDC maintains the right to insist upon Incentive Recipient's full
compliance with the terms of this Agreement, and by the act of subcontractor approval, PAEDC
does not waive any right of action which may exist or which may subsequently accrue to PAEDC
under this Agreement.
24. Incentive Recipient, as well as all of its approved subcontractors, shall comply with all
applicable federal, state, and local laws, regulations, and ordinances for making procurement
under this Agreement.
CONFLICT OF INTEREST /DISCLOSURE OBLIGATION
25. Conflict of Interest: No employee, agent, officer or elected or appointed official of the
City of Port Arthur or the PAEDC who has participated in a decision making process related to
this Agreement (without recusing him/herself and executing a conflict affidavit) may obtain a
personal or financial interest or benefit from an PAEDC assisted activity, or have an interest in
any contract, subcontract, or agreement (or proceeds thereof) with respect to an PAEDC assisted
activity, during their tenure or for one (1) year thereafter. Insofar as relates to the conduct
hereunder of Incentive Recipient, its agents, employees or representatives, Incentive Recipient
shall ensure compliance with applicable provisions under Article 5190.6 V.T.C.A. and Chapter
171 Local Government Code V.T.C.A.
26. Disclosure: In conjunction with execution of this Agreement, Incentive Recipient has
fully disclosed to PAEDC all known and potential owners of interests in Incentive Recipient
(whether shareholder, partner, limited partner, manager, member or otherwise). In the event of
any change in ownership or control of Incentive Recipient of five percent (5 %) or greater,
Incentive Recipient shall notify PAEDC in writing. Further, Incentive Recipient shall be
obligated to notify in writing the PAEDC in the event any time prior to, during or one (1) year
after the term of this Agreement, any City or PAEDC employee or representative or any third
party with a conflict of interest obtains or proposes to obtain a fmancial benefit, direct or indirect,
from Incentive Recipient. Fazlure to provide said notice immediately or no later than five (S)
business days after receipt of information shall constitute a default herein.
NONDISCRIlViIlVATION /EMPLOYMENT /REPORTING
27. Incentive Recipient shall ensure that no person shall on the grounds of race, color,
religion, sex, handicap, or national origin be excluded from participation in, be denied the
benefits of, or be subjected to discrimination under any program or activity funded in whole or in
part with funds provided under this Agreement. Additionally, funds shall be used in accordance
with the following requirements:
U618354 Page 9
(a) To the greatest extent feasible, opportunities for training and employment arising in
connection with the planning and carrying out of any project assisted with PAEDC
funds provided under this Agreement be given to Port Arthur residents; and
(b) To the greatest extent feasible, Agreements for work to be performed in connection
with any such project be awarded to Port Arthur residents and businesses, including,
but not limited to, individuals or firms doing business in the field of planning,
consulting, design, architecture, building construction, rehabilitation, maintenance, or
repair, which are located in or owned in substantial part by persons residing in the City
of Port Arthur, Texas.
(c) If Incentive Recipient advertises for employment then it shall among any other
advertising that it chooses to undertake covenants that it will advertise in the Port
Arthur News. Incentive Recipient acknowledges that PAEDC does not intend to
restrain any advertising in additional publications or media nor direct any others than
that stated.
LEGAL AUTHORITY
28. Incentive Recipient assures and guarantees it possesses legal and/or corporate authority
(i) to enter into this Agreement, receive funds authorized by this Agreement, and (ii) to perform
the obligations hereunder. Incentive Recipient has provided, or shall provide, as requested by the
PAEDC, such resolutions or other required authorizations necessary to evidence this authority.
29. The person or persons signing and executing this Agreement on behalf of Incentive
Recipient, or representing themselves as signing and executing this Agreement on behalf of
Incentive Recipient, do hereby warrant and guarantee that he, she, or they have been duly
authorized by Incentive Recipient to execute this Agreement on behalf of Incentive Recipient and
to validly and legally bind Incentive Recipient to all terms, performances, and provisions herein
set forth.
NOTICE OF LEGAL OR REGULATORY CLAIMS
30. Incentive Recipient shall give PAEDC immediate notice in writing of 1) any legal or
regulatory action, including any proceeding before an administrative agency filed against
Incentive Recipient, directly or indirectly; and 2) any material claim against Incentive Recipient,
which may impact continued operations. For purposes herein, "material" claims shall mean
claims in excess of $5,000. Except as otherwise directed by PAEDC, Incentive Recipient shall
furnish immediately to PAEDC copies of all pertinent documentation of any kind received by
Incentive Recipient with respect to such action or claim.
CHANGES AND AMENDMENTS
31. Except as specifically provided otherwise in this Agreement, any alterations, additions,
or deletions to the terms of this Agreement shall be by amendment in writing and executed by all
M618354 Page 10
parties to this Agreement. Such amendmerns must be approved by the PAEDC Board of
Directors and, in many cases, by the City Council for City of Port Arthur.
32. Performances under this Agreement must be rendered in accordance with the
regulations promulgated under the Development Corporation Act, the assurances and
certifications made to PAEDC by Incentive Recipient, and. the assurances and certifications made
to the City of Port Arthur with regard to the operation of the PAEDC's Projects. PAEDC may
from time to time during the period of performance of this Agreement issue policy directives
which serve to interpret, or clarify performance requirements under this Agreement. Such policy
directives shall be promulgated by the PAEDC Board of Directors in the form of PAEDC
issuances, shall be approved by the City Council and shall have the effect of qualifying the terms
of this Agreement and shall be binding upon Incentive Recipient, as if written herein.
33. Any alterations, additions, or deletions to the terms of this Agreement which are
required by changes in federal, state or local law are automatically incorporated into this
Agreement without written amendment hereto, and shall become effective on the date designated
by such law or regulation.
DEFAULT / TERMII~TATION
34. In the event of default of any of the obligations of Incentive Recipient detailed herein
or in the event of breach of any of the representations of or warranties of Incentive Recipient
either detailed herein or in its application to the PAEDC, and following any notice and
opportunity to cure provided for in this Agreement, the PAEDC may, at its sole option, terminate
this Agreement, in whole or in part. In the event of such termination, the PAEDC may, at its
sole option, utilize one or more of the following actions to resolve or otherwise remedy said
default:
(a) Declare the Commercial Promissory Note executed in conjunction with this Agreement
immediately effective. If Incentive Recipient defaults on the note, then the PAEDC
may exercise its default remedies provided under collateral documentation executed in
conjunction with said Note and this Agreement
(b) Exercise any remedies provided herein andlor within the Collateral Security
Documents;
(c) Withhold, whether temporarily or otherwise, disbursement of grant proceeds pending
correction of the deficiency(s) by Incentive Recipient;
(d) Disallow all or a part of the incentives which are not in compliance with the terms and
conditions of this Agreement or in compliance with the representations and warranties
contained within this Agreement and Incentive Recipient's application to the PAEDC;
(e) Withhold and/or disallow further PAEDC incentives to Incentive Recipient; and
~lb18354 Page 11
(f) Exercise any and all other remedies that may be legally available to the PAEDC, under
the laws of the State of Texas and as authorized by the terms and conditions of this
Agreement.
35. In addition to the foregoing, the parties agree that this Agreement may be terminated at
any time when both parties agree, in writing, to the terms and conditions of any such voluntary
termination.
COMPLIANCE AUDITS
36. If directed by PAEDC Board, Incentive Recipient shall arrange for the performance of
a compliance audit, by a cert~ed public accountant, of funds received and performances rendered
under this Agreement, subject to the following conditions and limitations:
(a) incentive Recipient shall have a compliance audit which may be limited to use of funds
received from the PAEDC, made for any of its fiscal years included within the Term
of this Agreement in which Incentive Recipient receives more than $50,000 in PAEDC
financial assistance provided by PAEDC in the form of grants, contracts, loans, loan
guarantees, property, cooperative agreements, interest subsidies, or direct
appropriations. Backup documentation regarding actual expenditures shall be provided
by Incentive Recipient. Said audit must be received and accepted by the Chief
Executive Officer of PAEDC and/or the PAEDC Board.
(b) At the option of Incentive Recipient, each audit required by this section may cover
either its entire operations or each department, agency, or establishment of Incentive
Recipient which received, expended, or otherwise administered PAEDC funds;
{c) Unless otherwise specifically authorized by PAEDC in writing, Incentive Recipient
shall submit the report of such audit to PAEDC within thirty (30) days after completion
of the audit, but no later than one hundred twenty (I20) days after the end of each
fiscal period included within the Term of this Agreement.
(d) As a part of its audit, Incentive Recipient shall verify that the expenditures were
exclusively for the assets listed in Exlu'bit "D". Any discrepancies in excess of $500
shall be specifically documented in writing.
37. Incentive Recipient understands and agrees that it shall be liable to reimburse
immediately PAEDC for any costs disallowed pursuant to financial and compliance audit(s) of
funds received under this Agreement and it may be required to submit formal audits at its
expense.
38. Incentive Recipient shall take all necessary actions to facilitate the performance of any
and all such audits, whether annual, mandatory or otherwise requested under this Agreement.
6~6I8354 Fage 12
39. Subject to financial privacy requirements of Incentive Recipient and properly
designated requests for non-disclosure due to proprietary reasons, all approved audit reports may
be made available for public inspection.
40. PAEDC shall not release any funds for costs incurred by Incentive Recipient under this
Agreement until PAEDC has received certification from Incentive Recipient that its fiscal control
and fund accounting procedures are adequate to assure proper disbursal of and accounting for
funds provided under this Agreement. PAEDC shall specify the content and form of such
certification.
ENVIRONMENTAL REQUIREMENTS
41. Incentive Recipient understands and agrees that by execution of this Agreement,
Incentive Recipient shall be responsible for providing to PAEDC all information, concerning this
PAEDC funded project, required for PAEDC to meet its responsibilities for environmental
review, decision making, and other action which applies to PAEDC in accordance with and to the
extent specified in Federal, State and Local Law. Incentive Recipient further understands and
agrees that Incentive Recipient shall make all reasonable efforts to assist PAEDC in handling
inquiries and complaints from persons and agencies seeking redress in relation to environmental
reviews covered by approved certifications.
ORAL AND WRITTEN AGREEMENTS /PRIOR AGREEMENTS
42. All oral and written contracts between the parties to this Agreement relating to the
subject matter of this Agreement that were made prior to the execution of this Agreement have
been reduced to writing and are contained in this Agreement.
