HomeMy WebLinkAboutPR 22143: EDC, CONTACT AND LOAN AGREEMENT WITH CLIFFORD DISTILLING LLC -r" )1),
PORT*ARTHURONOMIC DEVELOPMENT CORPORATION
INTEROFFICE MEMORANDUM
Date: September 21, 2021
To: The Honorable Mayor and City Council
Through: Ronald Burton, City Manager
From: Floyd Batiste, CEO Port Arthur EDC
RE: PR 22143 —An Economic Incentive Contract and Loan Agreement between the
City of Port Arthur Section 4A Economic Development Corporation and Clifford
Distilling LLC in an amount of$162,500.00
Introduction:
The intent of this Agenda Item is to seek City Council's approval of an Economic Incentive
Contract& Loan Agreement between the City of Port Arthur Section 4A Economic
Development Corporation and Clifford Distilling LLC in an amount of$162,500.00
Background:
Clifford Distilling LLC has presented a qualifying application to the PAEDC for an incentive
toward the business startup of a top shelf whiskey and rum distillery in Port Arthur. The PAEDC
has approved offering an incentive in the amount of$162,500.00 to be utilized for the building
renovation, purchase of equipment and inventory, and infrastructure for the project. In return,
Clifford Distilling has agreed to continue conducting its business operations in Port Arthur
during the term of the incentive contract and promises to employ Port Arthur residents creating a
minimum total payroll of$655,000 to Port Arthur residents through the term of the Incentive
Contract
Budget Impact:
$162,500.00
Recommendation:
It is recommended that the City Council of the City of Port Arthur approve an Economic
Incentive Contract& Loan Agreement between the City of Port Arthur Section 4A Economic
Development Corporation and Clifford Distilling, LLC
PR No. 22143
09/16/2021 KVM
RESOLUTION NO.
A RESOLUTION APPROVING AN ECONOMIC INCENTIVE
CONTRACT AND LOAN AGREEMENT BETWEEN THE CITY OF
PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT
CORPORATION AND CLIFFORD DISTILLING LLC IN AN AMOUNT
NOT TO EXCEED $162,500.00; FUNDING AVAILABLE IN PAEDC
ACCOUNT NO. 120-80-625-5478-00-00-000
WHEREAS,the Port Arthur City Council deems it is in the public interest to authorize the
City of Port Arthur Section 4A Economic Development Corporation ("PAEDC") to enter into an
Economic Incentive Contract and Loan Agreement (the "Agreement") with Clifford Distilling
LLC ("Clifford Distilling"); and
WHEREAS, Clifford Distilling has presented an application qualifying as a Section 4A
project as set forth in the Executive Summary of the Agreement attached hereto as Exhibit "A";
and
WHEREAS, Clifford Distilling is a Texas limited liability company locally owned and
will operate in Port Arthur as a top shelf whiskey and rum distillery; and
WHEREAS, PAEDC has reviewed Clifford Distilling's application and accompanying
financial statements; and
WHEREAS, at a special board meeting of September 13, 2021, the PAEDC Board of
Directors approved entering into an Economic Incentive and Loan Agreement with Clifford
Distilling offering an incentive not to exceed $162,500 to assist Clifford Distilling in its startup
business; and
WHEREAS, as a condition to the grant provided by PAEDC to Clifford Distilling,
PAEDC must secure a Letter of Credit and no PAEDC funds shall be distributed until the Letter
of Credit is secured and provided to PAEDC; and
WHEREAS,Clifford Distilling will utilize the incentive funds to go toward the renovation
costs for the facility, the purchase of equipment, infrastructure costs, and inventory ; and
WHEREAS, Clifford Distilling has agreed to continue conducting its business operations
in Port Arthur during the term of the incentive contract and promises to employ Port Arthur
residents creating a minimum total payroll of$655,000 to Port Arthur residents through the term
of the Incentive Contract as detailed in the Agreement attached hereto as Exhibit "A"; and
WHEREAS, Clifford Distilling has reviewed and approved the Agreement.
NOW THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF PORT ARTHUR, TEXAS:
Section 1. That the facts and opinions in the preamble are true and correct.
Section 2. That PAEDC is herein authorized to enter into the Agreement with Clifford
Distilling, and the President and Secretary of PAEDC are authorized to sign the Agreement in
substantially the same form attached hereto as Exhibit"A".
Section 3. That a copy of the caption of this Resolution be spread upon the Minutes of the
City Council.
