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2011_04.19 EDC Packet AGENDA KENNEDALE ECONOMIC DEVELOPMENT CORPORATION BOARD OF DIRECTORS REGULAR MEETING—APRIL 19"', 2011 405 MUNICIPAL DR. —KENNEDALE MUNICIPAL BLDG. COUNCIL CHAMBERS 7:15 PM I. CALL TO ORDER II. ROLL CALL III. REGULAR ITEMS A. Review and consider action to approve regular meeting minutes dated March 22,d 2011. B. Discuss and consider approval of independent auditor's report for year ended September 30, 2010. C. Review KEDC Financial Report, D. Consider authorizing Executive Director to sign Economic Development Corporation lender agreement. E. Consider acceptance of Texas Leverage Fund loan. IV. STAFF ANNOUNCEMENTS/REPORTS A. Executive Director/Orasi Development 1. TownCenter — 9/11 Memorial — Section House bid schedule — UTA presentations and projects — Street and Park construction update -- P.0 Tech Industry V. EXECUTIVE SESSION A. The Economic Development Corporation will meet in closed session pursuant to Section 55 1.072 of the Texas Government Code to deliberate the purchase, sale,exchange, lease, or value of real property. 1. Purchase of Land TXDOT surplus properties — Land sale protest B. The Economic Development Corporation will meet in closed session pursuant to Section 551.087 of the Texas Government Code to deliberate the offer of a financial or other incentive to a business prospect with which the city is conducting economic development negotiations. 1. Review proposals for sale and development of- - 1000 E. Kennedale Parkway VI. RECONVENE INTO OPEN SESSION AND TAKE ACTION PURSUANT TO EXECUTIVE SESSION,IF NECESSARY. VII. ADJOURNMENT MEETING MINUTES KENNEDALE ECONOMIC DEVELOPMENT CORPORATION BOARD OF DIRECTORS REGULAR MEETING—MARCH 22°'x, 2011 405 MUNICIPAL DR.—KENNEDALE MUNICIPAL BLDG, COUNCIL CHAMBERS I. CALL TO ORDER President Robert Mundy called the meeting to order at 7:18pm H. ROLL CALL BOARD MEMBERS PRESENT ABSENT ROBERT MUNDY-PRESIDENT,P4 X BEVERLY HAYES-P3 X DARRELL ERWIN-P1 X PAT TURNER-P2 X DONNIE GRAHAM-P5 X MARK YEARY-P6 X REBECCA MOWELL-P 7 X CITY STAFF PRESENT ABSENT BOB HART,EXECUTIVE DIRECTOR X SAKURA MOTEN-DEDRICK,CITY FINANCE DIRECTOR X III. REGULAR ITEMS A. Discuss and consider approval of independent auditor's report for year ended September 30, 2010. Due to a last minute scheduling conflict with the auditor, this item has been postponed until the April meeting. B. Review and consider action to approve regular meeting minutes dated February 15t",2011. Motion to approve the February 15`x' meeting minutes as presented on paper was made by Darrell Erwin, second by Donnie Graham. Motion passed (4-0), with Beverly Hayes abstaining. C. Review KEDC Financial Report, Sakura Moten-Dedrick presented the most recent EDC financial data to the board. No significant changes have occurred since the previous month. Ms.Moten-Dedrick noted that the city has seen eleven straight months of increase in sales tax revenue. Most of this can be attributed to reallocations completed last year. Current maintenance costs are due to fagade improvements that are currently being completed in TownCenter. Ms. Moten-Dedrick also gave a brief update on the 2009/2010 budget, noting that the fund balance was higher than expected due to increases in sales tax and less spending on sundry items. Board member Pat Turner asked for clarification regarding the expenditure line item described as `special services.' Ms. Moten-Dedrick stated that most expenses that are not engineering, architecture, or construction related generally fall into this category. Examples given included contracted items such as the Section House and the relocation of utility poles. Motion to approve the financial data as received was made by Pat Turner, second by Beverly Hayes. Motion passed (5-0) D. Amend fiscal year 2009/2010 Budget. No budget amendments were necessary, and this item was removed from the agenda. IV. STAFF ANNOUNCEMENTS/REPORTS A. Executive Director/Orasi Development Bob Hart addressed the Board on the following topics: I. TownCenter — Section House o The section house will go bid next week. — 9/11 Memorial o Mr. Hart discussed the Memorial for the entrance of the World Trade Center steel girder into Kennedale. Draft artistic plans will be in early next week, and the city is still exploring potential dedication dates and event speakers. — Fagade improvements o Mr. Hart announced that the lights, painting, and roof of current TownCenter development will be completed within the next few weeks. 2, Sustainability Grant Status Mr. Hart addressed the council, explaining that the City has received clarity on the status of the sustainability grant. The Attorney General has ruled that the sustainability funds previously discussed can only be expended in counties involved in Section 121, and therefore Tarrant County does not qualify. Instead,the city has switched to using Community Multiscale Air Quality(CMAQ)monies,which are federal funds administered by TxDOT. It may take 3 years for these firnds to become fully available. 3. I-20/Kennedale Parkway Development Status Mr. Hart announced that the city is still working with QuikTrip (QT) and with TxDOT and that appraisal processes are currently underway. QT has purchased additional land so that they can build a larger store model. Several restaurants have expressed interest in the TownCenter area, and land has been shown to six potential developers. The board recessed regular session and entered executive session at 7:39pm V. EXECUTIVE SESSION A. The Economic Development Corporation will meet in closed session pursuant to Section 551.087 of the Texas Government Code to deliberate the offer of a financial or other incentive to a business prospect with which the city is conducting economic development negotiations. Purchase of Land — 1170 Kennedale Parkway — 5414, 5421,5420, and 5424 High Ridge Road — 6708 and 6704 Lindale Road — 6713 and 6701 Oak Crest Drive — 1120 Kennedale Parkway — TXDOT parcels on Kennedale Parkway I. Incentive Texas Leverage Fund financial analysis 2. Review proposals for sale and development of: — 1000 E. Kennedale Parkway — Business expansion incentives VI. RECONVENE INTO OPEN SESSION AND TAKE ACTION PURSUANT TO EXECUTIVE SESSION, IF NECESSARY. The board reconvened into regular session at 8:51pin. VII. ADJOURNMENT A motion to adjourn the meeting was made by Darrell Erwin, second by Donnie Graham. Motion passed (5-0) The meeting was adjourned at 8:52pm. APPROVED Robert Mundy, Board President ATTEST Amethyst G. Cirmo,City Secretary Staff Report To the Members of the EDC4B Board Date: April 19, 2011 Agenda Item No: Subject: DISCUSS AND REVIEW FEBRUARY 2011 EDC FINANCIALS Originated by: Sakura Moten-Dedrick Summary: Budget/Amendment NIA Year-To-Date • Ad Valorem Tax: No significant change. • Sales Tax: Decrease in comparison over this time last year, but this is due to error. Both years contain slight errors in how sales tax was posted for accrual purposes. Last year's sales tax for YTD through Feb 2010 should have been $60,899 and $91,051 for YTD through Feb 2011. We are actually seeing a greater increase in comparison to this same time last year. Furthermore, this is due to both a gains in the economy, as well as the reallocation of Majestic Liquor sales given our FY09/10 audit by Municap Services (see Monthly Graph, 3-Year Historical Graph, 10-Year Historical Data). • Investment Earnings: Due to declining interest rates, income continues to be much lower in comparison over this time last year. • Miscellaneous Income:No significant change. • Surplus Sales/Rentals: Increase in comparison over this time last year. Staff continues to receive income from Cypress Properties in a timely manner. We used to run two months in arrears. For FY2010-11 Cypress Properties spreadsheet, Jan-Mar Tax Escrows are much higher than previous due to collection of MMD Assessments given annual invoice. To date, we have received payments from Surplus Warehouse, Chicken Express and Subway. We are awaiting Dollar General, approximately $SK. • Personnel:No significant change. • Supplies: Decrease in comparison over this time last year. Last year included $7K in printed supply purchases for posters in regards to the Kennedale Chamber and Section House. • Maintenance:No significant change. • Sundry:No significant change. • Debt: No significant change. • Transfers: Increase in comparison over this time last year. This fiscal year represents a payment in Nov (interest only) and May (principal plus interest). Last fiscal year represents the interest only payment reimbursed to the General Fund for the $2M CO Bond at year end. However, it was not made until May, and this is why the Jan YTD is $0. • Capital; Increase in comparison over this time last year. Represents expenses towards Town Center Redevelopment. Estimate Please note that the FY2009-10 figures are now "officially audited." The FY09/10 actual ending fund balance is $702,788, including the $119,637 EDC Bond Fund Reserve. Excluding the reserve, the FY09/10 actual is approximately$5831 . Recommended Motion: Staff recommends approval. Disposition by Board: CITY OF KENNEDALE,TEXAS ANNUAL PROGRAM OF SERVICES INCOME STATEMENT 1S;EDC4B FUND FY09-10 FY09.10 FY09.10 FY09.10 FY10-11 FY10.11 FY10.11 FY10-11 INCOME STATEMENT BUDGET AMENDED YTD FEB ACTUAL PROPOSED AMENDED YTD FEB ESTIMATE OPERATING REVENUES 567,171 511,788 76,492 692,446 586,487 586,487 245,295 629,212 OPERATING EXPENDITURES (744,417) {2,005,540) (503,271) (1,679,726) (608,442) (608,442) (512,854) (649,941) OPERATING INCOME/{LOSS) (177,246) (1,493,752) (426,779) (987,280) (21,955) (21,955) (267,558) (20,729) NONOPERATING REVENUES/(EXPENSES) INTEREST EARNINGS 20,000 20,000 1,160 1,958 4,200 4,200 120 4,200 TRANSFERS IN - - - - - - - (TRANSFER OUT) (10,000) (28,000) - (26,540) (154,619) (154,619) (39,809) (154,619) NET OPERATING INCOME/(LOSS) (167,246) (1,501,752) (425,619) (1,011,861) (172,374) (172,374) (307,248) (171,148) BEGINNING FUND BALANCE $ 1,595,012 $1,595,012 $1,595,012 $1,595,012 $ 583,151 $ 583,151 $ 583,151 $ 583,151 ENDING FUND BALANCE(EXCLUDING FUND 95) $ 1,437,766 $ 93,261 $1,169,393 $ 583,151 $ 410,777 $ 410,777 $ 275,903 $ 412,003 95:EDC46 RESERVE FUND $ 119,418 $ 119,418 $ 119,418 $ 119,637 $ 119,637 $ 119,637 $ 119,637 $ 119,63/ ENDING FUND BALANCE(INCLUDING FUND 95) $ 1,557,184 $ 212,678 $1,288,811 $ 702,788 $ 530,414 $ 530,414 $ 395,540 $ 531,640 "EXEMPLIFYING EXCELLENCE" CITY OF KENNEDALE,TEXAS ANNUAL PROGRAM OF SERVICES FUND SUMMARY BY CATEGORY 15:EDC4B FUND FY09-10 FY09-10 FY09-10 FY09-10 FY10.11 FY10-11 FY10-11 FY10.11 FY09-10 FY10-11 CATEGORY BUDGET AMENDED YTD FEB ACTUAL PROPOSED AMENDED YTD FEB ESTIMATE YTD% YTD%a BEGINNING FUND BALANCE $1,595,012 $ 1,595,012 $ 1,595,012 $ 1,595,012 $ 583,151 $ 583,151 $ 583,151 $ 583,151 AD VAtORFM TAXES - - - 16,690 23,467 23,467 1,560 23,467 0.0% 6,67. SALES/BEVERAGE TAXES 323,571 306,744 14,696 450,895 323,775 323,775 155,422 366,501 4.8% 48.0% INVESTMENT EARNINGS 20,000 20,000 1,160 1,958 4,200 4,200 120 4,200 5.8% 2.9% MISCELLANEOUS INCOME - - 21,065 - - - - 0.07. 