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04-B-2 PEDC Mtg Min 7-25-07 Paris Economic Development Corporation Board Meeting Minutes July 25, 2007 Board Members Present: John Wright Glen Bawcum Dick Severson Staff Present: Pete Kampfer Mindy Moree Rachel Schory Ex-officio Members Present: Pam Anglin Rodney Bass Guest Present: Bill Hankins John Wright called the meeting to order at 1 :05 PM. Minutes from the June 20, 2007 were approved unanimously as presented on a motion made by Glen Bawcum seconded by Dick Severson. The June financial report was presented and approved unanimously on a motion made by Dick Severson seconded by Glen Bawcum. Agenda item number 4, election of new Board officers, was tabled due to the new board members being out of town. Pete Kampfer reported that the main focus of his efforts since the last Board meeting has been on finalizing C-Tech negotiations. Mr. Kampfer also gave a brief report on the various other projects that are in the works to include the following items: 2007 PEDC Strategic Plan; the new PEDC Marketing Plan to include, branding, web page development, print media, as well as other advertisements; The Base Line Study via Texas A & M; and the SSRMA approved by TxDOT in Austin. The board went into executive session at 1:22 P.M. to discuss possible C-Tech negotiations. Executive session was closed at 1 :38 P.M. Dick Severson made the motion to accept the terms of the C-Tech Agreement, attached hereto and made apart thereof, and John Wright as Vice President ofPEDC to sign the Agreement as presented by Charles Waldrum dated July 25,2007. The motion passed unanimously on a second by Glen Bawcum. The documents were then signed by John Wright. With no further business to come before the board the meeting was adjourned at 1 :48 P.M. on a motion made by Glen Bawcum seconded by Dick Severson. Respectfully submitted, Mindy Moree Administrative Director AGREEMENT This agreement is effective as of the .~ 5 ~ay of .:r (;\ L yo , 2007 (the "Effective Date") between C-Tech, Inc., a Minnesota corporation ("C-Tech"), Paris Economic Development Corporation, a Texas non-profit corporation and any affiliate thereof ("PEDe'), Paris Holdings, LLC, a Texas limited liability company formerly known as Meshbesher Properties, LLC ("Holdings"), Mike Meshbesher, a Minnesota resident ("Meshbesher"), and Indigo Holdings, LLC, a Minnesota limited liability company ("Indigo'), a member of Holdings, said parties herein collectively referred to as "the Parties". C-Tech and PEDC are parties to an incentive agreement dated June 16, 2003 (as amended, the "Incentive Agreement") and a loan agreement dated June 16, 2003 (as amended, the "Loan Agreement') whereby, among other things, PEDC agreed to convey certain land situated in Paris, Texas (the "Real Property") to C- Tech at a later date and grant C- Tech certain economic incentives in consideration of C-Tech's agreement to conduct business on the Real Property, create new jobs over a certain period of time, and execute and deliver a non-interest bearing promissory note in favor of PEDC with an original principal amount of $1,500,000 (as amended, the "Note"), as amended by that certain First Amendment to Note and Incentive Agreement and Loan Agreement effective as of April 7, 2005 between PEDC, C-Tech, Meshbesher and Indigo (the "Amendment"). Pursuant to the Amendment PEDC agreed, among other things and in consideration of certain obligations and duties of C- Tech, Holdings, Meshbesher, and Indigo set forth therein, to convey the Real Property to Holdings rather than to C- Tech. PEDC conveyed the Real Property to Holdings by warranty deed dated April 7, 2005 and effective April 14, 2005. Meshbesher and Indigo are the sole owners of Holdings. Any and all liabilities and/or obligations of any party hereto (other than PEDC) to PEDC or pursuant to any agreement or document of any party hereto for the benefit of PEDC shall be referred to collectively and aggregately as the "Obligations'). The parties now desire to modify their relationships according to the terms set forth herein. The parties hereby agree as follows: I. Affirmation of Prior Agreements. As between or among the Parties, all Obligations remain in full force and effect until all provisions ofthis Agreement have been completed and all payments provided for herein have been paid. 2. Payments to PEDC. On the Effective Date, C- Tech shall initiate a wire transfer to PEDC in the amount of $250,000 pursuant to wire transfer instructions provided by PEDC. On or before December I, 2007, C-Tech shall pay to PEDC an additional $50,000. Beginning