READ, ADOPTED AND APPROVED on this day of A.D., 2021,
at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES:
Mayor
Councilmembers
•
NOES:
Thurman Bartie, Mayor
N1667870
Page 2
ATTEST:
Sherri Bellard, City Secretary
APPROVED:
Floyd Batis , PAE C EO
APPROVED AS TO FORM:
/ —
rank zip EDC Attorney
APPROVED AS TO FORM:
7?7,7(
Valecia R ize o,City tt rney
APPROVED AS TO AVAILABILIY OF FUNDS:
kG\_./...._ th n 0,_„,...„,...„._
Kandy Daniels, Iiterim Finance Director
#1667870 Page 3
EXHIBIT "A"
ECONOMIC INCENTIVE CONTRACT& LOAN AGREEMENT
BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC
DEVELOPMENT CORPORATION
CLIFFORD DISTILLING LLC
Executive Summary
Clifford Distilling, LLC ("Incentive Recipient") is a Texas Limited Liability Company
located in Port Arthur, Texas. Incentive Recipient is locally owned will operate a top shelf
whiskey and rum distillery. Incentive Recipient proposes to utilize incentive funds acquired
through the Port Arthur Section 4A Economic Development Corporation (the "PAEDC") to
assist in its start-up business. PAEDC shall assist Incentive Recipient in this business by
providing certain agreement with incentives which shall include a conditional grant/loan in
exchange for certain agreements by Incentive Recipient for creation of full-time permanent
employment at the Project and designated levels of payroll. Incentive Recipient will be provided
a credit against payroll paid to full-time employees who are residents of Port Arthur as outlined
in the Performance Milestone Schedule. Incentive Recipient has been advised that as a condition
of the Economic Incentive by PAEDC, Incentive Recipient must continue conducting its
business operations in Port Arthur during the term of the Incentive Contract. Incentive Recipient
has agreed to obtain a letter of credit from to securitize the loan provided by
PAEDC.
PAEDC has agreed as a consideration for the promise and performance of Incentive
Recipient to reimburse Incentive Recipient in accordance with the Agreement for the acquisition
by Incentive Recipient of the stated building renovation, equipment, infrastructure, and inventory
to be incorporated into the Project. PAEDC and Incentive Recipient have agreed that the
incentive credit shall be for an amount not to exceed $162,500.00, and Incentive Recipient shall
have the period outlined in the Performance Milestone Schedule attached to the Agreement to
meet its promised performance under the Agreement, and to provide all reports and other
affirmative commitments as outlined in the Agreement.
The Economic Incentive Contract & Loan Agreement (the "Agreement") shall be for a
period from its Effective Date through December 31, 2024.
Incentive Recipient has further agreed to execute the First Source Referral Agreement
and to utilize the services of the PAEDC on a non-exclusive basis to find qualified applicants for
employment at the Project.
ECONOMIC INCENTIVE CONTRACT& LOAN AGREEMENT
BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC
DEVELOPMENT CORPORATION
&
CLIFFORD DISTILLING, LLC
INTRODUCTION _
AGREEMENT TERM _
PARTIES _
PROMISED PERFORMANCE
(A) PERFORMANCE BY PAEDC
(B) PERFORMANCE BY INCENTIVE RECIPIENT
(C) CREDITS—SUBSTITUTE PERFORMANCE
(D) FIRST SOURCE REFERRAL AGREEMENT
—
PERFORMANCE MILESTONE SCHEDULE _
CONDITIONAL OBLIGATIONS AND LIMITED LIABILITY OF PAEDC _
LIQUIDATED DAMAGES FOR BREACH OF AGREEMENT _
RECORDS/INSPECTION/PAEDC AUDIT _
HOLD HARMLESS _
SUBCONTRACTS _
CONFLICT OF INTEREST/DISCLOSURE OBLIGATION _
NONDISCRIMINATION/EMPLOYMENT/REPORTING _
LEGAL AUTHORITY _
NOTICE OF LEGAL OR REGULATORY CLAIMS _
CHANGES AND AMENDMENTS _
DEFAULT/TERMINATION _
COMPLIANCE AUDITS _
SUPPLEMENTAL COVENANT _
ENVIRONMENTAL REQUIREMENTS _
ORAL AND WRITTEN AGREEMENTS/PRIOR AGREEMENTS —
VENUE _
ADDRESS OF NOTICE AND COMMUNICATIONS _
CAPTIONS _
COMPLIANCE WITH FEDERAL,STATE AND LOCAL LAWS _
CONDITIONS PRECEDENT —
ATTORNEY APPROVALS —
AGREEMENT EXECUTION —
Exhibit"A" Commercial Promissory Note for Conditional Grant
Exhibit"B" Equipment List
Exhibit"C" Letter of Credit
Exhibit"D" First Source Referral Agreement
Exhibit"E" Certification Regarding Lobbying
Exhibit"F" Compliance Statement
ECONOMIC INCENTIVE CONTRACT & LOAN AGREEMENT BETWEEN
THE CITY OF PORT ARTHUR SECTION 4A
ECONOMIC DEVELOPMENT CORPORATION
AND
CLIFFORD DISTILLING,LLC
("INCENTIVE RECIPIENT")
INTRODUCTION
Clifford Distilling, LLC ("Incentive Recipient") is a Texas Limited Liability Company
located in Port Arthur, Texas. Incentive Recipient is locally owned and operated and will
provide a top shelf whiskey and rum distillery services. Incentive Recipient proposes to utilize
incentive funds acquired through the Port Arthur Section 4A Economic Development
Corporation (the "PAEDC") to assist in its business startup. PAEDC shall assist Incentive
Recipient in this business startup by providing certain agreement with incentives which shall
include a conditional grant/loan in exchange for certain agreements by Incentive Recipient for
creation of additional full-time permanent employment at the Project and designated levels of
payroll. Incentive Recipient will be provided a credit against payroll paid to full-time employees
who are residents of Port Arthur as outlined in the Performance Milestone Schedule. Incentive
Recipient has been advised that as a condition of the Economic Incentive by PAEDC, Incentive
Recipient must continue conducting its business operations in Port Arthur during the term of the
Incentive Contract. Incentive Recipient has agreed to obtain a letter of credit from
to securitize the loan provided by PAEDC.