0.0% SURPLUS SALEWRENTALS 243,600 205,044 61,796 203,796 239,244 239,244 88,313 239,244 30.1% 36.9% TOTAL REVENUES $ 567,171 $ 531,788 $ 77,652 $ 694,404 $ 590,687 $ 590,687 $ 245,415 $ 633,412 14.6% 41.5% PERSONNEL - - - - - - - 0.0% 0.0% SUPPLIES 33,860 28,860 15,588 21,634 31,610 31,610 1,834 31,610 54.07 5,817 MAINTENANCE 23,790 23,790 8,518 17,905 17,790 17,790 9,930 17,790 35-8% 55.8% SUNDRY 417,537 1,024,582 99,484 300,501 249,744 249,744 100,944 228,744 97% 40.4% DEBT 164,230 114,230 39,534 114,149 111,798 111,798 38,277 111,798 34.6% 34.2'% TRANSFERS 10,000 28,000 - 26,540 154,619 154,619 39,809 154,619 0,0% 25.7% CAPITAL 95,000 814,078 340,146 1,225,538 197,501 197,501 361,868 260,000 41.8% 183.2% TOTAL EXPENDITURES $ 744,417 $2,033,540 $ 503,271 $ T,706,265 $ 763,061 $ 763,061 $ 552,663 $ 804,560 24.77. 72.4% REVENUES OVER EXPENDITURES $ (157,246) $(1,501752] $ (425,619) $(1,011,861) $ (172,374) $ (172,374) $ (307,248) $ (171,148) ENDING FUND BALANCE $1,437,766 $ 93,261 $ 1,169,393 $ 583,151 $ 410,777 $ 410,777 $ 275,903 $ 412,003 ADJUSTMENTS FUND BALANCE AS%OF EXP 193.1% 4.6% 232.47. 34,27. 53.8% 53.8% 49,97. 51.2% RESERVE(NO REQUIREMENT) $ - $ - $ - $ - $ - $ - $ - $ - RESERVE SURPLUS SHORTFALL 1,437,766 93,261 1,169,393 583,151 410,777 410,777 275,903 412,003 "EXEMPLIFYING EXCELLENCE' CITY OF KENNEDALE TEXAS ANNUAL PROGRAM OF SERVICES REVENUE LINE ITEM SUMMARY 15:EDC4B FUND FY09.10 FY09-10 FY09-10 FY09-10 FY10.11 FY10-11 FY10-11 FY10-11 FY09-10 PY10.11 ACCOUNT ACCOUNT NAME BUDGET AMENDED YID FEB ACTUAL PROPOSED AMENDED YTD FEB ESTIMATE YTD% YTD% 4001-00-00 PROPERTY TAX-CURRENT YEAR - - - - 0.0% 010% 4002-00-00 ASSESSMENTS-CURRENT YEAR 16,690 23,467 23,467 1,56.0 23,467 0.0% 6.6% AD VALOREM TAXES $ $ - $ - $ 16,690 $ 23,467 $ 23,467 $ 1,560 $ 23,467 0.07. 6.67. 4081-00-00 SALES TAX 323,571 306,744 14,696 450,895 323,775 323,775 155,422 366,501 4.8% 48.07. 4082-00-00 MIXED BEVERAGE TAX - - - - - - - - 0.0% 0.07 SALES/BEVERAGE TAXES $323,571 $ 306,744 $ 14,696 $450,895 $ 323,775 $ 323,775 $155,422 $ 366,501 4.87. 48.0% 4401-00-00 INVESTMENT INCOME 20,000 20,000 1,160 1,958 4,200 4,200 120 4,200 5.8% 2.9% INVESTMENT EARNINGS $ 20,000 $ 20,000 $ 1,160 $ 1,958 $ 4,200 $ 4,200 $ 120 $ 4,200 5.817. 2.9% 4409-00-00 MISCELLANEOUS INCOME - - - 21,065 - - - 0.0% 0.0% 4415-00.00 INSURANCE REIMBURSEMENT - 0.0% 0.0% MISCELLANEOUS INCOME $ - $ $ $ 21,065 $ - $ $ $ 0.0% 0.0% 4805-00-00 RENTAL FEES-SHOPPING CENTER 243,600 205,044 61,512 202,376 235,244 235,244 87,758 235,244 30.07o 373% 4806-00-00 RENTAL INSURANCE - 284 1,420 4,000 4,000 555 4,000 4DIV/01 13.9% SURPLUS SALES/RENTALS $243,600 $ 205,044 $ 61,796 $203,796 $ 239,244 $ 239,244 $ 88,313 $ 239,244 30.1% 36.9% TOTAL REVENUES $587,171 $ 531,788 $ 77,652 $694,404 $ 590,687 $ 590,687 $245,415 $ 633,412 14.6% 41.57o TOTAL REVENUES(EXCLUDING INTERE: $567,171 $ 511,788 $ 76,492 $692,446 $ 586,487 $ 586,487 $245,295 $ 629,212 10%ADMIN CHARGE-GENERAL FUND 56,717 51,179 7,649 66,200 58,649 58,649 24,530 62,921 "EXEMPLIFYING EXCELLENCE' CL w V) Q J I 7 Q r QJ � � Z Q � o G/ c LY. 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V?V7 V!V}V}N Vl V}V}V}V}Vl V}V}Vf N V>VF VF V1 O n n 0 p iD l0 0 0 0 O O O n a I� M O O O S r) r�rl p 0n S to m ID Lrl a a; • n : ' ' N A A A n ' n ' ul n ' ' W (T Ip .� O , a h N 4 M .�-€ X ua1 Ono V N H V}VT N V?M VF VL V>VF VT V!u!V!in Uf VF VY V}V1 VF VF N VT V) V} V{ a uUi � o yl V Q w CO u W h E O m ro M Q 11 C a n m C CL L V . m � O� ro C CL V w Q v O 0.��+ v m = Gq p O : 3 v o m U (D O m w 6 u w Fn N Q O Z H CITY OF KENNEDALE,TEXAS ANNUAL PROGRAM OF SERVICES EXPENDITURE LINE ITEM SUMMARY 15:EDC413 FUND 01:ADMINISTRATION FY09-10 FY09-10 FY09.10 PY09.10 FY10-11 FYIO-11 FY10.11 FY10•I1 FY09-10 FY10.11 ACCOUNT ACCOUNT NAME BUDGET AMENDED YTD FEB ACTUAL PROPOSED AMENDED YID FEB ESTIMAIE YTD% YID% 5101-01-00 SALARIES - - - - - - - - 010% 0.0% 5107-01-00 OVERTIME - - - - - - - - 010% 0.0% 5111-0100 AUTO ALLOWANCE - - - - - - - - 0.0% 0.09 5114.0100 LONGEVITY - - - - - - - - 0.0% 0.09 5115.01-00 RETIREMENT - - - - - - - - 0.0% O.M. 5116-01-00 UNEMPLOYMENT INSURANCE - - - - - - - - 0.09 OD% 5117-0100 FICA - - - - - - - - 0.051 0.0% 5118-01-00 MEDICAL INSURANCE - - - - - - - - 0.0% 0.0% 5120-01-00 LIFE INSURANCE - - - - - - - - 0.0% 0.0% 5121-01-00 DENTAL INSURANCE - - - - - - - - 0.0% 0.09 5122-0100 VISION INSURANCE - - - - - - - - 0.0% 0.09 5190-01-00 VACATION/SICK7TERM/LEAVE ADJ - - 0.0% 0.09 PERSONNEL $ $ $ $ - $ $ - $ - 5 - 0.01/. 010% 5220-01-00 UNIFORMS 300 300 - - 300 300 - 300 0.0% 0.0% 5240-W-00 PRINTED SUPPLIES 25,000 22,000 14,862 20,646 22,000 22,000 1,822 22,000 67.6% 8.3% 5260-01-00 GENERAL OFFICE SUPPLIES 500 500 102 155 250 250 12 250 20.3% 4,7% 5261-01-00 POSTAGE 1,000 500 - - 500 500 - 500 0.09 0J]% 5280-01-00 MINOR EQUIP/SMALL TOOLS<$5K 1,000 - - 196 - - - - OA% 0.0% 5290-01-00 EXPENDABLE SUPPLIES 1,500 1,000 12 4,000 4,000 4,000 0.0% 0.0% SUPPLIES $ 29,300 5 24,300 $ 14,963 $ 21,009 $ 27,050 $ 27,050 $ 1,834 $ 27,050 61.6% 6.8% 5403-01-00 BUILDING MAINTENANCE - - - 4,376 - - - - 0.0% 0.0% 5440-01-00 OFFICE EQUIP/SOFTWAREMAINT - - - - 0.0% 010% MAINTENANCE $ S - $ $ 4,376 $ $ $ - $ - 0.0% 0.074 5501-01-00 ADVERTISING 11,000 5,000 343 2,010 5,000 5,000 - 10,000 6.97. 0.0% 5510.01-00 ASSOC DUES/PUBLICATIONS 11000 200 - 3,475 3,375 3,375 250 3,375 0.0% 7.4% 5512-01-00 CONTRACTUAL SERVICES - - - - - - - - 0.0% 0.0% 5525-0100 TRAININGJSEMINARS 2,500 11000 - - 1,000 1,000 - 1,000 0.07. 0.0% 5565-01-00 LEGAL SERVICES 40,000 40,000 11,479 25,322 25,000 25,000 2,593 25,000 28.751 10.4% 5567-01-00 AUDIT SERVICES 4,000 4,000 1,500 1.500 1,500 1,500 - 1,500 37.5% 0.0% 5569-01-DO IT SUPPORT - - - - - - - - O.Ory 0.0% 5570-01-00 SPECIALSERVICES 78,920 103,420 29,172 162,725 95,420 95.420 43,754 95,420 28.2% 45.9% 5575-01-00 EQUIPMENT RENTAL - - - 358 - - - - 0.0% 0.0% 5578-01-00 TRAVEL 6,000 700 15 122 700 700 - 700 2.2% 0.0% 5580.01-00 ENGPNEERING SERVICES - - - - - - - - 0.0% 0.09 5585-01-00 TELEPHONE SERVICES - - - - - - - - 0.0% 0.0% 5595.01-00 AOMINCHARGE-GENERAL FUND 56,717 52,862 16,979 66,200 58,649 58,649 24.530 58,649 32.1% 41.8% SUNDRY $ 200,137 $ 207,182 $59,498 $ 261,711 $ 190,644 $ 190,644 $ 71,126 $ 195,644 28.7% 37.3% 5610-01-00 VISUAL GRANT 50.000 - - - - - - - 0.09 0.0% 5615.01-00 FUNCTIONAL GRANT - - - - - - - - 0.09 0.0% 5625-01-00 ISSUANCE COST - - - 0.0% 0.0% DEBT $ 50,000 $ S $ - $ $ $ $ 0.0% 0.07. 5701-01-00 TRANSFER OUT-GENERAL FUND 10,000 1,000 - - - - - - 0.0% 0.07. 5714.01.00 TRANSFER OUT-DEDICATION FUND - - - - - - - - O.0% 010% 5795-01-00 TRANSFER OUT-EDC RESERVE FUND - 0.0% O.W. TRANSFERS $ 10,000 $ 11000 $ - $ - $ - $ $ $ - 0.0% 0.07. 5800-01-00 LAND 25,000 400,000 - 385,897 10,000 10,D00 282 10,000 0.09 2.85. 5813-01-00 KENNEDALE ENTRANCE SIGN 45,000 45,000 - - 45,000 45,000 - 35,000 0.07. 0.0% 5820-01-00 BUILDING IMPROVEMENT 25,000 369,076 340,146 351,004 15.000 15,000 15,000 92.2% 0.09 CAPITAL $ 95,000 $ 814,078 $340,146 $ 736300 $ 70,000 $ 70,000 $ 282 $ 60,000 41,87. 0.47. TOTAL EXPENDITURES $ 384,437 $1,046,560 $414,597 $1,023,996 $ 287,694 $ 287,694 $ 73,243 $ 282,694 39.6% 25.57. "EXEMPLIFYING EXCELLENCE" CITY OF KENNEDALE,TEXAS ANNUAL PROGRAM OF SERVICES EXPENDITURE FINE ITEM SUMMARY 15:EDC411 FUND 01:ADMINISTRATION 03:DEBT SERVICE FY09-10 FY09-10 FY09-10 FY09-10 FY10.11 FY10-11 FY10-11 PY10-11 FY09-10 FY10.11 ACCOUNT ACCOUNT NAME BUDGET AMENDED YTD FEB ACTUAL PROPOSED AMENDED YTD FEB ESTIMATE YTD% YTD% 5620-01-03 ISSUANCF COSTS 0.0% 0.0% 5621-01-03 PAYING AGENT FEES 0.07. 0.0% 5643-01-03 2007$1.2M TAX BOND-INTEREST 79,230 79,230 39,534 79,149 76198 76,798 38,277 76,798 49.9% 49.8% 5643-01-03 2007$1.2M TAX BOND-INTEREST 35,000 35,000 - 35,000 35,000 35,000 - 35,000 0.0% 0.0% DEBT $ 114,230 $ 114,230 $ 39,534 $ 114,149 $ 111,798 $ 111,798 $ 38,277 $111,798 34,6% 34.2% 5702-01-03 TRANSFER OUT-DEBT SERVICE FUND - 27,000 - 26,540 154,619 154,619 39,809 154,619 0.07 25.7% TRANSFER $ . $ 27,000 $ - $ 26,540 $ 154,619 $ 154,619 $ 39,809 $154,619 0.0% 25.7% TOTAL EXPENDITURES $ 114,230 $ 141,230 $ 39,534 $ 140,689 $ 266,416 $ 266,416 $ 78,087 $266,416 28.0% 29.3% "EXEMPLIFYING EXCELLENCE" CRY OF KENNEDALE,TEXAS ANNUAL PROGRAM OF SERVICES EXPENDITURE LINE REM SUMMARY 15:EDC4B FUND 02:TOWN SHOPPING CENTER FY09-10 FY09-10 FY09-10 FY09-10 FY10-11 FY10-11 FY10,11 FY10.11 FY09.10 FY10.11 ACCOUNT ACCOUNTNAME BUDGET AMENDED YTD FEB ACTUAL PROPOSED AMENDED YTDFEB ESTIMATE YTD% YTD% 5280-02-00 MINOR EQUI P/SMALL TOOLS<$5K 4,560 4,560 625 625 4,560 4,560 - 4,560 13.7% 0.0% SUPPLIES $ 4,560 $ 4,560 $ 625 $ 625 $ 4,560 $ 4,560 $ - $ 4,560 117% 0.0% 5403-02-00 BUILDING MAINTENANCE 23,790 23,790 8,518 13,528 17,790 17,790 9530 17,790 35,8% 55.8% MAINTENANCE $ 23,790 $ 23,790 $ 8,518 $ 13,528 $ 17,790 $ 17,790 $ 9,930 $ 17,790 35.8% 55.8% 5501-02-00 ADVERTISING - - - - - - 0.0% 0.0% 5510-02-00 ASSOC DUESIPUBLICATIONS - - 0.0% 0.0% 5512-02-00 CONTRACTUAL SERVICES - - - - 0.0% 0.0% 5530-02-00 ELECTRIC SERVICES 7,800 7,800 1,469 2,681 7,800 7,800 270 7,800 18.8% 3.57. 5545-02-00 INSURANCE-PROPERTY - - 3,779 3,779 4,000 4,000 3,401 4,000 #DIVIOI 85.0% 5565-0200 LEGAL SERVICES - - 6,103 - - - - - #DIV10! 0.0% 5570-02-00 SPECIAL SERVICES 9,600 9,600 - 10,137 6000 6,000 2,500 6,000 0.0% 41.7% SUNDRY $ 17,400 $ 17,400 $ 11,350 $ 16,596 $ 17,800 $ 17,800 $ 6,171 $ 17,800 65.27. 34.7% TOTAL EXPENDITURES $ 45,750 $ 45,750 $ 20,493 $ 30,750 $ 40,150 $ 40,150 $ 16,101 $ 40,150 44.87. 40.17. "EXEMPLIFYING EXCELLENCE" CITY OF KENNEDALE,TEXAS ANNUAL PROGRAM OF SERVICES EXPENDfTURE LINE REM SUMMARY IS:EDC4BFUND 03:TOWN CENTER REDEVELOPMENT FY09-10 FY09-10 FY09-10 FY09.10 FYT0�11 FY10-11 FY10-11 FY10.11 FY09-10 FY10-11 ACCOUNT ACCOUNT NAME BUDGET AMENDED YTD FEB ACTUAL PROPOSED AMENDED YTD FEB ESTIMATE YTD% YTD% 5570-03-00 SPECIAL SERVICES 100,000 266,667 40 335 - - 0.07. 0.0% 5579-03-00 ARCHITECT/DESIGN SERVICES 75,000 266,667 18,167 - 26,000 26,000 6.8% 0.017 5580-0300 ENGINEERING SERVICES 25,000 266,667 10,439 21,858 15,300 15,300 23,647 15,300 39% 154.6% SUNDRY $ 200,000 $ 800,000 $ 28,646 $ 22,193 $ 41,300 $ 41,300 $ 23,647 $ 15,300 3.6% 57.3% 5847-03.00 CONSTRUCTION - - - 488,637 127,501 127,50) 361,586 200,000 0.0% 283.67. CAPITAL $ - $ - $ - $ 488,637 $ 127,501 $ 127,501 $361,586 $ 200,000 0.07. 283.6% $ 200,000 $ 800,000 $ 28,646 $ 510,830 $ 168,801 $ 168,801 $385,233 $ 215,300 3.67. 