HomeMy WebLinkAboutResolution - 811 - Issuance Of Revenue Bonds- LIDC - Magnolia Seed Company Project - 05/28/1981DGV:bs
RESOLUTION
RESOLUTION NO. 811 - 5/28/81
A RESOLUTION by the City Council of the City of Lubbock, Texas,
approving agreements and resolution authorizing the issuance of
revenue bonds of the Lubbock Industrial Development Corporation
relating to the financing of industrial or manufacturing facilities
for Magnolia Seed Company of Lubbock.
WHEREAS, on the 8th day of January, 1981, the City Council approved a
memorandum of agreement by and between the Lubbock Industrial Development
Corporation (the "Issuer") and Magnolia Seed Company of Lubbock (the "Com-
pany") pertaining to financing the costs of acquiring and constructing facili-
ties to be operated and maintained by the Company in its trade or business and
used for manufacturing or industrial purposes by the Company (the "Project");
and
WHEREAS, final agreements in relation to financing the Project and a
resolution adopted by the Board of Directors of the Issuer authorizing the
Issuance of its revenue bonds in the principal amount of $700,000 have been
submitted to this City Council for approval as required by Section 25(f) of
the Development Corporation Act of 1979 (Article 5190.6, V.A.T.C.S.); and
WHEREAS, the City Council hereby finds and determines that the resolution
of the Issuer authorizing the issuance of the Lubbock Industrial Development
Corporation Industrial Development Revenue Bonds, Series 1981 (Magnolia Seed
Company of Lubbock Project) in the principal amount of $700,000 and the agree-
ments executed in connection therewith, should be approved; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK, TEXAS:
SECTION 1: That the resolution of the Board of Directors of the
Issuer entitled as follows:
"A RESOLUTION by the Board of Directors of the Lubbock Industrial Develop-
ment Corporation relating to the issuance of revenue bonds to be known as
"LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION INDUSTRIAL DEVELOPMENT
REVENUE BONDS, SERIES 1981, (MAGNOLIA SEED COMPANY OF LUBBOCK PROJECT)",
dated June 1, 1981; fixing the details and providing for the payment and
security of such bonds, approving and authorizing the execution of a Loan
Agreement, Trust Indenture, Collateral Assignment and Security Agreement
and approving and accepting a Deed of Trust, Security Agreement, Assign-
ment of Rents and Financing Statement in relation to the payment and
security of such bonds and the rights of the holders of such bonds,
making such Loan Agreement, Trust Indenture, Deed of Trust and Collateral
Assignment a part of this Resolution; making certain findings, covenants
and declarations relating to such bonds and the issuance thereof; acknow-
ledging the 'rights of the Corporation under the Loan Agreement, the Note
and the Deed of Trust to be assigned to the Texas Commerce Bank - Irving,
as trustee, under the Trust Indenture, Collateral Assignment and Security
Agreement; and resolving other matters incident and related to the sub-
ject and purpose of this Resolution."
together with (i) a Trust Indenture from the Issuer to the Texas Commerce
Bank - Irving, Irving, Texas, as trustee, dated as of June 1, 1981 (attached
to said resolution as Exhibit "A"), (ii) a Loan Agreement by and between the
Issuer and the Company, dated as of June 1, 1981 (attached to said resolution
as Exhibit "B"), (iii) the Deed of Trust, Security Agreement, Assignment of
Rents and Financing Statement from the Company (attached to said resolution as
Exhibit "C"), and (iv) a Collateral Assignment and Security Agreement from the
Issuer to Texas Commerce Bank - Irving, as trustee (attached to said resolution
as Exhibit "D") are hereby in all respects approved.
SECTION 2: The approval herein given is in accordance with the pro-
visions of Section 25(f) of the Development Corporation Act of 1979, and is
not to be construed as any undertaking by the City of Lubbock, Texas, and such
bonds shall never constitute an indebtedness or pledge of the Issuer, the City
of Lubbock, Texas, and such bonds shall never constitute an indebtedness or
pledge of the Issuer, the City of Lubbock, Texas, or the State of Texas within
the meaning of any constitutional or statutory provision, and the holder of
such bonds shall never be paid in whole or in part out of any funds raised or
to be raised by taxation or any other revenues of the Issuer, the City of
Lubbock, Texas, or the State of Texas except those revenues assigned and
pledged by the resolution authorizing the issuance of such bonds.
SECTION 3: The programs and expenditures authorized and contemplated
by the aforesaid documents are hereby in all respects approved.
PASSED AND APPROVED, this 28th day of Mav 1981.
• { r
L cALI TER, MAYOA
L
{ ATTEST:
�_�
Evelyn fga, C ecretary reasur
(City Seal)
APPROVED AS TO FORM:
G. Vandiver, Asst. City Attorney
ON
�Q
CERTIFICATE OF CITY SECRETARY
THE STATE OF TEXAS §
§
COUNTY OF LUBBOCK §
§
CITY OF LUBBOCK §
I, the undersigned, City Secretary of the City of Lubbock, Texas, DO
HEREBY CERTIFY as follows:
1. That on the 28th day of May , 1981, the City Council
of the City of Lubbock, Texas convened in regular session at its regular
meeting place in the City Hall of said City; the duly constituted members of
the Council being as follows:
BILL McALISTER MAYOR
ALAN HENRY )
M. J. ADERTON ) COUNCILMEMBERS
E. JACK BROWN )
JOAN BAKER )
and all of said persons were present at said meeting, except the following:
none . Among other business considered
at said meeting, the attached resolution entitled:
"A RESOLUTION by the City Council of the City of Lubbock, Texas, ap-
proving agreements and resolution authorizing the issuance of revenue
bonds of the Lubbock Industrial Development Corporation relating to the
financing of industrial or manufacturing facilities for Magnolia Seed
Company of Lubbock."
was introduced and submitted to the Council for passage and adoption. After
presentation and due consideration of the resolution, a motion was made by
Councilman M. J. Aderton that the resolution be finally passed and
adopted. The motion was seconded by Councilman E. Jack Brown and carried by
the following vote:
5 voted "For" 0 voted "Against" 0 abstained
all as shown in the official Minutes of the Council for the meeting held on
the aforesaid date.
2. That the attached resolution is a true and correct copy of the
original on file in the official records of the City; the duly qualified and
acting members of the City Council of said City on the date of the aforesaid
meeting are those persons shown above and, according to the records of my
office, each member of the Council was given actual notice of the time, place
and purpose of the meeting and had actual notice that the matter would be
considered; and that said meeting, and deliberation of the aforesaid public
business, was open to the public and written notice of said meeting, including
the subject of the entitled resolution, was posted and given in advance there-
of in compliance with the provisions of Article 6252-17, Section 3A, V.A.T.C.S.
IN WITNESS WHEREOF, I have hereunto signed my name officially and affixed
the seal of said City, this the 28th day of May , 1981.
LJ -11-M e��ac' —
Evelyn Ga fga, Ci retary-Treasurer
City of Lubbock, Texas
(City Seal)
FACT SHEET
MAGNOLIA SEED COMPANY OF LUBBOCK
1. Project: The "Project" is the construction of a 30,000 square foot
expansion of an industrial warehouse and distribution complex located
at 925 East 66th Street at Magnolia in Lubbock, Texas, to be utilized
in the warehousing and distribution of garden supplies and equipment.
The warehouse -distribution facilities will occupy 25,000 square feet,
with the remaining 5,000 square feet utilized as office area.
Approximately 4 new jobs will be created as a result of the Project.
The annual payroll associated with the 4 new jobs is estimated to be
$60,000. The jobs will consist of professional, clerical and
unskilled warehouse positions.
2. Amount: $800,000
3. Interest Rate: 10%, payable semi-annually
4. Purchaser, Trustee and Paying Agent:
Purchaser: Texas Commerce Bank N.A. - Houston, Texas
Trustee and Paying Agent: Texas Commerce Bank - Irving, Irving,
Texas.
5. Date, Denomination, Number and Maturities: The Bonds, dated May 1,
1981, shall be issued in the form of coupon bonds, registrable as to
principal only in the denomination of $5,000 each. The Bonds shall be
numbered from one upward and shall mature on the dates and in the
amounts as stated in the Trust Indenture to accomplish approximately
level debt service payments over 15 years.
6. Additional Documents: Certificate relating to Ad Valorem and Sales
Taxes, a Deed of Trust, a Security Agreement and an Assignment of
Rents and Financing Statement.
FIRST ,U�'Otlti2CU-C-cJt COMPANY
INVESTMENT BANKERS
MERCANTILE BANK BUILDING
I
DAT.T.AS. TEXAS 73201
C. RADER McCULLEY (214) 742.6461
PRESIDENT
May 14, 1981
President, and Board of Directors
Lubbock Industrial Development Corporation
Chamber of Commerce
14th Street at Avenue K
Lubbock, Texas 79408
Gentlemen:
You have advised us that you are giving consideration to the issuance
of $800,000 in industrial development revenue bonds (the "Bonds") with the pro-
ceeds to be loaned to Magnolia Seed Company of Lubbock ("Magnolia Lubbock"),
a Texas corporation, a wholly-owned subsidiary of Magnolia Seed, Hardware and
Implement Company ("Magnolia" or the "Company"), a Texas corporation. Mag-
nolia is to guarantee unconditionally full, complete and prompt performance of
each and every representation, covenant and agreement made by Magnolia Lub-
bock with regard to the loan, including, specifically, the agreement to make in-
stallment loan payments to a* trustee bank (the "Trustee") as shall be necessary to
enable the Trustee to make full and prompt payment when due of the principal of,
premium, if any, and interest on all Bonds and all other amounts required to be
paid by the Trustee. You have requested that we undertake a review and analy-
sis of Magnolia and provide you with our opinion of the financial condition of
the Company as related to this proposed loan guarantee. We are pleased to com-
ply with this request.
For the purpose of this analysis, .we have examined the audited financial
statements of Magnolia for the fiscal years ended June 30, 1976 through 1980 to-
gether with unaudited financial statements for the eight months ended February 28,
1981. While we have no reason to believe otherwise, we have relied upon this
information to be complete and factual and containing no misstatements or omis-
sions of any material fact. We have not conducted interviews with any represen-
tatives of Magnolia, nor have we examined the facilities of the Company. The
opinion expressed herein is based upon our analysis of the financial condition of
the Company on February 28, 1981 and on market, economic and other conditions
as they exist at the date of this letter.
FIRST EOa&UVC4t COMPANY
Lubbock Industrial Development Corporation
May 14, 1981
Page 2
The major factors on which we have based our opinion are briefly sum-
marized below:
(1) Magnolia was incorporated in 1922 and is engaged in the whole-
sale distribution of garden supplies and equipment. The Company operates facil-
ities in Dallas and San Antonio, Texas as well as wholly-owned subsidiary com-
panies in Houston, Texas, acquired in 1970, and Lubbock, Texas, acquired in
1978.
(2) Sales and earnings for Magnolia were up significantly in the per-
iod included in this analysis. Sales increased from $9.4 million in 1976 to $15.9
million in 1980, a compound annual growth rate of 14.0%. Net earnings, which
have increased at a compound annual rate of 14.6% over the same period, were
$633,499 in fiscal 1980, up 41.8% from the preceding fiscal year.
(3) The financial position of the Company is strong. As can be seen
from the attached statistical analysis, the current .ratio shows that current assets
were 2.4X times current liabilities at -fiscal year-end, June 30, 1980, with a
minor drop in this ratio to 1.9X times at February 28, 1981. Additionally, the
quick ratio indicates that if necessary, Magnolia should be able to pay off cur-
rent liabilities, without selling inventory; through the liquidation of other current
assets. The capital structure is extremely conservative with 6.1% in long-term
debt and 93.9% in common equity at February 28, 1981. The addition of this
$800,000 in long-term debt, under consideration herein, would move this ratio
to 21.40/c long-term debt and 78.6% common equity which would allow substan-
tial additional debt to the Company if such were required.
(4) Gross, operating and net profit margins of the Company have held
consistent levels over the past five years with slight increases noted in the fiscal
year ended June 30, 1980. At the end of this past fiscal year, the return on
equity was 20.7%, which was up materially from the 16.3% shown in the three
fiscal years preceding and return on capitalization, at 18.8%, and return on to-
tal
otal assets, at 12.40/c, were both up material amounts over the immediately pre-
ceding fiscal year. Comparable percentages have not been computed for the un-
audited eight months ended February 28, 1981, except for gross profit margin,
which is in line with prior years.
FIRST E UtAWCdt COMPANY
Lubbock Industrial Development Corporation
May 14, 1981
Page 3
(5) Interest charges were earned by approximately 18.8X times earnings
before interest and taxes in fiscal 1980. The addition of some $800,000 in debt at
an estimated 11.5%, by way of example, would increase the present level of
interest expense by approximately $92,000 to about $156,000, based on fiscal
year end interest costs, or to $104,000, based on interest costs for the eight
months ended February 28, 1981 annualized. The interest on all debt, on a pro
forma basis, would be earned by no less than 7.3X times, at fiscal year-end
1980, or 5.1X times, at February 28, 1981, earnings before interest and taxes.
(6) We have been advised that the placement of the Bonds contem-
plated herein has been arranged for with an institution of substantial financial
sophistication, and that financial statements which have been supplied or other
information available to this institution, is considered sufficient for its commit-
ment to purchase the Bonds. However, while the availability of a purchaser of
the Bonds may be considered as supportive of the financial strength of the Com-
pany, it cannot be used as the only determination and must be supported by a
thorough financial analysis
Therefore,
it is our opinion,
based upon this review and analysis and
our own knowledge
and investigation,
that Magnolia
Seed, Hardware and Imple-
ment Company has
the financial resources
to provide
reasonable assurance that
the proposed loan,
including interest
thereon, to its
wholly-owned subsidiary,
Magnolia Seed Company of Lubbock,
will be paid as principal and interest pay-
ments become due.
truly yours
r
C. Rader McCulley
President
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CERTIFICATE OF SECRETARY
THE STATE OF TEXAS
COUNTY OF LUBBOCK
I, the undersigned,
of ,the Lubbock Industrial
CERTIFY as follows:
LUBBOCK INDUSTRIAL DEVELOPMENT
CORPORATION
Secretary of the Board of Directors
Development Corporation, DO HEREBY
1. That on the day of 1981, the
Board of Directors of _t Feubbock In— ustriarTevelopment
Corporation convened in session at the regular
meeting place thereof; the duly constituted members of the
Board of Directors being as follows:
B. C. MCMINN PRESIDENT
GEORGE MILLER VICE PRESIDENT
MARION SANFORD SECRETARY -TREASURER
GEORGE SCOTT, JR. )
ALAN HENRY ) DIRECTORS
MOISES PEREZ )
and all of said persons were present at said meeting, except
the following: -
Among other business considered at saidmeeting, the attached
resolution entitled:
"A RESOLUTION by the Board of Directors of the Lubbock
Industrial Development Corporation relating to the
issuance of revenue bonds to be known as "LUBBOCK
INDUSTRIAL DEVELOPMENT CORPORATION INDUSTRIAL DEVELOPMENT
REVENUE BONDS, SERIES 1981, (MAGNOLIA SEED COMPANY OF
LUBBOCK PROJECT)", dated June 1, 1981, fixing the details
and providing for the payment and security of such
bonds, approving and authorizing the execution of a
Loan Agreement, Trust Indenture, Collateral Assignment
and Security Agreement and approving and accepting a
Deed of Trust, Security Agreement, Assignment of Rents
and Financing Statement in relation to the payment and
security of such bonds and the rights of the holders of
such bonds, making such Loan Agreement, Trust Indenture,
Deed of Trust and Collateral Assignment a part of this
Resolution; making certain findings, covenants and
declarations relating to such bonds and the issuance
thereof; acknowledging the rights of the Corporation
under the Loan Agreement, the Note and the Deed of
Trust to be assigned to the Texas Commerce Bank - Irving,
as trustee, under the Trust Indenture, Collateral
Assignment and Security Agreement; and resolving other
matters incident and related to the subject and purpose
of this Resolution."
~� was introduced and submitted to the Board of Directors for
passage and adoption. After presentation and due consideration
of the resolution, a motion was made by Director
that the resolution be finally passed and adopted, The
motion was seconded by Director and carried by
the following vote:
voted "For" voted "Against"; and
abstained
all as shown in the official Minutes of the Board for the
meeting held on the aforesaid date.
2. That according to the records of my office, each
member of the Board was given actual notice of the time,
place and purpose of the meeting at which said resolution
was passed and had actual notice that the matter would be
considered.
TO CERTIFY WHICH, witness my hand and the seal of said
Corporation, this the day of , 1981.
Secretary, Board of Directors
Lubbock Industrial Development
Corporation
(Seal)
A RESOLUTION by the Board of Directors of the Lubbock
• Industrial Development Corporation relating to the
issuance of revenue bonds to be known as "LUBBOCK
INDUSTRIAL DEVELOPMENT CORPORATION INDUSTRIAL DEVELOPMENT
REVENUE BONDS, SERIES 1981, (MAGNOLIA SEED COMPANY
OF LUBBOCK PROJECT)", dated June 1, 1981, fixing the
details and providing for the payment and security of
such bonds, approving and authorizing the execution of
a Loan Agreement, Trust Indenture, Collateral Assignment
and Security Agreement and approving and accepting a
'Deed of Trust, Security Agreement, Assignment of Rents
and Financing Statement in relation to the payment and
security of such bonds and the rights of the holders of
such bonds, making such Loan Agreement, Trust Indenture,
Deed of Trust and Collateral Assignment a part of this
Resolution; making certain findings, covenants and
declarations relating to such bonds and the issuance
thereof; acknowledging the rights of the Corporation
under the Loan Agreement, the Note and the Deed of
Trust to be assigned to the Texas Commerce Bank - Irving,
as trustee, under the Trust Indenture, Collateral
Assignment and Security Agreement; and resolving other
matters incident and related to the subject and purpose
of this Resolution.
WHEREAS, under and pursuant to authority conferred by.
the Development Corporation Act of 1979 (Article 5190.6,
V.A.T.C.S. - the "Act"), the Lubbock Industrial Development
Corporation (the "Issuer") and Magnolia Seed Company of
Lubbock (the "Company"), a Texas corporation, entered into a
certain Memorandum of Agreement, dated December 15 1980,
whereby the Issuer committed to finance the costs of acquiring,
constructing and equipping a certain industrial or manufacturing
facility located in the City of Lubbock, Texas to be operated
and maintained by the Company in its trade or business (the
"Project") ; and
WHEREAS, the Issuer and the Company have determined
that the total amount of financing to be provided by the
Issuer in relation to the Project is $700,000 and such
financing is to be accomplished by the issuance and sale of
the Issuer's revenue bonds with the proceeds of sale of such
bonds.to be loaned to the Company; all as more fully set
forth and provided in the Loan Agreement and Trust Indenture,
dated as of June 1, 1981 hereinafter identfied; and
WHEREAS, the Board of Directors hereby finds, determines
and declares that:
(a) The Project is required or suitable for the
promotion of industrial and manufacturing development
and expansion and -the promotion of employment.
(b) The Company has the business experience, -
financial resources and responsibility to provide
reasonable assurance that the bonds and the interest
thereon, to be paid from or by reason of payments made
by the Company under the Loan Agreement (hereinafter
described) will be paid as the same becomes due.
+ (c) The Project is in the furtherence of the
public purpose of the promotion and development of new
and expanded industrial and manufacturing enterprises to
provide and encourage employment and the public welfare.
AND WHEREAS, the Board of Directors of the Issuer
hereby further finds and determines that the arrangements for
financing the costs of the Project are satisfactory ani
revenue bonds of the Issuer in the aggregate principal amount
of $700,000 should be issued for ,the purposes and in accordance
with the provisions and conditions and in the manner hereinafter
provided; now, therefore,
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE LUBBOCK
INDUSTRIAL DEVELOPMENT CORPORATION:
SECTION 1: That, for the purpose of financing the costs
of acquiring, constructing and equipping an industrial or
manufacturing facility for Magnolia Seed Company of Lubbock,
a Texas corporation, to promote and encourage employment and
the public welfare within the State of Texas and the City
of Lubbock, Texas, the Board of Directors of the Lubbock
Industrial Development Corporation has determined there shall
be -is sued .and there is hereby ordered to be issued revenue
bonds of the Issuer in the aggre ate principal amount of
SEVEN HUNDRED THOUSAND DOLLARS (700,000), to be' designated
and known as "LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION
INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1981 (MAGNOLIA
SEED COMPANY OF 'LUBBOCK PROJECT)" dated as of June 1, 1981
and hereinafter referred to as the "Bonds", under and pursuant
to authority conferred by and in accordance with the provisions
of the Act.
SECTION 2: That the details and specifications for the
Bonds, Enc u Eng their form and content, maturity, provisions
for prior redemption, interest rate, place of payment, means
of;payment, flow of funds, provisions for security (including
a security agreement with respect to the Project) and all
other features are fully provided for in'the Trust Indenture
herein authorized to be executed in Section 4 of this Resolution.
All the provisions of said Trust Indenture are hereby adopted
and incorporated by reference as a part hereof to the :same
extent and with like effect as though the same were here
rewritten in full detail.
SECTION 3: That the application of the payments to be
receives -under the Loan Agreement and the Note (hereinafter
described). to the payment of the Bonds shall be governed and
administered in the manner prescribed in the Trust Indenture
set forth in Section 4 hereof, and all the provisions thereof
shall be effective and applicable to the authorization,
issuance and payment of the Bonds.
SECTION 4: That for the purpose of securing the payment
of the onds and the interest thereon and providing and
fixing in more detail the rights of the holders thereof and
the duties and responsibilities of the Issuer and establishing
a lien on the revenues to be received on behalf of the
Issuer, the President or Vice President is authorized to
execute and the Secretary to attest on behalf of the Issuer
the Trust Indenture from the Issuer to Texas Commerce Bank -
Irving, as trustee (the form and content of which is hereby.
approved) attached hereto as Exhibit "A" and incorporated
herein by reference to the same extent and with like effect
as though it were here rewritten in full detail.
SECTION 5: The President or Vice President is authorized
to execute and the Secretary to attest on behalf of the Issuer
the Loan Agreement between the Issuer and the Company (the
form and content of which is hereby approved) attached
hereto as Exhibit "B" and incorporated herein by reference
to the same extent and with like effect as though it were
here rewritten in full detail, and the President or Vice
President is authorized to endorse to the Trustee the Note
payable to the Issuer by the Company pursuant to said Loan
Agreement in the principal amount of $700,000.
SECTION 7: That the President or Vice President is
authorized to accept on behalf of the Issuer a Deed of Trust,.._.._
Security Agreement, Assignment of Rents and Financing Statement
from the Company (the form and content of which is hereby
approved), attached hereto as Exhibit "C" and incorporated
herein to the same extent and with like effect as though it
were rewritten in full detail.
SECTION 8: That the President or Vice President is
author zi a to execute, and the Secretary or any Assistant
Secretary to attest, on behalf of the Issuer, a Collateral
Assignment and Security Agreement from the Issuer to
Texas Commerce Bank - Irving (the form and content of which is
hereby approved), attached hereto as Exhibit "D", and incorporated
herein to the same extent and with like effect as though it
were rewritten in full.
SECTION 9: That the Issuer covenants to and with the
purchasers or the Bonds that it will make no use of the
proceeds of the Bonds at any time throughout the terms of this
issue which would cause the Bonds to be arbitrage bonds within
the meaning of Section 103(c) of the Internal Revenue Code of
1954, as amended (the "Code"), or any regulations or rulings
pertaining thereto; and by this covenant the Issuer is obligated
to comply with the requirements of the aforesaid Section
103(c) and all applicable and pertinent regulations relating
to arbitrage bonds. The Issuer further covenants that it
shall take no action or fail to take any action, which action
and failure to acct may render the interest on the Bonds
subject to federal income taxation, particularly pursuant to
Section 103(b) of the Code.
SECTION 10: That (i) the Company will be obligated to
pay .a va orem taxes as well as sales taxes with respect to
v the Project to be acquired and constructed with the proceeds
of the Bonds, and (ii) the Issuer will not claim any exemption
from the payment of sales taxes on construction materials
supplied and equipment purchased in connection with the
Project or that the Project is exempt from the payment of ad
valorem taxes.
SECTION 11: That an application for a determination
that the ssuer is an organization recognized under the Code
to be exempt from the payment of Federal income taxes and is
not a private foundation under Section 509(a)(2) of the Code
is being made. In the event such recognition is not granted,
the Issuer may be required to pay federal income taxes and
the payments to be made by the Company under the Loan Agreement
will be increased accordingly.
SECTION 12: That the.President or Vice President is
hereby aut orized and directed to submit the Bonds to the
Trustee for authentication after which it shall be held for
delivery to the purchasers on the written order of the
President or Vice President.
That the procedural details to be followed in the
issuance of the Bonds, to the extent that the same may prove
to be needed, shall be prescribed by written order of the '
President or Vice President not inconsistent with the provisions
hereof (including the Trust Indenture).
SECTION 13: That the sale of the Bonds herein authorized
to be issue to the Texas Commerce Bank National Association,.
Houston. Texas, at the price of par plus accrued interest to
the• date v€ delivery of the. Bonds_, is hereby confirmed.
Delivery of the Bonds to said purchasers shall be made
as soon as possible after the adoption of this Resolution
and payment for the Bonds in accordance with the terms of
sale.
SECTION 14: That, prior to the execution of the Trust
Indenture,,t a Loan Agreement, the Deed of Trust, Security
Agreement, Assignment of Rents and Financing Statement and
Collateral Assignment and Security Agreement (all hereinabove
authorized), the President or Vice President is hereby
authorized to approve on behalf of the Issuer, such changes
to said instruments as are desirable, necessary or appropriate
and not contrary to the general tenor and substance thereof.
SECTION 15: That, if any Section, provision or part of
this Resoluti or the Trust Indenture shall be held to be
invalid or ineffective for any reason, the remainder of this
Resolution and Trust Indenture shall remain in full force
and effect.
PASSED AND APPROVED, this
ATTEST:
President, Board of Directors
Lubbock Industrial Development
Corporation Secretary, Board of Directors
Lubbock Industrial Development
(Seal) Corporation
GENERAL CERTIFICATE OF CITY
THE STATE OF TEXAS §
§
COUNTY OF LUBBOCK §
CITY OF LUBBOCK §
I, the undersigned, City Secretary of the City of Lubbock,
Texas, (the "City"), make.this certification for the benefit
of all persons interested in the issuance by the Lubbock
Industrial Development Corporation (the "Issuer") of its
$700,000 Industrial Development Revenue Bonds, Series 1981
(Magnolia Seed Company of Lubbock project) (the "Bonds"). On
behalf of the City, I hereby certify that:
1. That the Issuer was approved and authorized to be
created to act on behalf of the City pursuant to a resolution
duly adopted by the City Council on March 13,'1980, which
resolution also approved the Articles of Incorporation and
Bylaws of the Issuer, and the Certificate of Incorporation
for the Issuer, dated March28, 1980 issued by the Secretary
of State of the State of Texas is on file and of record in
the official records of the City.
3.. That, the duly qualified and acting members of the
Board of Directors of the Issuer, appointed by the City
Council of the City, are as follows:
B. C. McMINN PRESIDENT
GEORGE MILLER VICE PRESIDENT
MARION SANFORD SECRETARY -TREASURER
4. That the City Council of the City, by written
resolution, dated January 8, 1981, approved the "Memorandum
of Agreement" to issue bonds, between the Issuer and Magnolia
Seed Company of Lubbock and has, by written resolution, dated
May 28, 1981, specifically approved the issuance of the
Bonds and the documents relating thereto in the amount and
for the purposes set forth therein.
5. The City has approved all programs and expenditures
of the Issuer in connection with the issuance of the Bonds
and the transactions contemplated thereby.
WITNESS MY HAND AND THE OFFICIAL SEAL OF THE CITY, this
May 28, 1981.
�ftCity Se retar o Lu oc ,
Texas {�_.._..
(City Seal)
CERTIFICATE OF' 'SECRETARY
{ THE STATE OF TEXAS
Y'
COUNTY OF LUBBOCK
is
--USOLUTION NO. 811 - 5/28/81
§
§ LUBBOCK INDUSTRIAL DEVELOPMENT
§ CORPORATION
I, the undersigned, Secretary of the Board of Directors
of the Lubbock Industrial Development Corporation, DO HEREBY
CERTIFY as follows:
1. That on the 27th day of May 1981, the
Board of Directors of t e Lubbock In ustria evelopment
Corporation convened in session at the regular
meeting place thereof; the duly constituted members of the
Board of Directors being as follows:
B. C. McMINN PRESIDENT
GEORGE MILLER VICE PRESIDENT
MARION SANFORD SECRETARY -TREASURER
GEORGE SCOTT, JR. DIRECTORS
ALAN HENRY )
MOISES PEREZ )
and all of said persons were present at said meeting, except
the following
Among other business constdered at said meeting, the attached
resolution entitled:
"A RESOLUTION by the Board of Directors of the Lubbock
Industrial Development Corporation relating to the
issuance of revenue bonds to be known as "LUBBOCK
INDUSTRIAL DEVELOPMENT CORPORATION INDUSTRIAL DEVELOPMENT
REVENUE BONDS, SERIES 1981, (MAGNOLIA SEED COMPANY OF
LUBBOCK PROJECT)", dated June 1, 1981, fixing the details
and providing for the payment and security of such
bonds, approving and authorizing the execution of a
Loan Agreement, Trust Indenture, Collateral Assignment
and Security Agreement and approving and accepting a
Deed of Trust, Security Agreement, Assignment of Rents
and Financing Statement in relation to the payment and
security of such bonds and the rights of the holders of
such bonds, making such Loan Agreement, Trust Indenture,
Deed of Trust and Collateral Assignment a part of this
Resolution; making certain findings, covenants and
declarations relating to such bonds and the issuance
thereof; acknowledging the rights of the Corporation
under the Loan Agreement, the Note and the Deed of
Trust to be assigned to the Texas Commerce Bank - Irving,
as trustee, under the Trust Indenture, Collateral
Assignment and Security Ageae��ntheasubjectlandgpurpose
other
matters incident and relat
of this Resolution."
MAY 2 0 1981E!
CITY SECRETARY
-w .
was introduced and submitted to the Board of Directors for
passage and adoption. After presentation and due consideration
of the resolution, a motion was made by Director
that the resolution be finally passed and adopted. The
motion was seconded by Director and carried by
the following vote:
voted "For" voted "Against" and
abstained
all as shown in the official Minutes of the Board for the
meeting held on the aforesaid date.
2. That according to the records of my office, each
member of the Board was given actual notice of the time,
place and purpose of the meeting at which said resolution
was passed and had actual notice that the matter would be
considered.
TO CERTIFY WHICH, witness my hand and the seal of said
Corporation, this the 27th day of May 1981.
l
e retary, Board-of/Dire tors
!, Lu bock Industri evelopment
Co oration
(Seal).
J
A RESOLUTION by the Board of Directors of the Lubbock
` Industrial Development Corporation relating to the
issuance of revenue bonds to be known as "LUBBOCK
INDUSTRIAL DEVELOPMENT CORPORATION INDUSTRIAL DEVELOPMENT
REVENUE BONDS, SERIES 1981, (MAGNOLIA SEED COMPANY
OF LUBBOCK PROJECT)", dated June 1, 1981, fixing the
details and providing for the payment and security of
such bonds, approving and authorizing the execution of
a Loan Agreement, Trust Indenture, Collateral Assignment
and Security Agreement and approving and accepting a
Deed of Trust, Security Agreement, Assignment of Rents
and Financing Statement in relation to the payment and
security of such bonds and the rights of the holders of
such bonds, making such Loan Agreement, Trust Indenture,
Deed of Trust and Collateral Assignment a part of this
Resolution; making certain findings, covenants and
declarations relating to such bonds and the issuance
thereof; acknowledging the rights of the Corporation
under the Loan Agreement, the Note and the Deed of
Trust to be assigned to the Texas Commerce Bank - Irving,.
as trustee, under the Trust Indenture, Collateral
Assignment and Security Agreement; and resolving other
matters incident and related to the subject and purpose
of this Resolution.
WHEREAS, under and pursuant to authority conferred by
the Development Corporation Act of 1979 (Article 5190.6,
V.A.T.C.S. - the "Act"), the Lubbock Industrial Development
Corporation (the "Issuer") and Magnolia Seed Company of
Lubbock (the "Company"), a Texas corporation, entered into a
certain Memorandum of Agreement, dated December 15, 1980,
whereby the Issuer committed to finance the costs of acquiring,
constructing and equipping a certain industrial or manufacturing
facility located in the City of Lubbock, Texas to be operated
and maintained by the Company in its trade or business (the
"Project") ; and
WHEREAS, the Issuer and the Company have determined
that the total amount of financing to be.provided by the
Issuer in relation to the Project is $700,000 and such
financing is to be accomplished by the issuance and sale of
the Issuer's revenue bonds with the proceeds of sale of such
bonds to be loaned to the Company; all as more fully set
forth and provided in the.Loan Agreement and Trust Indenture,
dated as of June 1, 1981 hereinafter identfied; and
WHEREAS, the Board of Directors hereby finds, determines
and declares that:
(a) The Project is required or suitable for the
promotion of industrial and manufacturing development
and expansion and -the promotion of employment.
(b) The Company has the business experience,
financial resources and responsibility to provide
reasonable assurande that the bonds and the interest
thereon, to be paid from or by reason of payments made
by the Company under the Loan Agreement (hereinafter
described) will be paid as the same becomes due.
(c) The Project is in the furtherence of the
public purpose of the promotion and development of new
and expanded industrial and manufacturing enterprises to
provide and encourage employment and the public welfare.
AND WHEREAS, the Board of Directors of the Issuer
hereby further finds and determines that the arrangements for
financing the costs of the Project are satisfactory and
revenue bonds of the Issuer in the aggregate principal amount.
of $700,000 should be issued for the purposes and in accordance
with the provisions and conditions and in the manner hereinafter
provided; now, therefore,
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE LUBBOCK
INDUSTRIAL DEVELOPMENT CORPORATION:
SECTION 1: That, for the purpose of financing the costs
of acquiring, constructing and equipping an industrial or
manufacturing facility for Magnolia Seed Company of Lubbock,
a Texas corporation, to promote and encourage employment and
the public welfare within the State of Texas and the City
of Lubbock, Texas, the Board of Directors of the Lubbock
Industrial Development Corporation has determined there shall
be issued and there is hereby ordered to be issued revenue
bonds of the Issuer in the aggregate principal amount of
SEVEN HUNDRED THOUSAND DOLLARS (700,000), to be designated
and known as "LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION
INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1981 (MAGNOLIA
SEED COMPANY OF LUBBOCK PROJECT)" dated as of June 1, 1981
and hereinafter referred to as the "Bonds", under and pursuant
to authority conferred by and in accordancewith the provisions
of the Act.
SECTION 2: That the details and specifications for the
Bonds,including their form and content, maturity, provisions
for prior redemption, interest rate, place of payment, means
,of payment, flow of funds, provisions for security (including,
a security agreement with respect to the Project) and all
other features are fully provided for in the Trust Indenture
herein authorized to be executed in Section 4 of this Resolution.
All the provisions of said Trust Indenture are hereby adopted
and incorporated by reference as a part hereof to the same
extent and with like effect as though the same were here
rewritten in full detail.
SECTION 3: That the application of the payments to be
received under the Loan Agreement and the Note (hereinafter
described) to the payment of the Bonds shall be governed and
administered in the manner prescribed in the Trust Indenture
set forth in Section 4 hereof, and all the provisions thereof
shall be effective and applicable to the authorization,
issuance and payment of the Bonds.
SECTION 4: That for the purpose of securing the payment
of the Bonds and the interest thereon and providing and
fixing in more detail the rights of the holders thereof and
the duties and responsibilities of the Issuer and establishing
a lien on the revenues to be received on behalf of the
Issuer, the President or Vice President is authorized to
execute and the Secretary to attest on behalf of the Issuer
the Trust Indenture from the Issuer to Texas Commerce Bank -
Irving, as trustee (the form and content of which is hereby
approved) attached hereto as Exhibit "A" and incorporated
herein by reference to the same extent and with like effect
as though it were here rewritten.in full detail.
SECTION 5: The President or Vice President is authorized
to execute and the Secretary to attest on behalf of the Issuer
the Loan Agreement between the Issuer and the Company (the
form and content of which is hereby approved) attached
hereto as Exhibit "B" and incorporated herein by reference
to the same extent and with like effect as though it were
here rewritten in full detail, and the President or Vice
President is authorized to endorse to the Trustee the Note
payable to the Issuer by the Company pursuant to said Loan
Agreement in the principal amount of $700,000.
SECTION 7: That the President or Vice President is
authorized to accept on behalf of the Issuer a Deed of Trust,
Security Agreement, Assignment of Rents and Financing Statement
from the Company (the form and content of which is hereby
approved), attached hereto as Exhibit "C" and incorporated
herein to the same extent and with like effect as though it
were rewritten in full detail.
SECTION 8: That the President or Vice President is
authorized to execute, and the Secretary or any Assistant
Secretary to attest, on behalf of the Issuer, a Collateral
Assignment and Security Agreement from the Issuer to
Texas Commerce Bank -.Irving (the form and content of which is
hereby approved), attached hereto as Exhibit "D", and incorporated
herein to the same extent and with like effect as though it
were rewritten in full.
SECTION 9: That the Issuer covenants to and with the
purchasers of the Bonds that it will make no use of the
proceeds of the Bonds at any time throughout the terms of this
issue which would cause the Bonds to be arbitrage bonds within
the meaning of Section 103(c) of the Internal Revenue Code of
1954, as amended (the "Code"), or any regulations or rulings
pertaining thereto; and by this covenant the Issuer is obligated
to comply with the requirements of the aforesaid Section
103(c) and all applicable and pertinent regulations relating
to arbitrage bonds. The Issuer further covenants that it
shall take no action or fail to take any action, which action
and failure to act may render the interest on the Bonds
subject to federal income taxation, particularly pursuant to
Section 103(b) of the Code.
SECTION 10: That (i) the Company will be obligated to
pay ad valorem .taxes as well as sales taxes with respect to
•' the Project to be acquired and constructed with the proceeds
of the Bonds, and (ii) the Issuer will not claim any exemption
from the payment of sales taxes on construction materials
supplied and equipment purchased in connection with the
Project or that the Project is exempt from the payment of ad
valorem taxes.
SECTION 11: That an application for a determination
that the Issuer is an organization recognized under the Code
to be exempt from the payment of Federal income taxes and is
not a private foundation under Section 509(a)(2) of the Code
is being made. In the event such recognition is not granted,
the Issuer may be required to pay federal income taxes and
the payments to be made by the Company under the Loan Agreement
will be increased accordingly.
SECTION 12: That the President or Vice President is
hereby authorized and directed to submit the Bopds to the
Trustee for authentication after which it shall be held for
delivery to the purchasers on the written order of the
President or Vice President.
That the procedural details to be followed in the
issuance of the Bonds, to the extent that the same may prove
to be needed, shall be prescribed by written order of the
President or Vice President not inconsistent with the provisions
hereof (including the Trust Indenture).
SECTION 13: That the sale of the Bonds herein authorized
to be issued the Texas Commerce Bank National Association,
Houston, Texas, at the price of par plus accrued interest to
the -date of delivery of the. Bonds:, is hereby confirmed. .
Delivery of the Bonds to said purchasers shall be made
as soon as possible after the adoption of this Resolution
and payment for the Bonds in accordance with the terms of
sale.
SECTION 14: That, prior to the execution of the Trust
Indenture, tie Loan Agreement, the Deed of Trust, Security
Agreement, Assignment of Rents and Financing Statement and
Collateral Assignment and Security Agreement (all hereinabove
authorized), the President or Vice President is hereby
authorized to approve on behalf of the Issuer, such changes
to said instruments as are desirable, necessary or appropriate
and not contrary to the general tenor and substance thereof.
SECTION 15: That, if any Section, provision or part of
this Resoluti or the Trust Indenture shall be held to be
invalid or ineffective for any reason, the remainder of this
Resolution and Trust Indenture shall remain in full force
and effect.
PASSED AND APPROVED, this
C -
resi.dent,--Board o irectors
Lubbkick Industrial Development
Corpo-tat ion
(Seal -)-
27th day of May, 1981
A
beer Lary, board of ctMrs
Lubb k Z ustrial a Iopment
Corpora lon
r
RESOLUTION NO. 811 - 5/28/81
LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION
TO
TEXAS COMMERCE BANK — IRVING
As Trustee
TRUST INDENTURE
SECURING
$?00,000
INDUSTRIAL DEVELOPMENT REVENUE BONDS, SERIES 1981
(MAGNOLIA SEED COMPANY OF LUBBOCK PROJECT)
DATED AS OF
JUNE 11 1981
h
(The Index is not a part of the Trust Indenture
but for convenience of reference only.)
Page
Parties.....................................................................................................»........................................... 1
Preliminary Recitals............................................................ .... 1
GrantingClauses...............................................................................»............................................... 2
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION101. Definitions.............................................................................................................. 4
SECTION102. Interpretations...................................................................................................... 5
SECTION 103. Certain Findings by the Corporation.................................................................. 5
ARTICLE II
AUTHORIZED AMOUNT OF BONDS; THE BONDS; ADDITIONAL BONDS
SECTION
201.
Authorized Amount of Bonds............................................................................
6
SECTION
202.
Designation, Numbering, Principal Amount, Date,
SECTION
303.
Maturity, Interest on the Original Bonds..........................................................
6
SECTION
203.
Denomination of the Original Bonds.................................................................
6
SECTION
204.
Payment of the Original Bonds...........................................................................
6
SECTION
205.
Form of the Original Bonds .............................................................................
6
SECTION
206.
Delivery of the Original Bonds.................................................................».......
6
SECTION
207.
Disposition of Proceeds of Sale of the Original Bonds .....................................
7
SECTION
208.
Authorization of Additional Bonds....................................................................
7
SECTION
209.
Issuance of Additional Bonds.................................................._...........................
7
SECTION210.
Parity of Bonds......................................................................................................
9
SECTION
211.
Obligations other than Additional Bonds.................».......................................
9
ARTICLE III
GENERAL PROVISIONs RELATING TO BONDS OF ALL SERIES
SECTION
301.
Execution..................................................................... ...
10
SECTION302.
Authentication......................................................... ...........................................10
SECTION
303.
Mutilated, Lost, Stolen or Destroyed Bonds or Coupons................................10
SECTION
304.
Registration of Bonds; Transfers.........................................................................
11
SECTION
305.
Payment For and Limitations on Exchanges and Transfers ............................11
SECTION
306.
Persons Treated as Owners..................................................................................
11
SECTION
307.
Payment of Bonds; Cancellation of Surrendered Bonds..................................12
SECTION
308.
Limited Obligations ................................ .................. ...................................12
SECTION
309.
Variations Permitted............................................................................................
12
ARTICLE IV
REDEMPTION OF ORIGINAL BONDS BEFORE MATURITY
SECTION 401. Optional Redemption ........................................................................................ 13
SECTION 402. Extraordinary Mandatory Redemption.............................................................. 13
SECTION403. Redemption Requests...................................................... ................................ 14
SECTION 404. Notice of Redemption.......................................................................................... 14
1
ARTICLE V
CONSTRUCTION FUND
ARTICLE VI
DEBT SERVICE FUND
SECTION
601.
Establishment of the Debt Service Fund ................................................. .........
Page
SECTION
501.
Establishment of the Construction Fund..........................................................
16
SECTION
502.
Disbursement of the Construction Fund ......................................................
16
SECTION
503.
Investment of the Construction Fund.................................._.............................
16
SECTION
504.
Disposition of Proceeds in Construction Fund
Upon Acceleration of Bonds...................................................................................
