Loading...
HomeMy WebLinkAbout84-580 11-13-1984RESOLUTION NO. 84 -580 CERTIFICATE FOR RESOLUTION APPROVING AN AGREEMENT BY EULESS INDUSTRIAL DEVELOPMENT AUTHORITY TO ISSUE A BOND FOR KUELBS INVESTMENTS AND THE BOND RESOLUTION PROVIDING FOR THE ISSUANCE OF SUCH BOND THE STATE OF TEXAS CITY OF EULESS We, the undersigned officers of the City Council of said City of Euless, hereby certify as follows: 1. The City Council of the City of Euless convened in Regular Meeting ON THE 13TH DAY OF NOVEMBER, 1984, at the designated meeting place, and the roll was called of the duly constituted officers and members of said City Council, to -wit: Harold Samuels, Mayor Willie Mae McCormick Bob Eden Ron Sternfels Glenn Walker Kay Rainey, City Secretary and all of said persons were present, except the following absentees: leo 6 eiZ7 P, ,, thus constituting a quorum. Whereupon, among other busi- ness, the following was transacted at said Meeting: a written RESOLUTION APPROVING AN AGREEMENT BY EULESS INDUSTRIAL DEVELOPMENT AUTHORITY TO ISSUE A BOND FOR KUELBS INVESTMENTS AND THE BOND RESOLUTION PROVIDING FOR THE ISSUANCE OF SUCH BOND was duly introduced for the consideration of said City Council and read in full. It was then duly moved and seconded that said Resolution be adopted; and, after due discussion, said motion, carrying with it the adoption of said Resolution, prevailed and carried by the following vote: AYES: All members of said City Council shown present above voted "Aye ", except NOES: ABSTENTIONS: 2. That a true, full, and correct copy of the afore- said Resolution adopted at the Meeting described in the above and foregoing paragraph is attached to and follows this Certificate; that said Resolution has been duly record- ed in said City Council's minutes of said Meeting; that the above and foregoing paragraph is a true, full, and correct excerpt from said City Council's minutes of said Meeting pertaining to the adoption of said Resolution; that the persons named in the above and foregoing paragraph are the duly chosen, qualified, and acting officers and members of said City Council as indicated therein; and that each of the officers and members of said City Council was duly and sufficiently notified officially and personally, in advance, of the time, place, and purpose of the aforesaid Meeting, and that said Resolution would be introduced and considered for adoption at said Meeting, and each of said officers and members consented, in advance, to the holding of said Meeting for such purpose; and that said Meeting was open to the public, and public notice of the time, place, and purpose of said Meeting was given, all as required by Vernon's Ann. Civ. Stat. Article 6252 -17. SIGNED AND SEALED the 13th day of November, 1984. Secret y, City Texas (SEAL) less, Mayor, City of Eu ess, Texas RESOLUTION NO. 84 -580 RESOLUTION APPROVING AN AGREEMENT BY EULESS INDUSTRIAL DEVELOPMENT AUTHORITY TO ISSUE BONDS FOR KUELBS INVESTMENTS AND THE BOND RESOLUTION PROVIDING FOR THE ISSUANCE OF SUCH BOND WHEREAS, Euless Industrial Development Authority was created under the auspices of the City of Euless; and WHEREAS, the Euless Industrial Development Authority (the "Authority ") proposes to issue a bond (the "Bond ") under the Development Corporation Act of 1979, as amended (the "Act ") to finance a commercial project for Kuelbs Investments, located in the City of Euless, Texas (the "City "); and WHEREAS, a description of such commercial project is contained in Exhibit A of the hereinafter referred to Agreement, and shall be referred to herein as the "Project "; and WHEREAS, the Act requires that any commercial project financed under the Act must be within an area designated by a city as an "Eligible Blighted Area "; and WHEREAS, the Act and Section 103(k) of the Internal Revenue Code of 1954, as amended, requires that the City approve the Bonds and the Project, the cost of which will be financed with the proceeds of the Bond; and WHEREAS, a public hearing was held with respect to the aforementioned subject matter and notice of such public hearing was posted (as required by Article 6252 -17, V.A.T.C.S.) and published in a newspaper of general circulation in the City of Euless, Texas more than 14 days prior to such public hearing; and WHEREAS, the public had the opportunity to make comments on the Bond and the Project at said public hearing; 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 EULESS, TEXAS THAT: Section 1. That the City has reviewed the Project and finds that the Project is consistent with and conforms to the redevelopment objectives of the City of Euless as they were set forth in the resolution designating Eligible RESOLUTION AUTHORIZING THE ISSUANCE OF EULESS INDUSTRIAL DEVELOPMENT AUTHORITY REVENUE BOND, SERIES 1984 AND THE EXECUTION OF A TRUST INDENTURE (KUELBS INVESTMENTS PROJECT) JWR:3RD DRAFT :11 /12/84 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 2 SECTION 1. DESIGNATION, AMOUNT, AND PURPOSE OF THE BONDS 2 SECTION 2. GENERAL DESCRIPTION OF BOND 3 (a) Date, Denomination, Numbers and Maturities of the Bond 3 (b) Exchange Provisions 3 SECTION 3. INTEREST ON THE BONDS 3 SECTION 4. GENERAL CHARACTERISTICS OF BONDS 3 (a) In General 3 (b) Registration Books 4 (c) Restriction on Transferability of Bonds 4 (d) Payment of Registered Owner 5 (e) Notation of Prepayment 5 (f) Temporary Bonds 5 SECTION 5. FORM OF BOND 6 SECTION 6. PLEDGE 19 SECTION 7. DEBT SERVICE FUND 20 (a) Establishment of Debt Service Fund 20 (b) Accrued Interest 20 (c) Installment Loan Payments 21 (d) Redemption 21 (e) Payments from Debt Service Fund 22 (f) Immediately Available Funds (g) Investment of Funds 22 SECTION 8. SECURITY FOR FUNDS 23 SECTION 9. THE USER'S PAYMENTS 23 PAGE (a) Unconditional Obligation 23 (b) Prepayments 23 SECTION 10. ADDITIONAL PARITY BONDS 23 (a) Additional Bonds 23 (b) Amendments to Trust Indenture Unnecessary 25 SECTION 11. SPECIAL COVENANTS 25 (a) Installment Loan Payments Pledged to Bonds Only 25 (b) Non - Encumbrance 25 (c) Performance by Issuer 25 (d) Certain Modifications Prohibited 26 SECTION 12. BONDS ARE SPECIAL OBLIGATIONS 26 SECTION 13. AMENDMENTS 26 (a) Amendment with Consent of Owners of 51% of Bonds 26 (b) Notice of Amendment 27 (c) Consent to Amendment 27 (d) Effect of Amendment 27 (e) Consent of Bondholders 28 (f) Ownership of Bonds 28 (g) Amendments Without Consent 28 SECTION 14. ESTABLISHMENT OF CONSTRUCTION FUND 28 (a) Deposit of Bond Proceeds into Construction Fund 28 (b) Investment of Money in Construction Fund 29 (c) Deposit of Accrued Interest, Income, and Profits 30 SECTION 15. PAYMENTS FROM CONSTRUCTION FUND 30 (a) Reimbursements for and Payment of Cost of Project 30 (b) Reliance by Trustee 31 SECTION 16. SURPLUS CONSTRUCTION FUNDS 31 (a) Disposition of Surplus Funds 31 (b) Disposition of Construction Fund upon Acceleration and Redemption 32 PAGE SECTION 17. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS 32 (a) Replacement Bonds 32 (b) Application for Substitute Bonds 32 (c) No Default Occurred 32 (d) Charge for Issuing Substitute Bonds 33 (e) Authority for Issuing Substitute Bonds 33 SECTION 18. NO ARBITRAGE 33 SECTION 19. FINDINGS 33 SECTION 20. SALE OF THE BONDS 33 SECTION 21. TRUST INDENTURE 34 RESOLUTION AUTHORIZING THE ISSUANCE OF EULESS INDUS- TRIAL DEVELOPMENT AUTHORITY REVENUE BONDS, SERIES 1984, AND THE EXECUTION OF A TRUST INDENTURE (KUELBS INVESTMENTS PROJECT) THE STATE OF TEXAS EULESS INDUSTRIAL DEVELOPMENT AUTHORITY WHEREAS, Euless Industrial Development Authority (the "Issuer ") is a nonstock, nonprofit industrial development corporation organized and existing under the laws of the State of Texas, including particularly the Development Authority 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 City of Euless (the "Governmental 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 Euless Industrial Development Authority and Kuelbs Investments ", dated as of November 1, 1984 (the "Agreement "), has been duly executed by the Issuer and Kuelbs Investments, a general partnership composed of Leo Kuelbs, Gregory Kuelbs and John Kuelbs (the "User ") ; and WHEREAS, the User is a general partnership organized and existing under the laws of the State of Texas, 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 it 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 integral part of this Initial Bond Resolution; and WHEREAS, the corporate trustee under the Trust Inden- ture (the "Trustee ") will have the duties and obligations hereinafter provided; and 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 has granted to B. R. Daniel and /or John Donor and /or Horace Weaver for the benefit of the Trustee a lien and security interest in and to the Project pursuant to that certain Deed of Trust, Security Agreement and Assignment of Rents dated as of November 1, 1984 (the "Deed of Trust "), and that certain Assignment of Rents and Leases to Trustee (the "Assignment "), 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, 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 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 EULESS INDUSTRIAL DEVELOPMENT AUTHORITY THAT: Section 1. DESIGNATION, AMOUNT, AND PURPOSE OF THE BONDS. The Issuer's bond designated and to be known as EULESS INDUSTRIAL DEVELOPMENT AUTHORITY REVENUE BOND, SERIES 1984 (KUELBS INVESTMENTS PROJECT) (the "Bond" or the 2 "Bonds ") is hereby authorized to be issued in the aggregate principal amount of $800,000 on behalf of the City of Euless TO PAY PART OF THE COST OF ACQUIRING, CONSTRUCTING, EQUIP- PING, AND FURNISHING, OR CAUSING TO BE ACQUIRED, CON- STRUCTED, EQUIPPED, AND FURNISHED A PROJECT (THE "PROJECT ") IN THE CITY OF EULESS, TEXAS, FOR KUELBS INVESTMENTS (THE "USER ") FOR THE SPECIFIC PURPOSE OF THE PROMOTION AND ENCOURAGEMENT OF EMPLOYMENT AND THE PUBLIC WELFARE. Section 2. GENERAL DESCRIPTION OF BOND. (a) Date, Denomination, Numbers and Maturities of the Bond. The Bond initially authorized hereby shall be dated November 1, 1984, shall be issued and delivered in the form of a fully regis- tered 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 aggregate principal amount of $800,000, initially payable to Allied Bank Irving, Irving, 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. (b) Exchange Provisions. Upon surrender of the fully registered bond initially authorized hereby to the Trustee for exchange, the Trustee shall authenticate and deliver to the Bondholder fully registered Bonds, numbered R -2 upward in denominations of $5,000 each, to the extent possible, and with a last Bond being in such denomination as necessary to cause the total principal amount of exchanged Bonds to equal the aggregate principal amount of the Bond initially authorized hereby outstanding on the date of such exchange. 