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HomeMy WebLinkAboutPR 11628 TRES CABALLEROS LTDPort Arthur Economic Development Corporation P. O. I~ox 1089 " Pod/\rlhur, 'lbxas 77641-1089 409/983 819~ · 4()9/!)~/~ ~:)_22 I'ax Email: edc~'~i)ortarlhurtexas.c(m~ · hltl)://w~x~.l)ortart[~Lutexa~.c m/'( (: Memo To: Mayor, City Council and City Manage~and City Attomey From: Ike Mills, Interim Executive Director//b4~ Date: January 17, 2002 ' Re: P.R. No. 11628 a Resolution authorizing the Executive Director of the Port Arthur Section 4A Economic Development Corporation to Execute an Agreement between Port Arthur 'Section 4A Economic Development Corporation and Tres Caballeros, Ltd. Attached is P.R. No. 11628 authorizing the Executive Director of the Port Arthur Economic Development Corporation to execute an agreement between the Port Arthur Section 4A Economic Development Corporation and Tres Caballeros, Ltd. that will build a food manufacturing facility in the City of Port Arthur, Texas, in the amount of $300,000 and a loan for $200.000. After the meeting, Mr. Wimbedy prepared a note, a copy of which is attached as Exhibit "F". On January 17th, I met with City Attorney and concur with his recommendation in his memo. cc: Jim Wimbedy, PAEDC Attomey P.R. NO 11628 1/9/02 bjm RESOLUTION NO. A RESOLUTION AUTHORIZING THE EXECUTIVE DIRECTOR OF THE PORT ARTHUR ECONOMIC DEVELOPMENT CORPORATION TO EXECUTE AN AGREEMENT BETWEEN THE PORT ARTHUR SECTION 4AECONOMIC DEVELOPMENT CORPORATION AND TRES CABALLEROS, LTD. THAT WILL BUILD A FOOD PRODUCTS MANUFACTURING FACILITY AT PORT ARTHUR, TEXAS, IN THE AMOUNT OF $300,000 AND A LOAN FOR $200.000. WHEREAS, on January 9, 2002 the Port Arthur Section 4A Economic Development Corporation approved by a vote of 4 Directors for and 0 against to authorize the Executive Director to enter an agreement in substantially the same form as attached hereto as Exhibit "A" with Tres Caballeros, Ltd. to build a renovated products manufacturing facility and related equipment in the City of Port Arthur; and WHEREAS, this new facility will provide for 78 new jobs over 5 years; and WHEREAS, the EDC Grant is $300,000 and a loan for $200,000; and WHEREAS, Mr. Wimberly, the EDC Attorney has prepared a note for 6% which is now being submitted to the City Council and WHEREAS, pursuant to Section 8.19 of the bylaws, the Economic Development Corporation has to submit projects to the City Council for review and approval. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: THAT the City of Port ^rthur hereby authorizes the Executive Director of the Port ^rthur Economic Development Corporation to execute an agreement between the Port ^rthur Economic Development Corporation and Tres Caballeros, ltd. in substantially the same form as Attachment .1 for a food product facility. THAT the terms of the note as delineated in Exhibit "F" to the agreement is approved. THAT the Port ^rthur Economic Development Corporation shall not pay for expenditures or expenses by Tres Caballeros, Ltd. prior to the execution date of this agreement. THAT Tres Caballeros, Ltd. will sign a certification that no funds were used to lobby the City or the Port ^rthur Economic Development Corporation 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. 2002, at a Regular Meeting of the City Council of the City of Port Arthur, Texas by the following vote: AYES: Mayor. CityCouncil NOES: OSCAR ORTIZ, MAYOR ATTEST: CAROLYN DIXON, CITY SECRETARY APPROVED AS TO FORM MARK SOKOLOW, CITY ATTORNEY APPROVED FOR ADMINISTRATION: STEPHEN FITZGIBBONS, CITY MANAGER APPROVEDFOR SECTION 4A ECONOMIC DEVELOPMENT CORPORATION: IKE MILLS, INTERIM EXECUTIVE DIRECTOR APPROVED AS TO THE AVAILABILITY OF FUNDS: REBECCA UNDERHILL, DIRECTOR OF FINANCE PROMISSORY NOTE ,2002 Port Arthur, Texas $200,000.00 FOR VALUE RECEIVED, the undersigned (hereinafter called "Maker", whether one or more, and if more than one, then jointly and severally) promise(s) to pay to the order of PORT ARTHUR ECONOMIC DEVELOPMENT CORPORATION, a 4A development corporation (herein called "Lender"), at its office at P.O. Box 1089, Port Arthur, Texas 77640, or such other place or places as the holder hereof shall from time to time designate in written notice to Maker, the sum of TWO HUNDRED THOUSAND AND NO/100 ($200,000.00) DOLLARS, 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 6.00% per annum as detailed herein. Notwithstanding anything to the contrary contained herein, absent a prior default by Maker and a resulting acceleration of maturity date, this note shall not begin to accrue interest until the expiration of twenty-four (24) months after the date of advance of the funds provided hereunder. All past due principal and interest shall bear interest from date of maturity unti! paid at the lesser of (a) eighteen percent (18%) per annum, or (b) at the maximum rate of non-usurious interest allowed from time to time by law as now, or to the extent allowed by law, as may hereafter be in effect, payable on demand after maturity. Interest shall be computed on a per annum basis of a year of three hundred sixty (360) days and for the actual number of days (including the first but excluding the last day) elapsed, unless such calculation would result in a usurious rate of interest, in which case interest shall be calculated on a per annum basis of three hundred sixty-five (365) or three hundred sixty-six (366) days, as the case may be. This note is due and payable as follows. On demand; if no demand, then: In 120 consecutive equal monthly installments of $2,220.42, including interest, or more, each. The first installment is payable on or before , 2004, and a like installment is payable on or before the same day of each succeeding month, with a 60th and final installment consisting of the entire unpaid balance of principal and accrued interest being due and payable on or before ,2014. Each installment will be applied first to the payment of accrued interest payable on the unpaid principal, and the remainder will be applied to reduction of principal. THIS LOAN IS DUE AND PAYABLE IN FULL ON OR BEFORE , 2014. AT MATURITY MAKER MUST REPAY THE ENTIRE PRINCIPAL BALANCE OF THE LOAN AND UNPAID INTEREST THEN DUE. LENDER IS UNDER NO OBLIGATION TO REFINANCE THE LOAN AT THAT TIME. MAKER WILL THEREFORE BE REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS IT MAY OWN, OR IT WILL HAVE TO FIND A LENDER WILLING TO LEND IT THE MONEY AT PREVAILING MARKET RATES, WHICH MAY BE CONSIDERABLY HIGHER THAN THE INTEREST ON THIS LOAN. IF MAKER REFINANCES THIS LOAN AT MATURITY, IT MAY HAVE TO PAY SOME OR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WITH A NEW LOAN EVEN IF IT OBTAINS REFINANCING FROM THE SAME LENDER. 