16
ARTICLE VI
DEBT SERVICE FUND
SECTION
601.
Establishment of the Debt Service Fund ................................................. .........
17
SECTION
602.
Disbursement of the Debt Service Fund............................................................
17
SECTION
603.
Investment of the Debt Service Fund................................................................18
SECTION
604.
Moneys to be Held in Trust.................................._......................................._.....
18
1S
SECTION605.
Condemnation and Insurance Proceeds ............................... ..............................
ARTICLE VTI
GENERAL COVENANTS AND PROVISIONS
SECTION
701.
Payment of Principal, Premium, if any, and Interest......................................19
SECTION
702.
Performance of Covenants; Authority................................................................
19
SECTION
703.
Instruments of Further Assurance; Recording ..................................................
19
SECTION704.
Inspection of Books..............................................................................................
20
SECTION
705.
List of Bondholders..............................................................................................
20
SECTION
706.
Rights Under the Note, the Agreement, this Indenture,
the Guaranty, the Mortgage and the Collateral Assignment ............................
20
SECTION
707.
Subordination to the Rights of the User............................................................
21
SECTION
708.
Certificate as to Events of Default; Recording Opinion ..................................
21
SECTION
709.
Negative Covenants..............................................................................................
21
SECTION710.
Refunding ............................................................................................................21
SECTION711.
Concerning the Trust Estate ........................................................................
22
ARTICLE VIII
DISCHARGE
SECTION801.
Discharge ........ ..............................................................................................23
SECTION802.
Payment of Bonds and Coupons ................................................................... 23
ARTICLE EK
DEFAULT AND REMEDIES
SECTION901.
Events of Default...................................................................................................
25
SECTION902.
Acceleration............................................................................................................
26
SECTION
903.
Other Remedies .................................................................................
27
SECTION
904.
Failure to Exercise Remedies ..................................................................
27
SECTION
905.
Right of Bondholders to Direct Proceedings ......................................................
27
SECTION
906.
Appointment of Receivers.................................................................................... 27
SECTION
907.
Applications of Moneys.....................................................................................28
SECTION
908.
Remedies Vested in Trustee.........................._........................................... 29
SECTION
909.
Rights and Remedies of Bondholders .................................................. ........ 29
SECTION
910.
Termination of Proceedings ...................................................................... 29
SECTION
911.
Waivers of Events of Default .......... ............................................................ 30
SECTION912.
Usury......................................................................................................................30
ARTICLE X
THE TRUSTEE AND CO -PAYING AGENTS
SECTION
1001.
Rights and Obligations of Trustee......................................................................
31
SECTION
1002.
Fees, Charges and Expenses of Trustee ................................................. ...........
33
ii
1 r
Page
SECTION 1003.
Notice to Bondholders if Default Occurs..........................................................
33
SECTION 1004.
Intervention by Trustee......................................................................................33
SECTION 1005.
Successor Trustee..................................................................................................34
SECTION 1006.
Resignation by the Trustee................................................................................34
SECTION 1007.
Removal of the Trustee........................................................................................
35
SECTION 1008.
Appointment of Successor Trustee by the Bondholders;
TemporaryTrustee.................................................................................. ...35
SECTION 1009.
Concerning Any Successor Trustees..................................................................
35
SECTION 1010.
Right of Trustee to Pay Taxes and Other Charges ..........................................
35
SECTION 1011.
Appointment of Co-Paying Agents....................................................................
36
SECTION1012.
Co-Paying Agents................................................................................................36
SECTION1013.
Dealing in Bonds..................................................................................................
37
SECTION 1014.
Adoption of Authentication................................................................................
37
ARTICLE XI
SUPPLEMENTAL INDENTURES AND AMENDMENTS OF AGREE-HENT,
MORTGAGE, COLLATERAL ASSIGNMENT AND NOTE
SECTION 1101.
Supplemental Indentures and Amendments of Mortgage
or Collateral Assignment Not Requiring Consent
ofBondholders....................................................................................................... 38
SECTION 1102.
Supplemental Indentures and Amendments of Mortgage
or Collateral Assignment Requiring Consent of Bondholders ............................ 39
SECTION 1103.
Amendments of Agreement or Note Not Requiring
Consentof Bondholders........................................................................................
39
SECTION 1104.
Amendments of Agreement or Note Requiring
Consentof Bondholders........................................................................................
40
SECTION 1105.
Rights of Trustee and the User............................................................ ..........
40
ARTICLE XII
MISCELLANEOUS
SECTION 1201.
Consents, etc., of Bondholders ....................................................................... 41
SECTION 1202.
Limitation of Rights ........................................................................ .......... 42
SECTION1203.
Severability............................................................................................................42
SECTION1204.
Notices...................................................................................................................42
SECTION1205.
Waiver of Notice.................................................................................................... 42
SECTION 1206.
Payments Due on Sundays and Holidays.......................................................... 43
SECTION 1207.
Immunity of Certain Persons.............................................................................. 43
SECTION 1208.
Return of Moneys from Non-presentment of
Bondsor Coupons.................................................................................................
43
SECTION 1209.
Performance by the User or the Guarantor..........._..........................................
43
SECTION1210.
Counterparts..........................................................................................................
43
SECTION1211.
Governing Law ....................................................................................................
43
Testimonium......................................................................................................................................44
Signatures............................................................................................................................................
44
Acknowledgments..............................................................................................................................45
Exhibit A — Form of Coupon Bonds
iii
1. Jrr
TRUST MENTURE
by and between
LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION
and
TEXAS COMMERCE BANS. — IRVING
IRVI NG, TEXAS
As Trustee
THIS TRUST INDENTURE, dated as of June 1, 1981, (herein, together with any amend-
ments
mendments or supplements thereto, called the "Indenture"), by and between LiraBocK INDUSTRL4I..
DEVELOPMENT CORPORATION, a nonprofit development corporation created and existing under
the Act (as hereinafter defined), and TExAs COMMERCE BANK IRviNG, Irving, Texas, a
banking association organized under the laws of the State of Texas with its principal corporate
trust office located in Irving, Texas, as trustee (herein, together with any successor or assign
in such capacity, called the "Trustee") .
WITNESSETH:
WHEREAS, the Act authorizes and empowers the Corporation (as hereinafter defined) to
issue revenue bonds, on behalf of the Unit (as hereinafter defined) to finance the cost of projects
comprised of land, buildings, equipment, facilities and improvements (one or more) found by
the Board (as hereinafter defined) to be required or suitable for the promotion of commercial
or industrial development and expansion, the promotion of employment, or for use by com-
mercial, manufacturing or industrial enterprises; and
WHEREAS, in order to finance the cost of such projects, the Corporation is authorized by
the Act to issue revenue bonds payable from the revenues derived from repayment of loans
made to users of such projects; and
WHEREAS, the Corporation has entered into a Loan Agreement (the "Agreement"), dated
as of even date herewith, with the User (as hereinafter defined), providing for (i) a Ioan from
the Corporation to the User to provide financing for the acquisition, construction and installation
of the Project (as hereinafter defined), (ii) the revision from time to time of the Project and
(iii) the repayment of such loan by the User; and
WHEREAS, contemporaneously with the execution of the Agreement, the User has executed
that certain Deed of Trust, Security Agreement, Assignment of Rents and Financing Statement,
dated as of the date hereof (together with any amendments or supplements thereto, the
"Mortgage"), pursuant to which the User bargained, sold, granted, conveyed, transferred,
mortgaged, pledged and assigned to Tim A. Loudermilk, as mortgage trustee, for the use and
benefit of the Corporation, and further granted unto the Corporation a security interest in, the
Project and certain other properties of the User, in order to secure the payment of the
Loan Payments (as hereinafter defined) on the Note (as hereinafter defined), according to
its tenor and effect, and certain other indebtedness of the User and the performance and
observance by the User of all the covenants expressed or implied in the Mortgage, in the
Agreement and in the Note; and
WHEREAS, in order to provide funds for the Corporation to loan to the User, the Corpora-
tion now proposes to issue its Industrial Development Revenue Bonds, Series 1981 (Magnolia
Seed Company of Lubbock Project) in the aggregate principal amount of 7100,000, pursuant
to this Indenture and in accordance with a resolution duly adopted by the Board; and
WHEREAS, contemporaneously with the execution of this Indenture and the Agreement,
the Corporation has executed that certain Collateral Assignment and Security Agreement,
1
dated as of the date hereof (together with any amendments or supplements thereto, the
"Collateral Assignment"), pursuant to which the Corporation has conveyed, assigned, trans-
ferred and delivered and granted a security interest to the Trustee in the Note and all rights,
titles, interests, estates, real and personal property, liens, privileges, claims and demands and
equities existing and to exist in connection with or as security for payment of the Note
including its rights, titles and interests arising under the Agreement or the Mortgage in order
to secure payment of the Bonds (as hereinafter defined) according to their tenor and effect
and the performance by the Corporation of all the covenants expressed or implied herein,
therein and in the Bonds; and
WHEREAS, the Corporation also desires (within certain limitations) to provide for the
issuance from time to time in the future of Additional Bonds (as hereinafter defined) for the
purpose of defraying the costs of completing, enlarging, improving or expanding the Project
or refunding any Original Bonds (as hereinafter defined) or series of Additional Bonds thereto-
fore issued and outstanding under this Indenture; and
WHEREAS, all things necessary to make the Original Bonds (as hereinafter defined), when
issued, executed and delivered by the Corporation and authenticated by the Trustee pursuant
to this Indenture, the valid, legal and binding limited obligations of the Corporation, and
to constitute this Indenture a valid pledge of certain income and revenues derived from repay-
ment of the loan for the payment of the principal of and premium, if any, and interest on the
Bonds (as hereinafter defined) authenticated and delivered under this indenture have been
performed and the creation, execution and delivery of this Indenture, and the creation, execution
and issuance of the Original Bonds, subject to the terms hereof, have in all respects been duly
authorized;
Now THEREFoaE:
The Corporation, in consideration of the premises and the acceptance by the Trustee
of the trusts hereby created and of the purchase and acceptance of the Bonds by the holders
thereof and the sum of One Dollar ($1.00), in lawful money of the United States of America.,
to it duly paid by the Trustee at or before the execution and delivery of these presents and for
other good and valuable consideration, the receipt of which is hereby acknowledged, in order
to secure the payment of the principal of and premium, if any, and interest on the Bonds
according to their tenor and effect and the performance and observance by the Corporation
of all the covenants expressed or implied herein and in the Bonds, does heZeby grant, convey,
pledge and assign to the Trustee, and to its successors in trust, the following (herein called
the "Trust Estate"), to -wit:
FIRST, all of the Corporation's right, title and interest in and to the amounts (whether
or not by way of the Loan Payments [as hereinafter defined] payable under the Agree-
ment [as hereinafter defined]) required from time to time to be deposited in or credited
to the account of the Debt Service Fund (as hereinafter defined) in accordance with this
Indenture and the Agreement together in each case with any investments and reinvest-
ments made with such amounts and moneys and the proceeds thereof; and
SECOND, subject to the provision below, all of the Corporation's right, title and interest
in and to the Agreement and the Note, together with'all rights, powers, privileges, options
and other . benefits of the Corporation therein contained, including, but without limiting
the generality of the foregoing, the right to enforce against the User all obligations of the
User arising under the Agreement and the Note and all rights, titles, interests, liens,
privileges, claims with or as security for payment of the Note and the indebtedness
evidenced thereby, including (but not limitedto) those covering the Facilities and the
Site created by the Mortgage and all amounts, if any, to be received under and pursuant
2
� I
r
to the Agreement and the Note other than (a)' those described in the First Granting
Clause above, (b) any moneys to which the Corporation may be entitled under the Agree-
ment for the purposes set forth in Sections 3.3(a) and 8.1 of the Agreement, and (c)
amounts paid to the Corporation in reimbursement of expenses incurred by it pursuant
to the Agreement and the Note; and
THIRD, subject to the proviso below, any and all property of every kind or description
(including, without limitation, cash, bonds, stocks, obligations and other securities or
evidence thereof) which may from time to time hereafter be sold, transferred, conveyed,
assigned, hypothecated, endorsed, deposited, pledged, mortgaged, granted or delivered
to, or deposited with, the Trustee as additional security hereunder by the Corporation
or anyone on its behalf or with its written consent, or which pursuant to any of the provi-
sions hereof or of the Agreement may come into the possession or control of the Trustee,
or of a receiver lawfully appointed pursuant to Article IX of this Indenture, as such addi-
tional security; and the Trustee is hereby authorized to receive any and all such property
as and for additional security for the payment of the Bonds and coupons appertaining
thereto, if any, and to hold and apply all such property subject to the terms hereof.
To HAVE AND To HOLD the said Trust Estate, whether now owned or held or hereafter
acquired, unto the Trustee, its successors and assigns, forever.
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and
proportionate benefit and security of all present and future holders of the Bonds and interest
coupons, if any, appertaining thereto without preference of any Bond or coupon over any other,
and for enforcement of the payment of the Bonds and interest coupons appertaining thereto,
in accordance with their terms, and all other sums payable hereunder or on the Bonds and
for the performance of and compliance with the obligations, covenants and conditions of this
Indenture, as if all the Bonds at any time outstanding had been authenticated, executed and
delivered simultaneously with the execution and delivery of this Indenture, all as herein set forth.
PRovmED, HowEvER, that the grant, conveyance, pledge and assignment made in the Second
and Third Granting Clauses of this Indenture, which are intended for the aforesaid security
purposes only, shall in no way affect, impair or diminish the Corporation's obligations under
the Agreement, nor shall any such dbligations be imposed upon the Trustee, and, except as other-
wise provided in the remaining provisions of this Indenture, nothing in the Granting Clauses
of this Indenture shall prohibit the Corporation from bringing any actions or proceedings for
the enforcement of the obligations of the User under the Agreement except the obligations of
the User with respect to the amounts and moneys referred to in the First Granting Clause of
this Indenture (the Corporation having in such First Granting Clause absolutely and irrevo-
cably assigned to the Trustee all right, title and interest to such amounts and moneys) and
except that nothing in this proviso shall prejudice the rights of the Trustee under Articles VII
and IX of this Indenture.
IT Is HEREBY COVENANTED, DECLARED AND AGREED that this Indenture creates a continuing
lien on the Trust Estate equally and ratably to secure the payment in full of the principal of and
premium, if any, and interest on all Bonds which may, from time to time, be outstanding here-
under, and that the Bonds are to be issued, authenticated and delivered, and that the Trust
Estate is to be held, dealt with and disposed of by the Trustee, upon and subject to the terms,
covenants, conditions, uses, agreements and trusts set forth in this Indenture, as follows:
3
r
ARTICLE I
DEFINITIONS AM INTEHPBETATIONS
Section 101. Definitions. (a) The following terms shall have.the meanings assigned to them
in the Agreement whenever they are used in this Indenture, unless the context clearly otherwise
requires. Except where the context otherwise requires, words imparting the singular number
shall include the plural number and vice versa.
"Act"'
"Additional Bonds"
"Board!'
"Bond" or `Bonds"
«Code" .
"Completion Date"
"Construction Fund"
"Corporation"
"Debt Service Fund"
"Determination of Taxability"
"Event of Taxability"
"Facilities"
"Governing Body"
"Government Obligations"
"Guarantor"
"Guaranty"
"Insubstantial Amount"
"Loan Payments"
"Mortgage"
"Note"
"opinion of counsel"
"Original Bonds"
"Original Proceeds"
"outstanding"
"person"
"Qualifying Costs"
"Site"
"State"
'�Illt"
"User"
4
(b) The following terms shall have the meanings assigned to them below whenever they
are used in this Indenture:
"affiliate" of any person means any person which controls, is controlled by or is under
common control with such person.
"Agreement" is defined in the recitals of this Indenture.
"Bondholder" or "holder" means the bearer of any coupon Bond not registered as to
principal or registered as to principal to bearer, and the registered owner of any coupon
Bond registered as to principal other than to bearer. The word "holder" when used with
reference to a coupon shall mean the bearer of such coupon.
"Collateral Assignment" is defined in the recitals of this Indenture.
"Co -Paying Agent" means any co -paying agent appointed in accordance with the pro-
visions of this Indenture. Notwithstanding anything to the contrary herein, there is no
Co -Paying Agent being initially appointed in this Indenture.
"Eligible Securities" means the following obligations or securities, maturing or redeem-
able at the option of the Trustee, or marketable prior to the maturities thereof, at such
time or times as to enable disbursements to be made from the Construction Fund and the
Debt Service Fund in accordance with the terms hereof:
(a) Direct or indirect obligations of the United States Government or its agencies
(now or hereafter created) ; or
(b) Certificates of deposit of any bank, including the Trustee, or trust company
which deposits are secured by obligations described in (a) above.
(c) Repurchase agreements (including those issued by the Trustee), secured by
obligations described in (a) above.
"events of default" are defined in Section 901 of this Indenture.
"Indenture" means this instrument, together with any amendments or supplements
hereto.
"Trustee" means the party defined as such on page 1 of this Indenture.
"Trust Estate" is defined in the granting clause of this Indenture.
Section 102. Interpretations. The table of contents, article and section headings of this
Indenture are for reference purposes only and shall not affect its interpretation in any respect.
Section 103. Certain Findings by the Corporation. The Corporation hereby confirms its
prior determination and by the execution hereof again finds and determines that (i) the Project
to be constructed, acquired or provided by the expenditure of proceeds of the Bonds is required
and suitable for the promotion of industrial development and expansion, the promotion of
employment and is for the use of or by a commercial or industrial enterprise, (ii) such Project
to be financed through the utilization of the proceeds of the Bonds is in furtherance of
the public purpose of the promotion and development of new and expanded industrial and
manufacturing enterprises to promote and encourage employment and the public welfare and
(iii) the User has the business experience,' financial resources and responsibility to provide
reasonable assurance that the Bonds and interest thereon hereby secured (which are to be
paid from or by reason of payments to be made by the User under the Agreement) will be
paid as the same become due.
5
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ARTICLE II
AUTHORIZED AMOUNT OF BONDS; THE BONDS; ADDITIONAL BONDS
Section 201. Authorized Amount of Bonds. The total authorized amount of Bonds which
shall be initially issued under the provisions of thi Indenture is $700,000. Additional Bonds
on a parity with and in addition to those initially issued may be issued pursuant to this
Article II.
Section 202. Designation, Numbering, Principal Amount, Date, Maturity, Interest on the
Original Bonds. The initial series of Bonds which may be issued under this Indenture is
comprised of the Original Bonds. Each of the Original Bonds shall be designated Lubbock
Industrial Development Corporation Industrial Development Revenue Bonds, Series 1981 (Mag-
nolia Seed Company of Lubbock Project), and shall be dated June 1, 1981. The Original
Bonds shall be numbered from 1 upward.
The Original Bonds shall be in the aggregate principal amount of 8700,000; shall bear
interest at the rate of ten percentum (10%) per annum from their date until maturity and at
the maximum rate permitted by law from maturity until paid; interest on the Original Bonds
shall be payable semiannually on June 1 and December 1 of each year until paid, with the
first interest payment to be made on December 1, 1981; and shall mature on June 1 in each
of the years as follows:
Bond Numbers Bond Numbers
(All Inclusive) Year Amount (All Inclusive) Year Amount
1 to 4 1982 $20,000 51 to 59 1990 $45,000
5 to 9 1983 25,000 60 to 69 1991 50,000
10 to 14 1984 25,000 70 to 80 1992 55,000
15 to 20 1985 30,000 81 to 93 1993 65,000
21 to 26 1986 30,000 94 to 107 1994 70,000
27 to 33 1987 35,000 108 to 122 1995 75,000
34 to 41 1988 40,000 123 to 140 1996 90,000
42 to 50 1989 45,000
but subject to the redemption provisions of Article IV of this Indenture.
Section 203. Denomination of the Original Bonds. The Original Bonds shall be in the
denomination of $5,000, registrable as to principal only.
Section 204. Payment of the Original Bonds. Principal of and interest and premium,
if any, on the Original Bonds shall be payable in lawful money of the United States of
America at the principal corporate trust office of the Trustee, which is hereby appointed the
paying agent (or at the corporate trust office of any successor Trustee and paying agent under
this Indenture).
Section 205. Form of the Original Bonds. The Original Bonds and the coupons appertaining
thereto shall be substantially in the form set forth in Exhibit A, with such appropriate variations,
omissions and insertions as are permitted or required by this Indenture and may have such
letters, numbers or other marks of identification as may be consistent herewith and determined
by the officers executing such Original Bonds, as evidenced by their signing of the Original Bonds.
Section 206. Delivery of the Original Bonds. Upon the execution and delivery of this
Indenture, the Corporation shall execute and deliver to the Trustee the Original Bonds in the
6
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initial aggregate amount set forth in Sections 201 and 202 of this Indenture and the Trustee
shall authenticate the Original Bonds and deliver them to the purchasers thereof as directed by
the Corporation in accordance with the provisions of this Section 206.
Prior to the delivery by the Trustee of any of the Original Bonds, there shall be delivered
to the Trustee:
(a) A copy, duly certified by an officer of the Corporation, of the resolution or resolu-
tions adopted and approved by the Board authorizing the execution and delivery of the
Agreement, this Indenture and the Collateral Assignment and authorizing the issuance,
execution and delivery of the Original Bonds.
(b) An original executed counterpart of the Agreement, this Indenture, the Mortgage,
the Collateral Assignment, the Guaranty and the Note endorsed by the Corporation to the
Trustee without recourse.
(c) A written certificate to the Trustee, signed on behalf of the Corporation by an
officer of the Corporation, requesting and authorizing the Trustee to authenticate and
deliver the Original Bonds in the original aggregate principal amount set forth in Sections
201 and 202 to the original purchaser(s) upon payment to the Trustee for deposit in the
Construction Fund and the Debt Service Fund of the respective sums specified in such
request which sums shall be determined in accordance with Section 207 hereof.
(d) A policy of mortgagee's title insurance in favor of the Trustee in the amount of
$700,000 showing no liens or other encumbrances other than those shown on Exhibit B
to the Mortgage.
Section 207. Disposition of Proceeds of Sale of the Original Bonds. When the documents
described in the preceding Section 206 shall have been delivered to the Trustee and the Trustee
has authenticated the Original Bonds, the Trustee shall deliver such Original Bonds upon the
order of the original purchaser(s) named in the certificate mentioned in clause (c) of Section
206 and the payment of the sum specified in such certificate as the purchase price of the
Original Bonds in immediately available funds.
The proceeds of the sale of the Original Bonds shall be applied by the Trustee as follows:
(a) the amount received as accrued interest on the Original Bonds shall be deposited
in the Debt Service Fund; and
(b) the balance of the proceeds of the sale of the Original Bonds shall be deposited
in the Construction Fund and shall be loaned to the User and disbursed as provided in
the Agreement.
Section 208. Authorization of Additional Bonds. Subsequent to the issuance and delivery
of the Original Bonds, one or more series of Additional Bonds may be authenticated and
delivered by the Trustee for the purpose of financing the cost of (i) completing the Project;
(ii) providing enlargements, improvements or expansions of the Project; or (iii) refunding any
Bonds or series of Additional Bonds theretofore issued and outstanding under this Indenture
to the extent permitted by law.
Section 209. Issuance of Additional Bonds. Additional Bonds may be issued, executed
and delivered at any time and from time to time in one or more series, upon such terms and
conditions with respect to form, denomination, interest rate, maturity date, mandatory and
optional redemption provisions (all of which may differ from the terms and conditions with
respect thereto applicable to the Original Bonds or any other series of Additional Bonds)
7
and otherwise not inconsistent with this Indenture as may then be permitted by law and
as shall be provided in the proceedings of the Corporation whereunder such Additional Bonds
are authorized. The Corporation may execute and deliver to the Trustee, and the Trustee
shall thereupon authenticate, such Additional Bonds and deliver them to such purchaser or
purchasers as may be directed by the Corporation; provided, however, that, prior to such
authentication and delivery, there shall have been delivered to the Trustee:
(a) a copy, duly certified by an officer of the Corporation, of the resolution or resolu-
tions adopted and approved by the Board authorizing the issuance of such Additional
Bonds and the execution and delivery of an indenture supplemental to this Indenture
providing for the terms and conditions upon which they shall be issued, together with a
counterpart executed by the Corporation and the Trustee of such supplemental indenture;
(b) an executed counterpart of an amendment or supplement of the Agreement,
the Note, the Mortgage, the Collateral Assignment and the Guaranty, effective on or before
the date of issuance of such Additional Bonds, making all or whichever of the following
modifications the Trustee deems necessary to provide for the disposition of the proceeds of
the sale of such Additional Bonds and the payment by the User of amounts sufficient to pay
the principal of and interest and premium, if any, on such Additional Bonds: (i) increasing
or adjusting the aggregate amount of the Loan Payments, or other sums, payable under
the Agreement to an amount sufficient to pay, as and when the same matures or becomes
due, the principal of and interest and premium, if any, on all outstanding Bonds, including
such Additional Bonds (except to such extent as the same may be paid out of moneys
in the Debt Service Fund or otherwise on deposit with the Trustee in accordance with
this Indenture as then supplemented), and (ii) providing for the disposition of the
proceeds of the sale of such Additional Bonds, including if such Additional Bonds are not
issued for refunding purposes, the acquisition, construction, equipping or improvement of
the Facilities and additions to the Site, the financing of all or part of which is to be
effected by the issuance and sale of such Additional Bonds and (iii) providing for the
securing by the Mortgage and the Guaranty of the additional obligations of the User under
the Agreement and the Note and for the securing of the Additional Bonds by the Collateral
Agreement;
(c) a written statement signed by an officer of the User (i) approving the issuance
and delivery of such Additional Bonds, and (ii) certifying that there then exists no "event
of default" under either this Indenture or the Agreement;
(d) an opinion of nationally recognized bond counsel to the effect that the issuance of
the series of Additional Bonds will not adversely affect the tax exemption of the interest
on the Original Bonds or any series of Additional Bonds previously issued;
(e) an opinion of counsel to the Corporation, addressed to the Trustee, to the effect
that (i) all of the conditions to the issuance of such Additional Bonds set forth in this
Section 209 have been satisfied and (ii) the Agreement, this Indenture, and the Collateral
Assignment, as so amended or supplemented, constitute legal, valid and binding obliga-
tions of the Corporation in accordance with their respective terms, except to the extent
that the enforcement thereof may be limited by laws relating to bankruptcy, moratorium
or similar laws of general applicability;
(f) a written request and authorization to the Trustee, signed on behalf of the
Corporation by an officer of the Corporation, to authenticate and deliver such Additional
Bonds to the purchaser or purchasers therein identified upon payment to the Trustee of
the sum specified therein plus accrued interest to the date of delivery of such Additional
Bonds to the original purchasers thereof;
8
(g) an opinion of counsel to the User and to the Guarantor addressed to the Trustee,
to the effect that the amendment or supplement to the Agreement, the Mortgage, the
Guaranty and the Note referred to in Subsection (b) above have been duly authorized,
executed and delivered by the User or the Guarantor, as the case may be, and that the
Agreement, the Mortgage, the Guaranty and the Note, as so amended or supplemented,
constitute legal, valid and binding obligations of the User or the Guarantor, as the case
may be, enforceable in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, moratorium or similar laws of general applicability;
(h) a copy, duly certified by an officer of the Unit, of the resolution or resolutions
adopted by the Governing Body approving the resolution or resolutions of the Board
described in Subsection (a) above; and
(i) a policy of mortgagee's title insurance in favor of the Trustee in the amount of
the aggregate amount of Bonds outstanding taking into account such Additional Bonds.
The proceeds of such Additional Bonds shall be deposited with and held and disbursed by
the Trustee as provided in the indenture supplemental hereto providing for such Additional
Bonds.
The term "Additional Bonds" does not include any obligations issued or incurred to provide
facilities that are not located on the Site.
Section 210. Parity of Bonds. Each of such Additional Bonds of whatever series shall rank
equally and on a parity with the Original Bonds and shall be equally and ratably secured
hereunder with the Original Bonds and all other series of Additional Bonds, if any, without
preference, priority or distinction of any of the aforesaid Bonds, or coupons thereunto apper-
taining, over any other thereof, and shall be co -equal as to the lien of this Indenture regardless
of the time of delivery thereof. Nothing in this Section 210 shall require (a) that any Additional
Bonds bear interest at the same rate, have the same, or an earlier or later, maturity, or be
subject to mandatory or optional redemption prior to maturity or have sinking fund provisions
on the same basis as the basis of the Original Bonds or any other basis, or (b) that any revenue
bonds or other obligations (referred to in this sentence as "related bonds") which may be issued
by the Corporation or any other nonprofit corporation created and existing under the Act for
the purpose of defraying the cost of enlargements, improvements or expansion of the Project
(except such related bonds as may be secured by a pledge of revenues derived from the
Agreement or by a lien upon the Project) must be issued as Additional Bonds, or (c) that the
Bonds must rank equally and on a parity with any such related bonds not issued as Additional.
Bonds, or (d) that the Bonds must be secured by a pledge of the revenues derived from such
enlargements, improvements or expansions (except as such revenues are derived from the
Agreement) .
Section 211. Obligations other than Additional Bonds. The Corporation may issue bonds
or other obligations for the construction of additional facilities on land which is not included
as a part of the Site. Such bonds or other obligations shall not be considered as Additional
Bonds and shall not be secured by this Indenture or supplement to the Mortgage nor shall the
same be payable from or secured by a pledge of revenues or income derived from or in connection
with the Agreement or by a lien upon the Project, but nothing herein shall restrict the Corpora-
tion from making other contractual arrangements (similar or dissimilar to the Agreement) to
provide for the security and payment of such bonds or other obligations.
9
ARTICLE III
GENERAL PROVISIONS RELATING To BONDS OF ALL SERIES
Section 301. Execution. The Bonds and any coupons appertaining thereto, if any, shall
be signed by the President and Secretary of the Corporation. To the extent permitted by law,
such signatures on the Bonds may be facsimiles, in which event such facsimiles shall have the
same force and effect as if said officers had manually signed the Bonds. In case any officer whose
signature or whose facsimile signature shall appear on the Bonds or coupons shall cease to be
such officer before the delivery of such Bonds or shall not have been such officer on the date of
such Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if he had remained in office until delivery or had been such officer on the
date of such Bonds, as the case may be.
Section 302. Authentication. After execution, the Bonds shall be delivered to the Trustee
and the Trustee shall authenticate and deliver the Bonds as provided and subject to the
conditions stated, in this Indenture. The form of such certificate of authentication on the
Original Bonds shall be as prescribed in Exhibit A hereto and the form of such certificate of
authentication on any Additional Bond shall be prescribed in the indenture supplemental
hereto authorizing such series. No Bond and no coupon appertaining to any Bond shall be
valid or obligatory for any purpose or be entitled to any security or benefit under this Indenture
unless and until such certifigate of authentication shall have been duly executed by the Trustee,
and such executed certificate of the Trustee upon any such Bond shall be conclusive evidence
that such Bond has been authenticated and delivered. The Trustee's certificate of authentica-
tion on any Bond shall be deemed to have been executed by it if manually signed by an
authorized officer of the Trustee, but it shall not be necessary that the same officer sign the
certificate of authentication on all of the Bonds.
Before authenticating or delivering any Bonds, the Trustee shall detach and cancel all
matured coupons, if any, appertaining thereto, and such cancelled coupons shall be destroyed
by the Trustee.
Section 303. Mutilated, Lost, Stolen or Destroyed Bonds or Coupons. Mutilated Bonds
or Bonds with mutilated coupons appertaining thereto may be surrendered to the Trustee
and the Trustee shall validate the same or, upon the request of the person surrendering such
Bond or Bonds, the Corporation shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Bond or Bonds of like series, date, maturity, denomination, interest
rate and aggregate principal amount with coupons corresponding to the coupons, if any, apper-
taining to the surrendered Bond or Bonds. All mutilated Bonds and coupons surrendered in
any such exchange shall be cancelled forthwith.
If there be delivered to the Corporation, the Trustee and the User (a) an afndavit or
any other form of evidence satisfactory to them to establish proof of ownership and the circum-
stances of the destruction, loss or theft of any Bond or coupon, and (b) such security or
indemnity as may be required by them to save each of them harmless, then, in the absence of
notice to the Corporation or the Trustee that such Bond or coupon has been acquired by a bona
fide purchaser, the Corporation shall execute and upon its request the Trustee shall authenticate
and deliver in lieu of any such destroyed, lost or stolen Bond, or in exchange for the Bond to
which such coupon appertains (upon surrender of such Bond with all appurtenant coupons not
destroyed, lost or stolen), a new Bond of like series, date, maturity, denomination, interest
rate and principal amount, with coupons corresponding to the unpaid coupons, if any, appertain-
ing to such destroyed, lost or stolen Bond or to the Bond to which such destroyed, lost or
stolen coupon appertains.
10
In case any such mutilated, destroyed, lost or stolen Bond or coupon has become or is
about to become due and payable, the Corporation in its discretion and after satisfaction of
clauses (a) and (b) of the preceding paragraph may, instead of issuing a new Bond or coupon,
cause the Trustee to pay such Bond or coupon out of moneys held by the Trustee and available
for the purpose.
Section 304. Registration of Bonds; Transfers. All the Bonds issued under this Indenture
shall be negotiable, subject to the provisions for registration and transfer contained in this
Indenture and in the Bonds. The Trustee shall be the registrar for the Bonds. So long as any
of the Bonds shall remain outstanding, the Trustee shall maintain and keep at its corporate
trust office, books for the registration and transfer of Bonds. Upon presentation thereof for such
purpose at said office, the Trustee shall register or cause to be registered therein, and permit
to be transferred thereon, under such reasonable regulations as it may prescribe, any Bond
entitled to registration or transfer.
All coupon Bonds shall be transferable by delivery, unless registered as to principal other
than to bearer, in the manner provided in this Section 304. Any coupon Bond may be registered
as to principal on the books of the registrar upon presentation thereof at the corporate trust
office of the Trustee and the payment of a charge sufficient to reimburse the Corporation and
the Trustee for all taxes, fees or other governmental charges required to be paid with respect
to such registration, and the registration shall be noted on such Bonds. After registration,
such Bond may be transferred by surrendering it to the registrar duly endorsed for transfer or
accompanied by an assignment duly executed by the registered owner or his attorney duly
authorized in writing. However, such Bond may be discharged from registration by being in like
manner registered to bearer, after which it shall again become transferable by delivery. There-
after, such Bond may again, from time to time, be registered or discharged from registration in
the same manner. Registration of any coupon Bond as to principal, however, shall not affect the
negotiability by delivery of the coupons appertaining thereto.
Section 305. Payment for and Limitations on Exchanges and Transfers. For every change,
registration or transfer of Bonds provided for in Sections 303 and 304 of this Indenture, the
Corporation and the Trustee may make a charge sufficient to reimburse them for any tax, fee
or other governmental charge that may be imposed by others. The cost of preparing each new
Bond upon each exchange, and any other expenses (except any applicable tax, fee or other
governmental charge) of the Corporation or the Trustee incurred in connection with such
exchange or the registration of a Bond or the registration of a transfer, shall be paid by the
User pursuant to the Agreement. "Neither the Corporation nor the Trustee shall be required
(a) to exchange, register, or register the transfer of Bonds of any series for a period of fifteen
days next preceding an interest payment date on the Bonds, or next preceding any selection
of the Bonds of such series to be redeemed or thereafter until after the first publication or
mailing of notice of redemption of the Bonds of such series, or (b) to exchange, register, or
register the transfer of any Bond called for redemption unless the owner or, in the case of
transfer, the transferee shall acknowledge to the Trustee in writing that such Bond, or portion
of fully registered Bond, has been called for redemption.
Section 306. Persons Treated as Owners. The Corporation, the Trustee, any Co -Paying
Agent, the Guarantor and the User may, for the purposes indicated, deem and treat the following
persons as the absolute owners and holders of the Bonds and coupons described below, whether
or not such Bonds or coupons are overdue, and neither the Corporation, the Trustee, any
Co -Paying Agent, the Guarantor nor the User shall be affected by any notice to the contrary:
(a) For the purpose of receiving payment of, or on account of, the principal and
redemption premium, if any, in respect of any Bond registered as to principal only other
than to bearer and for all other purposes other than receiving payment of the interest on
the coupons appertaining thereto, the person in whose name such Bond shall be registered
upon the books of the registrar.
(b) For the purpose of receiving payment of, or on account of, the principal and
redemption premium, if any, and for all other purposes other than receiving payment of
the interest on the coupons appertaining thereto, the bearer of (i) any Bond not registered
as to principal, or (ii) any Bond registered to bearer.
(c) For the purpose of receiving payment of interest on Bonds, the bearer of any
coupon.
Payment made to the person deemed to be the owner of any Bond or coupon for the
purpose of such payment in accordance with the provisions of this Section 306 shall be valid
and effectual, to the extent of the sum or sums so paid, to satisfy and discharge the liability
upon such Bond or coupon in respect of which such payment was made.
Section 307. Payment of Bonds; Cancellation of Surrendered Bonds. If any Bonds shall
not be presented for payment when the principal thereof becomes due, either at maturity or
otherwise, or at the date fixed for redemption thereof, or in the event any coupons shall not
be presented for payment at the due date thereof, all liability of the Corporation to the
holders thereof for the payment of such Bonds or coupons, shall forthwith cease, determine
and be completely discharged whenever funds sufficient to pay such Bonds or coupons, shall
be held by the Trustee or a Co -Paying Agent, and such funds shall be segregated by the
Trustee or a Co -Paying Agent and, subject to Section 1208 of this Indenture, held in trust
for the benefit of the holders of such Bonds or coupons, who shall thereafter be restricted
exclusively to such funds for the satisfaction of any claim of whatever nature on their part
relating to such Bonds or coupons. Such segregated funds shall not be subject to investment
and no interest shall accrue or be imputed with respect thereto.
All Bonds or coupons paid or redeemed or purchased as provided herein shall forthwith
be cancelled (together with the unmatured coupons appertaining to such Bonds) upon the
making of proper records as to such payment, redemption or purchase and shall not be reissued.
Except as provided below, the Trustee shall destroy cancelled Bonds and coupons not sooner
than two years after cancellation and deliver a certificate of destruction thereof to the Corpora-
tion and to the User annually.
Section 308. Limited Obligations. The Bonds and coupons appertaining thereto shall be
limited obligations of the Corporation, payable solely out of the revenues derived from or
in connection with the Agreement (including all sums deposited in the Debt Service Fund
from time to time pursuant to this Indenture, the Mortgage, the Note and the Agreement and
in certain events, as provided herein, out of amounts attributable to Bond proceeds or amounts
obtained through the exercise of any remedy provided herein upon occurrence of an event of
default under this Indenture) . The Bonds shall never be paid out of any other funds of the
Corporation except such revenues.
NEITHER THE STATE, THE UNIT NOR ANY POLITICAL CORPORATION, SUB-
DIVISION OR AGENCY OF THE STATE SHALL BE OBLIGATED TO PAY THE BONDS
OR THE INTEREST THEREON. NEITHER THE FAITH AND CREDIT NOR THE TAX-
ING POWER OF THE STATE, THE UNIT OR ANY OTHER POLITICAL CORPORATION,
SUBDIVISION OR AGENCY THEREOF IS PLEDGED TO THE PAYMENT OF THE
PRINCIPAL OF OR THE INTEREST ON THE BONDS.
Section 309. Variations Permitted. Without the necessity of complying with Article XI
of this Indenture, the provisions of this Article III, insofar as they apply to any series of
Bonds other than the Original Bonds, may be varied by the indenture supplemental hereto
providing for the series.
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ARTICLE IV
REDEMPTION OF ORIGINAL BONDs BEFORE MATURITY
Section 401. Optional Redemption. The Original Bonds shall be subject to redemption prior
to maturity, in whole or any part thereof, at any time and at the price of par plus accrued
interest to the date of redemption.
Section 402. Extraordinary Mandatory Redemption. (a) Upon a Determination of Tax-
ability, the Original Bonds shall be redeemed prior to maturity in whole or in part, as provided
in subsection (c) below, on a date selected by the Trustee, which date shall, except as provided
below, be not more than 120 days from the date on which the Trustee receives written notice
that such Determination of Taxability shall have occurred, at a redemption price equal to the
principal amount thereof, plus a redemption premium calculated at the rate of eight per cent
(8%) per annum on the principal amount of the Original Bonds to be redeemed, for the period
of time which has elapsed since the Event of Taxability, or such reduced premium as is provided
for below, plus accrued interest to the redemption date (and, if the redemption date is other than
an interest payment date, interest shall be calculated on the basis of a 360 -day year) upon the
obligatory payment by the User of the amounts required to be paid in accordance with Subsec-
tion 7.3 (b) of the Agreement; provided, however, that if redemption of the Bonds at the redemp-
tion price and within the redemption period specified above would result in the payment of
interest on the Bonds or interest on the Note (including interest on the Note pursuant to Sec-
tion
ection 4.1 of the Agreement together with any other costs that constitute interest under the law
of the State which are contracted for, charged or received pursuant to the Agreement) at a rate
in excess of the maximum rate allowable under the law of the State, then, notwithstanding the
foregoing, (x) the premium payable upon such redemption shall be reduced or eliminated to the
minimum extent necessary in order to result in the payment of interest on the Bonds and the
Note at rates not in excess of the maximum rates allowable under the law of the State,
and (y) in the event that elimination of the redemption premium to the extent permitted
by clause (x) above would nonetheless result in the payment of interest on the Bonds or
the Note at a rate in excess of the maximum rate allowable under the law of the State if such
redemption occurred within the time period specified above, the date on which the redemption
shall occur and the redemption price shall become due and payable shall be delayed until the
earliest business day not a Sunday or a legal holiday or a day upon which banking institutions
in the city where the principal corporate trust office of the Trustee is located are authorized
by law or executive order to close that will result in the payment of interest on the Bonds and
the'Note at rates not in excess of the maximum rates allowable under the law of the State. ,
(b) In addition to the redemption requirements of Subsection (a) above, the Original
Bonds shall be redeemed prior to maturity in whole or in part, as provided in Subsection (c)
below, upon a final determination by the Internal Revenue Service or a court of competent
jurisdiction that (not due to the occurrence of an Event of Taxability) the interest payable
on the Original Bonds, or any of them, is includable for federal income tax purposes in the gross
income of any holder of such Original Bond (other than a holder who is a "substantial user" of
the Project or a "related person" within the meaning of Section 103(b) (9) of the Code and the
applicable regulations thereunder) . Redemption under this Subsection shall be at a redemption
price equal to the principal amount thereof and the interest accrued thereon to the redemption
date (and, if the redemption date is other than an interest payment date, interest shall be
calculated on the basis of a 360 -day year) and may occur at any time, on a date selected
by the .User, not more than 120 days after receipt by the Leser of notice of the final determination
described above; provided, however, that if redemption of the Bonds within the redemption
period specified above would result in the payment of interest on the Bonds or interest on the
Note (including interest on the Note pursuant to Section 4.1 of the Agreement together with
any other costs that constitute interest under the law of the State which are contracted for,
13
charged or received pursuant to the Agreement) at a rate in excess of the maximum rate allow-
able under the law of the State, then, notwithstanding the foregoing, the date on which the
redemption shall occur and the redemption price shall become due and payable shall be delayed
until the earliest business day not a Sunday or a legal holiday or a day upon which banking
institutions in the city where the principal corporate trust office of the Trustee is located are
authorized by law or executive order to close that will result in the payment of interest on the
Bonds and interest on the Note at rates not in excess of the maximum rates allowable under
the law of the State.
