4A Wichita Falls Economic Development Minutes - 06/18/2012MINUTES OF THE
WICHITA FALLS ECONOMIC DEVELOPMENT CORPORATION
June 18, 2012
PRESENT:
Gary Shores, President
Dick Bundy, Vice President/Sec.- Treasurer
Dave Lilley
Lanham Lyne
Gary McLendon
Glenn Barham, Mayor
Kevin Hugman, Assistant City Manager
Miles Risley, City Attorney
Linda Merrill, Recording Secretary
Tim Chase, President
Kevin Pearson, Vice President
Jay Carter
Mark Arciero
1. CALL TO ORDER
Members
City Council
City Staff
Chamber of Commerce & Industry
Carter Aviation
President Gary Shores called the meeting to order at 1:00 p.m.
2. APPROVAL OF MINUTES
Dave Lilley moved that the minutes of June 4, 2012 be approved. Seconded by Gary
McLendon, the motion unanimously carried.
3. UPDATES AND POSSIBLE ACTION ITEMS RELATED TO CARTER AVIATION
Mark Arciero of Carter Aviation submitted Carter Aviation's counter proposals to the
motion' made by the 4A Board following the June 4 meeting:
Gary McLendon moved to authorize the President to execute a modified Performance Agreement and other
documents as necessary to provide for a monthly reimbursement on the initial $468,750 that Carter Aviation
would otherwise become potentially entitled to under milestone 3(f) subject to the pledge of additional collateral
as determined to be appropriate by the President, including the Intellectual Property to secure a pledge
supporting the entire amount of funds received under the loan that has been forwarded to the Carter entities; and
subject to Carter's agreement to a modified Performance Agreement with respect to that $468,750 and the
remainder of the funds potentially available under the Performance Agreement. He further moved that the final
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WFEDC — Minutes of June 18, 2012 Z
1. Carter requests the entire loan of $468,750 be made available to the company upon
execution of the loan (rather than on a reimbursed - for -cost basis).
2. Carter requests the matching funds (up to $468,750) be reimbursable on all income
received, including income from sales of product or services and new capital infusion.
3. Carter requests the entire loan amount of the agreement ($3,750,000) be collateralized
according to the October 6, 2009 Performance Agreement, which would include the purchase of
stock at a 20% premium and 5% simple interest.
Mr. Arciero said Carter would still put up its assets, as detailed on the list supplied to the
4A Board at its June 4 meeting, which includes the CCDT. The company needs the proper
amount of funds in place to continue its testing and marketing. He believes the counter proposals
are realistic and hopes the 4A Board feels the same.
Mr. Chase reminded Mr. Arciero that Carter still needs to provide a document to reaffirm
that the Intellectual Property is owned by Carter Aviation Technologies.
Jay Carter said Carter Aviation has two classes of stock. Class A (which the 4A would
receive) includes investors who buy stock and at some point in the future will cash out. Class B
stockholders receive a small amount of stock, but it is more of a loan with a 20% compound rate
of return, with no timetable or security. Whenever the company feels it is in its best interests to
pay off the stock, it will do so. Mr. Risley asked if there is a distinction between voting rights of
these classes of stockholders. Mr. Carter said there is not. Mr. Chase asked who makes the
decision when to pay each class of stockholders. Mr. Carter said he has 58% ownership of the
company, but he has never overridden the majority vote of his board of advisors. Mr. Risley
asked if the company's bylaws or articles of incorporation limit the issuance of stock. Mr. Carter
said they do not, but he does not want to issue more stock than necessary.
Mr. Carter said people have asked him how his company has been able to survive for 18
years. His response is because he does not spend what he does not have. He understands the 4A
Board's most important goal is more jobs, but his company's most important goal is to achieve
mu -1, meet the performance milestones, and to survive. For the 4A Board not to release this
money, he would have to view it as having no money at all. In that case, he would have to take
actions that no one would want him to take
Mr. Shores thanked the Carter representatives for their attendance.
4. EXECUTIVE SESSION
Mr. Shores adjourned the meeting into executive session at 1:23 p.m. pursuant to TEXAS
GOVERNMENT CODE § §551.071, 551.072, and 551.087. He announced the meeting back into
regular session at 1:35 p.m. The subjects posted in the Notice of Meeting were deliberated, and
no action was taken on these items in executive session.
Lanham Lyne entered the meeting at 1:37 p.m.
WFEDC — Minutes of June 18, 2012
Gary McLendon moved to approve Carter Aviation's counteroffer, subject to
receipt of Intellectual Property security obligations in the form approved by the President.
Seconded by Dave Lilley, the motion carried (with all members voting affirmatively with
the exception of Mr. Lyne, who abstained from voting).
Tim Chase said Carter is still due $500,000 from AAI based upon meeting certain
milestones. He asked for clarification as to whether that money qualifies as new capital infusion
for which the 4A Board would provide the dollar- for - dollar match. After discussion, the Board
decided such funding would qualify for the match.
5. ADJOURN
The meeting adjourned at 1:51 p.m.
Gary res, President
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