HomeMy WebLinkAbout18013 ORD - 01/04/1984RESOLUTION APPROVING AN AGREEMENT BY -
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION
TO ISSUE A BOND FOR -
HERCO INC.
AND THE BOND RESOLUTION PROVIDING FOR
THE ISSUANCE OF SUCH BOND
WHEREAS, Corpus Christi Industrial Development Corpora-
tion was created under the auspices of the City of Corpus
Christ,, Texas; and
WHEREAS, Section 103(k) of the Internal Revenue Code of
1954, as amended, requires that the City Council of the City
of Corpus Christi approve the Bond described below to be
issued by Corpus Christi Industrial Development Corporation
on behalf of the City of Corpus Christi, Texas; and
WHEREAS, it is deemed necessary and advisable that this
Resolution be adopted.
THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF CORPUS CHRISTI, TEXAS THAT:
Section 1. The "Loan Agreement between Corpus Christi
Industrial Development Corporation and HERCO Inc.", in sub-
stantially the form and substance as attached to this Reso-
lution and made a part hereof for all purposes, is hereby
approved, and a Bond in the principal amount of $1,000,000
may be issued pursuant thereto for the purpose of paying the
cost of acquiring and constructing or causing to be acquired
and constructed the Project as defined and described there-
in.
Section 2. The "Resolution Authorizing the Issuance of
Corpus Christi Industrial Development Corporation Revenue
Bond, Series 1984 and the Execution of a Trust Indenture
(HERCO Inc. Project)", in substantially the form and sub-
stance attached to this Resolution and made a part hereof
for all purposes, is hereby specifically approved, and the
Bond may be issued as provided for therein.
Section 3. The City Council of the City of Corpus
Christi, Texas hereby approves the issuance of the aforesaid
Bond and the Project described in the aforesaid Loan Agree-
ment, and such approval shall be solely for the purposes of
Section 103(k) of the Internal Revenue Code of 1954, as
amended, and the City of Corpus Christi, Texas shall have no
liabilities for the payment of the Bond nor shall any of its
assets be pledged to the payment of the Bond.
Section 4. The public importance of the issuance of
the Series 1984 Bonds creates an emergency and an urgent
public necessity that the_isS�la.(lce be accomplished as soon
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as possible and without delay for the immediate preservation
of the public peace, health and safety of the citizens of
the City of Corpus Christi, Texas; that this Resolution take
effect and be in full force immediately upon its adoption;
and that the rule requiring that all resolutions be read on
three separate days be waived and suspended, and it is here-
by suspended and further that all resolutions and charter
rules governing the effective date of this Resolution are
hereby suspended and that this Resolution is hereby adopted
as an emergency measure and shall be effective immediately
upon its adoption as provided by the Charter of the City of
Corpus Christi.
ATTEST:
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E
ty ecretary
APPROVED:
44 DAY OF JANUARY, 1984
J. BRUCE AYCOCK, CITY ATTORNEY
taut City Attorney
MAYOR
THE CITY OF CORPUS CHRISTI,
TEXAS
T
RESOLUTION
AUTHORIZING THE ISSUANCE OF
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION
REVENUE BOND,
SERIES 1984
AND THE EXECUTION OF
A TRUST INDENTURE
(HERCO INC. PROJECT)
i
TABLE OF CONTENTS
(The Table of Contents is not a part of the Resolution
but is for convenience of reference only)
PAGE
Title 1
Recitals 1
Resolution 3
SECTION 1. DESIGNATION, AMOUNT, AND PURPOSE
OF THE BOND 3
SECTION 2. DATE, DENOMINATION, NUMBERS, AND
MATURITIES OF THE BOND 3
SECTION 3. INTEREST ON THE BOND 3
SECTION 4. GENERAL CHARACTERISTICS OF BONDS 3
(a) In General 3
(b) Registration Books 4
(c) Payment of Registered Owner 5
(d) Notation of Prepayment 5
(e) Temporary Bonds 5
SECTION 5. FORM OF BOND 6
SECTION 6. PLEDGE 16
SECTION 7. DEBT SERVICE FUND 16
(a) Establishment of Debt Service
Fund 16
(b) Accrued Interest 16
(c) Installment Loan Payments 16
(d) Redemption 17
(e) Payments from Debt Service
Fund 17
(f) Immediately Available Funds 18
(g) Investment of Funds 18
SECTION 8. SECURITY FOR FUNDS 19
SECTION 9. THE USER'S PAYMENTS 19
(a) Unconditional Obligation
(b) Prepayments
19
19
PAGE
SECTION 10. ADDITIONAL PARITY BONDS 19
(a) Additional Bonds 19
(b) Amendments to Trust Indenture
Unnecessary 21
SECTION 11. SPECIAL COVENANTS 21
(a) Installment Loan Payments
Pledged to Bonds Only 21
(b) Non -Encumbrance 21
(c) Performance by Issuer 22
(d) Certain Modifications
Prohibited 22
SECTION 12. BONDS ARE SPECIAL OBLIGATIONS
SECTION 13. AMENDMENTS
(a) Amendment with Consent of
Owners of 51% of Bonds
(b) Notice of Amendment
(c) Consent to Amendment
(d) Effect of Amendment
(e) Consent of Bondholders
(f) Ownership of Bonds
(g) Amendments Without Consent
SECTION 14. ESTABLISHMENT OF CONSTRUCTION FUND
22
22
22
23
24
24
24
24
25
25
(a) Deposit of Bond Proceeds into
Construction Fund 25
(b) Investment of Money in
Construction Fund 25
(c) Deposit of Accrued Interest,
Income, and Profits 26
SECTION 15. PAYMENTS FROM CONSTRUCTION FUND - 26
(a) Issuer's Administrative Overhead
Expenses and Other Costs 26
(b) Reimbursements for and Payment
of Cost of Project 26
(c) Reliance by Trustee 27
SECTION 16. SURPLUS CONSTRUCTION FUNDS 28
(a) Disposition of Surplus Funds 28
(b) Disposition of Construction
Fund upon Acceleration and
Redemption 28
PAGE
SECTION 17. DAMAGED, MUTILATED, LOST, STOLEN, OR
DESTROYED BONDS 28
(a) Replacement Bonds 28
(b) Application for Substitute
Bonds 29
(c) No Default Occurred 29
(d) Charge for Issuing Substitute
Bonds 29
(e) Authority for Issuing Substitute
Bonds 29
SECTION 18. NO ARBITRAGE 30
SECTION 19. FINDINGS 30
SECTION 20. SALE OF THE BOND 30
SECTION 21. TRUST INDENTURE 30
4
RESOLUTION AUTHORIZING THE ISSUANCE OF CORPUS
CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION REVENUE
BOND, SERIES 1984, AND THE EXECUTION OF A TRUST
INDENTURE (HERCO INC. PROJECT)
THE STATE OF TEXAS
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION .
WHEREAS, Corpus Christi Industrial Development Corpora-
tion (the "Issuer") is a nonstock, nonprofit industrial
development corporation organized and existing under the
laws of the State of Texas, including particularly the
Development Corporation Act of 1979, as amended (Article
5190.6, V.A.T.C.S.) (the "Act"); and
WHEREAS, the Issuer is a duly constituted public
instrumentality of the City of Corpus Christi (the "Govern-
mental Unit"), a political subdivision of the State of
Texas, within the meanings of the regulations of the United
States Treasury Department (the "Regulations") and the
rulings of the Internal Revenue Service prescribed and
promulgated pursuant to Section 103 of the Internal Revenue
Code of 1954, as amended (the "Code"), and the Issuer is
functioning and acting solely on behalf of the Governmental
Unit; and
WHEREAS, a "Loan Agreement between Corpus Christi
Industrial Development Corporation and HERCO Inc.", dated as
of January 1, 1984 (the "Agreement"), has been duly executed
between the Issuer and HERCO Inc. (the "User"); and
WHEREAS, the User is a corporation organized and
existing under the laws of the Commonwealth of Pennsylvania
and is fully qualified to transact business in the State of
Texas; and
WHEREAS, the Agreement is hereby adopted by reference
for all purposes, with the same effect as if they had been
set forth in entirety in this bond resolution (this "Initial
Bond Resolution"); and
WHEREAS, the Agreement was executed to provide for the
acquisition, construction, equipping, and furnishing of a
project (as defined by the Act) and to provide a loan to the
User for such purpose; and
WHEREAS, this preamble and the trust indenture (the
"Trust Indenture") hereinafter set forth in this Initial
Bond Resolution shall constitute an
Initial Bond Resolution; and
WHEREAS, the corporate trustee
ture (the "Trustee") will have the
hereinafter provided; and
integral part of this
under the Trust Inden-
duties and obligations
WHEREAS, the bonds authorized to be issued by this
Initial Bond Resolution (the "Bonds") are to be issued and
delivered pursuant to applicable laws, including the Act;
and
WHEREAS, the User and the Trustee have entered into a
Deed of Trust and Security Agreement dated as of January 1,
1984 (the "Deed of Trust"), providing further security for
the payment of the Installment Loan Payments for the benefit
of the owners of the Bonds; and
WHEREAS, the User will have duly approved and agreed to
be bound by this Initial Bond Resolution (including the
Trust Indenture) prior to the delivery of the Bonds; and
WHEREAS, as provided in the Agreement, by such approval
of this Initial Bond Resolution (including the Trust Inden-
ture) the User will have agreed and acknowledged that the
Bonds, when issued, sold, and delivered as provided in this
Initial Bond Resolution, will be issued in accordance and
compliance with the Agreement, and that, upon the issuance,
sale, and delivery of the Bonds, and the execution and
delivery of the Trust Indenture, the User will be uncondi-
tionally obligated to the Issuer and the Trustee to make or
pay, or cause to be made or paid, without set-off, recoup-
ment, or counterclaim, to the Trustee the "Installment Loan
Payments" required by the Agreement and by this Initial Bond
Resolution (including the Trust Indenture) in amounts suffi-
cient to pay the principal of, redemption premium, if any,
and interest on the Bonds, when due, agreed liquidated
damages, if any, all fees and expenses of the Trustee and
Registrar and the paying agents for the Bonds reasonably and
directly incurred in the performance of their duties as
stated in the Agreement, the Trust Indenture, the Initial
Bond Resolution or the Deed of Trust and Security Agreement,
and all other amounts required to be paid by the Agreement,
this Initial Bond Resolution, and the Trust Indenture, all
as hereinafter set forth; and
WHEREAS, for purposes of this Initial Bond Resolution,
the definitions of terms in the Agreement, the Deed of
Trust, and the Trust Indenture are hereby adopted, and the
2
terms given herein shall have the same meanings as such
terms are given in said Agreement, Deed of Trust, and Trust
Indenture unless a different meaning is given herein.
THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION THAT:
Section 1. DESIGNATION, AMOUNT, AND PURPOSE OF THE
BONDS. The Issuer's bond designated and to be known as
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION REVENUE
BOND, SERIES 1984 (HERCO INC. PROJECT) (the "Bond" or the
"Bonds") is hereby authorized to be issued in the aggregate
principal amount of $1,000,000 on behalf of the City of
Corpus Christi TO PAY PART OF THE COST OF ACQUIRING, CON-
STRUCTING, EQUIPPING, AND FURNISHING, OR CAUSING TO BE
ACQUIRED, CONSTRUCTED, EQUIPPED, AND FURNISHED A PROJECT
(THE "PROJECT") IN CORPUS CHRISTI, TEXAS, FOR HERCO INC.
(THE "USER") FOR THE SPECIFIC PURPOSE OF THE PROMOTION AND
ENCOURAGEMENT OF EMPLOYMENT AND THE PUBLIC WELFARE.
Section 2. DATE, DENOMINATION, NUMBERS, AND MATURITIES
OF THE BOND. The Bond initially authorized hereby shall be
dated January 1, 1984, shall be issued and delivered in the
form of one fully registered bond, without coupons, payable
in installments to the registered owner thereof, or its
registered assigns, all in the manner hereinafter provided,
with the Bond to be numbered R-1, in the denomination and
principal amount of $1,000,000, initially payable to First
City Bank of Corpus Christi, Corpus Christi, Texas, with the
principal of said Bond to be payable in monthly installments
on the dates and in the amounts as set forth in the FORM OF
BOND in Section 5.
Section 3. INTEREST ON THE BONDS. The Bond initially
authorized hereby shall bear interest on the unpaid balance
of the principal amount thereof from the date of delivery to
the initial purchaser thereof (which date shall be indicated
by the Trustee in the Delivery Certificate appearing on the
Bond) to the scheduled due date, or date of prepayment or
redemption prior to the scheduled due date, of the principal
installments of the Bond, at the rate set forth in the FORM
OF BOND in Section 5. The interest shall be payable on the
dates and in the manner provided in the FORM OF BOND set
forth in Section 5.
Section 4. GENERAL CHARACTERISTICS. (a) In General.
The Bond initially authorized hereby shall be issued, shall
be payable, may or shall be prepaid or redeemed prior to the
scheduled principal installment payment dates, may be
3
transferred and assigned, shall have the characteristics,
and shall be signed and executed (and the Bond shall be
sealed), all as provided, and in the manner indicated, in
the FORM OF BOND set forth in Section 5. After the Bond has
been authorized to be issued by the Board of Directors of
the Issuer, and prior to the delivery of the Bond, the
Trustee shall authenticate the Bond by executing the
Trustee's Certificate of Authentication appearing on the
Bond as provided in Section 5. In addition, on the date of
delivery of the Bond to the initial purchaser thereof, the
Trustee shall fill in the date of delivery of the Bond in
the Delivery Certificate appearing on the Bond as provided
in Section 5.
(b) Registration Books. The Issuer shall keep or
cause to be kept at the principal corporate trust office of
the Trustee books for the registration and transfer of Bonds
(the "Bond Registration Books") and the Issuer hereby
appoints the Trustee as its registrar and transfer agent
(the "Registrar") to keep such books and make such registra-
tions and transfers under such reasonable regulations as the
Issuer or the Registrar may prescribe; and the Registrar
will register or transfer as herein provided, any Bonds upon
presentation thereof at such office. The User, and each
Bondholder shall have the right to inspect such Bond Regis-
tration Books during the normal business hours of the
Trustee.
Registration of the Bonds may be transferred only on
the Bond Registration Books upon surrender thereof by the
registered owner in person or by his duly authorized attor-
ney, by proper written instrument of transfer, in the form
and with guaranty of signatures satisfactory to the Regis-
trar, duly executed by such owner or attorney. Upon such
surrender for transfer of registration, the Registrar shall
make notation of such transfer on the Bonds in the Assign-
ment section appearing thereon and in the Bond Registration
Books. Such transfers of registration shall be made without
charge to the owner of such Bonds, but any taxes or other
governmental charges required to be paid with respect to the
same shall be paid by the Bondholder requesting such trans-
fer of registration, as a condition precedent to the exer-
cise of such privilege.
The Trustee shall not be required to make transfers of
any Bond within ten (10) days prior to an interest payment
date or redemption date or subsequent to the date of mailing
of notice of redemption of such Bond or a portion thereof,
anything in such Bond to the contrary notwithstanding.
4
(c) Payment to Registered Owner. The person in whose
name any Bond shall be registered on the Bond Registration
Books shall be treated as the absolute owner thereof for all
purposes of this Initial Bond Resolution and the Trust
Indenture whether or not such Bond shall be overdue, and the
Issuer, the Trustee, and the User shall not be affected by
any notice to the contrary; and payment of, or on account
of, the principal of, premium, if any, agreed liquidated
damages, if any, and interest on any such Bond shall be made
only to such registered owner thereof; but such registration
may be changed as provided herein. All such payments shall
be valid and effectual to satisfy and discharge the liabil-
ity upon such Bond to the extent of the sum or sums so paid.
(d) Notation of Prepayment. The Issuer hereby ap-
points the Trustee as the Paying Agent for the Bonds. Upon
the prepayment or partial redemption of any Bond, the
Trustee, as Registrar and Paying Agent, shall note in the
Prepayment Record appearing an such Bond the amount of such
prepayment or redemption, the date said payment was made and
the remaining unpaid principal balance of said Bond and
shall then have said entry signed by an authorized official
of the Trustee. The Trustee shall also record such informa-
tion in the Bond Registration Books, and the Trustee shall
also record in the Bond Registration Books all payments of
principal installments on the Bonds when made on their
respective due dates.
(e) Temporary Bonds. Until Bonds in definitive form
are ready for delivery, the Issuer may execute, and upon its
request, the Trustee shall authenticate and deliver in lieu
of any thereof, and subject to the same provisions, limita-
tions, and conditions, one or more printed, lithographed, or
typewritten Bonds in temporary form, substantially of the
tenor of the Bonds as provided in the FORM OF BOND set forth
in Section 5 and with appropriate omissions, variations, and
insertions. Such Bond or Bonds in temporary form may be for
the principal amount as the Issuer may determine. Until
exchanged for Bonds in definitive form, such Bonds in
temporary form shall be entitled to the lien and benefit of
this Initial Bond Resolution and the Trust Indenture. The
Issuer shall, without unreasonable delay, prepare, execute,
and deliver to the Trustee, and thereupon, upon the presen-
tation and surrender of the Bond or Bonds in temporary form,
the Trustee shall authenticate and deliver, in exchange
therefor, a Bond or Bonds in definitive form in authorized
denominations of the same maturity and interest rate for the
same aggregate principal amount as the Bond or Bonds in
temporary form surrendered. Such exchange shall be made by
5
the Issuer at its own expense and without making any charge
therefor. When and as interest is paid upon Bonds in
temporary form the fact of such payment shall be noted
thereon.
