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HomeMy WebLinkAboutPR 13416: RELIABLE POLYMER SERVinteroffice MEMORANDUM To: Mayor, City Council, and City Manager From: Mark T. Sokolow, City Attorney /~ Date: February 3, 2006 Subject: P. R. No. 13416; Joint EDC/Special Council Meeting February 7, 2006 Attached is P. R. No. 13416 authorizing the President and Secretary of the EDC to execute an amendment to the incentive agreement between the EDC and Reliable Polymer Services. Since the EDC meeting, Reliable and Wachovia has agreed to limit the senior lien to $6,000,000. Reliable will also arrange for Wachovia to provide the EDC with notice of default. The EDC Board will also need to revote on the final agreement with the latest changes. MTS/gt Attachment cc: VIA FACSI~?~ (409) 962-444~ Floyd Batiste, CEO of EDC VIA FACSIMILE (409) 835-2115 Kate McGlynn, GERMER GERTZ z.pr13416-memo P. R. No. 13416 02/02/06 gt RESOLUTION NO. A RESOLUTION AUTHORIZING THE pRESIDENT AND SECRETARY OF THE CITY OF PORT ARTHUR SECTION 4AECONOMIC DEVELOPMENT CORPORATION TO EXEC~T~ AN AMENDMENT TO THE INCENTIVE AGREEMENT BETWEEN THE CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION ~ RELIARLE POLi'MER SERVICES WHEREAS, as noted in Exhibit "A", the Board of Directors of the City of Port Arthur Section 4A Economic Development Corporation has approved an amendment to the incentive agreement to be entered into with Reliable Polymer Services in substantially the same form as denoted in Exhibit "B"; and WHERY~AS, the senior lien of Wachovia will not exceed $6,000,000 and Reliable Polymer will arrange for Wachovia to provide notice of default; and WHEP~S, the original incentive agreement was approved by Resolution No. 05-337. WHEP~AS, a letter has been provided by Germer Gertz as noted in Exhibit "A that they have approved the amendment to the agreement as to legality; and WHEREAS, pursuant to Section 8.19 of the bylaws, the City of Port Arthur Section 4A Economic Development Corporation is submitting this project for approval. z.pr13416 NOW THEREFOi~E, BE IT i~ESOLIrED 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 the City of Port Arthur herein approves the amendment to the incentive agreement as noted in Exhibit "B" and herein authorizes the President and Secretary of the City of Port Arthur Section 4A Economic Development Corporation to execute the amendment to the agreement in substantially the same form as attached hereto as Exhibit "B". 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., 2006, at a Meeting of the City Council of the City of Port Arthur, Texas, by the following vote: AYES: Mayor ' Councilmembers ' ; NOES: z.pr13416 MAYOR ATTEST: CITY SECRETARY APPROVED AS TO FORM: CITY ATTORNEY APPROVED FOR ADMINISTRATION: CITY MANAGER z.pr13416 EXHIBIT "A" ,L.P. www.germer.com A T T O R N E Y ~/~.J'A T t A W KATHLEENA. McGLYNN ASSOCIATE Direct Line: 409.B13.8000 kmcglynn~germer.com February 3, 2006 Via Facsimile No. 1.409-962-4445 Mr. Floyd Batiste Chief Executive Officer City of Port Arthur EDC P.O. Box 3934 Port Arthur, Texas 77642 Re: Reliable Polymer Services, L.P.; GG File #56257 Dear Mr. Batiste: Attached is an amendment to the Economic Incentive Contract and Loan Agreement between the City of Port Arthur Section 4A Economic Development Corporation ("PAEDC") and Reliable Polymer Services, L.P. The amendmem was approved by the PAEDC Board of Directors on February 1, 2006, by a five to zero vote. The amendment has been approved by Germer Gertz, L.L.P. as to its legality. Sincerely, GERMER GERTZ, L.L.P. By: Kathleen A. McGly~l KAM/Ir cc: Jana Barnes Guy N. Goodson (in thefirm) P.O. BOX 4915 ° BEAUMONT, TX 77704 · PHONE: 409,654.6700 · FAX: 409.835.211.5 4347§7 EXHIBIT "B" DRAFT FIRST AMENDMENT TO ECONOMIC LNCENTIVE CONTRACT AND LOAN AGREEMENT BETWEEN THE CITY OF PORT ARTHUR ECONOMIC DEVELOPMENT CORPORATION AND RELIABLE POLYMER SERVICES, L.P. Section 3: Registered agent for Reliable in Texas is GEITI, LLC, a Texas limited liability company, whose address is 13669 Garden Grove Court, Houston, TX 77082. Section 4(a)(l): Said conveyance will occur once Reliable is ready for construction and financing, but in no case later than March 31, 2006. Section 4(a)(2): PAEDC will pay up to ONE MILLION AND NO/100 DOLLARS ($1,000,000) of the cost for Reliable's 100,000 square-foot rubber reprocessing and service building. Section 4(b)(2): Reliable will hire at least twenty-three (23) employees by August 1, 2006; employ thirty-seven (37) or more by January 1, 2007; employ fifty-one (51) or more by January 1, 2009, and will sustain employment of fif~y-one (51) or more for the remaining Term of the Agreement. Section 4(b)(5): It is understood that the deed of trust (Exhibit "B") for the benefit of PAEDC shall constitute a second lien, iunior in priority to a deed of trust on the same land and improvements for the benefit of [Wachovia