on September I, 2007, C-Tech shall pay PEDC Six Thousand Dollars ($6,000) per month on the first day of each month for thirty-two (32) consecutive months with a final payment on the first day of the thirty-third (33) month of $8,000, for an aggregate payment of $200,000. The date all such payments have been made shall be referred to as the "Final Payment Date." 510918.18 3. Forbearance. Except in the event that any party to this Agreement enters into Bankruptcy of any type, voluntarily or involuntarily, PEDC shall forbear from all legal actions for the collection or enforcement of the Obligations and shall forebear from all legal actions related to any security interests and/or liens related to the Obligations, unless and until C- Tech defaults in the payments due to PEDC under Section 2 of this Agreement or defaults as to any other provision of this Agreement, and fails to cure any such default within ninety (90) days after PEDC has given written notice to C- Tech of such default. 4. Corporate Stock of C-Tech. C-Tech agrees and guarantees that C-Tech Stock Certificate #1 represents all of the issued and outstanding shares of stock of C- Tech, and further, that C- Tech will issue no other stock to any person or entity until all terms of this Agreement shall have been fully completed or except with the consent of PEDC, which consent will not be unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing, C- Tech may issue additional stock as long as the proceeds are used to pay all of C- Tech's obligations to PEDC under this Agreement. 5. Life Insurance. In lieu of any previous agreement between PEDC and C- Tech and/or Meshbesher, C- Tech will obtain and keep current an insurance policy on the life of Meshbesher in the amount of $200,000, which policy will list PEDC as the primary beneficiary on that policy up to the amount then currently owed to PEDC by C- Tech under the terms of this Agreement. 6. Termination of Obligations. Effective as of the Final Payment Date, PEDC hereby terminates all agreements, whether written or oral, to which PEDC is a party, or of which PEDC is a direct or indirect beneficiary with respect to C-Tech's Paris, Texas operations and the Real Property, including, without limitation, the Incentive Agreement, the Note, the Loan Agreement, the Amendment, all security agreements, the deed of trust granted by Holdings and C- Tech in favor of Gary Vest, as trustee ofPEDC dated April 7, 2005, and any and all personal guarantees given by the parties hereto in favor of PEDC, including, without limitation, any personal guarantees ofMeshbesher to PEDC; also, effective as of the Final Payment Date, all other parties to such agreements that are parties to this Agreement hereby terminate all such agreements. As of the Final Payment Date, PEDC, hereby releases and terminates any security interests, liens, or encumbrances in its favor with respect to assets owned by C- Tech, Holdings, Indigo or Meshbesher, including, without limitation, the Real Property (the "Encumbrances"). As of the Final Payment Date, PEDC hereby forgives any and all monies payable to or due PEDC by any party hereto under the Note or any other instrument and irrevocably waives any right to payment thereunder. As of the Final Payment Date, PEDC hereby authorizes Holdings, C- Tech, Indigo and Meshbesher to file any documentation reasonably necessary to terminate and release the Encumbrances, including, without limitation, the filing of UCC-3 termination statements with the appropriate governmental offices, and agrees to execute any reasonable documents prepared by the parties hereto to effectuate same. For the avoidance of any doubt, after the Final Payment Date, Holdings will retain ownership of the Real Property free and clear of any Encumbrances in favor of PEDC and neither C- Tech, Holdings, Meshbesher, nor Indigo will have any obligations or liabilities to PEDC other than as set forth in this Agreement. PEDC shall return to C- Tech the following original documents on the Final Payment Date: (i) the Note, (ii) the Amendment, and (iii) the original Stock Certificate number one of C- Tech. 510918. ] 8 2 7. Waiver and Release. Effective as of the Final Payment Date, PEDC, on the one part, and C- Tech, Holdings, Meshbesher, and Indigo (collectively the "C- Tech Group") on the other, on behalf of itself and its respective affiliates, predecessors, successors, and assigns, each hereby forever, fully, and unconditionally releases and discharges the other and such parties' respective stockholders, members, board members, officers, and employees from any and all