Section 5. FORM OF BOND. The form of the Bond,
together with the forms of the various certificates and
forms to appear on the Bond, shall be, respectively, sub-
stantially as follows, with necessary and appropriate
variations, omissions, and insertions as permitted or
required by this Initial Bond Resolution:
FORM OF BOND
NO. R-1 $1,000,000
UNITED STATES OF AMERICA
STATE OF TEXAS
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION
REVENUE BOND
SERIES 1984
(HERCO INC. PROJECT)
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION (the
"Issuer"), being a nonstock, nonprofit industrial develop-
ment corporation organized and existing under the laws of
the State of Texas, including particularly the Development
Corporation Act of 1979, as amended (Article 5190.6,
V.A.T.C.S.) (the "Act"), and acting on behalf of the City of
Corpus Christi, hereby promises to pay to First City Bank of
Corpus Christi, or its registered assigns, the aggregate
principal amount of
ONE MILLION DOLLARS
in installments, as follows:
6
DATE PRINCIPAL DATE PRINCIPAL
May 1, 1985 154.00
June 1, 1985 154.00
July 1, 1985 154.00
August 1, 1985 154.00
September 1, 1985 154.00
October 1, 1985 154.00
November 1, 1985 154.00
December 1, 1985 154.00
January 1, 1986 154.00
February 1, 1986 154.00
March 1, 1986 154.00
April 1, 1986 154.00
May 1, 1986 180.00
June 1, 1986 180.00
July 1, 1986 180.00
August 1, 1986 180.00
September 1, 1986 180.00
October 1, 1986 180.00
November 1, 1986 180.00
December 1, 1986 180.00
January 1, 1987 180.00
February 1, 1987 180.00
March 1, 1987 180.00
April 1, 1987 180.00
May 1, 1987 209.00
June 1, 1987 209.00
July 1, 1987 209.00
August 1, 1987 209.00
September 1, 1987 209.00
October 1, 1987 209.00
November 1, 1987 209.00
December 1, 1987 209.00
January 1, 1988 209.00
February 1, 1988 209.00
March 1, 1988 209.00
April 1, 1988 209.00
May 1, 1988 242.00
June 1, 1988 242.00
July 1, 1988 242.00
August 1, 1988 242.00
September 1, 1988 242.00
October 1, 1988 242.00
November 1, 1988 242.00
December 1, 1988 242.00
January 1, 1989 242.00
February 1, 1989 242.00
March 1, 1989 242.00
April 1, 1989 242.00
May 1, 1989 281.00
June 1, 1989 281.00
July 1, 1989 281.00
August 1, 1989 281.00
September 1, 1989 281.00
October 1, 1989 281.00
November 1, 1989 281.00
December 1, 1989 281.00
January 1, 1990 281.00
February 1, 1990 281.00
March 1, 1990 281.00
April 1, 1990 987,489.00
and to pay interest on the unpaid principal balance hereof
from the date of delivery hereof (which date appears in the
Delivery Certificate endorsed on this Bond) payable on
March 1, 1984 and monthly thereafter on the lst day of each
month while this Bond is outstanding. The interest (unless
and until otherwise fixed as hereinafter provided) shall be
based on the number of days actually elapsed at a per annum
rate determined daily on the basis of a 360 day year equal
to 70% of the Prime Rate (hereinafter defined) (the "Formula
Rate") as announced from time to time by First City Bank of
Corpus Christi (the "Bank"), until the principal hereof may
become due and payable, and at a rate of 15% per annum
(based on a 365 or 366 day year, as appropriate) on overdue
principal, and overdue amounts of liquidated damages, if
any, and, to the extent legally permissible, on overdue
interest; provided however, that, on any date, if the
Formula Rate shall be such that the Net Effective Interest
Rate (as defined and calculated in accordance with Article
7
717k-2, V.A.T.C.S., as it exists on the date of issuance of
this Bond, the "Net Effective Interest Rate") from the date
of delivery of this Bond to such date shall exceed 15%, the
Formula Rate shall be that interest rate which produces a
Net Effective Interest Rate from the date of delivery of
this Bond to such date of 15% until such future date as the
Net Effective Interest Rate from the date of delivery of
this Bond to such future date is the same as it would have
been but for this proviso. Any change in the Prime Rate
shall automatically and without notice to the Issuer be
effective for the purpose of changing the rate of interest
which this Bond bears as of the date of any such change. It
is understood, however, that regardless of the rate result-
ing by taking 70% of the Prime Rate, the rate of interest on
this Bond shall never be lower than 6.5% per annum. Pro-
vided, that interest payable on this Bond, together with any
other costs or considerations that constitute interest under
applicable law, shall not exceed the maximum amount of
interest permitted to be paid on this Bond under applicable
law. The interest to be paid on this Bond on any date on
which interest is payable on this Bond shall be calculated
by first determining the amount of interest on the unpaid
principal balance of this Bond from time to time outstanding
at the Formula Rate in effect from time to time from the
date of delivery of this Bond through the corresponding
Calculation Date (hereinafter defined) then deducting any
interest previously paid on this Bond to determine the
amount of interest payable on such interest payment date.
The interest on this Bond is payable by check or draft
mailed to, or wire transfer to, the registered owner at its
address as it appears on the Bond Registration Books of the
Issuer kept by the Registrar (provided that in the alterna-
tive such payment may be made by any other method requested
in writing by the registered owner, subject to the approval
of the Trustee), in each case solely from the sources and in
the manner hereinafter described. Both principal and
interest are payable, without exchange or collection charges
in lawful money of the United States of America. For the
purposes of this Bond, "Prime Rate" shall be defined as the
rate announced from time to time by the Bank as of the close
of the business day as the Prime Rate of the Bank.
THE TRUSTEE (hereinafter defined) shall notify the
User, pursuant to the notice provisions of the Agreement
(hereinafter defined), of the Prime Rate, the Formula Rate
and the total interest due on the balance of the principal
on a date (the "Notice Date") no less than 5 days prior to
the next date (the "Payment Date") fixed for any payment of
interest or unpaid principal amount of this Bond which
Interest Calculation shall represent the full amount of
interest due on said Payment Date. The Interest Calculation
8
with respect to a particular Payment Date shall be made on a
date (the "Calculation Date") 10 days prior to such Payment
Date. In the event the amount of interest actually accrued
on a Payment Date differs from that calculated on the
Calculation Date by reason of changes in the Prime Rate
during the period between the Calculation Date and the
Payment Date, an adjustment for the difference shall be made
on the payment due on the next occurring Payment Date.
Provided, however, with respect to the Payment Date on which
the User shall pay the entire outstanding principal balance
of this Bond both the Notice Date and the Calculation Date
shall be the same as such Payment Date with the Interest
Calculation to be made on such Payment Date, and the Trustee
to provide the User with telephonic notice of such Interest
Calculation. The final payment of principal on this Bond
shall be paid only upon surrender of this Bond to the
Trustee for cancellation. Any prepayment or redemption of
any principal installments of this Bond shall be made only
upon presentation of this Bond to the Trustee, who shall
make notation of such prepayment or redemption in the
Prepayment Record endorsed hereon.
THIS BOND is dated as of January 1, 1984 and was autho-
rized and issued in the aggregate principal amount of
$1,000,000 pursuant to a resolution adopted by the Board of
Directors of the Issuer (the "Initial Bond Resolution") on
behalf of the CITY OF CORPUS CHRISTI TO PAY PART OF THE COST
OF ACQUIRING, CONSTRUCTING, EQUIPPING, AND FURNISHING, OR
CAUSING TO BE ACQUIRED, CONSTRUCTED, EQUIPPED, AND FURNISHED
A PROJECT (THE "PROJECT") IN CORPUS CHRISTI, TEXAS, FOR
HERCO INC. (THE "USER") FOR THE SPECIFIC PURPOSE OF THE
PROMOTION AND ENCOURAGEMENT OF EMPLOYMENT AND THE PUBLIC
WELFARE.
ON ANY DATE, the unpaid principal installments of this
Bond are subject to optional prepayment or redemption and
may be prepaid or redeemed prior to their scheduled due
dates, by the Trustee, at the option of the User, with funds
furnished by the User, upon written notice of the exercise
of the option to prepay or redeem delivered to the Trustee
by the User not later than the 45th day prior to the date of
prepayment or redemption. Such unpaid principal install-
ments may be so prepaid or redeemed as a whole on any date,
or in part on any interest payment date (and, if in part,
such installments shall be prepaid or redeemed in inverse
chronological order of their scheduled due dates, and in
amounts not less than all of an unpaid principal install-
ment), without penalty or premium.
ON ANY DATE, the unpaid principal installments of this
Bond are subject to mandatory prepayment or redemption, as a
whole, and shall be prepaid or redeemed prior to their
9
scheduled due dates, by the Trustee, with funds which shall
be furnished by the User, on the earliest practicable date,
and in all events within sixty days, following the occur-
rence of a Final Determination of Taxability as defined and
provided for in the Agreement (hereinafter defined). The
prepayment or redemption price in such event shall be equal
to the unpaid principal amount of this Bond so prepaid or
redeemed, plus accrued interest to the date of prepayment or
redemption, plus an additional amount calculated by multi-
plying an amount equal to 1-1/2% of the unpaid principal
amount of this Bond by the number of complete three-month
periods elapsed between the date of the Taxable Event (as
defined and provided for in the Agreement) and the prepay-
ment or redemption date, with such additional amount being
the agreed liquidated damages (for loss of a bargain and not
as a penalty) which the owner of this Bond will be due, and
which shall be a direct obligation of the User. Such
prepayment or redemption price shall constitute the entire
amount due with respect to this Bond as a result of the
occurrence of a Final Determination of Taxability.
IN ADDITION, if there shall be a Final Determination of
Taxability, the User shall be obligated to, and promptly
shall, pay an additional amount to the Trustee for the sole
benefit of the owner or owners of this Bond during the
period between the Taxable Event and the mandatory prepay-
ment or redemption date described and provided for in the
preceding paragraph of this Bond (the "Taxable Period").
Such payment shall be sufficient in aggregate to pay in
respect of each principal installment of this Bond which was
paid or prepaid or redeemed during the Taxable Period, the
amount the owner hereof would have received as agreed
liquidated damages if, and assuming that, the aforesaid
mandatory prepayment or redemption date had occurred on the
actual date of payment or prepayment or redemption of such
principal installment. The Trustee shall pay such addi-
tional amount to the owner or owners of this Bond during the
Taxable Period, as shown by the Bond Registration Books.
ON ANY DATE, the unpaid principal installments of this
Bond are subject to prepayment or redemption, and may be
prepaid or redeemed prior to the scheduled due dates by the
Trustee, in inverse chronological order of their scheduled
due dates (in the denominations of $1,000 or any integral
multiple thereof or in amounts not less than all of an
unpaid principal installment), at a prepayment or redemption
price equal to the principal amount thereof to be prepaid or
redeemed plus accrued interest thereon to the date of
prepayment or redemption, and without premium, with and to
the extent of any surplus funds remaining in the Construc-
tion Fund (created by the Initial Bond Resolution) after the
10
completion of the Project, as provided and required by
Section 16 of the Initial Bond Resolution.
THE AGREEMENT provides that any provision for any
payment contained in the Agreement or this Bond shall be
held to be subject to reduction to the amount allowed under
the applicable usury laws of the State of Texas and the
United States of America, as now or hereafter construed by
the courts having jurisdiction, and it is agreed by the
Issuer and the owner of this Bond that in no event shall
usury be paid or collected with respect to this Bond.
AT LEAST 30 DAYS PRIOR to the date fixed for any pre-
payment or redemption of the unpaid principal installments
of this Bond, the Trustee shall cause a written notice of
such redemption to be mailed to the registered owner of this
Bond addressed to such owner at the address appearing on the
Bond Registration Books. By the date fixed for any such
prepayment or redemption, due provision shall be made by the
User with the Trustee and the Paying Agent for the payment
of the principal amount of this Bond which is to be prepaid
or redeemed, plus accrued interest thereon to the date fixed
for prepayment or redemption, and any other amounts due the
owner of this Bond. If such written notice of prepayment or
redemption is given and if due provision for payment of the
redemption price is made, all as provided above, the unpaid
principal installments of this Bond which are to be prepaid
or redeemed thereby automatically shall be deemed to have
been prepaid or redeemed prior to their scheduled due dates,
and they shall not bear interest after the date fixed for
prepayment or redemption, and they shall not be regarded as
being outstanding except for the right of the owner thereof
to receive the redemption price from the Paying Agent out of
the funds provided for such payment. Upon presentation of
this Bond to the Paying Agent, such unpaid principal in-
stallments which are to be prepaid or redeemed, shall be
paid at the redemption price. Except as set forth above,
the principal installments of this Bond are not subject to
prepayment or redemption prior to their scheduled due dates.
IE THE DATE for the payment of the principal of or
interest on this Bond shall be a Saturday, Sunday, a legal
holiday, or a day on which banking institutions in the city
where the Paying Agent is located are authorized by law or
executive order to close, then the date for such payment
shall be the next succeeding day which is not such a
Saturday, Sunday, legal holiday, or day on which banking
institutions are authorized to close; and payment on such
date shall have the same force and effect as if made on the
original date of payment.
11
IT IS HEREBY CERTIFIED AND COVENANTED that this Bond
has been duly and validly authorized, issued, and delivered;
that all acts, conditions, and things required or proper to
be performed, exist, and be done precedent to or in the
authorization, issuance, and delivery of this Bond have been
performed, existed, and been done in accordance with law;
that this Bond is a special revenue obligation of the
Issuer, and that the principal of and interest on this Bond
are payable from and secured by a first lien on and pledge
of the payments designated as "Installment Loan Payments" to
be made or paid, or caused to be made or paid, to the
Trustee, pursuant to the Initial Bond Resolution, the Trust
Indenture and the "Loan Agreement between the Corpus Christi
Industrial Development Corporation and HERCO Inc.," dated as
of January 1, 1984 (the "Agreement"). The User, a
Pennsylvania corporation, is unconditionally obligated
(subject to the provisions of Sections 6.01 and 6.02 of the
Agreement relating to merger, consolidation, transfer of
assets, and assignment) to make or pay, or cause to be made
or paid, without set-off, recoupment, or counterclaim, to
the Trustee each such Installment Loan Payment for deposit
into the Debt Service Fund created for the benefit of the
owners of the Bonds by the Initial Bond Resolution, in
aggregate amounts sufficient to pay and redeem, and provide
for the payment and redemption of, the principal of and
interest on this Bond, and to pay all other amounts required
by the Agreement, the Initial Bond Resolution, and the Trust
Indenture when due, subject to and as required by the provi-
sions of the Agreement, the Initial Bond Resolution, and the
Trust Indenture.
THIS BOND is secured by a Trust Indenture dated as of
January 1, 1984 (the "Trust Indenture"), whereunder First
City Bank of Corpus Christi, or its successor, as Trustee,
is custodian of the Debt Service Fund and is obligated to
enforce the rights of the owner of this Bond and to perform
other duties in the manner and under the conditions stated
in the Trust Indenture. In case an "Event of Default," as
defined in the Trust Indenture, shall occur, the unpaid
principal installments of this Bond may be declared to be
due and payable immediately upon the conditions and in the
manner provided in the Trust Indenture. This Bond is addi-
tionally secured by a Deed of Trust and Security Agreement
between the User and the Trustee (the "Deed of Trust")
relating to certain property of the User pledged to secure
the payment of this Bond. Reference is hereby made to the
Initial Bond Resolution, the Trust Indenture, the Deed of
Trust and the Agreement for additional provisions with
respect to the nature and extent of the security, the
rights, duties, and obligations of the User, the Issuer, the
Trustee, and the owner of this Bond, the terms upon which
12
this Bond is issued and secured, and the modification of any
of the foregoing.
THE ISSUER has reserved the right, subject to the
restrictions stated in the Initial Bond Resolution and the
Agreement, to issue additional parity revenue bonds ("Addi-
tional Bonds") which, when issued and delivered, shall be
payable from the Debt Service Fund, and shall be payable
from and secured by a first lien on and pledge of Install-
ment Loan Payments pursuant to the Agreement and entitled to
the benefits of and secured by the Trust Indenture, and the
Deed of Trust in the same manner and to the same extent as,
and be on a parity with, this Bond and all then outstanding
Additional Bonds.
THE ISSUER also has reserved the right to amend the
Initial Bond Resolution and the Trust Indenture, as provided
therein and in the Agreement; and under some (but not all)
circumstances amendments thereto must be approved by the
owners of 51% in aggregate principal amount of this Bond
then outstanding and any Additional Bonds then outstanding.
THE OWNER HEREOF shall never have the right to demand
payment of this obligation out of any funds raised or to be
raised by taxation or from any source whatsoever except the
payments and amounts described in this Bond, the Initial
Bond Resolution, the Trust Indenture, the Agreement, and the
Deed of Trust. Except for the lien on and the assignment
and pledge of such property, payments, and amounts, no
property of the Issuer is encumbered by any lien or security
interest for the benefit of the owner of this Bond. Neither
the State of Texas, the City of Corpus Christi, nor any
other political corporation, subdivision, or agency of the
State of Texas, nor the Board of Directors of the Issuer,
either individually or collectively, shall be obligated to
pay the principal of this Bond, any premium or payment with
respect to this Bond, or the interest hereon; and neither
the faith and credit, nor the taxing power, of the State of
Texas, the City of Corpus Christi, nor any other political
corporation, subdivision, or agency of the State of Texas,
is pledged to the payment of the principal of this Bond, any
premium or payment with respect to this Bond, or the inter-
est hereon.
THIS BOND may be assigned and shall be transferred only
on the Bond Registration Books of the Issuer kept by the
Trustee, as Registrar, upon the terms and conditions set
forth in the Initial Bond Resolution, the Trust Indenture
and the Assignment provisions endorsed hereon. Such trans-
fers shall be without expense to the owner hereof, but any
taxes or other governmental charges required to be paid with
respect to the same shall be paid by the owner requesting
13
such transfer as a condition precedent to the exercise of
such privilege. The Trustee shall not be required to make
transfers of this Bond within ten (10) days prior to an
interest payment date or prepayment or redemption date or
subsequent to the date of mailing of notice of prepayment or
redemption of any principal installments of this Bond,
anything in this Bond to the contrary notwithstanding. The
registered owner of this Bond as it appears on the Bond
Registration Books kept by the Trustee shall be treated by
the Issuer, the Trustee, and the User as the absolute owner
hereof for all purposes, including payment and discharge of
liability upon this Bond to the extent of such payment, and
the Issuer, the Trustee, and the User shall not be affected
by any notice to the contrary.
THIS BOND shall not be valid or become obligatory for
any purpose or be entitled to any security or benefit under
the Trust Indenture until the Trustee's Certificate of
Authentication hereon shall have been signed by the Trustee
and the Delivery Certificate hereon shall have been com-
pleted.
IN WITNESS WHEREOF, this Bond has been signed with the
manual or facsimile signatures of the President and the
Secretary of the Board of Directors of the Issuer, and the
official seal of the Issuer has been duly impressed, or
placed in facsimile, on this Bond.
Secretary, Board of Directors President, Board of Directors
(ISSUER'S SEAL)
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This Bond is the Bond initially issued under the pro-
visions of the within mentioned Agreement, Initial Bond
Resolution, and Trust Indenture.
FIRST CITY BANK OF CORPUS CHRISTI
Trustee
By
Authorized Officer
14
FORM OF ASSIGNMENT
ASSIGNMENT
FOR VALUE RECEIVED, the registered owner of this Bond
last listed below sells, assigns, and transfers the within
Bond to the Assignee last listed below, and hereby autho-
rizes the transfer of this Bond on the Bond Registration
Books of the Trustee. Such assignment shall not be effec-
tive until such Assignee presents this Bond to the Trustee
for verification of such assignment and gives the Trustee
its address to which payments shall be made and the Trustee
makes notation of such Assignment below.
DATE OF REGISTERED
SIGNATURE OF
ASSIGNMENT OWNER ASSIGNEE REGISTRAR
FORM OF DELIVERY CERTIFICATE
DELIVERY CERTIFICATE
THIS BOND was delivered to and paid for by the pur-
chaser hereof on
FORM OF PREPAYMENT RECORD
PREPAYMENT RECORD
Date Principal Remaining Name & Title of Signature of
of Prepayment or Principal Authorized Officer Authorized
Payment Redemption Balance Making Entry Officer
15
Section 6. PLEDGE. The Bonds and the interest thereon
are and shall be payable from and secured by a first lien on
and pledge of the payments designated as Installment Loan
Payments to be made or paid, or caused to be made or paid,
to the Trustee by the User, pursuant and subject to the
terms and provisions of this Initial Bond Resolution, the
Trust Indenture, and the Agreement; and such Installment
Loan Payments are further pledged to the establishment and
maintenance of the Debt Service Fund hereinafter created.
Section 7. DEBT SERVICE FUND. (a) Establishment of
Debt Service Fund. A separate and special trust fund to be
designated and known as the "Debt Service Fund" shall be
established by the Issuer with the Trustee for the benefit
of the owners of the Bonds pursuant to the Agreement and the
Trust Indenture, and maintained as provided in this Initial
Bond Resolution and the Trust Indenture, as long as any of
the Bonds, or interest thereon, is outstanding and unpaid.
(b) Accrued Interest.
of the Bond to the initial
interest, if any, received
and delivery of the Bond,
Trustee into the Debt Service
Immediately after the delivery
purchaser thereof, all accrued
from the proceeds from the sale
shall be transferred by the
Fund.