Bank]. Section 5(b)(5) Contemporaneously with PAEDC's land grant to Reliable, Reliable will execute a deed of trust on both the land and the land improvements, and shall perform all Grantor obligations, including the obligations added to protect the PAEDC as the iunior lien-holder, to wit: 8. provide the Beneficiary herein copies of all notices~ financial statements, reports and other information provided to the senior lien holder; 9. punctually pay or cause to be paid the principal and interest to become due in respect of the senior debt according to the terms thereof; 10. perform all of its obligations under the senior lender documents; 11. immediately report to Beneficiary in writing any default by Grantor under the senior lien; 12. immediately report to Beneficiary in writing any tax, judgment, materialman's or mechanic's lien on the Property; and 13. in the event the Beneficiary herein deems itself reasonably insecure in its ability to realize upon its junior lien in the Property, upon notice thereof to Grantor, provide the Beneficiary with such additional 2/3/2006 DRAFT collateral as may reasonably secure the Beneficiary's position, subject to the rights and restrictions imposed by the senior lien holder. 14. Arrange for senior lien holder to provide notice of default to Beneficiary. Grantor shall not, without the prior written consent of Beneficiary, 1. materially alter any of the terms and conditions of the senior debt or increase the maximum indebtedness available to Grantor under the senior lender documents; or 2. further encumber the Property. See Exhibit "B" Section 5(b)(6): Reliable promises to limit senior lien amount to no more than $6,000,000. Section 35(d): As a part of its audit, Reliable shall verify that the expenditures were exclusively for the 100,000 square foot building on its park land. See attached Amended Exhibit "A": modified performance milestone schedule, wherein, project milestones are extended by two months, while the reporting deadlines remain generally the same. See attached Amended Exhibit "B": Modified Deed of Trust to account for junior lien status. ATTORNEY APPROVALS APPROVED AS TO FORM: Guy Goodson, General Counsel for PAEDC VERIF1ED AS CONSISTANT WITH CITY COUNCIL RESOLUTION: Resolution Number: Mark T. Sokolow, City Attorney DRAFT AMENDMENT EXECUTION CITY OF PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION SIGNED AND AGREED TO on the __ day of ,200__. By: By: President Eli Roberts Secretary Linda Spears Witness Witness RELIABLE POLYMER SERVICES~ SIGNED AND AGREED TO on the day of ,200__. RELIABLE POLYMER SERVICES, L.P., a Texas limited partnership By:. GEITI, LLC, a Texas limited liability company and the general partner of RELIABLE POLYMER SERVICES, L.P. Position Witness 1 ITl and G&E are jointly and severally liable for performance under this Agreement, through the Guaranties in Exhibit "E". DRAFT AMENDED EXHIBIT "A" Dea__.__dline Milestone (a) Apr 5, 2006 Issue a status report2 to PAEDC's Chief Executive Officer ("CEO") for the period I from the effective date of this Agreement to March 31,2006. Co) Apr. 8, 2006 >,eview architectural plans with the EDC Board for approval (c) July 5, 2006 Status report for April 1,2006 to June 30, 2006. (d) July 31, 2006 Complete construction of 100,000 square-foot building (e) Aug. 31, 2006 Achieve performance of 23 full-time, permanent employees; Annualized payroll of $600,000. (f) Oct. 5, 2006 Status report for July 1, 2006 to September 30, 2006. (g) Jan. 31, 2007 Achieve performance of 37 full-time, permanent employees; Annualized payroll of $1,000,000. I' ' Feb 5, 2007 (h) Status report3 for January 1, 2006 to Dece_m__ber 31, 2006. (i) July 5, 2007 Status report for January 1, 2007 to June 30, 2007 (j) Feb. 5, 2008 Status report for Jan. 1, 2007 to December 31,2007. (k) July 5, 2008 Status report for Jan. 1, 2008 to June 30, 2008. (1) Jan. 31, 2009 Achieve performance of 51 full-time, pennanent employees; ~nnualized payroll orS1,350,000. (m) Feb. 5, 2009 Status report for Jan. l, 2OO8 to December 31, 2008. (n) July 5, 2009 Status report for Jan. 1, 2009 to June 30, 2009. (o) Feb. 5, 2010 Status report for Jan. 1, 2009 to December 31, 2009. (p) JulyS, 2010 Status report fur Jan. 1,2010to June30,2010. (t(q Feb. 5, 2011 Status report for Jan. 1, 2010 to December 31,2010. Apr. 5, 20114 Close out report for presentation to the PAEDC Board at its April 2011 meeting. 2 Status reports shall include copies of invoices and check payments for machinery and equipment purchased with PAEDC funds dudng the reporting period, quarterly balance sheets, quaderly profit and loss statements, and employee reports, ~ February 5"' status reports shall also include identib7 of current General Partner and Limited Partners, ~ Or thldy (30) days a~ler Reliable fully performs. The EDC Board will determine if performance is complete. 