AGREEMENT TERM
EFFECTIVE DATE
1. This Economic Incentive Contract and Loan Agreement ("Agreement") is entered
into with an Effective Date as of the approval of the Agreement by the City Council for the City
of Port Arthur, Texas (the "City").
TERMINATION DATE
2. This Agreement expires the earlier of December 31, 2024, or 30 days after Incentive
Recipient either performs fully or breaches the Agreement, subject to earlier termination or
extension, voluntary or involuntary, as provided in Section 32. 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 501 Procter Street, Port Arthur, Texas, 77640, is a corporation. It is duly authorized to
do business in the State of Texas under Chapter 504, Local Government Code (the
"Development Corporation Act of 1979") and duly authorized by Resolution of the City Council
of the City of Port Arthur to enter into this Agreement. As so authorized and as provided by the
1
PAEDC bylaws, the President and Secretary of the PAEDC Board have the authority to execute
this Agreement.
4. Clifford Distilling, LLC is a limited liability company located at 235 Procter Street, Port
Arthur, Texas 77640.
PROMISED PERFORMANCE
5. The parties agree to perform as follows.
(a) PERFORMANCE BY PAEDC
(1) PAEDC shall conditionally grant Incentive Recipient an amount not to exceed
$162,500.00, subject to the conditions and limitations herein, which Incentive
Recipient shall not be required to repay unless Incentive Recipient breaches this
Agreement. If Incentive Recipient breaches this Agreement, then the grant will
become a loan as provided in the Conditional Commercial Promissory Note (the
"Note") attached hereto as Exhibit"A".
(2) PAEDC will use its best efforts to reimburse Incentive Recipient within forty-five
(45) days of receipt for the capital expenditures for building renovation,
equipment, infrastructure, and inventory listed in Exhibit"B".
HOWEVER, PAEDC WILL ONLY RELEASE FUNDS IN AN AMOUNT EQUAL
TO THE AMOUNT PAID FOR THE BUILDING RENOVATION, EQUIPMENT,
INFRASTRUCTURE AND INVENTORY. PAEDC WILL ONLY RELEASE
FUNDS UPON RECEIPT OF REQUIRED DOCUMENTATION OF THE
PURCHASE, BY INCENTIVE RECIPIENT OF SUCH BUILDING
RENOVATION, EQUIPMENT, INFRASTRUCTURE AND INVENTORY FREE
OF ANY LIEN OR ENCUMBRANCE. REQUIRED DOCUMENTATION
INCLUDED BUT IS NOT LIMITED TO AN INVOICE EVIDENCING THE
PURCHASE OF THE BUILDING RENOVATION, EQUIPMENT,
INFRASTRUCTURE AND INVENTORY.
These payments are PAEDC's only obligations and are not legally required to provide
any other financial support.
(b) PERFORMANCE BY INCENTIVE RECIPIENT
(1) By the end of the Agreement term, Incentive Recipient promises to employ the
equivalent of eight (8) full time employees with a total payroll as measured by
Internal Revenue Service (IRS) forms W-2 and 1040's for years ending 2022,
2023, and 2024 of$655,000.
(2) Incentive Recipient promises that one hundred percent (100%) of its full time
employees will be Port Arthur residents. Incentive Recipient shall receive credit
2
only for payroll paid to Port Arthur residents.