43. The documents required below are hereby made a part of this Agreement, and
constitute promised performances by Incentive Recipient in accordance with this Agreement:
Required
x Eahrbit "A"
x Exhibit "B"
x Eababit "C"
x Exhibit "D"
x Exkllbit "E"
X Exhibit "F"
x Exhlbit "G"
x Incentive
Conditional Commercial Promissory Note
Commercial Security Agreement
UCC-1 Piaancing Statement
Equipment List
Certification Regarding Lobbying
Guaranty Agreement of Team Industries, Ina
Conapliamce Statement
[recipient Application to PAEDC
44. For gurposes of any claim or cause of action that may accrue under this Agreement,
venue shall lie in Jefferson County, Texas, where substantially all the performance under the
Agreement is to be performed.
8618354 Page 13
ADDRESS OP NOTICE AND COMMUNICATIONS
City of Port Arthur Section 4A Economic Development Corporation
444 4th Street
Port Arthur, Texas 77640
ATTN: Floyd Batiste, Chief Executive Officer
Incentive Recipient
1200 Maloney Road
Post Office Box 350
Kaukauna, Wisconsin 54130
ATTN: John Panetti
CAPTIONS
45. This Agreement has been supplied with captions to serve only as a guide to the
contents. The caption does not control the meaning of any paragraph or in any way determine its
interpretation or application.
COMPLIANCE WITH FEDERAL STATE AND LOCAL LAWS
46. Incentive Recipient shall comply with all Federal, State and local laws, statutes,
ordinances, resolutions, rules, regulations, orders and decrees of any court or administrative body
or tribunal, including those related to the activities and performances of Incentive Recipient under
this Agreement. Upon request by PAEDC and by the City, Incentive Recipient shall furnish
satisfactory proof of its compliance herewith.
CONDITIONS PRECEDENT
47. This agreement has no Iegal consequences, and neither parry shall rely on the
agreement, unless and until both the PAEDC Board and the Port Arthur City Council approve the
Agreement in its final executed form.
ATTORNBY APPROVALS
APPROVED AS TO FORM:
Guy Goodson, General Counsel for PAEDC
VERIFIED BY
CITY COUNCIL RESOLUTION:
Resolution Number:
Marls T. Sokolow, City Attorney
0618354 Page 14
AGREEMENT EXECUTION
CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION
SIGNED AND AGREED TO on the
By:
President
day of , 2008.
By:
Secretary
EDC Representative EDC Representative
TEAM FABRICATORS, L.L.C.
SIGNED AND AGREED TO on the day of , 2008.
TEAM FABRICATORS, L.L.C.,
Wisconsin limited liability corporation and a
wholly owned subsidiary of Team Industries,
Inc., a Wisconsin corporation
By:
Title
Aclrnowledgment
;~IG618354 Page l5
EXHIBIT "A"
CONDITIONAL COMMERCIAL PRONIISSORY NOTE
Port Arthur, Texas
This COMMERCIAL PROMISSORY NOTE becomes effective on the date when Team
Fabricators, L.L.C., a Wisconsin business corporation (hereinafter called "Maker") breaches that
certain Economic Incentive Contract and Loan Agreement between the City of Port Arthur
Section 4A Economic Development Corporation (hereinafter called "Lender") and Maker, dated
2008.
Effective Date of Note: the day of , 2008 ("date of breach").
Principal Amount: $ ,which is $650,000.00 minus the incentive credits earned
by Maker according to that certain Economic Incentive Contract and Loan Agreement between
the Lender and Maker (described hereinbefore).
Term of the Loan: 3 years from the Effective Date (stated above).
Payment Schedule: Monthly from the Effective Date until Principal Amount and all interest due
as herein specified is paid in full.
FOR VALUE RECEIVED, the undersigned "Maker", promises to pay to Lender, at its office at
P.O. Box 1089, Port Arthur, Texas, 77640-1089, or such other place orlaces as the holder
hereof shall from time to time designate in written notice to Maker, the principal amount, in legal
and lawful money of the United States of America, together with interest thereon from the date
hereof until maturity at the rate of ten percent (1.0`X) per annum as detailed herein.
All past due prin~~p~al and interest shall bear interest from date of maturity until paid at the
rate of fifteenpement (15`X) per annum, or to the maximum extent allowed by law (whichever is
greater) as may hereafter be in effect, payable on demand after maturity.
This note is due and payable as follows: Thirty-six (3~ equally monthly installments of
principal and irnerest on the 15`~ day of each month starting with the month immediately following
the Effective Date of this Note as stated above.
Any notices required or permitted to be given by the holder hereof to Maker pursuant to
the provisions of this note shall be in writing and shall be either personally delivered or
transnutted by first class United States mail, addressed to Maker at the address designated below
for receipt of notice (or at such other address as Maker may, from time to time, designate in
writing to the holder hereof for receipt of notices hereunder). Any such notice personally
delivered shall be effective as of the date of delivery, and any notice transmitted by mail, in
accordance with the foregoing provisions, shall be deemed to have been given to and received by
Maker as of the date on which such notice was deposited with the United States Postal Service,
properly addressed and with postage prepaid.
This note is also secured by and entitled to the benefits of all other security agreements,
fledges, collateral assignments, deeds of trust, guaranties, mortgages, assignments, and hen
instruments, if any, of any land executed by Maker or by any other party as security for any loans
owing by Maker to the Lender. Such lien instnunents shall include those executed sunultaneously
herewith, those heretofore executed, and those hereafter executed.
If any instaihnent or payment of principal or interest of this note is not paid when due or
any drawer, acceptor, endorser, guarantor, surety, accommodation party or other person now or
hereafter primarily or secondarily liable upon or for payment of all or any part of this note (each
hereinafter called an "other liable party") shall die, or become insolvent (however such insolvency
ma be evidenced); or if any proceeding, procedure or remedy supplementary to or in
enforcement of judgment shall be resorted to or commenced against Maker or any other liable
party, or with respect to any property of any of them; or if any governmental authority or any
court at the instance thereof shall take possession of any substantial part of the property of or
assume control over the affairs or operations of, or a receiver shall be appointed for or take
possession of the property of, or a writ or order of attachment or garnishment shall be issued or
made against any of the property of Maker or any other liable party; or if any indebtedness for
which Maker or any other liable party is primarily or secondarily liable shall not be paid when
due or shall become due and payable by acceleration of maturity thereof, or if any event or
condition shall occur which shall permit the holder of any such indebtedness to declare it due and
payable upon the lapse of time, giving of notice or otherwise; or if Maker or any other fiable
party (if other than a natural person) shall be dissolved, wound up, liquidated or otherwise
termuiated, or a party to any merger or consolidation without the written consent of Lender; or if
Maker or any other fiable party shall sell substantially all or an integral portion of its assets
without the wntten consent of Lender; or if Maker or any other liable party fails to furnish
financial information requested by Lender; or if Maker or any other liable parry furnishes or has
furnished any financial or other information or statements which are misleading in any respect; or
if a default occurs under any instrument now or hereafter executed in connection with or as
security for this note; or any event occurs or condition exists which causes Lender to in good faith
deem itself insecure or in good faith believe the prospect of payment or performance by Maker or
any other liable party under this note, under any instrument or agreement executed in connection
with or as security for this note, or under any other indebtedness of Maker or any other liable
arty to Lender is impaired; thereupon, at the option of Lender, the principal balance and accrued
interest of this note and any and all other indebtedness of Maker to Lender shall become and be
due and payable forthwith without demand, notice of default, notice of acceleration, notice of
intent to accelerate the maturity hereof, notice of nonpayment, presentment, protest or notice of
dishonor, all of which are hereby expressly waived by Maker and each other liable party. Lender
may waive any default without waiving any prior or subsequent default.
If this note is not paid at maturity whether by acceleration or otherwise, and is placed in
the hands of any attorney for collection, or suit is filed hereon, or proceedings are had in probate,
bankruptcy, receivership, reorganization, arrangement or other legal proceedings for collection
hereof, Maker and each other fiable party agree to pay Lender its collection costs, including court
costs and a reasonable amount for attorney's fees.
It is the intention of Maker and Lender to conform strictly to applicable usury laws.
Accordingly, if the transaction contemplated hereby would be usurious under applicable law,
then, in that event, notwithstanding anything to the contrary herein or in any agreement entered
into in connection with or as security for this note, it is agreed as follows: {i) the aggregate of all
consideration which constitutes interest under applicable law that is taken, reserved, contracted
for, charged or received under this note or under any of the other aforesaid agreements or
otherwise in connection with this note shall under no circumstances exceed the maximum amount
of interest allowed by applicable law, and any excess shall be credited on this note by the holder
hereof (or, if this note shall have been paid in full, refunded to Maker); (ii) in the event that
maturity of this note is accelerated by reason of an election by the holder hereof resulting from
any default hereunder or otherwise, or m the event of any required or permitted prepayment, then
such consideration that constitutes interest may never include more than the maxunum amount
allowed by applicable law, and excess interest, if any, provided for in this note or otherwise shall
be canceled automatically as of the date of such acceleration or prepayment and, if theretofore
prepaid, shall be credited on this note (or if this note shall have been paid in full, refunded tv
Maker); and (iii) all calculations of the rate of interest taken, reserved, contracted for, charged or
N618354 - Ex. °A" Page 2
received under this note or under any of the other aforesaid agreements or otherwise in connection
with this note, that are made for the purpose of determining whether such rate exceeds the
maximum lawful rate shall be made, to the extent permitted by applicable law, by amortizing,
prorating: allocating, and spreading such interest over the entire term of the loan evidenced by
this note(mcluding all renewal and extended terms}.
Maker may prepay all or any part of the principal of this note before maturity without
penalty. No partial prepayment shall reduce, postpone or delay the obligation of Maker to
continue paying the installments herein provided on heir respective due dates following any such
partial prepayment until this note is fully paid.
The Maker shall be directly and primarily liable for the payment of all sums called for
hereunder; and, except for notices specifically required to be given by the holder hereof to Maker
pursuant to the earlier provisions of this note, Maker and each other liable party hereby expressly
waive demand, presentment for payment, notice of nonpayment, protest, notice of protest, notice
of intention to accelerate maturity, notice of acceleration of maturity, and all other notice, filuig of
suit and diligence in collecting this note or enforcing or handling any of the security therefor, and
do hereby agree to any substitution, exchange or release, in whole or in part, of any security here-
for or the release of any other liable party, and do hereby consent to any and all renewals or
extensions from time to time, of this note, or any part hereof, either before or after maturity, all
without any notice thereof to any of them and without affecting or releasing the liability of any of
them. Each holder hereof, in order to enforce payment of this note by any other liable party,
shall be required to first institute suit or exhaust its remedies against Maker and to enforce its
rights against any security therefor prior to enforcing payment of this Note by any other liable
party.
