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2011-R-35 Loan from EDC to SPV Ventures LLCRESOLUTION NO. 11-R-35 A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS APPROVING A $200,000 LOAN FROM THE SCHERTZ ECONOMIC DEVELOPMENT CORPORATION TO SPV VENTURES, LLC, AUTHORIZING A LOAN AGREEMENT, DEED OF TRUST, PROMISSORY NOTE, EASEMENT AGREEMENT, AND RELATED DOCUMENTS, AND OTHER MATTERS IN CONNECTION THEREWITH WIIEREAS, the City Council (the "City Council") of the City of Schertz (the "City") has determined that it is in the best interest of the City (1) to approve a $200,000 loan (the "Loan") from the City of Schertz Economic Development Corporation (the "SEDC") to SPV Ventures, LLC ("SPV"), relating to water lines and related appurtenances (the "Infrastructure Improvements") in connection with the conshuction of five new medical office buildings in the City; and (2) to accept an easement agreement from SPV in connection with the Loan; WIIEREAS, the City Council has determined that the expenditwes related to the Infrastructure Improvements are necessary to promote or develop new or expanded business enterprises; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS THAT: Section 1. The City Council hereby approves a loan from the SEDC to SPV (i) in the principal amount of $200,000; (ii) at an interest rate of 0%; and (iii) subordinate to the loan to SPV fiom The Frost National Bank. The loan shall be payable after five (5) years; however, each time that SPV obtains a certificate of occupancy for one of the five medical office buildings to be conshucted, 1/5 of the principal and administrative fee shall be immediately due and payable. Further, if SPV either (1) conveys 100% of its interest in the property; or (2) conveys 100% of the ownership interest in SPV Ventures, LLC, the entire outstanding principal and administrative fee shall be immediately due and payable. In the event that SPV conveys less than 100% of its interest in the Property or less than 100% of the ownership interest in SPV Ventures, LLC, the proportionate share of the outstanding principal and administrative fee shall be due upon the sale of such interest. Section 2. The City Council hereby approves, and authorizes the President (or the Vice President in the President's absence) of the SEDC to execute and deliver, the Loan Agreement with SPV in substantially the form set forth on Exhibit A, modified as appropriate to conform to The Frost National Bank senior loan documents and approved by the City Attorney, and any related documents. Section 3. The City Council hereby approves, and authorizes the SEDC to accept, a Deed of Trust-Financing Statement-Fixture Filing and a Promissory Note from SPV in substantially the forms set forth on Exhibit B and Exhibit C, modified as appropriate to conform to The Frost National Bank senior loan documents and approved by the City Attorney, and any related documents. 50929213.1 Section 4. The City Council hereby approves and accepts the Easement Agreement fiom SPV in substantially the form set forth on Exhibit D, modified as appropriate to conform to The Frost National Bank senior loan documents and approved by the City Attorney, and any related documents. Section 5. The recitals contained in the preamble hereof are hereby found to be true, and such recitals are hereby made a part of this Resolution for all purposes and aze adopted as a part of the judgment and findings of the City Council. Section 6. All resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Resolution are hereby repealed to the extent of such conflict, and the provisions of this Resolution shall be and remain_controlling as to the matters resolved herein. Section 7. This Resolution shall be conshued and enforced in accordance with the laws of the State of Texas and the United States of America. Section 8. If any provision of this Resolution or the application thereof to any person or• circumstance shall be held to be invalid, the remainder of this Resolution and the application of such provision to other persons and circumstances shall nevertheless be valid, and the City Council hereby declares that this Resolution would have been enacted without such invalid provision. Section 9. It is officially found, determined, and declared that the meeting at which this Resolution is adopted was open to the public and public notice of the time, place, and subject matter of the public business to be considered at such meeting, including this Resolution, was given, all as required by Chapter 551, Texas Govermnent Code, as amended. Section 10. This Resolution shall be in force and effect from and after its final passage, and it is so resolved. PASSED AND ADOPTED, this ~ay of July, 2011. CITY OF $CHERTZ, TEXAS ATTEST: Crty Secretazy (CITY SEAL) 50429213.1 EXHIBIT A LOAN AGREEMENT 50429213.1 A-1 EXHIBIT B DEED OF TRUST-FINANCING STATEMENT-FIXTURE FILING 50~F29213.1 $-] EXHIBIT C PROMISSORY NOTE 50429213.1 (,'-1 EXHIBIT D EASEMENT AGREEMENT 50429213.1 D_ I LOAN AGREEMENT THIS LOAN AGREEMENT (this "Loan Agreement") is dated effective as of the ~ ~ day of 1~ta.l , 2011 (the "Effective Date"), between SPV Ventures, LLC, a Texas limited liability co any, d/b/a Schertz Parkway Ventures, LLC, with an address of 16161 College Oak, Suite 100, San Antonio, Texas 78249 (the "Borrower"), and City of Schertz Economic Development Corporation with an address of 1400 Schertz Parkway Schertz, Texas 78154 (the "Lender"). ARTICLE I Definitions and Use of Terms Section 1.01. Certain Definitions. As used herein, the following terms have the meanings indicated, unless the context otherwise requires: "Administrative Fee" has the meaning set forth in Section 2.01. "Applicable Bankruptcy Law" means the United States Bankruptcy Code or any other present or future federal or state insolvency, banlu~uptcy, liquidation, conservatol•ship, reorganization, or moratorium Governmental Requirements or other similar Governmental Requirements. "Closine Date" means the date of this Loan Agreement. "Collateral" means any and all Property and rights and interests in or to Property of Borrower, whether tangible or intangible, in which a Lien is granted or purported to be granted pursuant to the Loan Documents. "City" means the City of Schertz, Texas. "Deeds of Trust" means, collectively, mortgages, deeds to secure, deeds of trust, leasehold mortgages, leasehold deeds to secure, leasehold deeds of trust, or other security documents or instruments of a similar nature which create a Lien or• security interest from time to time in, to or covering the Property or any other property of Borrower to secure the Obligations, including any modifications, amendments, supplements, ratifications, and restatements thereto. "Default" means any event or circumstance that constitutes an Event of Default or that, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Easement Agreement" means