(3) Incentive Recipient will utilize the incentive to renovate building, purchase
equipment, infrastructure, and inventory at a valued not less than $162,500.00 as
outlined in Exhibit"B".
(4) Incentive Recipient will be required to meet the conditions and agreements set
forth in the First Source Referral Agreement attached hereto as Exhibit "D" and
made a part hereof for all purposes.
(5) PAEDC shall only be required to reimburse Incentive Recipient for the renovation
of the building, purchase equipment, infrastructure, and inventory by Incentive
Recipient that is substantially similar to the items described on the attached
Exhibit "B". With each invoice or request for reimbursement sent to PAEDC,
Incentive Recipient will provide a listing of the specific renovate to the building,
equipment purchased, infrastructure, and inventory for reimbursement and
covenant that such request for reimbursement is being made for the specific
building renovation, purchase equipment, infrastructure, and inventory and that
all such building renovation, purchase equipment, infrastructure, and inventory
has been acquired by the Incentive Recipient free of any lien or encumbrance.
(6) Incentive Recipient acknowledges and agrees that the Economic Incentive
proposed under this Agreement is only being provided as to the startup of the
business of Incentive Recipient in Port Arthur, Texas. If Incentive Recipient at
any time during the term of this Agreement discontinues and/or moves its
business operations, including the Equipment identified in Exhibit "B", from the
City of Port Arthur, Texas, Incentive Recipient shall be immediately in default
under the terms of this Agreement, and all amounts less any credits given as set
forth in Paragraph 5 (C) shall become a loan for a period not to exceed the
remaining period for the Incentive as set forth herein.
(7) As the conditional grant provided by PAEDC to Incentive Recipient is to be
secured by Letter of Credit contained in Exhibit "C" from
. No PAEDC funds will be distributed until the Letter
of Credit is secured and provided to PAEDC.
(8) 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) CREDITS—SUBSTITUTE PERFORMANCE
3
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 $4.04 of payroll paid to residents of
Port Arthur. PAYROLL TO NON-RESIDENTS CANNOT BE CREDITED.
(2) Total credits cannot exceed $162,500.00.
(3) Incentive Recipient will forfeit any credits it earned during a period for which a
report is scheduled, but for which Incentive Recipient failed to issue the report
pursuant to the Performance Milestone Schedule within 10 days after receipt of
written notice from PAEDC that such report is past due.
(4) Once Incentive Recipient has earned credits equal to $162,500.00, the conditional
grant/loan and all obligations to PAEDC shall terminate.
(d) FIRST SOURCE REFERRAL AGREEMENT
PAEDC has adopted policies and procedures to assist Incentive Recipient in locating
a qualified workforce within the City. The First Source Referral Agreement is
incorporated into this Agreement in Exhibit "D" ("First Source"). Incentive
Recipient has agreed to the policies and procedures within First Source as a non-
exclusive resource and referral for all appropriate new job openings of Incentive
Recipient.
PERFORMANCE MILESTONE 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 following table.
1 Examples of reasonable assurances are copies of pending contracts and customer commitment letters.
4
PERFORMANCE MILESTONE SCHEDULE
Deadline Milestone
(a)
DECEMBER 31, 2021 CLIFFORD DISTILLING, will issue a status report on their move into
their new location in the 235 Procter Street and the retrofitting of the
building and installation of equipment completion date to PAEDC
(b) JUNE 30, 2022 Achieve full-time permanent employment of four(4) Port Arthur Resident
with an average annualized payroll of$27,300.00 per employee
(c)
DECEMBER 31, 2022 CLIFFORD DISTILLING, average annualized payroll for the four(4)
permanent Port Arthur Resident is not less than$109,200
(d)
MARCH 31, 2022 CLIFFORD DISTILLING, will provide PAEDC with W-2's for all
permanent Port Arthur Residents Employed during 2021
(e)
DECEMBER 31, 2022 CLIFFORD DISTILLING, will employ an additional four(4)permanent
Port Arthur Residents with an average annualized payroll of$27,300.00
per employee
(f)
DECEMBER 31, 2022 CLIFFORD DISTILLING, total payroll for permanent Port Arthur
Resident employees for years ending 2021 and 2022 should be not less
than$109,200
(g)
MARCH 31, 2023 CLIFFORD DISTILLING, will provide PAEDC with W-2's for
permanent Port Arthur Resident employees Employed during 2022
(h)
DECEMBER 31, 2023 CLIFFORD DISTILLING, total payroll for permanent Port Arthur
Resident employees for years ending 2021, 2022, and 2023 should be not
less than $436,800
(i) MARCH 30, 2024 CLIFFORD DISTILLING, will provide PAEDC with W-2's for
permanent Port Arthur Resident employees Employed during 2023
(j) DECEMBER 31, 2024 CLIFFORD DISTILLING, total payroll for permanent Port Arthur
Resident employees for years ending 2021, 2022, and 2023 should be not
less than$655,200
(lc) JUNE 30, 2025
Once all contractual obligations are met, PAEDC closes file CLIFFORD
DISTILLING file.