228.2% "EXEMPLIFYING EXCELLENCE" CITY OF KENNEDALE,TEXAS ANNUAL PROGRAM OF SERVICES INCOME STATEMENT 19:EDC4B CAPITAL BOND FUND FY09.10 FY09-10 FY09-10 FY09-10 FY10.11 FY10-11 FY10.11 FYID-11 INCOME STATEMENT BUDGET AMENDED YTD FEB ACTUAL PROPOSED AMENDED YTD FEB ESTIMATE OPERATING REVENUES 2,006,635 2,006,635 OPERATING FXPENDITURES - (729,562) (262,667) (262,667) (410,564) (706,500) OPERATING INCOME/(LOSS) 2,006,635 1,277,073 (262,667) (262,667) (410,564) (706,500) NONOPERATING REVENUES/(EXPENSES) INTEREST EARNINGS 158 2,278 500 500 405 1,000 TRANSFFRSIN - - - - - - (TRANSFFR OUT) _ _ NET OPERATING INCOME/(LOSS) 2,006,793 1,279,351 (262,167) (262,167) (409,660) (705,500) BEGINNING FUND BALANCE $ $ $2,006,793 $ - $ 1,279,351 $1,279,351 $1,279,351 $1,279,351 ENDING FUND BALANCE $ $ $2,006,793 $1,279,351 $ 1,017,184 $1,017,184 $ 869,691 $ 573,851 "EXEMPLIFYING EXCELLENCE" CITY OF KENNEDALE,TEXAS ANNUAL PROGRAM OF SERVICES FUND SUMMARY BY CATEGORY 19:EDC4B CAPITAL BOND FUND FY09-10 FY09-10 FY09.10 FY09.10 FY10-11 FY10.11 FY10-11 FY10-11 FY09-10 FY10.11 CATEGORY BUDGET AMENDED YTD FEB ACTUAL PROPOSED AMENDED YTD FEB ESTIMATE YTD% YTD 7. BEGINNING FUND BALANCE $ $ $ $ - $ 1,279,351 $1,279,351 $1,279,351 $1,279,351 INVESTMENT EARNINGS 158 2,278 500 500 905 1,000 #DIV/O! 180.97. TRANSFERS 2,006,635 2,006,635 - - - - #DIV/01 0.07. TOTAL REVENUES $ $ $ 2,006,793 $2,008,913 $ 500 $ 500 $ 905 $ 1,000 #DIV/01 180,9% MAINTENANCE - - - - - - 0.0% 0.0% SUNDRY 210,809 28,143 28,143 58,099 100,000 0,0% 206.4% CAPITAL 518,754 234,524 234,524 352,466 606,500 0.07. 150.3% TOTAL EXPENDITURES $ $ $ $ 729,562 $ 262,667 $ 262,667 $ 410,564 $ 706,500 0.0% T56.3% REVENUES OVER EXPENDITURES $ $ $ 2,006,793 $1,279,351 $ (262,167) $ (262,167} $ (409,660} $ (705,500) ENDING FUND BALANCE $ 2,006,793 $1,279,351 $ 1,017,184 $1,017,184 $ 869,691 $ 573,851 ADJUSTMENTS FUND BALANCE AS% EXP 0.0% 175.4% 387.37. 387.3% 211.8% 81.217. RESERVE{NO REGIOREMENT) $ $ . $ . $ - $ . $ RESERVE SURPLUSASHORTFALL) $ 2,006,793 $1,279,351 $51,017,184 $1,017,184 $ 869,691 $ 573,851 "EXEMPLIFYING EXCELLENCE" CITY OFKENNEDALE TEXAS ANNUAL PROGRAM OF SERVICES REVENUElEXPFNDIIURE LINE ITEM SUMMARY 19:EDC411 CAPITAL BOND FUND FY09-10 FY09-10 FY09.10 FY09-10 FY10.11 FY10-11 FY10.11 FY10-11 CY-PY FY09-10 FY10.11 ACCOUNT ACCOUNT NAME BUDGET AMENDED YTD FEB ACTUAL PROPOSED AMENDED YID FEB ESTIMATE CHANGE YTD% YTD% 4401-00-00 INVESTMENT INCOME - - 158 2.278 500 500 905 1.000 500 #DIV/01 180.9% INVESTMENT EARNINGS $ • $ - $ 158 $ 2,278 $ 500 $ 500 $ 905 5 1,000 $ 500 #DIV/0! 180.9% 4913-00-00 TRANSFER IN-CAPITAL BOND FUND - - 2,006,635 2,006,635 - - - #DV 101 0.0% TRANSFERS $ $ $2,006,635 $2,006,635 $ - $ - $ - $ - $ - #DIV/0! 0.0% TOTALREVENUES $ - $ $2,006,793 $2,008,913 $ 500 $ 800 $ 905 $ 1,000 $ 500 NDIV/01 180.97. 19:EDC4B CAPITAL BOND FUND 01:TOWN CENTER REDEVELOPMENT FY09-10 FY09-10 FY09.10 PY09-10 FY10-11 FY10.11 FY10-I1 FY10.11 CY-PY FY09.10 FY10.11 ACCOUNT ACCOUNT NAME BUDGET AMENDED YTD JAN ACTUAL PROPOSED AMENDED YTD JAN ESTIMATE CHANGE YTD% YTD% 5403-01-00 BUILDING MAINTENANCE - - - - - - U.N. 0.0% MAINTENANCE $ - $ - $ $ - $ $ - $ $ _ $ - 0.0% 0.0% 5525-01-00 TRAINING/SEMINARS - - - 40 - - - - - OA% 010% 5570-0I-00 SPECIAL SERVICES - - - 157,725 - - - - - 010% 0-0% 5579-01-00 ARCHITECTJDESIGNSERVICES - - - 19,422 - - 27,772 50,000 - 0.0% #DIV/01 5580-01-00 ENGINEERING SERVICES - 33,622 28,143 28,}43 30,327 50,000 28,143 0.0% 107.8% SUNDRY $ - $ $ $ 210,809 $ 28,143 $ 28,143 $ 58,099 $ 100,000 $ 26,143 OA% 206.4% 5800-01-00 LAND - - - 6,678 - - 6,473 61500 - 0.0% #DIV/01 5847-01-00 CONSTRUCTION - - 512,076 234.524 234,524 345,993 600,000 234,524 0.0% 147.5% CAPITAL $ - $ $ - $ 518,754 $ 234,524 $ 234,524 $352,466 $ 606,500 $234,524 0.0% 150.3% TOTAL EXPENDITURES $ - $ - $ - $ 729,562 $ 262,667 $ 262,667 $410,564 $ 706,500 $262,667 0.0% 156.3% "EXEMPLIFYING EXCELLENCE" y ECONOMIC DEVELOPMENT CORPORATION/LENDER AGREEMENT 12011 Definitions: Premises: The land described on Exhibit 111" attached hereto, together with all improvements now or hereafter constructed on such land Project: Multi-use development to be known as Kennedale TownCenter that will include office and retail uses Lease: Ground Lease dated March 30, 2010 by and between the Kennedale Economic Development Corporation ("Lessor") and Kennedale Town Center,LP("Lessee") Borrower: KENNEDALE TOWN CENTER, LP, a Texas limited partnership KEDC: KENNEDALE ECONOMIC DEVELOPMENT CORPORATION Lender: LONE STAR BANK, S.S.B. This Economic Development Corporation/Lender Agreement ("Agreement") is entered into by and between KEDC and Lender for Ten dollars ($10.00) and other good and valuable consideration provided by Lender to KEDC, the receipt of which is hereby acknowledged by KEDC, and the further consideration consideration of Lender's agreement with Borrower to finance construction ("Construction Funds") of the Project in accordance with and subject to that certain Construction Loan Agreement (the "Loan Agreement') dated , 2011, executed by the Borrower and Lender and all related writings (collectively, the "Credit Documents"), executed or to be executed by Borrower and others in favor of Lender. Except as provided for herein, all terms used in this Agreement with their initial letters capitalized shall have the respective meanings ascribed to such terms in the Loan Agreement. KEDC and Borrower have entered into three agreements as follows: 1. Economic Development Agreement For Development of Kennedale Towncenter, attached as Exhibit"2"; 2. Lease on the Premises, attached as Exhibit"3"; and 3. Commercial Property Management Agreement,attached as Exhibit 'W". 1 As an inducement for Lender to advance construction funds to develop the Project, Lender has requested the KEDC to make certain representations to and agreements with Lender. In consideration of Lender advancing the Construction Funds the KEDC hereby makes the following representations, acknowledgments and agreements with the understanding that Lender intends to rely upon the content and accuracy thereof in making advances under the Credit Documents: I. Exhibit 112" is a true and complete copy of the Economic Development Agreement for Development of Kennedale Towncenter("EDA"). 2. Exhibit"Y is a true and complete copy of the Lease on the Premises ("Lease"). 3. Exhibit "4" is a true and complete copy of the Commercial Property Management Agreement("PMA"). 4. KEDC acknowledges that Borrower has granted, and consents and agrees to Borrower's granting, a security interest to Lender in Borrower's right, title and interest in the EDA, the Lease and the PMA as a part of the security for the loan contemplated by the Credit Documents, and KEDC consents to the grant of such security interest. 5. If Borrower defaults under the EDA, the Lease and/or the PMA, before exercising any remedy KEDC shall give written notice to Lender specifying the default and the steps necessary to cure such default, and Lender shall have sixty (60) days after receipt of such notice to cure such default or cause it to be cured, if Lender elects to do so. 6. In the event that Lender notifies KEDC in writing that Borrower has defaulted under the Credit Documents and requests that KEDC continue performance under the EDA, the Lease and the PMA,KEDC shall thereafter perform under the EDA, the Lease and the PMA in accordance with its terms of those documents, so long as there is compliance with the terms of the EDA, the Lease and the PMA; provided, however, KEDC's sole remedy in respect of compliance with the terms of the EDA, the Lease and/or the PMA shall be to proceed against Borrower. For purposes of this paragraph only, "Lender" shall mean LONE STAR BANK, S.S.B. or any purchaser of the Lease, and/or Borrower's contractual rights under the EDA, and/or Borrower's contractual rights under the PMA, at judicial or non- judicial foreclosure (or by deed in lieu of foreclosure) and shall also include the successors or assigns of either LONE STAR BANK, S.S.B. or such purchaser. 7. Any notice, request or other communication required or permitted to be given under this Agreement shall be given in writing by delivering it against receipt for it, by depositing it with an overnight delivery service or by depositing it in a receptacle maintained by the United States Postal Service, postage prepaid, registered or certified mail, return receipt requested, addressed to the respective parties at the addresses shown in this Agreement(and if so given, shall be deemed given when mailed). ICEDC's address for notice may be changed at any time and 2 from time to time, but only after thirty (30) days'advance written notice to Lender and shall be the most recent such address furnished in writing by KEDC to Lender. Lender's address for notice may be changed at any time and from time to time, but only after ten (10) days' advance written notice to Contractor and shall be the most recent such address furnished in writing by Lender to KEDC. Actual notice, however and from whomever given or received, shall always be effective when received. S. This Agreement shall not be changed orally but shall be changed only by agreement in writing signed by KEDC and Lender. Any waiver or consent with respect to this Agreement shall be effective only in the specific instance and for the specific purpose for which given. No course of dealing between the parties, no usage of trade and no parol or extrinsic evidence of any nature shall be used to supplement or modify any of the terms or provisions of this Agreement. 9. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT. 10. Lender's exercise of any right, benefit or privilege under the Credit Documents or any other related papers or at Iaw or in equity shall not preclude the concurrent or subsequent exercise of Lender's other present or future rights, benefits or privileges. The remedies provided in this Agreement are cumulative and not exclusive of any remedies provided by law, the Credit Documents or any related papers or instruments. No failure by Lender to exercise, and no delay in exercising, any right under the Credit Documents or any related papers or instruments shall operate as a waiver thereof. 11. All covenants, agreements, representations and warranties in this Agreement shall be binding upon any successors and assigns of KEDC. 12. Wherever the term "including" or a similar terra is used in this Agreement, it shall be read as if it were written "including by way of example only and without in any way limiting the generality of the referred to clause or concept." All exhibits described in this Agreement as being attached to it are hereby incorporated into it. 13. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, the legality, validity and enforceability of the remaining provisions of this Agreement shall not be affected thereby, and this Agreement shall be liberally construed so as to carry out the intent of the parties to it. 14. This Agreement embodies the entire agreement and understanding between KEDC and Lender with respect to the subject matter of this Agreement and supersedes all prior conflicting or inconsistent agreements, consents and 3 understandings relating to such subject matter. KEDC acknowledges and agrees that there is no oral agreement between KEDC and Lender which has not been incorporated in this Agreement. EXECUTED the day of , 2011. KEDC: KENNEDALE ECONOMIC DEVELOPMENT CORPORATION By: Name: Title: Address: LENDER: LONE STAR BAND, S.S.S. By: VAN P. SWIFT, Executive Vice President Address: 100 South Main Street PO Drawer A Moulton,TX 77975 STATE OF TEXAS § COUNTY OF § This instrument was acknowledged before me on 2011, by , as of KENNEDALE ECONOMIC DEVELOPMENT CORPORATION, acting in said capacity. Notary Public in and for the State of Texas 4 STATE OF TEXAS § COUNTY OF § This instrument was acknowledged before me on , 2011,by VAN P. SWIFT, Executive Vice President of LONE STAR BANK, S.S.B., acting in said capacity. Notary Public in and for the State of Texas ATTACH: Exhibit"1" - Land Exhibit"2" - Economic Development Agreement for Development of Kennedale TownCenter Exhibit"3" - Lease Exhibit"4" - Commercial Property Management Agreement 5 EXHIBIT I'Land l F EXHIBIT B [Economic Development Agreement for Development of KennedaIe Towncenter) 7 EXHIBIT C [Lease] 8 0 CID OFFicr, OIa "t'IdE GOVI RNOR ECONo11IIc Dn-VELOnrIENT & TOURISM March 8, 2011 Bob Hatt Executive Director Kennedale Economic Development Corporation 405 Municipal Drive Kennedale, TX 76060 Dear Bob Hart: The Office of the Governor,Economic Development and Tourism Division(the "Division") is pleased to announce that the Kennedale Economic Development Corporation(the"Corporation")has been approved for a Texas Leverage Fund Loan(the "Loan") in the amount of One Million Seven Hundred Thousand Dollars ($1,700,000.00). These funds are to be loaned to the Corporation for manufacturing site expansion, as more fully described in the Loan Application and all supplements thereto. The Loan must comply with the Division's Program Guidelines and is subject to the terms and conditions of the Loan documents which are itemized in this Commitment Letter. The terms of the Loan are as follows: Amount: $1,700,000.00 Effective Date: To be determined Term: 15 Years Interest Rate: Variable,Federal Funds Rate Plus 3% Payments: Monthly principal and interest Collateral: First lien on economic development sales and use tax receipts The conditions of the Loan are as follows: 1) This commitment requires formal acceptance and response by the Corporation and the City of Kennedale(the"City"),within forty-five (45) days of, and the Loan must be fully funded within six (6)months of,the date of this letter; otherwise,this commitment shall expire and its terms shall be null and void. 2) The Corporation must have a Debt Service Coverage Ratio (the "DSC Ratio") of not less than 1.9 as of the effective date of the Loan and must not incur parity obligations, during the term of the Loan,that would have the immediate effect of reducing the DSC Ratio below 1.9. TE 6" Wtua OFEK FOR AUSIr Ilr P.O. Box 12428 AUSTIN, TX 78711 1 512-463-2000 1 W1' W.G0VHRN0R.STATF_.TX.US 3/17/2011 Page Two of Three 3) At least ten (10) days prior to the desired funding date,three (3)originals of Document A and B and one(1) original of all other documents listed below must be executed and submitted to the Division. Items A-B will be prepared by the Division and originals will be sent to you for your review and execution.No changes are to be made to these documents without the prior written consent of the Division. Items C - G are to be prepared by the Corporation and item H is to be prepared by the City. These documents must be of form and substance acceptable to the Division;however,the Division has no responsibility to review or approve these documents. Documents prepared by the Division: (A) A Loan Agreement between the Corporation and the Division with respect to the Loan; (B) A Promissory Note from the Corporation in favor of the Division with respect to the Loan (only one original required); Documents to be prepared by the Corporation: (C) An opinion of counsel to the Corporation; (D) A certificate from the City Secretary of the City to the effect that all actions necessary in connection with holding an election with respect to the Economic Development Sales and Use Tax were taken,that the requisite number of voters voted in favor of the levying of such Tax and that said election occurred at least 31 days prior to the date of such certificate and that no action has been taken in any court, either state or federal, within the State of Texas which in any way questions the validity of such election or any action taken by the City in connection therewith, and that no action has been taken by the City to repeal, amend, or rescind such tax subsequent to such election; (E) An Incumbency, Signature Identification, and Authority Certificate for the Corporation and the City; (F) A certification signed by the Chief Financial Officer of the City acknowledging receipt of the Program Guidelines and that the DSC Ratio as specified therein has been met; (G) A certified copy of a resolution of the Corporation authorizing and approving the Loan and pledging the Economic Development Sales and Use Tax in favor of any payee of the Loan; 3/17/2011 Page Three of Three Document to be prepared by the City: (H) A certified copy of a resolution of the City authorizing and approving the Loan. Please accept our congratulations and thank you for utilizing the Texas Leverage Fund as a tool to provide financial assistance to your community. If you require further assistance with this project,please feel free to contact Karen Norman(S 12) 936-0189. Best regards, Aaron Demerson Executive Director ACCEPTED BY: Bob Hart Date Executive Director Kennedale Economic Development Corporation Bryan Lankhorst Date Mayor City of Kennedale, Texas Cc: The Honorable Joe Barton, United States Representative The Honorable Wendy Davis, Texas Senate The Honorable Bill Zedler, Texas Representative Aaron Demerson, Office of the Governor Economic Development and Tourism Michael Chrobak, Office of the Governor Economic Development and Tourism OFFICE OF THE GOVERNOR ECONOMIC DEVELOPMENT AND TOURISM DIVISION TAXABLE COMMERCIAL PAPER NOTES SERIES A LOAN AGREEMENT between OFFICE OF THE GOVERNOR ECONOMIC DEVELOPMENT AND TOURISM DIVISION and KENNEDALE ECONOMIC DEVELOPMENT CORPORATION, DATED AS OF 1 I CERTAIN RIGHTS OF THE ECONOMIC DEVELOPMENT CORPORATION UNDER THIS AGREEMENT HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF THE OFFICE OF THE GOVERNOR, ECONOMIC DEVELOPMENT AND TOURISM DIVISION. INFORMATION CONCERNING SUCH SECURITY INTEREST MAY BE OBTAINED FROM OFFICE OF THE GOVERNOR P.O. BOX 12428,AUSTIN, TEXAS 78711-2428,ATTENTION: TEXAS LEVERAGE FUND. TABLE OF CONTENTS PAGE ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION SectionI.I. Definitions................................................................................................................1 Section 1.2. Rules of Construction ..............................................................................................4 ARTICLE II SECURITY;ASSIGNMENT Section 2.1. Security; Assignment; Limited Obligations.............................................................5 ARTICLE III REPRESENTATIONS Section 3.1. Representations by the Division ..............................................................................6 Section 3.2. Representations by the Economic Development Corporation.................................7 Section 3.3. Representations by the City.....................................................................................9 ARTICLE IV LOAN; PAYMENT PROVISIONS Section 4.1. Loan of Proceeds....................................................................................................12 Section 4.2. Amounts Payable...................................................................................................12 Section 4.3. Unconditional Obligations.....................................................................................12 Section4.4. Prepayments...........................................................................................................13 Section 4.5. Credits Against Payments......................................................................................13 ARTICLE V EVENTS OF DEFAULT AND REMEDIES Section 5.1. Events of Default Defined......................................................................................14 Section 5.2. Remedies on Default..............................................................................................15 Section 5.3. No Remedy Exclusive............................................................................................15 Section 5.4. Agreement to Pay Attorneys'Fees and Expenses ..................................................15 Section 5.5. Division, Economic Development Corporation and the City to Give Notice ofDefault...............................................................................................................15 Section 5.6. Conditions Precedent to Loan................................................................................15 i ARTICLE VI MISCELLANEOUS Section6.1. Reporting................................................................................................................17 Section 6.2. Division to Administer the Loan............................................................................17 Section6.3. No Implied Waiver.................................................................................................17 Section.6.4. Division Representative.........................................................................................17 Section 6.5. Corporation Representative ...................................................................................18 Section6.6. Notices...................................................................................................................18 Section 6.7. If Performance Date Not a Business Day...............................................................18 Section 6.8. Binding Effect........................................................................................................19 Section6.9. Severability............................................................................................................19 Section 6.10. Enforcement of Agreements or Mortgages............................................................19 Section 6.11. Amendments, Changes and Modifications............................................................19 Section 6.12. Execution in Counterparts......................................................................................19 Section6.13. Applicable Law......................................................................................................19 SIGNATURES...............................................................................................................................20 