TEAM FABRICATORS, L.L.C.
SIGNED AND AGREED TO on the day of , 2008.
TEAM FABRICATORS, L.L.C.,
Wisconsin limited liability corporation and
a wholly owned subsidiary of Team
Industries, Inc., a Wisconsin corporation
By:
Title
Aclniowledgment
x'618354 - Eac. "A" Page 3
THE STATE OF §
§ ACKNOWLEGEMENT
COUNTY OF §
BEFORE ME, THE UNDERSIGNED Notary Public, on this day personally appeared
known to me to be the person whose name is subscribed to
the foregoing instrument, and acknowledged to me that he/she executed the same as the act and
deed of a ,for the purposes and consideration
therein expressed, and the Capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of
2008.
Notary Public, State of Texas
MAI~F.RS' ADDRESS FOR RECEIPT OF NOTICE:
Mr. John Parretti
1200 Malone Road
P.O. Box 350
Kaukauna, Wisconsin 54130
JJ618354 - Ex. "A" Page 4
EXHIBIT "B"
COMMERCIAL SECURITY AGREEMENT
Dated , 2008
Debtorlsl Secured Partv
Team Fabricators, L.L.C. Port Arthur Economic Development
Co oration "PAEDC"
1200 Maloney Road 4173 39'~ Street
Post Office Box 350
Kaukauna, Wisconsin 54130 Port Arthur, Texas 77642
(hereuiatter referred to as "llebtor" whether one or more) (herematter referred to as °~ecured tarty°)
FOR VALUE RECEIVED, the receipt and sufficiency of which is hereby
acknowledged, Debtor grants to Secured Party the security interest (and the pledges and
assignments as applicable) hereinafter set forth and agrees with Secured Party as follows:
A. OBLIGATIONS SECURED. The first priority lien and pledges and
assignments as applicable granted hereby are to secure punctual payment and performance of
the following: (i) certain promissory note(s) of even date herewith in the original principal sum
of $650,000, executed by Debtor and payable to the order of Secured Parry, and any and all
extensions, renewals, modifications and rearrangements thereof, (ii) certain obligations of
Debtor to Secured Party under that certain Economic Incentive Contract and Loan Agreement
of even date and all extensions, renewals, modifications and rearrangements thereof, and (iii)
any and all other indebtedness, liabilities and obligations whatsoever and of whatever nature of
Debtor to Secured Parry whether dzrect or indirect, absolute or contingent, primary or
secondary, due or to become due and whether now existing or hereafter arising and howsoever
evidenced or acquired, whether joint or several, or joint and several (all of which are herein
separately and collectively referred to as the "Obligations"). Debtor acknowledges that the
security interest (and pledges and assignments as applicable) hereby granted shall secure all
future advances as well as any and all other indebtedness, liabilities and obligations of Debtor
to Secured Party whether now in existence or hereafter arising.
B. USE OF COLLATERAL. Debtor represents, warrants and covenants that
Collateral will be used by the Debtor primarily for business use, unless otherwise specified as
follows: Personal, family or household purposes; Farming operations.
C. DESCRIPTION OF COLLATERAL. Debtox hereby grants to Secured Party a
first priority lien in (and hereby pledges and assigns as applicable) and agrees that Secured
Party shall continue to have a security interest in (and a pledge and assignment of as
applicable), the following property, to wit: (DEBTOR TO INITIAL APPROPRIATE
BLANKS)
~ All Accounts. A security interest in aU accounts now owned or existing as well as
any and all that may hereafter arise or be acquired by Debtor, and all the proceeds and
products thereof, including without limitation, all notes, drafts, acceptances,
instruments and chattel paper arising therefrom, and all returned or repossessed goods
arising from or relating to any such accounts, or other proceeds of any sale or other
disposition of inventory.
_._. ~ Specific Accounts. A security interest in the supervised account at Texas State Bank,
including earned interest, described by the Deposit Agreement between the Financial
Institution, the Debtor and the Secured Party. Such agreement attached or which may
hereafter be attached hereto.
~ All Inventory. A security interest in all of Debtor's inventory, including all goods,
merchandise, raw materials, goods in process, finished goods and other tangible
personal property, wheresoever located, now owned or hereafter acquired and held for
sale or lease or furnished or to be furnished under contracts for service or used or
consumed in Debtor's business and all additions and accessions thereto and contracts
with respect thereto and all documents of title evidencing or representing any part
thereof, and all products and proceeds thereof, including, without limitation, all of such
which is now or hereafter located at the following locations: (give locations)
~ All Fixtures. A security interest in alI of Debtor's fixtures and appurtenances
thereto, and such other goods, chattels, fixtures, equipment and personal property
affixed or in any manner attached to the real estate and/or building(s) or structure(s),
including all additions and accessions thereto and replacements thereof and articles in
substitution therefor, howsoever attached or affixed, located at the following locations:
(give legal address)
The record owner of the real estate is:
~ All Equipment. A security interest in all equipment of every nature and description
whatsoever now owned or hereafter acquired by Debtor including all appurtenances and
additions thereto and substitutions therefor, wheresoever located, including all tools,
parts and accessories used in connection therewith.
~ General Intangibles. A security interest in all general intangibles and other
personal property now owned or hereafter acquired by Debtor other than goods,
accounts, chattel paper, documents and instruments.
~ Chattel Paper. A security interest in all of Debtor's interest under chattel paper,
lease agreements and other instruments or documents, whether now existing or owned
K6I8354 - Ex. "B" Page 2
by Debtor or hereafter arising or acquired by Debtor, evidencing both a debt and
security interest in or lease of specific goods.
~ Farm Products. A security interest in alt of Debtor's interest in any and all crops,
livestock and supplies used or produced by Debtor in farming operations wheresoever
located: Debtor's residence is in the county shown at the beginning of this Agreement
and Debtox agrees to notify promptly Secured Party of any change in the county of
Debtor's residence; all of Debtor's crops or livestock are presently located in the
following counties: (give counties)
~ Securities. A pledge and assignment of and security interest in the securities
described below, together with ail instruments and general intangibles related thereto
and all monies, income, proceeds and benefits attributable or accruing to said property,
including, but not limited to, all stock rights, options, rights to subscribe, dividends,
liquidating dividends, stock dividends, dividends paid in stock, new security or other
properties or benefits to which the Debtor is or may hereafter become entitled to
receive on account of said property. (give description)
~ Certificates of Deposit. A pledge and assignment of and security interest in all of
Debtor's interest in and to the certificates of deposit described below and instruments
related thereto, and all renewals or substitutions therefor, together with all monies,
income, interest, proceeds and benefits attributable or accruing to said property or to
which Debtor is or may hereafter be entitled to receive on account of said property.
(give description)
~ Instruments. A pledge and assignment of and security interest in alI of Debtor's
now owned or existing as well as hereafter acquired or arising instruments and
documents.
~ Other. A first priority lien on all of Debtor's interest, now owned or hereafter
acquired, in and to all the equipment, as detailed in that certain Economic Incentive
Contract and Loan Agreement between Debtor and Secured Party including that
identified in Exhibit "D" to the Economic Incentive Contract and Loan Agreement.
See Schedule ]. attached hereto and made a part hereof for all purposes including but
not limited to the invoice from Team Industries, Inc. Invoice Number MIS-PORT dated
04/03/2008 in the amount of $365,628.
Model Number: Serial Number:
The term "Collateral" as used in this Agreement shall mean and include, and the
security interest (and pledge and assignment as applicable) shall cover, all of the foregoing
property, as well as any accessions, additions and attachments thereto and the proceeds and
products thereof, including without limitation, all cash, general intangibles, accounts,
H618354 - Ex. "B" Page 3
inventory, equipment, fixtures, farm products, notes, drafts, acceptances, securities,
instruments, chattel paper, insurance proceeds payable because of loss or damage, or other
property, benefits or rights arising therefrom, and in and to all returned or repossessed goods
arising from or relating to any of the property described herein or other proceeds of any sale or
other disposition of such property.
As additional security for the punctual payment and performance of the Obligations,
and as part of the Collateral, Debtor hereby grants to Secured Party a security interest in, and a
pledge and assignment of, any and all money, property, deposit accounts, accounts, securities,
documents, chattel paper, claims, demands, instruments, items or deposits of the Debtor, and
each of them, or to which any of them is a party, now held or hereafter coming within Secured
Party's custody or control, including without limitation, all certificates of deposit and other
depository accounts, whether such have matured or the exercise of Secured Party's rights
results in loss of interest or principal or other penalty on such deposits, but excluding deposits
subject to tax penalties if assigned. Without prior notice to or demand upon the Debtor,
Secured Party may exercise its rights granted above at any time when a default has occurred or
Secured Party deems itself insecure. Secured Party's rights and remedies under this paragraph
shall be in addition to and cumulative of any other rights or remedies at law and equity,
including, without limitation, any rights of set-off. to which Secured Party may be entitled.
D. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.
Debtor represents and warrants as follows:
1. Ownership; No Encumbrances: Except for the security interest (and pledges and
assigmnents as applicable) granted hereby, the Debtor is, and as to any property acquired after
the date hereof which is included within the Collateral, Debtor will be, the owner of all such
Collateral free and clear from all charges, liens, security interests, adverse claims and
encumbrances of any and every nature whatsoever.
2. No Financing Statements: There is no financing statement or similar frling now
on file in any public office covering any part of the Collateral, and Debtor will not execute and
there will not be on file in any public office any financing statement or similar frling except the
financing statements filed or to be filed in favor of Secured Party.
3. Accuracy of Information: AIt information furnished to Secured Parry concerning
Debtor, the Collateral and the Obligations, or otherwise for the purpose of obtaining or
maintaining credit, is or will be at the time the same is furnished, accurate and complete in all
material respects.
4. Authority: Debtor has full right and authority to execute and perform this
Agreement and to create the security interest (and pledges and assignment as applicable)
created by this Agreement. The making and performance by Debtor of this Agreement will
not violate any articles of incorporation, bylaws or similar document respecting Debtor, any
provision of law, any order of court or governmental agency, or any indenture or other
agreement to which Debtor is a party, or by which Debtor or any of Debtor's property is
X618354 - Fac. "B" Page 4
bound, or be in conflict with, result in a breach of or constitute (with due notice and/or lapse
of time) a default under any such indenture or other agreement, or result in the creation or
imposition of any charge, lien, security interest, claim or encumbrance of any and every nature
whatsoever upon the Collateral, except as contemplated by this Agreement.