(c) Upon the occurrence of a Determination of Taxability within the meaning of Sub-
section (a) above or a final determination within the meaning of Subsection (b) above, the
User shall promptly give the Trustee written notice thereof and the Original Bonds shall be
redeemed in whole unless redemption of a portion of the Original Bonds outstanding would have
the result that interest payable on the Original Bonds remaining outstanding after such redemp-
tion would not be includable in the gross income of any holder of an Original Bond (other than
a holder who is a "substantial user" of the Project or a "related person" within the meaning
of Section 103(b) (9) of the Code, and the applicable regulations thereunder). In such event,
the Original Bonds shall be redeemed from time to time in inverse numerical order in such
amount as is deemed necessary in the opinion of a nationally recognized bond counsel to
accomplish that result.
Section 403. Redemption Requests. Redemptions of Original Bonds permitted or required
by this Article IV shall be made as follows, and the Trustee shall give the notice of redemption
referred to in Section 404 of this Indenture in respect to each such redemption:
(a) Redemption shall be made pursuant to Section 401 of this Indenture at such
times and in such principal amounts as the User shall, not later than 30 days prior to
the date on which any Original Bonds are to be redeemed pursuant to such Section 401,
state in a written notification to the Trustee.
(b) Redemptions shall be made pursuant to Subsection 402(a) of this Indenture
in the amount and on the date selected pursuant to said Subsection 402 (a) and the
Trustee shall deliver a written notification of such selections to the User and the Corpora-
tion as soon as practicable after the date on which the Trustee receives written notice
that such Determination of Taxability shall have occurred; and redemption shall be made
pursuant to Subsection 402(b) of this Indenture on the date selected by the.User pursuant
to said Subsection 402 (b).
Section 404. Notice of Redemption. Except as provided below, notice of each redemption
identifying the coupon Original Bonds to be redeemed shall be given by the Trustee in the
name of the Corporation (a) by publication at least once not less than 30 days prior to
the redemption date in a newspaper of general circulation in the State, which carries finan-
cial news and is customarily published on each business day, and (b) by first class mail,
postage prepaid, not less than 30 days prior to the redemption date, to each holder of an
Original Bond registered as to principal to be redeemed, addressed to such holder at its address
appearing on the register maintained by the Trustee, and to those Bondholders on the list
required to be kept by the Trustee pursuant to Section 705 of this Indenture whose Bonds are
to be redeemed. If, because of the temporary or permanent suspension of the newspaper or for
any other reason, it is impossible or impractical to publish such notice in the manner provided
in clause (a) above, then such publication in lieu thereof as shall be deemed appropriate by the
Trustee shall constitute a sufficient publication of notice. If notice is published as aforesaid,.
neither the failure to give notice by mail as provided in clause (b) above, nor defect in any
14
notice so mailed, shall affect the validity of any proceedings for the redemption of any of the
Original Bonds.
If all of the Original Bonds to be redeemed are at the time registered as to principal, notice
of the call for redemption may be given by mailing a copy of the redemption notice by registered
or certified mail at least 30 days prior to the date fixed for redemption to the holder or holders
thereof at the address shown in the registration books kept by the Trustee and publication of
the notice of the call for redemption need not be given; provided, however, that failure to give
such notice to any Original Bondholder by mailing, or any defect in such notice so mailed, shall
not affect the validity of the proceedings for the redemption of any of the other Original Bonds.
Notice having been so given, the Original Bonds designated for redemption shall on the
redemption date specified in such notice become due and payable at the redemption price
herein provided, and from and after the redemption date (unless there shall be default in the
payment of the redemption price) interest on such Bonds, called for redemption, shall cease
to accrue, and upon presentation and surrender of such Bonds at the principal corporate trust
office of the Trustee, together with all coupons thereto appertaining maturing after said redemp-
tion date, such Original Bonds shall be paid at the redemption price aforesaid, except that
interest called for by coupons, if any, which shall mature on or before said redemption date
shall be paid only upon presentation and surrender of such coupons.
The Trustee shall give the notice of redemption provided in this Section 404 even though,
as of the date of giving of such notice, sufficient amounts for such redemption are not in the
Debt Service Fund. However, prior to or on any redemption date, the User shall deposit with
the Trustee an amount of money sufficient, together with any other amounts in the Debt
Service Fund and available for the purpose, to pay the redemption price of all the Original
Bonds which are to be redeemed on that date.
16
ARTICLE V
CONSTRUCTION FUND
Section 501. Establishment of the Construction Fund. The proceeds of the sale of the
Original Bonds (other than the amount received as accrued interest on such Original Bonds
to the date of their delivery to the original purchaser thereof) shall forthwith upon receipt be
deposited in an escrow trust fund designated as the "Lubbock Industrial Development Cor-
poration Industrial Development Revenue Bonds, Series 1981 (Magnolia Seed Company of
Lubbock Project) Construction Fund." Such fund is hereby established by the Corporation
with the Trustee and is herein called the "Construction Fund."
Section 502. Disbursement of the Construction Fund. The Trustee shall apply the moneys
in the Construction Fund attributable to the proceeds of the sale of the Original Bonds for
the purposes and in the order specified in Section 3.3 of the Agreement•
The proceeds of the sale of a series of Additional Bonds shall be disbursed for the pur-
poses and at the times specified in the supplements to this Indenture under which such series
was issued.
Disbursements from the Construction Fund shall be made only as provided herein and in
the Agreement, in particular Section 3.5 of the Agreement, and notice of all such disburse-
ments shall be given promptly thereafter to the corporation and the User by the Trustee.
Section 503. Investment of the Construction Fund. In the Agreement, the Corporation has
authorized the User to provide instructions to the Trustee as to the investment and reinvestment
of money held as a part of the Construction Fund. Pending payment of the amounts in
the Construction Fund, the Trustee is hereby directed to invest and reinvest the undisbursed
portion of the Construction Fund promptly upon receipt of, and in accordance with, the written
instructions of the User. Subject to the next paragraph of this Section 503, such investments
shall be made by the Trustee, if and to the extent provided by law, in Eligible Securities which
shall mature or be redeemable at the option of the Trustee in such amounts and at such times,
or shall be readily marketable prior to their maturities, so that payments from the Construction
Fund may be made as provided in this Article V. All income or other gain (net of losses) from
the investments shall, unless the User shall otherwise direct, be retained in and be credited
to the Construction Fund; provided that, at the direction of the User, such income or gain
shall become a part of and shall be credited to the Debt Service Fund, and any loss (net of
gains) shall be charged to such Construction Fund. As and "when any amounts invested as
aforesaid may be needed for disbursement from the Construction Fund, the Trustee shall
cause a sufficient amount of such investments to be sold and converted into cash to the credit
of the Construction Fund. The Trustee shall not be liable for any loss from any investments
made pursuant to the written instructions of the User.
The User by its execution of the Agreement covenants to restrict the investment of
money in the Construction Fund realized either from the proceeds of the Bonds or investment
earnings therefrom in such manner and to such extent, if any, as may be necessary, after taking
into account reasonable expectations at the time the Bonds are delivered to their original
purchaser, so that they will not constitute arbitrage bonds under Section 103(c) of the Code
and the regulations prescribed under that section.
Section 504. Disposition of Proceeds in Construction Fund Upon Acceleration of Bonds.
Upon the declaration of acceleration of the maturity of the principal amount of the Bonds
pursuant to Section 902 hereof, any money then on deposit in the Construction Fund shall
forthwith be transferred from the Construction Fund to the Debt Service Fund without the
necessity of complying with the provisions of Section 3.5 of the Agreement.
16
ARTICLE VI
DEBT SERVICE FUND
Section 601. Establishment of the Debt Service Fund. The Corporation hereby establishes
with the Trustee pursuant to the provisions of .the Agreement a special fund designated as the
"Lubbock Industrial Development Corporation Industrial Development Revenue Bonds, Series
1981 (Magnolia Seed Company of Lubbock Project) Debt Service Fund". Such fund is
referred to in this Indenture as the "Debt Service Fund".
. There shall be paid into the Debt Service Fund (a) the interest accrued on the Bonds to
the date of their delivery, (b) the amounts required to be paid to the Trustee for deposit therein
out of the Construction Fund in accordance with the provisions hereof and of the Agreement,
and (c) any other amounts provided to be paid to the Trustee for deposit in the Debt Service
Fund.
Amounts paid into the Debt Service Fund together with all income or other gain (net of
losses) from any investment of any amounts in the Debt Service Fund shall, unless the User
shall otherwise direct; become a part of and be credited to the Debt Service Fund; provided
that, at the direction of the User, such income or gain shall be transferred to and credited
to the Construction Fund. The amounts in the Debt Service Fund shall be used for the
purposes authorized in this Article VI only. Subject to the provisions of Section 308 of this
Indenture, the Corporation hereby covenants and agrees that (until all of the Bonds and
coupons shall be deemed to have been paid within the meaning of Section 801 of this Indenture)
it will deposit, or cause to be deposited, in the Debt Service Fund sufficient sums promptly
to meet and pay the principal of and interest and premium, if any, on the Bonds as the same
become due, mature or otherwise become payable in accordance with the terms of this Indenture.
Section 602. Disbursement of the Debt Service Fund. Except as otherwise provided in
this Section 602 and elsewhere in this Indenture, the amounts in the Debt Service Fund shall
be used solely for the payment of the interest and premium, if any, coming due and principal
maturing or otherwise becoming payable on the Bonds as and when the same shall become
due, mature or otherwise become payable in accordance with the provisions of this Indenture.
Notwithstanding anything in this Indenture or the Agreement to the contrary, in no event shall
Original Proceeds be used to pay interest on the Bonds for more than one year after the
Completion Date.
To the extent that any amounts of Original Proceeds are deposited in the Debt Service
Fund pursuant to clauses (d) and (e) of Section 3.3 of the Agreement (other than as
provided in Section 2.3 of the Agreement for any excess above Qualifying Costs and the
Insubstantial Amount) such amounts shall be placed in escrow in a separate account in the
Debt Service Fund to be used solely for the purpose of paying the principal of all or part of
the Original Bonds on the next succeeding redemption date; provided, however, that the amount
so placed in escrow may be used in purchasing Original Bonds for the purpose of cancellation
*at prices not exceeding the lesser of par value or their then fair market value (provided that,
notwithstanding the foregoing, Original Bonds may be- purchased at a premium, if the User
pays the premium out of its separate funds and that in the event of such purchase, accrued
interest on such Original Bonds to the date of their delivery for cancellation shall also be paid
by the User out of its separate funds) if a nationally recognized bond counsel shall have
rendered an opinion to the Corporation and the Trustee to the effect that such use will not
affect the exemption from federal income taxation of the interest paid on any outstanding
Original Bonds; and provided further, that the amount so placed in escrow shall not be
invested to produce a yield greater than the yield on the Original Bonds.
If the User exercises its option to accelerate payment of the Loan Payments pursuant to
Section 7.2 of the Agreement or is required to accelerate the payment of all or a portion of
the Loan Payments pursuant to Section 7.1 of the Agreement, the amounts deposited by the
User in the Debt Service Fund upon such acceleration shall be used to redeem the Bonds called
for redemption in accordance with this Indenture.
If so specified in writing by the User to the Trustee, and if the amounts in the Debt Service
Fund shall not be sufficient to redeem the Bonds which are to be redeemed, amounts representing
advance payments of Loan Payments shall be used by the Trustee as promptly as practicable
to purchase Bonds in such manner (through brokers or otherwise and with or without receiving
tenders) and at such prices as the Trustee (with the approval of the User) shall determine,
but any such amounts which were paid after, or have not been so used by the date which shall
be 45 days before, the next interest payment date on any Bonds, shall regardless of any
specification by the User, be held for any permitted use of the Debt Service Fund.
If so requested in writing by the User to the Trustee, and if there shall be in the Debt
Service Fund amounts which shall not be expected to be required for the payment of interest
and premium, if any, coming due and principal maturing or otherwise becoming payable on
the Bonds within the next ensuing six months, such amounts or such portion thereof as the
User may request shall be used to redeem Bonds on the next date on which Bonds may be
redeemed in accordance with the provisions of this Indenture.
Unless paid from the Debt Service Fund pursuant to Section 1208 of this Indenture, after
all of the Bonds have been retired and all interest and applicable premiums, if any, due thereon
have been paid or provision for such retirement and payment has been made, and all compensa-
tion and expenses payable to the Trustee and any Co -Paying Agent have been paid or provision
for such payment has been made, any excess moneys in the Debt Service Fund shall be paid to
the User as a rebate of the Loan Payments.
Section 603. Investment of the Debt Service Fund. In the Agreement, the Corporation
authorized the User to provide instructions to the Trustee as to the investment and reinvestment
of money held as a part of the Debt Service Fund. Pending payment of the amounts in the Debt
Service Fund, the Trustee is hereby directed to invest and reinvest the undisbursed portion of
the Debt Service Fund promptly upon receipt of, and in accordance with, the written instruc-
tions of the User. Subject to the next paragraph of this Section 603, such investments shall be
made by the Trustee, if and to the extent permitted by law, in Eligible Securities. As and when
any amounts thus invested may be needed for disbursements from the Debt Service Fund, the
Trustee shall cause a sufficient amount of such investments to be sold or otherwise reduced to
cash to the credit of such Fund. The Trustee shall not be liable for any loss from any investments
made pursuant to the written instructions of the User.
The User by its execution of the Agreement covenants to restrict the investment of moneys
in the Debt Service Fund realized either from the proceeds of the Bonds or investment earnings
therefrom in such manner and to such extent, if any, as may be necessary, after taking into
account reasonable expectations at the time the Bonds are delivered to their original purchaser,
so that they will not constitute arbitrage bonds under Section 103 (c) of the Code and the
regulations prescribed under that section.
Section 604. Moneys to be Held in Trust. All moneys required to be deposited with or paid
to the Trustee for the account of the Debt Service Fund under any provision of this Indenture
shall be held in trust for the benefit of the holders of the Bonds but, except as provided in
Section 307, 602 or 802 of this Indenture, need not be segregated from other funds held in trust
under this Indenture by the Trustee, but shall be segregated at all times from all funds of the
Corporation or the Trustee not held by the Trustee under this Indenture.
Section 605. Condemnation and Insurance Proceeds. Reference is hereby made to the
Agreement wherein it is provided that amounts equal to the net proceeds of certain insurance
or condemnation awards are to be paid to the Trustee and deposited in the Debt Service Fund
in instances in which restoration is not effected.
1S
ARTICLE VII
GENERAL COVENANTS AND PROVISIONS
Section 701. Payments of Principal, Premium, if any, and Interest. Subject to the provisions
of Section 308 of this Indenture, the Corporation covenants that it will duly and punctually pay
the interest and premium, if any, coming due and the principal maturing or otherwise becoming
payable on the Bonds on the dates and in the manner provided in this Indenture and in the
Bonds and in the coupons appertaining thereto according to the true intent and meaning. thereof.
Section 702. Performance of Covenants; Authority. The Corporation covenants that it will
faithfully perform at all times all covenants, undertakings, stipulations and provisions contained
in this Indenture, in the Bonds executed, authenticated and delivered hereunder and in all
proceedings pertaining thereto. The Corporation covenants and warrants that it is duly authorized
under the Constitution of the State and the laws thereof, including particularly the Act, to
issue the Bonds and to execute this Indenture and to pledge the revenues from the Agreement
and the Note in the manner and to the extent herein set forth; that none of the revenues derived
from or in connection with the Agreement or the Note are pledged or assigned in any manner
other than as contemplated by this Indenture; that all action required on its part for the
issuance of the Bonds and the execution and delivery of this Indenture and the Agreement has
been duly and effectively taken and that the Bonds in the hands of the holders thereof are and
will be valid and enforceable limited obligations of, the Corporation.
The Corporation shall faithfully and punctually perform and observe all duties and
obligations of the Corporation with respect to the Project required by the Constitution of the
State and the laws thereof, including particularly the Act, and by this Indenture and will use
its best efforts to cause sufficient revenues to be collected under the Agreement or the Note to
meet the requirements of this Indenture and will segregate and apply such revenues, or cause
the same to be segregated and applied, as herein provided.
The Corporation covenants that, should there be a defauIt ' under the Agreement, the
Corporation shall fully cooperate with the Trustee and with the holders of the Bonds and the
coupons appertaining thereto to the end of fully protecting the rights and security of the holders
of the Bonds and the bearers of any coupons appertaining thereto.
The Corporation represents that it now has complete and lawful authority and privilege
to finance the acquisition and construction of the Project by making a loan to the User and
covenants that it will at all times maintain its corporate existence.
Section 703. Instruments of Further Assurance; Recording. The Corporation covenants
that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged
and delivered, such indentures supplemental hereto and such further acts, instruments and
transfers as the Trustee may reasonably require for the better assigning, pledging and confirming
unto the Trustee of the Trust Estate assigned and the revenues pledged hereunder.
The Corporation covenants that (a) upon the execution and delivery of this Indenture and
thereafter, from time to time, it shall cause the Agreement, this Indenture, the Mortgage and
each amendment and supplement to each of such instruments (or a memorandum with respect
to such instrument, amendment or supplement) to be filed, registered and recorded and to be
refiled, reregistered and rerecorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully to protect the lien of this
Indenture upon the Trust Estate and the lien of the Mortgage upon the Project and to publish
notice of and protect the validity of the Agreement and (b) it shall perform or cause to be
performed from time to time any other act as required by law, and it will execute or cause to
be executed any and all instruments of further assurance that may be necessary for such
publication and protection.
19
Section 704. Inspection of Books. The Corporation covenants and agrees that all books
and documents in its possession relating to the Project and the revenues derived from or in
connection with the Agreement shall at all times be open to inspection by such accountants
or other agencies as the Trustee may from time to time designate. So long as any of the Bonds
are outstanding, proper books of record and account shall be kept by the Trustee separate and
apart from all other records and accounts, showing all transactions relating to the loan to the
User carried on by the Trustee hereunder and under the Agreement, and the Corporation, the
User and the Guarantor shall have the right at all reasonable times to inspect all such records
and accounts and data relating thereto.
Section 705. List of Bondholders. To the extent that such information shall have been
furnished to the Trustee in accordance with the next sentence, there shall be kept on file at
the principal corporate trust office of the Trustee a list of names and addresses of the last known
holders of all Bonds payable to bearer. Any Bondholder may request that his name and address
be placed on said list by filing a written request with the Trustee, which request may include
a statement of the principal amount of Bonds held by such holder and the serial numbers of
such Bonds. The Trustee shall be under no responsibility with respect to the accuracy of said
list.
Section 706. Rights Under the Note, the Agreement, this Indenture, the Guaranty, the
Mortgage and the Collateral Assignment. The Note, the Agreement and the Mortgage set forth
the covenants and obligations of the User. The Agreement, this Indenture and the Collateral
Assignment set forth the covenants and obligations of the Corporation. The Guaranty sets
forth the covenants and obligations of the Guarantor. Reference is hereby made to the Note,
the Agreement, Guaranty, the Collateral Assignment and the Mortgage for a detailed statement
of said respective covenants and obligations of the Corporation, the User and the Guarantor.
So long as any of the Bonds are outstanding, the Corporation shall faithfully and punctually
perform and observe all obligations and undertakings on its part to be performed or observed
under the Agreement, this Indenture and the Collateral Assignment and shall preserve and
enforce all the terms and provisions of the Note, the Agreement and the Mortgage. Except as
provided in the Agreement and this Indenture, the Corporation shall not permit or authorize
any change or variation in the terms of the Note, the Agreement or the Mortgage without the
prior written consent of the Trustee, and any modification or amendment of the terms of the
Note, the Agreement or the Mortgage which in any manner materially adversely affects the
rights of the holders of any of the Bonds or coupons, shall be made only as provided in
Article XI.
To the extent that it is within its power to do so, the Corporation will, at all times, maintain
the validity and effectiveness of the Note, the Agreement, the Mortgage and the Guaranty and
of the pledge and assignment to the Trustee of the Note and the Agreement made by this
Indenture and the Collateral Assignment and (except as expressly permitted by the Agreement
or this Indenture) will take no action, will permit no action to be taken by others and will
not omit to take any action, which action or omission will release the User from its obligations
or liabilities under the Note, the Agreement or the Mortgage or result in the surrender, termina-
tion, amendment or modification of, or impair the validity of, the Note, the Agreement or the
Mortgage. The Corporation agrees that the Trustee, subject to the conditions thereof, may enforce
for and on behalf of the holders of the Bonds and coupons appertaining thereto all of the coven-
ants and agreements of the Corporation and the User as set forth in the Note, the Agreement and
the Mortgage whether or not the Corporation is ;-n default hereunder or under the Agreement, the
Mortgage or the Collateral Assignment. The Corporation further covenants that prior to commenc.
ing any action or proceeding for the enforcement of the User's obligations under the Note, the
Agreement or the Mortgage, the Corporation shall inform the Trustee and the Trustee shall have
the right to join in, and if it elects, to control, such action or proceeding for and on behalf of the
holders of the Bonds and the coupons appertaining thereto. The revenues derived under the Note
and the Agreement or any other agreement which are required to be paid into the Debt Service
20
L
Fund, shall be paid directly to the Trustee for deposit into the Debt Service Fund, or otherwise
dealt with as provided in the Note and the Agreement or such other agreement and shall be
set apart from all other funds of the Corporation.
Section 707. Subordination to the Rights of the User. The Trustee agrees that the User
may have and exercise all the rights, powers and benefits stated to be in the User in the Agree-
ment and in this Indenture (including, without limitation, its rights under Sections 603 and
603).
Section 708. Certificate as to Events of Default; Recording Opinion. So long as any Bonds
are outstanding, upon request of the Trustee (which the Trustee shall have no obligation to
make), the Corporation shall, at the expense of the User, furnish to the Trustee (a) a certifi-
cate of an officer of the Corporation to the effect that in the course of his duties as such
officer he has not become aware of any condition or event which constitutes or which, after
notice or lapse of time, or both, would constitute an event of default which has not been
cured by the date of such certificate or, if such officer has become aware of such an event or
condition, specifying the nature thereof, and (b) an opinion of counsel, who may be counsel
for the User, to the effect that all filing, registration, recording, refiling, reregistration and
rerecording required pursuant to Section 703 of this Indenture has been duly accomplished
pursuant to said Section 703 and setting forth the facts with respect thereto as specified
in any previous opinion delivered to the Trustee pursuant to this Section 708.
Section 709. Negative Covenants. Except as permitted or contemplated by Article II or
Section 710 of this Indenture or the provisions of the Agreement, the Corporation shall not:
(a) create, assume or suffer to exist directly or indirectly, any mortgage, lien, encum-
brance, pledge, charge or other exception to title upon or against any of the properties or
assets constituting the Trust Estate, or any funds payable to the Trustee or held by the
Trustee for the benefit of the holders of the Bonds or the coupons appertaining thereto;
(b) sell, lease, transfer, convey or otherwise dispose of all or any part of the Trust
Estate or its interest therein;
(c) create, incur, assume or suffer to exist any debt secured by the Trust. Estate or
the Corporation's interest therein or the revenues pledged herein that are derived or to be
derived from or in connection with the Agreement;
(d) take any other action that will impair the lien of this Indenture on the Trdt
Estate; or
(e) issue or permit to be issued any Bonds in any manner other than in accordance
with the provisions of this Indenture.
The Corporation further covenants that it will not knowingly take any action which will
adversely affect any exemption from federal income taxation of the interest on the Bonds,
and if it should take any such action will promptly on having knowledge thereof take all
lawful actions which it can take to rescind and nullify such action.
Section 710. Refunding. Pursuant to Section 3.2 of the Agreement and the provisions of
Article II of this Indenture and at the request of the User, with the consent of the Corporation
and in the manner and to the extent then permitted by law, any Bonds may be retired through
the issuance by the Corporation of its refunding bonds in an amount sufficient with other
moneys available and pledged for such purpose and earnings on both to retire the principal of
the Bonds to be so retired, any unpaid interest thereon and any premiums and commissions
21
(and all other expenses of retirement and issuance) necessary to be paid in connection
therewith. Any such refunding may be effected whether the Bonds to be retired shall have
matured or shall thereafter mature, either by sale of the refunding bonds and the application
of the proceeds thereof for the payment of the Bonds to be retired thereby, or by exchange of
the refunding bonds for the Bonds to be retired thereby; provided, however, that in any such
refunding, no holder of Bonds shall without his consent (a) be required to surrender his Bonds
in exchange for any refunding bond or bonds, (b) be deprived of the right of such holder to
receive payment of the principal of and interest and applicable premium, if any, on the Bonds
held by such holder as and when the same become due and payable in accordance with the
provisions of this Indenture, or (c) otherwise be deprived of any right under this Indenture,
the Note, the Agreement, the Mortgage or the Guaranty (except in accordance with the
provisions thereof and of this Indenture relating to modification or amendment of their
respective terms). In connection with any such refunding, there shall be made any amendments
to this Indenture, the Agreement, the Mortgage, the Collateral Assignment and the Guaranty
necessary to reflect the issuance of such refunding bonds (but only in accordance with the same
provisions thereof and of this Indenture relating to such amendment) and there shall be a
creation and issuance of a new note on behalf of the User (which may, in part, renew, rearrange
and extend the Note). The costs and expenses of such refunding shall be paid from the proceeds
of the refunding bonds and if there are not sufficient proceeds available for such purpose the
deficiency shall be borne by the User.
Section 711. Concerning the Trust Estate. Except for the security interest and liens in
favor of the Trustee, the Corporation owns (and at the time of transfer or delivery of the
Trust Estate to the Trustee will own) good and indefeasible title to the Trust Estate (including
without limitation the Note and the indebtedness evidenced hereby) free and clear of any other
security interests, liens, adverse claims or options; the Corporation has (and at the time of
transfer or delivery of the Trust Estate to the Trustee will have) full right, power and authority
to convey, assign, transfer and deliver the Trust Estate and to grant a security interest in
or a lien upon the Trust Estate to the Trustee in the manner provided herein and in the
Collateral Assignment, free and clear of any other security interests, liens, adverse claims and
options; no security interest or lien has been created by the Corporation or is known by the
Corporation to exist with respect to the Trust Estate; and, to the best of the Corporation's
information and belief, no financing statement or other security instrument is on file in any
jurisdiction covering the Trust Estate. The Corporation will not pledge, mortgage, otherwise
encumber, create or suffer a security interest to exist in, the Trust Estate (other than in favor
of the Trustee) or sell, assign or otherwise transfer any part of the Trust Estate, to or in
favor of anyone other than the Trustee, and the Corporation will not file or permit to be filed
any financing statement or other security instrument with respect to the Trust Estate other
than in favor of the Trustee.
22
ARTICLE VIII
DISCHARGE
Section 801. Discharge. When all of the Bonds and coupons shall have been deemed to
have been paid, and provision shall also be made for paying all other sums payable hereunder,
and if, at the time of such payment, the Corporation shall have kept, performed and observed -
all and singular the covenants and promises in the Bonds and in this Indenture required or
contemplated to be kept, performed and observed by it or on its part on or prior to that time,
then this Indenture and the lien created hereby shall be discharged and satisfied and the
Corporation shall be released from the covenants, agreements and obligations of the Corporation
contained in this Indenture. Upon such discharge and satisfaction, the Trustee, at the request
and the expense of the User, shall execute such documents as may be reasonably requested
by the User to evidence the discharge and satisfaction of this Indenture and the release of the
Corporation from its obligations hereunder.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the
Corporation to the Trustee under Section 1001(b) of this Indenture shall survive and the
Trustee shall (i) continue to be obligated to hold in trust any moneys or investments held by
the Trustee at the time of such satisfaction or discharge for the payment of the principal of and
premium, if any, and interest on the Bonds, to pay to the holders of Bonds and coupons the
funds so held by the Trustee as and when such payment becomes due, and to pay over to the
User any amounts required to be paid in accordance with Sections 602, 802 and 1208 of this
Indenture, and (ii) so long as Bonds shall not have matured in accordance with their terms,
upon redemption or otherwise, be entitled to exercise the rights and remedies contemplated
by this Indenture and the Agreement in respect of the provisions of the Agreement which, as
provided in Section 11.7 of the Agreement, survive the expiration of the term of the Agreement
or otherwise continue until all of the Bonds have matured.
Section 802. Payment of Bonds and Coupons. All of the Bonds and coupons shall be
deemed to have been paid within the meaning of the first paragraph of Section 801 of this
Indenture if there have been delivered to the Trustee for cancellation all of the Bonds and cou-
pons issued hereunder (other than any Bonds or coupons which shall have been previously
cancelled or delivered to the Trustee for cancellation or Bonds or coupons in exchange for or
in lieu of which other Bonds or coupons have been issued hereunder). All of the Bonds and
coupons shall also be deemed to have been paid within the meaning of said Section 801 if (a)
there shall have been deposited with the Trustee either (i) moneys in an amount, or (ii)
Government Obligations, the principal of and interest on which will, when due or redeemable
at the option of the holder, without further investment or reinvestment of either the principal
amount thereof or the interest earnings thereon, provide moneys in an amount, which, together
with the moneys (if any) deposited with or held by the Trustee or a Co -Paying Agent at
the same time and available for such purpose pursuant to this Indenture, shall be sufficient to
pay when due the principal of and premium, if any, and interest due and to become due on
and prior to the respective redemption dates or maturity dates on all of the Bonds and coupons
issued hereunder (other than Bonds and coupons which have been cancelled or delivered to the
Trustee for cancellation or Bonds and coupons in exchange for or in lieu of which other Bonds
or coupons have been issued hereunder), or (iii) a combination of (i) and (ii), and (b) in case
any of such Bonds are to be redeemed on any date prior to their maturity, the User shall
have given to the Trustee an irrevocable notice pursuant to the applicable subsection of Section
403 of this Indenture requiring redemption of such Bonds on said date and the Corporation
shall have given to the Trustee in form satisfactory to the Trustee irrevocable instructions to
publish notice of redemption of such Bonds prior to said date as provided in Section 404 of this
Indenture, and (c) in the event such Bonds are not to be redeemed within the 60 days nest
23
succeeding the date of such deposit with the Trustee, the Corporation shall have given the
Trustee in form satisfactory to it irrevocable instructions to publish, as soon as practicable, once
in each of two successive calendar weeks in a financial journal published in the State of Texas,
a notice to the holders of the Bonds and coupons appertaining thereto that the deposit required
by clause (a) of this Section 802 above has been made with the Trustee and that said Bonds
and coupons are deemed to have been paid in accordance with this Article VIII and stating
such maturity or redemption date or dates upon which moneys are to be available for the
payment of the principal of, premium, if any, and interest on such Bonds.
Any Government Obligations deposited with the Trustee pursuant to this Section 802
shall mature or be redeemable at the option of the holder on such dates as shall coincide as
nearly as practicable, but not later than, the time or times at which the moneys provided upon
such maturity will be required for the aforesaid purpose. Such Government Obligations shall
not contain provisions permitting the redemption thereof at the option of the issuer.
Government Obligations and moneys deposited with the Trustee pursuant to this Article
VIII and the principal or interest payments on any such Government Obligations shall be held
by the Trustee in trust in a special segregated fund and shall not be withdrawn or used for any
purpose other than the payment of the principal of and premium, if any, and interest on the
Bonds. However, after the whole amount of the principal of and premium, if any, and interest
on all the Bonds has been completely paid in full, and all other payments required pursuant
to the Agreement and this Indenture have been made, any income earned by the Government
Obligations in excess of the amount required for the purpose of such payment of principal and
premium and interest shall be promptly paid to the User as a rebate of the Loan Payments.
24
ARTICLE IX
DEFAULT AND REm. EDIES
Section 901. Events of Default. Wherever used herein, "event of default" means any one
of the following events (whatever the reason for such event of default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any administrative or govern-
mental body)
(a) payment of any installment of interest upon any Bond shall not be made when it
becomes due and payable and such nonpayment continues for a period of two (2) business.
days; or
(b) payment of the principal of (or premium, if any, on) any Bond shall not be made
at the stated maturity thereof or the date of redemption thereof or upon the maturity
thereof by declaration of acceleration and such nonpayment continues for a period of two (2)
business days; or
(c) default (other than a default provided for in subsections (a) or (b) of this
Section 901) in the due and punctual observance and performance of any covenant, term,
condition or agreement of the Corporation contained in this Indenture, the Bonds or the
Collateral Assignment shall have occurred and such default shall have continued for a
period of 30 days after there has been given, by certified mail (or another method satisfactory
to and selected by the Trustee if such is not available), to the Corporation and the User
by the Trustee or to the Corporation and the User and the Trustee by the holders of at
least 51% in principal amount of the outstanding Bonds, a written notice specifying such
default and requiring it to be remedied, and the Corporation and the Trustee shall not have
agreed in writing to an extension of such 30 day period prior to its expiration; provided,
however, that if the default stated in the notice cannot be corrected within the applicable
period, such time shall be extended if corrective action is instituted within the applicable
period and so long as such action is diligently pursued until the default is corrected; or
(d) default (other than default under subsection (a) or (b) of this Section 901 or
a default in the observance and performance of any covenant, condition or agreement
contained in Section 8.1 of the Agreement) in the due and punctual observance and
performance of any covenant, condition or agreement of the User contained in the Agree-
ment or the Mortgage or of the Guarantor contained in the Guaranty shall have occurred, and
such default shall have continued for a period of 30 days after there has been given, by certi-
fied mail, to the Corporation, the User and the Guarantor by the Trustee, or to the Corpora-
tion, the User, the Guarantor and the Trustee by the holders of not less than 51% in principal
amount of the outstanding Bonds, a written notice specifying such default and requiring
the same to be remedied and the Corporation and the Trustee shall not have agreed in
writing to an extension of such 30 day period prior to its expiration; provided, however, that
if the default stated in the notice cannot be corrected within the applicable period,
such time shall be extended if corrective action is instituted by the User or the Guarantor,
as the case may be, within the applicable period and so long as such action is diligently
pursued until the default is corrected; or
(e) an order of relief shall be issued by the Bankruptcy Court of the United States
District Court having valid jurisdiction, granting the User or the Guarantor relief under the
provisions of the Bankruptcy Reform Act of 1978, as amended, or any other court having
valid jurisdiction shall issue an order or decree under applicable federal or state law providing
for the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the User or the Guarantor or of any substantial part of its property, or ordering
the winding up or liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of sixty (60) consecutive days; or
25
t
(f) the User or the Guarantor shall have consented to the institution of proceedings in
bankruptcy against it, or the User or the Guarantor shall have consented to the institution
of any proceeding against it under any federal or state insolvency laws, or the User or the
Guarantor shall have consented to the filing of any petition, application or complaint
seeking the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the User or the Guarantor, as the case may be, or of any substantial
part of its property, or the User or the Guarantor shall have made an assignment for the
benefit of creditors, or the User or the Guarantor shall generally not pay its debts as they
become due; or
(g) The occurrence of one or more of the events specified in subsections (d), (f) and
(g) of Section 10.1 of the Agreement.
If the Corporation is prevented by reason of force majeure from avoiding default under
subsection (c) above and it gives notice and full particulars of such force majeure in writing to
the Trustee and the User, then the obligations of the Corporation under this Indenture and the
Collateral Assignment which are the subject of the force majeure shall be suspended during the
continuance of the inability then claimed including a reasonable time for removal of the effect
thereof. The term "force majeure" shall mean acts of God, strikes, lockouts or other industrial
disturbances, acts of the public enemy, orders of any kind of the Government of the United
States, or of any State thereof, or any civil or military authority, insurrections, riots, epidemics,
landslides, lightning, earthquakes, fires, hurricanes, tornadoes, storms, floods, washouts, droughts,
arrests, restraining of government and people, civil disturbances, explosions, breakage or accidents
to machinery, transmission pipes or canals, partial or entire failure of utilities, shortage of
labor, material, supplies or transportation, or any other cause not reasonably within the control
of the party claiming such inability. The requirement that any force majeure shall be reasonably
beyond the control of the Corporation shall be deemed to be fulfilled even though the existing or
impending strike, lockout or other disturbance may not be settled but could have been settled
by acceding to the demand of the opposing person or persons. The occurrence of any event of
force majeure shall not suspend or otherwise abate, and the Corporation shall not be relieved
from, its obligation under this Indenture to make the payments of principal, interest and
premium, if any, required to be made by it under this Indenture.
If any portion of the Loan Payments payable under Section 4.1 of the Agreement shall
not be paid at the time therein specified, then if any of the portion not paid is attributable to
payment of principal of (or premium, if any, on) any Bond whether at maturity, redemption
or acceleration) the Trustee shall promptly give telephonic or personal notice of such failure
to the Chairman of the Board, the President, a Vice President, the Treasurer or an Assistant
Treasurer of the User and of the Guarantor and shall immediately thereafter confirm such notice
by telegram or by a letter personally delivered to the Corporation, the User and the Guarantor;
or if any of the portion not paid is attributable to interest on the Bonds,. then the Trustee within.
72 hours of the failure to pay such portion shall give notice of such failure to the User and the
Guarantor.
Section 902. Acceleration. If an event of .default shall have occurred and be continuing,
the Trustee may, and upon the written request of the holders of not less than 51% in aggregate
principal amount of the Bonds then outstanding shall, by notice in writing to the Corporation,
the User and the Guarantor (which notice, in all cases other than an event of default of the
character specified in clause (a), (b), (e), (f) or (g) of Section 901 of this Indenture, shall
have been received by the User at least five business days prior to the date the acceleration is
to become effective), declare the principal of all Bonds then outstanding and the interest accrued
thereon immediately due and payable. On the fifth business day after such notice is received by
the User in the case of an event of default under clause (c) or (d) of Section 901 of this
Indenture, and on the day on which such notice is given by the Trustee in the case of an event
26
if
of default under clause (a), (b), (e), (f) or (g) of Section 901 of this Indenture, and subject
to the provisions of Section 912 of this Indenture such principal and interest shall become due
and payable.
Section 903. Other Remedies. If an event of default shall have occurred and be continuing,
the Trustee may pursue any available remedy by action at law or suit in equity to enforce
the payment of the principal of and premium, if any, and interest on the Bonds and coupons
then outstanding, or to enforce the performance of any other term, covenant or condition hereof.
Without limiting the generality of the foregoing, if any event of default shall have occurred and
be continuing, the Trustee may, by mandamus, or other suit, action or proceeding at law or in
equity, enforce all rights of the holders of the Bonds and coupons appertaining thereto and
require the Corporation, the User or the Guarantor to cavy out any agreements with or for the
benefit of the holders of the Bonds and coupons appertaining thereto and to perform its or
their duties under the Note, the Agreement, this Indenture, the Guaranty, the Collateral
Assignment and the Mortgage.
If an event of default shall have occurred and be continuing, and if requested so to do by
the holders of at least 25% in principal amount of the Bonds then outstanding and if indemni-
fied as provided in subsection (b) of Section 1001 of this Indenture, the Trustee shall be
obliged to exercise such one or more of the rights and powers conferred by this Section 903 as
the Trustee, being advised by counsel, shall deem most expedient in the interest of the holders
of the Bonds and coupons appertaining thereto.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee
(or to the holders of Bonds or any coupons appertaining thereto) is intended to be exclusive
of any other remedy, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy given to the Trustee or to the holders of Bonds or coupons
hereunder or now or hereafter existing at law or in equity or by statute.
Section 904. Failure to Exercise Remedies. No delay or omission to exercise any right
or power accruing upon any default or event of default shall impair any such right or power or
shall be construed to be a waiver of any such default or event of default or acquiescence there-
in; and every such right and power may be exercised from time to time and as often as may be
deemed expedient.
No waiver of any default or event of default hereunder, whether by the Trustee pursuant
to the provisions of Section 911 of this Indenture or by the Bondholders, shall extend to or
shall affect any subsequent default or event of default or shall impair any rights or remedies
consequent thereon. Z'
Section 905. Right of Bondholders to Direct Proceedings. Anything in this Indenture to
the contrary notwithstanding, the holder or holders of a majority in aggregate principal amount
of the Bonds then outstanding shall have the right, at any time, by an instrument or instru-
ments in writing executed and delivered to the Trustee, and accompanied by indemnity as
provided in subsection (b) of Section 1001 of this Indenture, to direct the method and place
of conducting all proceedings to be taken in connection with the enforcement of the terms
and conditions of this Indenture or for the appointment of a receiver or any other proceedings
hereunder; provided, however, that such direction shall not be contrary to Iaw or the pro-
visions of this Indenture; and provided, further, that the Trustee shall have the right to decline
to follow any such direction if the Trustee in good faith shall determine that the proceeding so
directed would involve it in personal liability.
Section 906. Appointment of Receivers. Subject in all respects to the rights of the User
under the Agreement and of the Guarantor under the Guaranty, if an event of default shall
have occurred and be continuing, the Trustee may apply for the appointment of a receiver or
receivers of the 'Trust Estate, only, and of the revenues, issues, earnings, income, products and
profits thereof with such powers, as the court making such appointment shall confer.
27
Section 907. Applications of Moneys. All moneys received by the Trustee with respect
to the Trust Estate pursuant to any right given or action taken under the provisions of this
Article IX, after payment of the costs and expenses of the proceedings resulting in the collec-
tion of such moneys and of the expenses, liabilities and advances incurred or made by the
Trustee, shall be deposited in the Debt Service Fund and all moneys so deposited in the Debt
Service Fund and all moneys held or deposited in the Debt Service Fund during the continuance
of an event of default (other than moneys for the payment of Bonds or coupons which have
matured or otherwise become payable prior to such event of default or for the payment of
interest due prior to such event of default) shall (after payment of the fees and expenses
of the Trustee) be applied as follows:
(a) Unless the principal of all the Bonds shall have become or shall have been declared
due and payable, all such moneys shall be applied:
First — To the payment to the persons entitled thereto of all installments of inter-
est then due on the Bonds, in the order of the maturity of the installments of such
interest and, if the amounts available shall not be sufficient to pay in full any particu-
lar installment, then to the payment ratably, according to the amounts due on such
installment, to the persons entitled thereto, without any discrimination or preference
except as to any differences in the respective rates of interest specified in the Bonds; and
Second — To the payment to the persons entitled thereto of the unpaid principal
of and premium, if any, on any of the Bonds which shall have become due (other
than. Bonds which have matured or otherwise become payable prior to such event of
default and moneys for the payment of which are held in the Debt Service Fund),
with interest at the rate or rates stated in the Bonds on such principal from the
respective dates upon which the same became due and, if the amount available shall
not be sufficient to pay in full the amount of principal and premium, if any, due on any
particular date, together with such interest, then to the payment ratably, according to
the amount of principal due on such date, to the persons entitled thereto without any
discrimination or preference except as to any difference in the respective rates of
interest specified in the Bonds.
(b) If the principal of all the Bonds shall have become due or shall have been declared
due and payable, all such moneys shall be applied to the payment of the principal, premium,
if any, and interest then due and unpaid upon all of the Bonds (other than Bonds which
have matured or otherwise become payable prior to such event of default and moneys for
the payment of which are held in the Debt Service Fund), without preference or priority
of principal or premium over interest or of interest over principal or premium., or of any
installment of interest over any other installment of interest, or of any Bonds over any other
Bond (except as aforesaid), ratably, according to the amounts due respectively for prind-
pal, premium, if any, and interest, to the persons entitled thereto without any discrimina-
tion or preference except as to any difference in the respective rates of interest specified in
the Bonds.
(c) If the principal of all the Bonds shall have been declared due and. payable, and if
such declaration shall thereafter have been rescinded and annulled under the provisions
of this Article IX then, subject to the provisions of subsection (b) of this Section 907 in the
event that the principal of all the Bonds shall later become due or be declared due and
payable, the moneys shall be applied in accordance with the provisions of subsection (a) of
this Section.