5
PAEDC'S CONDITIONAL OBLIGATIONS AND LIMITED 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.
Should PAEDC fail to fully fund its obligations hereunder, this Agreement shall terminate and
both parties shall be relieve of any further liability hereunder. In the event of such termination,
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.
Incentive Recipient shall not use 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 to the
extent Incentive Recipient has advanced funds to pay for equipment it will be deemed to satisfy
this requirement.
LIQUIDATED DAMAGES FOR BREACH OF AGREEMENT
10. 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 pursuant to section 5(c) of this Agreement, will be paid
back to PAEDC within ten (10) days of being provided notice of such recapture or after such ten
day period will automatically convert to a loan (liquidated damages), effective on the day of
breach, as agreed by Incentive Recipient in the executed Note attached 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.
11. 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.
6
RECORDS/INSPECTION/PAEDC AUDIT
12. Incentive Recipient must establish and maintain reasonably 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.
Incentive Recipient shall maintain employment records as necessary to allow the PAEDC to
audit and verify proper utilization of First Source and to verify any and all other covenants,
representations and warranties contained herein and in Incentive Recipient's Application.
13. 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.
14. Upon ten-day (10-day) advance written notice given not later than the 90th day after
the end of the calendar year in which such transactions being audited occurred, 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 so that PAEDC can ensure the Incentive Recipient
is meeting the Performance Milestone Schedule. 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 protect 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).
15. All records pertinent to this Agreement shall be retained by Incentive Recipient at
least one year 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 acquisition, including any long-term lease, shall be retained for a period equal to the
useful life of any asset purchased with PAEDC funds.
16. Incentive Recipient shall provide PAEDC with all reports reasonably necessary for
PAEDC compliance with the Development Corporation Act.
7
17. It is expressly understood and agreed by the parties hereto that if Incentive Recipient
fails to submit to PAEDC in a timely and reasonably satisfactory manner any report reasonably
required by this Agreement, PAEDC may, at its sole discretion, 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. 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.
18. The PAEDC reserves the right, from time to time, prior to the termination of this
agreement 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 HARMLESS
19. 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 KIND 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 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
20. Incentive Recipient may not subcontract for performance credits described in this
Agreement without obtaining PAEDC's written approval, such approval not to be unreasonably
withheld. 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).
21. 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
8
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.
22. 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
23. 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 Chapter 504, Local Government Code
and Chapter 171 Local Government Code.
24. 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 financial benefit, direct or
indirect, from Incentive Recipient. Failure to provide said notice immediately or no later than
five(5)business days after receipt of information shall constitute a default herein.
NONDISCRIMINATION/EMPLOYMENT/REPORTING
25. 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:
(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,
9
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.
LEGAL AUTHORITY
26. 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.
27. 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
28. 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$50,000. 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
29. 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 parties to this Agreement. Such amendments must be approved by the PAEDC
Board of Directors and, in many cases,by the City Council for City of Port Arthur.
30. It is understood and agreed by the parties hereto that 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. Based on these considerations, and in order to ensure the
legal and effective performance of this Agreement by all parties, it is agreed by the parties hereto
that the performances under this Agreement are by the provisions of the PAEDC Program and
any amendments thereto and may further be amended in the following manner: PAEDC may
from time to time during the period of performance of this Agreement issue policy directives
10
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.
31. Any alterations, additions, or deletions to the terms of this Agreement which are
required by changes in Federal, state law 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/TERMINATION
32. In the event of a material default of any of the material obligations of Incentive
Recipient detailed herein or in the event of a material 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;
(b) Exercise any remedies provided herein and/or within any 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
(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.
33. 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
11
34. If directed by PAEDC Board not more than once each 12 month period, Incentive
Recipient shall arrange for the performance of a compliance audit performed by a certified 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(120) 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 Exhibit "B". Any discrepancies in excess of
$5000 shall be specifically documented in writing.
35. 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.
36. 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.
37. 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.
38. 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.
12
SUPPLEMENTAL COVENANT
39. INCENTIVE RECIPIENT AND ANY BRANCH, DIVISION OR
DEPARTMENT OF INCENTIVE RECIPIENT CERTIFIES THAT THEY HAVE NOT
AND WILL NOT KNOWINGLY EMPLOY AN "UNDOCUMENTED WORKER"
WHICH MEANS "AN INDIVIDUAL WHO, AT THE TIME OF EMPLOYMENT, IS
NOT LAWFULLY ADMITTED FOR PERMANENT RESIDENCE TO THE UNITED
STATES OR AUTHORIZED UNDER LAW TO BE EMPLOYED IN THAT MANNER IN
THE UNITED STATES."