5. Addresses: The address of Debtor designated at the beginning of this Agreement
is Debtor's place of business if Debtor has only one place of business; Debtor's chief executive
office if Debtor has more than one place of business; or Debtor's residence if Debtor has no
place of business. Debtor agrees not to change such address without advance written notice to
Secured Party.
E. GENERALCOVENANTS. Debtor covenants and agrees as follows:
1. Operation of the Collateral: Debtor agrees to maintain and use the Collateral
solely in the conduct of its own business, in a careful and proper manner, and in conformity
with all applicable permits or licenses. Debtor shall comply in all respects with all applicable
statutes, laws, ordinances and regulations. Debtor shall not use the Collateral in any unlawful
manner or for any unlawful purposes, or in any manner or for any purpose that would expose
the Collateral to unusual risk, or to penalty, forfeiture or capture, or that would render
inoperative any insurance in connection with the Collateral.
2. Condition: Debtor shall maintain, service and repair the Collateral so as to keep
it in good operating condition. Debtor shall replace within a reasonable time all parts that may
be wom out, lost, destroyed or otherwise rendered unfit for use, with appropriate replacement
parts. Debtor shall obtain and maintain in good standing at all times alI applicable permits,
licenses, registrations and certificates respecting the Collateral.
3. Assessments: Debtor shall promptly pay when due all taxes, assessments,
license fees, registration fees, and governmental charges levied or assessed against Debtor or
with respect to the Collateral or any part thereof.
4. No Encumbxances: Debtor agrees not to suffer or permit any charge, lien,
security interest, adverse claim or encumbrance of any and every nature whatsoever against the
Collateral or any part thereof.
S. No Removal: Except as otherwise provided in this Agreement, Debtor shall not
remove the Collateral from the county or counties designated at the beginning of this
Agreement without Secured Party's prior written consent.
6. No Transfer: Except as otherwise provided in this Agreement with respect to
inventory, Debtor shall not, without the prior written consent of Secured Party, sell, assign,
transfer, lease, charter, encumber, hypothecate or dispose of the Collateral, or any part
thereof, or interest therein, or offer to do any of the foregoing.
X618354 - Ex. "B" Pagc S
7. Notices and Reports: Debtor shall promptly notify Secured Parry in writing of
any change in the name, identity or structure of Debtor, any charge, lien, security interest,
claim or encumbrance asserted against the Collateral, any litigation against Debtor or the
Collateral, any theft, loss, injury or similar incident involving the Collateral, and any other
material mattex adversely affecting Debtor or the Collateral. Debtor shall furnish such other
reports, information and data regarding Debtor's financial condition and operations, the
Collateral and such other matters as Secured Party may request from time to time.
8. Landlord's Waivers: Debtor shall furnish to Secured Party, if requested, a
landlord's waiver of all liens with respect to any Collateral covered by this Agreement that is
or may be located upon leased premises, such landlord's waivers to be in such form and upon
such terms as are acceptable to Secured Party.
9. Additional Filings: Debtor agrees to execute and deliver such financing
statement or statements, or amendments thereof or supplements thereto, or other documents as
Secured Parry may from time to time require in order to comply with the Texas Uniform
Commercial Code (or other applicable state law of the jurisdiction where any of the Collateral
is located} and to preserve and protect the Secured Parry's rights to the Collateral.
10. Protection of Collateral: Secured Party, at its option, whether before or after
default, but without any obligarion whatsoever to do so, may {a) discharge taxes, claims,
charges, liens, security interests, assessments or other encumbrances of any and every nature
whatsoever at any time levied, placed upon or asserted against the Collateral, (b) place and pay
for insurance on the Collateral, including insurance that only protects Secured Parry's interest,
(c) pay for the repair, improvement, testing, maintenance and preservation of the Collateral,
(d) pay any filing, recording, registration, licensing or certification fees or other fees and
charges related to the Collateral, or (e) take any other action to preserve and protect the
Collateral and Secured Parry's rights and remedies under this Agreement as Secured Party may
deem necessary or appropriate. Debtor agrees that Secured Party shall have no duty or
obligation whatsoever to take any of the foregoing action. Debtor agrees to promptly reimburse
Secured Party upon demand for any payment made or any expense incurred by the Secured
.Party pursuant to this authorization. These. payments and expenditures, together with interest
thereon from date incurred until paid by Debtor at the maximum contract rate allowed under
applicable laws, which Debtor agrees to pay, shall constitute additional Obligations and shall
be secured by and entitled to the benefits of this Agreement.
11. Inspection: Debtor shall at alI reasonable times allow Secured Party by or
through any of its officers, agents, attorneys or accountants, to examine the Collateral,
wherever located, and to examine and make extracts from Debtor's books and records.
12. Further Assurances: Debtor shall do, make, procure, execute and deliver all
such additional and further acts, things, deeds, interests and assurances as Secured Party may
require from time so time to protect, assure and enforce Secured Parry's rights and remedies.
N618354 - Fx. "B" Psge 6
13. Insurance: Debtor shall have and maintain insurance at all times with respect to
all tangible Collateral insuring against risks of fire (including so-called extended coverage),
theft and other risks as Secured Party may require, containing such terms, in such form and
amounts and written by such companies as may be satisfactory to Secured Party, all of such
insurance to contain toss payable clauses in favor of Secured Party as its interest may appear.
All policies of insurance shall provide for ten (TO) days written minimum cancellation notice to
Secured Party and at the request of Secured Party shall be delivered to and held by it. Secured
Party is hereby authorized to act as attorney for Debtor in obtaining, adjusting, settling and
canceling such insurance and endorsing any drafts or instruments. Secured Party shall be
authorized to apply the proceeds from any insurance to the Obligations secured hereby whether
or not such Obligations are then due and payable. Debtor speciFcally authorizes Secured Party
to disclose information from the policies of insurance to prospective insurers regarding the
Collateral.
14. Additional Collateral: If Secured Party should at any time be of the opinion that
the Collateral is impaired, not sufficient or has declined or may decline in value, or should
Secured Parry deem payment of the Obligations to be insecure, then Secured Party may call for
additional security satisfactory to Secured Party, and Debtor promises to furnish such
additional security forthwith. The call for additional security may be oral, by telegram, or
United States mail addressed to Debtor, and shall not affect any other subsequent right of
Secured Party to exercise the same.
F. ADDITIONAL PROVISIONS REGARDING ACCOUNTS. The following
provisions shall apply to all accounts included within the Collateral:
1. Definitions: The term "account", as used in this Agreement, shall have the same
meaning as set forth in the Uniform Commercial Code of Texas in effect as of the date of
execution hereof, and as set forth in any amendment to the Uniform Commercial Code of
Texas to become effective after the date of execution hereof, and also shall include all present
and future notes, instruments, documents, general intangibles, drafts, acceptances and chattel
paper of Debtor, and the proceeds thereof.
2. Additional Warranties: As of the time any account becomes subject to the
security interest (or pledge or assignment as applicable) granted hereby, Debtor shall be
deemed further to have warranted as to each and all of such accourns as follows: (a) each
account and all papers and documents relating thereto are genuine and in alI respects what they
puxport to be; (b) each account is valid and subsisting and arises out of a bona fide sale of
goods sold and delivered to, or out of and for services theretofore actually rendered by the
Debtor to the account debtor named in the account; (c) the amount of the account represented
as owing is the correct amount actually and unconditionally owing except for normal cash
discounts and is not subject to any setoffs, credits, defenses, deductions or countercharges; and
(d} Debtor is the owner thereof free and clear of any charges, liens, security interests, adverse
claims and encumbrances of any and every nature whatsoever.
N618354 - Ex. "B" Page ~
3. Collection of Accounts: Secured Party shall have the right in its own name or in
the name of the Debtor, whether before or after default, to require Debtor forthwith to transmit
all proceeds of collection of accounts to Secured Parry, to notify any and alI account debtors to
make payments of the accounts directly to Secured Parry, to demand, collect, receive, receipt
for, sue for, compound and give acquittal for, any and all amounts due or to become due on
the accounts and to endorse the name of the Debtor on all commercial paper given in payment
or part payment thereof, and in Secured Party's discretion to file any claim or take any other
action or proceeding that Secured Party may deem necessary or appropriate to protect and
preserve and realize upon the accounts and related Collateral. Unless and until Secured Party
elects to collect accounts, and the privilege of Debtor to collect accounts is revoked by Secured
Party in writing, Debtor shall continue to collect accounts, account far same to Secured Party,
and shall not commingle the proceeds of collection of accounts with any funds of the Debtor.
In order to assure collection of accounts in which Secured Parry has a security interest (or
pledge or assignment of as applicable) hereunder, Secured Party may notify the post office
authorities to change the address for delivery of mail addressed to Debtor to such address as
Secured Parry may designate, and to open and dispose of such mail and receive the collections
of accounts included herewith. Secured Parry shall have no duty or obligation whatsoever to
collect any account, or to take any other action to preserve or protect the Collateral; however,
should Secured Party elect to collect any account or take possession of any Collateral, Debtor
releases Secured Party from any claim or claims for loss or damage arising from any act or
omission in connection therewith.
4. Identification and Assignment of Accounts: Upon Secured Party's request,
whether before or after default, Debtor shall take such action and execute and deliver such
documents as Secured Party may reasonably request in order to identify, confirm, mark,
segregate and assign accounts and to evidence Secured Parry's interest in same. Without
limitation of the foregoing, Debtor, upon request, agrees to assign accounts to Secured Party,
identify and mark accounts as being subject to the security interest (or pledge or assignment as
applicable) granted hereby, mark Debtor's books and records to reflect such assignments, and
forthwith to transmit to Secured Party in the form as received by Debtor any and all proceeds
of collection of such accounts.
5. Account Reports: Debtor will deliver to Secured Parry, prior to the tenth (10)
day of each month, or on such other frequency as Secured Party may request, a written report
in form and content satisfactory to Secured Party, showing a listing and aging of accounts and
such other information as Secured Party may request from time to time. Debtor shall
immediately notify Secured Party of the assertion by any account debtor of any set-off, defense
or claim regarding an account or any other matter adversely -affecting an account.