an easement agreement, acceptable to the City in the City's sole and absolute discretion, granting a perpetual utility easement on that real property located in Guadalupe County, Texas, and more particularly described on Exhibit "B" attached hereto and incorporated herein for all purposes, from Borrower to the City in connection with the Infrastructure Improvements. "Environmental Laws" means any and all Federal, state, local, and foreign Governmental Requirements, judgments, permits, concessions, grants, franchises, licenses, agreements, or governmental restrictions relating to pollution and the protection of human health 50428924.1 and the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. "Event of Default" has the meaning set forth in Article VII. "GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied. "Governmental Authority" means the United States, the state, the county, the city, or any other political subdivision in which the Property is located, and any court or political subdivision, agency, or instrumentality havingjurisdiction over Borrower or the Property. "Governmental Requirements" means all constitutions, statutes, laws, ordinances, rules, regulations, orders, writs, injunctions, or decrees of any Governmental Authority applicable to Borrower or the Property. "Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or• toxic substances, wastes, or other pollutants, including petroleum or petroleum distillates, asbestos orasbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes, and all other substances or• wastes of any nature regulated pursuant to any Environmental Law. "Improvements" means any and all buildings, covered garages, air conditioning towers, open parking areas, structures and other improvements of any kind or nature, and any and all additions, alterations, betterments or appurtenances thereto, now or at any time hereafter situated, placed, or constructed upon the Land or any part thereof. "Infrastructure Improvements" has the meaning set forth in Section 6.07. "IRS" means the United States Internal Revenue Service. "Land" means the real estate described on Exhibit "A" attached hereto and incorporated herein for all purposes. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or• other), charge, or preference, priority or other security interest or preferential arrangement of any kind ol• nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing). "Loan" is defined in Section 2.01. "Loan Documents" means this Loan Agreement, the Note, all Deeds of Trust, and such other documents, instruments, agreements, evidencing, securing, or pertaining to the Obligations as will from time to time be executed and delivered to Lender by Borrowel• or any 50428924.1 - 2 - other parry pursuant to this Loan Agreement, and any future amendments, restatements, modifications, ratifications, confirmations, extensions, or supplements hereto or thereto. "Manaeerial Official" means, with respect to any Person, an officer or a governing Person of such Person. "Material Adverse Chanee" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, prospects, properties, liabilities (actual or contingent), condition (financial or otherwise) of Borrower; or (b) a material adverse effect upon the legality, validity, binding effect, or enforceability against Borrower of any Loan Document to which it is a party or the rights of Lender under any Loan Document. "Note" means the promissory note executed by Borrower and payable to the order of Lender, evidencing the Loan made by Lender, as the same may be amended, restated, supplemented, modified, extended, or increased from time to time. "Oblis?ations" mean all present and future indebtedness, obligations, and liabilities of Borrower to Lender arising pursuant to this Loan Agreement or• any of the other Loan Documents or otherwise, and any renewals, extensions, increases, or amendments thereof, or any part thereof, regardless of whether such indebtedness, obligations, and liabilities are direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, and including interest and fees that accrue after the commencement by or against Borrower of any proceeding under any Applicable Bankruptcy Law naming Borrower as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. "Patriot Act" is defined in Section 4.11. "Person" means any individual, firm, corporation, association, partnership, joint venture, trust, limited liability company, entity, unincorporated organization, or Governmental Authority. "Principal Amount" has the meaning set forth in Section 2.01. "Pro e "means the Land, the Improvements, and all other property, whether real or personal, tangible or intangible. Section 1.02. Headines. The headings, captions, and arrangements used in any of the Loan Documents are, unless specified otherwise, for convenience only and will not be deemed to limit, amplify, or modify the terms of the Loan Documents nor to affect the meaning thereof. Section 1.03. Number and Gender of Words. Whenever herein the singular number is used, the same will include the plural where appropriate, and words of any gender will include each other gender where appropriate. Section 1.04. Money. Unless stipulated otherwise, all references herein or in any of the Loan Documents to "Dollars", "money", "payments", or other similar financial or monetary terms are references to currency of the United States of America. Section 1.05. Articles and Sections. All references herein to Articles and Sections are, unless specified otherwise, references to articles and sections of this Loan Agreement. The 50428924. r - 3 - words "herein", "hereof', "hereunder", and other similar compounds of the word "here" when used in this Loan Agreement will refer to the entire Loan Agreement and not to any particular provision or section. ARTICLE II Loan Section 2.01. Loan. Subject to the terms and conditions set forth in this Loan Agreement and the other Loan Documents, Lender hereby agrees to lend to Bon~ower, and Borrower agrees to borrow from Lender, the principal amount of TWO HUNDRED THOUSAND and NO/100 ($200,000.00) (the "Princinal Amount") (the "Loan"). In addition to the Principal Amount set forth above, Borrower agrees to pay to the order of Lender an administrative fee in the amount of fifteen percent (15%) of the Principal Amount of the Loan (the "Administrative Fee"). (a) The City will construct, or cause to be constructed, the Infrastructure Improvements using proceeds of the Loan, and Lender shall pay the Loan proceeds directly to the City to be used for• the construction of the Infrastructure Improvements. The Infrastructure Improvements shall be owned by the City. (b) Further, upon receipt of the Administrative Fee, or any portion thereof, from Borrower, Lender shall promptly pay such fee to the City. The purpose of the Administrative Fee is to reimburse the City for the overhead costs associated