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. Prior to.maturity of this note, whether by acceleration or otherwise, Maker agrees to pay Lender a late payment service charge (a "Late Charge") to cover the extra expense of handling delinquent payments in an amount equal to five percent (5%) of any installment not received by Lender within fifteen (15) days after such installment is due. The Late Charge will be collected only once on any late payment. The Late Charge will be paid promptly upon Lender's notice thereof to Maker. The funds advanced hereunder and payment of this note are being made pursuant to that certain Economic Incentive Contract and Loan Agreement of even date entered into by and between Maker and Lender. 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 included those executed simultaneously herewith, those heretofore executed, and those hereafter executed. If any installment or payment of principal or interest of this note is not paid when due; or if Maker defaults incident to any of Maker's obligations under the terms and conditions of that certain Economic Incentive Contract and Loan Agreement between Maker and Lender of even date and as a result of same, Lender declares Maker to be in default of said Economic Inventive Contract and Loan Agreement; or if Maker or any drawer, accepter, 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 pern~it 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; 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; or any event occurs or condition exists which causes Lender to in good faith deem itself insecure or to in good 2 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 party 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 .ex. pressly 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 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 la~v 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 mammum 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). This note shall be construed under and governed by the laws of the State of Texas (including applicable federal law), but in any event Tex. Rev. Civ. Stat. Ann. art. 5069 ch. 15 (which regulates certain revolving loan accounts and revolving triparty accounts) shall not apply to the loan evidenced by this note. Unless changed in accordance with law, the applicable rate ceiling under Texas law shall be the indicated (weekly) rate ceiling in effect as provided in Tex. Rev. Civ. Stat. Am~. art. 5069-1.04, as amended; except, however, if any other lawful rate exceeds the indicated (weekly) ceiling rate referenced above, then such higher ceiling rate shall apply. 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 and each other liable party are and shall be directly and primarily, jointly and severally, 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 3 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 hm~dling any of the security therefor, and do hereby agree to any substitution, exchange or release, in whole or in part, of any security herefor 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 other liable party does further agree that it will not be necessary for the holder hereof, in order to enforce payment of this note by such other liable party, to first institute suit or exhaust its remedies against Maker or any other liable party or to enforce its rights against any security therefor. TRES CABALLEROS, LTD. By: Tres Caballeros Partnership Trust, General Partner Name: Eric Larson Title: Trustee "Maker" MAKER'S ADDRESS FOR RECEIPTOFNOTICE: Tres Caballeros, Ltd. CITY OF PORT ARTHUR PORT ARTHUR ECONOMIC DEVELOPMENT CORPORATION ECONOMIC INCENTIVE CONTRACT AND LOAN AGREEMENT This Economic incentive Contract and Loan Agreement is entered this the __ day of ., 2002, with an effective date of ., 2002, by and between the Port Arthur Economic Development Corporation and Tres Caballeros, Ltd. (the "Recipient"). RECITALS WHEREAS, the Recipient operates as a Texas limited partnership that will provide Port Arthur's citizens with (i) food products manufacturing facility together with, (ii) equipment and fixtures to operate same, all of the foregoing hereinafter son~etimes jointly referred to as the "Facility", and, WHEREAS, the EDC has funds derived from sales tax revenue that is available for economic development projects as defined under Article 5190.6 V.T.C.A., and WHEREAS, these projects must be approved by the City of Port Arthur, and, WHEREAS, projects undertaken by the Recipient pursuant to this Contract must principally be for economic development as has been determined by the parties and as established under the guidelines of Article 5190.6 V.T.C.A., as amended; NOW, THEREFORE, The Parties hereto do mutually agree as follows: AGREEMENTTERMS SECTION1 PARTIES This Economic Incentive Contract ("Agreement") is made and entered into by and between the Port Arthur 4A Economic Development Corporation (hereinafter called the "EDC") acting herein by its Executive Director, duly authorized by Resolution of the City Council of the City of Port Arthur and Tres Caballeros, Ltd. (hereinafter called "Recipient") acting herein by Eric Larson, trustee of its general partner, The Tres Caballeros Partnership Trust. Recipient agrees by the execution hereof, that it is bound to the obligations and to the performance of the tasks described herein. SECTION2. CONTRACT PERIOD This Agreement shall commence on the date that it is signed by the EDC Executive Director and shall terminate in sixty (60) months, unless otherwise specifically provided by the terms of this Contract. Notwithstanding the foregoing, the promissory note portions of this Agreement shall continue pursuant to the terms and conditions of Exhibit F and any renewals, extensions or modifications of same. SECTION 3. PERFORMANCE BY RECIPIENT The Recipient shall relocate, construct, modify and/or remodel its Facility and commence operation of same within the City of Port Arthur. Recipient has represented and warranted to the EDC, and the conditional grant provided herein has been extended in reliance upon said representations, that Recipient will employ not less than seventy-eight (78) new full time employees within the initial sixty (60) months after the effective date hereof (the "employment obligation"). The timing of said employment shall be as detailed in Exhibit C attached hereto and incorporated herein for all purposes. The Recipient shall perform all activities in accordance with the Performance Statement attached hereto as Exhibit A, the Budget attached hereto as Exhibit B, the Project Implementation Schedule attached hereto as Exhibit C, the Applicable Laws and Regulations attached hereto as Exhibit D, the Certifications attached hereto as Exhibit E, and the assurances, certifications and other statements, representations and warranties made by the Recipient in its application for the project funded under the terms and conditions of this Agreement. Further, Recipient (subject