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1997-01-21-Minutes 279 MINUTES OF THE PARIS ECONOMIC DEVELOPMENT CORPORATION SPECIAL MEETING January 21, 1997 The Paris Economic Development Corporation met in their special meeting on Tuesday, January 21, 1997, at 1:00 P.M., in the City Hall North Annex Fire Training Room, Paris, Texas. President Curtis Fendley called the meeting to order with the following boardmembers present: Dick Amis, Michael Rhodes, Leon Williams, and Barney Bray. Also present at this meeting were ex-officio boardmembers Judge Chuck Superville, Carl Cecil, Gary Vest, City Manager Michael E. Malone, and City Attorney, T.K. Haynes. 280 President Fendley asked Gary Vest to provide information on the agenda item since he had dealt with this prospect. Mr. Vest pointed out that there are still a number of variables with this particular prospect that is referred to as Prospect No. 1210396. He said what the Board is basically agreeing to is allowing this interest to pursue the acquisition of BITCO, continuing to make the bits, employing the people and paying the debts that have been created. He said basically the Board is looking at a newly formed company. He said P.E.D.C., the bank consortium and the Northeast Texas Economic Development District, all secured lenders, would agree to transfer assets of BITCO to the newly formed company subject to the existing debt and interest. He said all assets will secure new working capital, and the secured lenders will execute a subordination agreement. He said the P.E.D.C. guaranty would remain in effect until all secured debt is paid. He said the lease on the building will still need to be negotiated with this newly formed company. He said it is anticipated that the new company would take approximately seventeen (17) months to show profitability. He said to sum this proposal up, the bottom line is that thru this agreement, P.E.D.C. has an opportunity to obtain payment for all secured debt. Mr. Vest said the second option basically is that BITCO proceeds into a bankruptcy situation and we would receive some money from the sale of assets towards the debt that we have secured for BITCO. Mr. Vest introduced Clay Meadows who represented the Northeast Texas Economic Development District. Mr. Meadows stated that the Northeast Texas Economic Development District found this a favorable alternative to the other alternative which would be foreclosure on the real estate pledged by Charles Rhoades. He said after investigating the true value of the real estate through liquidation, there is no way to obtain full loan repayment. He said Northeast Texas Economic Development District would like to proceed with this offer in hopes of receiving full payment of the loan. Mr. Vest mentioned that Mr. Amis had visited with Nations Bank, the lead bank for our consortium and asked for his comments. Mr. Amis said the general agreement within the banking group, not unanimous, was to pursue this effort. President Fendley called for any questions concerning this agenda item. There was a question concerning the subordination of the lien, and Mr. Vest said for the new group to put the working capital in, they want us to subordinate our debt. President Fendley asked would the Board be subordinating to the extent of their debt and Mr. Vest said that was correct. There was a question if this was just the bank debt on the equipment on the subordination. Mr. Vest said it also included the Northeast Texas Economic Development District. Boardmember Rhodes stated he had a hard time giving up our collateral position, and he felt that we were just trading one corporate body for another, but losing our collateralized position. Mr. Vest said one thing that could happen is to negotiate with them and try to go into an equally shared collateral. Mr. Rhodes said he felt that would be a viable alternative. President Fendley stated that this agenda item is just to continue negotiations and after this meeting, the Board would be committed to attempt to work out a deal with this group. Mr. Vest said there is room for negotiation and anything that's done still has to come back to this Board for final approval. Boardmember Rhodes stated that he felt it was very important that the Board maintain a position and not give on everything. Mr. Vest said that this proposal is at least a last ditch effort to try to keep the business operating as it was originally intended. President Fendley asked for other questions and there were none. He said this agenda item would give the Board the ability to negotiate with this group, and no decision will be made until it comes back before the Board. Mr. Fendley stated he would like to place Boardmember Mike Rhodes, another member of the P.E.D.C., on the negotiating team. 281 President Fendley called for the reading of the resolution and City Attorney T.K. Haynes read the resolution. Resolution Number 97-001-Authorizing President Curtis Fendley to execute a pro forma agreement with regard to the BITCO business with Prospect No. 12-103-96 under the terms and conditions contained therein, and authorizing and directing President Curtis Fendley and Boardmember Michael R. Rhodes to negotiate acceptable terms with Prospect No. 12-103-96 for either the lease of, the purchase of, or the lease with purchase option of the BITCO building, and all other terms as may be necessary, with any and all such terms being subject to final approval by the Board of Directors of the Paris Economic Development Corporation. Boardmember Mike Rhodes made a motion, seconded by Boardmember Dick Amis to adopt the resolution as read and the motion carried unanimously. PARIS ECONOMIC DEVELOPMENT CORPORATION RESOLUTION NO. 97-001 WHEREAS, the Paris Economic Development Corporation is in receipt of an inquiry from Prospect No. 12-103-96, and has been requested to execute a pro forma agreement in order that such prospect may proceed to investigate and propose definitive terms with regard to the Bitco business; NOW, THEREFORE, BE IT RESOLVED BY THE PARIS ECONOMIC DEVELOPMENT CORPORATION, that the President, Curtis Fendley, be, and he is hereby, authorized and directed to execute, on behalf of the Paris Economic Development Corporation, a pro forma agreement with regard to the Bitco business with Prospect No. 12-103-96 under the terms and conditions contained therein, said agreement being conditioned upon such prospect being found to possess sufficient capital; and, BE IT FURTHER RESOLVED, that the President, Curtis Fendley, and Board Member, Michael R. Rhodes, be, and they are hereby, authorized and directed to negotiate acceptable terms with Prospect No. 12-103-96 for either the lease of, the purchase of, or the lease with purchase option of the Bitco building, and all other terms as may be necessary, with any and all such terms being subject to final approval by the Board of Directors of the Paris Economic Development Corporation; and, BE IT FURTHER RESOLVED, that a copy of this resolution shall be attached to and made a part of the pro forma agreement with Prospect No. 12-I03-96. PASSED AND ADOPTED this 21st day of January, 1997. Curtis Fendley, President 282 ATTEST: Richard M. Amis, Secretary-Treasurer APPROVED AS TO FORM: T. K. Haynes, City Attorney President Fendley stated that they would get together with the prospect group at which time another Board meeting will be called as soon as possible. President Fendley declared the meeting adjourned. President Curtis Fendley City Clerk Mattie Cunningham :