with the construction of the Infrastructure Improvements. Section 2.02. Promissory Note. The Loan will be evidenced by the Note. Interest on the Note will accrue at the rate, if any, set forth therein. The principal of and interest on the Note will be due and payable in accordance with the terms and conditions set forth in the Note and in this Loan Agreement. ARTICLE III Conditions Precedent Section 3.01. Initial Extension of Credit. The obligation of Lender to make the Loan is subject to the condition precedent that Lender will have received on or before the Closing Date, in form and substance satisfactory to Lender: (a) Resolutions. Resolutions of the board of directors, members, or other appropriate governing body of Borrower certified by a Managerial Official of such Person, which resolutions authorize the execution, delivery, and performance by such Person of this Loan Agreement and the other Loan Documents to which it is a party; (b) Certificate of Borrower. Certificate of Borrower executed by a Managerial Official of Bon~ower certifying as to (i) the names of the officers of Borrower authorized to sign this Loan Agreement and each of the other Loan Documents to which it is a party (including the certificate contemplated herein) together with specimen signatures of such officers; (ii) original certified or file-stamped copies of the certificate 50428924.1 . 4 _ or articles of formation or organization or other similar organizational document of Borrower, certified as true, correct, and complete by the appropriate authority in its jurisdiction of organization as of a date within ten (10) days prior to the Closing Date; (iii) bylaws, limited liability company agreement, operating agreement, ol• other similar organizational document of Borrower certified as true, correct, and complete by such Managerial Official; and (iv) certificates of the appropriate government officials as to the existence and good standing of Borrowel• in (A) its jurisdiction of organization and (B) each other jurisdiction in which Borrower is required to qualify to do business, each dated within ten (10) days prior to the Closing Date; (c) Note. The Note executed by Borrower; (d) Deed of Trust. The Deed of Trust executed by Bon~ower; (e) Easement Agreement. The Easement Agreement executed by Borrower; (f) Mortgagee Title Insurance Policy. A paid mortgagee policy of title insurance in an amount acceptable to Lender and insuring that the Deed of Trust creates in favor of Lender at least second priority Lien on the Collateral described therein. The mortgagee policy of title insurance will have been issued at Borrower's expense by a title insurance company acceptable to Lender, will show a state of title and exceptions thereto, if any, acceptable to Lender, and will contain such endorsements as may be required by Lender; (g) Easements. etc. Copies of all recorded easements, rights-of--way, restrictive covenants, leases, encumbrances, and other documents and instruments filed of record that affect the Collateral, together with evidence satisfactory to Lender that such Property is properly zoned for its present use; (h) Insurance Policies. Copies of all insurance policies required by Section 5.06, together with loss payable and additional insured endorsements in favor of Lender with respect to all insurance policies covering Collateral and Borower•; (i) Termination of Existing Indebtedness. Evidence that (i) all existing indebtedness with respect to the Collateral not otherwise permitted by Section 6.06 have been or concurrently with the Closing Date are being terminated, and all outstanding amounts thereunder have been paid in full; and (ii) all Liens securing such indebtedness with respect to the Collateral have been or concurrently with the Closing Date are being released; and Q) Additional Documentation. Lender will have received such additional approvals, opinions, instruments, or documents as Lender or its legal counsel may request. ARTICLE IV Representations and Warranties Borrower hereby represents and warrants to Lender as follows: 50428924.1 - 5 - Section 4.01. Existence. Power. Compliance with Governmental Requirements. Borrower (a) is a limited liability company duly organized, validly existing, and in good standing under the Govemmental Requirements of the jurisdiction of its organization and all other states where it is doing business; (b) has all requisite power and authority to execute, deliver, and perform the Loan Documents to which it is a party, to own its Property, and to conduct its business; and (c) is in compliance with all Governmental Requirements. Section 4.02. Binding Obli atg ions. The execution, delivery, and performance of this Loan Agreement and all of the other Loan Documents by Borrower has been duly authorized by all necessary action by Borrower, and constitutes legal, valid, and binding obligations of Borrower, enforceable in accordance with their respective terms, except as enforcement of remedies may be limited by Applicable Bankruptcy Law. Section 4.03. No Consent. The execution, delivery, and performance of this Loan Agreement and the other Loan Documents, and the consummation of the U•ansactions contemplated hereby and thereby, do not (a) conflict with, result in a violation of, or constitute a default under (i) any provision of its charter or organizational documents, or other instrument binding upon Borrower, (ii) any Governmental Requirements, or (iii) any contract, agreement, document or instrument to which Borrower is a party or affecting such Person or the Property of such Person; (b) require the consent, approval, or authorization of or notice to or filing with any third parry, not otherwise obtained and delivered to Lender; or (c) result in creation or perfection of a Lien (other than those created by the Loan Documents). Section 4.04. Taxes. Governmental Charees. Borrower has timely filed all federal, state, and local tax reports and returns required by any Governmental Requirement to be filed, including, without limitation, all income, franchise, employment, property, and sales tax tetums, and has duly paid all its liabilities for taxes, assessments, governmental charges, and levies that are due and payable. To the best of Borrower's knowledge, there is no pending investigation or audit of Borrower by any taxing authority. Furthermore, to the best of Borrower's knowledge, there is no pending but unassessed tax liability of Borrower or any unresolved questions or claims concerning any tax liability of Borrower. Section 4.05. No Default. Borrower is not in default under or with respect to any contractual obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Change. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Loan Agreement or any other Loan Document. Section 4.06. Solvency. Borrower is solvent. Section 4.07. Suits, Actions, Etc. There are no investigations, actions, suits, or proceedings pending or to the knowledge of Borrower threatened before or by any Governmental Authority or arbitration authority against or affecting Borrower or the Collateral, or involving the validity, enfotceabiliry, or priority of any of the Loan Documents. Borrower is not, and the consummation of the transactions contemplated hereby and the performance ot• satisfaction of any of the terms or conditions hereof and of the other Loan Documents will not cause Borrower to be, in violation of or in default with respect to any Governmental Requirement or in default (or provide cause for acceleration of indebtedness) under any mor4gage, deed of trust, lease, promissory note, loan agreement, credit agreement, partnership agreement, or other agreement or 50428924.1 - 6 _ restriction to which Borrower is a party or by which Borrower or the Collateral may be bound or affected. Section 4.08. Insurance. Borrower and the Properties of Borrower are insured with financially sound and reputable insurance companies not affiliates of Borrower, in such amounts, with such deductibles, and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where Bon~ower operates. Section 4.09. Ownershi off Property, Liens. Bon~ower has good record and marketable title in fee simple to, or valid leasehold interests in, all personal and real Property, including the Collateral, necessary or• used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change. The Collateral is not subject to any Lien other than Liens in favor of Lender and the First Lien. All Property of Borrower is titled in Borrower's legal name, and Borrower has not used any other name during the last five years other than the following assumed name: SPV Ventures, LLC or d/b/a Schertz Parkway Ventures, LLC. Section 4.10. Environmental Compliance. Bon•ower conducts in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for• violation of any Environmental Law on its business, operations, and properties, and as a result thereof Borrower has reasonably concluded that such Environmental Laws and claims could not, individually or• in the aggregate, reasonably be expected to have a Material Adverse Change. Section 4.11. Patriot Act. All capitalized words and phrases and all defined terms used in the USA Patriot Act of 2001, 107 Public Law 56 (October 26, 2001) (the "Patriot Act") and in other statutes and all orders, rules, and regulations of the United States government and its various executive department, agencies, and offices related to the subject matter of the Patriot Act, including, but not limited to, Executive Order• 13224 effective September 24, 2001, are hereinafter collectively referred to as the "Patriot Rules" and are incorporated into this section of the Loan Agreement. Borrower represents and warrants to Lender that neither it nor any of its principals, shareholders, members, partners, or affiliates, as applicable, is a Person named as a Specially Designated National and Blocked Person (as defined in Presidential Executive Order 13224) and that it is not acting, directly or indirectly, for• or on behalf of any such Person. Borrower further represents and warrants to Lender that Bortower and its principals, shareholders, members, partners, or affiliates, as applicable, are not, directly or indirectly, engaged in, nor facilitating, the transactions contemplated by this Loan Agreement on behalf of any Person named as a Specially Designated National and Blocked Person. Borrrower• hereby agrees to defend, indemnify, and hold harmless Lender from and against any and all claims, damages, losses, risks, liabilities, and expenses (including reasonable attorneys' fees and costs) arising from or related to any bleach of the foregoing representations and warranties. ARTICLE V Affirmative Covenants Until all Obligations are fully paid and satisfied, Borrower agrees and covenants that it will: 50428924.1 _ y _ Section 5.01. Furnish to Lender: (a) Additional Information. Such additional information regarding the business, financial, or other affairs of Borrower or any Property of Borrower or compliance with the terms of the Loan Documents, as Lender may fi~om time to time reasonably request. Section 5.02. Notices. Promptly notify Lender: (a) of the occurrence of any Default; (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Change, including (i) breach or non-performance of, or any default undet•, a contractual obligation of Borrower; (ii) any dispute, litigation, investigation, proceeding, or suspension between Borrower and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting Borrower; and (c) of a change in name of Borrower or a change in the location of Borrower or any Collateral, in each case, within thh•ty (30) days prior to such change. Each notice pursuant to this Section will be accompanied by a statement of a Managerial Official of Borrower setting forth details of the occurrence referred to therein and stating what action Borrower has taken and proposes to take with respect thereto. Each notice pursuant to this Section will describe with particularity any and all provisions of this Loan Agreement and any other Loan Document that have been breached or affected thereby. GAAP Section 5.03. Accounts and Records. Maintain its books and records in accordance with Section 5.04. Preservation of Existence. Eta (a) Preserve, renew, and maintain in full force and effect its legal existence and good standing under the Governmental Requirements of the jurisdiction of its organization and each state in which it is qualified to do business; and (b) take all reasonable action to maintain all rights, privileges, permits, licenses, and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Change. Section 5.05. Maintenance of Pro ep roes. (a) Maintain, preserve, and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Change; (c) use the standard of care typical in the industry in the operation and maintenance of its facilities; and (d) preserve or renew all of its registered patents, trademarks, trade names, and service marks (including licenses thereof), except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Change. Section 5.06. Maintenance of Insurance. Maintain with financially sound and reputable insurance companies not affiliates of Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in 50428924.1 - g _ the same or similar business, including but not limited to, fire insurance, comprehensive property damage, public liability, worker's compensation, business interruption and other insurance, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and providing for not less than thirty (30) days' prior notice to Lender of termination, lapse, or cancellation of such insurance. Each insurance policy (except for worker's compensation) will name Lender as "additional insured" and "loss payee". Borrower will deliver to Lender upon Lender's request, copies