to prior default and possible acceleration related to §ame) shall repay to EDC those certain loan proceeds ("loan funding") provided herein, with repayment to be made in compliance with that certain promissory note evidenced by Exhibit F attached hereto and incorporated herein for all purposes. It shall be Recipient's responsibility to furnish its own accounting services including clerical, statistical and bookkeeping for expenditures made by the Recipient in performance with the obligations detailed herein. SECTION 4. EDC'S OBLIGATIONS A. Conditional Fundin,q Obligations of EDC The EDC's sole obligation to Recipient hereunder shall be to provide conditional grant funding and loan funding as defined herein, not to exceed the limitation of liability declared herein, for actual and reasonable costs incurred by Recipient for "Authorized Expenditures" defined hereinabove. This funding shall be subject to limitations detailed herein and within the attached exhibits, and shall further constitute the EDC's sole obligation under the terms and conditions of this Contract. It is expressly understood and agreed by the parties hereto that the EDC funding obligations herein are contingent upon the actual receipt of adequate sales tax revenue funds to meet the EDC's liabilities under this Agreement. If adequate funds are not available to make payments under this Agreement, the EDC shall notify Recipient in writing within a reasonable time after such fact is reasonably determined by the EDC Board of Directors. The EDC, at its sole option, may then terminate this Agreement. In the event of such termination by the EDC, the EDC shall immediately cease all further funding, if any, required by this Agreement, and the EDC shall not be liable to Recipient or to any third parties for failure to make payments to Recipient under the terms and conditions of this Agreement. The EDC shall not be liable, in contract or otherwise, to the Recipient, or any person or entity claiming by or through Recipient, for any expense, expenditure or cost incurred by or on behalf of Recipient related to the project made the basis of this Agreement. The EDC's sole liability/obligations, if any, shall be to Recipient and shall be limited to the conditional funding obligations detailed in Section 4 of this Agreement. Recipient shall not use the funds conditionally granted 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 Recipient, which application is incorporated herein for all purposes. Funds conditionally granted by the EDC hereunder, as well as loan proceeds, shall not be utilized by Recipient for repayment of costs, expenditures or expenses incurred prior to the date of this Agreement unless specifically disclosed in writing by Recipient as part of or incident to Recipient's application. EDC shall not be liable for costs incurred or performances rendered by Recipient before commencement of this Contract or after termination of this Contract. Notwithstanding the foregoing, R6cipient shall be authorized to submit for reimbursement of Authorized Expenditures incurred prior to the execution date of this Contract, subiect to the maximum liability limit detailed in Section 4B. Fundin.q Limits Subject to the limitations provided herein, the EDC shall provide a conditional loan/grant to Recipient in the amount of not more than $300,000.00 and a loan in an amount of not more than $200,000.00. SECTION 5. DEFAULT/REFUND OBLIGATIONS In the event Recipient defaults in performance of its obligations hereunder, including failure to meet the new employment schedule attached hereto as Exhibit C (Employment Obligations) or in the event Recipient breaches its representations and warranties to the EDC contained herein or in its application for grant, the EDC, at its sole option, may terminate its remaining funding obligations, if any, detailed in Section 4 herein. Further, as provided in Section 5 (B) herein, the EDC may recover from Recipient all or a portion of the conditional grant made the basis of this Agreement. In the event the EDC demands that Recipient reimburse all or any part of the funds representing the conditional grant advanced hereunder, same shall be due and payable immediately upon tender of EDC's demand advising of Recipient's full or partial default. In the event Recipient fails to reimburse said funds within thirty (30) days of the tender of written demand by EDC, in addition to reimbursement of the principle funds advanced hereunder, Recipient shall further be obligated to reimburse EDC interest on said advanced funds at the rate of fifteen (15%) percent per annum, accruing from thirty days subsequent to EDC's default notice. In the event of default and failure of the Recipient to reimburse to EDC the funds advanced hereunder, the EDC shall further be entitled to recover its reasonable and customary attorney's fees and costs of Court incurred in collection of said obligation. Further, any default hereunder shall further constitute a default under the terms and conditions of the promissory note attached hereto as Exhibit F and shall, at the option of EDC, authorize EDC to accelerate the maturity date of said promissory note as provided more particularly therein. It is expressly understood and agreed by the parties hereto that any right or remedy provided for in this Section 5 or in any other provision of this Contract shall not preclude the exercise of any other right or remedy under this Contract 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. SECTION 6. OBLIGATIONS TO MAINTAIN RECORDS Recipient must establish and maintain sufficient records, as reasonably determined by the EDC, to account for the expenditure and utilization of funds received by Recipient from the EDC under the terms and conditions of this Agreement. Recipient shall maintain records of the receipt and disposition of all grant funds provided hereunder as necessary to allow the EDC to audit and verify proper utilization of said funds in compliance with this Agreement and the representations and warranties contained herein and in Recipient's application. Recipient shall provide reports of utilization of said grant funds, as reason to be requested by the EDC, and upon final termination of this contract. SECTION 7. RETENTION AND ACCESSIBILITY OF RECORDS Recipient shall give the EDC, 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 Recipient pertaining to this Agreement. Such rights to access shall continue as long as the records are maintained by Recipient. Recipient agrees to maintain such records in an accessible Location. All records pertinent to this Agreement shall be retained by 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 Recipient detailing Recipient's 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 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 repairs made by the Recipient