obligations, offsets, actions, suits, debts, sums of money, contracts, covenants, agreements, promises, legal rights, claims, counterclaims, causes of action, demands, damages, costs, compensation, liabilities, losses and expenses of any nature or of any kind, whether known or unknown, asserted or unasserted, liquidated or unliquidated, absolute or contingent, accrued or non-accrued, which any party ever had, now has, hereinafter may have or claim to have, whether grounded in law or equity, in contract or in tort, by statute or otherwise against such party or its stockholder, members, board members, officers, and employees by reason of any matter whatsoever arising as of the Effective Date; provided, however, that this release does not apply to damages, liabilities, claims or causes of action arising out of a breach of this Agreement. It is the agreement and intention of the parties that this agreement, including this release, shall operate as a full and final settlement of the past, present and future liabilities of the C- Tech Group to PEDC, and PEDC to the C- Tech Group, arising out of or under or relating to, directly or indirectly, C-Tech's Paris Texas operations and the Real Property; provided, however, that this release does not apply to damages, liabilities, claims or causes of action arising out of a breach of this Agreement, and every term or provision of this Agreement shall be valid and fully enforceable in all respects. Notwithstanding anything set forth herein seemingly to the contrary, this waiver and release is not intended to waive or release any obligations that may now or hereafter exist between or among any members of the C- Tech Group. 8. Subordination. The parties recognize that The Business Bank holds a fully perfected first security interest over all the assets of C- Tech, Inc. At the request of C- Tech from time to time, PEDC shall, pursuant to reasonable written documents presented by C- Tech and/or its lenders, subordinate its security interest and lien on the personal property of C- Tech to allow for C- Tech to borrow additional operating funds from its current or future primary lenders. 9. General. a. Parties and Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. This agreement may not be assigned by C- Tech or Mike Meshbesher without the prior written consent of PEDe. b. Counterparts. This agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute one instrument. The parties may deliver signatures to this agreement by facsimile or email and those signatures are valid and binding to the same extent as the delivery of original signatures. c. Waiver; Remedies. No delay or failure on the part of any party hereto to exercise any right, power, or privilege hereunder shall operate as a waiver thereof, nor shaH any waiver on the part of any party hereto of any right, power, or privilege hereunder operate as a waiver of any other right, power, or privilege hereunder, nor shall any single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege hereunder. 510918.18 3 d. Entire Agreement. This agreement sets forth the parties' final and entire agreement with respect to the subject matter hereof and supersedes any and all prior understandings and agreements. e. Further Assurances. At any time or from time to time after the date hereof, the parties shall execute and deliver to each other party such other instruments of transfer, conveyance, assignment and termination necessary to carry out the purposes of this agreement. f. Severability. If any provision or portion thereof of this agreement is held to be illegal, invalid or unenforceable under any present or future law in any jurisdiction, (i) such provision or portion thereof will be fully severable in such jurisdiction, (ii) this agreement will be construed and enforced as if such illegal, invalid or unenforceable provision or portion thereof had never comprised a part hereof, (iii) the remaining provisions of this agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or portion thereof or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision or portion thereof, there will be added automatically as a part of this agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible to the maximum extent allowable by law. g. Governing Law. This Agreement shall be construed in accordance with the laws of the State of Texas (without regard to principles of conflicts of laws) applicable to contracts made and to be performed within such State. h. Binding Arbitration. The laws of the State of Texas other than its laws regarding conflict of law principles will by applied in the interpretation and