HomeMy WebLinkAboutResolution - 2010-R0057 - LEDA To American State Bank Promissory Note For Revolving Line Of Credit - 02/09/2010Resolution No. 2010-R0057
February 9, 2010
Item No. 5.2
I
WHEREAS, pursuant to that certain Corporate Resolution of the Lubbock
Economic Development Alliance, Inc. ("LEDA"), dated February 9, 2010, the Board of
Directors of LEDA authorized the execution and delivery of a Promissory Note (the
"Note"), in the original principle sum of $500,000.00, payable to the order of American
State Bank;
WHEREAS, pursuant to article 5190.6 of the Texas Revised Civil Statues (Tex.
Rev. Civ. Stat. Ann. art. 5190.6 (Vernon Supp. 2007) (herein called "article 5190.6"), all
programs and expenditures of LEDA must be approved by the City of Lubbock;
WHEREAS, the Note, and/or drawing under same, constitutes an expenditure by
LEDA subject to the approval by the City;
WHEREAS, pursuant to article 5190.6, notwithstanding the approval of the City
Council of the City of Lubbock, the indebtedness created by the Note remains an
obligation of LEDA and is not an obligation of the City of Lubbock;
WHEREAS, the City Council of the City of Lubbock, Texas, finds it be in the
best interest of the citizens of the City of Lubbock to approve the Note executed by
LEDA.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
LUBBOCK:
The City Council of the City of Lubbock does hereby approve the execution and
delivery by LEDA to American State Bank of that certain Promissory Note, dated on/or
about February 9, 2010, and all documents executed in connection therewith (the
"Related Documents"), said Note and Related Documents being attached to, and
incorporated in, this Resolution as Exhibit "A".
Executed this 9th day of February , 2010.
TOM MARTIN, MAYOR
ATTEST:
Rebe a Garza, City Secretary
APPROVED AS TO CONTENT:
Andy Bui ham, Chief financial Officer
APPROVED AS TO FORM:
Attorney_'
LEDA-Txable Loan Agrmt.res. 126 10
1.26.10
EXHIBIT "A"
PROMISSORY NOTE
Resolution No. 2010—R0057
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Borrower: LUBBOCK ECONOMIC DEVELOPMENT ALLIANCE, Lender: AMERICAN STATE BANK
INC. Lending Dlvlson
1500 BROADWAY, 6TH FLOOR 1401 AVENUE Q
LUBBOCK, TX 79401 LUBBOCK, TX 79408-1401
Principal Amount: $500,000.00 Date of Note: February 9, 2010
PROMISE TO PAY. LUBBOCK ECONOMIC DEVELOPMENT ALLIANCE, INC, ("Borrower") promises to pay to AMERICAN STATE BANK
("Lender"), or order, In lawful money of the United States of America, the principal amount of Five Hundred Thousand & 001100 Dollars
($500,000,00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest
shall be calculated from the date of each advance until repayment of each advance or maturity, whichever occurs Oral
CHOICE OF USURY CEILING AND INTEREST RATE. The Interest rale on this Note has been Implemented under the "Quarterly Calling" as
referred to In Section 303.006 of the Texas Finance Code. The terms, Including the rale, or Index, formula, or provision of law used to compute
the rete on the Note, will be subject to revision as to current and future balances, from time to time by notice from Lender in compliance with
Section 303.103 of the Texas Finance Code.
PAYMENT. Borrower will pay this loan In one payment of all outstanding principal plus ell accrued unpaid Interest on February 9, 2011. In
addition, Borrower will pay regular monthly payments of all accrued unpaid Interest due as of each payment date, beginning March 9, 2010,
with ell subsequent Interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by applicable
law, payments will be applied first to any accrued unpaid Interest; then to principal; then to any unpaid collection coats; and then to any late
charges. Borrower will pay Lender at Lenders address shown above or at such other place as Lander may designate In writing.