utilizing EDC funds. All records pertinent to this Contract shall be retained by Recipient for three years following the date of termination of this Contract or submission of the final close-out report, whichever is later, with the following exceptions: If any litigation, claim or audit is started before the expiration of the three year period and extends beyond the three year period, the records will be maintained until all litigation (including any appeal), claims or audit(s) involving the records have been resolved. Records relating to real property acquisition or long-term lease shall be retained for a period equal to the useful life of any repairs made with EDC funds. SECTION 8. REPORTING REQUIREMENTS Recipient shall submit to EDC such reports on the operation and performance of this Contract as may be required by EDC including but not limited to the reports specified in this Section 8. Recipient shall provide EDC with all reports necessary for EDC compliance with Article 5190.6 V.T.C.A. It is expressly understood and agreed by the parties hereto that if Recipient fails to submit to EDC in a timely and satisfactory manner ~ny report required by this Contract, EDC may, at its sole discretion, withhold any or all payments otherwise due or requested by Recipient hereunder. If EDC withholds such payments; it shall notify Recipient in writing of its decision and the reasons therefore. Payments withheld pursuant to this paragraph may be held by EDC until such time as the delinquent obligations for which funds are withheld are fulfilled by Recipient. Notwithstanding the foregoing, if Recipient fails to fully and completely comply with its reporting requirements despite written demand by EDC, after expiration of thirty (30) days from the date of said written notice, EDC, at its sole option, may terminate this Agreement and demand reimbursement of all, or any portion thereof, of the funds advanced hereunder. SECTION 9. MONITORING The EDC reserves the right, from time to time, to carry out field inspections/audits to ensure compliance with the requirements of this Agreement. Recipient shall attend a compliance meeting after the notice of award of funds provided herein and prior to the first draw of any such funds. After completion of any such audit, the EDC, at its option, may provide the Recipient with a written report ofthe audit findings. Ifthe audit report details deficiencies in the Recipient's performance under the terms and conditions of this Agreement, the EDC may establish requirements for the timely correction of any such deficiencies by the Recipient. SECTION 10. HOLD HARMLESS Recipient agrees to hold harmless the EDC 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 grant funds provided by this Agreement. SECTION 11. SUBCONTRACTS Recipient may not subcontract for performances described in this Contract without obtaining EDC's written approval, which may be withheld for any reason. Recipient shall only subcontract for performance described in this Contract after Recipient has submitted Subcontractor Eligibility Request, as specified by EDC, for each proposed subcontract, and Recipient has obtained EDC's prior written approval, based on the information submitted, of Recipient's intent to enter into such proposed subcontract. Recipient, in subcontracting for any performances described in this contact, expressly understands that in entering into such subcontracts, EDC is in no way liable to Recipient's subcontractor(s). In no event shall any provision of this Section 11, specifically the requirement that Recipient obtain EDC's prior written approval of a subcontractor's eligibility, be construed as relieving Recipient of the responsibility for ensuring that the performances rendered under all subcontracts are rendered so as to comply with all terms of this Contract, as if such performances rendered were rendered by Rebipient. EDC's approval under Section 11 does not constitute adoption, ratification, or acceptance of Recipient's or subcontractor's performance hereunder. EDC maintains the right to insist upon Contractor's full compliance with the terms of this Contract, and by the act of approval under Section 11, EDC does not waive any right of action which may exist or which may subsequently accrue to EDC under this Contract. 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 Contract. SECTION 12. CONFLICT OF INTEREST No person who (1) is an employee, agent, officer or elected or appointed official of the City of Port Adhur or the EDC and who exercises or has exercised any functions or responsibilities with respect to activities assisted with funds provided under this Contract or (2) who is in a position to participate in a decision making process or gain inside information with regard to such activities may obtain a personal or financial interest or benefit from an EDC assisted activity, or have an interest in any contract, subcontract, or agreement (or proceeds thereof) with respect to a EDC assisted activity, during their tenure or for one year thereafter. 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 SECTION 13. NONDISCRIMINATION/EMPLOYMENT/REPORTING 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 Contract. Funds shall be used in accordance with the following requirements: To the greatest extent feasible, opportunities for training and employment arising in connection with the planning and carrying out of any project assisted with EDC funds provided under this Contract be given to Port Arthur residents; and To the greatest extent feasible, contracts 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. The Recipient shall notify the Economic Development Corporation of employment opportunities as to give the EDC a reasonable opportunity to forward names and resumes of Port Arthur residents. The Recipient shall advertise in the Port Arthur News as to all contracting employment and/or training opportunities. Beginning on the 6 month anniversary of the Contract and continuing at each 6 month interval of the term of the Contract, the Recipient shall furnish to the EDC reports detailing the total number of new full time employees hired by Recipient, with said report detailing (i) the new employee(s) by number or otherwise so as to ensure privacy, (ii) the job description/position, (iii) the wage rate, (iv) date of hire, (v) residence of the employee(s) and, (vii) any other information reasonably requested by EDC. Further, said report shall provide similar information on all terminations (whether voluntary or otherwise) occurring during the same period. SECTION 14. LEGAL AUTHORITY Recipient assures and guarantees that Recipient possesses legal authority to enter into this Contract, receive funds authorized by this Contract, and to perform the services Recipient has obligated to perform hereunder. The person or