(c) Installment Loan Payments. The User shall make or
pay, or cause to be made or paid, to the Trustee, which
shall deposit into the Debt Service Fund, Installment Loan
Payments as follows:
(1) On or before each interest payment date as pro-
vided in the FORM OF BOND set forth in Section 5,
an amount which, together with any other amounts
then on deposit therein and available for such
purpose, will be sufficient to pay the interest
coming due on the Bond on each interest payment
date; and
(2) On or before each principal payment date as
provided in Section 2 and in the FORM OF BOND set
forth in Section 5, an amount which, together with
any other amounts then on deposit therein and
available for such purpose, will be sufficient to
pay the principal of the Bond scheduled to be paid
on each principal payment date; and
(3)
On or before any optional or mandatory prepayment
or redemption date as permitted or required in the
FORM OF BOND set forth in Section 5, an amount
which, together with any other amounts then on
deposit and available for such purpose, will be
sufficient to pay the prepayment or redemption
16
price (including any agreed liquidated damages)
specified therein; and
(4) Promptly after the occurrence of a Final Determi-
nation of Taxability, the additional amount
required to pay the agreed liquidated damages to
the owner of the Bond for any installments of
principal which were unpaid on the date of any
Taxable Event, but which were paid or redeemed
prior to the prepayment or redemption of all
unpaid principal installments after a Final
Determination of Taxability, all as provided in
the FORM OF BOND set forth in Section 5; and
(5)
On any date on which the Bonds are declared to be
immediately due and payable pursuant to the Trust
Indenture, an amount which, together with any
other amounts then on deposit and available for
such purpose, will be sufficient to pay the prin-
cipal of all Bonds then outstanding and the
interest accrued thereon to such date; and
(6) Promptly after receipt of each statement and
request for payment, an amount equal to the
reasonable charges of the Trustee for performing
the duties of Trustee and Registrar, and the
reasonable charges of the Paying Agent for the
Bond, as designated in the FORM OF BOND set forth
in Section 5, for paying or redeeming principal
installments of the Bond, and paying the interest
thereon.
In the event the User should fail to make or pay, or cause
to be made or paid, any of the required Installment Loan
Payments set forth in this Section, each such required
payment shall continue as an obligation of the User until
fully paid, and the User agrees to pay the same to the
Trustee, for the benefit of the owners of the Bonds, with
interest thereon, to the extent legally permissible, at the
rate of fifteen percent (15%) per annum, from the date any
such payment was due until payment thereof.
(d) Redemption. The Bond initially authorized hereby
shall be subject to redemption, and may or shall be re-
deemed, as specified in the FORM OF BOND set forth in
Section 5.
(e) Payments from Debt Service Fund. Except as other-
wise specifically provided in this Initial Bond Resolution
or the Trust Indenture, the Debt Service Fund shall be used
by the Trustee only to pay the principal of, and prepayment
or redemption premium, if any, agreed liquidated damages, if
17
any, and interest on the Bonds, when due, and the reasonable
charges of the Trustee, Registrar, and Paying Agent; and the
Trustee shall make available to the Paying Agent, out of the
Debt Service Fund, the amounts required to pay or redeem the
principal of and interest on the Bonds when due, and the
Trustee shall make all other payments as required by this
Initial Bond Resolution and the Trust Indenture.
(f) Immediately Available Funds. The User shall make
all Installment Loan Payments in funds that will be immedi-
ately available and allow the Paying Agent to pay, in lawful
money of the United States of America, the principal, inter-
est, and other amounts with respect to the Bonds, when due.
(g) Investment of Funds. Any money held as part of
the Debt Service Fund shall be invested or reinvested by the
Trustee, upon the written direction of the Approving Officer
in any obligations, including certificates of deposit. The
Trustee shall make no investments except as specifically
directed by the Approving Officer. The investments of the
Debt Service Fund shall be deemed to be a part of such Fund,
and, for the purpose of determining the amount of money in
such Fund, such investments shall be valued at their cost
or market value, whichever is lower. The income and pro-
fits, including realized discount on obligations purchased,
received from such investments shall be deposited in or
credited to the Debt Service Fund, and any losses on invest-
ments thereon shall be charged against the Debt Service
Fund. If at any time it shall become necessary that some or
all of the investments made with the moneys from the Debt
Service Fund be redeemed or sold to raise moneys necessary
to comply with the provisions of this Initial Bond Resolu-
tion or the Trust Indenture, the Trustee shall, without
further authorization, effect such redemption or sale,
employing, in the case of a sale, any commercially reason-
able method of effecting the same. The Trustee shall not be
liable or responsible for any loss resulting from any such
investment or resulting from the redemption or sale of any
such investment as herein authorized; except that the
Trustee shall be liable for (1) any loss resulting from its
willful or negligent failure, within a reasonable time after
receiving the written direction from the Approving Officer
to make, redeem, or sell any investment in the manner
provided for herein, and (2) except for any redemption or
sale made pursuant to the next preceding sentence of this
paragraph, for any loss resulting from the making, redeem-
ing, or selling of any investment which was not authorized
by written direction of the Approving Officer. If the
Trustee is unable, after reasonable effort and within a
reasonable time, to make, redeem, or sell any such invest-
ment, it shall so notify in writing the Approving Officer
and thereafter the Trustee shall be relieved of all
18
responsibility with respect thereto. In the event of any
such loss, the User shall make additional deposits to
restore same if and to the extent required to enable the
Trustee to make all payments required to be made from the
Debt Service Fund, and such additional deposits shall
constitute additional amounts of Installment Loan Payments.
Section 8. SECURITY FOR FUNDS. All uninvested money
in all Funds established pursuant to this Initial Bond
Resolution (including the Debt Service Fund and the Con-
struction Fund), shall be secured by the Trustee in such
manner and to such extent as is required of Texas chartered
banks when acting in a fiduciary capacity.
Section 9. THE USER'S PAYMENTS. (a) Unconditional
Obligation. The User has covenanted in the Agreement, and,
by the approval of this Initial Bond Resolution, the User
further has unconditionally obligated itself and agreed,
regardless of and notwithstanding any provisions of the
Agreement, other than Sections 6.01 and 6.02 thereof relat-
ing to merger, consolidation, transfer of assets, and
assignment, and regardless of the provisions of any other
agreement or contract to the contrary, to make or pay, or
cause to be made or paid, without set-off, recoupment, or
counterclaim, the Installment Loan Payments to the Trustee
in the amounts required by Section 7(c) to be made into the
Debt Service Fund, and to make such payments on or before
the dates specified in this Initial Bond Resolution and the
Trust Indenture; and said payments by the User shall be and
constitute the Installment Loan Payments as contemplated and
required by the Agreement. Each Bondholder is and shall be
entitled to rely unconditionally on the agreements, cove-
nants, and representations set forth in this Initial Bond
Resolution and the Trust Indenture.
(b) Prepayments. It is further understood that the
User may prepay all or any part of each Installment Loan
Payment, and any such prepayment, and any earnings thereon,
shall be applied by the Trustee to the payment of each
Installment Loan Payment; provided that the prepayment or
redemption at any time of any unpaid principal installments
of the Bonds prior to their due dates, with funds from any
source (whether from Installment Loan Payments or other-
wise), shall not relieve the User of its obligation to make
or pay, or cause to be made or paid, each Installment Loan
Payment as specified in Section 9(a), when due with respect
to any remaining unpaid principal installments of the Bonds.
Section 10. ADDITIONAL PARITY BONDS. (a) Additional
Bonds. The Issuer reserves the right, upon the request of
the User, to issue additional parity revenue bonds ("Addi-
tional Bonds") in any amounts, for any lawful purpose or
19
purposes, including the refunding of any outstanding Bonds.
Such Additional Bonds, along with the Bond authorized by
this Initial Bond Resolution, shall be considered, consti-
tute, and be "Bonds" as defined in, and for all purposes of,
the Agreement and the Trust Indenture. Furthermore, for all
purposes of this Initial Bond Resolution, the term "Bonds"
shall mean and include the Bond authorized hereby and any
Additional Bonds, unless the context otherwise indicates.
When issued and delivered such Additional Bonds, the redemp-
tion premium, if any, agreed liquidated damages, if any, and
the interest thereon, shall be payable from the Debt Service
Fund, and shall be payable from and secured by a first lien
on and pledge of Installment Loan Payments pursuant to the
Agreement, and secured by the Trust Indenture and the Deed
of Trust, in the same manner and to the same extent as, and
be on a parity with, all then outstanding Bonds and Addi-
tional Bonds. Such Additional Bonds may be issued in one or
more series or issues, in various principal amounts, matur-
ing at different times, bearing interest at different rates,
be payable in installments or otherwise be redeemable prior
to maturity, with or without redemption premium, on'whatever
terms or prices, and may contain such other provisions as
may be provided in any Bond Resolution authorizing the
issuance of such Additional Bonds. It is provided, however,
that no series or issue of Additional Bonds shall be issued
unless:
(i) In the opinion of Bond Counsel (A) the
issuance of such Additional Bonds will not adversely
affect the exemption from federal income taxation of
the interest on the then outstanding Bonds and Addi-
tional Bonds, or affect the validity of the then
outstanding Bonds or Additional Bonds and (B) such
Additional Bonds are secured in the same manner and to
the same extent as and are on a parity with all then
outstanding Bonds and Additional Bonds;
(ii) A certificate is executed by the President
and Secretary of the Board of Directors of the Issuer
to the effect that no default exists in connection with
the Bonds or the Trust Indenture (or any amendment or
supplement thereto) or with any of the covenants or
requirements of this Initial Bond Resolution or the
Bond Resolutions (or any amendments or supplements
thereto) authorizing the issuance of all then out-
standing Bonds and Additional Bonds, and that the Debt
Service Fund contains the amount then required to be on
deposit therein;
(iii) The Bond Resolution authorizing the issuance
of such series or issue of Additional Bonds provides
for additional Installment Loan Payments to be
20
deposited into the Debt Service Fund in amounts
sufficient to pay all principal of, redemption premium,
if any, agreed liquidated damages, if any, and interest
on such Additional Bonds, together with all reasonable
Trustee, Registrar, and Paying Agent fees and expenses
attributable to such Additional Bonds;
(iv) The Approving Officer approves in writing the
Bond Resolution authorizing the issuance of such series
or issue of Additional Bonds, as required by the
Agreement;
(v) The holders of at least 51% in amount of the
outstanding Bonds approve in writing the issuance of
the Additional Bonds;
(vi) The principal and interest payment dates
during any year in which principal and interest on such
Additional Bonds are scheduled to be paid, are the same
for the Additional Bonds and the Bonds; and
(vii) The Commission expressly gives its prior
approval to the issuance of such Additional Bonds.
(b) Amendments to Trust Indenture Unnecessary. It
shall not be necessary or required that the Trust Indenture
be amended or supplemented to cause any series or issue of
Additional Bonds to be secured by the Trust Indenture. All
that shall be necessary or required to cause any such Addi-
tional Bonds to be secured by the Trust Indenture is for the
Issuer to deliver to the Trustee a certified copy of the
Bond Resolution authorizing their issuance prior to the
delivery of such Additional Bonds.
Section 11. SPECIAL COVENANTS. The Issuer further
covenants as follows:
(a) Installment Loan Payments Pledged to Bonds Only.
Other than for the payment of the Bonds, as provided in this
Initial Bond Resolution and the Trust Indenture, the In-
stallment Loan Payments have not in any manner been pledged
to the payment of any debt or obligation of the Issuer;
(b) Non -Encumbrance. While any of the Bonds is out-
standing, the Issuer will not (except with respect to the
Bonds and any Additional Bonds and except as provided in the
Agreement, any Bond Resolution, or the Trust Indenture) in
any manner whatsoever create, assume, or suffer to exist,
directly or indirectly, any mortgage, lien, encumbrance,
pledge, or charge against the Debt Service Fund, the In-
stallment Loan Payments, the Construction Fund, or any
property or moneys deposited with the Trustee;
21
(c) Performance by Issuer. The Issuer will carry out
all of its covenants and obligations under this Initial Bond
Resolution; and the Issuer may be required to carry out such
covenants and obligations by all legal and equitable means,
including, but without limitation, actions for specific per-
formance and the use and filing of mandamus proceedings, in
any court of competent jurisdiction, against the Issuer, its
Board of Directors, and its officials and employees; and
(d) Certain Modifications Prohibited. The Issuer
covenants and agrees that it will not execute or permit the
execution of any contract or agreement, or terminate or
amend the Agreement, in any manner that would relieve or
abrogate the obligations of the User to make or pay, or
cause to be made or paid, when due, all Installment Loan
Payments, in the manner and to the extent required by the
Agreement, this Initial Bond Resolution, and the Trust
Indenture, or which would change or affect Sections 4.04,
4.05, 4.06, 6.01 and 6.02 of the Agreement without the
written consent of all of the Bondholders and the Trustee.
Section 12. BONDS ARE SPECIAL OBLIGATIONS. The Bonds
are and shall be special revenue obligations of the Issuer
payable solely from payments to be made under the Agreement,
this Initial Bond' Resolution, the Deed of Trust, and the
Trust Indenture; and the Bondholders shall never have the
right to demand payment thereof or the interest thereon out
of funds raised or to be raised by taxation, or from any
source whatsoever other than the foregoing. The Bonds are
not and shall never be considered as obligations of the
State of Texas, the Governmental Unit, or any other politi-
cal subdivision or agency of the State of Texas, or of the
Board of Directors of the Issuer, either individually or
collectively.
Section 13. AMENDMENTS. (a) Amendment with Consent
of Owners of 51% of Bonds. Subject to approval in writing
by the Approving Officer of the User, the owners of 51% in
aggregate principal amount of the then outstanding Bonds
shall have the right from time to time to approve any amend-
ment to any Bond Resolution, or to the Trust Indenture
(provided that the Trustee must approve any amendment to the
Trust Indenture), which may be deemed necessary or desirable
by the Issuer; provided, however, that nothing herein con-
tained shall permit or be construed to permit the amendment,
without the consent of the owner of each of the then out-
standing Bonds affected thereby, of the terms and conditions
of any Bond Resolution, the Bonds, or the Trust Indenture,
so as to:
(1) change the Debt Service Fund requirements, inter-
est payment dates, or the due date or dates, or
22
the maturity or maturities of the outstanding
Bonds;
(2) reduce the rate of interest borne by any of the
outstanding Bonds;
(3) reduce the amount of the principal of, redemption
premium, if any, liquidated damages, if any, or
interest on the outstanding Bonds, or impose any
conditions with respect to such payments;
(4) modify the terms of payment of principal of,
redemption premium, if any, liquidated damages, if
any, or interest on the outstanding Bonds, or
impose any conditions with respect to such pay-
ments;
(5) affect the rights of the owners of less than all
of the Bonds then outstanding;
(6) decrease the minimum percentage of the principal
amount of Bonds necessary for consent to any such
amendment; or
(7) alter the obligations of the User to pay Install-
ment Loan Payments in the manner and to the extent
provided in the Agreement, the Bond Resolution,
and the Trust Indenture.
(b) Notice of Amendment. If at any time the Issuer
shall desire to amend any Bond Resolution, or the Trust
Indenture, under this Section, the Issuer shall file a copy
of the proposed amendment at the principal office of the
Trustee and shall cause notice of the proposed amendment to
be published at least once in a financial newspaper, journal
or publication of general circulation in The City of New
York, New York, or in the State of Texas, during each
calendar week for at least two successive calendar weeks.
If, because of temporary or permanent suspension of the
publication or general circulation of all such financial
newspapers, journals and publications, it is impossible or
impractical to publish such notice in the manner provided
herein, then such publication in lieu thereof as shall be
made by the Trustee shall constitute a sufficient publica-
tion of notice. Such notice shall briefly set forth the
nature of the proposed amendment and shall state that a copy
thereof is on file at the principal office of the Trustee
for inspection by all owners of Bonds. Such publication is
not required, however, if notice in writing is given to each
owner of Bonds.
23
(c) Consent to Amendment. Whenever at any time not
less than 30 days, and within one year, from the date of the
first publication of said notice or other service of written
notice the Issuer shall receive an instrument or instruments
executed by the owners of at least 51% in aggregate princi-
pal amount of all Bonds then outstanding, which instrument
or instruments shall refer to the proposed amendment de-
scribed in said notice and shall specifically consent to and
approve such amendment, the Issuer may adopt the amendatory
resolution in substantially the same form.
(d) Effect of Amendment. Upon the adoption of any
amendatory resolution pursuant to the provisions of this
Section, any such Bond Resolution, or the Trust Indenture,
shall be deemed to be amended in accordance with such
amendatory resolution, and the respective rights, duties,
and obligations under such amendatory resolution, or the
Trust Indenture, of all the Bondholders shall thereafter be
determined and exercised subject in all respects to such
amendments.
(e) Consent of Bondholders. Any consent given by a
Bondholder pursuant to the provisions of this Section shall
be irrevocable for a period of six months from the date of
the first publication or other giving of the notice provided
for in this Section, and shall be conclusive and binding
upon all future owners of the same Bond during such period.
Such consent may be revoked at any time after six months
from the date of the first publication or other giving of
such notice by the Bondholder who gave such consent, or by a
successor in title, by filing notice thereof with the
Trustee and the Issuer, but such revocation shall not be
effective if the owners of 51% in aggregate principal amount
of the then outstanding Bonds have, prior to the attempted
revocation, consented to and approved the amendment.
(f) Ownership of Bonds. For the purpose of this
Section, the fact of being a Bondholder and the amount and
numbers of such Bonds, and the date of being a Bondholder,
may be conclusively presumed, or may be proved by an affi-
davit satisfactory to the Issuer and the Trustee of the
person claiming to be such Bondholder, or by a certificate
executed by any trust company, bank, banker, or any other
depository wherever situated showing that at the date there-
in mentioned such person has on deposit with such trust
company, bank, banker, or other depository, the Bonds de-
scribed in such certificate, or in any other manner, whether
or not the Bonds are so deposited, as the Trustee may ap-
prove. The Issuer may conclusively presume that the status
of any Bondholders will continue until written notice to the
contrary is served upon the Issuer.
24
(g) Amendments Without Consent. Notwithstanding the
provisions of (a) through (f) of this Section, and without
publication of the proposed amendment and without the con-
sent of the Bondholders, but subject to approval of the
Approving Officer and, in the case of any amendment to the
Trust Indenture, with the approval of the Trustee, the
Issuer may, at any time, amend any Bond Resolution, or the
Trust Indenture, to cure any ambiguity or cure, correct, or
supplement any defective or inconsistent provision contained
therein, or make any other change that does not in any
respect materially and adversely affect the interest of the
Bondholders, provided that no such amendment shall be made
contrary to the proviso to Section 13(a), and a duly certi-
fied or executed copy of each such amendment shall be filed
with the Trustee.
Section 14. ESTABLISHMENT OF CONSTRUCTION FUND. (a)
Deposit of Bond Proceeds into Construction Fund. Prior to
or immediately after the sale and delivery of the Bonds
authorized hereby, the Issuer shall establish the Construc-
tion Fund with the Trustee, as defined in and required by
the Agreement. The Issuer shall deposit all of the proceeds
from the sale and delivery of the Bonds authorized hereby
into the Construction Fund. The Trustee shall draw on and
use the Construction Fund as hereinafter provided. The
amount so deposited into the Construction Fund shall consti-
tute the Loan made to the User by the Issuer as contemplated
and provided in the Agreement.
(b) Investment of Money in Construction Fund. Any
money held as part of the Construction Fund, other than the
amounts described in Section 15(a), shall be invested or
reinvested by the Trustee upon the written direction of the
Approving Officer in any obligations, including certificates
of deposit. The Trustee shall make no investments except as
specifically directed in writing by the Approving Officer.
The investments of the Construction Fund shall be deemed to
be a part of the Construction Fund, and for the purpose of
determining the amount of money in the Construction Fund,
such investments shall be valued at their cost or market
value, whichever is lower. The income and profits, includ-
ing realized discount on obligations purchased, received
from such investments shall be deposited in or credited to
the Construction Fund, and any losses on investments shall
be charged against the Construction Fund. Upon the written
direction of the Approving Officer the Trustee shall redeem
or sell all or any designated part of such investments
employing, in the case of a sale, any commercially reason-
able method of effecting the same. The Trustee shall not be
liable or responsible for any loss resulting from the
redemption or sale of any such investment as herein autho-
rized; except that (notwithstanding any provisions of the
25
Agreement) the Trustee shall be liable for: (1) any loss
resulting from its willful or negligent failure, within a
reasonable time after receiving the written direction from
the Approving Officer, to make, redeem, or sell any invest-
ment in the manner provided for herein, and (2) any loss
resulting from the making, redeeming, or selling of any
investment which was not authorized by written direction of
the Approving Officer. If the Trustee is unable, after
reasonable effort and within a reasonable time after receipt
of the required written direction, to make, redeem, or sell
any such investment, it shall so notify in writing the
Approving Officer, and thereupon the Trustee shall be
relieved of all liability or responsibility with respect
thereto.