Notwithstanding any other provision of this Note, Lender will not charge Interest on any undlsbursed loan proceeds. No scheduled payment,
whether of principal or Interest or both, will be due unless sufficient loan funds have been disbursed by the scheduled payment data to justify
the payment
VARIABLE INTEREST RATE. The Interest rate on this Note Is subject to change from time to time based on changes In an Index which Is the
AMERICAN STATE BANK, BASE RATE AS IT MAY EXIST AND CHANGE FROM TIME TO TIME (the "Index"). The Index is not necessarily the
lowest rete charged by Lender on Its loans and Is set by Lender in Its sole discretion. If the index becomes unavailable during the term of this
loan, Lender may designate a substitute Index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrowers
request. The Interest rete change will not occur more often than each DAY. Borrower understands that Lender may make loans based on olher
rales as well. The Index currently Is 4.000% per annum. Interest prior to maturity on the unpaid principal balance of this Note will be
calculated as described In the 'INTEREST CALCULATION METHOD' paragraph using a rale of 0.500 percentage points under the Index,
resulting in an Initial rate of 3.500% per annum based on a year of 360 days. NOTICE: Under no circumstances will the Interest rete on this
Note be more then (except for any higher default rate or Post Maturity Rale shown below) the lesser of 18.000% per annum or the maximum
rate allowed by applicable law. For purposes of this Note, the 'maximum rate allowed by applicable law" means the greeter of (A) the
maximum rate of Interest permitted under federal or other law applicable to the Indebtedness evidenced by this Note, or (B) the "Quarterly
Ceiling" as referred to in Section 303.006 of the Texas Finance Coda.
INTEREST CALCULATION METHOD. Interest on this Note Is computed on a 365/360 basis; that Is, by applying the ratio of the Interest rete
over a year of 380 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance Is
outstanding, unless such calculation would result In a usdrlous rata, In which case Interest shall be calculated on a per diem basis of a year of
385 or 366 days, as the case may be. All Interest payable under this Note Is computed using this method.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than It is due. Prepayment In full shall consist of
payment of the remaining unpaid principal balance together with all accrued and unpaid Interest and all other amounts, costs and expenses for
which Borrower Is responsible, under this Note or any other agreement with Lender pertaining to this loan, and In no event will Borrower ever be
required to pay any unearned Interest. Early payments will not, unless agreed to by Lender In writing, relieve Borrower of Borrowers obligation
to continue to make payments of accrued unpaid Interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to
send Lender payments marked 'paid In full", "without recourse', or similar language. If Borrower sande such a payment, Lender may accept It
without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written
commun cations concerning disputed amounts, Including any check or other payment Instrument that indicates that the payment constitutes
"payment In full" of the amount owed or that Is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be
malled or delivered to: AMERICAN STATE BANK, Lending Divison, 1401 AVENUE 0, LUBBOCK, TX 79408.1401.
LATE CHARGE. If a payment Is 10 days or more late, Borrower will be charged 5.000% of the regularly scheduled payment or $100.00,
whichever Is less.
POST MATURITY RATE The Post Maturity Rate on this Note Is the lesser of (A) the maximum rale allowed by law or (B) 18.000% per
annum based on a year of 360 days. Borrower will pay Interest on all sums due after final maturity, whether by acceleration or otherwise, at
that rale.
DEFAULT. Each of the following shall constitute an event of default ('Event of Default') under this Note:
Payment Default. Borrower fails to make any payment when due under this Note.
Other Defaults. Borrower falls to comply with or to perform any other term, obligation, covenant or condition contained In this Note or In
any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained In any other agreement
between Lender and Borrower.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrowers behalf under this
Note or the related documents Is false or misleading in any material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrowers existence as a going business, the insolvency of Borrower, the appointment of a
receiver for any pert of Borrowers property, any assignment for the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy or Insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.
This Includes a garnishment of any of Borrowers accounts, Including deposit accounts, with Lender. However, this Event of Default shall
not apply if there Is a good faith dispute by Borrower as to the validity or reasonableness of the claim which Is the basis of the creditor or
forfeiture proceeding and If Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or
a surety bond for the creditor or forfeiture proceeding, In an amount determined by Lender, in Its sola discretion, as being an adequate
reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor; endorser, surely, or accommodation party
of any of the Indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes Incompetent, or revokes or
disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.
Change In Ownership. Any change In ownership of twenty -Ove percent (25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs In Borrowers financial condition, or Lender believes the prospect of payment or
performance of this Note Is Impaired.