Exhibit A Description of the Project.........................................................................................A-1 ExhibitB Parity Debt.................................................................................................................B-1 ii LOAN AGREEMENT THIS LOAN AGREEMENT made and entered into as of / 1 by and between the Office of the Governor, Economic Development and Tourism division (the "Division") and the Kennedale Economic Development Corporation, a nonprofit industrial development corporation (the "Corporation") duly established and created pursuant to Chapter 505 (Type B)of the Development Corporation Act, Texas Local Government Code, as amended (the "Act"), created by or on behalf of the City of Kennedale, Texas ("the City"); RECITALS WITNESSETH: WHEREAS, pursuant to a master resolution and a first supplemental resolution thereto, as amended, the Division has issued its Taxable Commercial Paper Notes, Series A (the "Taxable Commercial Paper Notes"); WHEREAS, a portion of the proceeds from the issuance and sale of the Taxable Commercial Paper Notes are being loaned to the Corporation for the purpose of financing the costs of a project within the meaning of the Act("the Project"); WHEREAS, the City has established, levied, is maintaining and collecting on behalf of the Corporation the Economic Development Sales and Use Tax pursuant to Chapter 505 (Type B) of the Act; NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained,the parties hereto covenant, agree, and bind themselves as follows; ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION SECTION I.I.Definitions. In addition to the words and terms elsewhere defined in this Agreement, the following words and terms as used herein shall have the following meanings unless the context or use clearly indicates another or different meaning or intent. "Act" means the Development Corporation Act, Ch. 504 and 505, Texas Local Government Code. "Agreement" shall mean this Loan Agreement between the Division,the Corporation, and the City and any modifications, alterations and supplements hereto made in accordance with the provisions hereof and of the Resolution. "Bank" means JPMorgan Chase Bank,N.A., or any successor in interest thereof. Page I "Business Day" means any day other than a Saturday, a Sunday, a legal holiday or a day on which banking institutions in the cities of New York, New York, Chicago, Illinois or Dallas, Texas are authorized or permitted by law or executive order of the President of the United States to close or a day on which the New York Stock Exchange is closed. "City"means the city of Kennedale, Texas. "City Representative" means any one of the persons at the time designated to act on behalf of the City by written certificate furnished to the Division and the Corporation containing the specimen signatures of such persons and signed on behalf of the City by Mayor Bryan Lankhorst, or the then acting Mayor. "Comptroller" means the Comptroller of Public Accounts of the State. "Corporation" means the Kennedale Economic Development Corporation. "Corporation Representative" means any one of the persons at the time designated to act on behalf of the Kennedale Economic Development Corporation by written certificate furnished to the Division and the City containing the specimen signatures of such persons and signed on behalf of the Corporation by its President or Vice President. "Debt Service Coverage Ratio" means the ratio of Estimated Tax Receipts divided by Projected Debt Service, or Estimated Tax Receipts Projected Debt Service "Default Rate" subject to the provisions of the Promissory Note, means the interest rate of the loan participant plus a penalty rate of three percent(3%) applied upon being 30 days overdue on a payment. "Division" means Economic Development and Tourism division, a division of the Office of the Governor, and any successor to the duties thereof. "Economic Development Sales and Use Tax" means that certain sales and use tax that may be levied by a city for the benefit of an industrial development corporation under either Chapters 501, 504 or 505 of the Development Corporation Act, Texas Local Government Code. "Event of Default" shall have the meaning set forth in Section 5.1. "Guidelines of the Division" means the guidelines of the Division relating to the Texas Leverage Fund Program as in effect on the date hereof. Page 2 "Holder"means a holder of the Taxable Commercial Paper Notes. "Largest Four Year Sales Tax Decline" means a decline in the total sales tax receipts of the City calculated as follows: (HIGH-LOW) x 100 (HIGH) Wherein"LOW" means the lowest sure of sales tax revenue receipts collected by the city for any calendar year (adjusted for changes in sales tax rates) during the four (4) year period preceding the date of calculation, as determined from the most recent .Tune 30 or December 31, as applicable, for which sales tax data is available, and "HIGH" means the highest sum of sales tax revenue receipts collected for any calendar year (adjusted for changes in sales tax rates) during this same period and which occurred in a calendar year preceding the calendar year in which the LOW occurred. "Loan"means the loan from the Division to the Corporation made under this Agreement. "Loan Documents" means, collectively,this Agreement and the Promissory Note. "Moody's"means Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Division. "Parity Debt" means debt or other existing obligations, obligations that originate on the date hereof or accrued over the life of the loan that are secured in whole or in part by and payable from the Economic Development Sales and Use Tax of the City on a parity with the Loan and giving the holder thereof an equal and ratable claim to the proceeds of the Economic Development Sales and Use Tax. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Project" has the meaning set forth in the recitals hereto and is further described in Exhibit A hereto. As defined by Development Corporation Act, Chapters 501, 504 and 505, Texas Local Government Code. "Promissory Note" means the Promissory Note made by the Corporation to the Division herewith delivered pursuant to the Agreement. Page 3 "Public Security" shall have the meaning ascribed in Section 1202.001(3), as amended, Texas Government Code, or any successor statute. "Rating"means the long-term general obligation debt rating assigned by a Rating Agency. Any reference in this Agreement to the rating structure of one Rating Agency shall be deemed to include a reference to the equivalent rating or ratings of the other Rating Agency. "Rating Agency"means S&P or Moody's. "S&P" means Standard & Poor's Corporation, a Corporation organized and existing under the laws of the State of New York, its successors and assigns and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Division. "State"means the State of Texas. "State Attorney General" shall mean the Attorney General for the State of Texas, acting through its Public Finance Division, as provided by the provisions of Chapter 1202, as amended, Texas Government Code, or any successor statute. "Taxable Commercial Paper Notes" means the Taxable Commercial Paper Notes, Series A. issued by the Division "Trustee" means The Bank of New York Mellon Trust Company, N.A., as successor Trustee under a master resolution in respect to the Division's Taxable Commercial Paper Notes. "User" means an individual, a corporation, a partnership, or any other private entity, whether organized for profit or not for profit, or a city, county, district, or any other political subdivision,public entity, or agency of the State or federal government. SECTION 1.2.Rules of Construction. Unless the context clearly indicates to the contrary, the following rules shall apply to the construction of this Agreement: Words importing the singular number shall include the plural number and vice versa. The table of contents, captions, and headings herein are solely for convenience of reference only and shall not constitute a part of this Agreement nor shall they affect its meaning, construction, or effect. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders, and words of the neuter gender shall be deemed and construed to include correlative words of the masculine and feminine genders. Page 4 All references in this Agreement to particular Articles or Sections are references to Articles and Sections of this Agreement, unless otherwise indicated. [END OF ARTICLE I] ARTICLE 11 SECURITY;ASSIGNMENT SECTION 2.1.Security; Assignment, Limited Obligations. In order to secure the due and punctual observance and performance of the payment and all other obligations of the Corporation to the Division hereunder, the Corporation hereby pledges and assigns to the Division a lien on and security interest in (a) the Economic Development Sales and Use Tax authorized to be levied by the voters of the City on behalf of the Corporation on August 10, 1996 to the extent necessary to meet annually, so long as there are amounts due and owing under the Promissory Note, the Debt Service Coverage Ratio set forth in Section 33(i)hereof, also taking into account any Parity Debt incurred after the date hereof in accordance with the terms hereof, but only to the extent such Economic Development Sales and Use Tax is collected, and any and all security heretofore or hereafter granted or held for the payment of the Promissory Note, The lien and security interest pledged and assigned pursuant to this Section 2.1 shall be in effect so long as there are any amounts due and owing under the Promissory Note. The obligations of the Corporation are special limited obligations hereunder and neither the Promissory Note nor any instrument related to this Agreement may give a holder a right to demand payment from tax proceeds in excess of those collected from the Economic Development Sales and Use Tax imposed by Chapter 505 (Type B) of the Act and pledged hereunder. [END OF ARTICLE II] Page 5 ARTICLE III REPRESENTATIONS SECTION 3.I.Representations by the Division. The Division represents and warrants as follows: (a) The Division is a division of the Office of the Governor, and has the legal power and authority to enter into and to perform the agreements and covenants on its part contained in this Agreement, and has duly authorized the execution, delivery and performance of this Agreement and has duly approved this Agreement. (b) The execution and delivery of this Agreement to which it is a party, consummation of the transactions contemplated hereby to which it is a party, and the fulfillment of or compliance with the terms and conditions hereof will not conflict with or constitute a breach of or a default under any agreement or instrument to which the Division is a party or any