persons signing and executing this Contract on behalf of Recipient, or representing themselves as signing and executing this Contract on behalf of Recipient, do hereby warrant and guarantee that he, she or they have been duly authorized by Recipient to execute this Contract on behalf of Recipient and to validly and legally bind Recipient to all terms, performances, and provisions herein set forth. SECTION 1 5. LITIGATION AND CLAIMS Recipient shall give EDC immediate notice in writing of 1) any action, including any proceeding before an administrative agency filed against Recipient in connection with this Contract; and 2) any claim against Recipient, the cost and expense of which Recipient may be entitled to be reimbursed by EDC. Except as otherwise directed by EDC, Recipient shall furnish immediately to EDC copies of all pertinent documentation of any kind received by Recipient with respect to such action or claim. SECTION 16. CHANGES ANDAMENDMENTS Except as specifically provided otherwise in this Contract, any alterations, additions, or deletions to the terms of this Contract shall be by amendment in writing and executed by both parties to this Contract. It is understood and agreed by the parties hereto that performances under this Contract must be rendered in accordance with Article 5190.6 V.T.C.A., the regulations promulgated under Article 5190.6 V.T.C.A., the assurances and certifications made to EDC by Recipient, and the assurances and certifications made the City of Port Arthur with regard to the operation of the EDC's Projects. Based on these considerations, and in order to ensure the legal and effective performance of this Contract by both parties, it is agreed by the parties hereto that the performances under this Contract are by the provisions of the EDC Program and any amendments thereto and may further be amended in the following manner: EDC may from time to time during the period of performancb of this Contract issue policy directives which serve to establish, interpret, or clarify performance requirements under this Contract. Such policy directives shall be promulgated by the Executive Director when authorized by the City Council of Port Arthur and the EDC Board of Directors in the form of EDC issuances shall have the effect of qualifying the terms of this Contract and shall be binding upon Recipient, as if written herein, provided however that said policy directives and any amendments to the EDC Program shall not alter the terms of this Contract so as to release EDC of any obligation specified in Section 4 of this Contract to reimburse costs incurred by Recipient prior to the effective date of said amendments or policy directives. Any alterations, additions, or deletions to the terms of this Contract which are required by changes in Federal, state law or local law are automatically incorporated into this Contract without written amendment hereto, and shall become effective on the date designated by such law or regulation. SECTION 17. SUSPENSION In addition to the additional remedies provided hereunder, in the event Recipient fails to comply with any terms of this Contract, EDC may, upon written notification to Recipient, suspend this Contract in whole or in part and withhold further payments to Recipient, and prohibit Recipient from incurring additional obligations of funds under this Contract. SECTION 18 DEFAULT/TERMINATION tn the event of default of any of the obligations of the Recipient detailed herein or in the event of breach of any of the representations of or warranties of Recipient either detailed herein or in Recipient's application to the EDC, the EDC may, at its sole option, terminate this Agreement, in whole or in part. In the event of such termination, in addition to (i) any other remedies available to the EDC as provided by the laws of the State of Texas or (ii) any other remedies available to the EDC as provided herein, the EDC may, at its sole option, utilize one or more of the following actions to resolve or otherwise remedy said default: Withhold, whether temporarily or otherwise, disbursement of grant proceeds pending correction of the deficiency(s) by Recipient; Disallow all or a part of the grant expenditure which is not in compliance with the terms and conditions of this Agreement or in compliance with the representations and warranties contained within this Agreement and the Recipient's application to the EDC; 3. Withhold and/or disallow further EDC grants to the Recipient; Take any and all other remedies that may be legally available to the EDC, as authorized by the terms and conditions of this Agreement and as may be .authorized by the laws of the State of Texas; and Notwithstanding the foregoing, if Recipient fails to fully and completely comply with its obligations hereunder despite written demand by EDC, after expiration of thirty (30) days from the date of said written notice, EDC, at its sole option, may terminate this Agreement and demand reimbursement of all, or any portion thereof, of the funds advanced hereunder as provided more particularly in Section 5B hereinabove. 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. SECTION 19. AUDIT Unless otherwise directed by EDC, Recipient shall arrange for the performance of an annual financial and compliance audit of funds received and performances rendered under this Contract, subject to the following conditions and limitations: Recipient shall have an audit made for any of its fiscal years included within the contract period specified in Section 2 of this Contract in which the Recipient receives more than $25,000 in EDC financial assistance provided by EDC in the form of grants, contracts, loans, loan guarantees, property, cooperative agreements, interest subsidies, or direct appropriations. At the option of Recipient, each audit required by this section may cover either Recipient's entire operations or each department, agency, or establishment of Recipient which received, expended, or otherwise administered EDC funds; Unless otherwise specifically authorized by EDC in writing, Recipient shall submit the report of such audit to EDC within thirty (30) days after completion of the audit, but no later than one (1) year after the end of each fiscal period included within the period of this Contract. As a part of its audit, Recipient shall verify expenditures according to the Budget attached as Exhibit B. Notwithstanding Subsection A of this Section 19, EDC reserves the right to conduct annual and/or semiannual financial and compliance audit(s) of funds received and performances rendered under this Contract. Recipient agrees to permit EDC or its authorized representative to audit Recipient's records and to obtain any documents, materials, or information necessary to facilitate such audit. Recipient understands and agrees that it shall be liable to