6. Segregation of Returned Goods: Returned or repossessed goods arising from or
relating to any accounts included within the Collateral shall if requested by Secured Party be
held separate and apart from any other property. Debtor shall as often as requested by Secured
Party, but not less often than weekly even though no special request has been made, report to
Secured Party the appropriate identifying information with respect to any such returned or
A618354 - Ex. "B" Page 8
repossessed goods relating to accounts included in assignments or identifications made pursuant
hereto.
G. ADDITIONAL PROVISIONS REGARDING INVENTORY. The following
provisions shall apply to all inventory included within the Collateral:
1. Inventory Reports: Debtor will deliver to Secured Party, prior to the tenth (10th)
day of each month, or on such other frequency as Secured Party may request, a written report
in form and content satisfactory to Secured Party, with respect to the preceding month or other
applicable period, showing Debtor's opening inventory, inventory acquired, inventory sold,
inventory returned, inventory used in Debtor's business, closing inventory, any other inventory
not within the preceding categories, and such other information as Secured Party may request
from time to time. Debtor shall immediately notify Secured Party of any matter adversely
affecting the inventory, including, without limitation, any event causing loss or depreciation in
the vaiue of the inventory and the amount of such possible loss or depreciation.
2. Location of Inventory: Debtor will promptly notify Secured Party in writing of
any addition to, change in or discontinuance of its place(s) of business as shown in this
agreement, the places at which inventory is located as shown herein, the location of its chief
executive office and the location of the office where it keeps its records as set forth herein. All
Collateral will be located at the place(s) of business shown at the beginning of this agreement
as modified by any written notice(s) given pursuant hereto.
3. Use of Inventory: Unless and until the privilege of Debtor to use inventory in
the ordinary course-of Debtor's business is revoked by Secured Party in the event of default or
if Secured Party deems itself insecure, Debtor may use the inventory in any manner not
inconsistent with this Agreement, may sell that part of the Collateral consisting of inventory
provided that all such sales are in the ordinary course of business, and may use and consume
any raw materials or supplies that are necessary in order to carry on Debtor's business. A sale
in the ordinary course of business does not include a transfer in partial or total satisfaction of a
debt.
4. Accounts as Proceeds: All accounts that are proceeds of the inventory included
within the Collateral shall be subject to all of the terms and provisians hereof pertaining to
accounts.
5. Protection of Inventory: Debtor shall take all action necessary to protect and
preserve the inventory.
H. ADDITIONAL PROVISIONS REGARDING SECURITIES AND SIMILAR
COLLATERAL. The following provisions shall apply to all securities and similar property
included within the Collateral:
1. Additional Warranties: As to each and all securities and similar property
included within the Collateral (including securities hereafter acquired that are part of the
N618354 - Ex. "B" Page 9
Collateral), Debtor further represents and warrants (as of the time of delivery of same to
Secured Party) as follows: (a) such securities are genuine, validly issued and outstanding, fully
paid and non-assessable, and are not issued in violation of the preemptive rights of any person
or of any agreement by which the issuer or obligor thereof or Debtor is bound; (b) such
securities are not subject to any interest, option or right of any third person; (c) such securities
are in compliance with applicable law concerning form, content and manner of preparation and
execution; and (d) Debtor acquired and holds the securities in compliance with all applicable
laws and regulations.
2. Dividends and Proceeds: Any and alI payments, dividends, other distributions
(including stock redemption proceeds), or other securities in respect of or in exchange for the
Collateral, whether by way of dividends, stock dividends, recapitalizations, mergers,
consolidations, stock splits, combinations or exchanges of shares or otherwise, received by
Debtor shall be held by Debtor in trust for Secured Parry and Debtor shall immediately deliver
same to Secured Party to be held as part of the Collateral. Debtor may retain ordinary cash
dividends unless and until Secured Party requests that same be paid and delivered to Secured
Parry (which Secured Party may request either before or after default).
3. Collections: Secured Party shall have the right at any time and from time to time
{whether before or after default) to notify and direct the issuer or obligor to make all
payments, dividends and distributions regarding the Collateral directly to Secured Party.
Secured Party shall have the authority to demand of the issuer or obligor, and to receive and
receipt for, any and all payments, dividends and other distributions payable in respect thereof,
regardless Of the medium in which paid and whether they are ordinary or extraordinary. Each
issuer and obligor making payment to Secured Parry hereunder shall be fully protected in
relying on the written statement of Secured Party that it then holds a security interest which
entitles it to receive such payment, and the receipt by Secured Parry for such payment shall be
full acquittance therefor to the one making such payment.
4. Voting Rights: Upon default, or if Secured Party deems itself insecure, Secured
Party shall have the right, at its discretion, to transfer to or register in the name of Secured
Party or any nominee of Secured Party any of the Collateral and/or to exercise any or all
votvng rights as to any or all of the Collateral. For such purposes, Debtor hereby names,
constitutes and appoints the President or any Vice President of Secured Party as Debtor's
proxy in the Debtor's name, place and stead to vote any and all of the securities, as such proxy
may elect, for and in the name, place and stead of Debtor, as to all matters coming before
shareholders, such proxy to be irrevocable and deemed coupled with an interest. The rights,
powers and authority of said proxy shall remain in full force and effect, and shall not be
rescinded, revoked, terminated, amended or otherwise modified, until all Obligations have
been fully satisfied.
5. No Duty: Secured Parry shall never be liable for its failure to give notice to
Debtor of default in the payment of or. upon the Collateral: Secured Parry shall have no duty
to fix or preserve rights against prior parties to the Collateral and shall never be liable for its
failure to use diligence to collect any amount payable in respect to the Collateral, but shall be
#619354 - Ex. "B" Page 10
liable only to account to Debtor for what it may actually collect or receive thereon. Without
limiting the foregoing, it is specifically understood and agreed that Secured Party shall have no
responsibility for ascertaining any maturities, calls, conversions, exchanges, offers, tenders, or
similar matters relating to any of the Collateral or for informing Debtor with respect to any of
such matters (irrespective of whether Secured Party actually has, or may be deemed to have,
knowledge thereof). The foregoing provisions of this paragraph shall he fully applicable to all
securities or similar property held in pledge hereunder, irrespective of whether Secured Parry
may have exercised any right to have such securities or similar property registered in its name
or in the name of a nominee.
6. Purther Assurances: Debtor agrees to execute such stock powers, endorse such
instruments, or execute such additional pledge agreements or other documents as may be
required by the Secured Party in order effectively to grant to Secured Pariy the security interest
in (and pledge and assignment of) the Collateral and to enforce and exercise Secured Parry's
rights regarding same.
7. Securities Laws: Debtor hereby agrees to cooperate fully with Secured Party in
order to permit Secured Party to sell, at foreclosure or other private sale, the Collateral
pledged hereunder. Specifically, Debtor agrees to fully comply with the securities laws of the
United States and of the State of Texas and to take such action as may be necessary to permit
Secured Party to sell or otherwise transfer the securities pledged hereunder in compliance with
such laws. Without limiting the foregoing, Debtor, at its own expense, upon request by
Secured Party, agrees to effect and obtain such registrations, filings, statements, rulings,
consents and other matters as Secured Parry may request.
8. Power of Attorney: Debtor hereby makes, constitutes, and appoints Secured
Party or its nominee, its true and lawful attorney in fact and in its name, place and stead, and
on its behalf, and for its use and benefit to complete, execute and file `with the United States
Securities and Exchange Commission one or more notices of proposed sale of securities
pursuant to Rule 144 under the Securities Act of 1933 and/or any similar filings or notices with
any applicable state agencies, and said attorney in fact shall have full power and authority to
do, take and perform all and every act and thing whatsoever requisite, proper or necessary to
be done, in the exercise of the rights and powers herein granted, as fully to all intents and
purposes as Debtor might or could do if personally present. This power shall be irrevocable
and deemed coupled with an interest. The rights, powers and authority of said attorney in fact
herein granted shall commence and be in full force and effect from the date of this agreement,
and such rights, powers and authority shall remain in full force and effect, and this power of
attorney shall not be rescinded, revoked, terminated, amended or otherwise modified, until all
Obligations have been fully satisfied.
9. Private Sales: Because of the Securities Act of 1933, as amended, or any other
laws or regulations, there may be legal restrictions or limitations affecting Secured Party in any
attempts to dispose of certain portions of the Collateral in the enforcement of its rights and
remedies hereunder. For these reasons Secured Parry is hereby authorized by Debtor, but not
obligated, in the event any default hereunder, to sell all or any part of the Collateral at private
k618354 - Ex. "B" Page 11
sale, subject to investment letter or in any other manner which will not require the Collateral,
or any part thereof, to be registered in accordance with the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder,-or any other Iaw or regulation.
Secured Party is also hereby authorized by Debtor, but not obligated, to take such actions, give
such notices, obtain such rulings and consents, and do such other things as Secured Party may
deem appropriate in the event of a sale or disposition of any of the Collateral. Debtor clearly
understands that Secured Party may in its discretion approach a restricted number of potential
purchasers and that a sale under such circumstances may yield a lower price for the Collateral
or any part or parts thereof than would otherwise be obtainable if same were registered and
sold in the open market, and Debtor agrees that such private sales shall constitute a
commercially reasonable method of disposing of the Collateral.
I. ADDITIONAL PROVISIONS REGARDING CERTIFICATES OF DEPOSIT
AND SIMILAR COLLATERAL. The following provisions shall apply to certificates of
deposit and similar property included within the Collateral:
1. Collection of Deposits: Debtor agrees that Secured Party may, at any time
(whether before or after default) and in its sole discretion, surrender for payment and obtain
payment of any portion of the Collateral, whether such have matured or the exercise of
Secured Parry's rights results in loss of interest or principal or other penalty on such deposits,
and, in connection therewith, cause payment to be made directly to Secured Party.
2. Notice to Third Parry Issuer: With regard to any certificates of deposit or
similar Collateral for which Secured Party is not the issuer, Debtor agrees to notify the issuer
or obligor of the interests hereby granted to Secured Party and to obtain from such issuer or
obligor acknowledgement of the interests in favor of Secured Party and the issuer's or
obligor's agreement to waive in favor of Secured Party any and all rights of set-off or similar
rights or remedies to which such issuer or obligor may be entitled, and, in connection
therewith, to execute and cause the issuer or obligor to execute, any and a1I acknowledgments,
waivers and other agreements in such form and upon such terms as Secured Party may request.
3. Proceeds: Any and all replacement or renewal certificates, instruments, or other
benefits or proceeds related to the Collateral that are received by Debtor shall be held by
Debtor in trust for Secured Party and immediately delivered to Secured Party to be held as part
of the Collateral.