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 "Adjusted Rate" as defined in the FORM OF BOND set forth 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 Bonds 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 trans- ferred and assigned, shall have the characteristics, and shall be signed and executed (and the Bonds shall be sealed), all as provided, and in the manner indicated, in the FORM OF BOND set forth in Section 5. After the Bonds have been authorized to be issued by the Board of Directors of the Issuer, and prior to the delivery of the Bonds, the 3 Trustee shall authenticate the Bonds 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 Bonds to the initial purchaser thereof, the Trustee shall fill in the date of delivery of the Bonds in the Delivery Certificate appearing on the Bonds 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. (c) Restriction on Transferability of Bonds. Notwith- standing the foregoing, the Trustee, as registrar, shall not transfer any such fully registered Bonds except upon the completion of the conditions stated below. Bonds shall not be transferred unless the transferee is an "Institutional Investor." As used herein, an "Institutional Investor" shall mean any savings institution, commercial bank, bank or trust company, insurance company or mutual fund. In addition, the Trustee, as registrar, shall not transfer any Bonds until the Issuer and the Trustee shall have received a 4 certificate (delivered by certified mail, postage prepaid) of the transferor of such Bonds stating that such transferee is an "Institutional Investor "; provided, however, that the provision of this sentence need not be satisfied if the Transferee of this Bond is a subsidiary bank of Allied Bancshares, Inc., a Texas corporation. The foregoing restriction on transfer shall not be, nor be construed as, a restriction on the granting of a participation or participations in the Bonds to any Institutional Investors by any Bondholder. (d) Payment to Registered Owner. The person in whose name any Bond shall be registered on the Bond Registration Books may be deemed and 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 liability upon such Bond to the extent of the sum or sums so paid. (e) 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 on 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. (f) 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, 5 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 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 $800,000 UNITED STATES OF AMERICA STATE OF TEXAS EULESS INDUSTRIAL DEVELOPMENT AUTHORITY REVENUE BOND SERIES 1984 (KUELBS INVESTMENTS PROJECT) EULESS INDUSTRIAL DEVELOPMENT AUTHORITY (the "Issuer "), being a nonstock, nonprofit industrial development corporation organized and existing under the laws of the State of Texas, including particularly the Development Authority Act of 1979, as amended (Article 5190.6, V.A.T.C.S.) (the "Act "), and acting on behalf of the City of 6 • Euless, Texas, hereby promises to pay to Allied Bank Irving, or its registered assigns, the aggregate principal amount of EIGHT HUNDRED THOUSAND DOLLARS in monthly installments commencing on the first day of December, 1984, and continuing on the first day of each succeeding calendar month through and including November 1, 2001, together with interest as hereinafter provided, as follows: Principal Payment Date December 1, 1984 January 1, 1985 February 1, 1985 March 1, 1985 April 1, 1985 May 1, 1985 June 1, 1985 July 1, 1985 August 1, 1985 September 1, 1985 October 1, 1985 November 1, 1985 December 1, 1985 January 1, 1986 February 1, 1986 March 1, 1986 April 1, 1986 May 1, 1986 June 1, 1986 July 1, 1986 August 1, 1986 September 1, 1986 October 1, 1986 November 1, 1986 Principal Payment Amount $1,333.33 $1,333.33 $1,333.34 $1,333.33 $1,333.33 $1,333.34 $1,333.33 $1,333.33 $1,333.34 $1,333.33 $1,333.33 $1,333.34 $1,416,66 $1,416.66 $1,416.67 $1,416.66 $1,416.66 $1,416.67 $1,416.66 $1,416.66 $1,416.67 $1,416.66 $1,416.66 $1,416.67 Principal Payment Date Principal Payment Amount December 1, 1986 $1,666.66 January 1, 1987 $1,666.66 February 1, 1987 $1,666.67 March 1, 1987 $1,666.66 April 1, 1987 $1,666.66 May 1, 1987 $1,666.67 June 1, 1987 $1,666.66 July 1, 1987 $1,666.66 August 1, 1987 $1,666.67 September 1, 1987 $1,666.66 October 1, 1987 $1,666.66 November 1, 1987 $1,666.67 December 1, 1987 $1,833.33 January 1, 1988 $1,833.33 February 1, 1988 $1,833.34 March 1, 1988 $1,833.33 April 1, 1988 $1,833.33 May 1, 1988 $1,833.34 June 1, 1988 $1,833.33 July 1, 1988 $1,833.33 August 1, 1988 $1,833.34 September 1, 1988 $1,833.33 October 1, 1988 $1,833.33 November 1, 1988 $1,833.34 December 1, 1988 January 1, 1989 February 1, 1989 March 1, 1989 April 1, 1989 May 1, 1989 June 1, 1989 July 1, 1989 August 1, 1989 September 1, 1989 October 1, 1989 November 1, 1989 December 1, 1989 January 1, 1990 February 1, 1990 March 1, 1990 April 1, 1990 May 1, 1990 June 1, 1990 July 1, 1990 August 1, 1990 September 1, 1990 October 1, 1990 November 1, 1990 December 1, 1990 January 1, 1991 February 1, 1991 March 1, 1991 April 1, 1991 May 1, 1991 June 1, 1991 July 1, 1991 August 1, 1991 September 1, 1991 October 1, 1991 November 1, 1991 December 1, 1991 January 1, 1992 February 1, 1992 March 1, 1992 April 1, 1992 May 1, 1992 June 1, 1992 July 1, 1992 August 1, 1992 September 1, 1992 October 1, 1992 November 1, 1992 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,000.00 $2,333.33 $2,333.33 $2,333.34 $2,333.33 $2,333.33 $2,333.34 $2,333.33 $2,333.33 $2,333.34 $2,333.33 $2.333.33 $2,333.34 $2,666.66 $2,666.66 $2,666.67 $2,666.66 $2,666.66 $2,666.67 $2,666.66 $2,666.66 $2,666.67 $2,666.66 $2,666.66 $2,666.67 $2,916.66 $2,916.66 $2,916.67 $2,916.66 $2,916.66 $2,916.67 $2,916.66 $2,916.66 $2,916.67 $2,916.66 $2,916.66 $2,916.67 December 1, 1992 $3,333.33 January 1, 1993 $3,333.33 February 1, 1993 $3,333.34 March 1, 1993 $3,333.33 April 1, 1993 $3,333.33 May 1, 1993 $3,333.34 June 1, 1993 $3,333.33 July 1, 1993 $3,333.33 August 1, 1993 $3,333.34 September 1, 1993 $3,333.33 October 1, 1993 $3,333.33 November 1, 1993 $3,333.34 December 1, 1993 $3,750.00 January 1, 1994 $3,750.00 February 1, 1994 $3,750.00 March 1, 1994 $3,750.00 April 1, 1994 $3,750.00 May 1, 1994 $3,750.00 June 1, 1994 $3,750.00 July 1, 1994 $3,750.00 August 1, 1994 $3,750.00 September 1, 1994 $3,750.00 October 1, 1994 $3,750.00 November 1, 1994 $3,750.00 December 1, 1994 $4,166.66 January 1, 1995 $4,166.66 February 1, 1995 $4,166.67 March 1, 1995 $4,166.66 April 1, 1995 $4,166.66 May 1, 1995 $4,166.67 June 1, 1995 $4,166.66 July 1, 1995 $4,166.66 August 1, 1995 $4,166.67 September 1, 1995 $4,166.66 October 1, 1995 $4,166.66 November 1, 1995 $4,166.67 December 1, 1995 $4,833.33 January 1, 1996 $4,833.33 February 1, 1996 $4,833.34 March 1, 1996 $4,833.33 April 1, 1996 $4,833.33 May 1, 1996 $4,833.34 June 1, 1996 $4,833.33 July 1, 1996 $4,833.33 August 1, 1996 $4,833.34 September 1, 1996 $4,833.33 October 1, 1996 $4,833.33 November 1, 1996 $4,833.34 December 1, 1996 January 1, 1997 February 1, 1997 March 1, 1997 April 1, 1997 May 1, 1997 June 1, 1997 July 1, 1997 August 1, 1997 September 1, 1997 October 1, 1997 November 1, 1997 December 1, 1997 January 1, 1998 February 1, 1998 March 1, 1998 April 1, 1998 May 1, 1998 June 1, 1998 July 1, 1998 August 1, 1998 September 1, 1998 October 1, 1998 November 1, 1998 December 1, 1998 January 1, 1999 February 1, 1999 March 1, 1999 April 1, 1999 May 1, 1999 June 1, 1999 July 1, 1999 August 1, 1999 September 1, 1999 October 1, 1999 November 1, 1999 $5,333.33 $5,333.33 $5,333.34 $5,333.33 $5,333.33 $5,333.34 $5,333.33 $5,333.33 $5,333.34 $5,333.33 $5,333.33 $5,333.34 $6,000.00 $6,000.00 $6,000.00 $6,000.00 $6,000.00 $6,000.00 $6,000.00 $6,000.00 $6,000.00 $6,000.00 $6,000.00 $6,000.00 $6,833.33 $6,833.33 $6,833.34 $6,833.33 $6,833.33 $6,833.34 $6,833.33 $6,833.33 $6,833.34 $6,833.33 $6,833.33 $6,833.34 December 1, 1999 $7,666.66 January 1, 2000 $7,666.66 February 1, 2000 $7,666.67 March 1, 2000 $7,666.66 April 1, 2000 $7,666.66 May 1, 2000 $7,666.67 June 1, 2000 $7,666.66 July 1, 2000 $7,666.66 August 1, 2000 $7,666.67 September 1, 2000 $7,666.66 October 1, 2000 $7,666.66 November 1, 2000 $7,666.67 December 1, 2000 $8,583.33 January 1, 2001 $8,583.33 February 1, 2001 $8,583.34 March 1, 2001 $8,583.33 April 1, 2001 $8,583.33 May 1, 2001 $8,583.34 June 1, 2001 $8,583.33 July 1, 2001 $8,583.33 August 1, 2001 $8,583.34 September 1, 2001 $8,583.33 October 1, 2001 $8,583.33 November 1, 2001 $8,583.34 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) at a rate equal to the Adjusted Rate, until the principal hereof may become due and payable from time to time, and at a rate of 15% per annum on overdue principal and, to the extent legally permissible, on overdue interest. The term "Adjusted Rate" shall mean the per annum rate (calculated on the basis of a 360 day year for the actual number of days elapsed) equal to 80% of the "Prime Rate" of Allied Bank Irving (the "Prime Rate Bank "), provided that the Adjusted Rate shall not in any case be less than 8% per annum. The term "Prime Rate" shall mean the rate of interest established from time to time by the Prime Rate Bank as its Prime Rate. Any change in the Prime Rate shall automatically be effective for the 9 purpose of changing the rate of interest which this Bond bears as of the opening of business on the date of any such change in the Prime Rate. It is understood, however, that regardless of the Adjusted Rate, the rate of interest borne by this Bond shall never be greater than a rate which would cause the net effective interest rate (as defined and calculated in accordance with Article 717k -2, V.A.T.C.S. as it exists on the date of issuance of this Bond) for this Bond as of any date to exceed 15 %. The interest on this Bond shall be payable on December 1, 1984 and on the first day of each month thereafter while this Bond is outstanding by check or draft mailed to the registered owner at its address as it appears on the Bond Registration Books of the Issuer kept by Allied Lakewood Bank (the "Trustee ", "Paying Agent" and "Registrar ") (provided that in the alternative 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. THE TRUSTEE shall notify the User (which notice shall be deemed to have occurred one day after placing such notice in first class mail) of the Prime Rate and the total inter- est due on the balance of the principal amount due on the Bond (the "Interest Calculation ") on a date (the "Calcula- tion Date ") no less than 5 days prior to the date (the "Payment Date ") fixed for any payment of interest or unpaid principal amounts of the Bond, which Interest Calculation shall represent the full amount of interest due on the next Payment Date. The Interest Calculation with respect to a particular Payment Date shall be made on the Calculation Date preceding such Payment Date and shall be based upon the assumption that the Prime Rate shall not change between the Calculation Date and the Payment Date. If the Prime Rate shall change between a particular Calculation Date and the related Payment Date, the Interest Calculation for the period preceding the next Calculation Date and the amount of interest due on the next Payment Date shall be adjusted to reflect such difference. Provided, however, with respect to the Interest Calculation for the Payment Date on which the User shall pay the entire outstanding principal amount of this Bond, such adjustment shall be made on such Payment Date, with the Trustee to provide the User with telephonic notice of any such adjustment and the User to pay the actual amount of interest due as of such Payment Date. The failure of the Trustee to give the notice to the User required above shall not prevent an Event of Default (as defined in the Trust Indenture as hereinafter defined) from occurring under this Bond and the Trust Indenture; however, if no notice is given, the User may prevent an Event of Default by providing the Trustee with funds sufficient to pay interest on the unpaid principal at the rate of 80% of the then current 10 Prime Rate, plus the principal amount, if any, due on such date but subject to the interest rate limitations described in the immediately preceding paragraph. Such interest payment shall be adjusted within 10 days after the User receives notice from the Trustee of the correct interest amount which should have been paid on the preceding interest payment date. THE PRINCIPAL of and interest on this Bond shall be payable in lawful money of the United States of America, without exchange or collection charges. Payments of princi- pal and interest shall be made to the registered owner by check or draft mailed by Allied Lakewood Bank, Dallas, Texas (the "Trustee ", "Paying Agent ", and "Registrar" for this Bond) or its successor appointed under the Trust Indenture (hereinafter defined), to the registered owner at its address as it appears on the Bond Registration Books kept by the Trustee; provided that in the alternative such payment may be made by any other method requested in writing by the registered owner, subject to the approval of the Trustee. The final payment of principal on this Bond shall be paid only upon surrender of this Bond to the Trustee for cancel- lation. Any prepayment or redemption of any principal installments of this Bond shall be made only upon presenta- tion 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 November 1, 1984 and was authorized and issued in the aggregate principal amount of $800,000 pursuant to a resolution adopted by the Board of Directors of the Issuer (the "Initial Bond Resolution ") on behalf of the City of Euless, Texas 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 THE CITY OF EULESS, TEXAS, FOR KUELBS INVESTMENTS, a general partnership organized and existing under the laws of the State of Texas (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 11 installment), at the prepayment or redemption price equal to the principal amount to be redeemed, plus accrued interest to the date of prepayment or redemption, and without premium. ON NOVEMBER 1, 1989, NOVEMBER 1, 1994 AND NOVEMBER 1, 1999, THIS BOND is subject to mandatory redemption prior to its scheduled maturity and shall, at the option of the registered owner thereof (the "Bondholder "), be redeemed and cancelled prior to its scheduled maturity by the Trustee with funds to be deposited by the User into the Debt Service Fund created by the Initial Bond Resolution (unless such Bond is purchased by the User or its designee and remains outstanding as hereinafter provided), at a redemption price equal to the principal amount thereof, plus accrued interest to the date of redemption, and without premium (the "Option- al Put Redemption "). In order to exercise such option the Bondholder must, not less than 60 days prior to the applic- able redemption date, tender and deliver to the Trustee properly executed written notice to the Trustee to the effect that such Bondholder is exercising such option (which notice shall be in a form acceptable to the Trustee). The Trustee shall, in its sole discretion, determine whether or not a Bondholder shall have properly exercised such option of redemption. The aforesaid tender and delivery of such notice to the Trustee shall be irrevocable by such Bond- holder. Upon delivery of such notice to the Trustee, the Bondholder shall be obligated to tender and deliver such Bond to the Trustee not less than 60 nor more than 90 days prior to the applicable redemption date. NOTWITHSTANDING THE FOREGOING PROVISIONS HEREOF, THE USER HAS RESERVED THE RIGHT, at its option, to prevent the redemption and cancel- lation of the Bond by causing it to be purchased by the User or its designee on or before the date designated for such redemption, at a purchase price equal to the principal amount hereof plus accrued interest to the date designated for such redemption (the "Purchase Price ") , in lawful money of the United States of America, in the manner hereinafter provided. The Trustee, acting separately as escrow agent (the "Escrow Agent ") for the User and the Bondholders, shall, not later than 55 days prior to each applicable redemption date specified above, notify the User in writing that the Bond has been tendered for redemption. To exercise the above option to purchase, the User shall, prior to each redemption date, notify the Escrow Agent in writing that the User or its named designee will purchase the Bond specified in said notice and on or before such redemption date the User or such designee shall provide the Escrow Agent with the required Purchase Price, in funds which will be fully available by such redemption date so as to permit the Escrow Agent to pay the Purchase Price to the tendering Bondholders on such redemption date, and the Escrow Agent shall make 12 such payment to such Bondholders. If so tendered and purchased this Bond shall be and remain outstanding and unpaid for all purposes of the Agreement (hereinafter defined), the Initial Bond Resolution and the Trust Inden- ture, and shall be subordinate to all Bonds of this series held by the original purchaser or its registered assigns, all as further provided below. By accepting and holding or owning this Bond, the Bondholder thereby and hereby agrees that the Escrow Agent shall act on the Bondholder's behalf if this Bond is tendered, and the Bondholder agrees to sell this Bond to the User or its designee in lieu of its redemp- tion, all as provided above. 