existing law, administrative regulation, court order or consent decree to which the Division is subject, or by which it or any of its property is bound. (c) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending or threatened against or affecting the Division, nor to the best knowledge of the Division is there any basis therefore, wherein an unfavorable decision, ruling or finding would materially adversely affect the transactions contemplated by this Agreement or that would adversely affect, in any way, the validity or enforceability of this Agreement or any other agreement or instrument to which the Division is a party and that is to be used or contemplated for use in the consummation of the transactions contemplated hereby. (d) No further authorizations, consents, or approvals of governmental bodies or agencies are required in connection with the execution and delivery by the Division of this Agreement or in connection with the carrying out by the Division of its obligations under this Agreement. (e) This Agreement is a legally valid and binding obligation of the Division enforceable against the Division in accordance with its terms. (f) There is no pending or, to the knowledge of the undersigned official of the Division, threatened action or proceeding before any court, governmental agency or arbitrator(i) to restrain or enjoin the issuance or delivery of the Taxable Commercial Paper Notes, (ii) in any way contesting or affecting the authority for the Taxable Commercial Paper Notes or the loan of the proceeds thereof to the Corporation or the validity of this Agreement or (iii) in any way contesting the existence or powers of the Division with respect to matters relating to this Agreement. Page 6 (g) The Division has duly approved the lending of funds to the Corporation; no other authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required as a condition to the performance by the Division of its obligations under this Agreement. (h) There is no default of the Division in the payment of the principal of or interest on any of its indebtedness for borrowed money or under any instrument or instruments or agreements under and subject to which any indebtedness for borrowed money has been incurred which does or could affect the validity and enforceability of the Loan Documents or the ability of the Division to perform its obligations, and no event has occurred and is continuing under the provisions of any such instrument or agreement which constitutes or, with the lapse of time or the giving of notice, or both,would constitute such default. (i) The Division has not assigned or pledged and will not assign or pledge its interest in this Agreement for any purpose other than to secure the Taxable Commercial Paper Notes and the reimbursement obligations to the Bank under the Letter of Credit and Reimbursement Agreement. A portion of the Taxable Commercial Paper Notes constitute the only notes or other obligations of the Division in any manner payable from the revenues to be derived from this Agreement, and except for the Taxable Commercial Paper Notes and the reimbursement obligations, no notes or other obligations have been or will be issued on the basis of this Agreement other than notes or other obligations issued to refund or refinance outstanding notes or obligations. 0) The Division is not in default under any of the provisions of the laws of the State, where any such default would affect the issuance, validity, or enforceability of the Taxable Commercial Paper Notes or the transactions contemplated by this Agreement, (k) The Division, the Bank, and the Trustee have not taken any action to categorize the Promissory Note as a Public Security and the Division represents to the Corporation that as of 1 1 , the Promissory Note is not a Public Security subject to review and approval of the State Attorney General as provided by the provisions of Chapter 1202, as amended,Texas Government Code, SECTION 3,2.Representations by the Corporation. The Corporation represents warrants and covenants as follows: (a) The Corporation is a nonprofit economic development corporation, within the meaning of Chapter 505 (Type B) of the Act, has all of the rights, powers, privileges, authority and functions given by the general laws of the State to nonprofit corporations incorporated under the Texas Non-Profit Corporation Act, as amended (Article 1396-1.01 et. seq., Vernon's Texas Civil Statutes), except as otherwise provided in Section 501.054 of the Act, and is authorized by the Act to execute and to enter into this Agreement and to undertake the transactions contemplated herein and to carry out its obligations hereunder. Page 7 (b) The Corporation shall not have the power to own or operate the Project as a business other than as lessor, seller, or lender or pursuant to the requirements of any trust agreement securing a credit transaction. Accordingly,the Iessee,purchaser, or borrower pursuant to any lease, sale, or loan agreement relating to the Project shall be considered to be the owner of the Project for the purposes of the application of any ad valorem, sales, and use taxes or any other taxes levied or imposed by the State or any political subdivision of the State. (c) The Corporation has all requisite power, authority and legal right to execute and deliver the Loan Documents and all other instruments and documents to be executed and delivered by the Corporation pursuant thereto, to perform and observe the provisions thereof and to carry out the transactions contemplated by the Loan Documents. All corporate action on the part of the Corporation which is required for the execution, delivery, performance and observance by the Corporation of the Loan Documents has been duly authorized and effectively taken, and such execution, delivery, performance and observation by the Corporation does not contravene applicable law or any contractual restriction binding on or affecting the Corporation. (d) The Corporation has duly approved the borrowing of funds from the Division and has received the approval of the City; and based upon the Division's representations in Section 3.1(k), no other authorization or approval or other action by, and no notice to or tiling with, any governmental authority or regulatory body is required as a condition to the performance by the Corporation of its obligations under any of the Loan Documents. (e) This Agreement and the Promissory Note are legally valid and binding obligations of the Corporation enforceable against the Corporation in accordance with their respective terms. {f} There is no default of the Corporation in the payment of the principal of or interest on any of its indebtedness for borrowed money or under any instrument or instruments or agreements under and subject to which any indebtedness for borrowed money has been incurred which does or could affect the validity and enforceability of the Loan Documents or the ability of the Corporation to perform its obligations, and no event has occurred and is continuing under the provisions of any such instrument or agreement which constitutes or,with the lapse of time or the giving of notice, or both,would constitute such a default. (g) There is no pending or, to the knowledge of the undersigned officers of the Corporation, threatened action or proceeding before any court, governmental agency or arbitrator (i) to restrain or enjoin the issuance or delivery of the Promissory Note or the collection of any Economic Development Sales and Use Tax revenues pledged to pay for the Promissory Note, (ii) in any way contesting or affecting the authority for the issuance of the Promissory Note or the validity of the Loan Documents, or (iii) in any way contesting the existence or powers of the Corporation. Page 8 (h) In connection with the authorization, issuance, and delivery of the Promissory Note, the Corporation has complied with all provisions of the laws of the State, including the Act. (i) The Corporation has not assigned or pledged and will not assign or pledge its interest in this Agreement for any purpose other than to secure the Promissory Note. 0) The Corporation is not in default under any of the provisions of the laws of the State, where any such default would affect the issuance, validity, or enforceability of the Promissory Note or the transactions contemplated by this Agreement. (k) The Project and the costs thereof are authorized by Chapter 505 (Type B) of the Act and the Project is within the Guidelines of the Division. (1) Upon receipt of the proceeds of the Economic Development Sales and Use Tax imposed under Chapter 505 (Type B) of the Act from the City,the Corporation will deliver such proceeds to pay the Loan directly; to the extent such proceeds are pledged to secure the Loan, as directed by the Division. (m) The Corporation will not incur additional Parity Debt subsequent to the date hereof unless (i) it satisfies the Debt Service Coverage Ratio set forth in Section 3.2(p) hereof at the time such debt is incurred,taking into account such Parity Debt, and(ii)the City has not experienced a Four Year Sales Tax Decline of more than 10%. (n) The Promissory Note constitutes the only obligation of the Corporation payable on parity from the revenues to be derived from this Agreement except for the Parity Debt set forth on Exhibit B hereto, (o) The execution and delivery of the documents contemplated hereunder do not violate any provision of any instrument or agreement to which the Corporation is a party or by which it is bound. (p) The Debt Service Coverage Ratio of the Industrial Development Corporation is no less than 1.9 as of the time of closing of this transaction. (q) The Corporation will give the Division 30 day's prior written notice in the event that it pledges the Economic Development Sales and Use Tax with respect to any Parity Debt. (r) The Corporation will not create assume, or incur or suffer to be created, assumed, or incurred or to exist any mortgage, lien, charge, or encumbrance of any kind upon, or pledge of any portion or all of the Project without the prior written approval of the Division. Page 9 SECTION 3.3.Representations by the City. The City represents, warrants, and covenants as follows: (a) The City is a Home Rule city duly created and existing under the laws of the State and is authorized to execute this Agreement and to make the representations and warranties contained herein. (b) The City has all requisite power, authority and legal right to make the representations and warranties in this Agreement and all other instruments and documents to be executed and delivered by the City pursuant thereto, to perform and observe the provisions thereof and to carry out the transactions contemplated by the Loan Documents. All corporate action on the part of the City which is required for the