of insurance policies or certificates of insurance, each in form and substance satisfactory to Lender. Section 5.07. Right of Ins e~ction. Permit Lender to (a) visit its properties and installations; (b) examine, audit, and make and take away copies or reproductions of its books and records; and (c) discuss with its respective directors, partners, principal of£cers, and independent auditors its respective businesses, assets, liabilities, financial positions, results of operations, and business prospects, at all reasonable times. Borrower shall be responsible for the reasonable costs and expenses associated with such inspection. Section 5.08. Right to Additional Information. Furnish Lender with such additional information and statements, lists of assets and liabilities, tax returns, and other reports with respect to Borrower's financial condition and business operations as Lender may request from time to time. Section 5.09. Compliance with Governmental Requirements. Conduct its business in an orderly and efficient manner consistent with good business practices, and perform and comply with all Governmental Requirements applicable to Bon~ower and its businesses, operations, and Property (including without limitation, all applicable Environmental Laws). Section 5.10. Taxes. Timely pay and discharge when due all of its indebtedness and obligations, including without limitation, all assessments, taxes, governmental charges, levies, Liens, and claims, of every kind and nature, imposed upon Bon•ower or any of its properties, income, or profits, prior to the earlier of the date on which such obligation would become delinquent or the date penalties would attach, and all lawful claims that, if unpaid, might become a Lien or charge upon any of Bon~ower's properties, income, or profits; provided, however, Borrower will not be required to pay and discharge any such assessment, tax, government charge, levy, Lien or claim so long as (a) the legality of the same will be contested in good faith by appropriate judicial, administrative, or other legal proceedings instituted with reasonable ptomptness and diligently conducted; and (b) Borrower will have established on its books adequate reserves with respect to such contested assessment, tax, government charge, levy, Lien, or claim in accordance with GAAP. Section 5.11. Notice of Indebtedness. Promptly inform Lender of the creation, incun~ence, or assumption by Borrower of any actual or contingent liabilities not permitted under this Loan Agreement or any other Loan Document. Section 5.12. Additional Documents. Execute and deliver, or cause to be executed and delivered, to Lender, from time to time as required by Lender, any and all other agreements, instruments, and documents which Lender may reasonably request in ordet• to provide the rights and remedies to Lender granted or provided. for by the Loan Documents or give effect to the transactions contemplated under this Loan Agreement and the other Loan Documents. 50428924.1 - 9 - ARTICLE VI Neeative Covenants Until all Obligations are fully paid and satisfied, Borrower will not, directly or indirectly: Section 6.01. Nature of Business. Make any material change in the nature of its business as carried on as of the Closing Date. Section 6.02. Liquidations. Mercers, Consolidations. Become a party to a merger or consolidation, or purchase or otherwise acquire all or a substantial part of the assets of any Person or any shares or other evidence of beneficial ownership of any Person, or dissolve, liquidate or cease operations. Section 6.03. Sale of Assets. Sell, lease, assign, transfer, or• otherwise dispose of any of its assets or Properties, other than in the ordinary course of business. Section 6.04. Sale and Leaseback. Enter into any arrangement with any Person pursuant to which it leases from such Person real or personal Property that has been or is to be sold or transferred, directly or indirectly, by it to such Person. Section 6.05. Liens. Create, incur, or permit to exist any Lien or encumbrance on any of the Collateral, other than (a) Liens and security interests securing indebtedness owing to Lender; (b) Liens for taxes, assessments, or similar charges that are (i) not yet due or (ii) being contested in good faith by appropriate proceedings and for which Borrower has established adequate reserves; and (c) Liens and security interests existing as of the Closing Date which have been disclosed to and approved by Lender in writing. Section 6.06. Indebtedness. Create, incur, permit, or assume any indebtedness with respect to the Collateral, other than (a) indebtedness to Lender; (b) indebtedness outstanding on the Closing Date which has been disclosed to and approved by Lender in writing; and (c) that certain indebtedness in the original principal amount of THREE MILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($3,800,000.00) owed by Borrower to The Frost National Bank, a national banking association (the "First Lien"). Section 6.07. Use of Proceeds. Use the proceeds for any purpose other than as follows: direct infi•ash•ucture costs associated with the Property, specifically water utilities and related facilities, lines, and appurtenances (collectively, the "Infrastructure Improvements"), and not in contravention of any Governmental Requirement or of any Loan Document. ARTICLE VII Events of Default Section 7.01. Events of Default. Each of the following will constitute an "Event of Default" under this Loan Agreement: 50428924.1 - ] p - (a) The failure, refusal, ot• neglect of Borrower to pay when due any part of the principal of, or interest on, the Note or• any other Obligations by Borrower from time to time. (b) The failure of Borrower to timely and properly observe, keep, or perform any covenant, agreement, or condition required in Articles IV, V and VI. (c) The failure of Borrower to timely and properly observe, keep, or perform any covenant, agreement, or condition required herein (other than as specified in clauses a and ~ above) or in any of the other Loan Documents and the failure of Borrower to cure such default within 30 days after written notice from Lender specifying such default, provided that if such default or violation is susceptible of being remedied, but such remedy can not reasonably be accomplished within the initial 30 day cure period, no Event of Default will be deemed to have occurred so long as Borrower is diligently pursuing such remedy and is successful in curing the default or violation to the reasonable satisfaction of Lender within such additional period of time as may be necessary to effect the remedy, not to exceed in any event an additional 60 days following the end of the initial cure period. (d) Any representation or warranty contained herein, in any of the other Loan Documents or in anyother document ever delivered by Borrower to Lender in connection with the