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 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 sum of (i) the unpaid principal amount of this Bond so prepaid or redeemed, plus (ii) accrued interest to the date of prepayment or redemption, plus (iii) an additional amount equal to the difference between (a) the amount of interest which would have accrued on the principal amount of this Bond outstanding, from time to time, from the date of the Taxable Event (as defined and provided for in the Agreement) and the prepayment or redemption date, at a variable rate equal to 1% over the Prime Rate, and (b) the amount of interest actually paid on this Bond from the date of the Taxable Event to the prepayment or redemption date, plus (iv) the amount of any Interest or Penalties which are payable by the owner or former owner of such Bonds in connection with the Determination of Taxability, plus (v) the reasonable costs and expenses incurred by each owner or former owner of the Bonds in connection with the Determina- tion of Taxability and any other expenses for which the User may be responsible under the Agreement and (vi) the amount of any taxes (including taxes on taxes) imposed on payments received by a Bond owner, with such additional amounts being the agreed liquidated damages (the "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. "Interest" for purposes hereof, shall mean that rate of interest imposed by Code Section 6601, and determined under Section 6621, on the underpayment of taxes and /or deficiencies. "Penalty" shall mean those penalties imposed by Code Sections 6651 (a) (3) , 6653(a), 6655 and 6656 13 as the same may be amended, supplemented or succeeded from time to time. 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 only in the event that this Bond or any principal portion thereof was outstanding on the date of the Taxable Event but was paid or redeemed prior to the mandatory prepayment 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 additional 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 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 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; provided, that in the alternative such notice may be given by any other method requested in writing by the registered owner, subject to the approval of 14 the Trustee. 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, plus any required prepayment or redemption premium, and any other amounts due the owner of this Bond. If such 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. IF 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. 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 Euless Indus- trial Development Authority and Leo Kuelbs, Gregory Kuelbs and John Kuelbs," dated as of October 1, 1984 (the "Agree- ment"). The User, a Texas general partnership, is uncondi- tionally obligated (subject to the provisions of Sections 6.01 and 6.02 of the Agreement relating to transfer of assets and assignment) to make or pay, or cause to be made 15 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 November 1, 1984 (the "Trust Indenture "), whereunder Allied Lakewood Bank, 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 Inden- ture. In case an "Event of Default," as defined in the Trust Indenture, shall occur, the unpaid principal install- ments 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 additionally secured by a Deed of Trust, Security Agreement and Assignment of Rents dated as of November 1, 1984 from the User to B.R. Daniel and /or John Donor and /or Horace Weaver, as mortgage trustee for the benefit of the Trustee (the "Deed of Trust ") and Assignment of Rents and Leases dated as of November 1, 1984 from the User to the Trustee (the "Assignment "), 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, the Assignment 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 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, to issue additional parity revenue bonds ( "Additional 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 Installment 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 under some (but not all) circumstances 16 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 Euless, 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 Euless, 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 interest 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 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 may be deemed and 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. THE OWNER HEREOF, by the purchase of this Bond, agrees that notwithstanding anything herein contained to the contrary this Bond may only be transferred to an "Institu- tional Investor" and only after the Issuer and the Trustee shall have received a certificate (delivered by certified mail, postage prepaid) of the transferor of this Bond stating that such transferee is an "Institutional Investor ". 17 "Institutional Investor" shall mean any savings institution, commercial bank, a bank or trust company, insurance company or mutual fund; provided, however, that the provisions of this sentence need not be satisfied in the event that such transferee is a subsidiary bank of Allied Bancshares, Inc., a Texas corporation. The foregoing restriction shall not be, nor be construed as, a restriction on the granting of a participation or participations in the Bond to any Institu- tional Investor by the holder hereof. 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. (facsimile) (facsimile) 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 one of the Bonds initially issued under the provisions of the within mentioned Agreement, Initial Bond Resolution and Trust Indenture. ALLIED LAKEWOOD BANK Trustee By Authorized Officer FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the registered owner of this Bond last listed below sells, assigns, and transfers the within 18 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 initial purchaser 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 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 19 Trust Indenture, and the Agreement; and such Installment Loan Payments are further pledged irrevocably to the estab- lishment and maintenance of the Debt Service Fund herein- after 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. Immediately after the delivery of the Bond to the initial purchaser thereof, all accrued interest, if any, received from the proceeds from the sale and delivery of the Bond, shall be transferred by the Trustee into the Debt Service 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 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 20 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 any other amounts due with respect to the Bonds; and (6) Promptly after receipt of each statement and request for payment, an amount equal to the charges of the Trustee for performing the duties of Trustee and Registrar, and the 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 Bonds 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 any, and interest on the Bonds, when due, and the 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. 21 (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 of any bank including, but not limited to, the Trustee or any affiliated bank, such investments to mature in a manner and at a time which will allow timely payment of all amounts due with respect to the Bonds. The Trustee may make any such investments in pooled or common trust funds and /or through its own bond department. 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 profits, 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 investments 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 Resolution or the Trust Indenture, the Trustee shall, without further authorization, effect such redemption or sale, employing, in the case of a sale, any commercially reasonable 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 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, 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, to make, redeem, or sell any such investment, it shall so notify in writing the Approving Officer and thereafter the Trustee shall be relieved of all 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 22 deposits shall constitute additional amounts of Installment Loan Payments. It is expressly provided by the Issuer that, because investments hereunder are to be made by the Trustee pursuant to written instructions of the User, the Trustee shall have no liability with respect thereto if, as a result thereof, the Bonds become "arbitrage bonds" within the meaning of Section 103(c) of the Code. 