40. Incentive Recipient acknowledges that it has reviewed Chapter 2264, Texas
Government Code and hereby affirmatively agrees by execution of this Agreement to repay the
amount of any incentive(less any credits given as set forth in Paragraph 5(C)) with interest at the
rate of ten (10%) percent per annum not later than the 120th day after the date PAEDC notifies
Incentive Recipient of a violation.
41. Incentive Recipient acknowledges PAEDC may bring a civil action or cover any
amounts owed under this Chapter and further acknowledges that PAEDC may recover court
costs and reasonable attorneys' fees incurred in an action brought under §2264.101(a). Incentive
Recipient is not liable for a violation of this Chapter by a subsidiary, affiliate or franchisee of the
Incentive Recipient or by a person with whom the Incentive Recipient contracts.
ENVIRONMENTAL REQUIREMENTS
42. 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, reasonably 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,but shall not be
required to expend any funds in doing so, 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
43. 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.
44. 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 Exhibit"A" Commercial Promissory Note for Conditional Grant
X Exhibit"B" Equipment List
13
X Exhibit"C" Letter of Credit
X Exhibit"D" First Source Referral Agreement
X Exhibit"E" Certification Regarding Lobbying
X Exhibit"F" Compliance Statement
X Incentive Recipient Application to PAEDC
VENUE
45. For purposes of litigation that may accrue under this Agreement, venue shall lie in
Jefferson County,Texas,where substantially all the performance will occur.
ADDRESS OF NOTICE AND COMMUNICATIONS
City of Port Arthur Section 4A Economic Development Corporation
501 Procter Street
Port Arthur, Texas 77640
ATTN: Floyd Batiste, Chief Executive Officer
Incentive Recipient
Clifford Distilling, LLC d/b/a CLIFFORD DISTILLING,
235 Procter Street
Port Arthur, Texas 77640
Phone: (409) 300-1938
Fax: (409)
ATTN: Sean Clifford
CAPTIONS
46. 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
47. 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
48. This agreement has no legal consequences, and neither party shall rely on the
agreement,unless and until
a. Both the PAEDC Board and the Port Arthur City Council approve the Agreement
14
in its final executed form.
ATTORNEY APPROVALS
APPROVED AS TO FORM:
Frank Garza, General Counsel for PAEDC
VERIFIED BY
CITY COUNCIL RESOLUTION:
Resolution Number:
Valecia R. Tizeno, City Attorney
15
AGREEMENT EXECUTION
CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT
CORPORATION
SIGNED AND AGREED TO on the day of , 2019.
By: By:
President Secretary
EDC Representative EDC Representative
CLIFFORD DISTILLING, LLCD/B/A CLIFFORD DISTILLING,
SIGNED AND AGREED TO on the day of , 2019.
Clifford Distilling, LLC
By:
, (Title)
Acknowledgment
16
EXHIBIT "A"
CONDITIONAL COMMERCIAL PROMISSORY NOTE
Port Arthur,Texas
This COMMERCIAL PROMISSORY NOTE becomes effective on the date when Clifford
Distilling, LLC d/b/a CLIFFORD DISTILLING, , a Texas limited liability company(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 ,201
Effective Date of Note: The Note shall be dated effective the day of
201 which is the date upon which Lender provided written notification to Maker of its default
under the Economic Incentive Contract & Loan Agreement (the "Agreement") by and between
Lender and Maker dated ,201_("Date of Default").
Principal Amount: Principal amount is $ , which is $ less the
incentive credits earned by Maker according to Paragraph 5(C)of the Agreement.
Term of the Loan: From the Notice of Default, Maker shall thereafter make equal monthly
installments of principal and interest (interest being calculated as hereinafter specified at the rate of
10%per annum)until , (the"Final Payment Date"). Lender shall provide to
Maker, a payment amortization schedule for the monthly installments due hereunder. Maker agrees
that all principal and interest on this Note shall be due and payable by the Final Payment Date.
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 or places 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(10%)per annum as detailed herein.
All past due principal and interest shall bear interest from date of maturity until paid at the
rate of fifteen percent (15%) per annum, or to the maximum extent allowed by law (whichever is
greater)as may hereafter be in effect,payable on demand after maturity.