Obligations is false, misleading, erroneous, or breached in any material respect. (e) If Borrower: (i) becomes insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors, or admits in writing its inability to or is unable to pay its debts as they become due; (ii) generally is not paying its debts as such debts become due; (iii) has a receiver, trustee, or custodian appointed for, or take possession of, all or substantially all of the assets of such party, either in a proceeding brought by such parry or in a proceeding brought against such party and such appointment is not discharged or such possession is not terminated within 60 days after the effective date thereof or such party consents to ot• acquiesces in such appointment or possession; (iv) files a petition for relief under the Applicable Bankruptcy Laws or an involuntary petition for relief is filed against such parry under any Applicable Bankruptcy Law, or an order for relief naming such party is entered under any Applicable Banktuptcy Law, or any composition, rearrangement, extension, reorganization, or other relief of debtors now or hereafter existing is requested or consented to by such party; (v) fails to have discharged within a period of 30 days any attachment, sequestration, or similar writ levied upon any Property of such party; or (vi) fails to pay within 30 days any final money judgment against such party. (f) A levy against the Property or any part thereof, or against any material portion of Borrower's other property, or any execution, garnishment, attachment, sequestration, or other writ or similar proceeding which is not permanently dismissed or discharged within 30 days after such levy. (g) Abandonment of any portion of the Property or of any material portion of any of the other property of Borrower. soazs9za.t _ tr _ (h) The dissolution, liquidation, termination, or forfeiture of right to do business of Borrower. (i) Borrower will have (i) concealed, removed, or permitted to be concealed or removed any part of its Property with the intent to hinder, delay, or defraud any of its creditors; or (ii) made or suffered a transfer of any of its Property which may be fraudulent under any bankruptcy, fraudulent conveyance, or similar Governmental Requirement; or (iii) suffered or• permitted while insolvent (under any applicable definition of the term) any creditor to obtain a Lien upon any of its Property tlu~ough legal proceedings or distraint which Lien is not permanently vacated within 30 days from the Closing Date. Q) The occurrence of a Material Adverse Change. (k) The occun•ence of any default under any lease covering any portion of the Property or the repudiation, termination, or attempted repudiation or termination of any such lease. (1) Any Loan Document or any provision thereof ceases to be in full force and effect; or Borrower or any other Person contests the validity or enforceability of any Loan Document or any provision thereof; or Bon•ower denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate, or rescind any Loan Document or any provision thereof. Nothing contained in this Loan Agreement will be construed to limit the events of default enumerated in any of the other Loan Documents and all such events of default will be cumulative. Section 7.02. Remedies. Upon the occurrence of any Event of Default, (a) the entire unpaid balance of principal of the Note, together with all accrued but unpaid interest thereon, and all other indebtedness owing to Lender by Borrower at such time will, at the option of Lender, become immediately due and payable without further notice, demand, presentation, notice of dishonor, notice of intent to accelerate, notice of acceleration, protest, or notice of protest of any kind, all of which are expressly waived by Borrower, (b) reduce any claim to judgment; (c) have the payment and performance obligations under the Loan Documents enforced by mandamus; (d) appoint a receiver in equity with the power to (i) charge and collect rents, purchase price payments, and loan payments, and (ii) apply the revenue from the Property in accordance with the Loan Documents; and (e) exercise any and all rights and remedies afforded by any of the Loan Documents, or by law or equity or• otherwise, including, without limitation, those set forth in Texas Local Government Code Section 501.157, as Lender deems appropriate. All rights and remedies of Lender set forth in this Loan Agreement and in any of the other Loan Documents may be exercised by Lender at its option and in its sole discretion, upon the occurrence of an Event of Default. Section 7.03. Performance by Lender. Should any covenant, duty, or agreement of Bon~ower fail to be performed in accordance with the terms of the Loan Documents, Lender may, at its option, perform, or attempt to perform, such covenant, duty, or agreement on behalf of Bon~ower. In such event, Borrower will pay to Lender on demand any amount expended by Lender in such performance or attempted performance, together with interest thereon at the rate 5042%924.1 - 12 - provided in the Note for past-due principal from the date of such expenditure by Lender until paid. Notwithstanding the foregoing, it is expressly understood that Lender does not assume and will never have any liability or responsibility for the performance of any duties of Borrower hereunder. Without limiting the generality of the foregoing, upon the occun~ence of an Event of Default, Lender will have the right, in addition to any other right of Lender, but not the obligation, in its own name or in the name of Borrower, to enter into possession of the Property. Section 7.04. Rights Cumulative; Election of Remedies. All rights and remedies of Lender under the terms of this Loan Agreement will be cumulative of, and in addition to, the rights and remedies of Lender under any and all other agreements between Borrower and Lender (including, but not limited to, the other Loan Documents), and not in substitution or diminution of any rights and remedies now or hereafter held by Lender under the terms of any other agreement. Such rights and remedies may be pursued separately, successively, or concurrently against Borrower or any Property covered under the Loan Documents at the sole discretion of Lender. The exercise or failure to exercise any of the same will not constitute a waiver or release thereof or of any other Right, and the same will be nonexclusive. Section 7.05. Waiver of Deficiency Statute. In the event an interest in any of the Collateral is foreclosed upon pursuant to a judicial or nonjudicial foreclosure sale, Borrower agrees, notwithstanding the provisions of Sections 51.003, 51.004 and 51,005 of the Texas Property Code (as the same may be amended from time to time), and to the extent not prohibited by Governmental Requirements, that Lender shall be entitled to seek a deficiency judgment from Borrower equal to