(c) Deposit of Accrued Interest, Income, and Profits.
Any accrued interest received from the sale of the Bonds;
and, upon the written direction of the Approving Officer and
to the extent that such use is consistent with the require-
ments of Section 15(b)(v), all income and profits received
from the investment of the Construction Fund, shall (as soon
as practicable after any receipt thereof has been deposited
in or credited to the Construction Fund) be transferred by
the Trustee and deposited into the Debt Service Fund to be
used to pay interest on the Bonds during the period of
construction of the Project.
Section 15. PAYMENTS FROM CONSTRUCTION FUND. (a)
Issuer's Administrative Overhead Expenses and Other Costs.
Immediately after the delivery of the Bonds authorized
hereby the Trustee shall pay directly to the Issuer the
amount of $5,000 in accordance with the Agreement, being the
amount required to reimburse the Issuer for its adminis-
trative and overhead expenses directly attributable and
chargeable to the costs of issuance of the Bonds authorized
hereby and the acquisition, construction, equipping, and
furnishing of the Project. Also, immediately after the
delivery of the Bonds authorized hereby, the Trustee shall
pay directly out of the Construction Fund, promptly after
receiving the bills or statements therefor, all of the
actual direct expenses and costs reasonably incurred in the
issuance of such Bonds, including, without limitation,
financing charges, printing and engraving expenses, the fees
and expenses of accountants, financial advisors and attor-
neys, and the initial fees and expenses of the Trustee.
(b) Reimbursement for and Payment of Cost of Project.
Subject and subordinate to making the payments required by
the preceding paragraph, the Trustee shall make an initial
payment, if requested by the User in the manner described
below for payments from the Construction Fund, to reimburse
the User for any Cost of the Project, paid by the User prior
26
to such date of delivery. The Trustee shall make such
initial payment, if requested, and shall make any subsequent
payments from the Construction Fund to enable the User to
pay, or to reimburse the User for paying, any Cost of the
Project, from time to time upon receipt by the Trustee of a
request of the User signed by the Approving Officer. Such
request shall be accompanied by a certificate stating with
respect to each payment as follows:
(i) the expenditures, in summary form, for which
payment is to be made or for which reimbursement is
requested;
(ii) that the amounts requested are to be, or have
been paid, by the User for property or to contractors,
subcontractors, materialmen, engineers, architects, or
other persons who will perform or have performed neces-
sary or appropriate services or will supply or have
supplied necessary or appropriate materials for the
acquisition, construction, equipping, and furnishing of
the Project, as the case may be, and that, to the best
of his knowledge, the fair value of such property,
services, or materials is not exceeded by the amounts
requested to be paid;
(iii) that no part of the several amounts requested
to be paid to the User, as stated in such certificate,
has been or is the basis for the payment of any money
in any previous or then pending request;
(iv) that the payment of the amounts requested
will not result in a breach of any of the covenants of
the User contained in the Agreement, and particularly
those covenants in Sections 4.05 and 4.06 thereof,
which relate to the Code and the Regulations; and
(v) that the expenditure of such amounts to be
paid, when added to all previous disbursements from the
Construction Fund, will result in at least 90% of the
total of such disbursements, other than disbursements
for issuance expenses, being used to provide land or
property of a character subject to the allowance for
depreciation under the Code (which expenditures are
amounts paid or incurred which are, for federal income
tax purposes, chargeable to the Project's capital
account or would be so chargeable either with a proper
election by the User [for example, under Section 266 of
the Code] or but for a proper election by the User to
deduct such amounts).
(c) Reliance by Trustee. The Trustee shall rely fully
on any such request and certificate delivered pursuant to
27
this Section and shall not be required to make any investi-
gation in connection therewith. If amounts paid by the
Trustee with respect to any portion of the Project should
exceed the cost thereof, the User shall promptly repay such
overpayment into the Construction Fund.
Section 16. SURPLUS CONSTRUCTION FUNDS. (a) Disposi-
tion of Surplus Funds. The completion of the Project shall
be conclusively evidenced, and the date of completion shall
be established by a written certificate of completion to be
signed by the Approving Officer and delivered to the Trustee
immediately upon completion of the Project. If, upon the
completion of the Project, there shall be any surplus funds
remaining in the Construction Fund not required to provide
for the payment of the Cost of the Project, or if any funds
are on hand in the Construction Fund at the time of the
release of the Trust Indenture under the terms thereof, then
any such funds shall be used immediately to prepay or redeem
principal installments of the Bonds, in inverse chronologi-
cal order, in the manner set forth in the FORM OF BOND in
Section 5 for the prepayment or redemption of principal
installments of the Bonds with surplus Construction Fund
moneys, to the extent of any such available funds; provided
that prior to such use, the Issuer and the Trustee shall
have been furnished with an unqualified opinion of Bond
Counsel to the effect that the use of moneys from the
Construction Fund for such purpose will be lawful and will
not impair the exemption of interest on the Bonds from
federal income taxation; and provided, further, that the
User shall deposit into the Construction Fund prior to such
prepayment or redemption an amount sufficient to cause the
total amount in the Construction Fund to be equal to (i) an
integral multiple of $1,000, or (ii) not less than all of
the unpaid principal installment or installments to be
prepaid or redeemed.
(b) Disposition of Construction Fund upon Acceleration
and Redemption. If the Trustee shall declare the principal
of the Bonds and the interest accrued thereon immediately
due and payable as the result of an Event of Default speci-
fied in the Trust Indenture, or if the Bonds are optionally
or mandatorily prepaid or redeemed prior to maturity as a
whole in accordance with their terms, any amounts remaining
in the Construction Fund shall be used immediately by the
Trustee for the purpose of paying principal of, redemption
premium, if any, agreed liquidated damages, if any, and
interest on the Bonds when due.
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR
DESTROYED BONDS. (a) Replacement Bonds. In the event any
of the outstanding Bonds authorized hereby is damaged,
mutilated, lost, stolen, or destroyed, the Issuer shall
28
execute, and the Trustee shall authenticate, a new bond of
the same principal amount and maturity of the damaged,
mutilated, lost, stolen, or destroyed Bond in exchange and
substitution for such Bond or in lieu of and substitution
for such Bond.
(b) Application for Substitute Bonds. Application for
exchange and substitution of damaged, mutilated, lost,
stolen, or destroyed Bonds shall be made to the Issuer. In
every case, the applicant for a substitute bond shall
furnish to the Issuer and to the Trustee such security or
indemnity as may be required by them to save each of them
and the Paying Agent harmless. In every case of loss,
theft, or destruction of a Bond, the applicant shall also
furnish to the Issuer and to the Trustee evidence to their
satisfaction of the loss, theft, or destruction, and of the
ownership of such Bond. In every case of damage or mutila-
tion of a Bond, the applicant shall surrender the Bond so
damaged or mutilated.
(c) No Default Occurred. Notwithstanding the fore-
going provisions of this Section, in the event any such Bond
shall have matured, and no default has occurred which is
then continuing in the payment of the principal of, redemp-
tion premium, if any, agreed liquidated damages, if any, or
interest on the Bond, the Issuer may authorize the payment
of the same (without surrender thereof except in the case of
a damaged or mutilated Bond) instead of issuing a substitute
Bond, provided security or indemnity is furnished as above
provided in this Section.
(d) Charge for Issuing Substitute Bonds. Prior to the
issuance of any substitute bond, the Issuer and the Trustee
may charge the owner of such Bond with all legal, printing,
and other expenses in connection therewith. Every substi-
tute bond issued pursuant to the provisions of this Section
by virtue of the fact that any Bond is lost, stolen, or
destroyed shall constitute a contractural obligation of the
Issuer whether or not the lost, stolen, or destroyed Bond
shall be found at any time, or be enforceable by anyone, and
shall be entitled to all the benefits of the Trust Indenture
and this Initial Bond Resolution equally and proportionately
with any and all other Bonds duly issued under this Initial
Bond Resolution.
(e) Authority for Issuing Substitute Bonds. This Ini-
tial Bond Resolution shall constitute sufficient authority
for the issuance of any such substitute bonds without neces-
sity of further action by the Board of Directors of the
Issuer or any other body or person, and the issuance of such
substitute bonds is hereby authorized, notwithstanding any
29
other provisions of this Initial Bond Resolution, except to
the extent otherwise required by law.
Section 18. NO ARBITRAGE. The Issuer and the User
have covenanted to and with the purchasers of the Bonds that
they will make no use of the direct or indirect proceeds
thereof at any time throughout the term thereof which would
cause the Bonds to be arbitrage bonds within the meaning of
Section 103(c) of the Code or any Regulations or rulings
pertaining thereto; and by this covenant the Issuer and the
User are obligated to comply with the requirements of the
aforesaid Section 103(c) and all applicable and pertinent
Regulations relating to arbitrage bonds.
Section 19. FINDINGS. Based upon the representations
made by the User in the Agreement, the Board of Directors
hereby affirmatively finds that (i) the Project is suitable
for the promotion of commercial, industrial or manufacturing
development and expansion, (ii) the Project will have a
direct, positive and favorable impact on employment in the
Governmental Unit, and (iii) that the Project is in further-
ance of the public purposes as set forth in the Act.
Section 20. SALE OF THE BONDS. At the specific
request of the User, the Bonds are hereby authorized to be
sold, and shall be delivered to First City Bank of Corpus
Christi, for the price of par and any accrued interest to
the date of payment and delivery.
Section 21. TRUST INDENTURE. For the purpose of addi-
tionally securing the payment of the Bonds, the redemption
premium, if any, the agreed liquidated damages, if any, and
the interest thereon, and for the purpose of providing for
and fixing in more detail the rights of the owners of the
Bonds and any interest coupons appertaining thereto, and of
the Issuer, the User, and the Trustee, and for the purpose
of making more effective the first lien on and pledge of the
payments to be made pursuant to the Agreement and this
Initial Bond Resolution, a Trust Indenture in substantially
the following form and substance shall be signed, sealed,
and otherwise executed and delivered, for and on behalf of
the Issuer, by the President and the Secretary of its Board
of Directors, after which the Trust Indenture shall be
executed by the Trustee and shall become effective upon the
delivery of the Bonds authorized hereby:
30
TRUST INDENTURE
BETWEEN
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION
AND
FIRST CITY BANK OF CORPUS CHRISTI, TRUSTEE
(HERCO INC. PROJECT)
Pursuant to and under this Trust Indenture the Corpus
Christi Industrial Development Corporation has granted a
security interest in and assigned to First City Bank of
Corpus Christi, as Trustee, all of its interests in all
"Installment Loan Payments" due pursuant to and under the
"Loan Agreement between Corpus Christi Industrial Develop-
ment Corporation and HERCO Inc." to secure its Revenue Bond,
Series 1984 (HERCO Inc. Project).
DEBTOR:
Corpus Christi Industrial Development Corporation
302 South Shoreline
P. O. Box 9277
Corpus Christi, Texas 78469
SECURED PARTY:
First City Bank of Corpus Christi
P. O. Box 780
615 Upper N. Broadway
Corpus Christi, Texas 78403
TABLE OF CONTENTS
(The Table of Contents is not a part of the Trust Inden-
ture but is for convenience of reference only)
PAGE
Parties 1
Recitals 1
Granting Clause 2
ARTICLE 1. ACCEPTANCE OF TRUST 3
ARTICLE 2. DEBT SERVICE FUND AND CONSTRUCTION
FUND 3
ARTICLE 3. NOTICE TO THE USER 4
ARTICLE 4. ACCOUNTS AND RECORDS 4
ARTICLE 5.
(a) Separate Records to be Kept 4
(b) Annual Report 4
(c) Right to Inspect 5
ENFORCEMENT OF RIGHTS IN CASE OF
DEFAULT 5
(a) Appointment of Trustee and
Rights of Holder 5
(b) Control by Trustee 5
(c) Events of Default 6
(d) Declaration of Principal
and Interest Due 7
(e) Enforcement by Trustee 8
(f) Remedies Non -Exclusive 8
(g) Waiver of Defaults 8
(h) Discretion of Trustee 9
(i) Application of Moneys 9
(j) Judicial Proceedings 10
(k) Enforcement of Remedies
Without Possession of Bonds 10
(1) Direction by Majority in
Principal Amount of Bondholders 10
(m) Notice by Trustee 11
(n) Concurrence of Bondholders 11
(o) Default of Payments 11
(p) Notice to User of Past Due
Payments 11
PAGE
ARTICLE 6. CONCERNING THE TRUSTEE 12
ARTICLE 7.
ARTICLE 8.
ARTICLE 9.
ARTICLE 10.
ARTICLE 11.
ARTICLE 12.
Execution by
Execution by
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Not Accountable for Bond
Proceeds
Reliance by Trustee
Compensation of Trustee from
Debt Service Fund
Limited Responsibilities
Advice
Trustee May Own Bonds
Fees
SUCCESSOR TRUSTEE
(a)
(b)
(c)
(d)
(e)
Resignation of Trustee
Removal of Trustee
Appointment of Successor
Trustee
Transfer to Successor Trustee
Merger or Consolidation of
Trustee
RELEASE OF INDENTURE AND SATISFACTION
OF INDEBTEDNESS
AMENDMENTS
MISCELLANEOUS PROVISIONS
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Acknowledgements and
Ownership of Bonds
Trustee May Require Proof
of Ownership
Consent of Bondholders
Survival of Valid Bonds
Unclaimed Funds
Rights of Parties
Severability
Law
RECORDING
(a) Trustee to Record
(b) Non -Encumbrance
NOTICE TO TEXAS ECONOMIC DEVELOPMENT
COMMISSION
the Issuer
12
12
13
13
13
14
14
14
14
14
14
15
16
16
16
17
17
17
17
18
18
18
19
19
19
19
19
20
20
the Trustee - 21
TRUST INDENTURE
THE STATE OF TEXAS
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION
THIS TRUST INDENTURE, dated as of January 1, 1984,
executed by and between Corpus Christi Industrial Develop-
ment Corporation (the "Issuer"), a nonstock, nonprofit
industrial development corporation organized and existing
under the laws of the State of Texas, including particularly
the Development Corporation Act of 1979, as amended (Article
5190.6, V.A.T.C.S.) (the "Act"), and First City Bank of
Corpus Christi, Corpus Christi, Texas, a Texas banking
association duly organized and existing under the laws of
the State of Texas and having its principal office in the
City of Corpus Christi, Texas, as Trustee (the "Trustee"):
WITNESSETH THA T:
WHEREAS, a "Loan Agreement between Corpus Christi
Industrial Development Corporation and HERCO Inc.", dated as
of January 1, 1984 (the "Agreement") has been duly executed
between the Issuer and HERCO Inc. (the "User"), with the
User being a corporation organized and existing under the
laws of the Commonwealth of Pennsylvania, being fully
qualified to transact business in the State of Texas; and
WHEREAS, an executed copy of the Agreement, has been
filed with the Trustee; and
WHEREAS, pursuant to the Agreement the Board of Direc-
tors of the Issuer has duly adopted a "RESOLUTION AUTHORIZ-
ING THE ISSUANCE OF CORPUS CHRISTI INDUSTRIAL DEVELOPMENT
CORPORATION REVENUE BOND, SERIES 1984 AND THE EXECUTION OF A
TRUST INDENTURE (HERCO INC. PROJECT)", which, together with
any amendment thereto, is hereinafter called and designated
the "Initial Bond Resolution"; and
WHEREAS, the Initial Bond Resolution authorized the
issuance of CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORA-
TION REVENUE BOND, SERIES 1984 (HERCO INC. PROJECT), in the
aggregate principal amount of $1,000,000, which together
with any replacement bonds and any additional parity revenue
bonds ("Additional Bonds") authorized to be issued by the
Initial Bond Resolution, are hereinafter collectively called
the "Bonds"; and
WHEREAS, a certified copy of the Initial Bond Resolu-
tion has been duly filed with the Trustee; and
WHEREAS, pursuant to the Initial Bond Resolution, a
certified copy of each resolution authorizing the issuance
of each, series or issue of Additional Bonds shall be filed
with the Trustee prior to the delivery thereof; and
WHEREAS, as used in this Trust Indenture the word "Bond
Resolution" shall mean and include collectively the Initial
Bond Resolution (including the Trust Indenture prescribed
and authorized to be executed in the Initial Bond Resolu-
tion) and, when adopted and filed with the Trustee, each
resolution authorizing the issuance of Additional Bonds
together with any supplemental resolutions or amendments to
such resolutions or the Trust Indenture; and
WHEREAS, pursuant to the Agreement and the Bond Resolu-
tion and subject to the terms and provisions thereof, the
Bonds, the redemption premium, if any, agreed liquidated
damages, if any, and the interest thereon, are and shall be
payable from and secured by a first lien on and pledge of
the payments designated "Installment Loan Payments" to be
made or paid, or caused to be made or paid, by the User (or
its successors or assigns under certain circumstances) to
the Trustee; and
WHEREAS, the User and the Trustee have entered into a
Deed of Trust and Security Agreement dated as of January 1,
1984 (the "Deed of Trust"), providing further security for
the payment of the Installment Loan Payments for the benefit
of the owners of the Bonds; and
WHEREAS, for purposes of this Trust Indenture, the
definitions of terms in the Agreement, the Deed of Trust,
and the Bond Resolution are hereby adopted, and the terms
used herein shall have the same meanings as such terms are
given in said Agreement, Deed of Trust, and Bond Resolution
unless a different meaning is given herein; and
WHEREAS, the Trustee has accepted the trusts created by
this Trust Indenture, and in evidence thereof has joined in
the execution hereof; and
WHEREAS, this Preamble constitutes an integral part of
this Trust Indenture.
NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH:
That the Issuer 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
owners thereof, and for other good and valuable considera-
tion, the receipt of which is hereby acknowledged, and for
the purpose of securing and providing for the payment of the
2
principal of, redemption premium, if any, and interest on
the Bonds at any time issued and outstanding, when due, any
agreed liquidated damages, all fees and expenses of the
Trustee and Registrar, and the Paying Agents for the Bonds
reasonably and directly incurred in the performance of their
duties under and in the issuance and delivery of the Agree-
ment, the Bonds, the Trust Indenture and the Deed of Trust
and Security Agreement, and all other payments required to
be made by the User under the Agreement and the Bond Resolu-
tion, has granted a security interest in, assigned, trans-
ferred, pledged, set over, and confirmed, and by these
presents does grant a security interest in, assign, pledge,
set over, and confirm unto the Trustee, and to its successor
or successors in said trust, and to its or their assigns,
all and singular (i) all of its right, title, and interest
in and to the Installment Loan Payments as required and
provided in the Agreement and the Bond Resolution, (ii) the
Debt Service Fund and the Construction Fund created by the
Initial Bond Resolution, and subject to the terms, condi-
tions, stipulations, covenants, agreements, trusts, uses,
and purposes hereinafter expressed; and the Issuer and the
Trustee have agreed, and they hereby agree and covenant with
the respective owners from time to time of the Bonds, and
the interest coupons, if any, appertaining thereto, as
follows, to -wit:
Article 1. ACCEPTANCE OF TRUST. The Trustee hereby
accepts the trusts, duties, obligations, and requirements
imposed on it by the Bond Resolution and this Trust Inden-
ture, and agrees to carry out and perform, punctually and
effectively, such duties, obligations, and requirements for
the benefit of the Issuer, the User, and the owners of the
Bonds and the interest coupons, if any, appertaining there-
to. It is further specifically agreed that (i) the Trustee
will act as a Paying Agent for the Bonds at all times while
it is Trustee, (ii) the Trustee will act as Registrar for
the Bonds at all times while it is Trustee, (iii) the
Trustee will authenticate each of the Bonds by executing the
Trustee's Certificate of Authentication appearing on each of
the Bonds, as provided in the Bond Resolution, and it will
so authenticate the Bonds when requested by the Issuer,
prior to the delivery of the Bonds, at such time and in such
manner as directed by the Issuer, and (iv) the Trustee will
remain the Trustee under the Deed of Trust so long as it is
the Trustee hereunder.