4. No Duty: Secured Parry shall never be liable for its failure to give notice to
Debtor of default in the payment of or upon the Collateral. Secured Party shall have no duty to
fix or preserve rights against prior parties to the Collateral and shall never be liable for its
failure to use diligence to collect any amount payable in respect to the Collateral, but shall be
liable only to account to Debtor for what it may actually collect or receive thereon. Without
limiting the foregoing, it s specifically understood and agreed that Secured Party shall have no
responsibility for ascertaining any maturities or similar matters relating to any of the Collateral
or for informing Debtor with respect to any of such matters (irrespective of whether Secured
Party actually has, or may be deemed, to have, laxowledge thereof}.
A678354 - Ex. "8" Page 12
J. EVENTS OF DEFAULT. Debtor shall be in default hereunder upon the
happening of any of the following events or conditions: (i) non-payment when due (whether by
acceleration of maturity or otherwise) of any payment of principal, interest or other amount
due on any Obligation; {ii) the occurrence of any event which under the terms of any evidence
of indebtedness, indenture, loan agreement, security agreement or, similar instrument permits
the acceleration of maturity of any obligation of Debtor (whether to Secured Party or to
others); (iii) any representation or warranty made by Debtor to Secured Party in connection
with this Agreement, the Collateral or the Obligations, or in any statements or certificates,
proves incorrect in any material respect as of the date of the making or the issuance thereof;
(iv) default occurs in the observance or performance of, or if Debtor fails to furnish adequate
evidence of performance of, any provision of this Agreement or of any note, assignment,
transfer, other agreement, document or instrument delivered by Debtor to Secured Party in
connection with this Agreement, the Collateral or the Obligations; (v) death, dissolution,
liquidation, termination of existence, insolvency, business failure or winding-up of Debtor or
any maker, endorser, guazantor, surety or other party liable i.n any capacity for any of the
Obligations; (vi) the commission of an act of bankruptcy by, or the application for appointment
of a receiver or any other legal custodian for any part of the property of, assignment for the
benefit of creditors by, or the commencement of any proceedings under any bankruptcy,
arrangement, reorganization, insolvency or similar laws for the relief of debtors by ar against,
the Debtor or any maker, endorser, guarantor, surety or other party primarily or secondarily
liable for any of the Obligations: (vii) the Collateral becomes, in the judgment of Secured
Party, impaired, unsatisfactory or insufficient in chazacter or value; or (viii) the filing of any
levy, attachment, execution, garnishment ar other process against the Debtor or any of the
Collateral or any maker, endorser, guarantor, surety or other parry liable in any capacity for
any of the Obligations.
K. REMEDIES: Upon the occurrence of an event of default, or if Secured Party
deems payment of the Obligations to be insecure, Secured Party, at its option, shall be entitled
to exercise any one or more of the following remedies (all of which are cumulative):
1. Declare Obligations Due: Secured Party, at its option, may declare the
Obligations or any part thereof immediately due and payable, without demand, notice of
intention to accelerate, notice of acceleration, :notice of non-payment, presentment, protest,
notice of dishonor, or any other notice whatsoever, all of which are hereby waived by Debtor
and any maker, endorser, guarantor, surety or other party liable in any capacity for any of the
Obligations.
2. Remedies: Secured Parry shall have all of the rights and remedies provided for
in this Agreement and in any other agreements executed by Debtor, the rights and remedies Of
the Uniform Commercial Code of Texas, and any and all of the rights and remedies at law and
in equity, all of which shall be deemed cumulative. Without limiting the foregoing, Debtor
agrees that Secured Party shall have the right to: (a) require Debtor to assemble the Collateral
and make it available to Secured Party at a place designated by Secured Party that is
reasonably convenient to both parties, which Debtor agrees to do; (b) peaceably take
1!618354 - Fs. "B" Page 13
possession of the Collateral and remove same, with or without judicial process; (c) without
removal, render equipment included within the Collateral unusable, and dispose of the
Collateral on the Debtor's premises; (d) sell, lease or otherwise dispose of the Collateral, at
one or more locations, by public or private proceedings for cash or credit, without assumption
of credit risk; and/or (e) whether before or after default, collect and receipt for, compound,
compromise, and settle, and give releases, discharges and acquittances with respect to, any and
all amounts owed by any person or entity with respect to the Collateral. Unless the Collateral
is perishable or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Secured Party will send Debtor reasonable notice of the time and place of
any public sale or of the tune after which any private sale or other disposition will be made.
Any requirement of reasonable notice to Debtor shall be met if such notice is mailed, postage
prepaid, to Debtor at the address of Debtor designated at the beginning of this Agreement, at
least five (5) days before the day of any public sale or at least five (5) days before the time
after which any private sale or other disposition will be made.
3. Expenses: Debtor shall be liable for and agrees to pay the reasonable expenses
incurred by Secured Parry in enforcing its rights and remedies, in retaking, holding, testing,
repairing, improving, selling, leasing or disposing of the Collateral, or like expenses,
including, without limitation, attorneys' fees and legal expenses incurred by Secured Party.
These expenses, together with interest thereon from date incurred until paid by Debtor at the
maximum contract rate allowed under applicable laws, which Debtor agrees to pay, shall
constitute additional Obligations and shall be secured by and entitled to the benefits of this
Agreement.
4. Proceeds, Surplus, Deficiencies: Proceeds received by Secured Party from
disposition of the Collateral shall be applied toward Secured Party's expenses and other
Obligations in such order or manner as Secured Party may elect. Debtor shall be entitled to any
surplus if one results after lawful application of the proceeds. Debtor shall remain liable for
any deficiency.
5. Remedies Cumulative: The rights and remedies of Secured Party are cumulative
and the exercise of any one or more of the rights or remedies shall not be deemed an election
of rights or remedies or a waiver of any other right or remedy. Secured Parry may remedy any
default and may waive any default without waiving the default remedied or without waiving
any other prior or subsequent default.
L. OTHER AGREEMENTS .
1. Savings Clause: Notwithstanding any provision to the contrary herein, or in any
of the documents evidencing the Obligations or otherwise relating thereto, no such provision
shall require the payment or permit the collection of interest in excess of the maximum
permitted by applicable usury laws. If any such excessive interest is so provided for, then in
such event (i) the provisions of this paragraph shall govern and control; (ii} neither the Debtor
nor his heirs, legal representatives, successors or assigns or any other party liable for the
payment thereof, shall be obligated to pay the amount of such interest to the extent that is in
g6i$354 - Ex. "B' Page 14
excess of the maximum amount permitted by law; (iii) any such excess interest that may have
been collected shall be, at the option of the holder of the instrument evidencing the
Obligations, either applied as a credit against the then unpaid principal amount thereof or
refunded to the maker thereof; and (iv) the effective rate of interest shall be automatically
reduced to the maximum lawful rate under applicable usury laws as now or hereafter construed
by the courts having jurisdiction.
2. Joint and Several Responsibility: If this Security Agreement is executed by more
than one Debtor, the obligations of all such Debtors shall be joint and several.
3. Waivers: Debtor and any maker, endorser, guarantor, surety or other party
liable in any capacity respecting the Obligations hereby waive demand, notice of intention to
accelerate, notice of acceleration, notice of non-payment, presentment, protest, notice of
dishonor and any other similar notice whatsoever„
4. Severabiliry: Any provision hereof found to be invalid by courts having
jurisdiction shall be invalid only with respect to such provision (and then only to the extent
necessary to avoid such invalidity). The offending provision shall be modified to the maximum
extent possible to confer upon Secured Party the benefits intended thereby. Such provision as
modified and the remaining provisions hereof shall be construed and enforced to the same
effect as if such
offending provision (or portion thereof] had not been contained herein, to the maximum extent
possible.
5. Use of Copies: Any carbon, photographic or other reproduction of any financing
statement signed by Debtor is sufficient as a financing statement for all purposes, including
without limitation, filing in any state as may be permitted by the provisions of the Uniform
Commercial Code of such state.
6. Relationship to Other Agreements: This Security Agreement and the security
interests (and pledges and assignments as applicable) herein granted are in addition to (and not
in substitution, novation or discharge of) any and all prior or contemporaneous security
agreements, security interests, pledges, assignments, liens, rights, titles or other interests in
favor of Secured Party or assigned to Secured Party by others in connection with the
Obligations. All lights and remedies of Secured Party in all such agreements are cumulative,
but in the event of actual conflict in terms and conditions, the terms and conditions of the latest
security agreement shall govern and control.
7. Notices: Any notice or demand given by Secured Party to Debtor in connection
with this Agreement, the Collateral or the Obligations, shall be deemed given and effective
upon deposit in the Uzuted States mail, postage prepaid, addressed to Debtor at the address of
Debtor designated at the beginning of this Agreement. Actual notice to Debtor shall always be
effective no matter how given or received.
8618354 - Fx. "B" Page 15
8. Headings and Gender: Paragraph headings in this Agreement are for
convenience only and shall be given no meaning or significance in interpreting this Agreement.
All words used herein shall be construed to be of such gender or number as the circumstances
require.
9. Amendments: Neither this Agreement nor any of its provisions may be changed,
amended, modified, waived or discharged orally, but only by an instrument in writing signed
by the parry against whom enforcement of the change, amendment, modification, waiver or
discharge is sought.
10. Continuing Agreement: The security interest (and pledges and assignments as
applicable) hereby granted and all of the terms and provisions in this Agreement shall be
deemed a continuing agreement and shall continue in full force and effect until terminated in
writing. Any such revocation or termination shall only be effective if explicitly confirmed in a
signed writing issued by Secured Party to such effect and shall in no way impair or affect any
transactions entered into or rights created or Obligations incurred or arising prior to such
revocation or termination, as to which this Agreement shall be fully operative until same are
repaid and discharged in full. Unless otherwise required by applicable la Secured Party shall be
under no obligation to issue a termination statement or similar documents unless Debtor
requests same in writing and, provided further, that all Obligations have been repaid and
discharged in full and there are no commitments to make advances, incur any Obligations or
otherwise give value.
11. Binding Effect: The provisions of this Security Agreement shall be binding upon
the heirs, personal representatives, successors and assigns of Debtor and the rights, powers and
remedies of Secured Party hereunder shall inure to the benefit of the successors and assigns of
Secured Party.
12. Governing Law: This Security Agreement shall be governed by the law of the
State of Texas and applicable federal law.