Whenever moneys are to be applied pursuant to the provisions of this Section 907, such
moneys shall be applied at such times, and from time to time, as the Trustee shall determine,
28
having due regard to the amount of such moneys available for application and the likelihood
of additional moneys becoming available for such application in the future Whenever the
Trustee shall apply such funds, it shall fix the date (which shall be an interest payment date
unless it shall deem another date more suitable) upon which such application is to be made
and upon such date interest on the amounts of principal to be paid on such dates shall. cease
to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with
it of any such moneys and of the fixing of any such date, and shall not be required to make
payment to the holder of any unpaid coupon or any Bond until such coupon or such Bond
and all unmatured coupons, if any, appertaining to such Bond shall be presented to the
Trustee for appropriate endorsement or for cancellation if fully paid.
Whenever the principal of and premium, if any, and interest on all the Bonds have been
paid under the provisions of this Section 907 and all expenses and charges of the Thustee and
any Co -Paying Agent have been paid, any balance remaining in the Debt Service Fund shall
be paid to the User.
Section 908. Remedies Vested in Trustee. All rights of action (including the right to file
proof of claims) under this Indenture or under any of the Bonds or coupons appertaining
thereto may be enforced by the Trustee without the possession of any of the Bonds or coupons
or the production thereof in any trial or other proceedings relating thereto and any such suit
or proceeding instituted by the Trustee shall be brought in its name as Trustee without the
necessity of joining as plaintiffs or defendants any holders of the Bonds or coupons and any
recovery of judgment shall, subject to the provisions of Section 907 of this Indenture, be for
the equal benefit of all holders of the outstanding Bonds and coupons appertaining thereto.
Section 909. Rights and Remedies of Bondholders. No holder of any Bond or coupon shall
have any right to institute any suit, action or proceeding in equity or at Iaw for the enforce-
ment of this Indenture or for the execution of any trust thereof or for the appointment of a
receiver or any other remedy hereunder, unless all of the following conditions shall have been
met: (a) a default has occurred of which the Trustee has been notified as provided in sub-
section (j) of Section 1001 of this Indenture, or of which by said subsection it is deemed to
have notice, (b) such default shall have become an event of default and shall be continuing,
(c) a holder or holders of not less than 51% in aggregate principal amount of the Bonds then
outstanding shall have made written request to the Trustee and shall have offered it reasonable
opportunity either to proceed to exercise the powers hereinbefore granted, or to institute such
action, suit or proceeding in its own name, (d) such Bondholders shall have offered to the
Trustee indemnity as provided in subsection (b) of Section 1001 of this Indenture, and (e) the
Trustee shall thereafter fad or refuse to exercise the powers hereinbefore granted, or to institute
such action, suit or proceeding in its, his or their own name or names. Notwithstanding the
preceding sentence, no one or more holders of the Bonds or coupons shall have any right in
any manner whatsoever to enforce any right hereunder except in the manner herein provided
and for the equal benefit of the holders of all the Bonds and coupons then outstanding. Nothing
in this Indenture shall, however, affect or impair the right of any holders of Bonds or coupons
to enforce payment of the principal of and premium, if any, and interest on any Bond at
and after the maturity thereof, or the obligation of the Corporation to pay the principal of
and premium, if any, and interest on each of the Bonds issued hereunder to the respective
holders thereof at the time, place, from the source and in the manner expressed herein and in
said Bonds and the coupons appertaining thereto.
Section 910. Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Indenture by the appointment of a receiver, by entry or otherwise,
and such proceedings shall have been discontinued or abandoned for any reason, or shall have
been determined adversely, then and in every such case the Corporation, the User and the
29
Trustee shall be restored to their former positions and rights hereunder, and all rights, remedies
and powers of the Trustee shall continue as if no such proceedings had been taken.
Section 911. Waivers of Events of Default. If, after any event of default. but prior to
obtaining a final judgment for payment of all of the principal of the outstanding Bonds, all
amounts which would then be payable hereunder by the Corporation if such default had not
occurred and was not continuing shall have been paid by or on behalf of the Corporation and
the Corporation, the User and the Guarantor shall have also performed all other obligations in
respect of which any of them is then in default hereunder or under the Note, the Agreement,
the Guaranty, the Collateral Assignment or the 1XIortgage, and shall have paid the reasonable
charges and expenses of the Trustee and the holders of the Bonds, including reasonable attorneys'
fees paid or incurred, then and in every case the Trustee shall waive such event of default and
rescind and annul any remedial step theretofore taken by it in respect of such default and
its consequences.
After a declaration of acceleration of maturity of principal, the Trustee shall waive any
event of default hereunder and its consequences and rescind any such declaration upon the
written request of the holder or holders of a majority in aggregate principal amount of the
Bonds then outstanding in respect of which default exists; provided, however, that there shall
not be so waived without the consent of the holder of each Bond or coupon so affected (a) any
event of default in the payment of the principal of such Bond at the date of payment specified
therein or (b) any default in the payment when due of the interest or premium, if any, on
such Bonds. In case of any such waiver or rescission, then and in every such case, the Corpora-
tion, the User, the Guarantor, the Trustee and the holders of the Bonds and coupons appertaining
thereto, if any, shall be restored to their former positions and rights hereunder respectively, but
no such waiver or rescission shall extend to any subsequent or other default, or impair any
right consequent thereon.
Section 912. Usury. Notwithstanding any provision of this Indenture to the contrary, it is
hereby agreed that in no event shall the Corporation pay interest on the Bonds or the User
pay interest on the loan made under the Agreement (including interest on the Note pursuant to
Section 4.1 thereof, together with any other costs or considerations that constitute interest
under the law of the State which are contracted for, charged or received pursuant to the
Agreement) in an amount in excess of the maximum amount of interest allowed under the
laws of the State; and in the event of an acceleration pursuant to Section 902 hereof, such
amounts that constitute payments of interest on, the Bonds, together with any costs or
considerations which constitute interest on the Bonds under the laws of the State, may never
exceed the maximum amount of interest allowed by the laws of the State, and excess interest,
if any, provided for in this Indenture, the Bonds or otherwise, shall be cancelled automatically
as of the date of such acceleration or, if theretofore paid, shall be credited on the Bonds;
provided, however, that if the amount available for payment of the Bonds in accordance with
the Agreement and this Indenture is, solely as a result of the provisions of Section 4.7 of the
Agreement, insufficient to pay the amount of the entire principal of and accrued interest on
the Bonds which is otherwise due and payable pursuant to the preceeding clause, such excess
shall be cancelled automatically as of the date of such acceleration.
ARTICLE X
THE TRUSTEE AND Co -PAYING AGENTs
Section 1001. Rights and Obligations of Trustee. (a) The Trustee accepts the trusts hereby
created and agrees to perform the duties herein required of it upon the terms and conditions
hereof. The Trustee shall have the right, power and authority, at all times, to do all things,
not inconsistent with the express provisions of this Indenture which it may deem necessary
or advisable in order to (i) enforce the provisions of this Indenture, (ii) take any action with
respect to any event of default, (iii) institute, appear in or defend any suit or other proceeding
with respect to an event of default, or (iv) protect the interests of the holders of the Bonds
or coupons appertaining thereto at any time outstanding. The Trustee shall be responsible
only for performing those duties of the Trustee specifically provided for herein and no implied
duties or liabilities shall be read into this Indenture against the Trustee.
(b) The Corporation agrees to indemnify, and save harmless, the Trustee (but only to
the extent of the performance by the User pursuant to its indemnity of the Corporation pro-
vided in Section 8.1 of the Agreement) against and from any liability or damages which it
may incur or sustain, in good faith, and without negligence or willful misconduct, in the
exercise and performance of any of its powers and duties hereunder. The Trustee shall be
under no obligation to take any action to protect, preserve or enforce any rights or interests
in the Trust Estate or towards the execution or enforcement of the trust hereby created or
otherwise hereunder, whether on its own motion or at the request of any other person which
shall be, in its opinion, likely to involve expense or liability not otherwise provided for herein,
unless one or more of the holders of the Bonds then outstanding shall offer and furnish reason-
able indemnity against liability and expense to the Trustee.
(c) The Trustee may execute any of the trusts or powers hereof and perform any of its
duties by or through attorneys, agents, receivers or employees appointed by it with due care
but shall be answerable for the conduct of the same in accordance with the standards herein-
below specified, and may in all cases pay reasonable compensation to all such attorneys, agents,
receivers and employees as may reasonably be employed in connection with the trust hereof.
The Trustee may act upon an opinion of its counsel and shall not be responsible for any loss
or damage resulting from taking or omitting to take any action in good faith in reliance upon
such opinion of counsel.
(d) The Trustee shall not be responsible for any recital herein, or in the Bonds (except
in respect .of the certificate of the Trustee endorsed on the Bonds), or for the recording or
rerecording, registration or reregistration, filing or refiling of this Indenture, the Mortgage, or
the Collateral Assignment or for the validity of the execution by the Corporation of this
Indenture, or the Collateral Assignment or instruments of further assurance, or for the
sufficiency or maintenance of the security for the Bonds and coupons appertaining thereto,
and the Trustee shall not be bound to ascertain or inquire as to the performance or observance
of any covenants, conditions or agreements on the part of the Corporation or on the part
of the User under the Agreement or the Mortgage or on the part of the Guarantor under the
Guaranty, but the Trustee may require of the Corporation full information and advice as to
the performance of the covenants, conditions and agreements aforesaid; provided, however, that
nothing herein shall require disclosure of (i) any trade secrets of the Corporation, the User,
or the Guarantor or (ii) any other confidential processes, techniques or information which the
Corporation, the User, or the Guarantor is not free to disclose, whether by virtue of any applicable
statute, governmental security regulation, technical assistance agreement, patent license or
similar agreement relating to the acquisition or interchange of technology or otherwise. The
Trustee shall not be responsible or liable for any loss suffered in connection with any invest-
ment of funds made by it in accordance with this Indenture. The User has agreed in the
Agreement that if any such loss causes the amount in the Debt Service Fund to be insufficient
31
at any time to pay the principal of the interest and premium, if any, on the Bonds then due
and payable, it will forthwith deposit into the Debt Service Fund the amount of any such
insufficiency. The Trustee shall not be responsible for paying interest on any uninvested funds
held by it hereunder.
(e) The Trustee shall not be accountable for the use of any Bonds properly authenticated
or delivered hereunder.
(f) In the absence of bad faith on its part, the Trustee shall be protected in acting upon
any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or docu-
ment reasonably believed by it to be genuine and correct and to have been signed or sent by
the proper person or persons. Any action taken by the Trustee pursuant to this Indenture or the
Agreement upon the request or authority or consent of any person who at the time of making
such request or giving such authority or consent is the owner of any Bond, shall be conclusive
and binding upon all future owners of the same Bond and upon Bonds issued in exchange
therefor or in place thereof.
(g) The resolutions, opinions, certificates and other instruments provided for in this
Indenture or the Agreement may, in the absence of bad faith on its part, be accepted by the
Trustee as conclusive evidence of the facts and conclusions stated therein.
(h) As to the existence or non-existence of any fact or as to the sufficiency or validity of
any instrument, document or proceedings, the Trustee, in the absence of bad faith on its part,
shall be entitled to rely upon a certificate signed on behalf of the Corporation by an officer
or director of the Corporation or such other person as may be designated for such purpose
by resolution of the Board of the Corporation and attested by the Secretary of the Corporation
or such other person as may be designated for such purpose by resolution of the Board of the
Corporation as sufficient evidence of the facts therein contained and, prior to the occurrence
of a default of which the Trustee has been notified as provided in subsection (j) of this
Section 1001 or of which by said subsection it is deemed to have notice, shall also be at liberty,
to accept a similar certificate to the effect that any particular dealing, transaction or action is
necessary or expedient, but may at its discretion secure further evidence deemed necessary or
advisable, but shall in no case be bound to secure the same. The Trustee may accept a certifi-
cate of the Secretary of the Corporation to the effect that a resolution in the form therein Set
forth has been adopted by the Board of the Corporation as conclusive evidence that such
resolution has been duly adopted, and is in full force and effect.
(i) The permissive right of the Trustee to do things enumerated in this Indenture and the
Agreement shall not be construed as a duty and, except as provided in the next succeeding
sentence in respect of the period during the continuance of an event of default, the Trustee shall
not be liable for any action reasonably taken or omitted to be taken by it in good faith and
reasonably believed by it to be within the discretion or power conferred upon it hereby, or be
responsible other than for its own negligence or willful acts or omissions. In case an event of
default has occurred and is continuing of which the Trustee has been notified as provided in
subsection (j) of this Section 1001 or of which by said subsection it is deemed to have notice, the
Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the
same degree of care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(j) The Trustee shall not be required to take notice or be deemed to have notice of any
default hereunder unless the Trustee shall be specifically notified of such default in writing by
the Corporation, the User or by a holder or the holders of at least 51 percent in aggregate
principal amount of the Bonds then outstanding, and in the absence of such notice the Trustee
may conclusively assume there is no default; provided, however, that the Trustee shall be
32
required to take and be deemed to have notice of its failure to receive the moneys necessary
to make payments when due of principal, interest or premium, if any.
(k) At any and all reasonable times the Trustee and its duly authorized agents, attorneys,
experts, engineers, accountants and representatives shall have the right, but shall not be
required, to inspect any and all of the books, papers and records of the Corporation pertaining
to the Project and the Bonds, and to make such memoranda from and in regard thereto as
may be desired; provided, however, that nothing herein shall require disclosure by the Cor-
poration of (i) any trade secrets of the Corporation, the User or the Guarantor or (ii) any
other confidential processes, techniques or information which the Corporation, the User or
the Guarantor is not free to disclose, whether by virtue of any applicable statute, governmental
security regulation, technical assistance agreement, patent license or similar agreement relating
to the acquisition or interchange of technology or otherwise.
(1) The Trustee shall not be required to give any bond or surety in respect of the execu-
tion of the said trusts and powers or otherwise in respect of the premises.
(m) The Trustee hereby acknowledges that it has accepted the trusts imposed upon it
by the Agreement, the Guaranty and the Collateral Assignment subject to the terms and
conditions thereof and hereby agrees duly to perform and abide by the terms thereof insofar
as they purport to bind, impose duties on or relate to the Trustee subject, however, to the
limitations, exemptions and exceptions contained in this Indenture.
Section 1002. Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to
reasonable compensation for its services rendered hereunder and to reimbursement for its
actual out-of-pocket expenses (including counsel fees) necessarily incurred in connection there-
with. Pursuant to the provisions of Section 11.3 of the Agreement, the User has agreed to pay
to the Trustee such compensation and reimbursement but the User may, without creating a
default hereunder, contest in good faith the necessity for and the reasonableness of any such
services and expenses.
Section 1003. Notice to Bondholders if Default Occurs. If a default occurs consisting of
a failure to make a payment of which the Trustee is by subsection (j) of Section 1001 of this
Indenture required to take notice, then if such default continues for at least five business
days the Trustee shall give written notice thereof by first class mail to the last known holders
of all Bonds then outstanding shown by the list of Bondholders required by Section 705 to
be kept at the corporate trust office of the Trustee, and to the registered holders of Bonds
then outstanding appearing on the register kept by the Trustee as required by Section 304
of this Indenture, addressed to such holders at the addresses last appearing on such list and
register.
Section 1004. Intervention by Trustee. Subject to the Agreement, the Trustee may inter-
vene on behalf of the holders of Bonds and coupons appertaining thereto in any judicial
proceeding to which the Corporation is a party and which, in the opinion of the Trustee and
its counsel, has a substantial bearing on the interests of such holders of the Bonds or coupons,
and shall do so if requested in writing by the holder or holders of at. least a majority in
aggregate principal. amount of the Bonds then outstanding, provided that the Trustee shall first
have been offered such reasonable indemnity as it may require against the costs, expenses and
liabilities which it may incur in or by reason of such proceeding. The rights and obligations of
the Trustee under this paragraph are subject to the approval of a court of competent jurisdiction.
Without limiting the generality of the foregoing, in case of the pendency of any receiver-
ship, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composi-
33
s
tion or other judicial proceeding relative to the User or the Guarantor or the property of the
User or the Guarantor, the Trustee (irrespective or whether the principal of the Bonds shall
then be due and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Corporation for the payment of
overdue principal or interest) shall be entitled and empowered under this Indenture (and shall
do so if requested by the holder or holders of at least a majority in aggregate principal amount
of the Bonds then outstanding, and offered the reasonable indemnity referred to in the next
preceding paragraph) by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of principal (and premium, if any)
and interest owing and unpaid in respect of the Bonds and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the holders of the Bonds and coupons
appertaining thereto, if any, allowed in such judicial proceeding; and
(b) to collect and receive any moneys or other property payable or deliverable on
any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any
such judicial proceeding is hereby authorized by each holder of the Bonds and coupons apper-
taining thereto, if any, to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the holders of the Bonds and coupons
appertaining thereto, if any; to pay to the Trustee any amount due to it for the reasonable com-
pensation,
onpensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent
to or accept or adopt on behalf of any holder of a Bond or coupon any plan of reorganization,
arrangement, adjustment or composition affecting the Bonds or the rights of any holder thereof,
or to authorize the Trustee to vote in respect of the claim of any holder of a Bond or coupon in
any such proceeding.
Section 1005. Successor Trustee. Any corporation or association into which the Trustee
may be converted or merged, or with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole, or substantially as a whole, or any corporation
or association resulting from any such conversion, sale, merger, consolidation or transfer to which
it is a party, ipso facto, shall be and become successor Trustee hereunder and vested with all the
trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor,.
without the execution or filing of any instrument or any further act, deed or conveyance on the
part of any of the parties hereto, anything herein to the contrary notwithstanding.
Section 1006. Resignation by the Trustee. The Trustee and any successor Trustee may at
any time resign from the trusts hereby created by giving thirty days' notice by (i) publishing
notice of its resignation in the same manner as publication of notice for the redemption of Bonds
and (ii) giving written notice to the Corporation, the User and the Guarantor and by first
class mail to each registered holder of Bonds then outstanding, addressed to such holder at his
address last appearing in the Bond register required to be kept by Section 304 of this Indenture,
and to each last known holder of Bonds then outstanding as shown by the list of Bondholders
required by Section 705 of this Indenture to be kept by the Trustee, addressed to such holder
at his address last appearing in such list. Such resignation shall take effect at the end of such
thirty days, or upon the earlier appointment of a successor or temporary trustee by the Bond-
holders or by the Corporation in accordance with Section 1008 of this Indenture. Such notice
to the Corporation, the User and the Guarantor, may be served personally or sent by registered
mail.
34
Section 1007. Removal of the Trustee. The Trustee may be removed at any time, by an
instrument or concurrent instruments in writing delivered to the Trustee, the Corporation, the
User and the Guarantor and signed by the holder or holders of not less than a majority in
aggregate principal amount of the Bonds then outstanding.
Section 1008. Appointment of Successor Trustee by the Bondholders; Temporary Trustee.
In case the Trustee hereunder shall resign, be removed, be dissolved, or be in course of dissolution
or liquidation, or otherwise become incapable or acting hereunder, or in case it shall be taken
under the control of any public officer or officers or of a receiver appointed by a court, a successor
may be appointed by the holder or holders of a majority in aggregate principal amount of the
Bonds then outstanding, by an instrument or concurrent instruments in writing (with the prior
approval of the User if the User is then not in default under the Agreement, which approval
shall not unreasonably be withheld) by such holder or holders, or by their attorneys in fact, duly
authorized; provided, nevertheless, that in case of such vacancy, the Corporation by an intra-
ment executed and signed by the President or the Vice President of the Corporation and
attested by the Secretary of the Corporation may appoint a temporary Trustee to fill such
vacancy until a successor. Trustee shall be appointed by the Bondholders in the manner above
provided; and any such temporary Trustee so appointed by the Board of the Corporation shall
immediately and without further act be superseded by the Trustee so appointed by such holder
or holders. Every such Trustee so appointed pursuant to the provisions of this Section 1008
shall be a trust company, banking association or bank in good standing, within or outside the
State having aggregate capital and surplus of not less than $50,000,000 if there be such an
institution willing, qualified and able to accept the trust upon the terms stated herein and
otherwise shall have total assets as near as reasonably possible to that sum..
Section 1009. Concerning Any Successor Trustees. Each successor Trustee appointed under
the provisions of Section 1008 of this Indenture shall execute, acknowledge and deliver to its
predecessor and also to the Corporation an instrument in writing accepting such appointment
hereunder, and thereupon each successor, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, trusts; duties and obligations of its predecessor
and shall become custodian of the Debt Service Fund (and other funds held by the Trustee
in accordance with this Indenture or the Agreement) and Bond register; but such predecessor
shall, nevertheless, on the written request of the Corporation, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of such predecessor
hereunder. Every predecessor Trustee shall deliver all securities and moneys held by it as
Trustee hereunder to its successor together with all books and records, Qr facsimile copies thereof,
pertaining to the discharge of the functions of such successor. Should any instrument in writing
from the Corporation be required by any successor Trustee for more fully and certainly vesting
in such successor the property interests, rights, powers, trusts and duties hereby vested or
intended to be vested in the predecessor, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Corporation. The resignation of any
Trustee and the instrument or instruments removing any Trustee and appointing a successor
hereunder, together with all other instruments provided for in this Article X shall be filed and/or
recorded by the successor Trustee in each recording office where this Indenture or a notice
thereof shall have been filed and/or recorded.
Section 1010. Right of Trustee to Pay Taxes and Other Charges. In case any tag, assessment .
or governmental or other charge upon any part of the Trust Estate is not paid as required herein,
the Trustee may pay such tax, assessment or charge, without prejudice, however, to any rights
of the Trustee or the holders of Bonds or coupons hereunder arising in consequence of such.
failure; and any amount at any time so paid under this Section 1010, with interest thereon from
the date of payment at the rate of sig per cent per annum or a rate which is one percent in
35
+C 4
excess of the prime interest rate then charged by the Trustee to its prime commercial borrowers
in its lending capacity as a bank, whichever is, in whole or part, greater and lawfully chargeable,
shall become additional indebtedness secured by this Indenture, and the same shall be given a
preference in payment over any of the Bond or coupons, and shall be paid out of the proceeds
of revenues collected from the Trust Estate, if not otherwise caused to be paid; but the Trustee
shall be under no obligation to make any such payment unless it shall have been requested to
do so by the holder or holders of at least a majority in aggregate principal amount of the Bonds
then outstanding and shall have been provided with adequate funds for the purpose of such
payment.
Section 1011. Appointment of Co -Paying Agents. The Trustee shall be the paying agent
for the Bonds. The Corporation may at any time or from time to time, with the approval of the
User, appoint one or more Co -Paying Agents for any series of the Bonds, in the manner and
subject to the conditions set forth in Section 1012 of this Indenture for the appointment of a
Co -Paying Agent, and in the absence of such appointment the Trustee shall be the sole paying
agent for the Bonds. Each Co -Paying Agent shall signify its acceptance of the duties and
obligations imposed upon it by written instrument of acceptance deposited with the Corporation
and the Trustee under which such Co -Paying Agent shall agree with the Trustee and such
Co -Paying Agent will:
(a) hold all sums held by it for the payment of the principal of (and premium, if any)
or interest on Bonds in trust for the benefit of the owners of such Bonds and of the coupons
until such sums shall be paid to such owners or otherwise disposed of as herein provided; and
(b) upon the written request of the Trustee, forthwith pay to the Trustee all stuns so
held in trust by such Co -Paying Agent.
The Corporation hereby covenants and agrees to cause the necessary arrangements to be
made through the Trustee and to be thereafter continued, and the Trustee agrees to exercise
its best efforts to carry out its functions in such arrangements, whereby funds derived from the
sources specified in Section 308 of this Indenture will be made available for the payment of such
of the Bonds and interest coupons thereunto appertaining as are presented when due at the
appropriate offices of the Co -Paying Agents.
Section 1012. Co -Paying Agents. Any Co -Paying Agent may at any time resign and be
discharged of the duties and obligations created by this Indenture by giving at least 60 days'
written notice to the Corporation and the Trustee. Any Co -Paying Agent may be removed at
any time with the consent of the User by an instrument filed with such Co -Paying Agent and
the Trustee and signed by the Corporation. Any Co -Paying Agent shall be appointed by the
Corporation, with the approval of the User, and shall be a bank or trust company duly organized
under the laws of the United States of America or any state or territory thereof, in good standing,
having a combined capital and surplus aggregating at least $50,000,000, if there be such an
institution willing, qualified and able to accept the office on reasonable and customary terms and
authorized by law to perform all the duties imposed upon it by this Indenture and otherwise
such an institution having capital and surplus as near as reasonably possible to such sum.
In the event of the resignation or removal of any Co -Paying Agent, such Co -Paying Agent
shall pay over, r ssign and deliver any moneys held by it as Co -Paying Agent to its successor,
or if there be no successor, to the Trustee.
Any bank or trust company with or into which any Co -Paying Agent may be merged or
consolidated, or to which the assets and business of such Co -Paying Agent may be sold, shall
be deemed the successor of such Co -Paying Agent for the purposes of this Indenture.
36
Each Co -Paying Agent shall enjoy the same protective provisions in the performance of his
duties hereunder as are specified in Section 1001 of this Indenture with respect to the Trustee,
insofar as such provisions may be applicable.
Section 1013. Dealing in Bonds. The Trustee and Co -Paying Agents, and any of their
directors, officers, employees or agents, may become the owners of Bonds and coupons secured
by this Indenture with the same rights which it or they would have hereunder if the Trustee or
Co -Paying Agent were not such.
Section 1014. Adoption of Authentication. In case any of the Bonds contemplated to be
issued hereunder shall have been authenticated but not delivered, any successor Trustee may
adopt the certificate of authentication of the original Trustee or of any successor of it as Trustee
hereunder and deliver the said Bonds so authenticated as hereinbefore provided; and in case
any of such Bonds shall not have been authenticated, any successor Trustee may authenticate
such Bonds either in the name of any predecessor or in its own name. In all such cases such
certificate of authentication shall have the same force and effect as provided in the Bonds or in
this Indenture with respect to the certificate of authentication of the Trustee.
37
ARTICLE XI
SUPPLEMENTAL INDENTURES AND AMENDMENTS OF AGREEMENT, GUARANTY,
MORTGAGE, COLLATERAL ASSIGNMENT AND NOTE
Section 1101. Supplemental Indentures and Amendments of . Guaranty, Mortgage or
Collateral Assignment Not Requiring Consent of Bondholders. Without the consent of, or notice
to, any of the holders of the Bonds or coupons appertaining thereto, the Corporation and the
Trustee may enter into an indenture or indentures supplemental to this Indenture or any
amendments to the Collateral Assignment, the Guarantor and the Trustee may enter into any
amendments to the Guaranty, and the Trustee may consent to any amendments to the Mortgage,
for any one or more of the following purposes:
(a) to cure any ambiguity, formal defect, omission or inconsistent provision in this
Indenture, the Guaranty, the Mortgage, the Collateral Assignment or the Bonds or coupons
appertaining thereto; provided, however, that such action shall not adversely affect the
interests of the holders of the Bonds or coupons appertaining thereto;
(b) to grant to or confer upon the Trustee for the benefit of the holders of the Bonds
or coupons appertaining thereto, or upon the Mortgage Trustee for the benefit of the
holders of the Note, any additional rights, remedies, powers or authority that may lawfully
be granted to or conferred upon the holders of the Bonds or coupons appertaining thereto
or the Trustee, or upon the holders of the Note or the Mortgage Trustee, as the case
may be;
(c) to add to the covenants and agreements of the Corporation contained in this
Indenture or the Collateral Assignment or of the User in the Mortgage or of the Guarantor
in the Guaranty other covenants and agreements of, or conditions or restrictions upon, the
Corporation, the Guarantor or the User, as the case may be, or to surrender or eliminate
any right or power reserved to or conferred upon the Corporation in this Indenture or in the
Collateral Assignment or upon the User in the Mortgage or upon the Guarantor in the
Guaranty;
(d) to subject to the lien and pledge of this Indenture or to the lien of the Mortgage
additional revenues, properties or collateral;
(e) to provide for the issuance, sale and delivery of Additional Bonds as provided in
Article II and, in connection therewith, to provide for (i) the deposit of the proceeds of
such Additional Bonds in the Construction Fund or any other depository, (ii) the disburse-
ment of such proceeds in connection with the payment of the expenses of issuance of
such Additional Bonds and the cost of all or any part of the facilities to be financed by
means of such Additional Bonds except in the case of refunding bonds, (iii) the payment
of the principal of and interest and premium, if any, on such Additional Bonds, and
(iv) any variations from the provisions of Article III of this Indenture as permitted in
Section 309 of this Indenture; or
(f) to evidence the succession of any successor to the Corporation, the User, the
Guarantor, the Mortgage Trustee or the Trustee and the assumption by such successor of
the covenants and agreements of its predecessor under this Indenture, the Bonds, the
Guaranty, the Mortgage or the Collateral Assignment.
When requested by the Corporation, the Trustee shall, subject to Section 1105, join the
Corporation in the execution of any supplemental indenture or amendment to the Collateral
Assignment. When requested by the Corporation and the User, the Trustee shall, subject to
Section 1105 hereof, consent to an amendment of the Mortgage. When requested by the
Corporation and the Guarantor, the Trustee shall, subject to Section 1105 hereof, consent to an
amendment of the Guaranty.
38
Section 1102. Supplemental Indentures and Amendments of Mortgage or Collateral Assign-
ment Requiring Consent of Bondholders. (a) The Corporation and Trustee may, at any time,
enter into one or more supplements to this Indenture or any amendments to the Collateral
Assignment, the Guarantor and the Trustee may, at any time, enter into any amendments to
the Guaranty, and the Trustee may consent to any amendments to the Mortgage, amending,
modifying, adding to or eliminating any of the provisions of this Indenture, the Collateral
Assignment, the Guaranty or the Mortgage but, if such supplement or amendment is not of the
character described in Section 1101 of this Indenture, only with the consent given in accordance
with Section 1201 of this Indenture of the holder or holders of not less than a majority in
aggregate principal amount of the Bonds then outstanding.
(b) Notwithstanding the provisions of subsection (a) of this Section 1102, (i) no supplement
to this Indenture shall, without the consent of the holder of each Bond so affected, extend the
maturity date of any Bond, or reduce the rate or extend the time of payments of interest thereon,
or reduce the principal amount thereof, or reduce any premium payable upon the redemption
thereof, or extend or reduce the amount of any mandatory sinking fund requirement, or make.
the principal thereof or interest or premium thereon payable in any coin or currency other than
that hereinbefore provided, and (ii) no supplement to this Indenture or amendment to the
Guaranty, the Mortgage or the Collateral Assignment shall, without the consent of the holder,
deprive such holder of the lien hereof on the revenues pledged hereunder and on the Trust
Estate or the lien of the Mortgage on the Mortgage Trust Estate (as defined in the Mortgage)
or the guarantee of the Guarantor under the Guaranty. Moreover, without the consent of
the holder of each Bond then outstanding, no supplement to this Indenture or amendment
to the Guaranty, the Mortgage or the Collateral Assignment shall (A) permit the creation
of any additional lien on the Trust Estate hereunder equal. or prior to the lien hereof or
any additional lien on the Mortgage Trust Estate equal or prior to the lien of the Mortgage,
(B) reduce the aggregate principal amount of Bonds the holders of which are required to
approve any such supplement or an amendment, change or modification of the Agreement,
the Guaranty, the Mortgage, the Collateral Assignment or this Indenture, (C) increase the
percentage of the principal amount of Bonds necessary to require the Trustee to declare
the principal of and interest on the Bonds due and payable pursuant to Section 902 of this
Indenture, or (D) provide a privilege or priority of any Bonds over any other Bond or Bonds.
The preceding sentence shall not be construed as limiting the Corporation's right to issue
Additional Bonds in accordance with the provisions of this Indenture.,
Section 1103. Amendments of Agreement or Note Not Requiring Consent of Bondhoiders.
The Trustee may, without the consent of, or notice to, any of the holders of the Bonds or
coupons appertaining thereto, consent to any amendment, change or modification of the Agree-
ment or the Note, and the Corporation and the User may then enter into such amendment
or make such change or modification, for any one or more of the following purposes:
(a) to provide for the issuance, sale and delivery of Additional Bonds as provided
in Article II of this Indenture and in that connection, to provide for the deposit and
disbursement of the proceeds of the sale of such Additional Bonds and the construction
or installation of the facilities the cost of which is to be financed from the proceeds of
such Additional Bonds (except in the case of refunding bonds);
(b) to cure any ambiguity, inconsistency or formal defect or omission;
(c) to increase the payments to be made by the User thereunder,
(d) to modify Section 8.1 of the Agreement or to add any provision to the Agreement
or make any other change to the Agreement that does not.in any respect materially adversely
affect the interests of the holders of the Bonds or the coupons appertaining thereto;
39
(e) to modify the Agreement as perrutted by Section 2.2 thereof or as otherwise
required by the provisions of the Agreement or this Indenture; or
(f) to evidence the succession of any successor to the Corporation or the User and
the assumption by such successor of the covenants and agreements of its predecessor under
the Agreement or the Note.
Subject to Section 1105 of this Indenture, the Trustee shall consent to any such amendment,
change or modification when requested by the User and the Corporation.
Section 1104. Amendments of Agreement or Note Requiring Consent of Bondholders.
(a) The Trustee may consent to, and the Corporation and the User may then enter
into, one or more amendments, changes or modifications of the Agreement or the Note
not of the character described in Section 1103 of this Indenture but only with the consent
given in accordance with Section 1201 of this Indenture of the holder or holders of not less
than a majority in aggregate principal amount of the Bonds then outstanding and affected
by such amendment, change or modification.
(b) Notwithstanding the provisions of subsection (a) of this Section 1104, no amend-
ment, change or modification of the Agreement or the Note shall, without the consent of
the holder or holders of each Bond then outstanding, (i) decrease the Loan Payments
payable under the Agreement or the Note, or (ii) reduce the User's or the Corporation's
obligations under Sections 3.8, 4.5, 7.1, 8.1 and 8.2 of the Agreement.
Section 1105. Rights of Trustee and the User. Notwithstanding the foregoing provisions
of this Article XI, the Trustee shall not be required to enter into any supplement hereto, and
the Trustee shall not be required to consent to or enter into any amendment, change or modi-
fication of the Agreement, the Guaranty, the Mortgage or the Collateral Assignment unless it
shall have received an opinion of counsel, addressed to the Trustee, satisfactory to it, that such
supplement or amendment, change or modification complies with the provisions of this Article
XI. Moreover, the Trustee shall not be required to execute any supplement to this Indenture or
amendment to the Collateral Assignment or the Guaranty (except a supplement hereto provid-
ing for the issuance of Additional Bonds pursuant to Article II of this Indenture entitling the
Trustee to the same rights, privileges and immunities in respect of such Additional Bonds as
provided hereby in respect of the Original Bonds), and the Trustee shall not be required to
consent to or enter into any amendment, change or modification of the Agreement, the Note,
the Guaranty, the Mortgage or the Collateral Assignment if such supplement or amendment,
change or modification affects its rights, duties or immunities hereunder or under the Agree-
ment, the Note, the Guaranty, the Mortgage or the Collateral Assignment or the rights,
duties or immunities of the Mortgage Trustee under the Mortgage, in which case the Trus-
tee may, in its discretion, but shall not be obligated to, enter into or consent to such sup-
plement, amendment, change or modification. The Trustee shall not unreasonably withhold
such entry and consent. The Trustee shall not execute any supplement to this Indenture or
amendment of the Collateral Assignment without first having given the User and the Guarantor
45 days (or such shorter period as the User or the Guarantor may agree) notice of its intention
to execute such supplement, accompanied by a copy thereof, nor, as long as no event of default
shall have occurred and be continuing under the Agreement, shall the Trustee execute any such
supplement without the prior written consent of the User.
40
ARTICLE XII
NJISCELLANEOU9
Section 1201. Consents, etc., of Bondholders. Any consent, request, direction, approval,
obligation or other instrument required by this Indenture to be signed and executed by a
Bondholder may be in any number of concurrent writings of similar tenor and may be signed
or executed by such Bondholder in person or by his duly authorized attorney. Proof of the
execution of any such consent, request, direction, approval, objection or other instrument or
of the writings appointing any such attorney and of the ownership of Bonds, if made in the
following manner, shall be sufficient for any of the purposes of this Indenture, and shall be
conclusive in favor of the Trustee with regard to any action taken, suffered or omitted to be
taken by the Trustee under such request or other instrument, namely:
(a) The fact and date of the execution by any person of any such writing may be
proved by the certificate of . any officer in any jurisdiction who by law has power to take
acknowledgments within such jurisdiction that the person signing such writing acknowledged
before him the execution thereof, or by affidavit of any witness to such execution.
(b) The fact of the holding by any person of Bonds and/or coupons transferable by
delivery and the amounts, the series and the numbers of such Bonds, and the date of the
holding of same, may be proved by a certificate executed by any trust company, bank or
bankers, wherever situated, stating that at the date thereof the party named therein did
exhibit to an officer of" such trust company or bank or to such banker, as the property of
such party, the Bonds and/or coupons therein mentioned if such certificate shall be deemed
by the Trustee to be satisfactory. The Trustee may, in its discretion, require evidence that
such Bonds and/or coupons have been deposited with a bank, or trust company, before
taking any action based on such ownership.
In lieu of the foregoing the Trustee may accept such other proofs of- the foregoing as it
shall deem appropriate.
Consents to amendments to the Agreement, this Indenture, the Mortgage and the Collateral
Assignment may be consolidated in a single instrument.
Any consent or other action by a holder of any Bond shall bind every future holder of the
same Bond and the holder of any Bond issued., in exchange therefor or in lieu thereof.
Consents required pursuant to Section 1102 and 1104 of this Indenture shall be valid only
if given following the giving of notice by or on behalf of the Corporation requesting such
consent and setting forth the substance of the supplement to this Indenture or the amendment,
change or modification of the Agreement, the Note, the Guaranty, the Mortgage or the Collateral
Assignment in respect of which such consent is sought, and stating that copies thereof are avail-
able at the office of the Trustee for inspection, to the holders of Bonds whose consent is required
in accordance with said Sections 1102 and 1104 of this Indenture, as the case may be. Such
notice shall be given (i) by publication at least once in each of two successive calendar weeks in
a newspaper of general circulation in the State of Texas, which carries financial news and is
customarily published on each business day, and in such other publications, if any, as the
Trustee may deem advisable, and (ii) by mail to each registered holder of Bonds whose consent
is required at the address appearing on the register maintained by the Trustee pursuant to
Section 304 of this Indenture, and to the holders of Bonds whose consent is required and who
have caused their addresses to be entered on the list maintained by the Trustee pursuant to
Section 705 of this Indenture, at their respective addresses as they last appear on such register
and list.
41
R
Section 1202. Limitation of Rights. With the exception of rights conferred upon the User
or the Guarantor herein or in the Agreement or in the Guaranty, nothing expressed or mentioned
in or to be implied from this Indenture or the Bonds is intended or shall be construed to give
to any person other than the parties hereto, the User, ' the Guarantor and the holders of the
Bonds and coupons, any legal or equitable right, remedy or claim under or in respect to this
Indenture or any covenants, conditions and provisions hereof being intended to be and being
for the sole and exclusive benefit of the parties hereto, the User, the Guarantor and the holders
of the Bonds and coupons as herein provided.
Section 1203. Severability. If any provision of this Indenture shall be held or deemed to
be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions because it conflicts with any other provision or provisions hereof
or any constitution or statute or rule of public policy, or for any other reason, such circum-
stances
ircumstances shall not have the effect of rendering the provision in question inoperative or unenforce-
able in any other case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatever. The invalidity of any
one or more phrases, sentences, clauses or sections in this Indenture contained, shall not affect
the remaining portions of this Indenture, or any part thereof.
Section 1204. Notices. Except as otherwise specifically provided in this Indenture, all
notices, requests, demands, directions and other communications hereunder shall be in writing
and shall be deemed sufficiently made when sent by certified mail, postage prepaid, return
receipt requested, or when sent by telegram confirmed the same day in writing by certified
mail, return receipt requested, postage prepaid, addressed in each case as follows:
if to the Corporation: Lubbock Industrial Development Corporation
P.O. Box 561
Lubbock, Texas 79408
Attention: President
if to the Trustee: Texas Commerce Bank — Irving
P.O. Box 1285
Irving, Texas 75060
Attention: Corporate Trust Division
if to the User: Magnolia Seed Company of Lubbock
335 Avenue H
Lubbock, Texas 79401
Attention: Operating Manager
if to the Guarantor: Magnolia Seed, Hardware & Implement Company
P.O. Box 225650
Dallas, Texas 75265
Attention: President
or at such other address as may have been designated most recently in writing with specific
reference to this Section 1204 of this Indenture by the addressee to the addressor, provided,
however, that a duplicate copy of any communication to the Corporation, the Trustee, the
User or the Guarantor shall be sent at the same time and in like manner to each of the others.
If certified mad is not then available, notices, requests, demands, directions and other com-
munications hereunder shall be given by a method reasonably believed to provide actual notice
and approved by the Trustee.
Section 1205. Waiver of Notice. Whenever the giving of notice is requested in this Inden-
ture, the giving thereof may be waived in writing by the person or persons entitled to receive
such notice.
42
Section 1206. Payments Due on Sundays and Holidays. In any case where the date of
maturity of principal of the Bonds,. or an interest payment date, or the date fixed for
redemption of any Bonds, shall be a Sunday or a legal holiday or a day (including Saturdays)
on which banking institutions in the city where the principal corporate trust office of the
Trustee is located are authorized by law or executive order to close, then payment of interest
or principal (and premium, if any) need not be made on such date, but may be made on
the next succeeding business day not a Sunday or a legal holiday or a day upon which such
banking institutions are authorized by law or executive order to close in such city with the
same force and effect as if made on the date of maturity, and no interest shall accrue on
the matured principal, interest and premium, if any, for the period after such date and prior
to the date of payment as aforesaid; and further, payment of interest or principal (and
premium, if any) need not be made at the office of a Co-Paying Agent on a date which_ is
a legal holiday or a day (including Saturdays) on which banking institutions in the city
where the principal corporate trust office of such Co-Paying Agent is located are authorized
by law or executive order to close and such corporate trust office is closed, and payment may
be made on the next succeeding business day not a legal holiday nor a day on which banking
institutions in such city are authorized by law or executive order to close in such city with
the same force and effect as if made on the date of maturity, interest payment date or the
date fixed for redemption, as the case may be, and no interest shall accrue on the matured
principal, interest and premium, if any, for the period after such date and prior to the date of
payment as aforesaid.
Section 1207. Immunity of Certain Persons. No recourse under or upon any obligation,
covenant or agreement of this Indenture, or of any Bond, or for any claim based thereon
or otherwise in respect thereof, shall be had against any past, present or future member, officer
or commissioner, as such, of the Corporation, or of any successor body politic, either directly
or through the Corporation, whether by virtue of any constitution, statute or rule of law,
or by the enforcement of any assessment or penalty or otherwise, all such liability and all
such claims being hereby expressly waived and released as a condition of, and as consideration
for, the execution of this Indenture and the issue of the Bonds.
Section 1208. Return of Moneys from Non-presentment of Bonds or Coupons. In the
event any Bond shall not be presented for payment when the principal thereof becomes
due, either at maturity, at the date fixed for redemption thereof, or otherwise, or in the
event any coupon shall not be presented for payment at the due date thereof, any funds which
shall be held for such purpose by the Trustee or a Co-Paying Agent and which remain
unclaimed by the holder of the Bond or coupon not presented for payment for a period of
four years after such due date thereof, shall upon request in writing by the User be paid to the
User as an overpayment of the Loan Payments free of any trust or lien and thereafter the
holder of such Bond or coupon shall look only to the User for payment and then. only to the
amounts so received by the User without any interest thereon, and the Trustee shall have
no further responsibility with respect to such moneys.
Section 1209. Performance by the User or the Guarantor. Any requirement imposed by this
Indenture or the Agreement on the Corporation may, if not performed by the Corporation, be
performed by the User or the Guarantor and such performance by the User or the Guarantor
shall constitute compliance with the requirements of this Indenture or the Agreement as if
performed by the Corporation.