the difference between the Obligations and the amount for which the Collateral was sold pursuant to judicial or nonjudicial foreclosure sale. Borrower acknowledges and agrees that this waiver creates an inebuttable presumption that the foreclosure sale price is equal to the fair market value of the Collateral for purposes of calculating deficiencies owed by Borrower and others against whom recovery of a deficiency is sought. ARTICLE VIII Miscellaneous Section 8.01. Waiver and Agreement. Neither the failure nor any delay on the part of Lender to exercise any right, remedy, power, or privilege herein or under any of the other Loan Documents will operate as a waiver thereof, nor will any single or partial exercise of such right, remedy, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege. No waiver of any provision in this Loan Agreement or in any of the other Loan Documents and no departure by Borrower therefrom will be effective unless the same will be in writing and signed by Lender, and then will be effective only in the specific instance and for the purpose for which given and to the extent specified in such writing. No modification or• amendment to this Loan Agreement or to any of the other Loan Documents will be valid or effective unless the same is signed by the party against whom it is sought to be enforced. Section 8.02. Benefits. This Loan Agreement will be binding upon and inure to the benefit of Lender and Borrower, and their respective successors and assigns, provided, however, that Borrower may not, without the prior written consent of Lender, assign or encumber any interests, rights, remedies, powers, duties, or obligations under this Loan Agreement or any of the other Loan Documents. 50428924.1 - 13 - Section 8.03. Notices. All notices, requests, demands, or other communications required or permitted to be given pursuant to this Loan Agreement shall be in writing and given by (i) personal delivery; (ii) expedited delivery service with proof of delivery; or (iii) United States mail, postage prepaid, registered or certified mail, return receipt requested, sent to the intended addressee at the address set forth on the first page hereof and will be deemed to have been received either, in the case of personal delivery, as of the time of personal delivery, in the case of expedited delivery service, as of the date of first attempted delivery at the address and in the manner provided herein, or in the case of mail, upon deposit in a depository receptacle under the care and custody of the United States Postal Service. Either party will have the right to change its address for• notice hereunder to any other location within the continental United States by notice to the other parry of such new address at least 30 days prior to the effective date of such new address. Section 8.04. Continuation and Survival. All covenants, agreements, representations, and warranties made in or pursuant to this Loan Agreement and the other Loan Documents will be deemed continuing and made at and as of the date of this Loan Agreement and at and as of all times thereafter. All statements contained in any certificate or other instrument delivered by or on behalf of Borrower pursuant to or• in connection with any of the Loan Documents will constitute additional representations and warranties made under this Loan Agreement. All covenants, agreements, representations, and warranties made in or pursuant to this Loan Agreement and the other Loan Documents will survive until payment in full of all sums owing and performance of all other obligations hereunder by Borrower to Lender and will not be waived by the execution and delivery of this Loan Agreement, completion of construction of the Infrastructure Improvements, any investigation by Lender, or any other event except a specific written waiver by Lender. Section 8.05. Conttolline Agreement. The parties hereto intend to conform strictly to the applicable usury Governmental Requirements. In no event, whether by reason of demand for payment or acceleration of the maturity of the Obligations or otherwise, will the interest contracted for, charged or received by Lender hereunder or otherwise exceed the maximum amount permissible under applicable Governmental Requirements. If, from any circumstance whatsoever, interest would otherwise be payable to Lender in excess of the maximum lawful amount, the interest payable to Lender will be reduced automatically to the maximum amount permitted under applicable Governmental Requirements. If Lender will ever receive anything of value deemed interest under applicable Governmental Requirements which would apart from this provision be in excess of the maximum lawful amount, an amount equal to any amount which would have been excessive interest will be applied to the reduction of the principal amount owing on the Obligations in the inverse order of its maturity and not to the payment of interest, or if such amount which would have been excessive interest exceeds the unpaid principal balance of the Obligations, such excess will be refunded to Borrower. The interest and any other amounts that would have been payable in respect of any portion of the Obligations or• during any period but were not payable as a result of the operation of this Section shall be cumulated and the interest and other amounts on any other portion of the Obligations or periods shall be increased (but not above the maximum amount permitted under applicable Governmental Requirement) until such cumulated amount shall have been received by Lender. All interest paid or agreed to be paid to Lender will, to the extent permitted by applicable Governmental Requirements, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or extension) of such indebtedness so that the amount of interest on account of such indebtedness 50428924.1 - ]4 - . does not exceed the maximum permitted by applicable Governmental Requirements. The provisions of this Section will control all existing and future agreements between Bonowel• and Lender. Section 8.06. No Third Party Beneficiary. This Loan Agreement is for the sole benefit of Lender and Borrower and is not for the benefit of any third party. Section 8.07. Lender's Consent or Ap royal. Except where otherwise expressly provided in the Loan Documents, in any instance where the approval, consent, or the exercise of judgment of Lender is required, the granting or denial of such approval or consent and the exercise of such judgment will be (a) within the sole discretion of Lender; and (b) deemed to have been given only by a specific writing intended for the purpose and executed by Lendet•. Each provision for consent, approval, inspection, review, or verification by Lender is for Lender's own purposes and benefit only. Section 8.08. Applicable Governmental Requirements. This Loan Agreement and the other Loan Documents have been executed and