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 state 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 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 and consent of the holders of 51°% in principal amount of the then outstanding Bonds, to issue additional parity revenue bonds ( "Additional Bonds ") in any amounts, 23 for any lawful purpose or purposes, including the refunding of any outstanding Bonds. Such Additional Bonds, along with the Bond authorized by this Initial Bond Resolution, shall be considered, constitute, 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 redemption 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 Additional Bonds. Such Additional Bonds may be issued in one or more series or issues, in various principal amounts, maturing 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 depos- ited into the Debt Service Fund in amounts sufficient to pay all principal of, redemption premium, if any, 24 agreed liquidated damages, if any, and interest on such Additional Bonds, together with all 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 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; (vi) The holders of at least 51% in principal amount of the Bonds then outstanding expressly consent in writing to the issuance of such Additional 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; (c) Performance by Issuer. The Issuer will carry out all of its covenants and obligations under this Initial Bond 25 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, 6.02, 6.03 and 6.04 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 political 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 the maturity or maturities of the outstanding Bonds; 26 (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; affect the rights of the owners of less than all of the Bonds then outstanding; decrease the minimum percentage of the principal amount of Bonds necessary for consent to any such amendment; or 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 given by registered or certified mail to the owner of each Bond as shown by the Bond Registration Books required by the terms hereof to be kept by the Trustee as Registrar. 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. (c) Consent to Amendment. Whenever at any time not less than 30 days, and within one year, from the date of giving 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 principal amount of all Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described 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 27 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 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 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 the appropriate entries in the Bond Registration Books maintained by the Trustee as Registrar. (g) Amendments Without Consent. Notwithstanding the provisions of (a) through (f) of this Section, and without giving notice 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 28 constitute 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 of any bank, including but not limited to, the Trustee or any affiliated bank, such investments to mature in a manner and at a time which will allow timely payment of all amounts due with respect to the Bonds to be requested for payment or reimbursement by the User hereunder. The Trustee may make any such investments in pooled or common trust funds and /or through its own bond department. 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 Agreement) the Trustee shall be liable for: (1) any loss resulting from its willful 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) 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 invest ment, it shall so notify in writing the Approving Officer, and thereupon the Trustee shall be relieved of all liability or responsibility with respect thereto. It is expressly provided by the Issuer that, because investments hereunder are to be made by the Trustee pursuant to written instructions of the User, the Trustee shall have no liability with respect thereto if, as a result thereof, the Bonds become "arbitrage bonds" within the meaning of Section 103(c) of the Code. 29 (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) Reimbursement for and Payment of Cost of Project. 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 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 and an authorized officer of Allied Bank Irving, the initial Bondholder. Such request shall be accompanied by a certificate stating with respect to each payment as follows: (i) the expenditures, payee and related invoice in form and substance acceptable to the Trustee, 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 30 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). (b) Reliance by Trustee. The Trustee shall rely fully on any such request and certificate delivered pursuant to 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 not less than all of the unpaid principal installment or installments to be prepaid or redeemed. 31 (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 spec- ified 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 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, to include, without limitation, a surety bond naming the Trustee and Issuer as obligees, plus an affidavit and any other showing and representation as may be required by the Trustee in reference to such loss. 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 mutilation 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, 32 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 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 Allied Bank Irving, 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 any other amounts due with respect to the Bonds and for the purpose of providing for and fixing in more detail the rights of the owners of the Bonds, 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 33 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: 34 TRUST INDENTURE BETWEEN EULESS INDUSTRIAL DEVELOPMENT AUTHORITY AND ALLIED LAKEWOOD BANK, TRUSTEE (KUELBS INVESTMENTS PROJECT) * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ** Pursuant to and under this Trust Indenture the Euless Industrial Development Authority has granted a security interest in and assigned to Allied Lakewood Bank, as Trustee, all of its interests in all "Installment Loan Payments" due pursuant to and under the "Loan Agreement between Euless Industrial Development Authority and Leo Kuelbs, Gregory Kuelbs and John Kuelbs" to secure its Revenue Bonds, Series 1984 (Kuelbs Investments Project). DEBTOR: Euless Industrial Development Authority 201 North Ector Drive Euless, Texas 76039 SECURED PARTY: Allied Lakewood Bank, Trustee 6301 Gaston Avenue Dallas, Texas 75214 JWR :3RD DRAFT 11/12/84 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 3 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 (a) Separate Records to be Kept 4 (b) Annual Report 4 (c) Right to Inspect 5 ARTICLE 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 (a) Not Accountable for Bond Proceeds 12 (b) Reliance by Trustee 12 (c) Compensation of Trustee from Debt Service Fund 13 (d) Limited Responsibilities 13 (e) Advice 14 (f) Trustee May Own Bonds 14 (g) Fees 14 (h) Notice of Trustee 14 ARTICLE 7. SUCCESSOR TRUSTEE 14 (a) Resignation of Trustee 14 (b) Removal of Trustee 15 (c) Appointment of Successor Trustee 15 (d) Transfer to Successor Trustee 15 (e) Merger or Consolidation of Trustee 16 ARTICLE 8. RELEASE OF INDENTURE AND SATISFACTION OF INDEBTEDNESS 16 ARTICLE 9. AMENDMENTS 16 ARTICLE 10. MISCELLANEOUS PROVISIONS 17 (a) Acknowledgements and Ownership of Bonds 17 (b) Trustee May Require Proof of Ownership 17 (c) Consent of Bondholders 18 (d) Survival of Valid Bonds 18 (e) Unclaimed Funds 18 (f) Rights of Parties 18 (g) Severability 19 (h) Law 19 ARTICLE 11. RECORDING 19 (a) Trustee to Record (b) Non - Encumbrance ARTICLE 12. NOTICE TO TEXAS ECONOMIC DEVELOPMENT COMMISSION Execution by the Issuer Execution by the Trustee 19 19 19 20 21 TRUST INDENTURE THE STATE OF TEXAS EULESS INDUSTRIAL DEVELOPMENT AUTHORITY THIS TRUST INDENTURE, dated as of November 1, 1984, executed by and between Euless Industrial Development Authority (the "Issuer "), a nonstock, nonprofit industrial development corporation organized and existing under the laws of the State of Texas, including particularly the Development Authority Act of 1979, as amended (Article 5190.6, V.A.T.C.S.) (the "Act "), and Allied Lakewood Bank, a Texas state bank duly organized and existing under the laws of the State of Texas and having its principal office in the City of Dallas, Texas, as Trustee (the "Trustee ") : W I T N E S S E T H T HA T: WHEREAS, a "Loan Agreement between Euless Industrial Development Authority and Kuelbs Investments ", dated as of November 1 , 1984 (the "Agreement ") has been duly executed between the Issuer and Kuelbs Investments, a general partnership composed of Leo Kuelbs, Gregory Kuelbs and John Kuelbs (the "User "), with the User being a general partnership organized and existing under the laws of the State of Texas, and 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 EULESS INDUSTRIAL DEVELOPMENT AUTHORITY REVENUE BONDS, SERIES 1984 AND THE EXECUTION OF A TRUST INDENTURE (KUELBS INVESTMENTS 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 EULESS INDUSTRIAL DEVELOPMENT AUTHORITY REVENUE BONDS, SERIES 1984 (KUELBS INVESTMENTS PROJECT), in the aggregate principal amount of $800,000, 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 has granted a lien and security interest in and to the Project pursuant to that certain Deed of Trust, Security Agreement and Assignment of Rents dated as of November 1, 1984 from the User to B.R. Daniel and /or John Donor and /or Horace Weaver (the "Deed of Trust "), and that certain Assignment of Rents and Leases dated as of November 1, 1984 from the User to the Trustee (the "Assignment "), providing further security for the payment of the Installment Loan Payments for the ultimate 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. 