Section 1210. Counterparts. This Indenture may be executed in any number of counter-
parts, and each such counterpart shall be, and shall be deemed to be, an original. All such
counterparts shall constitute but one and the same instrument.
Section 1211. Governing Law. This Indenture shall be governed, in all respects including
validity, interpretation and effect by, and shall be enforceable in accordance with, the law
of the State.
43
ITT WITNESS WHEREOF, LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION and TEXAS
COMMERCE BANK — IRVING, IRVING, TExAs, as the Trustee, have caused this Indenture to be
signed and sealed in their behalf by their duly authorized representatives as of the date fust
written above.
LUBBocx INDUSTRIAL DEVELOPMENT
CORPORATION
By:
President
ATTEST:
Secretary
(SEAL)
T CAS COMMERCE BANK — IRVING
IRVING, Tmus
as Trustee
By:
Vice President and Trust Officer
ATTEST:
Vice President and Trust Officer
(SEAL)
44
THE STATE OF TEXAS
CoTINTY OF ........................
BEFORE ME, a Notary Public, .................... County, Texas, on this day personally appeared
................................................. President of LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION,
known to me to be the person and officer whose name is subscribed to the foregoing instrument,
and acknowledged to me that the same was the act of the said LUBBOCK INDUSTRIAL DEVELOP -
MERIT CORPORATION, a Texas nonprofit development corporation, that he was duly authorized to
perform the same by appropriate resolution of the Board of Directors of such nonprofit develop-
ment corporation, and that he executed the same as the act of such nonprofit development
corporation, for the purposes and consideration therein expressed, and in the capacity therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this ........ day of ......................... 1981.
Notary Public. .................... County, Texas
MyCommission Expires:........... .. .......................
(NOTARY SEAL)
THE STATE OF TEXAS
COUNTY OF ........................
BEFORE ME, a Notary Public, ................................ County, Texas, on this day personally
appeared ..................................................... Vice President and Trust Officer of T us ComviERCE
BANK — IRvlxc, Irving, Texas, known to me to be the person and officer whose name is
subscribed to the foregoing instrument and acknowledged to me that the same was the act
of TExAs COMMERCE BANK — IRVIxc, Irving, Texas, a national banking association, that he
was duly authorized to perform the same by appropriate resolution of the Board of Directors
of such association and that he executed the same as the act of such association for the purposes
and consideration therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this ........ day of ........................, 198E
(NOTARY SEAL)
Notary Public, .................... County, Texas
MyCommission Expires: ........... . .............. . .. ........
45
.. i
19►. .R1:µ
To Trust Indenture
(FORM OF SERIES 1981 BOND)
UNITED STATES OF AMERICA
STATE OF TEXAS
LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION
,INDUSTRIAL DEVELOPMENT REVENUE BOND
SERIES 1981
(MAGNOLIA SEED COMPANY OF LUBBOCK PROJECT)
NO.
$5,000
LuBBocx INDusnuAL DEVELOPMENT CORPORATION, a non-profit development corporation
created and existing under the Constitution and laws of the State of Texas (hereinafter called
the "Corporation"), for value received, hereby promises to pay to the bearer hereof, or, if this
Bond be registered as to principal, to the registered holder hereof, but solely from the source
and in the manner hereinafter provided, on the 1st day of June . ................. unless this Bond
shall have been duly called for previous redemption and payment of the redemption price shall
have been made or provided for in accordance with the Indenture (as hereinafter defined),
upon presentation and surrender of this Bond, the principal sum of Fm THousAND DOLLARS
($5,000) and to pay interest on said sum from the date hereof until maturity or redemption
at the rate of ten percentum (10%) per annum, semiannually on the 1st day of June and
of December of each year, commencing December 1, 1981 and to pay interest on said sum from
maturity until paid at the maximum rate permitted by law. Principal and interest on this Bond
are payable in lawful money of the United States of America, without deduction for services
of its paying agent, at the principal corporate trust office of the Trustee, currently Texas
Commerce Bank — Irving, Irving, Texas. All interest on this Bond accruing on and prior
to maturity hereof is payable only on presentation and surrender at such office of the respective
annexed interest coupons as they become due and payable.
This Bond is one of the duly authorized issue of the Corporation's Industrial Development
Revenue Bonds, Series 1981 (Magnolia Seed Company of Lubbock Project) (hereinafter called
the "Bonds") aggregating in principal amount SEvEN HuxnxED TxousAND DoLLARs ($700,000),
authorized by a resolution duly adopted by the Corporation (hereinafter called the "Resolu-
tion"), all issued or to be issued under a Trust Indenture, dated as of June 1, 1981 (herein-
after called the "Indenture"), between the Corporation and the Trustee, pursuant to and in
full conformity with the Constitution and the laws of the State of Texas (hereinafter called
the "State"). The Bonds are issued in order to provide funds for the Corporation to lend to
Magnolia Seed Company of Lubbock, a Texas corporation (hereinafter called the "User % for
the purpose of acquisition, construction and installation of certain industrial facilities and the
site thereof (hereinafter, together with the interest in the site thereof, called the "Project').
The proceeds of the sale of the Bonds are being lent to the User pursuant to a Loan Agreement,
dated as of June 1, 1981 (hereinafter called the "Agreement"), between the Corporation
and the User and will be further evidenced by the User's creation and issuance of a note (the
"Note") in an amount equal to the aggregate principal amount of the Bonds. The principal
of and premium, if any, and interest on this Bond are secured by an assignment by the Corpora-
tion in the Indenture of certain of its rights under the Agreement and the Note, including a
pledge of certain of the revenues derived from and in accordance with the Agreement. In
addition, contemporaneously with the execution of the Agreement, the User has executed that
certain Deed of Trust, Security Agreement, Assignment of Rents and Financing Statement,
dated as of June 1, 1981 (the "Mortgage"), pursuant to which the User has bargained,
A-1
sold, granted, conveyed, transferred, mortgaged, pledged and assigned to Tim A. Loudermilk, as
mortgage trustee, for the use and benefit of the Corporation, and has further granted unto the
Corporation a security interest in, the properties comprising the Project, in order to secure the
payment of the Loan Payments (as defined in the Agreement) on the Note, according to
its tenor and effect, and certain other indebtedness of the User and the performance and
observance by the User of all the covenants expressed or implied in the Mortgage, in the
Agreement and in the Note; and the Corporation has executed that certain Collateral Assign-
ment and Security Agreement, dated as of June 1, 1981 (the "Assignment"), pursuant
to which the Corporation has conveyed, assigned, transferred and delivered and granted a
security interest to the Trustee in the Note and all rights, titles, interests, liens, privileges,
claims and demands and equities existing and to exist in connection with or as security for
payment of the Note including its rights, titles and interests arising under the Mortgage in
order to secure payment of the Bonds according to their tenor and effect and the performance
by the Corporation of all covenants expressed or implied herein and in the Indenture and
the Assignment. The payment of the Note and the obligations of the Company existing under
the Note, the Mortgage, the Agreement or the Indenture has been guaranteed by Magnolia
Seed, Hardware & Implement Company, a Texas corporation and parent company of the User
(the "Guarantor"), pursuant to a Corporate Guaranty of Obligations of Subsidiary, dated as
of June 1, 1981 (the "Guaranty"), between the Guarantor and the Trustee.
Reference is hereby made to the Indenture, the Mortgage, the Assignment, the Guaranty,
the Note and the Agreement, copies of which are filed with the Trustee, for the full provisions
thereof (including, among others, those with respect to the nature and extent of the rights,
duties and obligations of the Corporation, the User, the Guarantor, the Trustee and the holders
of the Bonds and any coupons appertaining thereto, the terms upon which the Bonds are issued
and secured, and the modification or amendment of the Indenture, the Mortgage, the Assign-
ment, the Guaranty, the Note and the Agreement), to all of which the owner or holder of this
Bond and any interest coupons appertaining hereto assents by the acceptance of this Bond or
such coupons.
As provided in the Indenture, the Corporation reserves the right to issue from time to
time additional series of bonds (hereinafter called "Additional Bonds") for the purpose of
defraying the cost of (i) completing the Project, (ii) providing enlargements, improvements or
expansions of the Project, or (iii) refunding any Bonds or Additional Bonds theretofore issued
and outstanding under the Indenture to the extent provided by taw. Such Additional Bonds
may be issued in one or.more series in various principal amount, may mature at different times,
may bear interest at different rates and may otherwise vary. The Bonds and any Additional
Bonds will rank equally and on a parity with each other and will be equally and ratably secured
by the pledge and covenants contained in the Indenture, except as otherwise provided or
permitted in the Indenture.
Subject to the full terms of Article IV and the other provisions of the Indenture, the
Bonds may be redeemed prior to maturity, in whole or any part thereof, at any time and at
the price of par plus accrued interest to the date of redemption and without premium.
Additionally, the Bonds shall be redeemed prior to maturity upon a "Determination of
Taxability", as defined below, in whole or in part, as provided below, on a date selected by
the Trustee, which date shall, except as provided below, be not more than 120 days from the
date on which the Trustee receives written notice that a Determination of Taxability shall have
occurred, at a redemption price equal to the principal amount thereof, plus a redemption
premium calculated at the rate of eight per cent (8%) per annum on the principal amount
of the Bonds to be redeemed, for the period of time which has elapsed since the "Event of
Taxability", as defined below, or such reduced premium as is provided for below, plus accrued
interest to the redemption date, upon the obligatory payment by the User of the amounts
W;
required to be paid in accordance with Subsection 7.1(b) of the Agreement; provided, however,
that if redemption of the Bonds at the redemption price and within the redemption period
specified above would result in the payment of interest on the Bonds or interest on the Note
(including interest on the Note pursuant to Section 4.1 of the Agreement together with any
other costs that constitute interest under the law of the State which are contracted for,
charged or received pursuant to the • Agreement) at a rate in excess of the maximum rate.
allowable under the law of the State, then, notwithstanding the foregoing, (x) the premium
payable upon such redemption shall be reduced or eliminated to the minimum extent necessary
in order to result in the payment of interest on the Bonds and the Note at rates not in excess
of the maximum rates allowable under the law of the State and (y) in the event that elimina-
tion of the redemption premium to the extent permitted by clause (x) above would nonetheless
result in the payment of interest on the Bonds or the Note at a rate in excess of the maximum
rate allowable under the law of the State if such redemption occurred within the time period
specified above, the date on which the redemption shall occur and the redemption price shall
become due and payable shall be delayed until the earliest business day not a Sunday or a
legal holiday or a day upon which banking institutions in the city where the principal corporate
trust office of the Trustee is located are authorized by law or executive order to close that will
result in the payment of interest on the Bonds and the Note at rates not in excess of the
ma�mum rates allowable under the law of the State.
A "Determination of Taxability" is defined as and shall be deemed to have occurred when
either: (a) the User shall be advised in writing by the Commissioner or any District Director of
Internal Revenue that upon any ground whatsoever, an Event of Taxability shall have occurred;
or (b) the User shall receive notice from the Trustee in writing that the Trustee has been
advised by (i) any holder of a Bond that the Internal Revenue Service has assessed as
includable in the gross income of such holder the interest on his Bond due to the occurrence
of an Event of Taxability, or (ii) the Commissioner or any District Director of Internal
Revenue that the interest on the Bonds is includable in the gross income of any taxpaying
holder of a Bond due to the occurrence of an Event of Taxability; provided, however, should
(a) a right to contest or appeal such decision or assessment exist and (b) the User or the holder
of the Bond, jointly or severally, contest or appeal such decision or assessment, no Deter-
mination of Taxability shall have occurred or be deemed to have occurred under subparagraph
(i) or (ii) until such contest or appeal has been finally determined and no right of further
appeal is available to the User or the holder of the Bond. Upon the occurrence of such a
Determination of Taxability, the payment of the Loan Payments shall be accelerated and
shall become due and payable in the amount of the redemption price of the Bonds required
to be redeemed and on the Iast business day immediately preceding the redemption date for
such Bonds, said redemption price and redemption date to be determined in accordance with
Subsection 402 (a) of the Indenture and said redemption amount to be determined in accordance
with Subsection 402 (c) of the Indenture.
An "Event of Taxability" shall mean the taking of any action by the User (or the failure
to take any action), or the making by the User of any misrepresentation in the Agreement or
in any certificate given in connection with the issuance, sale or delivery of any of the Bonds,
which has the effect of causing the interest payment on any of the Bonds to become includable
for federal income tax purposes in the gross income of the holders of such Bonds (other than
a holder who is a "substantial user" of the Project or a "related person" as such terms are
used in Section 103(b) (9) of the Internal Revenue Code of 1954, as amended (the "Code"),
and the applicable regulations thereunder) .
Furthermore, the Bonds shall be redeemed prior to maturity in whole or in part, as provided
below, upon a final determination by the Internal Revenue Service or a court of competent
jurisdiction that (not due to the occurrence of an Event of .Taxability) the interest payable
on the Bonds, or any of them, is includable for federal income tax purposes in the gross income
A-3
of any holder of such Bond (other than a holder who is a "substantial user" of the Project
or a "related person" within the meaning of Section 103 (b) (9) of, the Code, and the applicable
regulations thereunder). Redemption as described in this paragraph shall be at a redemption
price equal to the principal amount thereof and the interest accrued thereon to the redemption
date and may occur at any time, on a date selected by the User, not more than 120 days after
receipt by the User of a notice of the final determination described above; provided, however,
that if redemption of the Bonds within the redemption period specified above would result in
the payment of interest on the Bonds or interest on the Note (including interest on the Note
pursuant to Section 4.1 of the Agreement together with any other costs that constitute interest
under the law of the State which are contracted for, charged or received pursuant to the
Agreement) at a rate in excess of the maximum rate allowable under the law of the State,
then, notwithstanding the foregoing, the date on which the redemption shall occur and the
redemption price shall become due and payable shall be delayed until the earliest business
day not a Sunday or a legal holiday or a day upon which banking institutions in the city
where the principal corporate trust office of the Trustee is located are authorized by law or
executive order to close that will result in the payment of interest on the Bonds and interest
on the Note at rates not in excess of the maximum rates allowable under the law of the State.
Upon the occurrence of a Determination of Taxability, or a final determination as described
above, the User shall immediately give the Trustee written notice thereof and the Bonds shall
be redeemed in whole unless redemption of a portion of the Bonds outstanding would have the
result that interest payable on the Bonds remaining outstanding after such redemption would
not be includable in the gross income of any holder of a Bond (other than a holder who is a
"substantial user" of the Project or a "related person" within the meaning of Section 103 (b) (9)
of the Code, and the applicable regulations thereunder). In such event, the Bonds shall be
redeemed from time to time in inverse numerical order in such amount as is deemed necessary
in the opinion of a nationally recognized bond counsel to accomplish that result.
Exceptas provided below, notice of each redemption identifying the coupon Bonds to be
redeemed shall be given by the Trustee in the name of the Corporation (a) by publication at
least once not less than 30 days prior to the redemption date in a newspaper of general circuIa-
tion published in the State which carries financial news and is customarily published on
each business day, and (b) by first class mail, postage prepaid, not less than 30 days prior
to the redemption date, to each holder of a Bond registered as to principal to be redeemed,
addressed to such holder at its address appearing on the register maintained by the Trustee,
and to those Bondholders on the list required to be kept by the Trustee pursuant to Section 705
of the Indenture whose Bonds are to be redeemed. If, because of the temporary or permanent
suspension of the newspaper or for any other reason, it is impossible or impractical to publish
such notice in the manner provided in clause (a) above, then such publication in lieu thereof
as shall be deemed appropriate by the Trustee shall constitute a sufficient publication of notice.
If notice is published as aforesaid, neither the failure to give notice by mail as provided in
clause (b) above, nor defect in any notice so mailed, shall affect the validity of any proceedings
for the redemptions of any of the Bonds.
If all of the Bonds to be redeemed are at the time registered as to principal, notice of the
call for redemption may be given by mailing a copy of the redemption notice by registered or
certified mail at least 30 days prior to the date fixed for redemption to the holder or holders
thereof at the address shown in the registration books kept by the Trustee and publication of
the notice of the call for redemption need not be given; provided, however, that failure to give
such notice to any Bondholder by mailing, or any defect in such notice so mailed, shall not
affect the validity of the proceedings for the redemption of any of the other Bonds.
A-4
V q A •'
Notice having been so given, the Bonds designated for redemption shall on the redemp-
tion date specified in such notice become due and payable at the redemption price herein
provided, and from and after the redemption date (unless there shall be default in the
payment of the redemption price) interest on such Bonds, called for redemption, shall cease
to accrue, and upon presentation and surrender of such Bonds at the principal corporate trust
office of the Trustee, together with all coupons thereto appertaining maturing after said redemp-
tion date, such Bonds shall be paid at the redemption price aforesaid, except . that interest
called for by coupons, if any, which shall mature on or before said redemption date shall be
paid only upon presentation and surrender of such coupons.
This Bond shall be transferable by delivery unless registered as to principal in the name
of the holder on the registration books of the Corporation at the principal corporate trust office
of the Trustee, such registration being noted hereon by the Trustee, after which no transfer
shall be valid unless made on such books, but this Bond may be discharged from such registra-
tion by being registered to bearer, after which it shall be again transferable by delivery. Such
registration of this Bond shall not affect the transferability of the attached coupons by delivery
and such coupons shall continue to be payable to bearer.
The Bonds are issuable as coupon bonds in the denomination of $5,000 and registrable
as to principal only, in denominations of $5,000.
The Bonds and coupons appertaining thereto are limited obligations of the Corporation
and shall be payable solely out of the revenues derived from or in connection with the Agree-
ment, including all sums deposited from time to time pursuant to the Indenture and the
Agreement in the Debt Service Fund established under the Indenture, and in certain events
out of amounts attributable to Bond proceeds or amounts secured through the exercise of the
remedies provided in the Indenture, the Mortgage, the Assignment or the Guaranty upon
occurrence of an event of default thereunder. Neither the State, the City of Lubbock, Texas
(the "Unit"), nor any political corporation, subdivision or agency of the State shall be obligated
to pay the principal of or interest on the Bonds, and neither the faith and credit nor the
taxing power of the State, the Unit, or any political corporation, subdivision or agency thereof
is pledged to the payment of the principal of or the interest on the Bonds. No recourse under
this Bond shall be had against any past, present or future officer of the Corporation or of the
Unit.
Subject to the restrictions set forth in Section 1102 of the Indenture, the Indenture
permits the Corporation and the Trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of the Bonds and Additional Bonds at the time out-
standing, to execute supplemental indentures amending, adding to or eliminating any pro-
visions of the Indenture. It is also provided in the Indenture that the holders of a majority
in aggregate principal amount of the Bonds and Additional Bonds at the time outstanding may
on behalf of the holders of all the Bonds and Additional Bonds waive any past default or event
of default under the Indenture and its consequences except a default in the payment of interest
or premium, if any, on or the principal of any of the Bonds.
The Indenture further provides that if, after any event of default but before a final
judgment, all amounts which would then be payable thereunder by the Corporation if such
default had not occurred and was not continuing and certain other amounts shall have been
paid by or on behalf of the Corporation, and the Corporation, the User and the Guarantor shall
have also performed all other obligations in respect of which they are then in default thereunder
or under the Mortgage, the Assignment, the Guaranty, the Agreement or the Note, then the
Trustee, subject to certain limitations, shall waive such event of default and rescind and annul
any remedial step theretofore taken by it in respect of such default and its consequences.
A-5
M - W}
• "t S'
Neither this Bond nor any appertaining interest coupons shaIl be valid or obligatory for
any purpose or be entitled to any benefit under the Indenture until the certificate of
authentication hereon shall have been signed by the Trustee.
IT Is HEREBY CERTIFIED, RECITED AND REPRESENTED that the issuance of this Bond and
the Bonds is duly authorized by law; that all acts, conditions and things required to exist
and necessary to be done or performed precedent to and in the issuance of this Bond and
the Bonds to render the same lawful, valid and binding have been properly done and performed
and have happened in regular and due time, form and manner as required lay law; that all
acts, conditions and things necessary to be done or performed by the Corporation or to have
happened precedent to and in the execution and delivery of the Indenture and the Agreement,
have been done and performed and have happened in regular and due form as required by
law; that due provision has been made for the payment of the interest on and principal and
premium, if any, of this Bond and the Bonds by irrevocably pledging the described revenues
as provided in the Indenture; that payment in full for the Bonds has been received; and that
the issuance of the Bonds does not exceed or violate any constitutional or statutory limitation.
IN WITNESS WHEREOF, the Corporation has caused this Bond to be executed in its name by
its President and to be attested to by its Secretary both by their respective facsimile signatures,
and a facsimile of the seal of the Corporation to be reproduced hereon, and has caused the
interest coupons hereto annexed to be executed by said President and Secretary by their
facsimile signatures, all as of the 1st day of June, 1981.
LUBBOCK INDUSTRIAL DEvELoPMENT
CORPORATION
President
Attest:
Secretary
(SEAL)
A-6
A
(FORM OF COUPON)
Unless the Bond described below shall have ON THE: 1st DAY OF .........................
been duly called for previous redemption and
payment of the redemption price duly made or ....................
provided for, LUBBOCK INDUSTRIAL DEVELOPMENT
CORPORATION promises to pay to bearer, solely out $250.00
of the revenues referred to in such Bond, the
amount shown hereon, in lawful money of the
United States of America, upon presentation and
surrender of this coupon, but without deduction
for services of its paying agent, at the principal
corporate trust office of the Trustee, presently,
TEXAS COMMERCE BANK — IRVING, IRVING, TEXAS,
as provided in and being the semi-annual interest
due that day on its Industrial Development Reve-
nue Bond, Series 1981 (Magnolia Seed Company
of Lubbock Project) dated June 1, 1981. No.........
Attest: Lmmocx INDUSTRIAL DEVELOPMENT
CORPORATION
f
Secretary President
(FORM OF TRUSTEE'S CERTIFICATE TO BE PRINTED
ON EACH SERIES 1981 BOND)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is to certify that this Bond is one of the Bonds issued under the provisions of the
within -mentioned Indenture.
TExas CoMMEECE Baas — II:VMG
I$viNG, Tmus
As Trustee
By
Authorized Signature
(FORM OF REGISTRATION OF OWNERSHIP OF PRINCIPAL TO BE PRINTED ON
THE BACK OF EACH SERIES 1981 BOND)
PROVISIONS FOR REGISTRATION
This Bond may be registered as to principal only in the name of the holder on the books
of the Trustee at the principal corporate trust office of the Trustee, such registration to be
noted hereon by the Trustee in the registration blank below and, if so registered, no transfer
of this Bond shall thereafter be valid unless made on such books by the registered owner in
person or by his duly authorized representative and similarly noted in the registration blank
below, but the same may be discharged from registration by being in like manner registered
to bearer, after which it shall again be transferable by delivery, and may again from time to
time be registered or transferred to bearer as before. Such registration, however, shall not
affect the negotiability of the interest coupons appertaining hereto, which shall continue to be
payable to bearer and transferable by delivery. The foregoing provisions are subject to the
further terms and conditions with respect to registration and discharge from registration set
forth in the Indenture referred to in this Bond.
Date of In Whose Name
Registradon Registered Bond Registrar
FXr-1
sSOLUTION NO. 811 — 5/28/81
..:
LOAN AGREEMMNI T
by and between
LUBBOCK INDUSTRIAL DEVELOP IE�►'T CORPORATION
AND
MAGNOLIA SEED COMPA24-Y OF LUBBOCK
MEX
(The Index is not a part of the Loan Agreement
but for convenience of reference only)
Page
Prelim ...................ls.............................................................................».......................................... 1
Preliminary Recatals .......
ARTICLE I -
DEFINITIONS AND INTERPRETATIONS
Section1.1 Definitions...................................................................................... ...................... 3
Section1.2 Interpretations.......................................................................................................... 5
ARTICLE II
ACQUISITIONS OF FACILITIES; CONSTRUCTION ARRANGEMENTS
Section
2.1
Acquisition and Construction of the Project........................................................ 6
Section
2.2
Revision of Project................................................................................................. 6
6
Section2.3
Completion ...........................................................................................................
Section2.4
Possession ......................................................................................................... 6
ARTICLE III
SALE OF THE BONDS; LOAN; DISPOSITION OF LOAN PROCEEDS
Section
3.1
Issuance of the Original Bonds..............................................................................
7
Section3.2
Additional Bonds .............................................................................. ...............
7
Section3.3
Loan..........................................................................................................................._ 7
Section3.4
Project Costs.............................................................................................................
8
Section3.5
Disbursements..........................................................................................................I0
Section
3.6
Completion of the Project if Bond Proceeds are Insuf&cient................................ 11
Section
3.7
Obligation of the Parties to Cooperate in
..
Furnishing Documents to Trustee.................................................................. 11
Section
3.8
Investment of .Fund Moneys.................................................................................. 11
ARTICLE IV
LOAN PAYMENTS
Section4.1
Loan Payments .......................................................................................................12
Section4.2
Debt Service Fund.................................................................................................. 12
Section
4.3
Prepayment and Payment of Loan............................................._..........................13
Section4.4
Excesd Funds...........................................................................................................13
Section
4.5
Nature of Obligations of the User ......................................................................
13
Section4.6
Redemption of Bonds.......................................................................................14
Section4.7
Usury.......................................................................................................................14
ARTICLE V
MAINTENANCE, INSURANCE, MODIFICATIONS, ABANDONMENT AND TAXES
j
Section
5.1
Maintenance, Operation and Insurance of the Project ........................................
15
Section
5.2
Modifications After the Completion Date............................................................
15
Section
5.3
Tries and Assessments............................................................................................15
Section
5.4
Corporation Relieved from Responsibility to Maintain Project ..........................16
i
t het
ARTICLE VI
CASUALTY AND CONDEMNATION
Page
Section 6.1
Casualty or Condemnation of the Project..............................................................17
Section 6.2
Effect of Casualty of Condemnation......................................•......................... 17
Section 6.3
Cooperation................................................................................ ............................
ARTICLE VII
AccELEPATION OF PAYMENT OF THE LOAN PAYMENTS
Section 7.1
Mandatory Acceleration of Loan Payments........................................................ 18
Section 7.2
Optional Redemption............................................................................................ 19
19
Section7.3
Unconditional Obligation.................................................... ...................................
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1
Indemnity of the Corporation and the Unit.......................................................... 20
Section 8.2
Representations of User; Maintenance of Corporate Existence ............................ 21
Section 8.3
Annual Statement ....................................................................•.................... 21
Section8.4
Representations of Corporation............................................................................. 21
Section8.5
Removal of Liens................................................................................. ................... 22
Section8.6
Special Covenants........................................................................................ 22
Section 8.7
. ........ ................................. 22
Bonds are Limited Obligations ....................... ...............
Section 8.8
Limitations on Liens Against or Disposition of the
Siteor Fixtures or Improvements Thereon....................................................... 22
Section 8.9
. .... ...... .
No Warranty of Project or Facilities ............................................ .... ............ 23
Section 8.10 Federal Income Tax Exemption.............................................................................. 23
Section8.11 Maintenance of Insurance by the User.................................................................. 23
ARTICLE IX
AssIGNMENT
Section9.1
Assignment by User.................................................................................... ...... 24
Section 9.2
Corporation's Right of Assignment .................................................................... 24
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1
Enumeration of "Events of Default"...............................................................<<. •. 25
Section10.2
Remedies .. .......................................................................................................... 25
Section10.3
No Remedy Exclusive ............................................... ............ ............................ -.....
ARTICLE XI
GENERAL
Section11.1
Force Majeure................................................................................................... 27
Section11.2
Waiver of Rights........................................................................................... 27
Section 11.3
The Trustee; Co -Paying Agents.............................................................................. 27
Section 11.4
Third Party Beneficiaries.......................................................................................... 27
Section11.5
Communications........................................................................................................ 28
Amendments, Governing Law, Etc....... 28
Section 11.6
Counterparts, ..........................................
Section11.7
Term of Agreement................................................................................................... 29
Section 11.8
User's Approval of Indenture.................................................................................. 29
Section 11.9
Recording; Certificate as to Events of Default ..................... ....:............................ 29
Signatures.............................................................................................................._.............................
29
Acknowledgments..............................................................................................................................30
Exhibit A -
Description of the Facilities
Exhibit B - Description of the Site
Exhibit C - Form of Note
ii
x
LOAN AGREEMENT
by and between
LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION
and
MAGNOLIA SEED C031PANY OF LUBBOCK
THIS LOAN AGREEMENT, dated as of June 1, 1981, (herein, together with any amend-
ments or supplements hereto, called this "Agreement"), by and between LUBso= INDUSTRIAL
DEVELOPMENT CORPORATION (herein, together with any successor to its duties and functions,
called the "Corporation"), a non-profit development corporation created and existing under the
Development Corporation Act of 1979, Article 5190.6, Vernon's Annotated Texas Civil Statutes
(herein called the "Act"), and MAGNOLIA SEED COMPANY OF LUBBOcx (herein, together with
any successor or assign under this Agreement, called the "User"), a corporation organized and
existing under the laws of the -State of Texas (herein called the "State"),
WITNESSETH:
WHEREAS, the Act authorizes and empowers the Corporation to issue revenue bonds, on
behalf of the City of Lubbock, Texas (the "Unit"), to finance the cost of projects comprised
of land, buildings, equipment, facilities and improvements (one or more) found by the Board of
Directors (herein called the "Board") of the Corporation to be required or suitable for the
promotion of commercial or industrial development and expansion, the promotion of employment,
or for use by commercial, manufacturing or industrial enterprises; and
WHEREAS, by a resolution duly adopted, the Board found and determined that the Project
(as hereinafter defined) qualifies for financing under the Act and pursuant to such resolution
the Corporation and the User entered into a certain Agreement to Issue Bonds (herein, as
amended, called the "Agreement to Issue Bonds"), whereby the Corporation agreed to issue
its bonds to provide for the financing of the Project and the User agreed, among other things,
to reimburse, compensate and indemnify the Corporation far ' all expenses incurred, services
rendered and losses suffered in connection with the issuance of such bonds and the acquisition
and construction of the Project, which Agreement to Issue Bonds has been approved by written
resolutions of the City Council (herein called the "Governing Body") of the Unit; and
WHEREAS, the User and the Corporation each recognizes and agrees that the Project is
comprised of land, buildings, equipment, facilities and improvements required or suitable
for the promotion of commercial or industrial development or expansion, the promotion of
employment and for use by commercial, manufacturing or industrial enterprises, and the
issuance of the Bonds (as hereinafter defined) to finance the Project will be in furtherance of
the public policy of the State; and
WHEREAS, the Corporation proposes hereby to loan the proceeds of the Bonds to the User
and the User desires to borrow the proceeds of the Bonds upon the terms and conditions set
forth herein for the purpose of financing the acquisition and construction of the Project; and
WHEREAS, contemporaneously with the execution of this Agreement, the User has executed
that certain Deed of Trust, Security Agreement, Assignment of Rents and Financing Statement,
dated as of the date hereof (together with any amendments or supplements thereto, the "Mort-
gage" ), pursuant to which the User bargained, sold, granted, conveyed, transferred, mortgaged,
I
pledged and assigned to Tim A. Loudermilk, as mortgage trustee, for the use and benefit of the
Corporation, and further granted unto the Corporation a security interest in, the Project and
certain other properties of the User, in order to secure the payment of the Loan Payments
(as hereinafter defined) on the Note (as hereinafter defined), according to its tenor and effect,
and certain other indebtedness of the User and the performance and observance by the User
of all the covenants expressed or implied in the Mortgage, in this Agreement and in the
Note; and
WHEREAs, the User is the wholly owned subsidiary of Magnolia Seed, Hardware &
Implement Company (herein called the "Guarantor"), a Texas corporation, and the Guarantor
has guaranteed the payment of the principal of and premium, if any, and interest on the Note
and the User's obligations under this Agreement, the Indenture and the Mortgage pursuant
to a Corporate Guaranty of Obligations of Subsidiary, dated as of June 1, 1981 (herein called
the "Guaranty"), by and between the Guarantor and the Trustee (as hereinafter defined), and
WHEREAS, the Texas Industrial Commission prior to the issuance of the Bonds will have
approved the contents of this Agreement in accordance with the Act; and
WHEREAs, the User hereby represents and warrants that it has the business experience,
financial resources and responsibility to provide reasonable assurance that all Bonds and
interest thereon to be paid from or by reason of payments made by the User hereunder will
be paid as the same became due.
Now THEREFORE, in consideration of the premises and other good and valuable consider -
tion and the mutual benefits, covenants and agreements herein expressed, the Corporation and
the User agree as follows (provided that any obligation of the Corporation created by or
arising out of this Agreement shall not impose a debt or pecuniary liability upon the Unit, the
Governing Body, the State, or any political subdivision thereof, or a charge upon the general
credit or taxing powers of such bodies, but shall be payable solely out of the revenues and
receipts derived pursuant to this Agreement and the Mortgage and, to the extent provided in
this Agreement, out of the proceeds of the sale of the Bonds and any temporary investment
thereof and any insurance and condemnation awards as herein provided) :
�A
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.1 Definitions. The following terms shall have the meanings assigned to them
below whenever they are used in this Agreement, unless the context clearly otherwise requires.
Except where the contest otherwise requires, words imparting the singular number shall include
the plural number and vice versa.
"Act" is defined in the recitals of this Agreement.
"Additional Bonds" means any Bonds issued by the Corporation pursuant to Article II
of the Indenture.
"Agreement" is defined in the recitals of this Agreement.
"Agreement to Issue Bonds" is defined in the recitals of this Agreement.
"Authorized Representative" shall mean any person or persons at the time designated to
act on behalf of the User or the Corporation by a written certificate, containing a specimen
signature of such person or persons, which in the case of the User's representative is signed
on behalf of the User by an officer of the User and which is furnished to the Corporation
and the Trustee and, in the case of the Corporation's representative, is signed on behalf of the
Corporation by an officer of the Corporation and furnished to the User and the Trustee.
"Board" is defined in the recitals of this Agreement.
"Bond" or "Bonds" includes both the Original Bonds and Additional Bonds.
"Bondholder" or "holder" has the same meaning as that specified in the Indenture.
"Claims" is defined in Section 8.1 of this Agreement.
"Collateral Assignment" has the same meaning as that specified in the Indenture.
"Code" means the Internal Revenue Code of 1954, as amended.
"Communication" is defined in Section 11.5 of this Agreement.
"Completion Date" is defined in Section 2.3 of this Agreement.
"Construction Fund" is defined in Section 501 of the Indenture.
"Co -Paying Agent" has the same meaning as that specified in the Indenture..
"Corporation" means the party defined as such on page 1 of this Agreement.
"Debt Service Fund" is defined in Section 601 of the Indenture
"Determination of Taxability" is described in Section 7.1 of this Agreement!
"event of default" or "default" is defined in Section 10.1 of this Agreement.
"Event of Taxability" shall mean the taking of any action by the User (or the failure
to take any action), or the making by the User of any misrepresentation in this Agreement
or in any certificate given in connection with the issuance, sale or delivery of any of the
Bonds, which has the effect of causing the interest payment on any of the Bonds to become
includable for federal income tax purposes in the gross income of the holders of such Bonds
(other than a holder who is a "substantial user" of the Project or a "related person" as such
terms are used in Section 103(b) (9) of the Code, and the applicable regulations thereunder).
"Facilities" means the facilities which are described in Exhibit A hereto, whether before
or after the date hereof, which are located on the Site and which are financed in whole, or in
1
part from the proceeds of Bonds, including any modifications to, substitutions for or additions
to and excluding deletions from the aforesaid facilities as described in Exhibit A; provided,
however, that, except as otherwise specifically provided in this Agreement, no facility shall
be considered part of the Facilities unless such facility is provided for in the Plans and
Specifications.
"force majeure" is defined in Section 11.1 of this Agreement.
"Governing Body" is defined in the recitals of this Agreement.
"Government Obligations" means direct obligations of the United States of America for
the payment of which the full faith and credit of the United States of America is pledged.
"Guarantor" is defined in the recitals to this Agreement.
"Guaranty" is defined in the recitals to this Agreement.
"Impositions" is defined in Section 5.5 of this Agreement.
"Indenture" means that certain trust indenture by and between the Corporation and the
Trustee, dated as of the date of this Agreement, together with any amendments or supplements
thereto
"Inducement Date" means January 8, 1981, the date on which the Governing Body
pursuant to a resolution duly adopted, approved that certain Agreement to Issue Bonds by
and between the Corporation and the User.
"Insubstantial Amount" means the quotient derived by dividing the actual amount of
Original Proceeds expended for Qualifying Costs by 9.
"Interest Payment Date" means the date upon which an interest payment on the Original
Bonds becomes due and payable under the Indenture. The Indenture provides that an Interest
Payment Date will occur on December 1, 1981, and semiannually thereafter on each, June 1
and December 1 until the Original Bonds are paid.
"Loan Payments" is defined in Section 4.1 of this Agreement.
"Losses" is defined in Section 8.1 of this Agreement.
"Mortgage" is defined in the recitals of this Agreement.
"Note" means the note issued by the User to the Corporation evidencing the loan made
on behalf of the Corporation to the User under this Agreement, substantially in the form of the
note attached hereto as Exhibit C.
"opinion of counsel" means an opinion or opinions in writing, signed by legal counsel who,
unless otherwise specified, may be counsel to the Trustee, the Corporation or the User. As to
any factual matters involved in an opinion of counsel, such counsel may rely, to the extent that
they deem such reliance proper, upon a certificate or certificates setting forth such matters
which have been signed by an official, officer, general, partner or authorized representative of
a particular governmental authority, corporation, firm or other person or entity.
"Original Bonds" means the Corporation's Industrial Development Revenue Bonds, Series
1981 (Magnolia Seed Company of Lubbock Project) dated as of June 1, 1981, which are
issued, sold and delivered pursuant to Section 202 of the Indenture.
"Original Proceeds" means the proceeds derived by the Corporation from the sale of the
Original Bonds less the amount received as accrued interest on the Original Bonds and less
any amounts of Project Costs described in Subsection 3.4 (a) hereof.
"outstanding" when used with respect to the Bonds means, as of the date of determination,
all Bonds theretofore authenticated and delivered under the Indenture, except
(i) Bonds theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation pursuant to the Indenture;
(ii) Bonds for whose payment or repayment. money in the necessary amount has
theretofore been deposited with the Trustee in trust for the holders of the Bonds pursuant
to the Indenture, provided that, if such Bonds are to be prepaid, notice of such prepayment
has been duly given pursuant to the Indenture or provision therefor satisfactory to the
Trustee has been made; and
4
(iii) Bonds in exchange for, or in lieu of which, other Bonds have been authenticated
and delivered pursuant to the Indenture;
provided, however, that in determining whether the holders of the requisite principal amount
of Bonds outstanding have given any request, demand, authorization, direction, notice, consent
or waiver hereunder, Bonds owned by the Corporation, the User or any affiliate of the User
shall be disregarded and deemed not to be outstanding, except that, in determining whether the
Trustee shall be protected in relying upon such request, demand, authorization, direction, notice,
consent or waiver, only Bonds which the Trustee knows to be so owned shall be so disregarded.
Bonds so owned which may have been pledged in good faith may be regarded as outstanding
if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with
respect to such Bonds and that the pledgee is not the Corporation, the User or any affiliate
of the User.
"person" includes any individual, corporation, governmental entity, partnership, joint
venture, business association, estate or other organization or entity.
"Plans and Specifications" means the plans and specifications prepared for the Facilities,
as the same may be implemented and detailed from time to time and as the same may be
revised from time to time in accordance with this Agreement, a copy of which is on file with
the User.
"Project" means the Facilities and the Site.
"Project Costs" is defined in Section 3.4 of this Agreement.
"Qualifying Costs" means the sum of (i) an amount equal to the Project Costs described
in Section 3.4 of this Agreement (other than Project Costs described in clauses (a) and (h)
thereof) that were incurred after the Inducement Date and that are incurred for the acquisi-
tion, construction, reconstruction or improvement of land or property of a character subject to
the allowance for depreciation under Section 167 of the Code, within the meaning of Section
1.103-10(b) (1) (ii) of the Treasury Regulations, as the same may be amended or supplemented
from time to time, plus (ii) an amount equal to the product obtained by multiplying the amount
described in clause (i) above by a multiplier equal to the product obtained by multiplying the
annual interest rate on the Original Bonds, by a fraction (x) the numerator of which shall be the
number of days from the date on which the Original Bonds were issued to the Completion
Date and (y) the denominator of which shall be 365.
"Site" means the tract(s) of land which are described in Exhibit B hereto, whether
before or after the date hereof, upon which the Facilities are located, and which are financed
in whole or in part from the proceeds of the Bonds as the same may be revised from time to
time in accordance with Section 2.2 of this Agreement.
"Site Property" is defined in Section 8.8 of this Agreement.
"State" is defined in the introduction hereof.
"Trustee" has the same meaning as that specified in the Indenture.
"Unit" is defined in the recitals to this Agreement.
"User" means the party defined as such on page 1 of this Agreement.
Section 1.2 Interpretations. The table of contents, article and section headings. of this
Agreement are for reference purposes only and shall not affect its interpretation in any respect -
5
ARTICLE II
ACQUISITION of FACILITIES; CONSTRUCTION ARRANGEMENTS
Section 2.1. Acquisition and Construction of the Project. The User agrees to use its best
efforts to cause the Facilities to be acquired, constructed and installed on the Site substantially
in accordance with the Plans and Specifications, as the same may be modified in accordance
with Section 2.2.
Anything in this Agreement to the contrary notwithstanding, the User shall not be obligated
to complete the acquisition, construction and installation of the Project or any part thereof
upon (i) acceleration of the payment of all amounts to be paid by the User pursuant to the
provisions of Article VII hereof and (ii) the making of any such payment in the amount
required by, and in accordance with the terms of, this Agreement.
Section 2.2. Revision of Project. The description of the Facilities set forth in Exhibit A
to this Agreement has been prepared on the basis of the Plans and Specifications for the
Project which exist on the date of the execution of this Agreement. The Plans and Specifica-
tions and the description of the Site contained in Exhibit B to this Agreement may be revised
by the User prior to the Completion Date provided that such revision must not result in a
violation of Section 8.10 hereof.
Section 2.3. Completion. (a) There shall be no diminution in or postponement of the pay-
ments required in Section 4.1 hereof or any other payment required under this Agreement to
be paid by the User because of any delay in the completion of the Project. When the Project
has been completed, the User shall promptly deliver to the Trustee and the Corporation a
certificate signed by an Authorized Representative of the User, (i) stating that, as of a specified
date (herein called the "Completion Date"), the Project has been completed and the Facilities
placed into service, (ii) certifying that, of the Original Proceeds actually disbursed (not includ-
ing any retainage described in clause (iii) below), not more than the Insubstantial Amount was
used to pay other than Qualifying Costs, and (iii) directing the Trustee with respect to any
amount which the Trustee is to retain in the Construction Fund for future disbursement to pay
Project Costs not then due and payable or the liability for payment of which the Corporation
or the User is contesting.
(b) The remaining moneys in the Construction Fund shall be disposed of as follows:
(i) if the sum of Qualifying Costs plus the Insubstantial Amount exceeds the amount
of Original Proceeds theretofore disbursed to pay Project Costs, such excess shall, at the
discretion of the User, (A) be disbursed to the User upon receipt of a certificate signed by
an Authorized Representative of the User stating that an amount at least equal to such
amount requested has been expended by the User, as appropriate, for Project Costs and has
not previously been paid by a disbursement under Section 3.5 of this Agreement or (B) be
disbursed for deposit in the Debt Service Fund to pay interest on the Bonds to the extent
provided in Section 602 of the Indenture, and any remaining Original Proceeds shall be
disbursed and applied in accordance with Section 602 of the Indenture;
(ii) if, of the Original Proceeds actually disbursed, an amountgreater than the Insub-
stantial Amount was initially disbursed for purposes other than paying Qualifying Costs,
the User shall, prior to delivery of the certificate described in clause (i) (A) above, deposit
into the Construction Fund an amount equal to such excess in repayment of moneys dis-
bursed to the User.