Article 2. DEBT SERVICE FUND AND CONSTRUCTION FUND.
The Debt Service Fund and the Construction Fund created by
the Initial Bond Resolution are hereby confirmed and estab-
lished, respectively, in trust, with the Trustee, and the
Trustee agrees to hold, administer, deposit, secure, invest,
and use said funds in all respects as provided and required
3
by the Agreement, the Bond Resolution, and this Trust Inden-
ture.
Article 3. NOTICE TO THE USER. On or before the 15th
day prior to each date upon or before which each Installment
Loan Payment is required by each Bond Resolution to be
deposited into the Debt Service Fund, the Trustee shall give
written notice to the User, by hand delivery or first class
mail, postage prepaid, at such address as the User shall
from time to time designate and file in writing with the
Trustee, of the amount, if any, of each Installment Loan
Payment required by each Bond Resolution to be made by the
User to the Trustee and deposited by the Trustee into the
Debt Service Fund, on or before such date. Such notice
shall give a brief statement of the manner in which the
amount due was calculated, including a showing of all
credits on account of available moneys in the Debt Service
Fund. The failure of the Trustee to give, or the User to
receive, any such notice shall not relieve the User of its
unconditional duty and obligation to make all deposits or
payments of Installment Loan Payments to the Trustee as
required by the Agreement and each Bond Resolution;
provided, however, that if the Trustee fails to give or the
User fails to receive such notice sufficiently in advance of
the date on which an Installment Loan Payment is due, the
User shall then pay the same amount as the immediately
proceeding Installment Loan Payment, and an adjustment for
the difference shall be made at the time the next Install-
ment Loan Payment (following receipt of the notice) is due.
Article 4. ACCOUNTS AND RECORDS (a) Separate Records
to be Kept. The Trustee shall keep proper books of records
and accounts, separate from all other records and accounts,
in which complete and correct entries shall be made of all
transactions relating to the Installment Loan Payments, the
Debt Service Fund, and the Construction Fund.
(b) Annual Report. Within 90 days after the close of
each fiscal year of the Trustee, the Trustee will furnish to
the Issuer, the User, and any owner of any outstanding Bonds
who may so request, a copy of a report by the Trustee
covering the preceding fiscal year, showing the following
information:
(1) a detailed statement concerning the receipt
and disposition of all Installment Loan Payments and
the disposition of the amounts in the Construction Fund
(until the Construction Fund shall have been fully
disposed of).
(2) an asset statement or balance sheet of the
Debt Service Fund and of the Construction Fund (until
4
the Construction Fund shall have been fully disposed
of).
(c) Right to Inspect. The Issuer, the User, and the
owners of any Bonds shall have the right, at all reasonable
times and upon reasonable notice, to inspect all records,
accounts, and data of the Trustee relating to the Debt
Service Fund and the Construction Fund.
Article 5. ENFORCEMENT OF RIGHTS IN CASE OF DEFAULT.
(a) Appointment of the Trustee and Rights of the Holder.
The Trustee is hereby irrevocably appointed the special
agent and representative of the owners of the Bonds and
vested with full power in their behalf to effect and enforce
the Agreement, this Trust Indenture, and the Bond Resolution
for their benefit as provided herein and in the Bond Resolu-
tion; but anything contained in this Trust Indenture to the
contrary notwithstanding, the owners of a majority in
aggregate principal amount of the Bonds then outstanding, in
case of any subsisting Event of Default (hereinafter de-
fined) or of any other event entitling the Trustee to
proceed hereunder, shall have the right from time to time to
direct and control the Trustee in connection with the
enforcement of any of the provisions of the Agreement, this
Trust Indenture, and the Bond Resolution, and any other
proceedings taken by virtue of any provisions of the afore-
said instruments, including the right to have withdrawn and
discontinued at any stage thereof any proceedings taken
hereunder by the Trustee, provided that the Event of Default
upon which such proceedings were based and all other Events
of Default hereunder shall have been remedied and made good.
Anything contained in this Trust Indenture to the contrary
notwithstanding, each owner of any Bond shall have a right
of action to enforce the payment of all amounts due with
respect to any Bond owned by him when or after the same
shall have become due, at the place, from the sources, and
in the manner expressed in the Agreement, the Bond Resolu-
tion, or this Trust Indenture; provided that no right of
action shall exist subsequent to the time of waiver of an
Event of Default in the payment'of any such amount so due
and such Event of Default having been remedied and made
good, as provided in Article 5(g).
(b) Control by Trustee. Except as otherwise provided
in this Article, the rights of action with respect to this
Trust Indenture shall be exercised by the Trustee and no
owner of any Bond shall have any right to institute any
suit, action or proceeding at law or equity for the appoint-
ment of a receiver or for any other remedy hereunder or by
reason hereof unless and until in addition to the fulfill-
ment of all other conditions precedent specified in this
Trust Indenture, the Trustee shall have received the written
5
request of the owners of not less than 25% in aggregate
principal amount of the Bonds then outstanding and shall
have been offered reasonable indemnity and shall have
refused, or for 30 days thereafter neglected, to institute
such suit, action, or proceeding; and it is hereby declared
that the making of such request and the furnishing of such
indemnity are in each case conditions precedent to the
execution and enforcement by any owner of any Bond of the
powers and remedies given to the Trustee hereunder and to
the institution and maintenance by any owner of any Bond of
any action or cause of action for the appointment of a
receiver or for any other remedy hereunder; but the Trustee
may, in its discretion, or when duly requested in writing by
the owners of at least 25% in aggregate principal amount of
the Bonds then outstanding and upon being furnished indem-
nity satisfactory to the Trustee against expenses, charges,
and liability shall, forthwith take such appropriate action
by judicial proceedings or otherwise to enforce the cove-
nants of the User, and the Issuer as the Trustee may deem
expedient in the interest of the owners of the Bonds.
(c) Events of Default. Any one or more of the follow-
ing events shall constitute and hereinafter shall be called
an "Event of Default":
(1) the failure by the Issuer to make due and
punctual payment of principal of, redemption premium,
if any, and interest on the Bonds within ten (10) days
after receipt of notice of nonpayment from the
Trustee, whether payment is required at maturity or by
call for redemption or otherwise; provided, however,
that if such failure shall arise other than by reason
of a default by the User under the Bond Resolution and
the Agreement, the continuation of such failure for two
days.
(2) the failure of the User to make or pay, or
cause to be made or paid, any Installment Loan Payment,
or any part thereof, when and to the extent due and
required by the Agreement or the Bond Resolution within
ten (10) days after receipt of notice of nonpayment
from the Trustee.
(3) the failure of the User to make due and
punctual payment within ten (10) days after receipt of
notice of nonpayment from First City Bank of Corpus
Christi, of principal and interest on that certain
indebtedness evidenced by a Promissory Note dated April
6, 1983, in the original principal amount of Forty
Million Dollars ($40,000,000), executed by the User and
delivered to First City Bank of Corpus Christi.
6
(4) the dissolution or liquidation of the User in
any manner not specifically authorized by the Agree-
ment, or the filing by the User of a voluntary petition
in bankruptcy or failure by the User promptly to lift
or suspend any execution, garnishment, or attachment of
such consequence as will materially impair its ability
to carry out its obligations under the Agreement or the
Bond Resolution, or the commission by the User of any
act of bankruptcy, or failure of the User generally to
pay its debts as they become due, or entry of an order
for relief of the User in a bankruptcy case of the User
or assignment by the User of a substantial portion of
its assets for the benefit of its creditors, or the
entry by the User into an agreement of composition with
its creditors, or the entry of an order or decree
applicable to the User in any proceeding for its
reorganization or arrangement in any proceedings
instituted under the provisions of any applicable
federal or state bankruptcy statutes, including the
federal Bankruptcy Code, as they now exist or are
hereafter amended or enacted.
(5) the User defaulting in the observance or
performance of any other of its covenants, conditions,
or obligations in the Bonds, the Agreement, the Bond
Resolution, or this Trust Indenture, and the User not
remedying such default within 60 days after written
notice to do so has been received by the User from the
Trustee or the owners of the Bonds; and the Trustee may
serve such notice, in its discretion, or shall serve
such notice at the written request of the owners of not
less than 25% in aggregate principal amount of the
Bonds then outstanding.
(6) the failure by the User to observe or perform
any covenant or condition specified in the Deed of
Trust.
(d) Declaration of Principal and Interest Due. Upon
the happening of an Event of Default, the Trustee may, in
its discretion, or upon the written request of the owners of
at least 25% in aggregate principal amount of the Bonds then
outstanding, and upon being indemnified to the satisfaction
of the Trustee, shall, declare the principal of all Bonds
then outstanding and the interest accrued thereon immedi-
ately due and payable, and such principal and interest,
together with any applicable agreed liquidated damages, and
any applicable redemption premium, and any other amounts
then due, shall thereupon become and be immediately due and
payable, anything in the Bonds, the Agreement, the Bond
Resolution, or this Trust Indenture to the contrary notwith-
standing.
7
(e) Enforcement by Trustee. Upon the happening of an
Event of Default, the Trustee may, in its discretion, or
upon the written request of the owners of at least 25% in
aggregate principal amount of the Bonds then outstanding,
and upon being indemnified to the satisfaction of the
Trustee, shall,,: take such appropriate action by judicial
proceedings or otherwise to cure the Event of Default and/or
to require the User, or the Issuer to carry out its or their
covenants and obligations under and with respect to the
Bonds, the Agreement, the Bond Resolution, or this Trust
Indenture, including without limitation, the use and filing
of actions for specific performance, and mandamus proceed-
ings, in any court of competent jurisdiction, against the
Issuer, its Board of Directors, and its officers, employees,
and/or agents, and to obtain judgments against the User for
any Installment Loan Payments due but unpaid into the Debt
Service Fund, or for any other amounts due hereunder, under
the Bond Resolution, or under the Agreement, including all
amounts due with respect to the Bonds then outstanding if
declared due and payable as provided herein.
(f) Remedies Non -Exclusive. No remedy herein con-
ferred upon or reserved to the Trustee 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 hereunder or under
the Agreement, the Bonds or the Bond Resolution, or now and
hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing
upon the happening of an Event of Default continuing as
aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such Event of Default or
acquiescence therein, and every such right and power may be
exercised from time to time and so often as may be deemed
expedient.
(g) Waiver of Defaults. The Trustee may, and upon the
written request of the owners of a majority in aggregate
principal amount of the Bonds then outstanding shall, waive
any Event of Default hereunder and its consequences, except
that an Event of Default in the payment of Installment Loan
Payments, or in the payment of any amounts with respect to
the Bonds when and as the same shall become due and payable,
may be waived only if, the Event of Default therein shall
have been remedied and made good. In case of any such
waiver, the Issuer, the User, the Trustee, and the owners of
the Bonds shall be restored to their former position and
rights hereunder respectively, but such waiver shall not
extend to any subsequent or other Event of Default or impair
any right consequent thereon.
8
(h) Discretion of Trustee. In the event the Trustee
shall receive conflicting or inconsistent requests and
indemnity from two or more groups of owners of Bonds, each
representing less than a majority of the aggregate principal
amount of Bonds then outstanding, the Trustee in its sole
discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Trust
Indenture.
(i) Application of Moneys. All money collected by the
Trustee pursuant to the exercise of the remedies and powers
provided in this Article, together with all other sums which
then may be held by the Trustee under any provision of this
Trust Indenture or the Deed of Trust as security for the
Bonds, shall be applied as follows:
FIRST: to the payment of the costs and expenses
of the proceedings whereunder such money was collected,
including a reasonable compensation to the Trustee, its
agents, attorneys, and all other necessary or proper
expenses, liabilities, and advances incurred or made by
the Trustee under this Trust Indenture, and to the
payment of all taxes, assessments, and liens superior
to the lien of this Trust Indenture.
SECOND: to the payment of matured interest on the
Bonds, including, to the extent legally permissible,
interest thereon at the rate of 15% per annum from due
date to date of payment.
THIRD: to the payment of principal of, redemption
premium, if any, and agreed liquidated damages, if any,
on the Bonds which have been called for redemption as
permitted or required by the Bond Resolution or have
matured as provided thereby, and interest thereon, to
the extent legally permissible, at the rate of 15% per
annum from the date of redemption or maturity to date
of payment.
FOURTH: to the payment of principal of the Bonds
which have become due by virtue of the declaration of
the Trustee pursuant to Article 5(d), and interest
thereon, to the extent legally permissible, at the rate
of 15% per annum from the date declared due to date of
payment.
FIFTH: to the payment of all liens, in the order
of their priority, that are inferior to the lien of
this Trust Indenture.
SIXTH: to the payment of the surplus, if any, to
whomsoever may be lawfully entitled to receive the
9
same, or as a court of competent jurisdiction may
direct.
If in making distribution pursuant to the order above
stated, the amount available for distribution in a particu-
lar classification shall be insufficient to pay in full all
of the items in such classification, the amount available
for distribution to items in such classification shall be
prorated among such items in the proportion that the amount
each item bears to the total of all such items. Notwith-
standing anything contained in this Trust Indenture to the
contrary, if the Trustee shall declare the principal of all
Bonds then outstanding and the interest accrued thereon
immediately due and payable as the result of an Event of
Default, or if the Bonds are to be redeemed as a whole
pursuant to mandatory redemption provisions provided in the
Bond Resolution, or if the User shall exercise any option to
redeem the Bonds as a whole in accordance with their terms,
any amounts remaining in the Construction Fund shall be
deposited in the Debt Service Fund and applied by the
Trustee as provided in this subsection (i).
(j) Judicial Proceedings. In any judicial proceeding
in which the Issuer is a party and which, in the opinion of
the Trustee and its counsel, has a substantial bearing on
the interests of the owners of the Bonds, the Trustee, if
permitted by the court having jurisdiction over such pro-
ceeding, may, in its discretion, or upon the written request
of the owners of at least 25% in aggregate principal amount
of the Bonds then outstanding, and upon being indemnified to
the satisfaction of the Trustee, shall, intervene on behalf
of the owners of the Bonds to assert the rights of such
owners.
(k) Enforcement of Remedies Without Possession of
Bonds. All rights of action or other rights under this
Trust Indenture or otherwise may be brought by the Trustee
in its own name as Trustee of an express trust and may be
enforced by the Trustee without the possession of any of the
Bonds or any interest coupons appertaining thereto, or the
production thereof on the trial or other proceedings rela-
tive thereto.
(1) Direction by Majority in Principal Amount of
Bondholders. It is expressly provided, however, that the
owners of a majority in aggregate principal amount of the
Bonds then outstanding, or a committee representing, pursu-
ant to a written appointment filed with the Trustee, the
owners of a majority in aggregate principal amount of the
Bonds then outstanding, shall have the right, at any time,
by an instrument or instruments in writing executed and
delivered to the Trustee, to direct the method and place of
10
conducting all proceedings to be taken in connection with
the enforcement of the Trustee's rights and remedies under
the Agreement or the rights of the owners of the Bonds or
the Trustee's rights and remedies under the Bond Resolution
and this Trust Indenture, and may exercise any right or
perform any action hereunder, with the same effect as the
Trustee under this Trust Indenture, provided, that such
direction shall not be otherwise than in accordance with the
provisions of law and of this Trust Indenture, and provided
that the Trustee shall be indemnified to its satisfaction.
(m) Notice By Trustee. The Trustee shall not be re-
quired to take notice nor be deemed to have notice of any
default specified in this Trust Indenture, except for those
Events of Default specified in Article 5(c)(1) and 5(c)(2),
unless specifically notified in writing of such default by
the owners of at least 25% in aggregate principal amount of
the Bonds then outstanding.
(n) Concurrence of Bondholders. In determining
whether the owners of a requisite aggregate principal amount
of Bonds outstanding have concurred in any request, demand,
authorization, direction, notice, consent, or waiver under
this Trust Indenture or the Bond Resolution, Bonds owned by
or for the account of the User or any person controlled by,
controlling, or under common control of the User, shall be
disregarded and deemed not to be outstanding for the purpose
of any such determination; provided however, that for the
purpose of determining whether the Trustee shall be protect-
ed in relying upon any such request, demand, authorization,
direction, notice, consent, or waiver, only Bonds of which
the Trustee has actual knowledge of such ownership shall be
so disregarded.
(o) Default of Payments. In the event of a default in
the payment of any Installment Loan Payment, or in the per-
formance of any agreement or covenant contained in the
Bonds, the Agreement, the Bond Resolution, or this Trust
Indenture, such payment and performance may be enforced by
the Trustee by mandamus, specific performance, or by the
appointment of a receiver (in equity with power to charge
and collect Installment Loan Payments) in accordance with
the Agreement, the Bond Resolution and this Trust Indenture.
(p) Notice to User of Past Due Payments. Pursuant to
the Agreement, Installment Loan Payments are to be paid by
the User directly to the Trustee. In the event that any
such payments are not timely made, the Trustee shall immedi-
ately notify the User by wire at the address provided in the
Agreement or by telephonic notice with confirmation of such
notice by wire, that payment has not been made. Such notice
shall be deemed given at the time the wire is received or
11
telephonic notice is given, whichever is earlier. Failure
of the Trustee to give, or the User to receive, such notice
shall not relieve the User of any covenant or obligation
under the Agreement, the Bond Resolution or this Trust
Indenture and shall not constitute a waiver of any Event of
Default under this Trust Indenture.
Article 6. CONCERNING THE TRUSTEE. The Trustee
accepts the trust imposed upon it by this Trust Indenture,
but only upon and subject to the following express terms and
conditions:
(a) Not Accountable for Bond Proceeds. In no event
shall the Trustee be liable except for its negligence or
willful misconduct in relation to its duties under this
Trust Indenture and the Bond Resolution. The Trustee shall
not be responsible for any recitals herein, in the Bonds,
the interest coupons, if any, appertaining thereto, the Bond
Resolution, the Agreement, or for the sufficiency of the
security for the Bonds or interest coupons, if any, apper-
taining thereto. The Trustee shall have no responsibility
hereunder except to the extent of the duties placed upon the
Trustee to hold, administer, deposit, secure, invest, and
use the Debt Service Fund and the Construction Fund as
expressly required by the Bond Resolution, to the extent
funds for such purposes are received by the Trustee, and to
perform the other express covenants and agreements made by
the Trustee under the provisions of this Trust Indenture and
the Bond Resolution.
(b) Reliance by Trustee. The Trustee may rely and
shall be protected in acting or refraining from acting in
accordance with the provisions of this Trust Indenture and
the Bond Resolution upon any notice, requisition, request,
consent, certificate, order, affidavit, letter, telegram, or
other paper or document believed by it to be genuine and
correct and to have been signed or sent by the proper person
or persons, and the Trustee shall not be bound to recognize
any person as an owner of Bonds or to take any action at his
request, unless the Bond or Bonds owned by such owner of
Bonds shall be deposited with the Trustee, be registered in
the name of such owner on the Bond Registration Books kept
by the Trustee, or submitted to it for inspection. Any
action taken by the Trustee pursuant to this Trust Indenture
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 secured hereby, shall
be conclusive and binding upon all future owners of the same
Bond and of Bonds issued in exchange therefor or in place
thereof.
12
(c) Compensation of Trustee from Debt Service Fund.
There shall be paid from the Debt Service Fund the Trustee's
reasonable compensation, and its reasonable expenses, ad-
vances, and counsel fees, and its liabilities incurred in
and about the execution of the trusts hereby created and the
exercise and performance of the powers and duties of the
Trustee hereunder (except liabilities incurred as a result
of the negligence or willful misconduct of the Trustee, or
as provided in the Bond Resolution), and the reasonable cost
and expenses, including counsel fees, of defending against
liabilities.