2 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 and sufficiency of which is hereby acknowledged, and for the purpose of securing and providing for the payment of the principal of, redemption premium, if any, and interest on the Bonds at any time issued and outstanding, when and as due, any agreed liquidated damages, all fees and expenses of the Trustee and Registrar, and the Paying Agents for the Bonds, and all other payments required to be made by the User under the Agreement, this Trust Indenture and the Bond Resolution, has granted a security interest in, assigned, transferred, 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 and (ii) the Debt Service Fund and the Construction Fund created by the Initial Bond Resolution, upon, and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses, and purposes herein- after expressed; and the Issuer and the Trustee have agreed, and they hereby agree and covenant with the respec- tive owners from time to time of the Bonds 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. 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, and (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. 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 3 Trustee agrees to hold, administer, deposit, secure, invest, and use said funds in all respects as provided and required by the Agreement, the Bond Resolution, and this Trust Inden- ture. Article 3. NOTICE TO THE USER. On or before the 5th 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 or cause to be given 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. 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 the Construction Fund shall have been fully disposed of) . 4 (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 request of the owners of not less than 25% in aggregate principal amount of the Bonds then outstanding and shall have been offered indemnity satisfactory to it and shall 5 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 all expenses, charges, and liability shall, forthwith take such appropriate action by judicial proceedings or otherwise to enforce the covenants 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, 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. (3) Issuer, User or Guarantor shall (a) execute an assignment for the benefit of creditors, or (b) become or be adjudicated a bankrupt or involvent, or (c) admit in writing its inability to pay its debts generally as they become due, or (d) apply for or consent to the appointment of a conservator, receiver, trustee, or liquidator of it or of all or a substantial part of its assets, or (e) file a voluntary petition seeking reorganization or an arrangement with creditors, or to take advantage of or seek any other relief under any Debtor Relief Laws, or (f) file an answer admitting the material allegations of or consenting to, or default in, a petition filed against it in any proceeding under any Debtor Relief Laws, or (g) institute or voluntarily be or become a party to 6 any other judicial proceedings intended to effect a discharge of its debts, in whole or in part, or a postponement of the maturity or the collection thereof, or a suspension of any of the Rights of the Issuer, Bondholders or Trustee granted in any of the Trust Indenture, Agreement, Guaranty, Assignment, Deed of Trust, Bond Resolution or Bonds. (4) (a) An order, judgment, or decree shall be entered by any court of competent jurisdiction approving a petition seeking reorganization of any of Issuer, User or Guarantor or appointing a conservator, receiver, trustee, or liquidator of any such person or entity or of all or any substantial part of its assets, and such order, judgment, or decree is not permanently stayed or reversed within sixty (60) days after the entry thereof, or (b) a petition is filed against any of Issuer, User or Guarantor seeking reorganization, an arrangement with creditors, or any other relief under any Debtor Relief Laws, and such petition is not discharged within sixty (60) days after the filing thereof. (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 30 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, Assignment or Guaranty or the occurrence of any "Event of Default" under the Deed of Trust, Assignment or Guaranty. (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 7 payable, anything in the Bonds, the Agreement, the Bond Resolution, or this Trust Indenture to the contrary notwith- standing. (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 Deed of Trust, the Bond Resolu- tion, or this Trust Indenture, including without limitation, the use and filing of actions for specific performance, and mandamus proceedings, in any court of competent jurisdic- tion, 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 8 rights hereunder respectively, but such waiver shall not extend to any subsequent or other Event of Default or impair any right consequent thereon. (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 including, but not limited to, any outstanding fees of the Trustee for the performance of its duties hereunder, 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. 9 FIFTH: to the payment of the surplus, if any, to whomsoever may be lawfully entitled to receive the 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 the production thereof on the trial or other proceedings relative 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 10 delivered to the Trustee, to direct the method and place of 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. In the absence of notice by the owners of at least 25% in aggregate principal amount of the Bonds then outstanding of a default as aforesaid (other than a default specified in Article 5(c)(1) and 5(c)(2)) the Trustee may conclusively presume that no default exists under this Trust Indenture. (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 protected 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 11 the User directly to the Trustee. In the event that any such payments are not timely made, the Trustee shall immediately notify the User by certified or registered mail, return receipt requested, at the address provided in the Agreement or by telephonic notice with confirmation of such notice by certified or registered mail, return receipt requested, that payment has not been made. Such notice shall be deemed given at the time the notice is received or 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, the Deed of Trust, 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 gross 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 Bond Resolution, the Agreement, or for the sufficiency of the security for the Bonds. 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 Resol- ution, 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 12 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. (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 gross 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 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 direction. 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, how- ever, 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) . 13 (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 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, and the Trustee shall pay the cost of obtaining such advice with funds from the Debt Service Fund in accordance with Section 6(c) hereof. (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 charges for performing the duties of Trustee, Registrar, and Paying Agent for the Bonds in accordance with the Trustee named and customary charges for such 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. (h) Notice of Trustee. The Trustee shall not be required to take notice or deemed to have notice of any default hereunder except failure by the Issuer, User to cause to be made any of the payments to the Trustee required to be made pursuant to Article 5(c)(1) and 5(c)(2) of this Trust Indenture. 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 30 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 hereinafter provided. 14 (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 dis- solved, 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 outstand- ing Bonds by an instrument or concurrent instruments in writing, signed by such owners of Bonds, or by their attor- neys 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 Five Million Dollars ($5,000,000), 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 30 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 appoin- tment of a successor Trustee, and such court may thereupon, after such notice, if any, as it shall deem proper, pres- cribe 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 15 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 by the User. Should any deed, assignment, or instrument in writing from the Issuer be required by any successor Trustee for more fully and cer- tainly 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 general partnership 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 general partnership 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, the User, and the 16 Guarantor, 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; provided, that until the Bonds are finally paid, the Trustee shall continue to act as Paying Agent and Regis- trar 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. 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 the appropriate entries in the Bond Registration Books maintained by the Trustee as Registrar. The Trustee may conclusively assume that such ownership continued until ownership of the Bonds is transferred on the Bond Registration Books by 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. 