immediately reimburse EDC for any costs disallowed pursuant to financial and compliance audit(s) of funds received under this Contract. Recipient shall take all necessary actions to facilitate the performance of such audit or audits conducted pursuant to this Section 19 as EDC may require of Recipient. All approved EDC audit reports shall be made available for public inspection within 30 days after completion of the audit. SECTION 20. ENVIRONMENTAL CLEARANCE REQUIREMENTS Recipient understands and agrees that by execution of this Contract Recipient shall be responsible for providing to EDC all information, concerning this EDC funded project, required for EDC to meet its responsibilities for environmental review, decision making, and other action which applies to EDC in accordance with and to the extent specified in Federal, State and Local Law. Recipient further understands and agrees that Recipient shall make all reasonable efforts to assist EDC in handling inquiries and complaints from persons and agencies seeking redress in relation to environmental reviews covered by approved certifications. SECTION 21. SPECIAL CONDITIONS EDC shall not release any funds for costs incurred by Recipient under this Contract until EDC has received certification from Recipient that its fiscal control and fund accounting procedures are adequate to assure proper disbursal of and accounting for funds provided under this Contract. EDC shall specify the content and form of such certification. SECTION 22. ORAL AND WRITTEN CONTRACTS All oral and written contracts between the parties to this Contract relating to the subject matter of this Contract that were made prior to the execution of this Contract have been reduced to writing and are contained in this Contract. The attachments enumerated and denominated below are hereby made a part of this Contract, and constitute promised performances by Recipient in accordance with Section 3 of this Contract: Exhibit A, Performance Statement Exhibit B, Budget (where applicable) ]0 4. 5. 6. Exhibit C, Project Implementation Schedule Exhibit D, Applicable Laws and Regulations Exhibit E, Certifications Exhibit F, Promissory Note SECTION 23. .VENUE For purposes of litigation pursuant to this Contract, venue shall lie in Jefferson County, Texas. SECTION 24. ADDRESS OF NOTICE AND COMMUNICATIONS Port Arthur Economic Development Corporation 444 4th Street Port Arthur, Texas 77640 ATTN: Ignacious "lke" Mills, Interim Executive Director Tres Caballeros, Ltd. Tres Caballeros Partnership Trust, General Partner ATTN: Eric Larson, Trustee SECTION 25. CAPTIONS Each paragraph of this Contract has been supplied with a caption to serve only as a guide to contents. The caption does not control the meaning of any paragraph or in any way determine its interpretation or application. SECTION 26. COMPLIANCE WITH FEDERAL, STATE AND LOCAL LAWS Recipient shall comply with all Federal, State and local haws, statutes, ordinances, resolutions, rules, regulations, orders and decrees of any court or administrative body or tribunal related to the activities and performances of Recipient under this Contract. Upon request by City, Recipient shall furnish satisfactory proof of its compliance herewith. APPROVED AS TO FORM: James Wimberley, PAEDC Counsel ]! SIGNED on the day of ., 2002. Port Arthur Economic Development Corporation By:¸ Interim Executive Director Witnessed SIGNED on the day of ,2002. Tres Caballeros, Ltd. Tres Caballeros Partnership Trust, General Partner By: Eric Larson Its: Trustee Witnessed EXHIBIT A Performance Statement Recipient's performance: Recipient shall complete relocation, acquisition, construction/remodeling and operation of the Facility as defined and detailed in Section 3. In addition, Recipient shall employ new full time employees in the total numbers detailed in Section 3 and within the time frames detailed in Exhibit C. Funding Parameters: Recipient shall receive a conditional grant/loan up to the maximum sum of $300,000.00, which loan shall bear conditional interest at the rate of 15% per annum as detailed more particularly in Section 5(B) of the Agreement. In addition, EDC shall grant a loan to Recipient in the amount of $200,000.00, the repayment of which shall be as provided in Exhibit F attached hereto and incorporated herein for all purposes. The funds, whether from the conditional grant/loan or from the loan evidenced by Exhibit F, shall be utilized by Recipient and/or advanced on behalf of Recipient solely for costs related to "Authorized Expenditures" as defined within the Agreement. As detailed therein, Authorized Expenditures shall be limited to costs incurred by or on behalf of the Recipient related to (i) construction and acquisition of the Facility, (ii) acquisition and/or construction of fixtures within the Facility, and/or (iii) acquisition and/or installation of equipment, furniture and fixtures to be utilized in operation of the business operations which comprise the Facilities, including the food manufacturing and distribution facility. Conditional grant and loan funds hereunder shall be advanced to Recipient by EDC, subject to the maximum sum of $500,000.00, solely to reimburse Recipient for the Authorized Expenditures detailed hereinabove, with verification related to said Authorized Expenditures being provided to the EDC, prior to funding, in the form of invoices, purchase orders or other appropriate documentation which would be reasonably necessary to atlow the EDC to verify that the requested advance and/or reimbursement are for costs/expenses which constitute Authorized Expenditures. Recipient agrees to complete acquisition and construction of the Facility and complete acquisition and construction of all furniture, fixtures, equipment, software and other components utilized in operation of the Facility and commence operations of same within six (6) months of the effective date of this Agreement. Administrative Costs: Recipient shall utilize its own funds to carry out all project administration activities, including the costs associated with the required annual program in compliance in fiscal audits as detailed in the Agreement. It is further understood that any costs incurred by Recipient for these activities shall be paid with private and/or other funds. START-UP COST PROJECTIONS Building Building Cost Estimated Total Cost of Building New Building 550,000 550,000 Equipment Pan de Huevo & Bolillo Roll Line Champion Mixer Gry 6 Pocket Divider-rounder Gry 6 pocket Intermediate Proofer Tw. eery Dough Chunker Rhodes Dual Cut Depositor with Dual Independent Variable Drives With control eyes 2 S/S Dough Trough 7" Long Delta Tough Hoist White Belt Conveyor 12' Long Liquid Carbonic spiral Freezer White Belt Conveyor 12' Long Packing Metal Detector Estimate Cost Pan de Huevo Line 35,000 11,700 2,600' 11,700 6,700 