execution, delivery, performance, and observance by the Corporation of the Loan Documents has been duly authorized and effectively taken. (c) The City has duly approved Sections 3.3, 5.1(b), 5.1(c) and 5.5 hereof and such provisions of this Agreement when delivered will be a legally valid and binding obligation of the City enforceable against the City in accordance with its terms. (d) There is no default of the City in the payment of the principal of or interest on any of its indebtedness for borrowed money or under any instrument or instruments or agreements under and subject to which any indebtedness for borrowed money has been incurred which does or could affect the validity and enforceability of this Agreement or the ability of the City to perform its obligations, and no event has occurred and is continuing under the provisions of any such instrument or agreement which constitutes or, with the Iapse of time or the giving of notice,or both,would constitute such a default. (e) There is no pending or, to the knowledge of the undersigned officials of the City, threatened action or proceeding before any court, governmental agency or arbitrator (i) to restrain or enjoin the collection of the Economic Development Sales and Use Tax pursuant to Chapter 505 (Type B) of the Act, or (ii) in any way contesting or affecting the authority for the issuance of the Promissory Note or the validity of the Loan Documents,the levy of the Economic Development Sales and Use Tax or in any way contesting the existence or powers of the City. (f) The City is not in default under any of the provisions of the laws of the State, where any such default would affect the transactions contemplated by this Agreement. (g) The City has duly voted upon and approved, and, from and after the date hereof, will levy, maintain and collect the Economic Development Sales and Use Tax pursuant to Chapter 505 (Type B) of the Act for the purpose of paying and providing security for the payment of principal of, interest on and other costs of the Loan made hereunder. The City will not reduce the rate of or decrease the duration of such Economic Development Sales and Use Tax if the result thereof would be a violation of Section 3.3(i) hereof, also taking into account Page 10 any Parity Debt incurred after the date hereof in accordance with the terms hereof, but only to the extent such Economic Development Sales and Use Tax is collected. (h) Upon the receipt of the proceeds of the Economic Development Sales and Use Tax imposed under Chapter 505 (Type B) of the Act from the Comptroller, the City shall deliver such proceeds to the Corporation. (i) The Debt Service Coverage Ratio of the Corporation is no less than 1.9 as of the time of closing of this transaction. 0) The City has levied the Economic Development Sales and Use Tax for the benefit of the Corporation either generally or for the specific purpose of the transactions contemplated hereby and after such Economic Development Sales and Use Tax was authorized by a majority of the qualified voters of the City voting at an election called and held for that purpose not less than thirty (30) days from the date hereof. Such Economic Development Sales and Use Tax are imposed on the receipts from the sale at retail of taxable items within the City at the rate approved by the voters (1/2). The combined rate of all sales and use taxes, including the Economic Development Sales and Use Tax under Chapter 505 (Type B) of the Act, imposed by the City and other political subdivisions of this State having territory in the City does not exceed two percent. (k) The City has not experienced a Four Year Sales Tax Decline of more than 10%. [END OF ARTICLE 1111 Page A A ARTICLE IV LOAN; PAYMENT PROVISIONS SECTION 4.1.Loan of Proceeds. The Division agrees, upon the terms and conditions contained in this Agreement, to lend One Million Seven Hundred Thousand Dollars and 001100 cents ($1,700,000)to the Corporation which represents a portion of the proceeds received by the Division from the sale of the Taxable Commercial Paper Notes. The Loan shall be made by wire transfer according to instructions specified by the Corporation to the Division, or other acceptable methods, as specified by the Division. Such proceeds shall be disbursed to or on behalf of the Corporation (as provided in the commitment letter of the Division, dated March 8, 2011. The Corporation's obligation to repay the loan shall be evidenced by the Promissory Note. Section 4.2. Amounts Payable. The Corporation hereby agrees to pay the Promissory Note and repay the Ioan by making the following payments: (a) Unless otherwise directed by the Division in writing, the Corporation shall pay or cause to be paid to the Trustee in immediately available funds for the account of the Division held by the Texas Comptroller of Public Accounts on or before any date that any payment of interest, principal and any other amount that is required to be made in respect of the Promissory Note, until the principal, interest and any other amount on the Promissory Note shall have been fully paid or provision for the payment thereof shall have been made. It is understood and agreed that the Promissory Note and all payments payable by the Corporation hereunder are assigned by the Division to the Trustee for the benefit of the Holders and the Bank. The Corporation consents to such assignment. The Division hereby directs the Corporation and the Corporation hereby agrees to pay to the Trustee at the principal corporate trust office of the Trustee all payments payable by the Corporation pursuant to the Promissory Note and this subsection (a). In the event the Corporation shall fail to make any of the payments required in this Section 4.2, the item or installment so in default shall bear interest at the Default Rate and continue as an obligation of the Corporation until the amount in default shall have been fully paid. (b) From and after the declaration of an Event of Default hereunder, the Corporation shall pay from sources pledged as security hereunder and may pay from other funds legally available, the reasonable fees and expenses of the Division and its counsel, and all other amounts which may be payable to the Division and its counsel under this Agreement, such fees and expenses to be paid when due and payable by the Corporation directly to the Division and its counsel for their own respective accounts. SECTION 4.3.Unconditional Obligations. The obligation of the Corporation to make the payments required by Section 4.2 shall be absolute and unconditional. The Corporation shall pay all such amounts without abatement, diminution or deduction (whether for taxes or otherwise) Page 12 regardless of any cause or circumstance whatsoever including, without limitation, any defense, set-off, recoupment or counterclaim that the Corporation may have or assert against the Division, the Trustee or any other person. The obligations of the Corporation hereunder are special limited obligations thereof and neither the Promissory Note nor any instrument related to this Agreement may give a Holder a right to demand payment from tax proceeds in excess of those collected from the Economic Development Sales and Use Tax imposed by Chapter 505 (Type B) of the Act and pledged hereunder. SECTION 4.4.Prepayments. The Corporation may prepay all or any part of the amounts required to be paid by it under Section 4.2 and shall use the proceeds of condemnation awards, foreclosure proceeds, insurance payments related to the Project or other moneys not reinvested in the collateral related to the Project to prepay principal amounts required to be paid under this Agreement. SECTION 4.5.Credits Against Pa ments. To the extent that principal of or interest on or any other amount on the Promissory Note shall be paid, there shall be credited against payments required by Section 4.2, an amount equal to the principal of or interest on the Promissory Note so paid. If the principal of and interest on or any other amount on the Promissory Note shall have been paid sufficiently that payment of the Promissory Note shall have occurred in accordance with this Agreement, then the obligations of the Corporation pursuant to Section 4,2, shall be deemed to have been paid in full, and the Corporation's obligations under Section 4.2 and this Agreement shall be discharged. [END OF ARTICLE IV] Page 13 ARTICLE V EVENTS OF DEFAULT AND REMEDIES SECTION 5.1.Events of Default Defined. The term "Event of Default" shall mean any one or more of the following events: (a) Failure by the Corporation to make any payments required to be paid pursuant to Section 4.2(a); (b) Any representation by or on behalf of the Corporation or the City contained in this Agreement or in any instrument furnished in compliance with or in reference to this Agreement proves false or misleading in any material respect as of the date of the malting or furnishing thereof, (c) Failure by the Corporation or the City to observe or perform any of its other covenants, conditions, payments or agreements under this Agreement for a period of 30 days after written notice, specifying such failure and requesting that it be remedied, is given to the Corporation or the City by the Division or the Trustee; (d) The Corporation shall (i) apply for or consent to the appointment of or the taking of possession by a receiver, custodian, assignee, sequestrator, trustee, liquidator or similar official of the Corporation of all or a substantial part of its property, (ii) admit in writing its inability, or be generally unable, to pay its debts as such debts become due, (iii) make a general assignment for the benefit of its creditors, (iv) commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (v) file a petition seeking to take advantage of any other federal or state law relating to bankruptcy, insolvency, reorganization arrangement, winding-up or composition or adjustment of debts, (vi) fail to controvert in a timely or appropriate manner, or acquiesce in writing to any petition filed against the Corporation in an involuntary case under said Federal Bankruptcy Code, or (vii) take any corporate action for the purpose of effecting any of the foregoing; (e) A proceeding or case shall be commenced, without the application or consent of the Corporation, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, arrangement, dissolution, winding-up or composition or adjustment of debts of the Corporation, (ii) the appointment of a trustee, receiver, custodian, assignee, sequestrator, liquidator or similar official of the Corporation or of all or any substantial part of its assets, or (iii) similar relief in respect of the Corporation under any law relating to bankruptcy, insolvency, reorganization, arrangement, winding-up or composition or adjustment of debts and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 90 