(d) Limited Responsibilities. The responsibilities of
the Trustee elsewhere set forth herein shall be further
limited as follows:
FIRST: the Trustee shall not be liable with
respect to any action taken or omitted to be taken by
it in good faith in accordance with a direction of the
owners of Bonds pursuant to any provision of this Trust
Indenture relating to the time, method, and place of
conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Trust Indenture.
SECOND: no provision of this Trust Indenture
shall require the Trustee (1) to expend or risk its own
funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or
liability is not reasonably assured to it, nor (2) to
take any action, whether or not directed to take such
action by the owners of Bonds, pursuant to this Trust
Indenture, which in the judgment of the Trustee would
conflict with any rule of law, or with the terms of
this Trust Indenture, or would be unjustly prejudicial
to the owners of Bonds not taking part in such direc-
tion. When acting pursuant to the direction of any
owners of Bonds pursuant to this Trust Indenture, the
Trustee may take other action deemed proper by the
Trustee which is not inconsistent with such direction;
provided, however, that the terms of this subparagraph
SECOND shall not impose any additional duties or
responsibilities upon the Trustee and shall not be
construed to limit the effect of subparagraph FIRST of
this paragraph (d).
(e) Advice. The Trustee may act upon the professional
opinion or advice of any legal counsel, engineer, account-
ant, or other expert, reasonably believed by the Trustee to
13
be qualified in relation to the subject matter, whether
retained by the Trustee or the Issuer or otherwise, and the
Trustee shall not be responsible for anything suffered or
done or not done by it in good faith in accordance with any
such opinion or advice.
(f) Trustee May Own Bonds. Except as prohibited by
law, the Trustee may become the owner of any of the Bonds
secured by this Trust Indenture with the same rights which
it would have if it were not the Trustee; and nothing herein
contained shall be construed to prohibit the Trustee, either
as principal or agent, from engaging in or being interested
in any financial or other transaction with the Issuer or the
User or from acting as depository, trustee, or agent for any
committee or body of owners of the Bonds or of other obliga-
tions of the Issuer as freely as if it were not the Trustee.
(g) Fees. The Issuer has agreed with the User in the
Agreement and the Bond Resolution provides that, as part of
the Installment Loan Payments the User shall pay to the
Trustee its reasonable charges for performing the duties of
Trustee, Registrar, and Paying Agent for the Bonds. It is
agreed by the Trustee that the User may, without causing or
creating a default or Event of Default hereunder, contest in
good faith (and withhold payment of the contested amount
until such contest is resolved) the reasonableness of any of
the foregoing charges for services. All payments due the
Trustee for such charges, fees, or expenses shall be paid by
the User and no such charges, fees, or expenses shall be
charged against or be payable by the Issuer, except the
initial fees and expenses of the Trustee which are paid as
part of the costs of issuance of the Bonds.
Article 7. SUCCESSOR TRUSTEE. (a) Resignation of
Trustee. The Trustee at the time acting hereunder may at
any time resign and be discharged from all trusts created by
this Trust Indenture by giving not less than 60 days written
notice to the Issuer, the User, and to any owners of Bonds
as shown on the Bond Registration Books and any other list
of owners of Bonds kept by the Trustee, and such resignation
shall take effect upon the appointment of a successor
Trustee by the owners of Bonds or by the Issuer as herein-
after provided.
(b) Removal of Trustee. The Trustee may be discharged
and removed at any time by an instrument or concurrent
instruments in writing, delivered to the Trustee and to the
Issuer, and signed by the owners of a majority in aggregate
principal amount of the then outstanding Bonds.
(c) Appointment of Successor Trustee. In case the
Trustee hereunder shall resign or be removed, or be
14
dissolved, or shall be in course of dissolution or
liquidation, or otherwise become incapable of acting
hereunder, or in case the Trustee 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
owners of a majority in aggregate principal amount of the
then outstanding Bonds by an instrument or concurrent
instruments in writing, signed by such owners of Bonds, or
by their attorneys in fact duly authorized in writing, and
delivered to the Issuer; provided, nevertheless, that in any
such event the Issuer by an instrument executed by authority
of a resolution of its Board of Directors and signed by the
President and by the Secretary of such Board, may appoint a
temporary Trustee to fill such vacancy until a successor
Trustee shall be appointed by the owners of Bonds in the
manner above provided, and any such temporary Trustee so
appointed by the Issuer shall immediately and without
further act be superseded by the Trustee so appointed by
such owners of Bonds. Every such successor or temporary
Trustee shall be a trust company or bank in good standing
located in the State of Texas, and having a capital and
surplus of not less than Twenty -Five Million Dollars
($25,000,000), if there be such a trust company or bank
willing, qualified, and able to accept the trust upon
reasonable and customary terms. In the event that no
appointment of a temporary or successor Trustee shall be
made pursuant to the foregoing provisions of this Article
within 60 days after the Trustee gives written notice of
resignation or the Trustee is removed, any owner of Bonds or
any retiring Trustee may apply to any court of competent
jurisdiction for the appointment of a successor Trustee, and
such court may thereupon, after such notice, if any, as it
shall deem proper, prescribe or appoint a successor Trustee.
(d) Transfer to Successor Trustee. Every successor
Trustee appointed hereunder shall execute, acknowledge, and
deliver to its predecessor, the Issuer, and the User, an
instrument in writing accepting such appointment hereunder,
and thereupon such successor Trustee, without any further
act, deed, or conveyance, shall become fully vested with all
the estates, rights, powers, trusts, duties, and obligations
hereunder of its predecessor; but such predecessor shall
nevertheless, on the written request of the Issuer, execute
and deliver an instrument transferring to such successor
Trustee all of the estates, rights, powers, and trusts of
such predecessor hereunder; and every predecessor Trustee
shall deliver all securities and money held by it to its
successor; provided, however, that before any such delivery
is required or made, all reasonable, customary, and legally
accrued fees, advances, and expenses of such predecessor
Trustee shall be paid in full. Should any deed, assignment,
or instrument in writing from the Issuer be required by any
15
successor Trustee for more fully and certainly vesting in
such Trustee the estates, rights, powers, and duties hereby
vested or intended to be vested in the predecessor Trustee,
any and all such deeds, assignments, and instruments in
writing shall, on request, be executed, acknowledged, and
delivered by the Issuer.
(e) Merger or Consolidation of Trustee. Any corpora-
tion or association into which the Trustee, or any successor
to it in the trusts created by this Trust Indenture, may be
merged or converted or with which it or any successor to it
may be consolidated, or any corporation or association
resulting from any merger, conversion, or consolidation to
which the Trustee or any successor to it shall be a party,
shall be the successor Trustee under this Trust Indenture
without the necessity of the execution or filing of any
paper or any other act on the part of any of the parties
hereto anything herein to the contrary notwithstanding.
Article 8. RELEASE OF INDENTURE AND SATISFACTION OF
INDEBTEDNESS. If, when the Bonds shall have become due and
payable in accordance with their terms or otherwise as
provided in this Trust Indenture or shall have been duly
called for redemption, and the whole amount of the princi-
pal, redemption premium, if any, and the interest so due and
payable upon all of the Bonds, and the agreed liquidated
damages, if any, with respect to the Bonds then due, shall
be paid, or sufficient money shall be held by the Trustee
for such purpose, and provision shall also be made for
paying all other sums payable hereunder and/or under the
Agreement and/or the Bond Resolution by the User, then and
in that case all right, title, and interest of the Trustee
in these presents and the estate and rights hereby granted
shall thereupon cease, determine, and become void, and the
Trustee in such case shall release this Trust Indenture and
shall execute such documents to evidence such release as may
be reasonably required by the Issuer, and the User, and
shall turn over any surplus funds held by it to whomsoever
may then be entitled pursuant to the Bond Resolution, the
Agreement, or by law to receive the same; and thereupon this
Trust Indenture shall terminate and be of no effect; provid-
ed, that until the Bonds are finally paid, the Trustee shall
continue to act as Paying Agent and Registrar for the Bonds.
Article 9. AMENDMENTS. This Trust Indenture may be
amended only as provided in the Bond Resolution; provided,
however, that Additional Bonds may be issued pursuant to the
Bond Resolution as provided therein, and may be secured by
this Trust Indenture without the necessity of amending or
supplementing this Trust Indenture.
16
Article 10. MISCELLANEOUS PROVISIONS. (a) Acknowl-
edgments and Ownership of Bonds. Any request, direction,
consent, or other instrument required by this Trust Inden-
ture to be signed or executed by owners of Bonds may be in
any number of concurrent writings of similar tenor and may
be signed or executed by such owners of Bonds in person or
by an agent appointed in writing. Proof of the execution of
any instrument, or of the writing appointing such agent, and
of the ownership of the Bonds, if made in the following
manner, shall be sufficient for any purpose of this Trust
Indenture and shall be conclusive in favor of the Trustee
with regard to any action taken by it under such instrument:
(i) the fact, date, and due authorization of the
execution by any person of any such instrument may be
proved by the certificate of any officer in any juris-
diction, who, by the laws thereof, has power to take
acknowledgments within such jurisdiction to the effect
that the person signing such instrument acknowledged
before him the execution thereof, or by an affidavit of
a witness to such execution.
(ii) the fact of the owning of the Bonds by any
owner thereof, the amount and numbers of such Bonds,
and the date of his owning same may be proved by (A)
with respect to bearer Bonds, the affidavit of the
person claiming to be such owner, if such affidavit
shall be deemed by the Trustee to be satisfactory, or
by a certificate executed by any trust company, bank,
banker, or any other depositary, wherever situated, if
such certificate shall be deemed by the Trustee to be
satisfactory, showing that at the date therein men-
tioned such person had on deposit with such trust
company, bank, banker, or other depositary, the Bonds
described in such certificate or in any other manner,
whether or not the Bonds are deposited, as the Trustee
may approve or (B) with respect to registered Bonds,
the appropriate entries in the Bond Registration Books
maintained by the Trustee as Registrar. The Trustee
may conclusively assume that such ownership continued
until written notice to the contrary is served upon the
Trustee.
(b) Trustee May Require Proof of Ownership. Nothing
contained in this Article shall be construed as limiting the
Trustee to the proof hereinabove specified, it being in-
tended that the Trustee may accept any other evidence of the
matters herein stated which it may deem sufficient.
(c) Consent of Bondholders. Unless otherwise provided
in the Bond Resolution, any request or consent of any owner
of Bonds shall bind every future owner of the same Bond in
17
respect of anything done by the Trustee in pursuance of such
request or consent. In the event of the dissolution of the
Issuer, all of the covenants, stipulations, promises, and
agreements in this Trust Indenture contained by, on behalf
of, or for the benefit of the Issuer, shall bind or inure to
the benefit of the successor or successors of the Issuer
from time to time and any officer, board, or commission to
whom or to which any power or duty affecting such covenants,
stipulations, promises, and agreements shall be transferred
by or in accordance with law.
(d) Survival of Valid Bonds. If any Bond shall not be
presented for payment when the principal thereof becomes
due, either at maturity or at the date fixed for redemption
thereof or otherwise, or in the event any coupons shall not
be presented for payment at the due date, thereof, all
liability of the Issuer and the User to the owners thereof
and to the Trustee for the payment of such Bond or coupons,
as the case may be, shall forthwith cease, determine, and be
completely discharged whenever funds sufficient to pay such
Bond or coupons shall be paid to the Trustee by the User,
and such funds shall be segregated by the Trustee and held
in trust for the benefit of the owners of such Bond or
coupons, as the case may be, who shall thereafter be re-
stricted exclusively to such funds for the satisfaction of
any claim of whatever nature on their part relating to such
Bond or coupons.
(e) Unclaimed Funds. Any money deposited with the
Trustee in trust for the payment of the principal of,
redemption premium, if any, agreed liquidated damages, if
any, or interest on any Bond and remaining unclaimed for six
years after such principal of, redemption premium, if any,
agreed liquidated damages, if any, or interest on such Bond
has become due and payable shall be paid to the User;
provided, however, that before the Trustee shall be required
to make any such repayment, the Trustee may at the expense
of the User cause to be published at least once, in a
financial newspaper, journal, or publication of general
circulation in The City of New York, New York, or in the
State of Texas, a notice that such money remains unclaimed
and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be
repaid to the User. After the payment of such unclaimed
moneys to the User, the owner of such Bond or the owner of
the relevant coupon shall thereafter look only to the User
for the payment thereof, and all liability of the Trustee
with respect to such money shall thereupon cease.
(f) Rights of Parties. Except as herein otherwise
expressly provided, nothing in this Trust Indenture
18
expressed or implied is intended or shall be construed to
confer upon any person, firm, or corporation other than the
User, the Issuer, the Trustee, and the owners of Bonds, any
right, remedy, or claim, legal or equitable, under or by
reason of this Trust Indenture or any covenant, condition,
or stipulation contained herein.
(g) Severability. In case any one or more of the
provisions of this Trust Indenture or of the Bonds, or any
interest coupons appertaining thereto, shall be held to be
invalid or ineffective as to any person or circumstance, the
remainder thereof and the application of such provision to
persons or circumstances other than those as to which it is
held invalid shall not be affected thereby.
(h) Law. The validity, interpretation, and perform-
ance of this Trust Indenture shall be governed by the laws
of the State of Texas.
Article 11. RECORDING. (a) Trustee to Record. The
Issuer shall cause the Agreement and this Trust Indenture to
be filed in such manner and in such places as are now
required by law to establish initially the lien of this
Trust Indenture, and the priority thereof. The Trustee
shall (1) cause each memorandum, financing statement, or
continuation statement with respect to the Agreement and
this Trust Indenture 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 Trust Indenture and to publish
notice of and to protect the rights and security of the
owners of the Bonds and the rights of the Trustee under the
Agreement, the Bond Resolution, and this Trust Indenture and
(2) perform or cause to be performed from time to time any
other act as required by law, and execute and file or cause
to be executed and filed any and all instruments of further
assurance, that may be necessary for such publication and
protection. The Issuer shall, when so requested by the
Trustee, execute all such instruments, memoranda, or state-
ments necessary to maintain, protect, or preserve the
interests assigned to the Trustee under this Trust Inden-
ture.
(b) Non -Encumbrance. This Trust Indenture is, and
always will be kept, a direct lien and security interest
upon the Installment Loan Payments, the Debt Service Fund,
and the Construction Fund, and the Issuer will not create or
suffer to be created any lien prior to or on a parity with
the lien of this Trust Indenture or any part thereof.
19
Article 12. NOTICE TO TEXAS ECONOMIC DEVELOPMENT
COMMISSION. If the User fails to timely make or pay any
Installment Loan Payment, or upon receiving notice that a
Final Determination of Taxability has occurred, or if the
Trustee is notified by the Internal Revenue Service that the
interest on the Bonds is, or may be, subject to federal
income taxation, the Trustee promptly shall inform the
Commission of such an occurrence, by sending written notice
to the following address:
Texas Economic Development Commission
Attention: Executive Director
410 East Fifth Street
Box 12728, Capitol Station
Austin, Texas 78711
or the latest address specified by said Commission in
writing.
IN WITNESS WHEREOF, the Issuer acting through its Board
of Directors, has caused this Trust Indenture to be executed
in multiple counterparts, each of which shall be considered
an original for all purposes, in its name, and for and on
its behalf, by the President of such Board and attested by
the Secretary of such Board, and its corporate seal to be
hereto affixed; and the Trustee, to evidence its acceptance
of the trusts hereby created and vested in it, has caused
this Trust Indenture to be executed in multiple counter-
parts, each of which shall be considered an original for all
purposes, in its behalf by one of its Vice Presidents,
attested by one of its Trust Officers, and its corporate
seal to be hereunto affixed, all as of the date first above
written.
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION
By
President, Board of Directors
ATTEST:
Secretary, Board of Directors
(SEAL)
20
FIRST CITY BANK OF CORPUS CHRISTI, TRUSTEE
By
Vice President
ATTEST:
Trust Officer
(SEAL)
21
LOAN AGREEMENT
BETWEEN
CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION
AND
HERCO INC.
********************
The Corpus Christi Industrial Development Corporation
has granted a security interest in and assigned to First
City Bank of Corpus Christi, as Trustee under the Trust
Indenture dated as of the date hereof, all of its interests
in all "Installment Loan Payments" due pursuant to and under
this Loan Agreement to secure its Revenue Bond, Series 1984
(HERCO Inc. Project).
DEBTOR: SECURED PARTY:
HERCO Inc. Corpus Christi Industrial
300 Park Boulevard Development Corporation
Hershey, Pennsylvania 17033 P. O. Box 9277
302 South Shoreline
Corpus Christi, Texas 78469
ASSIGNEE:
First City Bank of Corpus Christi
P. O. Box 780
615 Upper N. Broadway
Corpus Christi, Texas 78403
TABLE OF CONTENTS
(The Table of Contents is not a part of the Loan Agree-
ment but is for convenience of reference only.)
PAGE
Parties 1
ARTICLE I
DEFINITIONS; GENERAL RECITALS, FINDINGS, AND REPRESENTATIONS
Section 1.01. Definitions 1
Section 1.02. General Recitals, Findings, 1
and Representations
ARTICLE II
THE PROJECT
Section 2.01. Approvals and Permits 6
Section 2.02. Acquisition and Construction 6
ARTICLE III
FINANCING THE PROJECT; TITLE AND OPERATION
Section 3.01. The Loan 8
Section 3.02. Security for the Loan 8
Section 3.03. Repayment of Loan 8
Section 3.04. Title 9
Section 3.05. Operation 10
Section 3.06. Indemnities 10
Section 3.07. Issuer's Limited Liability 11
ARTICLE IV
THE BONDS
Section 4.01. Issuance of Bonds 12
Section 4.02. Refunding of Bonds 13
PAGE
Section 4.03. Redemption of Bonds 13
Section 4.04. Installment Loan Payments 13
Section 4.05. No Arbitrage 14
Section 4.06. Tax -Exempt Status of Interest on
the Bonds and Mandatory Redemption 14
Section 4.07. Payments to Issuer 16
ARTICLE V
COVENANTS AND REMEDIES
Section 5.01. Covenant 18
Section 5.02. Trustee and Remedies 18
Section 5.03. General Provisions 18
Section 5.04. Amendment of Agreement 19
ARTICLE VI
SPECIAL COVENANTS
Section 6.01. Corporate Existence 21
Section 6.02. Assignment 21
Section 6.03. Financial Reports 22
Section 6.04. Term of Agreement 22
Section 6.05. Termination 22
Section 6.06. Notices 22
Section 6.07. Severability 23
Execution by the Issuer 24
Execution by the User 24
Exhibit A A-1
LOAN AGREEMENT
This Loan Agreement dated as of January 1, 1984,
between Corpus Christi Industrial Development Corporation
and HERCO Inc.
W I T N E S S E T H:
ARTICLE I
DEFINITIONS; GENERAL RECITALS, FINDINGS, AND REPRESENTATIONS
Section 1.01. DEFINITIONS. In addition to all other
words and terms defined herein, and unless a different
meaning or intent clearly appears from the context, the
following words and terms shall have the following meanings,
respectively, whenever they are used herein:
Act - The Development Corporation Act of 1979, as
amended (Article 5190.6, V.A.T.C.S.).
Agreement - This Loan Agreement, together with Exhibit
A attached to this Loan Agreement, and all amendments and
supplements to this Loan Agreement.
Approving Officer - Any authorized officer of the User.
Article - Any subdivision of this Agreement designated
with a roman numeral.
Board or Board of Directors - The lawfully qualified
board of directors of the Issuer.
Bondholder - The bearer of any Bond not registered as
to principal (or registered as to bearer) or the owner of
any Bond registered as to principal (except to bearer).
Bond Counsel - An attorney or firm of attorneys experi-
enced in matters relating to municipal bond law and the tax
exemption of interest on bonds of states and their political
subdivisions, selected by the Issuer and satisfactory to the
Trustee and the User.