17 (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 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 on otherwise, all liability of the Issuer and the User to the owners thereof and to the Trustee for the payment of such Bond shall forthwith cease, determine, and be completely discharged whenever funds sufficient to pay such Bond 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 who shall thereafter be restricted exclusively to such funds for the satisfaction of any claim of whatever nature on their part relating to such Bond. (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 Dallas, 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 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 ex- pressed or implied is intended or shall be construed to confer upon any person, firm, or general partnership other 18 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 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 Indenture. (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. 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 19 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 P.O. 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. EULESS INDUSTRIAL DEVELOPMENT AUTHORITY By President, Board of Directors ATTEST: Secretary, Board of Directors (SEAL) 20 ALLIED LAKEWOOD BANK, TRUSTEE By Assistant Vice President and Trust Officer ATTEST: Vice President (SEAL) 21 LOAN AGREEMENT BETWEEN EULESS INDUSTRIAL DEVELOPMENT AUTHORITY AND KUELBS INVESTMENTS, A GENERAL PARTNERSHIP * * * * * * * * * * * * * * * * * * ** The Euless Industrial Development Authority has granted a security interest in and Assigned to Allied Lakewood Bank, 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 Bonds, Series 1984 (Kuelbs Investments Project). DEBTOR: SECURED PARTY: Kuelbs Investments c/o Leo Kuelbs, Gregory Kuelbs and John Kuelbs 3227 West Euless Boulevard Euless, Texas 76040 ASSIGNEE: Euless Industrial Development Authority 201 North Ector Drive Euless, Texas 76039 Allied Lakewood Bank, Trustee 6301 Gaston Avenue Dallas, Texas 75214 JWR:3RD DRAFT 11/12/84 TABLE OF CONTENTS (The Table of Contents is not a part of the Loan Agree- ment but is for convenience of reference only.) Parties ARTICLE I DEFINITIONS; GENERAL RECITALS, FINDINGS, AND REPRESENTATIONS Section 1.01. Definitions Section 1.02. General Recitals, Findings, and Representations ARTICLE II THE PROJECT PAGE 1 4 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 9 Section 3.02. Security for the Loan 9 Section 3.03. Repayment of Loan 9 Section 3.04. Title 10 Section 3.05. Operation 11 Section 3.06. Indemnities 11 Section 3.07. Issuer's Limited Liability 12 ARTICLE IV THE BONDS Section 4.01. Issuance of Bonds 11 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 14 the Bonds and Mandatory Redemption Section 4.07. Payments to Issuer 17 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. 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 23 Section 6.07. Additional Documents and Security 23 Section 6.08. Severability 24 Execution by the Issuer 25 Execution by the User 25 Exhibit A - Project Description A -1 Exhibit B - Legal Opinion B -1 LOAN AGREEMENT This Loan Agreement dated as of November 1, 1984, between Euless Industrial Development Authority and Kuelbs Investments, a general partnership organized and existing under the laws of the State of Texas and composed of Leo Kuelbs, Gregory Kuelbs and John Kuelbs, all individual residents of the State of Texas 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 Authority 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 partner of the User. Article - Any subdivision of this Agreement designated with a roman numeral. Assignment - That certain Assignment of Rents and Leases dated as of November 1, 1984 from the User to the Trustee, pursuant to which the User has, inter alia, collaterally assigned the Lease to the Trustee as additional security for the payment and performance of the User's obligation under the Agreement. Board or Board of Directors - The lawfully qualified board of directors of the Issuer. Bondholder - The owner of any registered Bond. 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 issuance 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 acquisition, 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. Debtor Relief Laws - The applicable liquidation, conservatorship, bankruptcy, insolvency, rearrangement, moratorium, reorganization, or similar debtor relief laws affecting the rights of creditors generally from time to time in effect. Deed of Trust - The Deed of Trust, Security Agreement and Assignment of Rents, dated as of November 1, 1984, from the User to B. R. Daniel and /or John Doner and /or Horace Weaver, as the mortgage trustee named therein for the benefit of the Trustee. Governmental Unit - The City of Euless, Texas, a political subdivision of the State of Texas. Guaranty - That certain Guaranty and Indemnification Agreement dated as of November 1, 1984 between the Trustee and Chrome Specialties, Inc., a Texas corporation ( "Chrome ") pursuant to which Chrome has guaranteed the payment and performance of the User's obligation under this Agreement to the Issuer and which the Issuer has assigned to the Trustee. Inducement Date - May 8, 1984. Initial Bond Resolution - The Bond Resolution adopted by the Board of Directors, authorizing the issuance and delivery of Euless Industrial Development Authority Revenue Bonds, Series 1984 (Kuelbs Investments Project) in the aggregate principal amount of $800,000. Issuer - Euless Industrial Development Authority. 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. Lease - That certain Lease Agreement between the User and Chrome pursuant to which the User has leased the Project to Chrome and which has been collaterally assigned to the Trustee pursuant to the Agreement. Loan - The loan of the proceeds of the sale of the Bonds as described in Section 3.01 which is in renewal, extension and modification of, but not extinguishment of the Prior Note. Paying Agent - The Trustee and any other paying agent for an issue or series of Bonds named in the Bond Resolution authorizing such Bonds. Prior Note - The Commercial /Real Estate Note dated June 28, 1984, executed by the general partners of the User and 3 payable to the order of Allied Bank Irving in the original principal amount of $800,000. Project - The land, buildings, equipment, facilities, and improvements described in Exhibit "A" to this Agreement. Project Location - The City of Euless, Texas. Registrar - The registrar for the Bonds named in the Bond Resolution. Regulations - The currently effective regulations promulgated by the United States Treasury Department pursuant to the Code. Rights - With respect to any person or entity, the rights, remedies (equitable or legal), claims, causes of action, powers, and privileges granted to such person or entity, pursuant to any or all of this Agreement, the Trust Indenture, the Bond Resolution, the Bonds, the Deed of Trust, the Guaranty, the Assignment or any other document, instrument or other agreement heretofore, now, or hereafter executed in connection therewith, whether granted or arising pursuant to the express provisions of any of the foregoing, or at law, or in equity, by constitution, statute, case or otherwise. 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 Resolution. Trustee - The corporate trustee named under the Trust Indenture, and its successors or assigns. User - Kuelbs Investments, a general partnership organized and existing under the laws of the State of Texas and composed of Leo Kuelbs, Gregory Kuelbs and John Kuelbs and which is fully 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 REPRESENTATIONS. (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 by its partnership agreement 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 transactions 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 performance of the transactions contemplated hereby will not violate any law or regulation, or any partnership agreement, 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 Commission that (1) the Project will contribute to the economic growth or stability of the Governmental Unit by (aa) increasing or stabilizing employment opportunities in the Governmental Unit, (bb) significantly increasing or stabilizing 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 using or moving any portion of the Project outside the State of 5 1. Texas of 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. (k) The User further represents to the Board and the Commission that (1) the Project is located within or adjacent to a designated blighted area; (2) the Governmental Unit has approved the Project and has found that the Project will (aa) contribute significantly to the fulfillment of the redevelopment objectives of the Governmental Unit for the designated blighted area and (bb) is in furtherance of the public purposes of the Act; and (3) it will not, while the Bonds are outstanding, direct the Project to a use not authorized within the eligible blighted area, as defined by the Act, and the rules promulgated by the Commission pursuant to the Act. NOW THEREFORE, in consideration of the covenants and agreements herein made, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and subject to the conditions herein set forth, the Issuer and the User contract and agree as follows: 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. The User has obtained all required licenses, certificates, permits, zoning changes and other governmental approvals necessary for the construction, occupancy and operation 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 recognizes that the Plans and Specifications for the Project will be prepared at its instruction; therefore, THE ISSUER, THE UNIT, THE TRUSTEE, AND THE BONDHOLDERS MAKE NO EXPRESS OR IMPLIED WARRANTY OF ANY KIND WHATSOEVER WITH RESPECT TO THE PROJECT INCLUDING BUT NOT LIMITED TO: ITS MERCHANTABILITY, ITS FITNESS FOR ANY PARTICULAR PURPOSE, ITS DESIGN OR CONDITION, THE WORKMANSHIP OR QUALITY THEREOF, THE COMPLIANCE WITH REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR CONTRACT PERTAINING THERETO, OR THAT THE PROCEEDS DERIVED FROM THE SALE OF THE BONDS WILL BE SUFFICIENT TO PAY IN FULL FOR THE SAME. The User shall acquire, construct, equip, and furnish the Project or cause the Project to be acquired, constructed, equipped, and furnished and the Bondholders, Trustee and 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, equipping, and furnishing of the Project (and that neither the Issuer, Bondholders, or Trustee shall 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, construction, equipping, and furnishing of the Project as is required by law, this Agreement and the Deed of Trust. 