EXECUTED this day of , 2008.
TEAM FABRICATORS, L.L.C.
SIGNED AND AGREED TO on the _ day of , 2008.
TEAM FABRICATORS, L.L.C.,
Wisconsin limited liability corporation and
a wholly owned subsidiary of Team
Industries, Inc., a Wisconsin corporation
By:
A618354 - Fc. "B" Page 16
Title
Acl~owledgment
8618354 - Pic. "$" Page 17
EXHIBIT "C"
UCC-1
To be Provided.
EXHIBIT "D"
EQUIPMENT LIST
See Attached.
EXHIBIT "E"
CERTIFICATION REGARDING LOBBYING
For Contracts, Grants, Loans, and Cooperative Agreements
The undersigned certifies, to the best of his knowledge and belief, that:
No funds have been paid or will be paid, by or on behalf of the undersigned, to
any person for influencing or attempting to influence an officer or employee of
any agency, a member of the City or of the PAEDC in connection with the
awarding of any contract, the making of any grant, the making of any Loan, the
entering into of any cooperative agreement, or modification of any contract,
grant, loan, or cooperative agreement.
2 The undersigned shall require that the language of this certification be included
in the award documents for all sub-awards at all tiers (including subcontracts,
sub-grants, and contracts under grants, loans, and cooperative agreements), and
that all Subs shall certify and disclose accordingly.
This certification is material representation of fact which reliance was placed when this
transaction was made or entered into. Submission of this certification is a prerequisite for
making or entering into this transaction.
TEAM FABRICATORS, L.L.C.
SIGNED AND AGREED TO on the _ day of , 2008.
TEAM FABRICATORS, L.L.C.,
Wisconsin limited liability corporation and
a wholly owned subsidiary of Team
Industries, Inc., a Wisconsin corporation
By:
Title
Acknowledgment
EXHIBIT "F"
TEAM INDUSTRIES, INC. GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of 2008 (the
"Guaranty"), is made between the City of Port Arthur ectron Economic Development
Corporation (the "PAEDC"}, a corporation validly existing under its Charter and the constitution
and laws of the State of Texas, and Team Industries, Inc. (the "Guarantor"), a business
corporation duly organized and validly existing under the laws of the State of Wisconsin.
Capitalized terms used in this Guaranty and not defined otherwise are used herein as defined in
the Economic Incentive Contract and Loan Agreement, dated 2008 (the
"Agreement"), between the PAEDC, as grantor, and Team Fabricators, ., a Wisconsin
limited liability corporation as grantee {the "Grantee"}. Those defuritions are incorporated in this
Guaranty by reference.
WITNESSETH THAT: WHEREAS,
A. Upon the terms and conditions set forth in the Agreement, the PAEDC is
willing to convey certain real property to the Grantee and make certain financial grants to the
Grantee to enable the Grantee to improve and construct the Project, and the Grantee is willing to
agree to provide certain employment and economic opportunities to the residents of Port Arthur,
Texas.
B. Irr order to enhance the security of the PAEDC that the benefits under the
Agreement will inure to the benefit of the residents of Port Arthur, Texas, the Guarantor is
willing, in this Guaranty, to guaranty the obligations of the Grantee under the Agreement.
C. The PAEDC and the Guarantor each have full right and lawful authority to
enter into this Guaranty and to perform and observe the provisions hereof on their respective parts
to be performed and observed.
NOW, THEREFORE, in consideration of the premises and representations and
agreements hereinafter contained and subject to the terms hereof, and for other good and valuable
consideration, the receipt of which is acknowledged hereby, the Guarantor agrees with the
PAEDC as follows:
ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR
Section 1.1. The Guarantor represents and warrants as follows:
(a) The Guarantor has full corporate power under applicable law and its
articles of incorporation, code of regulations and bylaws, each as amended to date, to
enter into, observe and perform all covenants, agreements and obligations on its part
hereunder.
(b) The Guarantor has authorized the signing and delivery of this Guaranty by
ail necessary and proper corporate action.
(c) The signing, delivery, observance and performance by the Guarantor of
this Guaranty and the Guarantor's covenants, agreements and obligations hereunder
do not, and will not, (i) violate any Iaw now existing, (ii) contravene or constitute a
4618354 - En. "F" Page 2
default under any agreement, indenture, trust agreement or understanding to which
the Guarantor is a parry or by which it or its property may be bound, or (iii)
contravene any provision of the Guarantor's articles of incorporation, code of
regulations or bylaws, each as amended to date.
(d) This Guaranty (i) is made in furtherance of the purposes for which the
Guarantor was incorporated, (ii) is necessary to promote and further the business of
the Guarantor and is, in the estimation of the Guarantor, desirable to promote the best
interests and further the mission of the Guarantor, and (iii) will result in direct
financial benefits to the Guarantor.
ARTICLE II.
COVENANTS AND GUARANTEES
Section 2.1. The Guarantor, jointly and severally with any other guarantor to the
PAEDC of the obligations of the Grantee herein guaranteed, hereby absolutely and
unconditionally guarantees to the PAEDC at any time:
(a) the full and prompt performance of all covenants, agreements and
obligations of the Grantee under the Agreement, and
(b) the payment of alI principal, interest and other sums due, whether by
acceleration or otherwise, together with all late charges, disbursements, expenses, and
deficiencies pursuant to that certain Commercial Promissory Note made by the
Grantee to the PAEDC as of even date herewith {collectively the "Guaranteed Debt")
together with the performance of Grantee's obligations under any documents or
instruments executed in connection with or given to secure the Guaranteed Debt, and
(c} the full and prompt payment of all expenses and charges, including
without limitation, to the extent permitted by law, reasonable attorneys' fees and
expenses, paid or incurred by the PAEDC acting as Grantor under the Agreement and
in realizing any of the payments guaranteed hereby or in enforcing this Guaranty.
The Guarantor will pay all payments in lawful money of the United States of America. Each
default in payment of any amount payable hereunder shall give rise to a separate cause of action
hereunder, and separate suits may be brought hereunder as each cause of action arises.
Section 2.2. The Guarantor's covenants, agreements and obligations under this
Guaranty are absolute and unconditional, are a present, and shall be a continuing, guaranty of
performance and payment and not collectibiliry, and shall remain in full force and effect until all
covenants, agreements and obligations of the Grantee under the Agreement have been performed
or met, and aU other amounts payable hereunder shall have been paid or provision shall have been
made therefor to the satisfaction of the PAEDC, :regardless of the legality, validity, regularity or
enforceability of the Agreement or any other document.
The obligations of the Guarantor described in the preceding paragraph shall not be
amended, modified or impaired upon the happening of any event, including without limitation,
any of the following, regardless of whether there is notice to or consent of the Guarantor with
respect thereto:
(a) the compromise, settlement, release or termination of any or all of the
covenants, agreements or obligations of the PAEDC under the Agreement;
IM618354 - Ex. "F" Page 3
(b) the failure to give notice to the Guarantor of the occurrence of a default
under this Guarany or an Event of Default under the Agreement, except as provided
specifically in this Guaranty;
(c) the waiver of the payment, observance or performance by the PAEDC or
the Guarantor of any of their covenants, agreements or obligations under this
Guaranty or the Agreement;
(d) the extension of the time for observance or performance of any covenant,
agreement or obligation under this Guaranty or the Agreement, or the extension or the
renewal of any extension;
(e) the modification or amendment of any covenant, agreement or obligation
under the Agreement;
(fj the taking or the omission of any action under this Guaranty or the
Agreement;
(g) any failure, omission or cielay on the part of the PAEDC to enforce,
assert or exercise any right, power or remedy conferred on the PAEDC under this
Guaranty or the Agreement, or any act or omission on the part of the PAEDC at any
time;
(h) the dissolution or liquidation of the Guarantor or any failure by the
Guarantor to vacate promptly any execution, garnishment or attachment of such
consequence that it will impair the Guarantor's ability to observe and perform its
covenants, agreements and obligations under any agreement, contract or other
instrument or document to which it is a party or by which it or its property is or may
be bound; providers that the term '"dissolution or liquidation," as used in this
subsection, shall not be construed to include the cessation of the corporate existence
of the Guarantor resulting either from a merger or consolidation of the Guarantor into
or with another Person, or from a dissolution or liquidation of the Guarantor
following a transfer of all or substantially all of its assets as an entirety;
(i) the occurrence of any of the following:
(i) the admission by the Guarantor in writing of its inability to pay its
debts generally as they become due,
(ii) the entering of an order for relief in any case commenced by or
against the Guarantor (except cases commenced by the Guarantor
against third parties) under federal bankruptcy law, as in effect
from time to time,
(iii) a general assignment by the Guarantor for the benefit of creditors,
or
(iv) the appointment of a receiver for the Guarantor or for the whole or
any substantial part of its property;
(j) to the extent permitted by law, the release or discharge by operation of
law of the Guarantor from the observance or performance of any covenant, agreement
or obligation under this Guaranty or any other agreement, contract or other
#618354 - Ex. "P" Page 4
instrument or document to which it is a party or by which it or its property is or may
be bound;
(k) the default or failure of the. Guarantor to observe or perform fully any of
its covenants, agreements or obligations under this Guaranty or any other agreement,
contract or other instrument or document to which it is a party or by which it or its
property is or may be bound;
(1) the default of the PAEDC under the Agreement; or
(m) to the extent permitted by law, the invalidity of the Agreement, this
Guaranty, any agreement, contract or other instrument or document to which the
Guarantor is a party or by which it or its property is or may be bound.
Section 2.3. No setoff, counterclaim, reduction, or diminution of any covenant,
agreement or obligation, or any defense of airy land, which the Guarantor has or may have
against the PAEDC or the Grantee, shall be available hereunder to the Guarantor against the
PAEDC; provided, however, that the Guarantor shall be entitled to assert in a timely manner in a
separate action against the PAEDC or the Grantee:, as the case may be, any rights that could not
be asserted, by virtue of this Section 2.3, by the Guarantor as a setoff, counterclaim, reduction,
diminution or defense in the action on this Guaranty. The Guarantor shall not exercise any right
of subrogation under this Guaranty until its obligations hereunder have been discharged in fall,
and such obligations shall not be discharged by virtue of any impairment of such rights of
subrogation.