115,000 6,700 9,300 198,700 Empanada & Marranito Line Readco Double Z Arm Mixer 2 - Hobart Mixer Rondo Makeup Line Rondo Dough Extruder Anets Sheeter Head with Two Flour Dusting Assemblies Rondo Depositor Scrap Dough Removal Conveyor White Conveyor 12' Packing Line Metal Detector Estimate Cost Empanada Line 47,000 23,000 72,000 16,500 15,500 5,000 6,500 6,700 9,300 201,500 Cookie Line Wire Cut Depositor White Conveyor 12' Packing Line Metal Detector Estimate Cost Cookie Line 35,000 6,700 9,300 51,000 Corn Bread & Cake Line Hinds Bock Mu[ti-piston Depositor ~White Belt Conveyor 12' Long 45' Reed Tunnel Oven White Cenveyor 12' Packing Line Estimate Corn Bread & Cake Line 13,500 6,700 57,000 6,700 83,900 USE OF ~ FU~ 100,000 198,700 201,300 Holding Freezer EXHIBIT C Project Implementation Schedule CONTRACT START DATE: IMPLEMENTATION SCHEDULE CONTRACT ENDING DATE: MONTHS Activities 6 12 18 24 30 36 42 48 54 Go Acquisition/Construction/ ,/- Start up Acquisition Of New Equipment and Fixtures Hire New Full Time 7 14 21 28 35 42 51 60 69 Employees Begin Repayment of Note (absent prior default) General Administration t/' Interim and Final Report & v/ ¢,- v/ ¢/ ¢/ v/ / v/ ¢_ v/ Close-out Recipient shall complete acquisition and construction of the Facility, including construction, acquisition and installation of all furniture, fixtures, equipment, software and other components utilized in operation of the Facility and commence actual operation of the Facility, including all businesses located therein, on or before the expiration of six (6) months from the effective date of this Contract. Recipient shall operate continuously the Facility for a minimum period of sixty (60) months, which sixty (60) months shall commence from the effective date of this Contract. EXHIBIT D The Applicable Laws and Regulations Recipient shall comply with all federal, state, and local laws and regulations applicable to the activities and performances rendered by Recipient under this Contract including, but not limited to, the civil rights laws and regulations as well as Articles 5190.6 V.T.CA. EXHIBIT E Certification Regarding Lobbying for Contracts, Grants, Loans, and Cooperative Agreements The undersigned cer[ifies, to the best of his knowledge and belief, that: No federal appropriated 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 congress, an officer or employee of congress, or an employee of a member of congress in connection with the awarding · of any federal contract, the making of any federal grant, the making of any federal loan, the entering into of any cooperative agreement, or modification of any federal contract, grant, loan, or cooperative agreement. If any funds other than federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a member of congress, an officer or employee of congress, or an employee of a member of congress in connection with this federal contract, grant, loan, or cooperative agreement, the undersigned shall complete and submit standard form -LLL, "Disclosure Form to Report Lobbying", in accordance with its instructions. The undersigned shall require that the language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all Subrecipients shall certify and disclose accordingly. This cedification 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 imposed by section 1352, Title 31, U.S. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $100,000 for each such failure. Signed: Tres Caballeros, Ltd. Tres Caballeros Partnership Trust, general partner By: Its: Trustee Date: 17 01/11/2002 09:54 FAX 409 7247450 MCPBERSON MON~ ~006 PROMISSORY NOTE Po~Arthur, Texas 2002 $200,000.00 FOR VALUE RECEIVED, the undersigned (hereinafter called "Maker"~ whether one or more, and if more than one, then jointly and several/y) promise(s) to pay to thc order of PORT ARTHUR ECONO,,MIC DEVELOPMENT CORPORATION, a 4A development cerporalion (herein called "Lender' ), at its office at P.O. Box 1089, Port Arthur, Texas 77640~ or such other place or plac~ as the holder hereof shall from time to time designate in written notice to Maker, the sum of TWO HUNDRED THOUSAND AND NO/100.($200,000.00) DOLLARS, La legal and lawful money of the United States of America, together ruth interest thereon 'from the date hereof until maturity at the rote of 6.00% per annum as detailed herein. Notwithstanding anything to the contrary contained herein, absent a prior default by Maker and. a resulting acceleration of maturity date, this note shall not begin to accrue interest until the expiration oflwenty-four (24) months after the date of advance of the funds provided hereunder. All past due principal and interest shall bear interest from date of maturity until paid al. the lesser of (a) eighteen percent (18%) per annum, or Co) at the maximum rote of non-usurious Latc~mst allowed fzom lime to llme by law as now, or to the extent allowed by law, as may hereafter be in effect, payable on demand after maturity. Interest shall be computed on a per annum basis of a year of three htmcked sixty (360) days and for the actual number of days (including the f~t but excluding the last day) elapsed, unless such calculation wou/d result in a usurious rote of Laterest~ in which case interest shall be calculated on a per annum basis of three hun&ed sixty-five (365) or three hun&ed sixty-six (366) days, as the case may be. This note is due and payable as follows. On demand; if no demand, then: In 120 consecutive equal monthly installracmts of $2,220.42, including interest, or more, each. The first i~stallmeat is payable on or before ~ 2004, and a like installment is payable on 'or beforetime same day of each succeeding month, with a 60th and final installment consisting of the entire unpaid balance of principal and accrued interest being due and payable on or before .... 2014. Each installment will be applied first to the payment of accrued interest payable on the unpaid principal, and the remainder will be applied to reduction of principal. THIS LOAN IS DUE AND PAYABLE IN FULL ON OR BEFORE , 2014. AT MATURITY MAKER MUST REPAY THE ENTIRE PRINCTPAL BALANCE OF THE LOAN AND UNPAID INTEREST THEN DUE. LENDER IS UNDER NO OBLIGATION TO REFINANCE THE LOAN AT THAT TIME. MAKER WILL THEREFORE BE REQUIRED TO MAKE PAY1ViENT OUT OF OTHER ASSETS IT MAY OWN, OR IT WILL HAVE TO FIND A LENDER WILLING TO LEND IT THE MONEY AT PREVAILING M_A~T RATES, WI-IICH MAY BE CONSIDERABLY HIGHER THAN THE INTEREST ON THIS LOAN. IF NL4KER REFINANCES THIS LOAN AT MATURITY, IT MAY HAVE TO PAY SOME OR ALL OF THE CLOSING COSTS NORMALLY ASSOCIATED WIIH A NEW LOAN EVEN IF IT OBTAINS REFINANCING FROM THE SAME LENDER. 