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 transmitted 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,
pledges, collateral assignments, deeds of trust, guaranties, mortgages, assignments, and lien
instruments, if any, of any kind executed by Maker or by any other party as security for any loans
owing by Maker to the Lender. Such lien instruments shall include those executed simultaneously
herewith,those heretofore executed, and those hereafter executed.
17
If any installment 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 may 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 liable party (if other than a natural person) shall be dissolved, wound up,
liquidated or otherwise terminated, or a party to any merger or consolidation without the written
consent of Lender; or if Maker or any other liable party shall sell substantially all or an integral
portion of its assets without the written consent of Lender; or if Maker or any other liable party fails
to furnish financial information requested by Lender pursuant to this Agreement; or if Maker or any
other liable party 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;; 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 liable party agree to pay Lender its collection costs, including court
costs and a reasonable amount for attorneys 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 in the event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum 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 to Maker); and (iii) all calculations of the
rate of interest 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, 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(including all renewal and extended terms).
18
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 their 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, filing 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.
SIGNED AND AGREED TO on the day of , 2019.
Clifford Distilling, LLC
By:
THE STATE OF TEXAS §
§ ACKNOWLEGEMENT
COUNTY OF JEFFERSON §
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 Clifford
Distilling, LLC for the purposes and consideration therein expressed, and the Capacities therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of
,2019.
Notary Public, State of Texas
19
EXHIBIT "B"
EQUIPMENT LIST
20
EXHIBIT "C"
LETTER OF CREDIT
21
EXHIBIT "D"
FIRST SOURCE REFERRAL AGREEMENT
Resolution Number:
Project Name: CLIFFORD DISTILLING, LLC d/b/a CLIFFORD DISTILLING,
Project Address:
Project Contact Person:
Project Contact Person Phone Number:
This First Source Referral Agreement (the "Agreement"), for recruitment, referral, and
placement of City of Port Arthur Section 4A Economic Development Corporation (the
"PAEDC"), hereinafter, and Clifford Distilling, LLC (the "EMPLOYER"). Under this
Agreement, the EMPLOYER will use PAEDC as its first source for recruitment, referral, and
placement of new hires or employees for the new jobs created by their project and will hire the
number of Port Arthur residents specified for new jobs created by the Project in that certain
Economic Incentive Contract & Loan Agreement (the "Incentive Agreement") between PAEDC
and the EMPLOYER.
I. GENERAL TERMS
A. The EMPLOYER will use PAEDC as its first source for the recruitment, referral
and placement of employees.
B. PAEDC participation in this Agreement will be carried out by its Chief Executive
Officer which is responsible for referral and placement of employees, designated by PAEDC.
C. PAEDC will provide recruitment, referral and placement services to the
EMPLOYER subject to the limitations set out in this Agreement.
22
D. This Agreement shall take effect when signed by the parties below and shall be
fully effective for the duration of the incentive contract and any extensions or modifications to
the contract.
E. PAEDC and the EMPLOYER agree that for purposes of this Agreement, new
hires and jobs created include all EMPLOYER'S job openings and vacancies in the Port Arthur
Area created as a result of internal promotions, terminations, and expansions of the
EMPLOYER'S workforce, as a result of this project.
II. RECRUITMENT
A. The EMPLOYER will complete the attached Employment Plan, which will
indicate the number of new jobs projected, salary range, and hiring dates. The EMPLOYER will
notify PAEDC of its specific need for new employees as soon as that need is identified.
B. Notification of specific needs, as set forth in Section II.A. must be given to
PAEDC at least five (5) business days (Monday- Friday) before using any other referral source,
and shall include, at a minimum, the number of employees needed by job title, qualification,
hiring date, rate of pay,hours of work, duration of employment, and work to be performed.
C. Job openings to be filled by internal promotion from the EMPLOYER'S current
workforce need not be referred to PAEDC for placement and referral.
D. The EMPLOYER will submit to PAEDC, prior to starting work on the project,
the names, and social security numbers of all current employees, including apprentices, trainees,
and laid-off workers who will be employed on the project.
III.REFERRAL
PAEDC will screen and refer applicants according to the qualifications supplied by the
EMPLOYER.
23
IV. PLACEMENT
A. PAEDC will notify the EMPLOYER, prior to the anticipated hiring dates, of the
number of applicants PAEDC will refer. PAEDC will make every reasonable effort to refer at
least two qualified applicants for each job opening.
B. The EMPLOYER will make all decisions on hiring new employees but will in
good faith use reasonable efforts to select its new hires or employees from among the qualified
persons referred by PAEDC.
C. In the event PAEDC is unable to refer the qualified personnel requested, within
five (5) business days (Monday - Friday) from the date of notification, the EMPLOYER will be
free to directly fill remaining positions for which no qualified applicants have been referred.