Section 2.4. Possession. Prior to the occurrence of an event of default or default hereunder,
sole and exclusive possession of the Project shall be in the User subject to the right of inspec-
tion by an Authorized Representative of the Corporation, which inspection shall be made at
reasonable times and only after reasonable notice.
6
ARTICLE III
SALE OF THE BONDS; IRAN; DISPOSITION OF IRAN PEOCEEDs
Section 3.1. Issuance of the Original Bonds. The Corporation agrees that immediately
following the delivery of this Agreement, it will execute and deliver the Indenture, issue, sell
and deliver the Original Bonds in the aggregate principal amount specified by the User, but not
to exceed the principal sum of $700,000.
Section 3.2. Additional Bonds. If the User is not in default under this Agreement, the
Corporation shall, at the request of the User, cooperate with the User and from time to time
use its best efforts to issue such amount or amounts of :additional Bonds as may be requested
by the User for the purposes of completing the Project or providing enlargements, improvements
or expansions of the Project, but in no event shall there be an obligation to deliver any bonds
unless nationally recognized bond counsel has delivered an opinion to the effect . that the interest
on the proposed Additional Bonds will be exempt from federal income taxation.
The Corporation and the User have entered into this Agreement pursuant to the authority
of the Act in order to promote and develop commercial, industrial and manufacturing enter-
prises to promote and encourage employment and the public welfare. The Corporation and the
User have been induced, in part, to enter into this Agreement by their mutual promises and
agreements to cooperate with each other to cause the Project to be financed upon the most
economical terms possible. In furtherance of that goal, the Corporation agrees that it will,
upon the request of the User and subject to the applicable provisions of the Indenture, the
then existing law and the preceding paragraph, cooperate with the User and use its best efforts
to issue such amount or amounts of Additional Bonds as may be specified by the User, the
proceeds of which shall be used to retire all or a portion of the Bonds or any series of Additional
Bonds theretofore issued and outstanding.
Prior to or contemporaneously with the issuance of any Additional Bands provided for
above, (i) the terms, conditions, manner of issuance, purchase price, delivery and disposition
of proceeds of the sale of such Additional Bonds shall be approved in writing by the User and
the Corporation, and (ii) the conditions specified in the Indenture with respect to the issuance-
of
ssuanceof Additional Bonds shall be satisfied.
Section 3.3. Loan. The proceeds of the sale of the Original Bonds which are deposited
into the Construction Fund pursuant to Section 207 of the Indenture are hereby lent by the
Corporation to the User. The loan shall be evidenced by the User's creation and issuance
of the Note, dated as of the same date as the Original Bonds and payable to the order
of the Corporation. As security for repayment of the Note and performance of the User's
obligations under this Agreement, the User hereby pledges, sets over, assigns and grants a
security interest to the Corporation in all funds at any time deposited in the Construction
Fund. The User hereby authorizes and directs the Trustee to hold such funds as bailee and
custodian for the Corporation in accordance with the provisions of Section 9.305 of the Texas
Business & Commerce Code, as amended, and to invest and disburse such funds in accordance
with the Indenture and this Agreement. The Trustee shall disburse the moneys in the Con-
struction Fund for the following purposes and in the order specified below (with subsections
4a), (b) and (c) hereof being deemed to be of equal order and priority) :
(a) Payment to the User or to the Corporation, as the case mr:y be, of amounts in
respect of Project Costs which are described in subsection 3.4 (a) of this Agreement.
(b) Payment of that amount of Project Costs described in subsection 3.4(h) of this
Agreement (but such amounts will be offset by any amounts then on deposit in the Debt
Service Fund and available for such purposes).
7
L
(c) Payment to the User or to a contractor or contractors or materialman or material -
men acting for the User or to other persons to whom the User may be indebted, as the case
may be, of amounts of Qualifying Costs in respect of the Project Costs defined in Section
3.4 of this Agreement (other than amounts of Project Costs paid pursuant to clauses (a)
and (b) above), which are paid or payable from time to time in accordance with Section
3.5 of this Agreement.
(d) Upon receipt from the User of the certificate referred to in Section 2.3 of this
Agreement, payment to the Trustee for deposit in the Debt Service Fund of all amounts
remaining in the Construction Fund in excess of the amount specified in such certificate
as being the amount which the Trustee is to retain in the Construction Fund for future
disbursements to pay Project Costs not then due and payable or the liability for the pay-
ment of which the Corporation or the User is contesting.
(e) Upon receipt of a written instrument from the User (i) stating that no further
moneys will be required to be disbursed pursuant to clause (c) above, (ii) certifying that
not more than the Insubstantial Amount of Original Proceeds disbursed was used for pur-
poses other than paying Qualifying Costs and (iii) directing the Trustee to make final
disbursement from the Construction Fund for deposit in the Debt Service Fund to be
applied in accordance with Section 602 of the Indenture, final payment to the Trustee for
deposit in the Debt Service Fund of all amounts remaining, in the Construction Fund;
provided, that if the sum of Qualifying Cost plus the Insubstantial Amount exceeds the
amount of Original Proceeds theretofore disbursed for Project Costs, such excess may be
disbursed to the User upon receipt of a certificate signed by an Authorized Representative
of the User stating that an amount at least equal to such amount requested has been
expended by the User for Project Costs and has not previously been paid by a disburse-
ment under Section 3.5 of this Agreement, and further provided that if the amount of
Original Proceeds theretofore disbursed for payment of Project Costs exceeds the sum of
Qualifying Costs plus the Insubstantial Amount, the User shall, prior to delivery of the
certificate described in clause (ii) above, deposit into the Construction Fund an amount
equal to such excess in repayment of moneys disbursed to, or on behalf of, the User which
amount shall be subject to disbursement as though it was Original Proceeds.
Pending disbursement of the amounts in the Construction Fund, the undisbursed portion
of the same shall be invested and reinvested in the manner and subject to the limitations
prescribed in the Indenture.
Section 3.4. Project Costs. For purposes of this Agreement, the term "Project Costs" shall
mean:
(a) Costs incurred by or on behalf of the User in connection with the making of the
loan by the Corporation to the User; the parties hereby express their understanding and
agreement that the sole purpose for the Corporation's issuance, sale and delivery of the
Bonds is to enable the making of the loan to the User in order to effect the public purposes
of the Act and that all costs incurred in connection with the issuance, sale and delivery
of the Bonds are incurred incident to the making of such Ioan at the request and for the
benefit of the User and, therefore, are properly chargeable as costs incurred by or on
behalf of the User; accordingly, the costs described in this paragraph include, among
others, payment of financial, legal, accounting and appraisal fees, expenses and disburse-
ments, the Corporation's actual out-of-pocket administrative expenses attributable to the
issuance of the Bonds, the cost of printing, engraving and reproduction services, the
initial or acceptance fee of the Trustee, the fees and disbursements of the Trustee payable
in accordance with the Indenture prior to completion of the Project, all other fees, charges
and expenses incurred in connection with the authorization, preparation, sale, issuance and
8
y delivery of the Bonds (including all costs, fees, expenses and other amounts [other than
interest, principal or prepayment premiums on the Bonds] which may be payable by the
Corporation under any bond purchase agreement or agreements pursuant to which the
Bonds were sold), the preparation and filing or recording of the Indenture or any similar
agreement with the User (including any amendments or supplements thereto), and the
preparation of any bond purchase agreement and other related documents entered into or
prepared in connection with the financing of the Project;
(b) costs incurred in connection with the acquisition by the User of its interest
in the Site, including, without limitation, payment of, or reimbursement for, the costs of
any easements and rights of way for the purpose of providing access to and from the Site
or otherwise relating to the Project, the expenses of preparing and recording this Agreement
and any title curative documents that are necessary to perfect or protect the interest of
the User in the Site or the validity of this Agreement, the expenses of any actions and
proceedings brought to perfect or protect the title to the Site, realty and other sales or
transfer taxes, title searches, title insurance, payments made to remove any lien or charges
upon the Facilities or the Site and all other similar or related expenses or charges;
(c) preliminary project planning and initial site preparation and related costs, incIud-
ing all advances, payments and expenditures made in connection with the surveying and
mapping of the Site, the preparation of and amendments to the plans and specifications
for the Project (including plans, specifications, renderings, mock-ups and other simulations,
and any preliminary studies, tests, surveys, investigations or planning with respect to the
Project or any aspect thereof, whether as proposed or as constructed), the preparation of
costs and of revenues, site preparation (including any demolition, excavation, removal,
relocation and landscaping), together with all incidental costs incurred in connection there-
with (including the cost of architectural, legal, engineering, appraisal, accounting, financial,
consulting, design, statistical and other technical and supervisory services with respect to
any of the foregoing and all other expenses necessary or incident to determining the feasi-
bility and practicability of acquiring, constructing, improving and expanding the Project) ;
(d) costs of constructing and installing the Facilities (whether direct or indirect,
and whether or not on account of payments to contractors and subcontractors, materialmen,
suppliers, carriers or similar payments) including payment, or reimbursement, for labor,
services, materials and equipment used, furnished or installed and any other costs incurred
in connection with the acquisition, construction or installation of the improvements
constituting a part of the Project, including utilities on or off the $rte, and all other real
and personal. property deemed necessary in connection with the Project, the cost of
acquiring any performance and payment bonds, the costs of placing the Project into
operation, the fees for architectural, legal, engineering, accounting, financial, consulting,
design, statistical and other technical supervisory services with respect to the Project,
and for the miscellaneous expenses incidental to any thereof;
(e) any of the following: the cost of insurance and the aggregate amount of the
Impositions (as defined in Section 5.3) payable under this Agreement, in each case in respect
of the period prior to the Completion Date; the cost of all licenses, technical data, permits,
glans and designs obtained or employed in connection with the construction of the Facili-
ties; the cost of providing electricity, water, waste disposal, transportation and utility
services in connection with the construction of the Facilities; the expenses of seeking to
enforce any remedy against any contractor, subcontractor or other person in respect of any
default under a contract or other liability or obligation relating to the Project
(f) the costs of refunding any outstanding obligations, mortgages, or advances issued,
made or given by any person for any of the aforementioned costs;
9
(g) payment of interest actually incurred on any interim financing obtained by the
User from an unrelated lender or lenders for the performance of work on the Project, prior
to the delivery of the Original Bonds;
(h) payment of interest on the Note prior to the Completion Date in an aggregate
amount not to exceed the aggregate amount of interest on the Bonds prior to the
Completion Date;
and all other costs, charges, fees and expenses attributable for federal income tax purposes to the
capital cost of the Project (including amounts subject to an election by the User to charge such
amount to a capital account, whether or not such election is in fact made) .
Section 3.5 Disbursements. The amounts to be disbursed in accordance with clauses (a)
and (c) of Section 3.3 of this Agreement shall be disbursed by the Trustee as hereinafter pro-
vided. Before any disbursement, the Trustee and the Corporation shall receive a certificate signed
by an Authorized Representative of the User, stating (i) that there has been expended, or is
being expended concurrently with the delivery of such certificate an amount on account of
Project Costs described in any of clauses (a) -(g) of Section 3.4 at least equal to the amount
set forth in such certificate, (ii) that to the extent such certificate relates to Project Costs
described in clauses (b) -(g) of Section 3.4, such Project Costa are incurred for the acquisi-
tion, construction, reconstruction or improvement of land or property of a character subject
to the allowance for depreciation under Section 167 of the Code, within the meaning of Section
1.103-10(b) (1) (ii) of the -Treasury Regulations, as the same may be amended or supple-
mented from time to time, and such Project Costs were incurred after the Inducement Date,
and (iii) that no other certificate in respect of such expenditures is being or has previously been
delivered to the Trustee. The User covenants and agrees that in preparing and delivering such
certificates for disbursement it will use its best efforts to cause not more than an Insubstantial
Amount of Original Proceeds to be disbursed for purposes other than paying Qualifying Costs.
Further, the User will not approve or deliver any certificate for disbursement to the Corporation
or to the Trustee unless the disbursement is for the purpose of paying amounts in respect of
Project Costs in connection with property which is described in Exhibits A and B to this
Agreement, as they may be revised pursuant to Section 2.2 of this Agreement, and which is being
financed by the loan of proceeds derived from the sale of bonds the interest on which is exempt
from federal income taxation (except for interest on any bond for any period during which such
bond is held by a person who is a "substantial user" of the Project or a "related person" as those
terms are used in Section 103(b)(9) of the Code). The Corporation and the Trustee may
rely fully on any certificates delivered pursuant to this Section 3.5 and shall not be required
to make any investigation in connection therewith.
The appropriate amounts to be disbursed in accordance with clause (b) of Section 3.3 of
this Agreement shall be transferred by the Trustee for deposit into the Debt Service Fund
on the last business day before each Interest Payment Date without further instruction or
direction from the User or the Corporation; provided that, such transfer will be made only to
the extent necessary to cause payment of all amounts then due, taking into account amounts
then adequate in the Debt Service Fund, and further provided that no amounts in the Construc-
tion Fund that represent Original Proceeds shall be transferred to the Debt Service Fund for
the payment of interest on the Bonds for more than one year after the Completion Date.
The amounts to be disbursed in accordance with clauses (d) and (e) of Section 3.3 of
this Agreement shall be disbursed by the Trustee in accordance with the certificates described
in such clauses and the additional amount to be disbursed to the User in accordance with Section
2.3(b) (i) of this Agreement shall be disbursed to the User in accordance with the certificate
delivered by the User pursuant to said Section 2.3(b) (i).
10
Section 3.6. Completion of the Project if Bond Proceeds are Insufficient. The User
agrees to pay, or cause to be paid, all Project Costs which are not, or cannot be, paid or
reimbursed from the proceeds of the Bonds and to make such payments in compliance with
its covenants in Section 8.10 hereof. The Corporation does not make any representation or
warranty, either express or implied that the moneys which will be deposited into the Construc-
tion Fund and which will be available for disbursement for the purpose of paying Project
Costs will be sufficient to pay all the Project Costs which will be incurred. The User agrees that
if, after exhaustion of the moneys in the Construction Fund, the User should pay any portion
of the cost ' of the Project, it shall not be entitled to any reimbursement therefor from the
Corporation or from the holders of any of the Bonds other than from the proceeds of Additional
Bonds, nor shall it be entitled, as a consequence of such unreimbursed payment, to any
abatement, postponement, or diminution of the amounts payable under this Agreement.
Section 3.7. Obligation of the Parties to Cooperate in Furnishing Documents to Trustee.
The Corporation and the User agree to cooperate in furnishing to the Trustee the documents
referred to in this Article that are required to effect disbursements out of the Construction
Fund, and to cause such orders to be directed to the Trustee as may be necessary to effect
disbursements out of the Construction Fund in accordance with this Article. Such obligation
is subject to any provisions of this Agreement or the Indenture requiring additional docu-
mentation
ocumentation with respect to disbursements and shall not extend beyond the moneys in the
Construction Fund available for disbursement under the terms of this Agreement or the
Indenture.
Section 3.8. Investment of Fund Moneys. The Corporation hereby authorizes the User to
prepare and provide instructions to the Trustee as to the investment and reinvestment of moneys
held as part of the Debt Service Fund and the Construction Fund. Any such moneys so held
as part of the Debt Service Fund or the Construction Fund shall be invested or reinvested by
the Trustee as specified in the Indenture. The User hereby covenants that it will make such use
of the proceeds of the Bonds, regulate the investment of such proceeds and take such other and
further action as may be required so that the Bonds will not constitute arbitrage bonds under
Section 103 (c) (2) of the Code and any regulations prescribed under that section. Any officer
of the Corporation or the User having responsibility with respect to the issuance of the Bonds
is authorized, alone or in conjunction with any other officer, employee or consultant of the
Corporation or the User, to give an appropriate certificate on behalf of the Corporation or the
User, for inclusion in the transcript of proceedings, setting forth the reasonable expectations
of the Corporation regarding the amount and use of the proceeds of the Bonds and the facts
and estimates (set forth in brief and summary form) on which the expectations are based,
which will be sufficient to conclusively establish the Corporation's reasonable expectations
as to future events described in the certificate, all pursuant to Section 103(c) (2) of the Code
and the regulations thereunder. The Corporation shall cause to be furnished as provided in the
Indenture a true transcript of certified proceedings including all proceedings had with reference
to the issuance of the Bonds along with such other information as is necessary or proper with
respect to the Bonds.
ARTICLE IV
LOAN PAYMENTS
Section 4.1. Loan Payments. To repay the loan evidenced by the Note, the User shall pay
as principal an amount equal to the aggregate principal amount of the Bonds, and as interest on
the unpaid principal balance thereof from time to time outstanding an amount equal to .the
interest on the Bonds then due and payable together with any redemption premium required
pursuant to Section 402(a) of the Indenture (but in no event to exceed the maximum
amount of interest allowed by law). All of the foregoing amounts shall be payable at the times,
in the manner, and according to the other terms hereafter specified in this Section 4.1. Subject to
the limitations of Section 4.7 hereof, the User shall pay the "Loan Payments", as defined in the
last sentence of this Section 4.1, regardless of the amount thereof that constitutes interest on
or principal of the Note, in funds in such form so as to provide amounts for the timely payment
of the principal of and premium, if any, and interest on the Bonds in the amounts and on the
dates as follows: (a) on or before each Interest Payment Date on the Bonds, an aggregate
amount equal to the sum of (i) the accrued interest coming due on such date on all out-
standing Bonds, plus (ii) the principal amount of all outstanding Bonds maturing on such
date; (b) on or before each date on which any of the Bonds are to be redeemed, the principal
amount of and premium, if any, and interest (including interest accrued or to be accrued to
such date) on the Bonds to be redeemed on such date in accordance with the provisions of
the Indenture; and (c) on any date on which all the Bonds shall be declared to be and shall
become due and payable prior .to their stated maturities pursuant to the provisions of the
Indenture, the aggregate amount of principal, premium, if any, and interest so becoming due
and payable on all the Bonds in accordance with the terms of the Indenture. Any amount in
cash held in or concurrently paid to the Debt Service Fund or otherwise held by the Trustee
which may, pursuant to the provisions of the Indenture, be applied to the payment of the
principal of and interest and premium, if any, on the Bonds and which is in excess of the
amount, if any, required for payment of any past due principal of (whether by maturity or
redemption) and premium, if any, on any Bonds theretofore matured or called for redemption
and any past due interest, if any, on the Bonds shall, unless otherwise specified by the User,
be credited against the installment of the Loan Payments (as defined in the last sentence of this
Section 4.1) then required to be made by the User. If on any date of payment referred to in
clause (a), (b) or (c) of this Section 4.1, the amount in cash held in the Debt Service Fund or
otherwise held by the Trustee and available in accordance with the provisions of the Indenture
for the payment of the principal of and interest and premium, if any, on the Bonds shall not
be sufficient to pay all principal, interest and premiums, if any, then due or overdue, the
User forthwith shall also pay the amount of such deficiency on such date to the Trustee in
immediately available funds.
Notwithstanding the first sentence of this Section 4.1, the term `loan Payments" as
used elsewhere in this Agreement and in the Indenture shall for convenience be deemed to mean
and include, collectively, all payments due under this Section 4.1, whether such payments are
characterized in such sentence as the principal amount of the loan or as interest on said
principal amount.
Section 4.2. Debt Service Fund. The User shall pay the Loan Payments required of it
under this Agreement by remitting the same directly to the Trustee for deposit in the Debt
Service Fund which is to be established under the Indenture and administered by the Trustee
as provided in the Indenture. In addition to the Loan Payments under this Agreement, the
Debt Service Fund shall also receive from time to time such other amounts as are required by
the provisions of this Agreement or of the Indenture to be paid to the Trustee for deposit in
or to be paid into the Debt Service Fund. As security for the repayment of the Note and
12
performance of the User's obligations under this Agreement the User hereby pledges, sets
over, assigns and grants a security interest to the Corporation in all funds at any time deposited
in the Debt Service Fund, to the extent that any such amounts in the Debt Service Fund are
owned by the User. The User hereby authorizes and directs the Trustee to hold such funds as
bailee and custodian for the Corporation in accordance with the provisions of Section 9.305
of the Texas Business & Commerce Code, as amended, and to invest and disburse such funds in
accordance with the Indenture and this Agreement.
Section 4.3. Prepayment and Payment of Loan. In addition to the option of the User
under Article VII of this Agreement to pay in advance all or a portion of the unpaid Loan
Payments, the User may at any time deliver moneys and Government Obligations, either or
both, to the Trustee with instructions to the Trustee to hold such moneys and Government
Obligations, either or both, in the special segregated fund referred to in Section 802 of the
Indenture in connection with a discharge of the Indenture.
No payment of or on account of the Loan Payments need be made during the term of this
Agreement or thereafter when and so long as the amount in the Debt Service Fund, together
with any other amounts then held by the Trustee and available for the purpose is sufficient to
retire all of the Bonds then outstanding in accordance with the Indenture, including any
applicable redemption premium on such Bonds and the amount of interest ,due and thereafter
to become due on the Bonds or coupons appertaining thereto on and prior to such retirement.
However, if, subsequent to a date on which the User is not obligated to pay the Loan Payments
or any installment thereof pursuant to the preceding sentence, losses (net of gains) shall be
incurred in respect of the investments in Eligible Securities as defined in the Indenture and such
net losses or any other event shall have reduced the amounts in the Debt Service Fund,
together with any other amounts then held by the Trustee and available for the purpose,
below the amount sufficient at the time of such occurrence or other event to redeem or pay,
in accordance with the provisions of the Indenture, on the next date on which redemption or
payment is to be effected, the principal amount of the Bonds, and the amount of interest and
premium, if any, due or to become due on the Bonds or coupons appertaining thereto on and
prior to such redemption or payment, the Trustee shall notify the User of such fact and
thereafter, the User, as and when required for purposes of such Debt Service Fund shall pay
to the Trustee for deposit in the Debt Service Fund the amount of any such reduction below
such sufficient amount.
Section 4.4. Excess Funds. After all of the Bonds have been retired and all interest and
applicable premiums, if any, due thereon have been paid or provision for such retirement and
payment has been made, and all compensation and expenses of the Trustee and any Co -Paying
Agent has been made or provision for such payment has been made, any excess moneys
remaining in the Debt Service Fund shall forthwith be -paid by the Trustee to the User in
the manner prescribed by the last sentence of Section 802 of the Indenture.
Section 4.5. Nature of Obligations of the User. Until all of the Bonds and coupons shall be
deemed to have been paid within the meaning of Section 801 of the Indenture, the obligations
of the User to pay the Loan Payments as provided in this Agreement and to make all other
payments required herein shall be absolute and unconditional, irrespective of any rights of
set-off, recoupment or counterclaim the User might otherwise have against the Corporation,
the Trustee or any other person or. persons, and the User will not suspend or discontinue
any such payment or (except in accordance with Article VII of this Agreement) terminate this
Agreement for any cause including, without limiting the generality of the foregoing, any event
constituting force majeure, any acts or circumstance that may constitute an eviction or con-
structive eviction, failure of consideration, failure of title, or commercial frustration of purpose,
13
or any damage to or destruction of all or part of the Project, or the failure of the Facilities
to be constructed or be completed, or the failure to obtain any permit or order from any
governmental agency which is required to be obtained in connection with the construction or
operation of the Project, or the taking or condemnation of title to or the use or possession of
all or any part of the Project, or any change in the laws of the United States, or any state, or
any political subdivision thereof, or any failure of the Corporation to perform and observe any
agreement or covenant, whether express or implied, or to discharge any duty, liability or
obligation arising out of or connected with this Agreement or any other agreement between the
User and the Corporation. The preceding sentence shall not be construed to release the
Corporation from the performance of any of its agreements contained in this Agreement, or
except to the extent provided in this Section 4.5, prevent or restrict the User from asserting
any rights which it may have against the Corporation, the Trustee or any other persons under.
this Agreement or under any provision of law or prevent or restrict the User, at its own cost
and expense, from prosecuting or defending any action or proceeding against or by third parties
or taking any other action to secure or protect its rights of purchase, acquisition, possession
and use of the Project and its rights under this Agreement.
Section 4.6. Redemption of Bonds. The Corporation agrees that, at the request at any
time of the User and if the Bonds are then callable, it will forthwith take all steps that may be
necessary under the applicable redemption provisions of the Indenture to effect redemption of
all or part of the then outstanding Bonds, as may be specified by the User, on the redemption
date designated by the User and on which such redemption may be made under such applicable
provisions.
Section 4.7. Usury. Notwithstanding any provision of this Agreement to the contrary, it
is hereby agreed by and between the Corporation and the User that in no event shall the
interest contracted for, charged or received in connection with the loan made hereunder
(including interest on the Note pursuant to Section 4.1 of this Agreement together with any
other costs or considerations that constitute interest under the law of the State which are
contracted for, charged or received pursuant to this Agreement) exceed the maximum amount
of interest allowed under the laws of the State; and in the event that the maturity of the
Note is accelerated pursuant to Section 10.2 hereof, then such amounts that constitute
payments of interest on the Note, together with any costs or considerations which constitute
interest under the laws of the State, may never exceed the maximum amount of interest
allowed by the laws of the State, and excess interest, if any, provided for in this Agreement,
the Note or otherwise, shall be cancelled automatically as of the date of such acceleration or,
if theretofore paid, shall be credited on the Note.
14
ARTICLE v
MAINTENANCE, INSURANCE, MODIFICATIONS, ABANDONZAMiT A.%m TAXES
Section 5.1. Maintenance, Operation and Insurance of Project. The User hereby covenants
that it will at its own expense maintain in good repair, working order and condition those portions
of tha Mortgage. Trust Estate (as such term is defined in the Mortgage) constituting real
property, as well as all improvements and fixtures thereto, and those portions of the Mortgage
Trust Estate constituting personal property useful in the business of the User when in good.
repair, working order and condition. The User further covenants that it will at its own expense
keep the Project properly insured against such losses and in such amounts as is customary for
persons engaged in the same business as the User and operating facilities similar to the Project:
Each policy of insurance with respect to the Project shall name the Trustee as a loss payee and
shall provide that is not cancellable without at least thirty days' prior written notice to the
Trustee.
Section 5.2. Modifications After the Completion Date. After the Completion Date, the
User shall have the right to remodel or alter any Facility or the Project; make substitutions,
additions and improvements thereto and, subject to the provisions of the second paragraph of
this Section 5.2, dispose of or remove any immaterial part thereof, all as the User, in its
discretion, may deem to be desirable.
The User shall have the right to sell or otherwise dispose of personal property subject to
the lien of the mortgage (and be entitled to a release of such lien with respect to such property,
executed by the Mortgage Trustee as such term is defined in the Mortgage, upon the direction
of the Trustee) upon delivery to the Trustee of a certificate signed by the Chairman of the
Board, the President or any Vice President of the User describing such sale or other disposition
in reasonable detail, stating that such sale or other disposition is in the best interest of the
User and is not disadvantageous to the Bondholders and, in the case of personal property
that is not to be replaced with property that will be subject to the Lien of the Mortgage,
upon delivery to the Trustee for deposit in the Debt Service Fund of immediately available
funds in an amount at least equal to the fair market value (as set forth in the certificate
to be delivered to the Trustee) of the property to be sold or otherwise disposed of.
Section 5.3. Taxes and Assessments. Subject to the provisions of this Section 5.3, the
User shall pay or will otherwise discharge (a) all taxes and assessments, general and special,
if any, levied and assessed with respect to the Project during the term of this Agreement,
(b) all water, sewer or other utility fees or assessments incurred in the operation or maintenance
of the Project during the term of this Agreement, (c) any and all governmental charges- and
impositions, foreseen or unforeseen, with respect to the Project during the term of this
Agreement and (d) all sales, gross receipts, franchise, capital stock, excess profit, income and
like taxes imposed or assessed upon or in respect of the Corporation and its interest hereunder
in respect of this Agreement or by reason of the payments hereunder, whether measured by
the Loan Payments or the net income therefrom or any other payments hereunder, or against
the Trustee by reason of any payments to the Trustee of the Loan Payments or however
measured, including any penalty, interest or cost for nonpayment (all of which taxes, assess-
ments, fees and impositions are herein called collectively the "Impositions'). Unless the User
shall be contesting the amount or validity of the Impositions in accordance with this Section 5.3,
such payment by the User shall be made to the person entitled to receive the same prior to
the imposition of any fine; penalty, interest or cost for non-payment of any Imposition but
may be made in installments if so payable by law, whether or not interest accrues on the unpaid
balance. The User shall have the right, in its own name or in the name or names of the
Corporation or the Trustee, to contest in good faith the validity or amount of any Imposition
by appropriate proceedings timely instituted, if the User diligently prosecutes such contest.
The Corporation will cooperate in any such contest. The User shall hold the Corporation and
the Trustee harmless from any costs and expenses either may incur related to any such contest
15
and shall promptly pay any valid, final judgment enforcing any Imposition and cause the
same to be satisfied of record. The Corporation and the Trustee each shall promptly forward
to the User any notice, bill or other advice received by it concerning any Imposition and, . at
the User's cost and expense, shall use its best efforts and take such lawful and reasonable steps
as may be proposed by the User to minimise the Impositions for which the User is responsible.
Section 5.4. Corporation Relieved from Responsibility to Maintain Project. The User and
the Corporation hereby expressly acknowledge and agree that the Corporation is under no
responsibility to maintain, operate or repair the completed Project and the User expressly
relieves the Corporation from any such responsibility.
16
ARTICLE VI
CASUALTY AND CONDEMNATION
Section 6.1. Casualty or Condemnation of the Project. If (a) any material damage or
destruction of the Project or any portion thereof shall occur or (b) title to or the temporary
use of any portion of the Project shall be taken in any condemnation proceedings or by
the exercise of the power of eminent domain by any governmental body or by any person
acting under governmental authority, the User shall with reasonable promptness notify
the Corporation and the Trustee, as to the nature and extent of such damage, destruction
or taking and whether, in the User's sole judgment, it is practicable to restore such portion
of the Project. If the User shall determine that restoration is practicable, the User or any
designee of the User shall proceed to restore and complete such portion of the Project in
accordance with Section 2.1 of this Agreement and an amount equal to the proceeds of any
insurance or condemnation award received by the User or the Corporation in connection
with such damage, destruction, condemnation or eminent domain proceedings, after payment
of all expenses incurred in the collection thereof, shall be used to pay restoration costs. Such
amount equal to the proceeds of any insurance or condemnation award shall be paid by the
User or the Corporation into the Construction Fund and disbursed by the Trustee in the same
manner as the proceeds of the Bonds for purpose of such restoration. Any restoration costs in
excess of the amount equal to such insurance or condemnation proceeds or of moneys then
held in the Construction Fund shall be borne by the User in accordance with Section 3.6 of
this Agreement. If the User determines that it is impracticable to restore such portion of the
Project, the amount equal to the net proceeds of any insurance or condemnation award shall
be paid by the User or the Corporation to the Trustee for deposit into the Debt Service Fund
for application by the Trustee, at the User's written direction (i) to the redemption of Bonds,
on the earliest date upon which redemption can be made, at the principal amount thereof
plus accrued interest to the redemption date, (ii) for the purchase of Bonds for the purpose of
cancellation (provided that if Bonds are purchased at a premium, the User must pay such
premium with its own funds), or a combination of (i) and (ii); provided that if such net
proceeds exceed the amount required to discharge the Bonds and the Indenture, as provided
therein, such excess shall be paid to the User pursuant to Section 4.4 hereof.
Section 6.2. Effect of Casualty or Condemnation. The occurrence of a casualty or condem-
nation shall not entitle the User to any abatement, postponement or reduction in the amount
of the Loan Payments payable under this Agreement and the User hereby waives the benefits
and provisions of all laws and rights which, by reason of the casualty or condemnation, might
relieve the User from any of its obligations under this Agreement.
Section 6.3. Cooperation. The Corporation agrees that, if and to the extent that the
User may request, it will cooperate with the User at the expense of the User in all matters
relating to any casualty to or condemnation of all or any part of the Project and to this end
the Corporation hereby authorizes the User to take any and all action, in its own name or in the
name of the Corporation as the User may elect, which the Corporation could take in respect
of such matters.
17
ARTICLE VII
ACCELERATION OF PAYMENT OF THE LOAN PAYMENTS
Section 7.1. Mandatory Acceleration of Loan Payments. (a) The User covenants that it
will not take any action or omit to take. any action required under this Agreement or the Code
and the regulations promulgated thereunder, which act or omission will cause the loss of the
exemption from federal income taxation of interest paid on the Bonds.
(b) The payment of the Loan Payments shall be accelerated, ' in whole or in part, as
provided below, prior to the maturity of the Bonds (or prior to making provision for payment
thereof in accordance with the Indenture) upon a Determination of Taxability. A Determination
of Taxability shall be deemed to have occurred when either:
(i) the User shall be advised in writing by the Commissioner or any District Director
of the Internal Revenue Service that upon any ground whatsoever, an Event of Taxability
shall have occurred; or
(ii) the User shall receive notice from the Trustee in writing that the Trmtee has
been advised by (A) any holder of a Bond that the Internal Revenue Service has assessed.
as includable in the gross income of such holder the interest on his Bonds due to the
occurrence of an Event of Taxability, or (B) the Commissioner or any District Director
of the Internal Revenue Service that the interest on the Bonds is includable in the gross
income of any taxpaying holder of a Bond due to the occurrence of an Event of Taxability;
provided, however, should (a) a right to contest or appeal such decision or assessment exist
and (b) the User or the holder of the Bond, jointly or severally, contest or appeal such decision
or assessment, no Determination of Taxability shall have occurred or be deemed to have
occurred under subparagraph (i) or (ii) until such contest or appeal has been finally determined
and no right of further appeal is available to the User or the holder of the Bond. The User shall
promptly give to the Corporation and the Trustee written notice of its receipt of a written
instrument described in subparagraph (i) above which advises that an Event of Taxability
shall have occurred. Upon the occurrence of such a Determination of Taxability, the payment
of the Loan Payments shall be accelerated and shall become due and payable in the amount
of the redemption price of the Original Bonds required to be redeemed and on the last business
day immediately preceding the redemption date for such Original Bonds, said redemption price
and redemption date to be determined in accordance with Subsection 402(a) of the Indenture
and said redemption amount to be determined in accordance with Subsection 402(c) of the }
Indenture;
(c) In addition to the acceleration requirements of Subsection (b) above, the payment
of the Loan Payments shall be accelerated, in whole or in part, as provided below, prior to the
maturity of the Bonds (or prior to making provision for payment thereof in accordance with the
Indenture) upon a final determination by the Internal Revenue Service or a court of competent
jurisdiction that (not due to the occurrence of an Event of Taxability) the interest payable
on the Bonds, or any of them, is includable for federal income tax purposes in the gross income
of any holder of such Bond (other than a holder who is a "substantial user" of the Project or
a "related person" within the meaning of Section 103 (b) (9) of the Code and the applicable
regulations thereunder) . Upon the occurrence of such a final determination the Loan Payments
shall be accelerated and shall become due and payable in the amount of the redemption price
of the Original Bonds required to. be redeemed and on the last business day immediately
preceding the redemption date for such Original Bonds, said redemption price and redemption
amount to be determined in accordance with Subsection 402 (b) of the Indenture The User
shall, within 30 days following such final determination, give to the Trustee written notice
selecting a redemption date for the Original Bonds, as required by Subsection 402(b) of the
Indenture.
(d) On the date on which the accelerated Loan Payments become due and payable, the
User shall pay to the Trustee the sum of the accelerated Loan Payments in such form as to be
available on the day on which the Original Bonds are to be redeemed to pay the principal of and
premium, if any, and interest on such Original Bonds.
(e) The provisions of this Section 7.1 shall be deemed a separate and independent covenant
for the benefit of the owners or holders of the Bonds. Acceleration pursuant to this Section 7.1
shall not limit or discharge any remaining obligations which the User may have
Section 7.2. Optional Redemption. The User shall pay to the Trustee as a prepayment of the
loan evidenced by the Note for deposit in the Debt Service Fund, the amount, if any, which
when added to all amounts then held by the Trustee and available for such purposes pursuant
to this Agreement and the Indenture, will be sufficient to redeem the Bonds called for redemption
pursuant to Section 401 of the Indenture.
Section 7.3. Unconditional Obligation. It is the intention and agreement of the parties
hereto that the sums payable by the User under Section 7.1 of this Agreement and the other
provisions of this Agreement shall be payable in all events.
19
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. Indemnity of the Corporation and the Unit. The User agrees that it will at
all times indemnify and hold harmless the Corporation, and each officer thereof, the Board,
and each member thereof, the Unit, and each officer thereof, and the Governing Body, and each
member thereof against any and all losses, costs, damages, expenses and liabilities (collectively
lierein called "Losses") of whatsoever nature (including but not limited to attorney's fees,
litigation and court costs, amounts paid in settlement and amounts paid to discharge judgments)
directly or indirectly resulting from, arising out of, or related to one or more Claims, as
hereinafter defined, even if such Losses or Claims, or both, directly or indirectly result from,
arise out of or relate to or are asserted to have resulted from, arisen out of, or related to, in
whole or in part, one or more negligent acts or omissions of the Corporation, the Board, the
Unit, the Governing Body, or any of the officers, directors, employees, agents, servants or any
other party acting for or on behalf of the Corporation or the Unit in connection with the issuance
of the Bonds or in connection with the Project. The term "Claims" as used herein shall mean
all claims, lawsuits, causes of action and other legal actions and proceedings of whatsoever
nature, including but not limited to claims, lawsuits, causes of action and other legal actions and
proceedings, involving bodily or personal injury or death of any person or damage to any
property (including but not limited to persons employed by the Corporation, the Unit, the
User, or any other person and all property owned or claimed by the Corporation, the Unit,
the User, any affiliate of the User or any other person) or involving damages relating to the
issuance, offering, sale or delivery of the Bonds brought against the Corporation, the Board, the
Unit, or the Governing Body or to which the Corporation, the Board, the Unit or the Governing
Body is a party, even if groundless, false or fraudulent, that directly or indirectly result from,
arise out of, or relate to the design, construction, operation, use, occupancy, maintenance or
ownership of the Project or any part thereof or from the issuance, offering, sale or delivery of
the Bonds, and including but not limited to all claims for indemnification of the Trustee in its
capacity as such. The obligations of the User under this Section 8.1 shall apply to all Losses
or Claims, or both, that result from, arise out of, or are related to any event, occurrence,
condition or relationship prior to termination of this Agreement, whether such Losses or
Claims, or both, are asserted prior to termination of this Agreement or thereafter. The
obligations of the User under this Section 8.1 shall not be affected by an assignment or
other transfer by the Corporation of its rights, titles or interests under this Agreement
to the Trustee pursuant to the Indenture, and will continue to inure to the benefit of
the Corporation, the Board, the Unit ori- the Governing Body both prior to and after any
such assignment or transfer. Neither the Corporation, the Board, the Unit or the Governing
Body will be liable to the User for, and the User hereby releases each of them from all
liability to the User for, all injuries, damages or destruction of all. or any part or parts of
any property owned or claimed by the User that directly or indirectly result from, arise out of
or relate to the design, construction, operation, use, occupancy, maintenance or ownership of
the Project or any part thereof, even if such injuries, damages, or destruction directly or
indirectly result from, arise out of or relate to, in whole or in part, one or more negligent acts
or omissions of the Corporation, the Board, the Unit, the Governing Body or any of the officers,
directors, employees, agents, servants or any other party acting for or on behalf of the Corpora-
tion or the Unit in connection with the issuance of the Bonds or in connection with the Project.
The Corporation, the Board, the Unit and the Governing Body, as appropriate, shall reimburse
the User for payments made by the User pursuant to this Section 8.1 to the extent of any
proceeds, net of all expenses of collection, actually received by them from any insurance with
respect to the loss sustained. The Corporation, the Board, the Unit and the Governing Body
shall have the duty to claim any such insurance proceeds and the Corporation, the Board,
the Unit and the Governing Body, as appropriate, shall assign their respective rights to such
proceeds, to the extent of such required reimbursement, to the User. In case any action shall be
brought or to the knowledge of the Corporation, the Board, the Unit or the Governing Body
20
J
threatened against any of them in respect of which indemnity may be sought against the User,
the indemnified party shall promptly notify the User in writing and. the User shall have the right
to assume the investigation and defense thereof including the employment of counsel and the
payment of all expenses. The indemnified party shall have the right to employ separate counsel
in any such action and participate in the investigation and defense thereof, but the fees and
expenses of such counsel shall be paid by the indemnified party unless the employment of such
counsel has been authorized by the User. The User shall not be liable for any settlement of any
such action without its consent but, if any such action is settled with the consent- of the User,
or if there be final judgment for the plaintiff in any such action, the User agrees to indemnify
and hold harmless the Corporation, the Board, the Unit and the Governing Body from and
against any Loss by reason of such settlement or judgment. The User also agrees to indemnify
and save the Corporation harmless from any damage, loss, cost or expense arising as a result of
agreements by the Corporation in the Indenture to indemnify the Trustee.
Section 8.2 Representations of User; Maintenance of Corporate Existence. The User
represents it is and will remain duly qualified to do business in the State, that it has duly
accomplished all conditions precedent necessary to be accomplished by it prior to issuance and
delivery of the Bonds and execution and delivery of this Agreement, that it is not in default
under any agreement, indenture or other instrument in any manner which would impair the
User's ability to carry out its obligations hereunder, that it has power to enter into the
transactions contemplated by this Agreement, that it has been duly authorized to execute and
deliver this Agreement and that it will not voluntarily take any action that would adversely
affect its existence.
Until all of the Bonds and coupons shall be deemed to have been paid within the meaning
of Section 801 of the Indenture, the User will maintain its corporate existence and its qualifi-
cation to do business in the State and will not merge or consolidate with any other corporation
unless the User (a) is the surviving corporation and (b) shall not, immediately after such
merger or consolidation, be in default in the performance of any covenant, condition or obligation
of the User pursuant to this Agreement.
Section 8.3. Annual Statement. The User shall, promptly upon its becoming available,
furnish the Trustee audited financial statements of the Guarantor (prepared by an independent
certified public accountant) or a copy of each annual report and any amendment to an
annual report, filed by the User or Guarantor, either or both, with the Securities and
Exchange Commission or any successor agency pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (currently Form 10-K), as the same may be amended from time to time.
Section 8.4. Representations of Corporation. The Corporation represents that it is duly
incorporated and existing under the Act, that it has duly accomplished all conditions precedent
necessary to be accomplished by it prior to the 'execution and delivery of this Agreement,
that it is not in default under any of the provisions contained. in the laws of the State or any
agreement to which it is a party in any manner which would impair its ability to carry out
its obligations hereunder, that it has power to enter into the transactions contemplated by
this Agreement, that it has been duly authorized to execute and deliver this Agreement and
that it will not voluntarily take any action that would adversely affect its existence.
The Corporation will not knowingly take any affirmative action or omit to take any action,
which act or omission will adversely affect the exemption from federal income taxation of
interest paid on the Bonds, and in the event it should unknowingly do so or omit to do so,
will promptly upon having such brought to its attention take such reasonable actions as may
rescind or otherwise negate its unknowing action or omission.