Insecurity. Lender In good faith believes Itself Insecure.
Cure Provisions. If any default, other than a default In payment is curable, It may be cured if Borrower, after Lender sends written notice to
Borrower demanding cure of such default: (1) cures the default within ten (10) days; or (2) If the cure requires more than len(10) days,
Immediately Initiates steps which Lender deems In Lenders sole discretion to be sufficient to cure the default and thereafter continues and
completed all reasonable and necessary steps sufficient to produce compliance as soon es reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire Indebtedness, Including the unpaid principal balance under this Note, all
accrued unpaid Interest, and all other amounts, costs and expenses for which Borrower Is responsible under this Note or any other agreement
with Lender pertaining to this loan, Immediately due, without notice, and then Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire an attorney to help collect this Note if Borrower does not pay, and Borrower will pay Lenders
PROMISSORY NOTE
Loan No: 2011009126 (Continued) Page 2
reasonable attorneys' fees. Borrower also will pay Lender all other amounts Lender actually Incurs as court costs, lawful fees for filing,
recording, releasing to any public office any Instrument securing this Note; the reasonable cost actually expended for repossessing, storing,
preparing for sale, and selling any security; and fees for noting a Ilan on or transferring a certificate of title to any motor vehicle offered as
security for this Note, or premiums or Identifiable charges received In connection with the sale of authorized Insurance.
GOVERNING LAW. This Note will be governed by federal law applicable to Lander and, to the extent not preempted by fedeMl law, the laws of
the State of Texas without regard to ffs conflicts of law provisions. This Note has been accepted by Under In the State of Taxes.
DISHONORED CHECK CHARGE. Borrower will pay a processing fee of $25.00 If any check given by Borrower to Lender as a payment on this
loan is dishonored.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff In all Borrower's accounts with Lender (whether
checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone also and all accounts Borrower may
open In the future. However, this does not Include any IRA Or Keogh accounts, or any trust accounts for which setoff would be prohlblled by
law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff ell sums owing on the debt against any and all
such accounts.
COLLATERAL. This loan Is unsecured.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note may be requested orally by Borrower or es provided
In this paragraph. Lender may, but need not, require that all oral requests be confirmed in writing. All communications, Instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender's office shown above. The following person or persona are
authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown
above, written notice of revocation of such authority: JANA JOHNSTON, CFO of LU98OCK ECONOMIC DEVELOPMENT ALLIANCE, INC.; and
KENNETH RAY MCKAY, Interim President & CEO of LUBBOCK ECONOMIC DEVELOPMENT ALLIANCE, INC. Borrower agrees to be liable for all
sums either. (A) advanced In accordance with the Instructions of an authorized person or (B) credited to any of Borrower's accounts with
Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lenders Internal
records, Including dally computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor
Is In default under the terms of this Note or any agreement that Borrower or any guarantor has with Lander, Including any agreement made In
connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is Insolvent; (Cj any guarantor seeks, claims
or otherwise attempts to limit, modify or revoke such guarantors guarantee of this Note or any other loan with Lender, (D) Borrower has
applied funds provided pursuant to this Note for purposes other than those authorized by Lender, or (E) Lender In good faith believes itself
Insecure. This revolving Ilne of credit shall not be subject to Ch, 348 of the Texas Finance Code.
RENEWAL AND EXTENSION. This Nota Is given in renewal and extension and not in novation of the following described Indebtedness: the
Promissory Nate from LUBBOCK ECONOMIC DEVELOPEMENT ALLIANCE, INC, to AMERICAN STATE BANK dated JANUARY 27, 2009 In the
original principal amount of $500,000,00.
REPAYMENT PROVISION. Notwithstanding any other provision contained herein, neither the State of Texas nor the City of Lubbock, Texas,
shall be obligated to pay the Indebtedness heroin Incurred or any Interest thereon and that neither the faith and credit nor the taxing power of
either the State of Texas or the City of Lubbock, Texas, Is pledged to the payment of the principal of or the Interest on such Indebtedness. The
source of funds for the repayment of the Indebtedness shall be limited to 1,) the proceeds of the sell of bonds Issued by Lubbock Economic
Development Alliance, [rib., (LEDA), 2,) revenues realized from the lease or sale of any project or realized from a loan made by LEDA to finance
or refinance a project, and/or 3.) revenues from a contract with the City of Lubbock under Section 380.002 of the Local Government Code.