Notwithstanding, the EMPLOYER will still be required to hire Port Arthur residents in the
percentage specified for new jobs created by the Project in that certain Economic Incentive
Contract & Loan Agreement (the "Incentive Agreement") between PAEDC and the
EMPLOYER.
D. After the EMPLOYER has selected its employees, PAEDC will not be
responsible for the employees' actions and the EMPLOYER hereby releases PAEDC, from any
liability for employees' actions.
V. TRAINING
PAEDC and the EMPLOYER may agree to develop skills training and on-the-job
training programs; the training specifications and cost for such training will be mutually agreed
upon by the EMPLOYER and PAEDC and set forth in a separate Training Agreement.
24
VI. CONTROLLING REGULATIONS AND LAWS
A. To the extent this Agreement is in conflict with any labor laws or governmental
regulations, the laws or regulations shall prevail.
B. PAEDC will make every effort to work within the terms of all collective
bargaining agreements to which the EMPLOYER is a party.
C. The EMPLOYER will provide PAEDC with written documentation that the
EMPLOYER has provided the representative of any involved collective bargaining unit with a
copy of this Agreement and has requested comments or objections. If the representative has any
comments or objections, the EMPLOYER will promptly provide them to PAEDC.
VII. EXEMPTIONS
A. Employment openings the contractor will fill with individuals already employed
by the company.
B. Job openings to be filled by laid-off workers according to formally established
recall procedures and rosters.
C. Suppliers located outside of the Port Arthur Area and who will perform no work
in the Port Arthur Area.
VIII. AGREEMENT MODIFICATIONS, RENEWAL,MONITORING,AND PENALTIES
A. If, during the term of this Agreement, the EMPLOYER should transfer possession
of all or a portion of its business concerns affected by this Agreement to any other party by lease,
sale, assignment,merger, or otherwise, the EMPLOYER as a condition of transfer shall:
1. Notify the party taking possession of the existence of the EMPLOYER'S Agreement.
2. Notify the party taking possession that full compliance with this Agreement is
required in order to avoid termination of the project.
25
3. EMPLOYER shall, additionally, advise PAEDC within seven (7) business/calendar
days of the transfer. This advice will include the name of the party taking possession and
the name and telephone of that party's representative.
B. PAEDC shall monitor EMPLOYER'S performance under this Agreement. The
EMPLOYER will cooperate in PAEDC' monitoring effort and will submit a Contract
Compliance Form to PAEDC quarterly.
C. To assist PAEDC in the conduct of the monitoring review, the EMPLOYER will
make available payroll and employment records for the review period indicated.
D. If additional information is needed during the review, the EMPLOYER will
provide the requested information to PAEDC.
E. With the EMPLOYER submission of the final request for closure of Agreement
from the Board, the EMPLOYER shall:
1. Document in a report to the Compliance Officer compliance with the hiring
requirements specified in the Incentive Agreement to be Port Arthur residents; or
2. Submit a request to the Compliance Officer for a waiver of compliance with the
hiring requirement at the project to be Port Arthur residents and include the following
documentations:
a. Material supporting a good faith effort to comply;
b. Referrals provided by PAEDC and other referral sources; and
c. Advertisement of job openings listed with PAEDC and other referral sources.
F. Willful breach of the First Source Referral Agreement by the EMPLOYER, or
failure to submit the Compliance Report may be enforced by the Compliance Officer through
notification and possible termination of the Incentive Agreement.
26
G. The EMPLOYER and PAEDC, or such other agent as PAEDC may designate,
may mutually agree to modify this Agreement.
H. The project may be terminated because of the EMPLOYER'S noncompliance
with the provisions of this Agreement.
CITY OF PORT ARTHUR SECTION
4A ECONOMIC DEVELOPMENT CORPORATION
SIGNED AND AGREED TO on the day of , 2019.
By: By:
Ingrid Holmes, President , Secretary
EDC Representative EDC Representative
27
CLIFFORD DISTILLING, LLC
SIGNED AND AGREED TO on the day of , 2019.
By:
Acknowledgment
28
EXHIBIT "E"
CERTIFICATION REGARDING LOBBYING
For Contracts, Grants, Loans, and Cooperative Agreements
The undersigned certifies,to the best of his knowledge and belief, that:
1. 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.
CLIFFORD DISTILLING, LLC
Date: By:
Signature
Its:
Title
29
EXHIBIT "F"
COMPLIANCE STATEMENT
Clifford Distilling, LLC hereby certifies that it has fully complied with
Local Government Code §176.006, as amended, which mandates the disclosure
requirements for persons who contract or seek to contract with a local
governmental entity.
CLIFFORD DISTILLING LLC
Date: By:
Signature
Its:
Title
30