Section 2.4. If there is a default lby the Grantee under the Agreement or the
Commercial Promissory Note made by the Grantee thereunder, the PAEDC shall proceed first
against the Grantee, but is not required to exhaust its remedies against the Grantee and its security
or other rights in the collateral of the Grantee, prior to resorting to any remedy of the PAEDC as
to the Guarantor; however, Guarantor will pay alI reasonable costs, expenses and fees (including
without 1unitation, to the extent permitted by law, all court costs, attorneys' fees, expenses,
prejudgment interest and post judgment interest) that the PAEDC incurs in the process of
exercising its remedies against Grantee, to comply with this section. If Guarantor finds that
further action against Grantee is futile, Guarantor may request in writing that PAEDC halt
executing remedies against Grantee, after which PAEDC may proceed with remedies against
Guarantor.
Section 2.5. The Guarantor covenants and agrees to pay all reasonable costs,
expenses and fees {including without limitation, to the extent permitted by law, all court costs and
attorneys' fees) that may be incurred by the PAEDC in enforcing or attempting to enforce this
Guaranty, whether by suit or otherwise, following any default on the part of the Guarantor under
this Guaranty.
Section 2.6. The Guarantor covenants and agrees that, so long as the Agreement is
in effect, the Guarantor will preserve and will keep in full force and effect its corporate existence.
Section 2.7. (a) The failure oil the Guarantor to abide by or to observe or
perform any covenant, agreement or obligation hereunder, or any inaccuracy in any
material adverse respect of, or any material adverse omission from, any
representation or warranty herein, shall constitute a default hereunder.
(b) The occurrence of any of the following shall also constitute a default
hereunder:
X618354 - Fx. "F" Page 5
(i) the admission by the Guarantor in writing of its inability to pay its
debts generally as they become due;
{ii) the entering of an order for relief in any case commenced by or
against the Guarantor (except any case commenced by the
Guarantor against a third party) under federal bankruptcy law, as in
effect from time to time;
(iii) a general assignment by the Guarantor for the benefit of creditors;
(iv) the appointment of a receiver for the Guarantor or for the whole or
any substantial part of its property; or
(v) the dissolution or liquidation of the Guarantor or the failure by the
Guarantor to vacate within 90 days any execution, ganushment or
attachment of such a consequence. that it will impair the Guarantor's
ability to carry out its covenants, agreements and obligations
hereunder. The ternz "dissolution or liquidation of the Guarantor,"
as used in this clause., shall not be construed to include the cessation
of the corporate existence of the Guarantor resulting either from a
merger or consolidation of the Guarantor into or with another
Person, or from a dissolution or liquidation of the Guarantor
following a transfer of all or substantially all of its assets as an
entirety, in accordance with the Agreement.
The declaration of a default hereunder and the exercise of remedies upon the
declaration shall be subject to any applicable limitations of federal bankruptcy law
affecting or precluding the declaration or exercise during the pendency of or
immediately following any bankruptcy, liquidation or reorganization proceedings.
{c) If the default hereunder shall consist of the breach of any of the covenants,
agreements or obligations of the Guarantor under Section 2.1, or if any default shall
occur under Section 2.7(b), upon written demand by the PAEDC, the Guarantor shall
(i} cause any such covenant, agreement or obligation to be performed or met and (ii)
pay forthwith, or make provision for payment, to the PAEDC without further demand
or notice and regardless of whether there has been any other default or event of default
under the Agreement, the amount due and payable under the Agreement and the
Guaranty.
In the event that the Guarantor shall be required to make payment to the PAEDC as
described in the preceding paragraph, in addition to that payment, the Guarantor shall
(i) cause any such covenant, agreement or obligation to be performed or met and (ii)
pay to the PAEDC any further amount that is necessary to cover (i) the reasonable
costs and expenses of collection, including reasonable compensation to the PAEDC,
its agents and, to the extent permitted by law, the PAEDC's attorneys and counsel,
and (ii) any reasonable expenses or liabilities incurred by the PAIDC hereunder.
(d) In the case of a default hereunder, other than under Secrions 2.1 and
2.7(b), the PAEDC upon obtaining Irnowledge of such default shall promptly give the
Guarantor written notice of the default at the Guarantor's Notice Address, by
registered or certified mail, postage prepaid, return receipt requested, and if the
default continues unremedied for 30 days following the giving of the notice, the
PAEDC shall have the rights, remedies and powers, and the Guarantor shall make the
payments, described in Section 2.7(c;l; provided, however, that if the default (other
/tb18354 - Ex. "F" Page 6
than a default under Sections 2.1 or 2.7(b)) can be remedied but not within that
period, that failure shall not constitute: a default, so long as the Guarantor is taking
appropriate corrective action as permitted under the Agreement.
Section 2.8. Rights, remedies and powers under this Guaranty may be exercised,
either separately or cumulatively, in the event of orie or more defaults under this Guaranty.
ARTICLE III.
NOTICE AND SERVICE OF PROCESS, PLEADINGS AND OTHER PAPERS
Section 3.1. The Guarantor covenants and agrees that it is subject to service of
process in the State of Texas, and that it will remain so subject to that service of process so long
as the Agreement remains in full force and effect or arty obligations of the Grantee remain
outstanding thereunder. If the Guarantor should not be subject to that service of process for any
reason, it designates and appoints as the Guarantor"s agent, without power of revocation,
(a) the ,
,Texas 7 , an s successors, or
(b) if that agent shall cease to act, the Secretary of State of the State of
upon whom shall be served all process, pleadings, notices or other papers that may be served
upon the Guarantor as a result of any of its covenants, agreemerns and obligations under this
Guaranty.
Section 3.2. Any process, pleadings, notices or other papers served upon airy agent
appointed in the preceding Section shall be sent ai: the same time by registered or certified mail,
postage prepaid, to the Guarantor's Notice Address and to any other addresses that may be
furnished by the Guarantor to the PAEDC in writuig from time to time.
ARTICLE IV.
MISCELLANEOUS
Section 4.1. The covenants, agreements and obligations of the Guarantor hereunder
shall arise absolutely and unconditionally when the Agreement becomes effective.
Section 4.2. No remedy, right or power conferred herein upon or reserved
hereunder to the PAEDC is intended to be exclusive of any other available remedy, right or
power, but each remedy, right and power shall be cumulative and shall be in addition to every
other remedy, right and power under the Agreement or any other document entered into in
connection with the Agreement or existing at Iaw,, in equity or by statute or otherwise from time
to time.
No delay in exercising, or omission to exercise, any remedy, right or power upon any
default, omission or failure of observance or performance hereunder shall impair any remedy,
right or power or shall be construed to be a waiver thereof, but any remedy, right and power may
be exercised whenever and as often as may be deemed expedient.
To entitle the PAEDC to exercise any remedy, right or power reserved to it under
this Guaranty, it shall not be necessary for the PAEDC to give any notice, other than any notice
that may be expressly required herein.
!/618354 - Ex. "F" Page 7
In the event any provision contained in this Guaranty shall be breached by any party
and the breach shall be duly waived thereafter by the other party so empowered to act, the waiver
shall be limited to the particular breach so waived and shall not be deemed to waive any other
breach hereunder. No waiver, amendment, modification or release of this Guaranty shall be
established by conduct, custom or course of dealing, but any amendment, modification or release
shall be made solely by an instrument or document in writing duly signed by the parties hereto
who have been duly authorized by this Guaranty so to amend this Guaranty.
Section 4.3. This Guaranty may be amended and supplemented, to the same extent
and upon the same condttions that the Agreement may be amended and supplemented, by a
written agreement signed by the parties hereto. The purposes for which an amendment of or
supplement to this Guaranty may be made pursuant to this Section include, without limitation, the
addition of, or substitution for the Guarantor as guarantor hereunder of, any Person that succeeds
to or assumes, as the case may be, the Guarantor's covenants, agreements and obligations
hereunder.
Section 4.4. This Guaranty shall inure to the benefit of the PAIDC and its
respective successors and assigns and is binding upon the PAEDC and the Guarantor and their
respective successors and assigns.
Section 4.5. This Guaranty constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, between the Guarantor and the
PAEDC with respect to the subject matter hereof. This Guaranty may be signed simultaneously
in several counterparts, each of which shall be deemed to constitute an original, but all of which
together shall constitute but one and the same instnunent. It shall not be necessary in proving this
Guaranty to produce or account for more than one of those counterparts.
Section 4.6. The invalidity or unenforceabiliry of any one or more phrases,
sentences, clauses or sections contained in this Guaranty shall not affect the validity or
enforceability of the remaining phrases, sentences, clauses and sections hereof.
Section 4.7. This Guaranty shall be governed by and construed in accordance with
the laws of the State of Texas.
Section 4. $. All representations and warranties herein shall survive the signing and
delivery hereof.
IN WITNESS WHEREOF, this Guaranty has been duly signed and delivered for and
in the name and on behalf of the Guarantor and the PAEDC by their duly authorized officers or
representatives, as of the date first above written.
CITE' OF PORT ARTHUR SECTION 4A
ECONOMIC DEVELOPMENT CORPORATION
By:_
President
By:_
Secretary
p618354 - Ex. "F" Page 8
TEAM INDUSTRIES INC.
SIGNED AND AGREED TO on the _ day of , 2008.
TEAM INDUSTRIES, INC.,
a Wisconsin Business Corporation
By:
Title
Acknowledgment
APPROVED AS TO FORM:
Guy N. Goodson, GERMER GERTZ, L.L.P.
8618354 - Ex. `F'• Page 9
STATE OF TEXAS §
COUNTY OF JEFFERSON §
On this day of _, 200, before me, a Notary Public in and
for said County and State, personally appeared ,President of the PAEDC, who
acknowledged that, with due authorization, he dial 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 here;unto 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 _, 200_, before me, a Notary Public in and
for said County and State, personally appeared ,Secretary of the PAEDC, 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 officex 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
COUNTY OF
On this day of _, 200 ,before me, a Notary Public in and
far said County and State, personally appeared _ of
,who acknowledged that, with due authorization, 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 affixed my
official seal on the day and year aforesaid.
Notary Public, State of
J16I8354 - Ex. "F.. Page 10
EXHIBIT "G"
COMPLIANCE STATEMENT
hereby certifies that it has fully
complied with Local Government Code § 176.006, effective June 18, 2005, which
mandates the disclosure requirements for persons who contract or seek to
contract with a local governmental entity.
TEAM FABRICATORS, L.L.C.
SIGNED AND AGREED TO on the _ day of , 2008.
TEAM FABRICATORS, L.L.C.,
Wisconsin limited liability corporation and
a wholly owned subsidiary of Team
Industries, Inc., a Wisconsin corporation
By:
Title
Acknowledgment