2/3/2006 DRAFT AMENDED EXHIBIT "B" DEED OF TRUST Date: ,200 Grantors: Reliable Polymer Services, L.P. Grantors' Mailing Address (including county): P.O. Box 5508 Beaumont, Texas 77726-5508 (Jefferson County) Trustee: KATHLEEN A. MCGLYNN Trustee's Mailing Address (including county): Gender Gertz, L.L.P. P.O. Box Beaumont, Texas 77704 (Jefferson County) Beneficiary: PORT ARTHUR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION Bcmeficiary's Mailing Address (including county): 4173 39th Street Port Arthur, Texas 77642 (Jefferson County) Note Date: Amount: $1 million plus $392,040.00, the estimated cost to PAEDC often (10) acres of Port Arthur Business Park land. Maker: Reliable Polymer Services, L.P. Payee: Same Final Maturity Date: Three years after Date of Note. Property: Lot lB in Port Arthur Business Park. See Attachinent 1 for legal description The Property covered by this Instrument includes the Land and the following items, whether now owned or hereafter acquired, all of which, including replaccnnents and additions thereto, shall be deeaned to be and remain part of the Properly covered by this Instrument, and all rights, hereditaments and appurtenances pertaining thereto, all of which are referred to as the "Property": (a) Any and all buildings, improvements, and tenements now or hereafter attached to or placed, erected, constructed, or developed on the Land; (b) all fixtures, now or hereafter attached to Land or Improvements, that are necessary or useful for the complete and comfortable use and occupancy of the Land and Improvements; (c) all water and water rights, timber, crops, and mineral interest pertaining to the Land; (d) all building materials and fixtures now or hereafter delivered to and intended to be installed in or on the Land or the Improvements; (e) all plans and specifications for the Improvements and for any future development of or construction on the Land; (f) all Grantor's rights (but not Grantor's obligations) under any contracts relating to the Land or the Improvements; (g) all deposits (including tenant security deposits), bank accounts, funds, instruments, notes or chattel paper arising from or by virtue of any transactions related to the Land or the Improvements; (h) all Grantor's rights (bm not Grantor's obligations) under any documents, contract rights, accounts, commitments, construction contracts (and all payment and performance bonds, statutory or otherwise, issued by any surety in connection with any such construction contracts, and the proceeds of such bonds), architectural contracts and engineering contracts arising from or by virtue of any transactions related to the Land or the Improvements; (i) all permits, licenses, franchises, certificates, and other rights and privileges now owned or held or hereafter obtained in connection with the Land and the Improvements; (j) all development rights, utility commitments, water and wastewater taps, capital improvement project contracts, utility construction agreements with any governmental authority, including municipal utility districts, or with any utility companies (and all refunds and reimbursements thereunder) relating to the Land or the Improvements; (k) all proceeds arising from or by virtue of the sale, lease or other disposition of the Land or the Improvements; (1) all proceeds (including premium refunds) of each policy of insurance relating to the Land and the Improvements; (m) all proceeds from the taking of any of the Land or the Improvements or any rights appurtenant thereto by right of eminent domain or by private or other purchase in lieu thereof, including change of grade of streets, curb cuts or other rights of access, for any public or quasi-public use under any law; (n) all right, title, and interest of Grantor in and to all streets, roads, public places, easements, and rights-of-way, existing or proposed, public or private, adjacent to or used in connection with, belonging or pertaining to the Land; (o) all of the Leases, rents, royalties, bonuses, issues, profits, revenues, or other benefits of the Land or the Improvements, including without limitation cash or securities deposited pursuant to leases to secure performance by the tenants of their obligations thereunder (subject to the Assignment of Rents made in Article V below); and (p) other interest of every kind and character that Grantor now has or at any time hereafter acquires in and to the Land and the Improvements, including rights of ingress and egress and all reversionary rights or interests of Grantor with respect to such property and all of Grantor's fights (but not Grantor's obligations) under any covenants, conditions, and restrictions for the Land, as the same may be mended from time to time, including Grantor's rights, title, and interests thereunder as declarant or developer, if applicable. Senior (prior) Lien (including recording information): Deed of