CROSS DEFAULT PROVISION. It Is expressly agreed that an addlttanal event of default under this Note shall be: any default made In the
punctual payment of that certain Floating Rate Promissory Note dated August 23, 2007 In the original amount of $7,250,000.00, payable to
PlalnsOapital Bank, Lubbock, Texas (PCB Note), or any default In the performance of any covenant or agreement contained In the PCB Note or
any related Loan Documents.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrowers helm, personal representatives,
successors and assigns, and shall inure to the benefit of Lender and Its successors and assigns.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Borrower does not agree or
Intend to pay, and Lender does not agree or Intend to contract for, charge, collect, take, reserve or receive (collectively referred to herein as
"charge or collect"), any amount In the nature of Interest or In the nature of a fee for this ban, which would In any way or event (Including
demand, prepayment, or acceleration) cause Lender to charge or collect more for this loan than the maximum Lender would be permitted to
charge or collect by federal law or the law of the Stale of Texas (ss applicable). Any such excess Interest or unauthorized fee shall, Instead of
anything stated to the contrary, be applied first to reduce the principal balance of this loan, and when the principal has been paid In full, be
refunded to Borrower. The right to accelerate maturity of sums due under this Note does not include the right to accelerate any interest which
has not otherwise accrued on the date of such acceleration, and Lander does not Intend to charge or collect any unearned Interest In the event
of acceleration. Al sums paid or agreed to be paid to Lender for the use, forbearance or detention of sums due hereunder shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of the loan evidenced by this Note until
payment In full so that the rate or amount of Interest on account of the loan evidenced hereby does not exceed the applicable usury ceiling.
Lender may delay or forgo enforcing any of Its rights or remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, notice of dishonor, notice of
Intent to accelerate the maturity of this Note, and notice of acceleration of the maturity of this Note. Upon any change In the terms of this Note,
and unless otherwise expressly stated In writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this
loan or release any party or guarantor or collateral; or Impair, fag to realize upon or perfect Lenders security Interest In the collateral without the
consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other
than the party with whom the modification Is made. The obligations under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE
INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
BORROWER:
LUBBOCK ECONOMIC DEVELOPMENT ALLIANCE, INC.
By: By:
JANA JOHNSTON, CFO of LUBBOCK ECONOMIC KENNETH RAY MCKAY, Interim President 8, CFO of
DEVELOPMENT ALLIANCE, INC. LUBBOCK ECONOMIC DEVELOPMENT ALLIANCE,
INC.
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RESOLUTION
THE STATE OF TEXAS
COUNTY OF LUBBOCK
Resolution No. 2010—R0057
At a regular meeting of the Board of Directors of LUBBOCK ECONOMIC
DEVELOPMENT ALLIANCE, INC., a Texas nonprofit corporation (LEDA), on January 25,
2010, held in conformity with the bylaws, after due notice as therein provided, a quorum being
present and acting, the following resolution was unanimously adopted:
WHEREAS, LEDA presented to members of the Board the renewal of a $500,000
Revolving Line of Credit with American State Bank dated February 9, 2010 and maturing on
February 9, 2011.
WHEREAS, The Board of Directors of LEDA agreed that is was in the best interest of
the Corporation to execute the renewal of the Revolving Line of Credit.
Upon Motion by Director, Ms. Sandy Henry, and Seconded by director, Mr. Curtis
Griffith, with Directors, Mr. Van May and Mr. Tony Whitehead, abstaining, it was approved that
the Revolving Line of Credit with American State Bank in the amount of $500,000 be renewed
dated February 9, 2010 and maturing February 9, 2011.
IT WAS RESOLVED that members of the Board agreed that the Revolving Line of Credit be
renewed and authorized Ms. Jana Johnston, CFO, and Mr. Kenny McKay, CEO, execute all
documents related to the renewal.
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LINDA DAVIS, SECRETARY