Bond Resolution - The Initial Bond Resolution and each
resolution of the Board of Directors authorizing the issu-
ance of Bonds (including the Trust Indenture prescribed and
authorized to be executed in the Initial Bond Resolution)
together with any supplemental resolutions or amendments to
such resolutions or such Trust Indenture.
Bonds - Any and all revenue bonds of the Issuer issued
and delivered to finance and pay for all or any part of the
Cost of the Project pursuant to the Act and this Agreement,
including initial series or issues of revenue bonds and
revenue bonds issued to finance and pay for all or any part
of the Cost of completing the Project, and any revenue bonds
issued for the purpose of refunding or replacing any Bonds.
Code - The Internal Revenue Code of 1954, as amended.
Commission - The Texas Economic Development Commission,
and its successors and assigns.
Construction Fund - The segregated account or accounts
into which certain proceeds from the sale and delivery of
each series of Bonds will be deposited as provided in each
Bond Resolution (excepting any Bond Resolution authorizing
revenue bonds to refund any Bonds) .
Cost - With respect to the Project, the cost of acqui-
sition, construction, reconstruction, improvement, and
expansion of the Project as provided in the Act, including,
without limitation, the cost of the acquisition of all land,
rights-of-way, property rights, easements, and interests,
the cost of all machinery and equipment, financing charges,
interest during construction, necessary reserve funds, cost
of estimates and of engineering and legal services, plans,
specifications, surveys, estimates of cost and of revenue,
other expenses necessary or incident to determining the
feasibility and practicability of acquiring, constructing,
reconstructing, improving, and expanding any such Project,
administrative expense, and such other expense as may be
necessary or incident to the acquisition, construction,
reconstruction, improvement, and expansion thereof, the
placing of the same in operation, and the financing of the
Project.
Debt Service Fund - The segregated account or accounts
in which Installment Loan Payments will be deposited as pro-
vided in each Bond Resolution.
Deed of Trust - The Deed of Trust and Security Agree-
ment, dated as of January 1, 1984, from the User to the
trustee named therein.
Governmental Unit - the City of Corpus Christi, a
political subdivision of the State of Texas.
Inducement Date - April 6, 1983.
Initial Bond Resolution - The Bond Resolution adopted
by the Board of Directors, authorizing the issuance and
2
delivery of Corpus Christi Industrial Development Corpora-
tion Revenue Bond, Series 1984 (HERCO Inc. Project) in the
aggregate principal amount of $1,000,000.
Issuer - Corpus Christi Industrial Development Corpora-
tion.
Installment Loan Payments - Payments required to be
made by the User to amortize each series or issue of Bonds,
as provided for in the applicable Bond Resolution, including
the principal of, redemption premium, if any, and interest
on such Bonds when due (whether at stated maturity, upon
redemption prior to stated maturity, or upon acceleration of
stated maturity), any agreed liquidated damages owed by the
User to the Bondholders, and all fees and expenses of the
Trustee, Registrar, and any Paying Agent for such Bonds,
together with any other payments required by such Bond
Resolution or the Trust Indenture, other than the fees and
expenses of the Issuer.
Loan - The loan of the proceeds of the sale of the
Bonds as described in Section 3.01.
Paying Agent - The Trustee and any other paying agent
for an issue or series of Bonds named in the Bond Resolution
authorizing such Bonds.
Project - The land, buildings, equipment, facilities,
and improvements described in Exhibit A to this Agreement.
Project Location - The City of Corpus Christi, Texas.
Registrar - The registrar for the Bonds named in the
Bond Resolution.
Regulations - The regulations promulgated by the United
States Treasury Department pursuant to the Code.
Section - Any subdivision of this Agreement designated
by arabic numerals.
Trust Indenture - The trust indenture, including all
supplements and amendments thereto, prescribed in and
executed and delivered pursuant to the Initial Bond Reso-
lution.
Trustee - The corporate trustee named under the Trust
Indenture, and its successors or assigns.
User - HERCO Inc., a corporation organized and existing
under the laws of the Commonwealth of Pennsylvania and fully
3
qualified to transact business in the State of Texas, and
its herein permitted successors and assigns.
References in the singular number in this Agreement
shall be considered to include the plural, if and when
appropriate.
Section 1.02. GENERAL RECITALS, FINDINGS, AND REPRE-
SENTATIONS. (a) The Issuer is a nonstock, nonprofit
industrial development corporation organized and existing
under the laws of the State of Texas, including particularly
the Act.
(b) The Issuer is a duly constituted authority and
public instrumentality of the Governmental Unit, a political
subdivision of the State of Texas, within the meaning of the
Regulations and the rulings of the Internal Revenue Service
prescribed and promulgated pursuant to Section 103 of the
Code, and the Issuer is functioning and acting solely on
behalf of the Governmental Unit.
(c) The User is fully qualified to transact business
in the State of Texas, and is fully authorized by law and
corporate proceedings to execute this Agreement.
(d) This Agreement is authorized and executed pursuant
to applicable laws, including the Act.
(e) The User has requested the Issuer to finance the
Cost of the Project.
(f) The Issuer has determined, in the public interest,
that it will finance the Cost of the Project, and loan money
to the User for such purpose in the manner provided in the
Act and this Agreement.
(g) The governing body of the Governmental Unit has
approved this Agreement by written resolution as required by
the Act.
(h) The Issuer and the User have taken all action and
have complied with all provisions of law with respect to the
execution, delivery and performance of this Agreement and
the due authorization of the consummation of the transac-
tions contemplated hereby, and this Agreement has been duly
executed and delivered by, and constitutes a valid and
legally binding agreement of, the Issuer and the User,
enforceable against the respective parties in accordance
with its terms.
(i) The execution of this Agreement and the per-
formance of the transactions contemplated hereby will not
4
violate any law or regulation, or any Articles of Incorpora-
tion, Charter, or Bylaws, or any judicial order, judgment,
decree, or injunction, or contravene the provisions of or
constitute a default under any agreement, indenture, bond
resolution, or other instrument to which the Issuer or the
User is a party.
(j) The User represents to the Board and the Commis-
sion that (1) the Project will contribute to the economic
growth or stability of the Governmental Unit by (aa) in-
creasing or stabilizing employment opportunities in the
Governmental Unit, (bb) significantly increasing or sta-
bilizing the property tax base of the Governmental Unit and
(cc) promoting commerce within the Governmental Unit and the
State of Texas; (2) it has no present intention of or moving
any portion of the Project outside the State of Texas or
using or moving any portion of the Project out of the State
of Texas or disposing of or abandoning the Project; and (3)
it has no present intention of directing the Project to a
use other than the purposes represented to the Governmental
Unit and the Commission.
NOW THEREFORE, in consideration of the covenants and
agreements herein made, and subject to the conditions herein
set forth, the Issuer and the User contract and agree as
follows:
5
ARTICLE II
THE PROJECT
Section 2.01. APPROVALS AND PERMITS. The Issuer and
the User agree to use their best efforts to obtain the
necessary approval of this Agreement by the Commission as
required by the Act, prior to the issuance of the Bonds, and
to obtain all other permits necessary with respect to the
acquisition, construction, equipping, and furnishing of the
Project.
Section 2.02. ACQUISITION AND CONSTRUCTION. (a) The
Project shall be acquired, constructed, equipped, and fur-
nished with all reasonable dispatch, and the User will use
its best efforts to cause such acquisition, construction,
equipping, and furnishing to be completed as soon as practi-
cable, delays incident to strikes, riots, acts of God, or
the public enemy, or other causes beyond the reasonable
control of the User only excepted; but if for any reason
there should be delays in such acquisition, construction,
equipping, and furnishing there shall be no diminution in or
postponement of the Installment Loan Payments to be made by
the User hereunder, and no resulting liability on the part
of the Issuer.
(b) The User shall acquire, construct, equip, and
furnish the Project or cause the Project to be acquired,
constructed, equipped, and furnished and the Issuer shall
have no responsibility or liability whatsoever with respect
to the Project and the acquisition, construction, equipping,
and furnishing thereof. It is agreed and understood that
the User has entered into and executed and will enter into
and execute all agreements and contracts necessary to assure
and accomplish the actual acquisition, construction, equip-
ping, and furnishing of the Project (and that the Issuer
shall not execute any such agreements or contracts) and that
the User will carry out, pay, supervise, and enforce all
such agreements and contracts, and will provide for such
insurance on and in connection with the acquisition, con-
struction, equipping, and furnishing of the Project as it
deems necessary or advisable or as is required by law and
this Agreement. The User shall pay, from proceeds from the
sale and delivery of the Bonds loaned to it pursuant to this
Agreement, and from any available income or earnings derived
therefrom, and from other funds of the User to the extent
necessary, the entire Cost of the Project. The User shall
promptly pay all taxes, including specifically all sales
taxes and ad valorem taxes, in connection with the Project
and the acquisition, construction, equipping, and furnishing
thereof. The Issuer shall loan certain proceeds from the
sale of the Bonds to the User to be used by the User to pay
6
all or part of the Cost of the Project, in accordance with
procedures to be established in any applicable Bond Resolu-
tion, including provisions for reimbursing the User for
paying all or any part of such Cost under the aforesaid
agreements and contracts for the acquisition, construction,
equipping, and furnishing of the Project prior to the User's
receipt of the Loan as hereinafter provided. It is specifi-
cally provided, however, that none of the proceeds from the
sale of the Bonds will be used to reimburse the User for, or
to pay (and the User hereby covenants and agrees not to
request reimbursement of or payment for) any part of the
Cost of the Project if such use or payment would result in a
violation of any of the User's covenants contained in
Section 4.06. Each Bond Resolution (excepting any Bond
Resolution authorizing revenue bonds to refund any Bonds)
shall contain appropriate provisions with respect to the
Construction Fund, to be drawn on and administered as
provided in such Bond Resolution.
7
ARTICLE III
FINANCING THE PROJECT;
TITLE AND OPERATION
Section 3.01. THE LOAN. The Issuer shall make the
Loan to the User by depositing into the Construction Fund
(or such other fund as specifically provided in the Bond
Resolution) the proceeds from the sale of Bonds in such
amount as is provided in each Bond Resolution. The amounts
so deposited shall be advanced in the manner provided in the
Bond Resolution; and the User shall repay the Loan by making
the Installment Loan Payments as provided in this Agreement
and the Bond Resolution.
Section 3.02. SECURITY FOR THE LOAN. The obligations
of the User under this Agreement shall be direct general
obligations of the User. Prior to or simultaneously with
the issuance of the Bonds, the Issuer will assign to the
Trustee under the terms of the Trust Indenture all of the
Issuer's right, title, and interest in and to the Install-
ment Loan Payments. In addition, it is recognized and
understood that the Deed of Trust has been given by the User
as additional security for the payment of Installment Loan
Payments for the benefit of the owners of the Bonds.
Section 3.03. REPAYMENT OF LOAN. (a) Notwithstanding
any provision expressly or inferentially to the contrary
contained herein, the User unconditionally agrees that it
shall make Installment Loan Payments to the Trustee (pursu-
ant to the aforesaid assignment by the Issuer) in lawful
money of the United States of America, and in such amounts
and at such times as shall be necessary to enable the
Trustee to make full and prompt payment of the principal of,
redemption premium, if any, and interest on all Bonds when
due (whether at stated maturity, upon redemption prior to
stated maturity, or upon acceleration of stated maturity),
any agreed liquidated damages owed by the User to the
Bondholders, and all reasonable fees and expenses of the
Trustee, the Registrar, and any Paying Agent for such Bonds
incurred in the discharge of their duties under and pursuant
to the issuance and delivery of this Agreement, the Bonds,
the Trust Indenture and the Deed of Trust and Security
Agreement; and of all other amounts required to be paid by
this Agreement, each Bond Resolution and the Trust Inden-
ture. Upon the issuance and delivery of Bonds to the
initial purchaser thereof, and the deposit of the proceeds
derived therefrom into the accounts established in the Bond
Resolution, the User shall have received, and the Issuer
shall have given, full and complete consideration for the
User's obligation hereunder to make Installment Loan Pay-
ments. The obligations of the User to make the payments
8
required by this Agreement shall be absolute and uncondi-
tional (except as provided in Sections 6.01 and 6.02), and
shall not be subject to diminution by set-off, recoupment,
counterclaim, abatement, or otherwise; and until such time
as all Installment Loan Payments shall have been made or
provision therefor shall have been made in accordance with
each Bond Resolution and the Trust Indenture, the User: (i)
will not suspend or discontinue, or permit the suspension or
discontinuance of, any payments provided for in this Agree-
ment; (ii) will perform and observe all of its other agree-
ments contained in this Agreement; and (iii) will not
terminate this Agreement for any cause including, without
limiting the generality of the foregoing, failure of the
Project to comply with the plans and specifications there-
for, any acts or circumstances that may constitute failure
of consideration, destruction of, or damage to the Project,
frustration of commercial purpose, any change in the tax or
other laws or administrative rulings of or administrative
actions by the United States of America, or the State of
Texas, or any political subdivision of either, or any
failure of the Issuer to perform and observe any agreement,
whether expressed or implied, or any duty, liability, or
obligation arising out of or in connection with this Agree-
ment. Nothing contained in this Section shall be construed
to release the Issuer from the performance of any of the
agreements on its part contained herein; and in the event
the Issuer shall fail to perform any such agreement on its
part, the User may institute such action against the Issuer
as the User may deem necessary to compel performance,
provided that no such action shall violate the agreements on
the part of the User contained in this Section or postpone
or diminish the amounts required to be paid by the User
pursuant to this Agreement.
(b) Notwithstanding the foregoing, it is the intention
of the parties hereto to conform strictly to the applicable
usury laws of the State of Texas and the United States of
America, and any provision for any payment contained herein
and in such Bonds and the interest coupons appertaining
thereto, if any, shall be held to be subject to reduction to
the amount allowed under said usury laws as now or hereafter
construed by the courts having jurisdiction. This provision
shall be held to operate to deny the owners of the Bonds and
the interest coupons appertaining thereto, if any, the
right, in any event, to collect usury.
Section 3.04. TITLE. The Issuer shall have no right,
title, or interest in and to the Project. Except for making
the Loan to the User from the source and in the manner
provided in this Agreement, the Issuer shall not be respon-
sible or liable in any manner for any claims, losses,
damages, penalties, costs, taxes, or fines with respect to
9
the acquisition, construction, equipping, furnishing,
installation, operation, maintenance, or ownership of the
Project.
Section 3.05. OPERATION. The User represents and
covenants that it will operate and maintain the Project, or
cause the Project to be operated and maintained, and will
pay, or cause to be paid, all costs and expenses of opera-
tion and maintenance of the Project, including all appli-
cable taxes, and that it will keep, or cause to be kept, in
force adequate insurance, including self-insurance, on the
Project as is customarily carried by persons engaged in the
same business and operating facilities like the Project. It
is understood and agreed that the Issuer shall have no
duties or responsibilities whatsoever with respect to the
operation or maintenance of the Project, or the performance
of the Project for its designed purposes.
Section 3.06. INDEMNITIES. The User releases the
Commission, its directors, employees and agents, the Issuer,
its officers, directors, employees, agents, and attorneys
and the Governmental Unit, its officers, agents, attorneys,
employees and the members of its governing body (collec-
tively the "Indemnified Parties") from, and the Indemnified
Parties shall not be liable for, and the User agrees and
shall protect, indemnify, defend, and hold the Indemnified
Parties harmless from any and all liability, cost, expense,
damage or loss of whatever nature (including, but not
limited to, attorneys' fees, litigation and court costs,
amounts paid in settlement, and amounts paid to discharge
judgments) directly or indirectly resulting from, arising
out of, in connection with, or related to (i) the issuance,
offering, sale, or delivery of the Bonds, the Bond Resolu-
tion, the Trust Indenture, and this Agreement and the
obligations imposed on the Issuer hereby and thereby; or the
design, construction, installation, operation, use, occu-
pancy, maintenance, or ownership of the Project; (ii) any
written statements or representations made or given by the
User or any of its officers or employees, to the Indemnified
Parties, the Trustee, or any underwriters or purchasers of
any of the Bonds, with respect to the Issuer, the User, the
Project, or the Bonds, including, but not limited to,
statements or representations of facts, financial informa-
tion, or corporate affairs; (iii) damage to property or any
injury to or death of any person that may be occasioned by
any cause whatsoever pertaining to the Project; and (iv) any
loss or damage incurred by the Issuer as a result of viola-
tion by the User of the provisions of Sections 4.05 or 4.06.
The provisions of the preceding sentence shall remain and be
in full force and effect even if any such liability, cost,
expense, damage or loss or claim therefor by any person,
directly or indirectly results from, arises out of, or
10
relates to or is asserted to have resulted from, arisen out
of, or related to, in whole or in part, one or more negli-
gent acts or omissions of the Commission, the Issuer or the
Governmental Unit or its officers, directors, employees,
agents, servants, or any other party acting for or on behalf
of the Commission, the Issuer or the Governmental Unit in
connection with the matters set forth in clauses (i) through
(iv) of said sentence.
Section 3.07. ISSUER'S LIMITED LIABILITY. It is
recognized that the Issuer's only source of funds with which
to carry out its commitments with respect to the Project and
this Agreement will be from the proceeds from the sale of
the Bonds; and it is expressly agreed that the Issuer shall
have no liability, obligation, or responsibility with
respect to this Agreement or the Project except to the
extent of funds available from such Bond proceeds. If, for
any reason, the proceeds from the sale of the Bonds are not
sufficient to pay all the Cost of the Project, the User
shall complete the Project and pay all such Cost from its
own funds, but it shall not be entitled to reimbursement
therefor unless additional Bonds are issued for such pur-
pose, or to any diminution in or postponement of any pay-
ments required to be made by the User hereunder.
11
ARTICLE IV
THE BONDS
Section 4.01. ISSUANCE OF BONDS. (a) In considera-
tion of the covenants and agreements set forth in this
Agreement, and to enable the Issuer to issue the Bonds to
carry out the intents and purposes hereof, this Agreement is
executed to assure the issuance of such Bonds, and to
provide for the due and punctual payment by the User to the
Trustee of the Installment Loan Payments. The User shall
make the Installment Loan Payments, for the benefit of each
series or issue of Bonds, to the Trustee for deposit into
the Debt Service Fund as provided in each Bond Resolution.
(b) Simultaneously with the authorization of this
Agreement by the Board of Directors, such Board has adopted
the Initial Bond Resolution. The User hereby approves the
Initial Bond Resolution, including the Trust Indenture
authorized therein. Each Bond Resolution authorizing addi-
tional Bonds shall be subject to the written approval of the
Approving Officer and the provisions of any such Bond
Resolution shall not be binding or effective upon the User
unless and until such approval is given. It is hereby
agreed that the foregoing approval of the Initial Bond
Resolution and the Trust Indenture, and any approval of any
Bond Resolution authorizing the issuance of additional Bonds
constitutes the acknowledgment and agreement of the User
that such Bonds, when issued and delivered as provided in
such Bond Resolution, will be issued in accordance with and
in compliance with this Agreement, notwithstanding any other
provisions of this Agreement or any other contract or
agreement to the contrary. Any Bondholder is entitled to
rely fully and unconditionally on any approvals. Notwith-
standing any provisions of this Agreement or any other
contract or agreement to the contrary, the User's approval
of any Bond Resolution (including the Trust Indenture
authorized by the Initial Bond Resolution), shall be the
User's agreement that all covenants and provisions in such
Bond Resolution and the Trust Indenture affecting the User
shall, upon the delivery of such Bonds and the Trust Inden-
ture, become unconditional, valid, and binding covenants and
obligations of the User so long as said Bonds and the
interest thereon are outstanding and unpaid. Particularly,
the obligation of the User to make, promptly when due, all
Installment Loan Payments specified in each Bond Resolution
and the Trust Indenture shall be absolute and unconditional,
and said obligation may be enforced as provided in each Bond
Resolution and the Trust Indenture, regardless of any other
provisions of this Agreement or any other contract or
agreement to the contrary. Upon the request of the User,
and only upon its request, the Issuer may, when, in the
12
opinion of the Issuer, it becomes necessary or advisable,
authorize and use its best efforts to sell and deliver
additional Bonds, in one or more series or issues, in aggre-
gate principal amounts sufficient to pay the Cost of the
Project.