days from the commencement of such proceeding or case or the date of such order,judgment or decree, or an order for relief against the Corporation shall be entered in an involuntary case under said Federal Bankruptcy Code; Page 14 (f) With respect to any Parity Debt, events of default under the instrument giving rise to such Parity Debt. SECTION 5,2,Remedies on Default. Upon the occurrence of an Event of Default under this Agreement, the Division, its successors and assigns, may take any one or more of the following remedial steps: (a) By written notice declare all payments hereunder immediately due and payable, whereupon the same shall become immediately due and payable without presentment, demand,protest or any other notice whatsoever, including any notice of intention to accelerate or any notice of acceleration, all of which are hereby expressly waived by the Corporation. (b) Take whatever other action at law or in equity may appear necessary or desirable to collect the amounts payable pursuant hereto then due and thereafter to become due or to enforce the performance and observance of any obligation, agreement or covenant of the Corporation under this Agreement. In the enforcement of the remedies provided in this Section 5.2, the Division may treat all reasonable expenses of enforcement, including, without limitation, legal, accounting and advertising fees and expenses, as additional amounts payable by the Corporation then due and owing. SECTION 5.3.No Remedy Exclusive. No remedy herein conferred upon or reserved to the Division is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon an Event of Default under this Agreement shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. SECTION 5A.Myeement to Pay Attorneys' Fees and Expenses. Upon the occurrence of an Event of Default under this Agreement, in the absence of the fault of the Division, if the Division employs attorneys or incurs other expenses for the collection of amounts payable hereunder or for the enforcement of the performance or observance of any covenants or agreements on the part of the Corporation herein contained, whether or not suit is commenced, the Corporation agrees that it will on demand pay to the Division or any combination thereof, as the case may be, the reasonable fees of such attorneys and such other reasonable expenses so incurred by the Division. SECTION 5.5.Division Corporation and the Cit y to Give Notice of Default. The Division, the Corporation and the City severally covenant that they will, at their own respective expense, promptly give to each other and to the Trustee, written notice of any Event of Default under this Agreement of which they shall have actual knowledge or written notice, but the Division, Corporation and the City shall not be liable for failing to give such notice. Page I5 SECTION 5.6.Conditions Precedent to Loan. The following events shall be conditions precedent to the closing of the Loan hereunder (i) that an opinion of counsel to the Corporation be delivered in form and substance acceptable to the Division; (ii)that evidence of voter and city council approval of the Economic Development Sales and Use Tax under Chapter 505 (Type B) of the Act be given which is acceptable to the Division; and(iii)that the chief financial officer of the City deliver a certificate acceptable to the Division that the Debt Service Coverage Ratio has been met. [END OF ARTICLE V] Page 16 i� ARTICLE VI MISCELLANEOUS SECTION 6.1.Reporting. In connection with the Loan hereunder, the Corporation shall provide to the Division within fifteen (15) days after the end of each quarter ending November 30, February 28 (or February 29 during a leap year), May 31 and August 31 (i) all Parity Debt of the Corporation secured by the Economic Development Sales and Use Tax, (ii) quarterly reports on the Ratings, if any, (iii) Economic Development Sales and Use Tax revenues, and (iv) the Debt Service Coverage Ratio of the City taking into account any Parity Debt incurred after the date hereof in accordance with the terms hereof. SECTION 6.2.Division to Administer the Loan. Except as (and only to the extent that) this Agreement shall expressly provide to the contrary, the Division shall administer the Loan. The Division, from and after the declaration of an Event of Default, may pursue appropriate remedies available to it with due diligence. Except for its obligation to use due care,the Division shall incur no liability for any action which the Division shall take or omit to take in connection with the Loan unless such act or omission shall involve willful misconduct on the part of the Division. Without limiting the generality of the foregoing: a. Consultation with Counsel. The Division may consult with legal counsel (including general counsel for the Division), independent certified public accountants, and other experts selected by the Division. The Division shall not be liable for any action taken or omitted to be taken upon the advice of such counsel, accountants, or experts. b. Performance by Other Parties. The Division shall not be responsible for the performance or observance of any of the terms, covenants, or conditions of the Loan Documents, if any, by any party thereto other than the Division. C. Action in Reliance of Documents. The Division shall incur no liability for having acted or omitted to act upon any notice, consent, certificate or other instrument or writing (including any telegram, cable or telex) pertaining to any of the collateral or to any of the Loan Documents (including, but not limited to any guaranty) which is believed by the Division to be genuine and to have been signed or sent by the proper party. SECTION 6.3.No implied Waiver. In the event any provision of this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach thereunder or hereunder. SECTION 6A.Division Re resentative. Whenever under the provisions of this Agreement the approval of the Division is required or the Division is required to take some action at the request of the Corporation, such approval shall be made or such action shall be taken by the Division representative; and the Corporation and the City shall be authorized to rely on any such approval or action. Page 17 SECTION 6.5.Corporation. Representative. Whenever under the provisions of this Agreement the approval of the Corporation is required or the Corporation is required to take some action at the request of the Division, such approval shall be made or such action shall be taken by the Corporation Representative; and the Division shall be authorized to rely on any such approval or action. SECTION 6.6.Notices. Except as otherwise provided herein, it shall be sufficient service or giving of any notice, request, complaint, demand or other paper if the same shall be duly mailed by registered or certified mail, postage prepaid, addressed as set forth below to the Division, the Corporation, the City or to any other person set forth therein. The Division, the Corporation, and the City by notice given hereunder may designate any different addresses to which subsequent notices, certificates or other communications shall be sent. A duplicate copy of each notice, certificate or other communication given hereunder by one party to another shall also be to each of the other parties listed herein. To the Division: Office of the Governor Texas Leverage Fund Economic Development and Tourism P.O.Box 12428 Austin,Texas 78711-2428 With a copy to: Office of the Governor Chief Financial Officer Financial Services P.O.Box 12878 Austin,Texas 78711-2878 To the Corporation: Bob Hart Executive Director Kennedale Economic Development Corporation 405 Municipal Drive Kennedale,TX 76060 With a copy to: Bryan Lankhorst Mayor City of Kennedale 405 Municipal Drive Kennedale, TX 76060 SECTION 6.7.If Performance Date Not a Business Day. If the due date for any payment hereunder or if the last date for performance of any act or the exercising of any right, as provided in this Agreement, shall not be a Business Day, then such payment may be made or act performed or right exercised on the next succeeding Business Day. Page 18 SECTION 6.S.Bindin Effect. This Agreement shall inure to the benefit of and shall be binding upon the Division, the Corporation, and the City and their respective successors and assigns. Each party shall be individually responsible and severally liable for its obligations eve under this Agreement. No assignment of this Agreement by the Corporation Corporation of its obligations hereunder. SECTION 6.9.Severabilit . In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. SECTION 6.10.Enforcement of Agreements or Mort a es. This Agreement shall be for he event of a default in the payment of the principal of or the the benefit of the Corporation. In t interest on the Promissory Note or in the performance of any agreement contained herein or in any related instrument, such payment and performance may be enforced by mandamus o�y price appointment of a receiver in equity with power to charge and collect rents, p p r payments, and loan payments and to apply as the from may be.Project in accordance with this Agreement,the Promissory Note or such instrument, SECTION 6.11.Amendments Chan es and Modifications: Subsequent to the delivery of the Promissory Note and prior to payment of the Promissory Note, this Agreement may not be effectively amended, changed, modified, altered or terminated except in writing signed by both parties to this Agreement. SECTION 6.12.Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. SECTION 6.13.Applicable Law, This Agreement shall be for the laws of the State. [END OF ARTICLE VI] Page 19 IN WITNESS WHEREOF, the Division, the Corporation, and the City have caused this Agreement to be executed in their respective legal names,all as of the date first above written. OFFICE OF THE GOVERNOR By: Name: Raymond C. Sullivan Title: Chief of Staff APPROVED AS TO FORM By: Name:Michael Bryant Title:Assistant General Counsel KENNEDALE ECONOMIC DEVELOPMENT CORPORATION By: Name: Bob Hart Title: Executive Director THE CITY OF KENNEDALE, TEXAS By: Name: Bryan Lankhorst Title: Mayor Page 20 EXHIBIT A DESCRIPTION OF THE PROJECT Purchase 5 acre site and subdivide into two parcels. The 2 acre parcel will have a 25,444 square foot manufacturing facility constructed for Grover Corporation. Additionally site improvements will be made to the 3 acre parcel in preparation for future construction of light industrial space for lease. The terms of the loan are as follows: Term: 15 YEARS (184 Months) Interest Rate: Variable,Federal Funds Rate plus 3% Payments: Monthly principal and interest Collateral: First lien on economic development sales and use tax receipts A-I EXHIBIT B PARITY DEBT Creditor Name and Address Original Amount Current Balance Monthly Amount Maturity Date None n/a n/a n/a n/a B-1