Trust, dated · 2006, and recorded at ~ for the benefit of [Wachovia Bank], which Deed of Trust shall be senior in priority to the within Deed of Trust. Other Exceptions to Conveyance and Warranty: This conveyance is made expressly SUBJECT TO any and all restrictions, covenants, conditions, easements, right-of-ways, and mineral and/or royalty reservations of record, if any, affecting this Property. For value received and to secure payment of the note, Grantor conveys the property to Trustee in trust. Grantor warrants and agrees to defend the title to the property. If Grantor performs all the covenants and pays the note according to its terms, this deed of trust shall have no further effect, and Beneficiary shall release it at Grantor's expense. Grantor's Obligations Grantor agrees to: 1. keep the property in good repair and condition; 2. pay all taxes and assessments on the property when due and by January 31 of the year immediately following, furnishing Beneficiary copies of tax receipts showing that all such taxes and assessments have been paid; 3. preserve the lien's priority as it is established in this deed of trust; 4. maintain, in a form acceptable to Beneficiary, an insurance policy that a. covers all improvements for their full insurable value as determined when the policy is issued and renewed, unless Beneficiary approves a smaller amount in writing; b. contains an 80% coinsurance clause; c. provides fire and extended coverage, including windstorm coverage; d. protects Beneficiary with a standard mortgage clause; e. provides flood insurance at any time the property is in a flood hazard area; and f. contains such other coverage as Beneficiary may reasonably require; 5. comply at all times with the requirements of the 80% coinsurance clause; 6. deliver the insurance policy to Beneficiary and deliver renewals to Beneficiary at least ten days before expiration; 7. keep any buildings occupied as required by the insurance policy; and 8. provide the Beneficiary herein copies of all notices, financial statements, reports and other information provided to the senior lien holder; 9. punctually pay or cause to be paid the principal and interest to become due in respect of the senior debt according to the terms thereof,; I 0. perform all of its obligations under the senior lender documents; 11. immediately report to Beneficiary in writing any default by Grantor under the senior lien; 12. immediately report to Beneficiary in writing any tax, judgment, materialmen's or mechanic's lien on the Property; 13. in the event the Beneficiary herein deems itself reasonably insecure in its ability to realize upon its junior llen in the Property, upon notice thereof to Grantor, provide the Beneficiary with such additional collateral as may reasonably secure the Beneficiary's position, subject to the rights and restrictions imposed by the senior lien holder; and 14. arrange for senior lien holder to provide notice of default to Beneficiary. Grantor shall not, without the prior written consent of Beneficiary, 1. materially alter any of the terms and conditions of the senior debt or increase the maximum indebtedness available to Grantor under the senior lender documents; or 2. further encumber the Property. Beneficiary's Rights 1. Beneficiary may appoint in writing a substitute or successor trustee, succeeding to all rights and responsibilities of Trustee; 2. If the proceeds of the note are used to pay any debt secured by senior (prior) liens, Beneficiary is subrogated to all of the fights and liens of ~he holders of any debt so paid; 3. Beneficiary shall apply any proceeds received under the insurance policy to repair or replace damaged or destroyed improvements covered by the policy, unless Grantor is in default of Note or Deed of Trust in which case insurance proceeds may be applied to reduce Grantor's obligation under Note or Deed of Trust; 4. If Grantor fails to perfon~n any of Grantor's obligations, Beneficiary may perform those obligations and be reimbursed by Grantor on demand at the place where the note is payable for any sums so paid, including attorney's fees, plus interest on those sums from the dates of payments at the rate stated in the note for matured, unpaid amounts. The sum to be reimbursed shall be secured by this deed of trust. 5. If Grantor defaults on the note or fails to perform any of Grantor's obligations or if default occurs on the senior lien note or other instrument, and the default continues after Beneficiary gives Grantor notice of the default and the time within which it must be cured, as may be required by law or by written agreement, then Beneficiary may: a. Declare the unpaid principle balance and earned interest on the note immediately due; and b. Request Trustee to reconvey property to Beneficiary by a proper recorded warranty deed. Trustee's Duties If requested by Beneficiary to reconvey this property, Trustee shall: 1. Either personally or by agent give notice to Grantor at least 30 days before reconveyance. Beneficiary will pay Tmstee's expenses and fees. General Provisions 1. If any of the property is reconveyed under this deed of trust, Grantor shall immediately surrender possession to the Beneficiary. If Grantor fails to do so, Grantor shall become a tenant at sufferance of the Beneficiary, subject to an action for forcible detainer. 