2003-008-PEDCR
PARIS ECONOMIC DEVELOPMENT CORPORATION
RESOLUTION NO. 2003-008
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE PARIS
ECONOMIC DEVELOPMENT CORPORATION, APPROVING AND
AUTHORIZING THE EXECUTION OF A LOAN AGREEMENT,
PROMISSORY NOTE, AND OTHER NECESSARY FINANCING
INSTRUMENTS ASSOCIATED WITH A LINE OF CREDIT OF UP TO
$2,000,000.00 TO FUND AN INCENTIVE AGREEMENT WITH C- TECH,
INC. AND OTHER INCENTIVE AND ASSOCIATED EXPENSES; MAKING
OTHER FINDINGS AND PROVISIONS RELATED TO THE SUBJECT;
AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the Paris Economic Development Corporation (PEDC) did heretofore, on
the 5th day of June, 2003, in Resolution No. 2003-007, authorize the execution of an Incentive
Agreement with C- Tech, Inc., subject to approval by the City Council of the City of Paris; and,
WHEREAS, in order to fund the incentives provided under said Agreement, and to have
resources available to fund other possible incentives to future prospects, the PEDC deems it to be
in its best interest to borrow up to $2,000,000.00 in the form of a line of credit from a local
financial institution; and,
WHEREAS, said line of credit shall bear interest at varying rates and terms as stated in
the financing proposal attached hereto and incorporated herein as Exhibit A, and shall be payable
to Hibernia National Bank in accordance with the terms thereof; and,
WHEREAS, the Board of Directors of the PEDC finds and determines that sufficient
financial resources are available from PEDC to adequately fund said financing; and,
WHEREAS, the President of the PEDC should be authorized to execute a loan agreement
and any and all documents necessary to finalize the lending transaction and bind the PEDC thereto,
with the forms of all such documents being first approved by the City Attorney; NOW,
THEREFORE,
BE IT RESOLVED BY THE PARIS ECONOMIC DEVELOPMENT
CORPORATION:
Section 1. That the findings set out in the preamble to this resolution are hereby in all
things approved.
Section 2. That the Paris Economic Development Corporation borrow up to
$2,000,000.00 from Hibernia National Bank in the form of a line of credit to fund the incentives
provided under the Incentive Agreement with C- Tech, Inc. and to have resources available to fund
other possible incentives to future prospects.
Section 3. That the President be, and he is hereby, authorized and directed to execute, on
behalf of the PEDC, a loan agreement, promissory note, and any and all other instruments
necessary to fmalize the same and bind the PEDC thereto, under the terms and conditions and in
the forms approved by the City Attorney, and subject to approval by the City Council of the City
of Paris.
Section 4. That the PEDC does hereby pledge its one-quarter (1/4) cent economic
development sales tax and other available revenues to the repayment of said loan, subject to any
and all prior security pledges, notes, and other prior obligations of the PEDC.
Section 5. That said line of credit shall bear interest at varying rates and terms as stated
in the financing proposal attached hereto and incorporated herein as Exhibit A, and shall be
payable to Hibernia National Bank in accordance with the terms thereof.
Section 6. That this resolution shall be effective from and after its date of passage.
PASSED AND ADOPTED this 5th day of June, 2003.
Don Wall, President
ATTEST:
Richard Severson, Secretary-Treasurer
APPROVED AS TO FORM:
Larry W. Schen, City Attorney
Paris Economic Development Corporation
June 4, 2003
Page 1 of 5
June 4, 2003
Mr. Gary Vest
Paris Economic Development Corporation
1125 Bonham Street
Paris, TX 75460
Dear Gary:
"On behalf of Hibernia National Bank ("Lender"), I am authorized to extend a
commitment to making the following loans to Paris Economic Development
Corporation ("PEDC" or "Borrower"), subject to the terms and conditions set forth
below. The following terms and conditions are not intended to be exhaustive, since final '
documentation of the facilities will require further discussions between Lender and
Borrower and approval of Lender's and Borrower's legal counsel.
Borrower: Paris Economic Development Corporation
Facility: 1) Revolving Line of Credit
2) 5-Year Term Out of above Line of Credit
3) Revolving Line of Credit
Amount of Loan: 1) $1,000,000
2) $1,000,000
3) $1,000,000
Purpose: 1) Provide funds for project Holt
2) Term out line of credit facility for project Holt
3) Provide funds as deemed appropriate by the PEDC
for working capital .
Interest Rate:
Taxable Rate Options:
1) Floating rate of I-month LIBOR plus 1.44 BPS
(current rate would be 2.76%).
2) Wall Street Journal Prime Rate minus 0.308 BPS to
be fixed at closing (current rate would be 3.942%).
3) Same as number (1) above
Paris Economic Development Corporation
June 4, 2003
Page 2 of 5
Tax Free Rate Options:
1) Floating rate of 1 month LffiOR plus 0.737 BPS
(current rate would be 2.057%)
2) Wall Street Journal Prime Rate minus 1.425 BPS to
be fixed at closing (current rate would be 2.825%).
3) Same as number (I) above
Fees: None
Repayment: 1) 12 monthly interest only payments
2) 5- Year term out note with interest and principal due
monthly
3) 12 monthly interest only payments
'Maturity: 1) 12 months .