21
Section 8.5. Removal of Liens. If any lien, encumbrance or charge of any kind based on
any claim of any kind (including, without limitation, any claim for income, franchise or
other taxes, whether federal, state or otherwise) , shall be asserted or filed against any amount
paid or payable by the User under or pursuant to this Agreement or any order (whether or
not valid) of any court shall be entered with respect to any such amount by virtue of any
claim of any kind, in either case so as to
(a) interfere with the due payment of such amount to the Trustee or the due appli-
cation of such amount by the Trustee pursuant to the applicable provisions of the
Indenture,
(b) subject the holders of the Bonds or the coupons appertaining thereto to any
obligations to refund any moneys applied to payment of the Bonds or such coupons, or
(c) result in the refusal of the Trustee to make such. due application because of its
reasonable determination that liability might be incurred if such due application were to
be made,
then the User will promptly take such action (including, but not limited to, the payment of
money) as may be necessary to prevent, or to nullify the cause or result of, such interference,
such obligation or such refusal, as the case may be.
Section 8.6. Special Covenants. The Corporation and the User agree that all proceeds
received from the sale of the Bonds, as well as all Loan Payments paid by the User and other
moneys received by the Corporation pursuant to this Agreement, shall be applied solely in the
manner and for the purposes specified in this Agreement and the Indenture. The Corporation
further agrees that it will observe the covenants made by it in the Indenture and that the
User may have and exercise all the rights, powers and benefits stated to be in the User in
this Agreement and the Indenture (including, without limitation, its rights under Sections 503
and 603 of the Indenture) and that, without the prior written consent of the User, the Inden-
ture,
ndenture, the Bonds, and bond purchase agreement pursuant to which the Bonds are to be sold
and any similar agreement relating to the sale of Additional Bonds shall not be modified in
any manner.
Section 8.7. Bonds are Limited Obligations. The Bonds shall be limited obligations of
the Corporation and shall be payable solely out of the revenues derived from or in connection
with this Agreement (including all sums deposited in the Debt Service Fund from time to time
pursuant to this Agreement and the Indenture and, in certain events, amounts attributable to
Bond proceeds or amounts obtained through the exercise of certain remedies provided for in
the Indenture and the Mortgage) and through the exercise of certain remedies pursuant to the
Indenture, the Mortgage and the Guaranty. The Bonds shall never be paid out of any other
funds of the Corporation except such revenues.
Section 8.8. Limitations on Liens or Disposition of the Site or Fixtures or Improve-
ments Thereon. Until such time as all of the Bonds and coupons shall be deemed to have been
paid within the meaning of Section 801 of the Indenture:
(a) The User will not create or incur or suffer to be ereated or incurred or to exist
any mortgage, lien, pledge or security interest in respect of the Site, or the fixtures or
improvements located or to be located thereon (such real property, fixtures and improve -
menu being herein called the "Site Property"), other than Permitted Encumbrances, as
such term is defined in the Mortgage.
(b) The User will not sell or otherwise dispose of all or any portion of the Site
Property except in compliance with the second paragraph of Section 5.2 of this Agreement.
22
. I?
Section 8.9. No Warranty of Project or Facilities. The User recognizes that the Plans and
Specifications for the Project will be furnished, prepared, revised or implemented substantially
to its requirements; therefore, the Corporation MAKES NO EXPRESS OR IMPLIED WAR-
RANTY OF ANY KIND WHATSOEVER WITH RESPECT TO THE PROJECT OR ANY
ONE OR MORE OF THE FACILITIES, INCLUDING, BUT NOT LIMITED TO: THE
MERCHANTABILITY THEREOF OR THE FITNESS THEREOF FOR ANY PARTICULAR
PURPOSES; THE DESIGN OR CONDITION THEREOF; THE WORKMANSHIP,
QUALITY OR CAPACITY THEREOF; COMPLIANCE THEREOF WITH THE REQUIRE-
MENTS OF LAW, RULE, SPECIFICATION OR CONTRACT PERTAINING THERETO;
PATENT INFRINGEMENT; LATENT DEFECTS; OR THAT THE PROCEEDS DERIVED
FROM THE SALE OF THE BONDS WILL BE SUFFICIENT TO PAY IN FULL FOR
SAME.
Section 8.10. Federal Income Tax Exemption. The User and the Corporation each coven-
ants and represents that there have never been issued any bonds with respect to "facilities"
described in Section 103 (b) (6) (E) of the Code which are located within the boundaries of the
Unit, or which would be considered "contiguous or integrated" with such facilities, which bonds
should be taken into account in determining the aggregate face amount of the bonds as provided
in Section 103 (b) (6) (B) of the Code.
The User further covenants and agrees that should there occur, either through the fault
of the User or through circumstances beyond the User's control, a Determination of Taxability,
the User shall prepay the Loan Payments in accordance with Section 71 hereof, and the User
and the Corporation hereby agree that the Corporation shall use the moneys received from
such prepayment for the immediate redemption of outstanding Bonds and otherwise as provided
in said Section 7.1.
The User and the Corporation further covenant and agree to comply fully, during the
term of the Agreement, with all effective rules, rulings or regulations promulgated by the
Department of the Treasury or the Internal Revenue Service, with respect to obligations issued
under Section 103 (b) (6) (A) as an "exempt small issue" the interest on which is exempt
from Federal income taxation.
Section 8.11. Maintenance of Insurance by the User. In addition to its obligations under
Section 5.1 hereof, the User will keep the Project insured against loss or damage in such amounts,
against such hazards and to such extents as are customarily maintained by other companies
operating similar businesses in the same or similar areas. The User will maintain public liability
insurance against claims for personal injury, death or property damage suffered by others `upon
or in or about any premises occupied by it or occurring as a result of its ownership, maintenance
or operation of any automobiles, trucks or other vehicles, aircraft or other facilities or as a
result of the use of its products or services in such amounts and to such extents as are custom-
arily maintained by other companies operating similar businesses in the same or similar areas.
Section 8.12. Notices to and Waiver of Claims Against the Texas Industrial Commission.
The User hereby agrees and covenants to promptly notify in writing the Texas Industrial
Commission (the "TIC") at its offices in Austin, Texas of any late payments on the Note, the
occurrence of an Event of Default under Section 9.01 of the Indenture or the occurrence of a
Determination of Taxability; such notice being solely for the purpose of keeping the TIC
advised of any financial difficulties with respect to bonds involving TIC approval and enabling
the TIC to perform its administrative duties under the provisionsof the Act and no other.
That no recourse under or upon any obligation, covenant or agreement contained in this
Agreement, the Indenture, the Bonds, the Note or any claims based thereon or otherwise in
respect thereto, shall be had against any past, present or future member, Commissioner, agent
or employee of the TIC, whether by virtue of any Constitution, statute or rule of law, all such
liability and all such claims being hereby expressly waived.
23
ARTICLE IX
AssIGN=NT
Section 9.1. Assignment by the User. The User may, without the consent of the Corpora-
tion or the Trustee, transfer or assign this Agreement or transfer or assign any or all of its rights
and delegate any or all of its duties hereunder, but no such transfer, assignment or delegation
(other than pursuant to Section 8.2 of this Agreement) shall relieve the User or the Guarantor
of their respective liabilities for the payment of the Loan Payments or for the payment of any
other amounts to be paid by it under this Agreement or the Guaranty, as the case may be,
and for the full observance and performance of all of the covenants and conditions to be
observed and performed by them which are contained in this Agreement, the Indenture and
the Mortgage.
Section 9.2. Corporation's Right of Assignment. The Corporation may, only in accordance
with the Indenture, assign this Agreement, the Note and the security interest of the Corporation
created hereby and pledge the moneys receivable hereunder to the Trustee as security for
payment of the principal of and premium, if any, and interest on the Bonds. The User hereby
assents to such assignments and agrees that the Trustee may exercise and enforce in accordance
with the Indenture any of the rights of the Corporation under this Agreement or the Note.
Any such assignment, however, shall be subject to all of the rights and privileges of the User
as provided in this Agreement.
24
ARTICLE X
EVENTS of DEFAULT AND REmDIEs
Section 10.1. Enumeration of "Events of Default". The terms "events of default" or
"default" shall mean, whenever they are used in this Agreement, any one or more of the
following events:
(a) Failure by the User to pay when due in accordance with Section 4.1 of this
Agreement the portion of the Loan Payments representing payment of the principal
of and premium, if any, on the Bonds and such non-payment continues for a period of
two (2) business days.
(b) Failure by the User to pay when due in accordance with Section 4.1 of this
Agreement the portion of the Loan Payments representing payment of interest on the
Bonds and such non-payment continues for a period of two (2) business days.
(c) The occurrence of one or more of the events specified in subsection (d) of Section
901 of the Indenture.
(d) If any material representation or warranty by the User contained in this Agree-
ment or furnished in writing in connection herewith is false or misleading in any material
respect.
(e) The occurrence of one or more of the events specified in subsection (e) or (f)
of Section 901 of the Indenture.
(f) Failure by the User to observe or perform any covenant, condition or agreement
contained in Section 8.1 of this Agreement and such failure shall have continued for a
period of 30 days after the User's receipt of written notice from the Corporation or the
Trustee specifying such failure.
(g) The User conveys the Project, Site or Facilities to Santa Fe Land Development
Company ("Santa Fe") pursuant to that certain. Repurchase Agreementby and between
the User and Sante Fe dated September 20, 1979 recorded in Volume 1661, Page 334,
Deed Records, Lubbock County, Texas (the "Repurchase Agreement") or the Project,
Site or Facilities reverts to Santa Fe pursuant to the Repurchase Agreement.
Section 10.2. Remedies. Whenever any event of default referred to in clauses (a) through
(g) of Section 10.1 shall have occurred and be continuing either or both of the following remedial
steps may be taken:
i (a) Ten calendar days after receipt by the User of written notice that the Trustee
or the Corporation intends to accelerate the Loan Payments, the Trustee, or the Corpora-
tion with the prior written consent of the, Trustee, may at its option, and shall upon the
written request of the holders of 51% in aggregate principal amount of the Bonds then
outstanding, declare all unpaid Loan Payments to be immediately due and payable,
whereupon the same shall become immediately due and payable; provided, however, that
such declaration may be made immediately, without the necessity of any prior notice to
the User, upon an event of default of the character specified in Section 10.1(a), (b), (e)
or (g) of this Agreement.
(b) The Trustee, or the Corporation with the prior written consent of the Trustee,
may take any action at law or in equity to collect amounts then due and thereafter to
become due, or to enforce performance and observance of any obligation, agreement or
covenant of the User under this Agreement.
Any amounts collected pursuant to action taken under this Section 10.2 shall be applied in
accordance with the provisions of the Indenture.
The Trustee may, but in no event shall be obligated to, declare all unpaid Loan Payments
immediately due because of a failure by the User to observe or perform any covenant, condition
or agreement contained in Section 8.1 of this Agreement. However, the Corporation is not
precluded from enforcing, with or without the consent of the Trustee, the observance and
performance of the covenants, conditions and agreements contained in such Section.
25
The above provisions are subject to the condition that if, after any event of default, but
prior to obtaining a final judgment for payment of all of the unpaid Loan Payments, all amounts
which would then be payable hereunder by the User if such default had not occurred and was not
continuing shall have been paid by or on behalf of the User, and the User shall have also
performed all other obligations in respect of which it is then in default hereunder, and shall have
paid the reasonable charges and expenses of the Corporation, the Trustee and the holders of the
Bonds, including reasonable attorney's fees paid or incurred, then and in every such case the
Trustee, without the consent of the Corporation or of any of the holders of the Bonds, shall waive
such event of default and rescind and annul any default and its consequences; but no such
waiver, rescission or annulment shall extend to or affect any subsequent default or impair any
right or remedy consequent thereon. In addition, in accordance with Section 911 of the Indenture
and the limitations contained therein, the Trustee shall also waive an event of default and its
consequences and rescind any prior declaration of acceleration upon the written request of the
holders of a majority of the aggregate principal amount of the Bonds then outstanding in respect
of which a default exists.
Section 10.3. No Remedy Exclusive. No remedy conferred upon or reserved to the Carpo -
ration or the Trustee by this Agreement 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 hereunder shall
impair any such right or power or shall be construed to be a waiver thereof, nor shall any single
or partial exercise of any other right, power or privilege, but every such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to entitle the
Trustee to exercise any remedy reserved to it in this Article, it shall not be necessary to give
any notice, other than such notice as may be herein expressly required.
26
1.
Ir
ARTICLE XI
GENERAL
Section 11.1. Force Majeure. If by reason of force majeure either the Corporation or the
User shall be rendered unable wholly or in part to carry out its obligations under this Agree-
ment, and if such party gives notice and full particulars of such force majeure in writing to the
other party within a reasonable time after failure to carry out its obligations under this
Agreement, such obligations (other than the obligations of the User specified in the last
sentence of this Section 11.1) of .the party giving such notice, so far as they are affected by
such force majeure, shall be suspended during the continuance of the inability then claimed,
including a reasonable time for removal of the effect thereof. The term "force majeure' shall
mean acts of God, strikes, lockouts or other industrial disturbances, acts of the public enemy,
orders of any kind of the Government of the United States, or of any State thereof, or any
civil or military authority, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fires, hurricanes, tornadoes, storms, floods, washouts, droughts, arrests, restraining of govern-
ment and people, civil disturbances, explosions, breakage or accidents to machinery, transmis-
sion pipes or canals, partial or entire failure of utilities, shortages of labor, material, supplies
or transportation, or any other cause not reasonably within the control of the party claiming
such inability. The requirement that any force majeure shall be reasonably beyond the control
of the party shall be deemed to be fulfilled even though the existing or impending strike,
lockout or other industrial disturbance may not be settled but could have been settled by
acceding to the demand of the opposing person or persons. The occurrence of any event of
force majeure shall not suspend or otherwise abate, and the User shall not be relieved from,
the obligation to pay the Loan Payments and to pay any other payments required to be made
by it under this Agreement at the times required.
Section 11.2. Waiver of Rights. Failure by the Corporation, the User or the Trustee to
insist upon the strict performance of any of the covenants and agreements contained in this
Agreement or to exercise any rights or remedies upon default shall not be considered a waiver
or relinquishment of the right to insist upon and to enforce by an appropriate legal remedy a
strict compliance by the defaulting party with all of the covenants and conditions binding on
it, or of the right to exercise any such rights or remedies if such default be continued or
repeated.
Section 11.3. The Trustee; Co -Paying Agents. The User shall pay to the Trustee reason-
able compensation for all its services, together with its actual out-of-pocket expenses necessarily
incurred, in connection with acting as Trustee under the Indenture. The User also agrees with
the Corporation that the User shall provide the Trustee with fiords sufficient to pay reasonable
compensation to all Co -Paying Agents appointed under the Indenture for their respective
services, together with their out-of-pocket expenses necessarily incurred, in connection with
acts as such Co -Paying Agents. In accordance with Section 305 of the Indenture, but subject
to the limitations of Section 4.7 of this Agreement, the User shall pay all expenses (other than
applicable taxes, fees or other governmental charges) incurred in connection with exchanges,
registrations or transfers of Bonds. Each reference herein to the Trustee shall include any
successor Trustee.
Section 11.4. Third Party Beneficiaries. This instrument is executed in part to induce the
purchase by others of the Bonds, and for the further securing of the Bonds; and accordingly,
so long as any Bonds are outstanding, all respective covenants and agreements of the parties
herein contained are hereby declared to be for the benefit of the holders from time to time of
the Bonds and the coupons appertaining thereto, and may be enforced by or on behalf of such
holders only by the Trustee in accordance with the provisions of the Indenture. This Agreement
shall not be deemed to create any right of subrogation or otherwise in any person who is not
a party (other than the permitted successors and assigns of a party) and shall not be construed
in any respect to be a contract in whole or in part for the benefit of any third party (other
27
r
than the permitted successors or assigns of a party hereto), except in each case the holders
from time to time of the Bonds and such coupons and the Trustee, but such rights shall be
enforceable only as provided in the Indenture.
Section 11.5. Communications. Except as otherwise specifically provided in this Agreement,
all notices, demands, certificates, requests, consents, submissions, or other communications
hereunder (herein collectively called a "Communication") shall be in Writing and shall be
deemed to have been given or made if delivered personally to the person who is to receive
the same or if mailed to such person by certified mail, return receipt requested, postage prepaid
(or another method reasonably believed to provide actual notice and approved by the Trustee
if certified mail is not then available), addressed
if to the Corporation, LumocK INDUSTRIAL DEVELOPMENT CORPORATION
P. O. Bos 561
Lubbock, Texas 79408
Attention: President
if to the User, MAGNOLIA SEED COMPANY of LUBEOCIZ
335 Avenue H
Lubbock, Texas 79401
Attention: Operating Manager
if to the Trustee, TEXAS COMMERCE BANS — IRVING
P. O. Bos 1285
Irving, Texas 75060
Attention: Corporate Trust Division
if to the Guarantor, MAGNOLIA SEED, HARDWARE & IMPLEMENT COMPANY
P.O. Boz 225650
Dallas, Texas 75265
Attention: President
or, in each case, at such other address as may have been designated most recently in Writing
by the addressee to the addressor; provided, however, that in order to be considered duly made,
a duplicate copy of any communication to the Corporation, the User, the Trustee or the
Guarantor shall be sent at the same time and in like manner to each of the others.
Whenever this Agreement provides for the delivery by the Corporation of a Communication,
the person receiving the same shall be entitled to rely and act upon such Communication if it is
signed by the President, Vice President or Secretary of the Corporation, or any other authorized
officers of the Corporation. Whenever this Agreement provides for the delivery by the User
of any Communication, the person receiving such Communication shall be entitled to rely and
act upon such Communication if it is signed by the Chairman of the Board, the President,
any Vice President, the Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the User, or any other duly authorized officer of the User.
Section 11.6. Counterparts, Amendments, Governing Law, Etc. This Agreement (a) may
be executed in several counterparts, each of Which shall be deemed an original, and all of which
shall constitute one and the same instrument; (b) except as provided in this Agreement or
in the Indenture, may be modified or. amended only by an instrument in writing signed by
the duly authorized representatives of all parties (or their respective successors or assigns) and,
so long as any Bonds are outstanding, only with the consent ,of the Trustee given in accordance
with the applicable provisions of the Indenture; and (c) shall be governed, in all respects
including validity, interpretation and effect by, and shall be enforceable in accordance with,
the law of the State. The parties agree that, in accordance with the Act, they will appropriately
amend this Agreement to increase the payments to be made by the User hereunder if for any
reason such payments, if made, are not sufficient to pay the principal of and interest and
28
a
premium, if any, on the Bonds as the same become due but, in no event shall the User be
obligated to pay interest on the principal amount of the loan in excess of the maximum amount
allowed by law.
The section and other headings contained in this Agreement are for reference purposes
only and shall not control or affect its interpretation in any respect. In the event that any
clause or provision of this Agreement shall be held to be invalid by any court of competent
jurisdiction, the invalidity of such clause or provision shall not affect any of the rema'nin9
provisions hereof.
Section 11.7. Term of Agreement. Except as provided in Article VII of this agreement,
this Agreement shall remain in full force and effect from the date of execution and delivery
hereof until the Indenture has been discharged in accordance with the provisions thereof;
provided, however, that (a) the provisions of Sections 3.8, 8.1, 8.5, 11.3 and the last paragraph
of 4.3 of this Agreement shall survive any expiration or termination of this Agreement, -and
(b) if the Indenture is discharged prior to the date on which all Bonds shall have matured
in accordance with their terms, by redemption or otherwise, the provisions of Section 3.3 and
3.6 of this Agreement shall continue until such date.
Section 11.8. User's Approval of Indenture. The Indenture has been submitted to the
User for examination, and the User acknowledges that, by execution of this Agreement, it
has approved the Indenture.
Section 11.9. Recording; Certificate as to Events of Default. The User covenants that
if requested by the Corporation or the Trustee (a) upon the execution and delivery of this
Agreement and thereafter from time to time, it shall cause this Agreement, the Indenture, the
Mortgage, the Collateral Assignment and each amendment and supplement to each of such
instruments (or a memorandum with respect to such instrument, amendment or supplement) to
be filed, registered and recorded and to be refiled, reregistered and rerecorded in such manner
and in such places as may be required by any present or future law in order to publish notice of
and fully to protect the lien of the Indenture, of the Mortgage and of the Collateral Assignment
and to publish notice of and protect the validity of this Agreement and (b) it shall perform or
cause to be performed from time to time any other act as required by law, and it will execute
or cause to be executed any and all instruments of further assurance that may be necessary for
such publication and protection.
So long as any Bonds are outstanding, within ninety (90) days following the end of each
fiscal year of the User the User shall furnish to the Trustee a certificate of an officer of the
User to the effect that in the course of his duties as such officer he has not become aware of
any condition or event which constitutes or which, after notice of lapse of time or both, would
constitute an event of default which has not been cured by the date of such certificate or,
if such officer has become aware of such an event or condition, specifying the nature thereof.
IN WITNESS WHEREOF, the Corporation and the User have caused this Agreement to be
signed and sealed in their behalf by their duly authorized representatives as of the date set
forth below.
LuBwcx INDusTRLAL DEVELOP- ENT
CORPORATION -
ATTEST: 9
Secretary
(Seal)
ATTEST:
Secretary
(Seal)
29
By:
President
MAGNOLIA SEE ComPANY of LuBSocS
By:
President
STATE OF TEXAS
COUNTYOF ...................
BEFORE ME, a Notary Public, .................... County, Texas, on this day personally appeared
.............................. President of LUBBocx INDUSTRIAL DEVELOPMENT CORPORATION, known to
me to be the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the Luaaocx INDUSTRIAL DEVELOPMENT
CORPORATION, a Texas non-profit development corporation, that he was duly authorized to
perform the same by appropriate resolution of the Board of Directors of such non-profit devel-
opment corporation, and that he executed the same as the act of such non-profit development
corporation for the purposes and consideration therein expressed, and in the capacity therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ........ day Of ......................... 1981.
Notary Public, ........................ County, Texas
My Commission Expires:
(NOTARY SEAL).....................................»...................................
STATE OF TEXAS
COUNTY OF .................... }
BEFORE ME, a Notary Public . .................... County, Texas, on this day personally appeared
............................... President of MAGNOLIA SEED COMPANY OF LUBBocx, a corporation, known
to me to be the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of said corporation, that he was duly authorized
to perform the same by appropriate resolution of the Board of Directors of such corporation and
that he executed the same as the act of such corporation for the purposes and consideration
therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ........ day of ............................ 1981.
Notary Public, ........................ County, Texas
My Commission Expires:
(NOTARY SEAL)........................................».................................
so
LOAN AGREEMENT
EXHIBIT A
DEscmpTioN of THE FACILITIES
A 30,000 square feet building and rail spur track for rail access to be located on the site
described in Exhibit B to this Agreement, shelving, warehouse equipment, office furniture and
office equipment.
. 4 VI
LOAN AGREEI. MNT
EXHIBIT B
DESCRIPTION OF THE SITE
All of that part of Lot 2, Block 11, Crawford Industrial Addition to the City of Lubbock,
Lubbock County, Texas, a subdivision of a part of the south half of Section 1, Block E,
GC&SF RR Co. Survey, as shown on the official plat of the First Installment of said addition of
record in Volume 972, Page 553, of the records of Lubbock County, Texas, more particularly
described as follows:
BEGINNING at the west line of Magnolia Avenue, (a 75.0 -foot street right-of-way) and
the south line of The Atchison, Topeka and Santa Fe Railway Company's Track No. 244
right-of-way;
THENCE South along the east line of said Lot 2, 335.0 feet to a point for curve;
THENCE Southwesterly on said curve, with a radius of 15.0 feet, an arc distance of
23.56 feet to a point in the north line of 66th Street (a 75.0 -foot street right-of-way);
THENCE West along the south line of said Lot 2 a distance of 335.0 feet to a point for
corner;
THENCE North parallel with the east line of said Lot 2 a distance of 350.0 feet to the
right-of-way line of said Railway Company;
THENCE East along said right-of-way 350.0 feet to the POINT OF BEGINNING;
Containing an area of 122,451.71 square feet, or 2.811 acres, more or less.
B-1
Wk a
LOAN AGREEMENT
FORM OF NOTE
$700,000 Lubbock, Texas June 1, 1981
FOR VALUE RECEIVED, MAGNOLIA SEED COMPANY OF LUBBOCK, a Texas
corporation (hereinafter called the "User"), does hereby promise to pay to the order of
LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION (hereinafter called the
"Corporation") at the principal corporate trust office of TEXAS COMMERCE BANK
— IRVING, Irving, Texas, or any successor Trustee acting as such under that certain trust
indenture dated as of June 1, 1981, by and between the Corporation and TEXAS COMMERCE
BANK— IRVIl�IG, Irving, Texas, (hereinafter called "Trustee"), in lawful money of the
United States of America, the principal sum of SEVEN HUNDRED THOUSAND DOLLARS
($700,000), and to pay interest on the unpaid principal amount hereof, in like money, at such
office at the rate and in the amount specified in Section 4.1 of the Loan Agreement hereafter
referenced.
ALL SLIMS paid hereon shall be applied first to the satisfaction of accrued interest and
the balance to the unpaid principal.
THE PRINCIPAL AMOUNT of this Note is due and payable in installments on each
Interest Payment Date, as defined in the Loan Agreement, and at maturity in the amounts
specified in Section 4.1 of the Loan Agreement. Interest on the Note is due and payable on
each Interest Payment Date at maturity in the amounts and at the rate specified in
Section 4.1 of the Loan Agreement.
THIS NOTE is the Note referred to in that certain loan agreement, dated as of June 1,
1981, by and between the User and the Corporation, and is subject to all of the terms, condi-
tions and provisions thereof, including those respecting prepayment and the acceleration of
maturity and is further subject to all of the terms, conditions and provisions of the Indenture,
all as provided in the Loan Agreement.
THIS NOTE is a contract made under and shall be construed in accordance with and
governed by the laws of the State of Texas and of the United States of America.
MAGNOLIA SEED COMPANY
OF LUBBOCK
ATTEST: By:
President
Secretary
Pay to the order of Texas Commerce Bank — Irving, Irving, Texas as trustee for the
Lubbock Industrial Development Corporation Industrial Development Revenue Bonds, Series
1981 (Magnolia Seed Company of Lubbock Project), without recourse.
LUBBOCK INau=mL DEVELOPMENT
CORPORATION
By:
President
C-1
f
RESOLUTION 0 - - 5/28/81
i
MAGNOLIA SEED COMPANY OF LUBBOCK
TO
TIM A. LOUDERMILK
As Mortgage Trustee
DEED OF TRUST, 56UUR1'1'Y HlatCr.r.ririvi
ASSIGNMENT OF RENTS AND FINANCING STATEMENT
Dated as of June 1, 1961
6'/lul" 're (l
TABLE OF CONTENTS
Page
RECITALS
..................................
1
GRANTING CLAUSES ... ............... .....
2
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section
101
Definitions ..........................
I-1 .
Section
102
Interpretations ......................
I-4
ARTICLE II
GENERAL COVENANTS AND PROVISIONS
Section
201
Payment of Loan Payments .............
II -1
Section
202
Performance of Covenants .............
II -1
Section
203
Instruments of Further Assurance;
Recording..........................
II -1
Section
204
Warranty of Title ....................
II -1
F Section
205
General ,. ........ ................
II -2
ARTICLE III
DISCHARGE
Section
301
Discharge ............................
III -1
ARTICLE IV
FORECLOSURE PROCEEDINGS
Section
401
Right to Foreclosure .................
IV -1
Section
402
Method of Sale .............. .......
IV -1
Section
403
Application of Proceeds;
Effect of Sale .....................
IV -2
Section
404
Abandonment of Sale ..................
IV -2
Section
405
Non -Extinguishment of Lien ...........
IV -3
Section
406
Right to Purchase ....................
IV -3
Section
407
Successor Mortgage Trustee ...........
IV -3
(-, j
ARTICLE V
PERFORMANCE OF USER'S OBLIGATION
Section
501
Performance of User's Obligations ....
V-1
Section
502
No Waiver ..........................
V-1
ARTICLE VI
ASSIGNMENT OF RENTS
Section
601
Assignment of Rents, Revenues and
Income.............................
VI -1
Section
602
Modification or Cancellation of
Leases.............................
VI -1 -
Section
603
Collections ..........................
VI -1
Section
604
No Assumption ........................
VI -2
ARTICLE VII
SECURITY AGREEMENT
Section
701
Security Interest ....................
VII -1
Section
702
Covenants ............................
VII -1
Section
703
Warranty of Title ..................
VII -3
ARTICLE VIII
GENERAL
Section
801
Extension, Rearrangement or
Renewal of Indebtedness ............
VIII -1
Section
802
Tenants at Will ......................
VIII -1
Section
803
Condemnation .........................
VIIT_-2
Section
804
Notice ...............................
VIII -2
Section
805
Severability .........................
VIII -2
Section
806
Application of Payments ..............
VIII -3
Section
807
Encumbrances.........................VIII-3
Section
808
Governing Law ........................
VIII -3
Section
809
Amendments ...........................
VIII -3
Signatures.....................
....... ..........
VIII -4
Acknowledgements
..... ... ....... ................
VIII -S
Exhibit
A -
Description of Site
Exhibit
B -
Liens and Encumbrances
1 e
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF RENTS AND FINANCING STATEMENT
STATE OF TEXAS §
KNOW ALL MEN BY THESE PRESENTS
COUNTY OF LUBBOCK §
THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF
RENTS AND FINANCING STATEMENT, dated as of June 1, 1981
(together with any amendments or supplements hereto, this
"Mortgage"), by MAGNOLIA SEED COMPANY OF LUBBOCK (the "User"),
a Texas corporation, for the use and benefit of LUBBOCK
INDUSTRIAL DEVELOPMENT CORPORATION (the "Corporation"), a
nonprofit development corporation created and existing under
the Development Corporation Act of 1979, Article 5190.6,
Vernon's Annotated Texas Civil Statutes (the "Act"), to
Tim A. Loudermilk, as mortgage trustee (together with any
successor or substitute in such capacity, called the "Mort-
gage Trustee"),
W I T N E S S E T H:
WHEREAS, pursuant to the terms and provisions of a
Trust Indenture (together with any amendments or supplements
thereto, the "Indenture"), dated as of even date herewith,
the Corporation has authorized the issuance of the Original
Bonds (as hereinafter defined) and has agreed to lend the
proceeds thereof to the User pursuant to the provisions of a
Loan Agreement (together with any amendments or supplements
thereto, the "Agreement"), dated as of even date herewith,
to finance the cost of the Project (as hereinafter defined),
which is comprised of land, buildings, equipment, facilities
and improvements required or suitable for the promotion of
commercial or industrial development and expansion,.the
promotion of employment, or for use by commercial, manufac-
turing or industrial enterprises;
WHEREAS, the proceeds of the Original Bonds loaned to
the User shall be used by the User to discharge the User's
obligations under a certain Real Estate Lien Note in the
original principal sum of $700,000.00 dated April 6, 1981
(the "Construction Note") made in favor of Texas Commerce
Bank -Irving of Irving, Texas by the User to facilitate
timely completion of the Project in furtherance of the
User's rights under a Repurchase Agreement (as hereinafter
defined), and payment of the Construction Note is secured by
a certain Deed of Trust and Security Agreement covering the
Project dated April 6, 1981 (the "Construction Deed of
Trust") executed by the User in favor of W. 0. Parsons, Joe
Holt, and/or
record on
Deed Records,
Tim A. Loudermilk, as trustees, and filed of
in Volume , Page
Lubbock County, Texas; and
WHEREAS, to evidence its obligations to make payments
under the Agreement in amounts sufficient to pay the principal
of and premium, if any, and interest on the Original. Bonds,
the User issued the Note (as hereinafter defined) to the
Corporation and now desires to execute and deliver this
Mortgage to secure the payment of Loan Payments (as herein-
after defined) on the Note, which Note and Mortgage will be
assigned to the Trustee (as hereinafter defined) to further
secure the payment of said Original Bonds;
(End of recitals)
NOW, THEREFORE:
The User, in consideration of the premises and of the
purchase and acceptance of the Note by the Corporation and
of the debts, covenants and agreements hereinafter mentioned
and the sum of One Dollar ($1.00), in lawful money of the
United States of America, to it duly paid at or before the
execution and delivery of these presents and for other good
and valuable consideration, the receipt and sufficiency of
all of which is hereby acknowledged, in order to secure the
payment of the Loan Payments on the Note, according to its
tenor and effect, and all other Indebtedness (as hereinafter
defined) and the performance and observance by the User of
all the covenants expressed or implied herein, in the Agreement
and in the Note, does hereby bargain, sell, grant, convey,
transfer, mortgage, pledge and assign to the Mortgage Trustee
and his successors and substitutes in trust hereunder, the
following described real and personal property, rights,
titles, interests and estates (herein collectively called
the "Mortgage Trust Estate"):
All of the rights, titles, interests and estates, now
owned or hereafter acquired by the User, in the Site (as
hereinafter defined-) with all buildings, structures, fixtures,
equipment, additions, enlargements, extensions, improvements,
modifications, accessions, additions, substitutions or
replacements or repairs now or hereafter located thereon or
therein and with the tenements, hereditaments, servitudes,
appurtenances, rights, privileges and immunities thereunto
belonging or appertaining which may from time to time be
owned by the User, and all claims or demands whatsoever of
-2-
the User either at law or in equity, in possession or expec-
tancy, of, in and to the Site, it being the intention of the
parties hereto that, so far as may be permitted by law, all
property of the character hereinabove described, which is
now owned or is hereafter acquired by the User, and is
affixed or attached or annexed to the Site, shall be and
remain or become and constitute a portion of the Site, and
the security covered by and subject to the lien of this
Mortgage.
II.
All of the rights, titles, interests and estates, now
owned or hereafter acquired by the User, in and to all other
equipment and goods of every type, kind and character which
are now or hereafter situated on the Site (whether or not
situated within or attached to buildings, structures or
other improvements) and which facilitate the use and occupancy
of the buildings, structures or other improvements located
on the Site.
III.
All leases and rentals and oil and gas or other mineral
royalties, bonuses and rental income from the Site and
Facilities owned by the User, if any, and all proceeds from
the sale and distribution thereof.
TO HAVE AND TO HOLD the said Mortgage Trust Estate,
whether now owned or held or hereafter acquired, unto the
Mortgage Trustee, his successors and assigns, forever.
IN TRUST NEVERTHELESS, upon the terms and trusts herein
set forth to secure the payment of the Indebtedness, present
and future, owing and to become owing, and to secure the
performance of and compliance with the obligations, covenants
and conditions of the Agreement and the Note and of this
Mortgage, all as herein set forth.
IT IS HEREBY COVENANTED, DECLARED AND AGREED that the
lien or interest created by this Mortgage to secure the
payment of any of the Indebtedness, both present and future,
shall be first, prior and superior to any lien, reservation
of title or other interest heretofore, contemporaneously or
subsequently suffered or granted by User, its legal repre-
sentatives, successors or assigns, except only those (if
any) expressly hereinafter referred to or described and that
the Mortgage Trust Estate is to be held, dealt with and
disposed of by the Mortgage Trustee, upon and subject to the
-3-
I
terms, covenants, conditions, uses, agreements and trusts
set forth in this Mortgage as follows:
(Next page begins with Article I
of this Mortgage)
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 101. Definitions. The following terms shall
have the meanings assigned to them below whenever they are
used in this Mortgage, unless the context clearly otherwise
requires. Except where the context otherwise requires,
words imparting the singular number shall include the plural
number and vice versa.
"Act" is defined in the introduction of this Mortgage.
"Additional Bonds" means any Bonds other than Original
Bonds issued by the Corporation pursuant to Article II of
the Indenture.
"Agreement" is defined in the recitals of this Mortgage.
"Bonds" includes both the Original Bonds and Additional
Bonds.
"Construction Deed of Trust" is defined in the recitals
of this Mortgage.
"Construction Note" is defined in the recitals of this
Mortgage.
"Corporation" means the party defined as such on page 1
of this Mortgage; provided that the term "Corporation," as
used herein, shall mean and include the holder or holders of
the Note from time to time, and upon acquisition of the Note
by any holder or holders other than the Lubbock Industrial
Development Corporation effective as of the time of such
acquisition, the term "Corporation" shall mean all of the
then holders of the Note, to the exclusion of all prior
holders, not then retaining or reserving an interest in the
Note, to the end that all rights, powers, remedies, liens,
benefits and privileges accruing and to accrue hereunder to
the "Corporation," as such term is used herein, shall inure
to the benefit of and be held by the holder or holders of
the Note from time to time, whether such holder acquires the
Note through succession to or assignment from a prior holder.
"Facilities" means the facilities which.are described
in Exhibit A to the Loan Agreement.
I-1
"Indebtedness" means:
(a) All Loan Payments;
(b) Any extensions, renewals and rearrangements
of the Note or of any indebtedness evidenced thereby
(c) All indebtedness of the User arising out of,
contained or referred to in, the Agreement; and
(d) Any and all sums, together with interest
accruing thereon as herein provided, which may here-
after be advanced by or on behalf of the Corporation or
the Mortgage Trustee under the terms of this Mortgage
on account of the failure of the User to keep, observe
or perform the User's covenants under this Mortgage, as
hereinafter provided.
"Indenture" is defined in the recitals of this Mortgage.
"Loan Payments" means the installment payments required
to be made by the User pursuant to Section 4.1 of the Agree-
ment to provide amounts for the timely payment of the principal
of and premium, if any, and interest on the Original Bonds.
"Mortgage Trust Estate" is defined in the granting
clause of this Mortgage.
. "Mortgage Trustee" means the party defined as such on
page 1 of this Mortgage.
"Note" means any promissory note which is issued by the
User to the Corporation evidencing the loan made on behalf
of the Corporation to the User under the Agreement, substan-
tially in the form of the note attached to the Agreement as
Exhibit C
"Original Bonds" means the Corporation's Industrial
Development Revenue Bonds, Series 1981 (Magnolia Seed Company
of Lubbock Project), in the principal amount of $700,000
dated as of June 1, 1981, which are issued, sold and delivered
pursuant to Article II of the Indenture.
"Permitted Encumbrances" means and includes:.
(a) Mechanics', materialmen's, workmen's, vendors'
or other undetermined liens and charges incident to
construction or maintenance provided.that the same
shall be discharged in the ordinary course of business
I-2
I_ 4
�`,
or the amount or validity of the same shall be con-
tested in good faith with any pending execution thereof
appropriately stayed;
(b) Liens of taxes, assessments and governmental
charges not yet payable, or payable without penalty so
long as so payable, or deposits created in the ordinary
course of business as security for compliance with laws
imposing taxes, assessments or governmental charges;
(c) The lien of taxes and assessments which are
delinquent but the validity of which is being contested
in good faith and with respect to which the User shall
have set aside adequate reserves unless thereby any of
the Project or the interest of the User therein may be
in danger of being lost or forfeited;
(d) The lien of this Mortgage;
(e) With regard to the Project, those certain
easements and other encumbrances rec=ted on Exhibit B
hereto;
(f) Such minor defects, irregularities, encum-
brances, exceptions, restrictions, easements, licenses,
rights-of-way and clouds on title as normally exist
with respect to properties similar in character to the
Project and as do not impair the use or the operation
of the Facilities or otherwise diminish or impair the
security intended to be afforded by this Mortgage;
(g) Any judgment lien, unless the judgment it
secures shall not, within thirty (30) days after the
entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall not have been discharged
within thirty (30) days after the expiration of any
such stay; and
(h) Rights reserved to or vested in any munici-
pality or government, statutory or public authority to
control or regulate any property of the User or to use
such property in any manner.
"Project" means the Facilities and she Site.
"Repurchase Agreement" means that certain Repurchase
Agreement by and between User and Santa Fe Land Development
1-3
1- 4
Company, dated September 20, 1979, and recorded in Volume
1661, Page 334 of the Deed Records of Lubbock County, Texas..
"Site" means the tract(s) of land which are described
in Exhibit A hereto.
"State" means the State of Texas.
"Trustee" means TEXAS COMMERCE BANK - IRVING of Irving,
Texas, serving as trustee pursuant to the Indenture, or any
successor trustee.
"User" means the party defined as such on page 1 of
this Mortgage.
Section 102. Interpretations. The table of contents,
article and section headings of this Mortgage are -for reference
purposes only and shall not affect its interpretation in any
respect.
(End of Article I)
I-4
a-
ARTICLE II
GENERAL COVENANTS AND PROVISIONS
Section 201. Pavment of Loan Payments. The User
covenants that it will duly and punctually pay the Loan
Payments on the dates and in the manner provided in the
Agreement and in the Note according to the true intent and
meaning thereof.
Section 202. Performance of Covenants. The User
covenants that it will faithfully perform at all times all
covenants, undertakings, stipulations and provisions contained
in the Agreement, in the Note and in this Mortgage and in
all proceedings pertaining thereto.
Section 203. Instruments or' Further Assurance; Recording.
The User covenants that it will do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and
delivered, such supplements hereto and such further acts,
instruments and transfers as the Corporation or the. Mortgage
Trustee may reasonably require for the better assigning,
pledging and confirming unto the Mortgage Trustee of the
Mortgage Trust Estate assigned and the revenues pledged
hereunder.
The User covenants that (a) upon the execution and
delivery of this Mortgage and thereafter, from time to time,
it shall cause this Mortgage and each amendment and supplement
hereto (or a memorandum with respect hereto or to such
amendment or supplement) to be filed, registered and recorded
and to be refiled, re -registered and re-recorded in such
manner and in such places as may be required by any present
or future law in order to publish notice of and fully to
protect the lieia of this Mortgage upon the Mortgage Trust
Estate and (b) it shall perform or cause to be performed
from time to time any other act as required by law, and it
will execute or cause to be executed any and all instruments
of further assurance that may be necessary for such publication
and protection.
Section 204. Warranty of Title. The User warrants
its good and indefeasible title to the real property and
other property described and mortgaged pursuant hereto and
all rights and interests relating thereto as being free and
clear of every mortgage, lien, encumbrance or charge, other.
than Permitted Encumbrances. The User shall lawfully acquire
and own the Project and, subject to the provisions of this
Mortgage concerning release of property, will forever warrant
and defend the title to the Project unto the Mortgage Trustee,
for the benefit of the holders or owners of the Note against
the claims of all persons whomsoever, except those claiming
under Permitted Encumbrances.
Section 205. General. For the purpose of better
securing payment of the Indebtedness, the User expressly
covenants and agrees with the Mortgage Trustee, for the use
and benefit of the Corporation and subsequent holders or
owners of the Note, that:
(a) No lien, security interest, right or
remedy in favor of the Corporation granted in or
secured by this Mortgage shall be considered as
exclusive, but all liens, security interests,
rights and remedies under this Mortgage shall be
cumulative of each other, and of all other which
the Corporation may now or hereafter have as
security for or in respect of the Indebtedness or
any part thereof.
(b) All rights of marshalling of assets or
sale in inverse order of alienation in the event
of foreclosure of any lien or security interest at
any time securing the Indebtedness or any part
thereof (including, but not limited to, the lien
hereby created) are hereby waived.
(c) Neither the timing of the User's completion
of the Facilities, the User's use of.the Project,
the location of the Facilities on.the Site, the
respective levels of the Facilities and.the Site,
the relation between the Facilities and rail
service tracks, nor the architectural design and
appearance of the Facilities and the Site, shall
obligate the User to convey the Site or the Project,
or any portion thereof, to Santa Fe Land Development
Company or shall infringe or breach or result in a
breach or an infringement of any condition or
portion of the Repurchase Agreement, and the User
shall not otherwise infringe or breach any condi-
tion or portion of the Repurchase Agreement.
(d) -The User will proceed with reasonable
diligence and at its expense to correct any defect
in title to the Mortgage Trust Estate should any
such defect be found to exist after the execution
and delivery of this instrument, and in this
connection, should it be found aZfter the execution
and delivery of this instrument that there exists
II -2
I -
upon the Mortgage Trust Estate any lien or encum-
brance equal or superior in rank or priority to
the lien created by this Mortgage, or should any
such hereafter arise, then, unless the Corporation
is the only holder of such other lien or encum-.
brance, or unless such other.lien or encumbrance
shall be specifically included on Exhibit B to
this Mortgage, the User at its expense will promptly
discharge and remove any such lien or encumbrance
from the Mortgage Trust Estate.