Section 4.02. REFUNDING OF BONDS. After the issuance
of any Bonds, the Issuer shall not refund any of the Bonds
or change or modify the Bonds in any way, except as provided
for in the Bond Resolution, without the prior written
approval of the Approving Officer; nor shall the Issuer
redeem any Bonds prior to their scheduled maturities, or
change or modify any Bond Resolution, without the prior
written approval of the Approving Officer, unless such
redemption is required by a Bond Resolution.
Section 4.03. REDEMPTION OF BONDS. Provision shall be
made in each Bond Resolution for the redemption of Bonds
prior to maturity, under such terms and conditions as shall
be set forth therein. The redemption of any outstanding
Bonds prior to maturity at any time shall not relieve the
User of its unconditional obligation to pay each remaining
Installment Loan Payment as specified in any Bond Resolution
or the Trust Indenture. The User also shall comply with and
be bound by all provisions of this Agreement and of each
Bond Resolution and the Trust Indenture with respect to the
mandatory and optional redemption of Bonds.
Section 4.04. INSTALLMENT LOAN PAYMENTS. (a) Payment
of all Installment Loan Payments shall be made and deposited
as required by each Bond Resolution and the Trust Indenture
including all such payments which may come due because of
the acceleration of the maturity or maturities of any Bonds
upon default, or otherwise, under the provisions of the
Trust Indenture. If any available funds in excess of
current requirements are held on deposit in the Debt Service
Fund at the time payment of any Installment Loan Payment is
due, such payment may be reduced by the amount of the funds
so held on deposit. The User shall have the right to prepay
all or a portion of any Installment Loan Payment at any
time. Any such prepayment by the User shall not relieve it
of liability for each remaining Installment Loan Payment as
provided in this Agreement and each Bond Resolution and the
Trust Indenture.
(b) Recognizing that the Installment Loan Payments
will be the Issuer's sole source for the payment and per-
formance of its obligations to the Trustee, any Paying Agent
and the Bondholders under each Bond Resolution and the Trust
Indenture, when any Bonds are delivered, the User shall be
unconditionally obligated to make and pay, or cause to be
made and paid, each Installment Loan Payment regardless of
13
whether or not the User actually acquires or completes the
Project, or whether or not the User actually approves,
purchases, receives, accepts, or uses the Project; and such
payments shall not be subject to any abatement, set-off,
recoupment, or counterclaim; and the Bondholders shall be
entitled to rely on this agreement and representation,
notwithstanding any provisions of this Agreement or any
other contract or agreement to the contrary, and regardless
of the validity of, or the performance of, the remainder of
this Agreement or any other contract or agreement.
Section 4.05. NO ARBITRAGE. The Issuer and the User
hereby covenant with each other and with the Bondholders
that they will make no use of the direct or indirect pro-
ceeds of the Bonds at any time which will cause the Bonds to
be arbitrage bonds within the meaning of Section 103(c) of
the Code or the Regulations pertaining thereto; and by this
covenant the Issuer and the User are obligated to comply
with the requirements of the aforesaid Section 103(c) and
the pertinent Regulations.
Section 4.06. TAX-EXEMPT STATUS OF INTEREST ON THE
BONDS AND MANDATORY REDEMPTION. (a) The User hereby
covenants that (i) substantially all of the proceeds (within
the meaning of Section 103(b)(6) of the Code) from the sale
of the Bonds will be used and expended for amounts paid or
incurred after the Inducement Date for the acquisition,
construction, reconstruction, or improvement of land or
property of a character subject to the allowance for depre-
ciation under the Code, and (ii) except as otherwise set
forth in a certificate or statement furnished to the Issuer
and its Bond Counsel prior to the issuance of Bonds, the
acquisition, construction, reconstruction, or improvement of
the Project did not begin before the Inducement Date, nor
was any work performed or any costs paid or incurred by the
User or any other entity in connection with such acquisi-
tion, construction, reconstruction, or improvement before -
the Inducement Date.
(b) The User represents (i) that all of the proceeds
of the Bonds are to be used with respect to the Project,
which will be located wholly within the Governmental Unit;
(ii) that, except for any person related to the User within
the meaning of Section 103(b)(6)(C) of the Code, the User
will be the only principal user of the Project within the
meaning of Section 103(b)(6) of the Code; and (iii) that,
except for the Bonds, there will not be outstanding on the
date of delivery of the Bonds any obligations of any state,
territory, or possession of the United States, or any
political subdivision of the foregoing or of the District of
Columbia constituting "exempt small issues" within the
meaning of Section 1.103-10 of the Regulations, the proceeds
14
of which have been or are to be used primarily with respect
to facilities located in the Project Location, or in any
contiguous political jurisdiction with respect to any
contiguous or integrated facilities, and which are to be
used principally by the User (including any person related
to the User within the meaning of Section 103(b)(6)(C) of
the Code).
(c) The User further covenants that it has not taken
any action or permitted any action to be taken, and that it
will not take any action or permit any action to be taken,
which would result in a Taxable Event, as hereinafter
defined, and that the User has not failed to take and will
not fail to take any action required to prevent the occur-
rence of such Taxable Event.
(d) As used herein, a "Taxable Event" shall mean:
(i) the application of the proceeds of the Bonds
in such manner that the Bonds become "arbitrage bonds"
within the meaning of Section 103(c) of the Code, with
the result that interest on the Bonds is or becomes
includable in the gross income of any Bondholder; or
(ii) the application of the proceeds of the Bonds
in such manner, or the occurrence or non-occurrence of
any event, with the result that, under the Code and the
Regulations, the interest on the Bonds is or becomes
includable in the gross income of any Bondholder (other
than a Bondholder who is a "substantial user" or a
"related person" within the meaning of Section 103(b)
of the Code); or
(iii) the violation by the User of a representa-
tion or covenant contained in this Agreement with the
result that, under the Code and the Regulations, the
interest on the Bonds is or becomes includable in the
gross income of any Bondholder (other than a Bondholder
who is a "substantial user" or a "related person"
within the meaning of Section 103(b) of the Code).
(e) A "Determination" shall be deemed to have occurred
on the first to occur of the following:
(i) on that date when the User shall be advised
by the Commissioner or any District Director of In-
ternal Revenue that, based upon filings of the User or
the Issuer or upon any review or audit of the User, or
upon any ground whatsoever, a Taxable Event shall have
occurred; or
15
(ii) on that date when the User shall receive
notice from the Issuer, the Trustee, or any Bondholder
that it or he has been advised: (A) that the Internal
Revenue Service has assessed as includable in the gross
income of any Bondholder any interest on his Bonds due
to the occurrence of a Taxable Event; or (B) by the
Commissioner or any District Director of Internal
Revenue that the interest on any of the Bonds is
includable in the gross income of any Bondholder due to
the occurrence of a Taxable Event.
(f) A "Final Determination of Taxability" shall be
deemed to have occurred on the first to occur of the fol-
lowing:
(i) on that day when the User files with the
Trustee or the Internal Revenue Service any statement,
supplemental statement or other tax schedule, return or
document which discloses that a Taxable Event shall
have occurred; provided, however, that if and so long
as the User is contesting in good faith and by appro-
priate proceedings, either directly or through a
Bondholder, the existence of a Taxable Event, no such
Final Determination of Taxability shall be deemed to
have occurred; or
(ii) the entry of any final unappealable order,
decree or ruling of any court of the United States or
of the Commissioner of Internal Revenue relating to a
Determination, or the failure to prosecute an appeal
from any order, decree or ruling of any such court or
the Commissioner and the expiration of time for an
appeal or review of such order, decree or ruling.
(g) Should a Final Determination of Taxability occur,
there shall be a prompt mandatory redemption prior to
maturity of the entire outstanding and unpaid principal and
accrued interest of the Bonds, and the payment by the User
to the Bondholders of appropriate and sufficient agreed
liquidated damages, if any (for loss of a bargain and not as
a penalty), all as shall be provided for in, and in accord-
ance with the provisions of, each Bond Resolution. Payment
of liquidated damages, if any, shall be a direct obligation
of the User to the Bondholders and shall be paid to the
Trustee for the benefit of such Bondholders during the term
of this Agreement and thereafter shall be paid by the User
directly to such Bondholders.
Section 4.07. PAYMENTS TO ISSUER. At the time of
delivery of each series or issue of Bonds, and from the
proceeds of the sale and delivery of such Bonds, there shall
be paid all of the fees, expenses and costs required to be
16
so paid by the Issuer's local regulations and policies.
Also, the User agrees to pay directly to the Issuer such
other amounts at the time and in the manner required by the
Issuer's local regulations.
17
ARTICLE V
COVENANT AND REMEDIES
Section 5.01. COVENANT. The User unconditionally
agrees and covenants with the Issuer and the Trustee that it
will pay, or cause to be paid, when due, each Installment
Loan Payment required and prescribed to be paid by it
pursuant to each Bond Resolution. The User further uncondi-
tionally agrees and covenants to pay all reasonable expenses
and charges, legal or otherwise (including court costs and
attorneys' fees), paid or incurred by the Issuer and the
Trustee in realizing upon any of the said payments to be
made by the User or in enforcing the provisions of this
Agreement or any Bond Resolution or the Trust Indenture.
Section 5.02. TRUSTEE AND REMEDIES. (a) The User is
advised and recognizes that the Issuer will assign all of
its right, title, and interest in and to all the Installment
Loan Payments required to be made pursuant to this Agree-
ment, and the right to receive and collect same, to the
Trustee. The Trustee, or the Bondholders to the extent
provided in the Bond Resolution and the Trust Indenture, may
enforce the obligations of the User under this Agreement,
the Bond Resolution, and the Trust Indenture in the manner
provided in the Trust Indenture, without the necessity of
making the Issuer a party.
(b) In the event of a default in the payment of any
Installment Loan Payment, or in the performance of any
agreement or covenant contained herein or in any Bond, any
Bond Resolution, or the Trust Indenture, such payment and
performance may be enforced by mandamus or by the appoint-
ment of a receiver in equity with power to charge and
collect Installment Loan Payments and to apply such revenues
in accordance with this Agreement, the Bonds, each Bond
Resolution, and the Trust Indenture.
Section 5.03. GENERAL PROVISIONS. (a) The terms of
this Agreement may be enforced as to one or more breaches
either separately or cumulatively.
(b) No remedy conferred upon or reserved to the
Issuer, the Trustee, or the Bondholders in 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 now or
hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing
upon any default, omission, or failure of performance
hereunder shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and
18
power may be exercised from time to time and as often as may
be deemed expedient. In the event any provision contained
in this Agreement should be breached by the User and there-
after duly waived, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive
any other breach of this Agreement. No waiver by either
party of any breach by the other party of any of the provi-
sions of this Agreement shall be construed as a waiver of
any subsequent breach, whether of the same or of a different
provision of this Agreement.
(c) Headings of the Articles and Sections of this
Agreement have been inserted for convenience of reference
only and in no way shall they affect the interpretation of
any of the provisions of this Agreement.
(d) This Agreement is made for the exclusive benefit
of the Issuer, the Trustee, the Bondholders, and the User,
and their respective successors and assigns herein permit-
ted, and not for any other third party or parties; and
nothing in this Agreement, expressed or implied, is in-
tended to confer upon any party or parties other than the
Issuer, the Trustee, the Bondholders, and the User, and
their respective successors and assigns herein permitted,
any rights or remedies under or by reason of this Agreement.
(e) The validity, interpretations, and performance of
this Agreement shall be governed by the laws of the State of
Texas.
Section 5.04. AMENDMENT OF AGREEMENT. No amendment,
change, addition to, or waiver of any of the provisions of
this Agreement shall be binding upon the parties hereto
unless in writing signed by the Approving Officer and the
President of the Board of Directors. In addition to amend-
ments for any other purpose, it is specifically understood
that this Agreement may be amended, if deemed necessary or
advisable by the User and the Issuer, to change the defini-
tion and scope of the term "Project", as used herein, so as
to permit the acquisition, construction, equipping, and
furnishing of other or additional facilities, at the same or
other locations, or improvements related to the Project,
pursuant to this Agreement and in accordance with applicable
laws, with the same effect as if they had been described
originally in Exhibit A hereto. Notwithstanding any of the
foregoing, it is covenanted and agreed, for the benefit of
the Bondholders and the Trustee, that (without the concur-
rence of all of the Bondholders and the Trustee) the provi-
sions of this Agreement shall not be amended, changed, added
to, or waived in any way which would relieve or abrogate the
obligations of the User to make or pay, or cause to be made,
or paid, when due, all Installment Loan Payments with
19
respect to any then outstanding Bonds in the manner and
under the terms and conditions provided herein and in any
Bond Resolution or the Trust Indenture, or which would
materially change or affect Sections 4.04, 4.05, 4.06, 6.01,
or 6.02.
20
ARTICLE VI
SPECIAL COVENANTS
Section 6.01. CORPORATE EXISTENCE. (a) The User
agrees that during the term of this Agreement it will
maintain its corporate existence, will not dissolve or
otherwise dispose of all or substantially all of its assets,
and will not consolidate with or merge into another corpora-
tion or permit one or more other corporations to consolidate
with or merge into it; provided, that the User may, without
violating the agreement contained in this Section, consoli-
date with or merge into another domestic corporation (i.e.,
a corporation incorporated and existing under the laws of
one of the states of the United States of America or under
the laws of the United States of America), or permit one or
more such domestic corporations to consolidate with or merge
into it, or sell or otherwise transfer to another such
domestic corporation all or substantially all of its assets
as an entirety and thereafter dissolve, if the surviving,
resulting, or transferee entity: (i) is authorized to
transact business in the State of Texas, (ii) shall have,
immediately after such transaction, a consolidated net worth
at least equal to 90% of the consolidated net worth of the
User immediately prior to such transaction, with net worth
being determined in accordance with generally accepted
accounting principles, and (iii) shall have, concurrently
with such transaction (unless the entity is the User),
irrevocably and unconditionally assumed, in an instrument
delivered to the Issuer and the Trustee, the due and prompt
performance of all of the obligations of the User under this
Agreement. If any consolidation, merger, or sale or other
transfer is made as provided in this Section, the provisions
of this Section shall continue in full force and effect and
no further consolidation, merger, or sale or other transfer
shall be made except in compliance with the provisions of
this Section.
(b) The User covenants that it is and, throughout the
term of this Agreement, unless relieved of liability pursu-
ant to paragraph (a) above, that it (i) will continue to be
a corporation organized under the laws of a state of the
United States, and (ii) will at all times be and remain duly
qualified to transact business in the State of Texas.
Section 6.02. ASSIGNMENT. The User shall not assign
its interest in this Agreement or any of its rights or
obligations hereunder except with the prior written consent
of the holders of at least 51% in amount of the outstanding
Bonds. Upon any approved assignment by User, the User shall
remain and be primarily responsible and liable for all of
its obligation hereunder, including particularly the making
21
of all payments required hereunder, when due. The User may,
however, assign its interest in this Agreement to another
party in connection with a merger or consolidation of the
User, or in connection with the transfer of all or substan-
tially all of its assets as permitted in Section 6.01, and
upon delivery of such instrument of assumption to the Issuer
and the Trustee and compliance with all of the requirements
of Section 6.01, the assignor or transferor shall have no
further obligation, except for any obligation for the
payment of money theretofore accrued under this Agreement.
Section 6.03. FINANCIAL REPORTS. The User shall have
an annual audit made by its regular independent certified
public accountants, and shall furnish the Trustee either a
copy of such certified audit within 120 days after the end
of the fiscal year for which such audit was made, or, in
lieu of such audit, a copy of its annual report to its
shareholders, if such report contains financial statements
of substantially similar detail and are similarly prepared
and certified. The requirements made under this Section may
be fulfilled if and so long as the User should be a wholly-
owned subsidiary of another corporation by furnishing
consolidated audits, annual reports, or financial statements
or reports of the owner of the User together with its
consolidated subsidiaries. Such financial statements and
reports shall be furnished to the Trustee at the same time
as they are furnished to the shareholders.
Section 6.04. TERM OF AGREEMENT. The term of this
Agreement shall be from the date hereof until all payments
required to be made by the User pursuant hereto shall have
been made, provided, however, that the provisions of Sec-
tions 3.06, 4.05 and 4.06 shall survive the termination of
this Agreement and shall continue in effect regardless of
the termination of this Agreement.
Section 6.05. TERMINATION. This Agreement may be
terminated by mutual agreement at any time prior to the
delivery of and payment for any Bonds. However, if any
Bonds have been issued and delivered, the term of this
Agreement shall be as set forth in Section 6.04, and this
Agreement may not and shall not be sooner terminated by
either or both parties hereto.
Section 6.06. NOTICES. Any notice, request, or other
communication under this Agreement shall be given in writing
and shall be deemed to have been given by either party to
the other party upon either of the following dates:
(a) One business day after the date of the mailing
thereof, as shown by the post office receipt, if mailed to
22
the other party hereto by registered or certified mail at
the applicable address as follows:
Corpus Christi Industrial Development Corporation
Attention: President
P. 0. Box 9277
302 South Shoreline
Corpus Christi, Texas 78469
HERCO Inc.
Attention: President
300 Park Boulevard
Hershey, Pennsylvania 17033,
or the latest address specified by such other party in
writing; or
(b) The date of the receipt thereof by such other
party if not so mailed by registered or certified mail.
Any notice, request, or other communication made or
given under this Agreement shall be given to the Trustee by
registered or certified mail at the applicable address as
follows:
First City Bank of Corpus Christi
Attention: Corporate Trust Department
P. O. Box 780
615 Upper N. Broadway
Corpus.Christi, Texas 78403
or the latest address specified by said Trustee in writing.
Section 6.07. SEVERABILITY. If any clause, provision,
or Section of this Agreement should be held illegal or
invalid by any court of competent jurisdiction, the invalid-
ity of such clause, provision, or Section shall not affect
any of the remaining clauses, provisions, or Sections hereof
and this Agreement shall be construed and enforced as if
such illegal or invalid clause, provision, or Section had
not been contained herein. In case any agreement or obli-
gation contained in this Agreement should be held to be in
violation of law, then such agreement or obligation shall be
deemed to be the agreement or obligation of the Issuer and
the User, as the case may be, to the full extent permitted
by law.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed in multiple counterparts, each of
which shall be considered an original for all purposes, as
of the day and year first set out above.
23
CORPUS CHRISTI INDUSTRIAL
DEVELOPMENT CORPORATION
ATTEST:
Secret
, Y'
Secret ry, Board of Directors
(SEAL)
HERCO INC.
By
Title
ATTEST:
Secretary
(SEAL)
24
•
Exhibit A
Description of the Project
The project to be financed is located on Water Street,
between Main and Twigg in the City of Corpus Christi, Nueces
County, Texas and will consist of the construction and
equipping of a new 400 car parking garage facility to serve
a 495 room hotel to be located on a tract of land not being
financed with the proceeds of the Bond.
A-1
Corpus Christi, T
day of , l987
TO THE MEMBERS OF THE CITY COUNCIL
Corpus Christi, Texas
For the reasons set forth in the emergency clause of the foregoing ordinance
or resolution, an emergency exists requiring suspension of the Charter rule
as to consideration and voting upon ordinances or resolutions at three
regular meetings; I/we, therefore, request that you suspend said Charter rule
and pass this ordinance or resolution finally on the date it is introduced,
or at the present meeting of the City Council.
Respectfully, Respectfully,
Council Members
MAYOR
The above ordinance was passed
Luther Jones
Betty N. Turner
David Berlanga, Sr.
Leo Guerrero
Herbert L. Hawkins, Jr.
Dr. Charles W. Kennedy
Joe McComb
Frank Mendez
Mary Pat Slavik
THE CIT 'IF CORPUS CHRISTI, TEXAS
the following vote:
18013