2. Recitals in any Tmstee's deed conveying the property will be presumed to be tree. 3. Proceeding under this deed of trust, filing suit or pursuing any other remedy will not constitute an election of remedies. 4. This lien shall remain superior to liens later created even if the time of payment of all or part of the note is extended or part of the property is released. 5. If any portion of the note cannot be lawfully secured by this deed of trust, payments shall be applied first to discharge that portion. 6. Grantor assigns to Beneficiary all sums payable to or received by Grantor from condemnation of all or part of the property, from private sale in lieu of condemnation, and from damages caused by public works or construction on or near the property. After deducting any expenses incurred, including attorney's fees, Beneficiary may release any remaining sums to Grantor or apply such sums to reduce the note Beneficiary shall not be liable for failure to collect or to exercise diligence in collecting any such sums. 7. Grantor assigns to Beneficiary absolutely, not only as collateral, all present and future rent and other income and receipts from the property. Leases are not assigned. Grantor warrants the validity and enforceability of the assignment. Grantor may as Beneficiary's licensee collect rent and other income and receipts as long as Grantor is not in default under the note or this deed of trust. Grantor will apply all rent and other incmne and receipts to payment of the note and performance of this deed of trust, but if the rent and other income and receipts exceed the amount due under the note and deed of trust, Grantor may retain the excess. If Grantor defaults in payment of the note of performance of this deed of trust, Beneficiary may terminate Grantor's license to collect and then as Grantor's agent may rent the property if it is vacant and collect all rent and other income and receipts. Beneficiary neither has not assumes any obligations as lessor or landlord with respect to any occupant of the property. Beneficiary may exercise Beneficiary's rights and remedies under this paragraph without taking possession of the property. Beneficiary shall apply all rent and other income and receipts collected under this paragraph first to expenses incurred in exercising Beneficiary's fights and remedies and then to Grantor's obligations under the note and this deed of trust in the order deten-nined by Beneficiary. Beneficiary is not required to act under this paragraph, and acting under this paragraph does not waive any of Beneficiary's other rights or remedies. If Grantor becomes a voluntary or involuntary bankrupt, Beneficiary's filing a proof of claim in bankruptcy will be tantamount to the appointment of a receiver under Texas law. 8. Interest on the debt secured by this deed of trust shall not exceed the maximum amount of nonusurious interest that may be contracted for, taken, reserved, charged, or received under law; any interest in excess of that maximum amount shall be credited on the principal of the debt or, if that has been paid, refunded. On any acceleration or required or permitted prepayment, any such excess shall be canceled automatically as of the acceleration or prepayment or, if already paid, credited on the principal of the debt or, if the principal of the debt has been paid, refunded. This provision overrides other provisions in this and all other instruments concerning the debt. 9. When the context requires, singular nouns and pronouns include the plural. 10. The term nole includes all sums secured by this deed of trust. 11. This deed of trust shall bind, insure to the benefit of, and be exercised by successors in interest of all parties. 12. If Grantor and Maker are not the same person, the term Grantor shall include Maker. 13. THIS DEED OF TRUST IS GRANTED IN CONJUNCTION WiTH THAT CERTAIN ECONOMIC INCENTIVE CONTRACT AND LOAN AGREEMENT OF EVEN DATE. Reliable Polymer Services, L.P. GEITI, L.L.C., General Partner By: Signature Its: Position STATE OF § COUNTY OF § This instrument was acknowledged before me on this the __ day of , 200 , by (name), (position) of GEITI, L.L.C., General Partner of Reliable Polymer Services, L.P. Notary Public, State of Texas AFTER RECORDING RETURN TO: Kathleen A. McGlynn Germer Gertz, L.L.P. P.O. Box 4915 Beaumont, Texas 77704 Attachment 1 to Deed of Trust Insert Legal Description of lO-acre Lot lB of Business Park