2) 5-years from maturity of note #1 above
3) 12 months
Collateral: The 0.25% sales tax revenue will be pledged to Hibernia
National Bank on a pari passu basis with the existing bond
issue, unless the existing bond issue prohibits the first lien
position in which case, Hibernia National Bank would
assume the second lien position.
Guarantors: None
Financial Statements and Reports:
Throughout the term of the Loan, Borrower will submit to Lender the following:
Borrower's Annual Audited Financial Statements to be due not later than 6 months
from fiscal year end;
Borrower's Quarterly Financial Statements to be due not later than 45 days from the
end of each fiscal quarter;
Borrower's Annual Budget to be due not later than 60 days from adoption.
Financial Covenants:
Minimum Fixed Charge Ratio. A minimum fixed charged ratio of 1.0X is required.
Defined as: Total Income and Revenue divided by all principal and interest debt service.
To be measured annually from the audited financial statements.
Paris Economic Development Corporation
June 4, 2003
Page 3 of 5
Conditions Precedent to Fundine and General ReQuirements:
No funding under the Loan shall be made until all conditions precedent have been met to
the satisfaction of Lender, including but not limited to, the satisfaction and/or receipt by
Lender of the following regarding the Loan:
- Lender's receipt of a duly êxecuted loan agreement, promissory note, security
agreements, subordination agreements, and all other documentation as Lender may
require. All documentation regarding the Loan must be approved by Lender's legal
counsel.
- Signed copy of resolutions of shareholders and directors of Borrower, which shall
certify the names of the officers of Borrower authorized to execute and delìver the
Loan and Collateral documents related to the transaction shall have been received by
the Lender;
- Lender shall receive organizational documents of the Borrower (Articles of
Incorporation, By-Laws, Certificates of Good Standing);
- An opinion, among other things, of counsel for Borrower, in form and substance
satisfactory to Lender, certifying that all of the Loan documents have been duly
authorized, executed and delivered, are fully enforceable in accordance with the terms
and as to such other matters as Lender may reasonably request;
- Lender shall have received such additional documentation as deemed reasonably
necessary by Lender's counsel;
- Lender shall receive written verification from Borrowers that it is not obligated nor
will continue to fund any monies to/for Turner Industries;
These conditions constitute only a partial list of conditions that may appear in the
documentation, and should not be deemed to be exhaustive or all-inclusive. Lender's
obligations to make the Loans described herein shall be subject to Borrower's agreeing to
conditions, affirmative and negative covenants, and default provisions which are standard
in loan documentation for similar loans made by Bank or which Bank, in its sole
discretion, may require for purposes of the Loans.
Material Adverse Chanee:
It is a condition to funding the Loan that there shall not have occurred, in the sole, opinion
of the Lender, any material adverse change in (a) the business operation or financial
condition of the Borrower, (b) the collateral and/or (c) any other facts, circumstances, or
conditions upon which the Lender has relied or utilized in making its decision to commit
to the Loan. Furthermore, as of the date of funding, there shall exist no event of default
(or event with which notice or lapse of time or both could constitute an event or default)
under any of the Loan Documents.
Paris Economic Development Corporation
June 4, 2003
Page 4 of 5
Closine Costs:
The Borrower will pay all reasonable costs and expenses incurred at any time by Lender
(including, without duplication, all reasonable attorneys' fees and disbursements in
connection with the preparation and delivery of the loan agreement and all related
documents for the Loan).
Tax-free bank Qualified opinion (if applicable):
Lender will engage the services of outside legal counsel to provide a tax-free legal opinion
on this transaction with the Borrower, and the preparation. The Lender's proposed
interest rate is tax-free Bank Qualified, which will require the Borrower to execute an IRS
Form 8038-G, Information Return for Tax-Exempt Governmental Obligations. The
fulfillment of these requirements along with the confirmation of this transaction's tax-free
bank qualified opinion provides support to the pricing for this loan.
Amendments or Modifications:
All amendments or modifications to this letter must be in writing and signed by the
Lender.
Expiration Date:
The commitment described in this letter shall expire and become null and void at the close
of business on July 8, 2003, unless the executed original of this letter is received by
Lender prior to the Expiration Date.
Closine Date:
This commitment, once accepted by Borrower, will expire 30 days after the acceptance
hereof, unless, prior to that date, all of the conditions precedent to the Loan have been
fully satisfied and the Loan has closed.
Confidentiality:
All correspondence from Lender and Borrower, including this commitment letter and all
closing documents, are confidential.
Governine Law:
This commitment letter and the committed Term Loan transaction is governed by Texas
Law.
Prepayment:
A prepayment penalty will not be assessed for prepayment on any of the loan facilities in
this commitment letter.
Paris Economic Development Corporation
June 4, 2003
Page 5 of 5
If the terms and conditions of this Commitment Letter are satisfactory, please signify your
acceptance by signing below in the space indicated and return the executed original of this
letter. We look forward to working with you on this and future opportunities.
Sincerely,
HIBERNIA NATIONAL BANK
Rodney L. Bass
City President-Paris/Pittsburg
.
ACCEPTANCE: The foregoing Commitment is hereby accepted, and the undersigned
agrees to accept the Loan described therein, as of this___________ day
of ______________,2003.
PARIS ECONOMIC DEVELOPMENT CORPORATION ("PEDC")
_________________________________
Don Wall, President
_________________________________
, Chairman
_________________________________
, Secretary/Treasurer