01/~1/2002 09:55 FA~ 409 7247450 MCPHERSON MONK ~007 Any notices required or permitted to be given by the holder hereof to Ivlaker pursuant t() the provisions of this note shall be m writing and shall be either personally delivered or transm/tted by first class United States mail, addressed to Maker at the address designated below for receipt of notice (or at such other address as Makcr may, from lime 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 trans~tted by mail, ha accordance with the foregoing provisions, shall be deemed to have been given to and received by Maker as of thc date on wkich such notice was deposited with the United States Postal Service, properly addressed and with postage prepaid. Prior to maturity of this note, whether by acceleration or otherwise, Maker agrees to pay Lender a late payment service charge (a "Late Charge") to cover the extra expense of handling delinquent payments in an amounl equal to five percent (5%) of any installment not received by Lender withLn fitSeen (15) days after such insm/lm~nt is due. The Late Charge will be collected only once on any late payment_ The Late Charge will be paid promptly upon Lender's notice thereof to Maker. The funds advanced hereunder and payment of this note are being made pursuant to that certain Economic Incentive Contract and Loan Agreement of even date entered into by and between Maker and Lender. This note is also secured by and entitled to the benefits of all other security agreements, pledges, collateral ass~gnments, deeds of trusk 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 h~Lmments shall included those executed skmultancously herewith, those heretofore executed, and those hereafter executed_ If any installment or payment of principal or interest of this note is not paid when due; or.if Maker defaults incident to any of Maker's obligations under the terms and conditions of that certain Economic Incentive Contract and Loan Agreement between Maker and Lender of even date and as a ~esult of same, Lender declares Maker to be in default of said Economic Inventive Contract and Loan Agreement; or if Maker or any drawer, aecepter~ 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 evidence); or ff any proceeding, procedare or remedy supplementary to or in enforcement ofjudgrnent shall be resorted to or commenced against Maker or any other liable party, or with respect to any property of any of them; or ff 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, ct a '~t or order of attachment or garnishment slmll be issued or made agaln~t 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 sh .al, 1 not be paid when due or shall become due and payable by acceleration of maturity thereof, or it any evcrtt 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 (it: other th~n 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 ffMaker or any other liable party fails to furnish financial informauon requested by Lender;, or if Maker or any other liable party furnishes or has fitmished any :financial pr other information or statements wttich 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 to in good 2 01/11/2002 09:55 FAX 409 7247450 MCPHERSON MONK ~005 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 ['or th.is note, or under any other indebtedness of Maker or any other liable party 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 parry. Lender may waive any default without waiv/ng 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, reor.g, anizafion, arrangem.ent or othej/ legal proceedings for collection her.eof, .Maker and..e.e.e.e~ch other ~able party agree to pay Lender its collection costs, including court costs aaa a reasonable amount ~or 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 ail consideration which constitu.tes 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 cixcumstances 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 herenf resulting from any default hereunder or other. 'Se, .or in the event of .any required or permitted prepayment, then such consideration that conslatutes interest may never mclude more than the mm<Lmm mount 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, ff theretofore prepaid, shall be credited on this note (or if this note shall have been paid in full, refunded to Maker); and ({ii) all calculations of the rote 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 rote exceeds the maximum lawful rote shall be made, to the extent~ perm~.'tted by ap~plicable law, by amortizing, prorating, allocating and spreading such interest o~ver me enure term of the loan evidenced by this note(including all renewal and extended temps). This note shall be construed under and governed by the laws of the State of Texas (includin~ appli.cable federal law) but in any event Tex. Rev. Civ. Stat. Ann. art. 5069 ch. 15 (which regulates certain revolving loan accounts and revolving triparty accounts) shall not appty to the loan evidenced by this note_ Unless changed in accordance with law, the applicable rote ceiling m~der Texas law shah be the indicated (weekly) rate ceiking in effect as provided in Tex. Rev. Civ. Stat_ Ann. art. 5069-1.04, as amended; except, however, if any other lawful rote exceeds the indicated (weekly) ceiling rote referenced above, then such higher ceiling rate shall apply. · Maker m..ay prepay all or any part of the principal o~ this note before maturity without penalty.. No par~.~al pm,payment shall reduce, postpone or dela) the obligation or' Maker to continue paying me installments herein provided on their respective due dates following any such partial prepayment until this note is fully paid_ The Maker and each other liable party are and shall be directly and primarily, jointly and severally, liable for the payment of all sa~m~ called for hereunder; and, except for notices specifically required to be given by the holder hereof to Maker purs~ant to the earlier provisions of this note, Maker and each other liable party hereby expressly waive demand, presentment for 3 01/11/2002 0~:§6 FAX 400 7247450 MCP~IERSON MONK ~000 payment, notice of nonpayment, protest, notice of protest, notice of intention to accelerate mab..rity, 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 therefo,r, and do hereby agree to any substitution, exchange or release, in whole or in part, of any s¢curit3 hen:for or thc 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 partMhe.reof, either .before o.r. aR._e.r maturity, all without any notice thereof to any of them and · w~thout a~ec~mg or releasm.~ the habihty of any of them. Each other llablc party does further agree that it will not be necessary for the holder hereof, in order to enforce pays_ ent of this note by such other liable party, to first institute stilt or exhaust its remedies against Mal~er or any other liable party or to enforce its rights against any seem-ity therefor. - TRES CABALLEROS. LTD. By: Tres Caballeros Partnership Trust, General Partner Name: Erie Latson Title: Trustee "Maker" MAKER'S ADDRESS FOR RECEIPT OF NOTICE: Tres Caballeros, Ltd.