construction of the Agreement. The parties will, to the greatest extent possible, endeavor to resolve any disputes relating to the Agreement through amicable negotiations with escalation to the top executives of each party. Failing such amicable settlement, any controversy, claim, or dispute arising under or relating to this Agreement, including the existence, validity, interpretation, performance, termination or breach of this Agreement, will finally be settled by binding arbitration before a single arbitrator (the "Arbitration Tribunal") which will be jointly appointed by the parties. The Arbitration Tribunal will self-administer the arbitration proceedings utilizing the Commercial Rules of the American Arbitration Association ("AM"); however, the AM will not be involved in administration of the arbitration. The arbitrator must be a retired judge of a state or federal court of the United States or a licensed lawyer with at least ten (10) years of corporate or commercial law experience from a law firm with at least 10 attorneys and at least an A V rating by Martindale Hubbell. If the parties cannot agree on an arbitrator, either party may request a court in Dallas, Texas to appoint an arbitrator which appointment will be final. The arbitration will be held in Dallas, Texas. Each party will have discovery rights as provided by the Federal Rules of Civil Procedure within the limits imposed by the arbitrator; provided, however, that all such discovery will be commenced and concluded within sixty (60) days of the selection of the arbitrator. It is the intent of the parties that any arbitration will be concluded as quickly as reasonably practicable. Once commenced, the hearing on the disputed matters will be held four days a week until concluded, with each hearing date to begin at 9:00 a.m. and to conclude at 5:00 p.m. The arbitrator will use all reasonable efforts to issue the final written report containing award or awards within a period of five (5) business days after closure of the proceedings. Failure of the arbitrator to meet the time limits of this Section will not be a basis for challenging the award. The Arbitration Tribunal will strictly enforce the terms of this Agreement and will not have the authority to award punitive damages to either party. Each party will bear its own 510918.18 4 expenses, but the parties will share equally the expenses of the Arbitration Tribunal. This Agreement will be enforceable, and any arbitration award will be final and non-appealable, and judgment thereon may be entered in any court of competent jurisdiction. 1. Attorney Fees. If any legal action or other proceeding is brought for the enforcement of this agreement or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this agreement or any exhibit attached hereto, the prevailing party shall be entitled to recover reasonable attorneys' fees and all other costs incurred in that action or proceeding from the non-prevailing party, in addition to any other reliefto which it may be entitled. j. Changes, Waivers, etc. This agreement may only be modified, waived, discharged or terminated in writing signed by the party against which enforcement of the modification, waiver, discharge or termination is sought. k. Notices. All communications, notices and disclosures required or permitted by this Agreement shall be in writing and shall be deemed to have been given at the earlier ofthe date when actually delivered to the other party or when deposited in the United States mail, certified or registered mail, postage prepaid, return receipt requested, or by overnight courier service, and addressed as follows, unless and until any party notifies the others in accordance with this Section of a change of address: Paris Economic Development Corporation 1125 Bonham Street Paris, Texas 75460 C- Tech, Inc. 9675 W 76th Street Ste 180 Eden Prairie, Minnesota 55344 Mike Meshbesher 9675 W 76th Street Ste 180 Eden Prairie, Minnesota 55344 Paris Holdings, LLC Lake Calhoun Center, Suite 10 3033 Excelsior Blvd. Minneapolis, Minnesota 55416 Indigo Holdings, LLC Lake Calhoun Center, Suite 10 3033 Excelsior Blvd. Minneapolis, Minnesota 55416 510918. 18 5 ~,..__."._-~._"_._-- -- ----...--.- The parties are signing this release and termination agreement on the date first set forth above. ., . /i C-TeCb'~ Mike Meshbesher President 1 Mike Meshbe Paris Economic Development Corporation Paris Holdings, LLC By Indigo Holdings, LLC, Member 1 f ! By: Mike Meshbesher, Member Indigo Holdings, LLC By: Stuart Ackerberg, Member 510918.18 6 .. -,,- ,,-- .,----_.."-~._---_.~-_..,,*_.~,, - "..- "" ~ - --~.,._.__.~-