delivered in the State of Texas, are performable in Texas, and will be governed by and construed in accordance with the Governmental Requirements of the State of Texas and the Governmental Requirements of the United States applicable to transactions within the State of Texas. Except to the extent that the Governmental Requirements of the United States may apply to the terms hereof, the substantive Governmental Requirements of the State of Texas shall govern the validity, construction, enforcement, and interpretation of this Loan Agreement and the other Loan Documents. To the extent that Chapter 303 of the Texas Finance Code is applicable to any Loan or any Loan Document, the "wEExLY CEILING" specified in such article is the applicable ceiling; provided that, if any applicable Governmental Requirement permits greater interest, the Governmental Requirement permitting the greatest interest will apply. Section 8.09. Loan Aereement Governs. This Loan Agreement, together with the other Loan Documents, comprise the complete and integrated agreement of the patties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the terms of this Loan Agreement and any terms of any other Loan Document, the terms of this Loan Agreement will govern; provided, that the inclusion of supplemental rights or remedies in favor of Lender in any other Loan Document will not be deemed a conflict with this Loan Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and will be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. Section 8.10. Time of Essence. Time will be of the essence in this Loan Agreement. Section 8.11. Invalid Provisions. If any provision of this Loan Agreement or any of the other Loan Documents is held to be illegal, invalid, or unenforceable under present or future Governmental Requirements, such provision will be fully severable and the remaining provisions of this Loan Agreement or any of the other Loan Documents will remain in full force and effect and will not be affected by the illegal, invalid, or unenforceable provision or by its severance. Section 8.12. Expenses of Lender. Bonower• shall pay to Lender on demand all costs and expenses incurred by Lender in connection with the enforcement, workout, or restructure of soazs9za. r _ I5 _ this Loan Agreement or any other Loan Document, including, without limitation, the fees and expenses of Lender's legal counsel and professionals. Section 8.13. INDEMNIFICATION OF LENDER. BORROWER SHALL INDEMNIFY AND HOLD LENDER, ITS AFFILIATES AND LENDER'S SUCCESSORS AND ASSIGNS (EACH SUCH PERSON HEREIN REFERRED TO AS AN "INDEMNITEE") ABSOLUTELY HARMLESS FROM AND AGAINST ALL CLAIMS, LIABILITIES, LOSSES, DAMAGES, OBLIGATIONS, OR RELATED EXPENSES INCURRED BY OR IMPOSED UPON OR ALLEGED TO BE DUE OF INDEMNITEE IN CONNECTION WITH (a) THE EXECUTION OR DELIVERY OF THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY OTHER AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER, THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR, IN THE CASE OF LENDER, THE ADMINISTRATION OF THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS; (b) ANY LOAN OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM; (c) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERLALS ON OR FROM ANY PROPERTY OWNED OR OPERATED BY BORROWER, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO BORROWER; OR (d) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION, OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY BORROWER, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PARTY, OUT OF THE COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF THE INDEMNITEE; PROVH)ED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH CLAIMS, LIABILITIES, LOSSES, DAMAGES, OBLIGATIONS, OR RELATED EXPENSES (i) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (ii) RESULT FROM A CLAIM BROUGHT BY BORROWER AGAINST AN INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH INDEMNITEE'S OBLIGATIONS HEREUNDER OR ANY OTHER LOAN DOCUMENT, IF' BORROWER HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION. IN THE EVENT OF COURT ACTION IN CONNECTION WITH ANY SUCH CLAIM OR DEMAND, BORROWER WILL ASSUME, TO THE EXTENT REQUESTED BY LENDER, THE RESPONSIBILITY FOR THE DEFENSE OF ANY SUCH ACTION AND WILL IMMEDIATELY SATISFY AND DISCHARGE ANY FINAL DECREE OR JUDGMENT RENDERED THEREIN. LENDER MAY, IN ITS SOLE DISCRETION, MAKE ANY PAYMENTS SUSTAINED OR INCURRED BY REASON OF ANY OF THE FOREGOING, AND BORROWER WILL IMMEDIATELY REPAY TO LENDER IN CASH THE AMOUNT OF SUCH PAYMENT, WITH INTEREST THEREON AT THE RATE SPECIFIED IN THE NOTE TO BE APPLICABLE TO PAST-DUE PRINCIPAL. LENDER WILL HAVE THE RIGHT TO JOIN BORROWER AS A PARTY 50428924.1 - 16 - DEFENDANT IN ANY LEGAL ACTION BROUGHT AGAINST LENDER, AND BORROWER HEREBY CONSENTS TO THE ENTRY OF AN ORDER MAHING BORROWER A PARTY DEFENDANT TO ANY SUCH ACTION. Section 8.14. Assienment of the Loan. Borrower agrees that Lender may, at its option, sell or assign all or a portion of its interest in the Loan and its rights and remedies under this Loan Agreement and the Loan Documents to one or more Persons, and in connection with each such transfer, Lender may disclose any financial and other information available to Lender concerning Borrower to each prospective assignee. Section 8.15. Conflicts. In the event any term or provision hereof is inconsistent with or• conflicts with any provision of the other Loan Documents, the terms and provisions contained in this Loan Agreement will be controlling. Section 8.16. Counter~rts. This Loan Agreement may be separately executed in any numbet• of counterparts, each of which will be an original, but all of which, taken together, will be deemed to constitute one and the same instrument. Section 8.17. Imagine of Documents. Borrower understands and agrees that (a) Lender's document tetention policy may involve the electronic imaging of executed Loan Documents and the destruction of the papel• originals; and (b) Bol•1•ower waives any right that it may have to claim that the imaged copies of the Loan Documents are not originals. Section 8.18. No Oral Agreements. The term "WRITTEN AGREEMENT" will include this Loan Agreement, together with each and every other document relating to and/or securing the Obligations, regardless of the date of execution. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. [Remainder of Page Intentionally Left Blank] 50428924.1 - 17 - Executed to be effective as of the Effective Date. BORROWER: SPV Ventures, LLC, a Texas limited liability company, d/b/a Schertz Parkway Ventures, LLC Nam : esse M. Hellu s Title: President LENDER: City of Schertz Economic Development Corporation Name: Harry ney Title: President Approved: City of Schertz, Texas By: Name: Jo C. Kesel Title: City Manager 50428924.1 Exhibit "A" Real Estate [To be attached] 50428924.1 Exhibit "B" The Easement Proaerty [ To be attached J 50428924.1