(e) So long as any of the Indebtedness
remains unpaid, User will maintain insurance as
required by Section 5.1 of the Agreement, such
insurance to be evidenced by a policy or policies
which shall list the Trustee as a loss payee and
shall provide that such policy or policies shall
not be cancelled without at least thirty (30)
days' written notice to the Trustee.
(f) Upon request of the Corporation, the
User at its expense will promptly correct any
defect, which may be discovered after the execution
and delivery of this Mortgage, in the Note, in the
Agreement or in any other writings secured hereby
or executed in connection herewith, in the execution
or acknowledgment hereof or thereof, or in. the
description of the Mortgage Trust Estate, and will
execute, acknowledge and deliver such further
assurances and documents as in the reasonable
opinion of the Corporation shall be necessary,
proper or appropriate to (1) convey and assign to
the Mortgage Trustee all the Mortgage Trust Estate
herein conveyed or assigned, or intended so to be,
or (2) properly evidence or give notice of the
Indebtedness or of each lien and security interest
securing payment of the Indebtedness.
(g) The User will, at the User's own cost
and expense, promptly pay and discharge when due
all taxes, assessments, maintenance charges and
other impositions of every kind and character
charged, levied, assessed or imposed against the
Mortgage Trust Estate, or any part thereof,. as the
same become payable, and before they become delin-
quent, and upon request of the Corporation, shall
furnish due proof of such payment to the Corporation
promptly after payment. The User shall have the
right, however, to contest in good faith the
validity or amount of any such tax, assessment,
maintenance charge or other imposition by appropriate
proceedings timely instituted, if the User diligently
II -3
11
prosecutes such contest and with respect to which
the User shall have set aside adequate reserves
and shall promptly pay any valid, final judgment
enforcing any such tax, assessment, maintenance
charge or other imposition and cause.the same to
be satisified of record.
(h) The User will keep and maintain those
portions of the Mortgage Trust Estate constituting
real property, as well as all improvements and
fixtures thereto and all other parts thereof, -and
all personal property useful in the business of
User when in a good state;of repair and condition
and now or hereafter constitu_ing a part of the
Mortgage Trust Estate, in a gcod state of repair
and condition, and will not tear down, damage or
attempt to remove any substantial part of the
improvements, or permit the sa^e to be torn down
or removed, without the prior written consent of
the Corporation.
(i) The User will prompt'_ pay all bills for
labor and materials incurred in connection with
the Mortgage Trust Estate and shall never permit
to be fixed against the Mortgage Trust state, or
any part thereof, any lien, even though inferior
to the lien hereof, for any such bill which may be
legally due and payable. The User shall have the
right, however, to contest in good faith the
validity or amount of such bills or to bond the
amount of such lien. Due proo= of payment before
delinquency of all such bills shall be furnished
by the User to the Corporation upon request.
(j) The User will permit the Corporation and
its agents, representatives and employees at all
reasonable times and upon reasonable prior notice
to go upon, examine, inspect and remain on the
Mortgage Trust Estate, and will furnish to the
Corporation on request all pertinent information
in regard to the development and operation of the
Mortgage Trust Estate; provided, however, that
access may be limited by the User in order to
protect trade secrets.
(k) The Corporation at all times shall have
the right to release any part cf the Mortgage
Trust Estate now or hereafter subject to the lien
hereof or any other security the Corporation now
has or may hereafter have securing payment of all
II -4
or any part of the Indebtedness, without releasing
any other part of the Mortgage Trust Estate or
other security, and without affecting the lien and
security interest hereof as to the part or parts
thereof not so released.
(1) The User will notify the Corporation in
writing promptly of the commencement of any legal
proceedings affecting title to, or the lien of
this Mortgage upon, the Mortgage Trust Estate or
any part thereof and will at the User's expense
take such action as may be necessary to preserve
the Corporation's rights affected thereby; and
should the User fail or refuse to take any such
action, the Corporation may, at the Corporation's
election, take such action in behalf and in the
name of the User and at the User's cost and expense.
(m) Promptly upon demand by the Corporation,
the User will pay all costs and expenses hereto-
fore or hereafter incurred by the Corporation for
legal, architectural or engineering services
rendered to or for the benefit of the Corporation
in connection with the making of the initial or
any subsequent loan to the User secured in whole
or in part by the lien hereof, or in the enforcement
of any of the Corporation's rights or remedies
hereunder, or both.
(End of Article II)
II -5
ARTICLE III
Discharge
Section 301. Discharge. When all of the Indebtedness
shall have been deemed to have been paid pursuant to the
provisions of the Agreement, and provision shall also be
made for paying all other sums payable thereunder and hereunder,
and if, at the time of such payment, the User shall have
kept, performed and observed all and singular the covenants
and promises in the Agreement and the Note and in this
Mortgage required or contemplated to be kept, performed and
observed by it or on its part on or prior to that time, then
this Mortgage and the lien created hereby shall be null and
void and the Mortgage Trust Estate shall revert to the. User
and the User shall be released from the covenants, agreements
and obligations of the User contained in this Mortgage, and
the Mortgage Trustee, at the request and the expense of the
User, shall execute such documents as may be reasonably
requested by the User to evidence the discharge and satisfac-
tion of this Mortgage and the release of the User from its
obligations hereunder. Otherwise, this Mortgage shall
remain and continue in full force and effect.
(End of Article III)
L.
ARTICLE IV
FORECLOSURE PROCEEDINGS
Section 401. Right to Foreclose. If'(a)(1) an "event
of default" shall have occurred and be continuing, within
the meaning of Section 10.1 of the Agreement, or (2) the
User shall have failed to observe and perform any covenant,
condition or agreement of the User herein contained, and
such default shall have continued for a.period of 30 days
after there has been given, by certified mail, to the User
by the Mortgage Trustee, or by the holders of not less than
51% in principal amount of the outstanding Bonds, a written
notice specifying such default and requiring the same to be
remedied, and the Mortgage Trustee shall not have agreed in
writing to an extension of such 30 day period prior to its
expiration (provided, however, that if the default stated in
the notice cannot be corrected within the applicable period,
such time shall be extended if corrective action is instituted
by the User within the applicable period and so long as such
action is diligently pursued until the default is corrected),
and (b) all unpaid Loan Payments shall be declared to be
immediately due and payable as provided in Section 10.2 of
the Agreement, the Corporation or any subsequent owner or
holder of the Note shall have the right and option to direct
the Mortgage Trustee, or its successor or substitute in
trust as hereinafter provided, to enforce this trust by
selling the Mortgage Trust Estate, including said real
estate, as hereinafter provided.
Section 402. Method of Sale. The sale shall be made
in the county in which said real estate is situated. If
said real estate is situated in more than one county, then
notices as hereinafter provided shall be given in both or
all of such counties, said real estate may be sold in either
county, and such notices shall designate the county where
said real estate will be sold. Notice of such sale shall be
given by posting written notice thereof at least twenty-one
(21) days preceding the date of the sale at the courthouse
door in the county in which the sale is to be made, and if
said real estate is in more than one county, one notice
shall be posted at the courthouse door of each county in
which said real estate is situated. In addition, one of the
holders of the Note (or any part thereof) shall at least
twenty-one (21) days preceding the date of such sale- serve
written notice of the proposed sale by certified mail on
each debtor obligated to pay the Indebtedness (or any part
thereof) according to the records of a holder thereof.
IV -1
Service of such notice upon each debtor shall be completed
upon deposit of the notice, enclosed in a postpaid wrapper,
properly addressed to such debtor at his, her or its most
recent address as shown by the records of such holder of the
Note {or any part thereof) in a post office or official
depository under the care and custody of the United States
Postal Service. The affidavit of any person having knowledge
of the facts to the effect that such service was completed
shall be prima facie evidence of the fact of service. After
such written notice shall have been posted, as aforesaid,
and such notice shall have been served upon such debtor or
debtors, as aforesaid, the Mortgage Trustee acting shall
perform his duty to enforce this trust by selling the
Mortgage Trust Estate, either as an entirety or in parcels
as the Mortgage Trustee acting may elect (all rights to a
marshalling of assets or sale in inverse order of alienation
being waived, as aforesaid) at public vendue, in front of
the door of the courthouse of the county designated in such
notice on the first Tuesday in any month between the hours
of 10:00 a.m. and 4:00 p.m., to the highest bidder or bidders
for cash, and make due conveyance to the purchaser or pur-
chasers, with general warranty, and the title to such pur-
chaser or purchasers, when so made by the Mortgage Trustee
acting, the User binds itself, its heirs, legal representa-
tives, successors and assigns, to warrant and forever defend.
The provisions hereof with respect to posting and giving
notices of sale are intended to comply with the provisions
of Article 3810 of the Texas Revised Civil Statutes as now
in force and effect, and in the event the requirement for
any notice under such Article 3810 shall be eliminated or
the prescribed manner of giving same modified by future
amendment to, or adoption of any statute superseding, such
Article 3810, the requirement for such particular notice
shall be deemed stricken from or modified in this Mortgage
in conformity with such amendment or superseding statute,
effective as of the effective date of same. The manner
herein prescribed for serving or giving any notice, other
than that to be posted or caused to be posted by the Mortgage
Trustee, shall not be deemed exclusive but such notice or
notices may be given in any other manner which may be per-
mitted by applicable law.
Section 403. Application of Proceeds; Effect of Sale..
The Mortgage Trustee acting shall deliver to the Trustee the
proceeds of any such sale for payment, distribution and
application as provided in the Indenture. Said sale shall
forever be a bar against the User, its legal representatives,
successors and assigns, and all other persons claiming under
any of them. It is expressly agreed that the recitals in
IV -2
each conveyance to the purchaser shall be full evidence of
the truth of,the matters therein stated, and all lawful
prerequisites to said sale shall be conclusively presumed to
have been performed.
Section 404. Abandonment of Sale. If foreclosure
should be commenced by the Mortgage Trustee, the Corporation,
or any subsequent owner or holder of the Note, may at any
time before the sale direct the Mortgage Trustee to abandon
the sale, and may at any time or times thereafter direct the
Mortgage Trustee to again commence foreclosure; or, irrespec-
tive of whether foreclosure is commenced by the Mortgage
Trustee, the Corporation, or any subsequent owner or holder
of the Note, may at any time after default under this Article
or any other Article of this Mortgage institute suit for
collection of all or any part of the Indebtedness or fore-
closure of the lien of this Mortgage or both. If the Corpora-
tion, or any subsequent owner or holder of the Note, should
institute suit for collection of the Indebtedness and fore-
closure of the lien of this Mortgage, the Corporation or
such other holder of the Note may at any time before the
entry of final judgment dismiss the same, and require the
Mortgage Trustee to sell the Mortgage Trust Estate in accor-
dance with the provisions of this Mortgage.
Section 405. Non -Extinguishment of Lien_ No single or
series of sales by the Mortgage Trustee or by any substitute
or successor Mortgage Trustee under this instrument, and no
judicial foreclosure shall extinguish the lien or exhaust
the power of sale under this Mortgage except with respect to
the items of property sold, but such lien and power shall
exist for so long as, and may be exercised in any manner by
law or in this instrument provided as often as, the circum-
stances require to give the Corporation, and any subsequent
owner or holder of the Note, full relief hereunder.
Section 406. Right to Purchase. The Corporation, and
any subsequent owner or holder of the Note, shall have the
right (but in no event the obligation) to become the purchaser
at any sale made hereunder, being the highest bidder, and
credit upon all or any part of the Indebtedness shall be
deemed cash paid for the purposes of this Article.
Section 407. Successor Mortgage Trustee. In case of
absence, death, inability, refusal or failure of the Mortgage
Trustee herein named to act, or in case he should resign
(and he is hereby authorized to resign without notice to the
User), or if the Corporation, or any subsequent owner or
hnlAcr of the Note, shall desire, with or without cause, to
IV -3
replace the Mortgage Trustee herein named, successor and
substitute mortgage trustees may be named, constituted and
appointed by the Corporation, or any subsequent owner or
holder of the Note, without other formality than an appoint-
ment and designation by a written instrument (which instrument,
if the Corporation or other such holder or owner is a corpora-
tion or association, shall be executed by the President or
any Vice President and attested by the Secretary or any
Assistant Secretary or by the Cashier or any Assistant
Cashier, without the necessity of any action by the Board of
Directors authorizing such appointment) appointing and
designating such successor and substitute trustee, whereupon
this conveyance shall vest in such successor and substitute
trustee, as Mortgage Trustee, the estate in and title to all
of the Mortgage Trust Estate, and such successor and substi-
tute trustee so appointed and designated shall thereupon
hold, possess and exercise all the title, rights, powers and
duties herein conferred on the Mortgage Trustee named and
any previous successor or substitute trustee, and his convey-
ance to the purchaser at any such sale shall be equally
valid and effective as if made by the Mortgage Trustee named
herein, and such right to appoint a successor and substitute
trustee shall exist and may be exercised as often and whenever
from any -of said causes, or without cause, as aforesaid, any
Mortgage Trustee, original or substitute, cannot or will not
act or has been removed as herein provided.
(End of Article IV)
IV -4
ARTICLE V
PERFORMANCE OF USER'S OBLIGATIONS
Section 501. Performance of User's Obligations. If
the User should fail to comply with any of the agreements,
covenants or obligations of the User under this or any other
instrument securing, guaranteeing or otherwise relating to
the Indebtedness or any part thereof, then the Corporation
may perform the same for the account and at the expense of
the User but shall not be obligated to do so; any and all
reasonable expenses incurred or paid in so doing shall be
payable by the User to the Corporation, with interest at the
lesser of (i) 15% per annum or (ii) the maximum nor -usurious
interest rate under the laws of the State, from the date
when same was so incurred or paid; the amount thereof and
accrued interest thereon shall be due and payable on demand
and shall be secured by and under this instrument; and the
amount and nature of such expense and the time when paid
shall be fully established by the affidavit of the Corpora-
tion or any officer or agent thereof, or by the affidavit of
the Mortgage Trustee acting hereunder.
Section 502. No Waiver. The exercise of the privileges
granted inthisArticle V shall in no event be considered or
constitute a waiver of the right of the Corporation at any
time after default hereunder to declare the Indebtedness to
be at once due and payable, but is cumulative of such right
and of all other rights given by this instrument, all loan
agreements, security instruments, guaranties and other
instruments now or hereafter executed by (or accepted by the
User as binding upon) the User or Magnolia Seed, Hardware,
and Implement. Company, as the case may be, and of all rights
given the Corporation by law.
(End of Article V)
V-1
ARTICLE VI
ASSIGNMENT OF RENTS
Section 601. Assignment of Rents, Revenues and Income.
The User hereby assigns and transfers to the Corporation all
rents from the Mortgage Trust Estate, including all rents
now due and which may hereafter become due under all leases
thereof, whether written or oral, now existing or hereafter
made, as additional security for the Indebtedness, and the
Corporation is given a prior and continuing lien thereon and
security interest therein.
Section 602. Modification or Cancellation of Leases%.
The User shall not modify or cancel or suffer or permit the
modification or cancellation of any lease without the prior
written consent of the Corporation.
Section 603. Collections. The transfer of the rents
from the Mortgage Trust Estate hereinabove made to the
Corporation is specific in nature and irrevocable, and the
User hereby appoints the Corporation as the User's attorney
to collect said rents with or without suit, and apply same,
less expenses of collection, to the Indebtedness in such
manner as the Corporation may elect; provided, however, that
so long as no default exists in the punctual payment of the
Indebtedness or in the keeping and performance of the User's
covenants and obligations under this Mortgage or the Agreement,
but not otherwise, the User may collect and retain the
currently accruing rents from the Mortgage Trust Estate, but
in no event may the User collect any such rents more than
six (6) months in advance of the time that same will be
earned. However, should default occur under Article IV or
any other Article of this Mortgage, thereupon or at any time
thereafter, while such or any subsequent default continues,
the Corporation may, personally or through an agent selected
by the Corporation, take, or have the Mortgage Trustee take,
possession and control of the Mortgage Trust Estate, or any
part thereof, and receive and collect all rents theretofore
accrued and all thereafter accruing therefrom so long as any
of the Indebtedness remains unpaid or until the foreclosure
of the lien hereof, applying so much thereof as may be
collected prior to the sale of the Mortgage Trust Estate by
the Mortgage Trustee or judicial foreclosure of the lien
hereof, first to the expenses incident to such possession,
control and collection, and second, for deposit in the Debt
Service Fund for payment as provided in the Indenture,
irrespective of whether the Indebtedness shall then be
matured, paying the balance, if any, to the User, its legal.
VI -1
i
representatives, successors or assigns. The Corporation,
the Corporation's agent or the Mortgage Trustee acting may
use against the User or any other person such lawful or
peaceable means as the person acting may see fit to enforce
the collection of any such rents and to secure possession of
the Mortgage Trust Estate, or any part thereof and may
settle or compromise, on any terms as the Corporation, the
Corporation's agent or the Mortgage Trustee acting sees fit,
the liability of any person or persons for any such rents;
and particularly, the Corporation, the Corporation's agent
or the Mortgage Trustee acting may institute and prosecute
to final conclusion actions of forcible entry and detainer,
or actions of trespass to try title, or actions for damages,
or any other appropriate actions, in the name of the
Corporation or in the name of the User or the Mortgage
Trustee, and may settle, compromise or abandon any such
actions as the Corporation, the Corporation's agent or the
Mortgage Trustee may see fit; and the User binds itself and
all persons and concerns claiming by, through or under the
User to take whatever lawful or peaceful steps the Corporation,
the Corporation's agent or the Mortgage Trustee may ask the
User or any such person or concern so claiming to take for
such purposes, including the institution and prosecution of
actions of the character above stated; provided, however,
that neither the Corporation nor the Mortgage Trustee shall
be required to collect any such rents or income or be liable
or chargeable for failure so to do.
Section 604. No Assumption. The Corporation does not
assume and shall not be liable in respect of any obligation
of the landlord or lessor under any of said .leases.
(End of Article VI)
VI -2
ARTICLE VII
SECURITY AGREEMENT
Section 701. Security Interest. Without limiting any
of the provisions of this Mortgage, the User, as Debtor, and
referred to in this Article as "Debtor" (whether one or
more), expressly grants unto the Corporation, as Secured
Party, and referred to in this Article as "Secured Party"
(whether one or more), a security interest in all of the
Mortgage Trust Estate (including both that now and that
hereafter existing) to the full extent that the Mortgage
Trust Estate may be subject to the Uniform Commercial Code
of the State or other states where the Mortgage Trust Estate
is situated (for purposes of this Article, the "Collateral").
Section 702. Covenants. Debtor covenants and agrees
with Secured Party that:
(a) In addition to and cumulative of any other
remedies granted in this instrument to Secured Party or
the Mortgage Trustee, Secured Party or the Mortgage
Trustee may, upon or at any time after default under
this Mortgage proceed under said Uniform Commercial
Code as to all or any part of the Collateral and shall
have and may exercise with respect to the Collateral
all the rights, remedies and powers of a secured party
under said Uniform Commercial Code, including, without
limitation, the right and power to sell, at public or
private sale or sales, or otherwise dispose of, lease
or utilize the Collateral and any part or parts theregf
in any manner authorized or permitted under said Uniform
Commercial Code after default by a debtor, and to apply
the proceeds thereof toward payment of any costs,
expenses, attorneys' fees and legal expenses thereby
incurred by Secured Party, and toward payment of the
Indebtedness in such order or manner as Secured Party
may elect. Among the rights of Secured Party upon and
after the occurrence of an event of default, and without
limitation, Secured Party shall have the right to take
possession of the Collateral and to enter upon any
premises where the same may be situated for such purpose
without being deemed guilty of trespass and without
liability for damages thereby occasioned, and to take
any action deemed necessary, appropriate or desirable
by Secured Party, at its option and in its discretion,
to repair, refurbish or otherwise prepare the Collateral
for sale, lease or other use or disposition as herein
authorized. Debtor agrees that if notice is mailed,
VII -1
A
postage prepaid, to Debtor at its address designated
pursuant to Section 804 of this Mortgage at least ten
(10) days before the time of any public sale or disposition,
or the date after which the Collateral will be sold or
disposed of by private sale, such notice shall be
deemed reasonable and shall fully satisfy any require-
ment for giving of any such notice.
(b) All recitals in any instrument or assignment
or any other instrument executed by Secured Party
incident to sale, transfer, assignment, lease or other
disposition or utilization of the Collateral or any
part thereof hereunder shall be prima facie evidence of
the matters stated therein, and no other proof shall be
required to establish full legal propriety of the sale
or other action or any fact, condition or thing incident
thereto, and all prerequisites of such.sale or other
action and of the fact, condition or thing incident
thereto shall be presumed conclusively to have been
performed or to have occurred.
(c) After default under this Mortgage Secured
Party may require Debtor to assemble the Collateral and
make it available to Secured Party at a place to be
designated by Secured Party that is reasonably con-
venient to both parties. All expenses of retaking,
holding, preparing for sale, lease or other use or
disposition, selling, leasing or otherwise using or
disposing of the Collateral and the like which are
incurred or paid by Secured Party as authorized or
permitted hereunder, including also all attorneys`
fees, legal expenses and costs, shall be added to the
Indebtedness secured by this Mortgage and Debtor shall
be liable therefor.
(d) Should Secured Party elect to exercise its
rights under said Uniform Commercial Code as to part of
the personal property or fixtures described herein,
this election shall not preclude Secured Party or the
Mortgage Trustee from exercising any or all of the
rights and remedies granted by the other Articles of
this Mortgage as to the remaining personal property or
fixtures.
(e) Secured Party may, at its election, at any
time after delivery of this Mortgage, sign one or more
copies hereof.in order that such copies may be used as
a financing statement under said Uniform Commercial
VII -2
Code. Said signature by Secured Party may be placed
between the last sentence of this Mortgage and Debtor's
acknowledgment or may follow Debtor's acknowledgment.
Secured Party's signature need not be acknowledged and
is not necessary to the effectiveness hereof as a deed
of trust, mortgage, assignment, pledge, security agreement
or (unless otherwise required by applicable law) as a
financing statement.
(f) So long as any amount remains unpaid on the
Indebtedness,. Debtor will not execute and there will
not be filed in any public office any financing statement
or statements affecting the Collateral other than
financing statements in favor of Secured Party hereunder,
unless prior written specific consent and approval of
Secured Party shall have been first obtained.
(g) Secured Party is authorized to file in any
jurisdiction where Secured Party deems it necessary, a
financing statement or statements and one or more
continuation statements, and at the request of Secured
Party, Debtor will join Secured Party in executing one
or more financing statements, continuation statements
or both, pursuant to said Uniform Commercial Code in
form.satisfactory to.Secured Party, and will pay the
cost of filing or recording this Mortgage as a financing
statement, in all public offices at any time and from
time to time whenever filing or recording of any financing
statement, continuation statement or this Mortgage is
deemed by Secured Party to be necessary or desirable.
(h) Certain of the Collateral is or will become
"fixtures" (as that term is defined in said Uniform
Commercial Code) on the real estate described or referred
to in this Mortgage, and this Mortgage upon being filed
for record in the real estate records of the county
wherein such fixtures are situated shall operate also
as a financing statement filed as a fixture filing in
accordance with Section 9.402(f) of said Uniform Commer-
cial Code upon such of the Collateral which is or may
become fixtures.
Section 703. Warranty of Title. Debtor further warrants
and represents to Secured Party that, except for (i) the
security interest granted hereby in the Collateral and (ii)
the Permitted Encumbrances, Debtor is the legal and equitable
owner and holder of the Collateral free of any adverse claim
and free of any security interest or encumbrance except only
those (if any) expressly hereinafter referred to or described,
VII -3
and Debtor agrees to defend the Collateral against all
claims and demands of any person at any time claiming the
same or any interest therein. Debtor further warrants and
represents that Debtor has not heretofore signed any financing
statement directly or indirectly affecting the Collateral or
any part thereof, and no such financing statement signed by
Debtor is now on file in any public office except only those
statements (if any) reflected on Exhibit S.
(End of Article VII)
VII -4
ARTICLE VIII
GENERAL
Section 801. Extension, Rearrangement or Renewal
of Indebtedness; Cumulative Security; Subrogation. It is
expressly agreed that (a) any of the Indebtedness at any
time secured hereby may be from time to time extended for
any period, rearranged or renewed, and that any part of the
security herein described, or any other security for the
Indebtedness, maybe waived or released without in anywise
altering, varying or diminishing the force, effect or lien
of this Mortgage, and the lien and securityinterest granted.
by this Mortgage shall continue as a prior lien and security
interest on all of the Mortgage Trust Estate not expressly
so released, until all sums with interest and charges hereby
secured are fully paid; (b) no other security now existing
or hereafter taken to secure payment of the Indebtedness or
any part thereof or the performance of any obligation or
liability whatever shall in any manner impair or affect the
security given by this Mortgage, and the execution of.this
Mortgage shall in no manner impair or affect any other
security now existing or hereafter taken to secure payment
of the Indebtedness or any part thereof or the performance
of any obligation or liability of User whatever, and all
security for the payment of the Indebtedness or any part
thereof and the performance of any obligation or liability
shall be taken, considered and held as cumulative; and (c)
any and all rights, titles, powers, equities, liens or
interests in or against the Project or any part thereof
(including, without limiting the generality of the foregoing,
the rights, title,. powers, equities, liens, and interests in
and against the Project under the Construction Deed of
Trust) securing payment of any obligation (including, without
limiting the generality of the foregoing, the Construction
Note) satisfied, discharged, paid off, or extended as a
result of the creation of any Indebtedness are continued in
full force and effect to secure payment of the Indebtedness.
Section 802. Tenants at Will. The User agrees
for itself and any and all persons or concerns claiming by,
through or under the User, that if the User shall hold
possession of the Mortgage Trust Estate or any part thereof
subsequent to foreclosure hereunder, the User, or the parties
so holding possession, shall become and be considered as
tenants at will of the purchaser or purchasers at such
ft }
foreclosure sale; and any such tenant failing or refusing to
surrender possession upon demand shall be guilty of forcible
detainer and shall be liable to such purchaser or purchasers
for reasonable rental on said premises, and shall be subject
to eviction and removal, forcible or otherwise, with or
without process of law, all damages which may be sustained
by any such tenant as a result thereof being hereby expressly
waived.
Section 803. Condemnation. If prior to -the full
payment of -the Indebtedness, all or a portion of the Mortgage
Trust Estate be taken for public or quasi -public purposes,
either through eminent domain or condemnation proceedings or
some similar proceeding, it is expressly agreed that any and
all sums of money awarded or allowed as damages or otherwise
to the owner of the Mortgage Trust Estate or any portion
thereof on account of such taking shall be disposed of as
provided in the Agreement.
Section 804. Notice. Except as otherwise specifi-
cally provided in this Mortgage, all notices, requests,
demands, directions and'other communications hereunder shall
be in writing and shall be deemed sufficiently given or made.
when delivered personally to the party who is to receive the
same or when sent by registered or certified mail, postage
prepaid, return receipt requested or when sent by telex,
addressed in each case to the User as follows: Magnolia
Seed Company of Lubbock, 335 Avenue H, Lubbock, Texas 79401,
Attention: Operating Manager, or at such other address as
may have been designated most recently in writing with
specific reference to this Section 804 by the addressee to
the addressor. If certified or registered mail is not then
available, notices, requests, demands, directions and other
communications hereunder shall be given by a method reasonably
believed to provide actual notice in any manner permitted or
recognized by law.
Section 805. Severability. In the event any
item, term or provision contained in this Mortgage is in
conflict, or may hereafter be held to -be in conflict, with
the laws of the State or of the United States, this Mortgage
shall be affected only as to such particular item, term or
provision, and shall in all other respects remain in full
force and effect.
VIII -2
i
Section 806. Application of Payments. In the
_ event that any part of the Indebtedness cannot lawfully be
secured hereby, or in the event that the lien and security
interest hereof cannot be lawfully enforced.to any part of
the Indebtedness, or in the event that the lien or security
interest created by this Mortgage shall be invalid or unen-
forceable as to any part of the Indebtedness, then, and in
any such event, all payments on the Indebtedness shall be
deemed to have been first applied to the complete payment
and liquidation of that part of the Indebtedness which is
not secured by this Mortgage and the unsecured portion of
the Indebtedness shall be completely paid and liquidated
prior to the payment and liquidation of the remaining and
secured portion of the Indebtedness.
Section 807. Encumbrances. This Mortgage is
executed subject to all valid easements, restrictions,
covenants, mineral and royalty reservations and maintenance
charges, if any, applicable to and enforceable against the
Mortgage Trust Estate which have been duly recorded in the
real estate records of the county where any portion of the
Mortgage Trust Estate is located prior to the date of the
recording of this Mortgage.
Section 808. Governing Law. This Mortgage shall
be governed, in all respects including validity, interpreta-
tion and affect by, and shall be enforceable in accordance
with, the law of the State and of the United States.
Section 809. Amendments. This Mortgage may be
amended only by an instrument in writing signed by the duly`
authorized representatives of the User and the Corporation
(or their respective successors or assigns) and, so long as
any Bonds are outstanding, only with the consent of the
Trustee as provided in Article XI of the Indenture.
VIII -3
a s
IN WITNESS WHEREOF, MAGNOLIA SEED COMPANY OF
LUBBOCK has caused this Mortgage to be signed and sealed on
its behalf by its duly authorized representative as of the
date first written above. `
MAGNOLIA SEED COMPANY OF LUBBOCK
By
ATTEST:
BY
Secretary
(SEAL)
Accepted and Agreed By:
LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION
By
President
VIII -4
10 , Ap
THE STATE OF TEXAS §
COUNTY OF §
BEFORE ME, the undersigned authority, on this day
personally appeared 11 of
Magnolia Seed Company of Lubbock, a corporation organized
under the laws of the State of Texas, known to me to be the
person and officer whose name is subscribed to the foregoing
instrument, and acknowledged to me that the same was the act
of the said corporation, that he was duly authorized to
perform the same by appropriate resolution of the Board of
Directors of such corporation, and that he executed the same
for the purposes and consideration therein expressed, and in
the capacity therein stated.
Given under my hand and seal of office this
day of , 1981.
Notary Public in and for the
State of Texas
(NOTARIAL SEAL)
My Commission Expires:
19
THE STATE OF TEXAS §
COUNTY OF §
BEFORE ME, the undersigned authority, on this day
personally appeared , President of LUBBOCK
INDUSTRIAL DEVELOPMENT CORPORATION, a nonprofit development
corporation, known to me to be the person and officer whose
name is subscribed to the foregoing instrument, and acknowledged
to me that the same was the act of the said Lubbock Industrial
Development Corporation, that he was duly authorized to
perform the same by appropriate resolution of the Board of
Directors of such corporation, and that he executed the same
for the purposes and consideration therein expressed, and in
the capacity therein stated.
VIII -5
Given under my hand and seal of office this
day of 1981.
Notary Public in and for the
State of Texas
(NOTARIAL SEAL)
My Commission Expires:
19
Exhibit A
DEED OF TRUST
DESCRIPTION OF THE SITE
All of that part of Lot 2, Block 11, Crawford
'Industrial Addition to the City of Lubbock, Lubbock County,
Texas, a subdivision of a part of the south half.of Section 1,
Block E, GC&SF RR Co. Survey, as shown on the official plat
of the First Installment of said addition of record in
Volume 972, Page 553, of the records of Lubbock County,
Texas, more particularly described as follows:
BEGINNING at the west line of Magnolia Avenue, (a
75.0 -foot street right-of-way) and the south line of
The Atchison, Topeka and Santa Fe Railway Company's
Track No. 244 right-of-way;
THENCE South along the east line of said Lot 2,
335.0 feet to a point for curve;
THENCE Southwesterly on said curve, with a radius_
of 15.0 feet, an arc distance of 23.56 feet to a point
in the north line of 66th Street (a 75.0 -foot street
right-of-way);
THENCE West along the south line of said Lot 2 a
distance of 335.0 feet to a point for corner;
THENCE North parallel with the east line of said
Lot 2 a distance of 350.0 feet to the right-of-way line
of said Railway Company;
THENCE East along said right-of-way 350.0 feet to
the POINT OF BEGINNING:
Containing an area of 122,451.71 square feet, or
2.811 acres, more or less.
I
Exhibit A
DEED OF TRUST
DESCRIPTION OF THE SITE
All of that part of Lot 2, Block 11, Crawford
'Industrial Addition to the City of Lubbock, Lubbock County,
Texas, a subdivision of a part of the south half.of Section 1,
Block E, GC&SF RR Co. Survey, as shown on the official plat
of the First Installment of said addition of record in
Volume 972, Page 553, of the records of Lubbock County,
Texas, more particularly described as follows:
BEGINNING at the west line of Magnolia Avenue, (a
75.0 -foot street right-of-way) and the south line of
The Atchison, Topeka and Santa Fe Railway Company's
Track No. 244 right-of-way;
THENCE South along the east line of said Lot 2,
335.0 feet to a point for curve;
THENCE Southwesterly on said curve, with a radius_
of 15.0 feet, an arc distance of 23.56 feet to a point
in the north line of 66th Street (a 75.0 -foot street
right-of-way);
THENCE West along the south line of said Lot 2 a
distance of 335.0 feet to a point for corner;
THENCE North parallel with the east line of said
Lot 2 a distance of 350.0 feet to the right-of-way line
of said Railway Company;
THENCE East along said right-of-way 350.0 feet to
the POINT OF BEGINNING:
Containing an area of 122,451.71 square feet, or
2.811 acres, more or less.
Exhibit B
DEED OF TRUST
CERTAIN PERMITTED ENCUMBRANCES
1. Easement dated September 5, 1957, executed by
Lone Star Townsite Company, to Pioneer Natural Gas Company,
recorded in Volume 674, Page 47, Deed Records, Lubbock
County, Texas, covering the South 2.5 feet of the Site, for
gas pipeline purposes.
2. Easement reserved in Warranty Deed dated
September 18, 1979, executed by Santa Fe Land Improvement
Company to Magnolia Seed Company, recorded in Volume 1659.-
Page
659.Page 548, Deed Records, Lubbock County, Texas, covering the
North 12.5 feet of the Site, for railroad purposes.
3. Mineral Deed dated November 2, 1964, executed
by Terminal Building Corporation of Texas to Oil Development
Company of Texas, recorded in Volume 1016, Page 404, Deed
Records, Lubbock County, Texas.
4. Repurchase Agreement dated September 20,
1979, executed by Magnolia Seed Company, recorded in Volume 1661,
Page 334, Deed Records, Lubbock County, Texas.
�.
et
Exhibit B
DEED OF TRUST
CERTAIN PERMITTED ENCUMBRANCES
1. Easement dated September 5, 1957, executed by
Lone Star Townsite Company, to Pioneer Natural Gas Company,
recorded in Volume 674, Page 47, Deed Records, Lubbock
County, Texas, covering the South 2.5 feet of the Site, for
gas pipeline purposes.
2. Easement reserved in Warranty Deed dated
September 18, 1979, executed by Santa Fe Land Improvement
Company to Magnolia Seed Company, recorded in Volume 1659.-
Page
659.Page 548, Deed Records, Lubbock County, Texas, covering the
North 12.5 feet of the Site, for railroad purposes.
3. Mineral Deed dated November 2, 1964, executed
by Terminal Building Corporation of Texas to Oil Development
Company of Texas, recorded in Volume 1016, Page 404, Deed
Records, Lubbock County, Texas.
4. Repurchase Agreement dated September 20,
1979, executed by Magnolia Seed Company, recorded in Volume 1661,
Page 334, Deed Records, Lubbock County, Texas.
-- RESOLUTION NO. 811 - 5/28/81
COLLATERAL ASSIGNMENT
AND
SECURITY AGREEMENT
(Notes and Liens)
THE STATE OF TEXAS §
§ KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF LUBBOCK §,
I. Grant of Security Interest, Collateral
101. The undersigned, LUBBOCK INDUSTRIAL DEVELOPMENT
CORPORATION, a Texas nonprofit development corporation
created and existing under the Development Corporation Act
of 1979, Article 5190.6, Vernon's Annotated Texas Civil
Statutes (the "Debtor"), for value received, by these presents
hereby Conveys, Assigns, Transfers and Delivers and Grants a
Security Interest to TEXAS COMMERCE BANK- IRVING, a bank
organized under the laws of the State of Texas with its
principal corporate trust office located in Irving, Texas,
as trustee (together with any successor trustee at the time
serving as such under the Trust Indenture, dated as of the
date hereof between the Debtor and said bank, as trustee
(the "Indenture"), the "Secured Party"), in the following
,(the "Collateral"), viz:
(a) The Note, as defined in the Indenture; and
(b) all rights, titles, interests, estates,
liens, privileges, claims and demands and
equities existing and to exist in connection
with or as security for payment of the Note
and the indebtedness evidenced thereby; in-
cluding, among others, all rights, titles,
interests, estates, liens, privileges, claims
and demands and equities arising under that
certain Deed of Trust, Security Agreement,
Assignment of Rents and Financing Statement
from Magnolia Seed Company of Lubbock to
Tim A. Loudermilk as Mortgage Trustee, for
the use and benefit of the Debtor (the "Mortgage"),.
which was duly recorded with the County Clerk
of Lubbock County, Texas, on ,
1981, under Clerk's File No. ;
to have and to hold the Collateral, together with all rights,
titles, interests, estates, liens, privileges, claims,
demands and equities existing and to exist in connection
therewith as security for the Original Bonds (as defined in
the Indenture) unto Secured Party, its successors and assigns
forever. The Secured Party may exercise and enforce all of
the rights, powers and remedies of the holder and owner of
the Collateral, including (but not by way of limitation) the
right to demand payment of the Note in the event of any
default thereunder; provided, that Secured Party is and
shall be fully subrogated to all rights and liens and other
security existing unto and in favor of Debtor under the
provisions of the Mortgage securing the Note and in the
event of default in the payment of the Note or performance
of the Mortgage, Secured Party shall be entitled to foreclose
said rights and liens and other security and have the proper-
ties covered by the Mortgage sold, in whole or in part, in
the manner and under the terms and conditions provided in
the Mortgage.
II. Indebtedness Secured
201. This assignment and security interest is granted
to Secured Party to secure the payment of the principal of
and premium, if any, and interest on the Original Bonds
according to their terms and effect and the performance and
observance by the Debtor of all the covenants expressed or
implied herein and in the Indenture and the Original Bonds
(the "Indebtedness").
III. Rights and Remedies
301. If an "event of default" shall have occurred and
be continuing, within the meaning of Section 901 of the
Indenture, and all of the Bonds (as defined in the Indenture)
then outstanding shall be declared to be immediately due and
payable as provided in Section 902 of the Indenture, Secured
Party may then, or at any time thereafter, exercise the
rights of the Debtor under any or all of the Collateral, or
apply, setoff, collect, sell in one or more sales or otherwise
dispose of, any or all of the Collateral in such order as
Secured Party may elect. Debtor hereby renounces its rights
to require Secured Party to sell or otherwise dispose of the
Collateral and hereby agrees to execute and deliver after
default hereunder a statement renouncing such rights.
302. All cash sums paid to and received by Secured
Party on account of the Collateral shall be applied in the
manner set forth in Section 907 of the Indenture.
-2-
303. Secured Party shall use reasonable care in the
custody and preservation of any Collateral in its possession
but need not take any steps to keep the Collateral identifiable.
304. The execution and delivery of this Collateral
Assignment and Security Agreement in no manner shall impair
or affect any other security (by endorsement or otherwise)
for the payment of the Indebtedness. No security taken
hereafter as security for payment of the Indebtedness shall
impair in any manner or affect this Collateral Assignment
a^.d Security Agreement. All such present and future -additional
security is to be considered as cumulative security.
305. The rights, powers and remedies of Secured Party
hereunder shall be in addition to all rights, powers and
remedies given by statute or rule of law and'are cumulative.
The exercise of any one or more of the rights, powers and
remedies provided herein shall not be construed as a waiver
o any other rights, powers and remedies of Secured Party.
Furthermore, regardless of whether or not the Uniform Commercial
Code is in effect in the jurisdiction where such rights,
powers and remedies are asserted, Secured Party shall have
the rights, powers and remedies of a secured party under the
Texas Business and Commerce Code, as amended.
!J. General
401. Any notice or demand to Debtor under this Collateral
Assignment and Security Agreement or in connection with this
Collateral Assignment and Security Agreement shall be given
in the manner provided in the Indenture.
402. This Collateral Assignment and Security Agreement
has been made in and the conveyance, assignment, transfer
and delivery has been made in and the security interest
granted hereby is granted in and each shall be governed by
the laws of the State of Texas in all respects, including
matters of construction, validity, enforcement and performance.
Except as the context may otherwise require, any term used
herein that is defined in the Texas Business and Commerce
Code shall have the meaning given therein..
403. This Collateral Assignment and Security Agreement
is entered into pursuant to the Indenture and in the event
of any conflict between the terms of this Collateral Assignment
a.d Security Agreement and the terms of the Indenture, the
:.erms of the Indenture shall control.
-3-
IN WITNESS WHEREOF Debtor has executed this Security
Agreementthis the-" day of 1981.
LUBBOCK INDUSTRIAL
DEVELOPMENT CORPORATION
ATTEST:
By
President
Secretary
THE STATE OF TEXAS §
COUNTY OF §
BEFORE ME, the undersigned authority, on this day per-
sonally appeared President of
LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION, a nonprofit
development corporation, known to me to be the person and
officer whose name is subscribed to the foregoing instrument,
and acknowledged to me that the same was the act of the said
Lubbock Industrial Development Corporation, that he was duly
authorized to perform the same'by appropriate resolution of
the Board of Directors of such corporation, and that he
executed the same for the purposes and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this the
day of , 1981.
My commission expires:
DUNBAR:02:A
. -4
Notary Public in and for
the State of Texas
LUBBOCK INDUSTRIAL DEVELOPMENT CORPORATION BOARD
Term: 6 years
NAME
ADDRESS
PHONE
APPOINTED EXPIRES
George Scott, Jr.
-Business:
7-24-80 7-24-86
DEAN 0-F_ STUDENTS OFFICE
250 West Hall
Texas Tech University
.Lubbock,
TX 79409
742-2192
Home:
1505 E. 26th Street
Lubbock, -TX 79404
762-0758
Moises Perez
80OKBINDING & BIBLE REPAIR CO.
7-24-80 7-24-86
2623 34th Street
Lubbock, TX 79410
795-7796
3716 37th Street
Lubbock,'TX 79413
795-0846.
+Alan Henry
INSURANCE GROUP
7-24-80 7-24-86
3208 34th Street
Lubbock, TX 79410
792-2173
3302 43rd Street
Lubbock, TX 79413
799-2042
*B.C. McMinn
R.H. FULTON INVESTMENTS
7-24-80 7-24-86
2323 Erskine Rd.
Lubbock, TX 79415
(Mailing Address)
P.O. Box 1526
Lubbock, TX 79408
763-4376
3028 55th Street
Lubbock, TX 79413
799-4258
*George Miller
502 TEXAS COMMERCE BANK BLDG.
7-24-80 7-24-86
Lubbock, TX 79401
744-2404
3213 43rd Street
Lubbock, TX 79413
799-3803
*Marion Sanford
THE SANFORD AGENCY
7-24-80 7-24-86
6303 Indiana Ave
Lubbock, TX 79423
792-5564
3322 23rd Street
Lubbock, TX 79411
795-3203
+ Representative for the City Council
* Incorporators of the Lubbock Industrial Board, Inc.
May, 1981