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 all or part of the Cost of the Project, in accordance with procedures to be established in any applicable Bond Resolution, 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 specifically 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. 7 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. 8 ARTICLE III FINANCING THE PROJECT; TITLE AND OPERATION Section 3.01. THE LOAN. The Issuer shall make the Loan (in renewal, extension and modification of, but not extinguishment of the Prior Note) 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 Installment Loan Payments, the amounts on deposit to the Construction Fund, and the amounts on deposit to the Debt Service Fund. 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 ultimate 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 (pursuant to the aforesaid assignment by the Issuer) in lawful money of the United States of America; and in immediately available funds 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 and as 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, the Registrar, and any Paying Agent for such Bonds, and of all other amounts required to be paid by this Agreement, each Bond Resolution and the Trust Indenture. 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 Payments. The obligations of the User to make the payments required by this Agreement shall be absolute and unconditional (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 Agreement; (ii) will perform and observe all of its other agreements 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 therefor, 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 Agreement. 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 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 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 the acquisition, construction, equipping, furnishing, installation, operation, maintenance, or ownership of the Project. 10 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 operation and maintenance of the Project, including all applicable taxes, and that it will keep, or cause to be kept, in force adequate insurance, including self- insurance, on the Project as is required by the Deed of Trust. 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, the Trustee, its officers, agents, attorneys, employees and the members of its governing body (collectively 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, delivery or payment of the Bonds, the Bond Resolution, the Trust Indenture, and this Agreement and the obligations imposed on the Issuer hereby and thereby; or the design, construction, installation, operation, use, occupancy, maintenance, or ownership of the Project; (ii) any written statements or representations made or given by the User or any of its employees, to the Indemnified Parties, 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 information, 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 any Indemnified Party as a result of violation 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 relates to or is asserted to have resulted from, arisen out of, or related to, in whole or in part, one or more negligent acts or omissions of the Commission, the Issuer, the Trustee 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 11 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 purpose, or to any diminution in or postponement of any payments required to be made by the User hereunder including, but not limited to, the Installment Loan Payments. ARTICLE IV THE BONDS Section 4.01. ISSUANCE OF BONDS. (a) In consideration 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 Section 10 of the Initial Bond Resolution, 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 12 agreement to the contrary. Any Bondholder is entitled to rely fully and unconditionally on any approvals. Notwithstanding 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 Indenture, become unconditional, valid, and binding covenants and obligations of the User so long as said Bonds, the interest thereon and any other amounts due with respect thereto 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 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 and Trustee at the direction of the Bondholders; 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 and Trustee, unless such redemption is required or contemplated 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 13 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 perfor- mance 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 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 proceeds 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 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 depreciation 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, 14 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 acquisition, 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, and except for any person or entity which may use or lease 10% (in value or area) of the Project, 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 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 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 occurrence 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 15 (iii) the violation by the User of a representation 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); or (iv) any change in law affecting the Bonds such that the interest thereon 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 Internal 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 (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 following: (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 appropriate proceedings, either directly or through a Bondholder, the existence of a Taxable Event (and shall have provided to the Trustee on approval of Bond Counsel that such contest has a reasonable chance of success), no such Final Determination of Taxability shall be deemed to have occurred; or 16 (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 confirming 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; or (iii) on the date when the Trustee receives an opinion of Bond Counsel, selected and employed by the Issuer and approved by the Trustee, that interest on the Bonds is no longer exempt from federal income taxation because of a Taxable Event. (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 (for loss of a bargain-and not as a penalty) all as shall be provided for in, and in accordance with the provisions of, each Bond Resolution. Such payment of liquidated damages 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. The User covenants to pay upon delivery of each series or issue of Bonds all of the Issuer's reasonable, actual out -of- pocket expenses and costs of issuance in connection with such series of Bonds, including, without limitation, all financing, legal, printing, and other expenses and costs of issuance incurred in issuing the Bonds. In addition, the User shall pay to the Issuer upon delivery of each series or issue of Bonds an amount equal to the amount specified in each Bond Resolution to pay and reimburse the Issuer for its administrative and overhead expenses directly attributable and chargeable to the issuance of the Bonds and the acquisition, construction, equipping, and furnishing of the Project. Also the User agrees to pay directly to the Issuer annually while any of the Bonds is outstanding, upon receiving a bill or statement therefor, which shall be submitted by the Issuer promptly after the close of each fiscal year of the Issuer, an amount sufficient to pay and reimburse the Issuer for any of its actual costs reasonably and necessarily incurred in connection with the Bonds and the Project during the previous fiscal year. The User further covenants to pay all of the other actual expenses and costs of issuance of such Bonds, including, without limitation, financing charges, the fees and expenses of accountants, financial advisors, and attorneys, including, but not limited to Bond counsel, Bondholders' counsel and Trustee's counsel. 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 unconditionally 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 Agreement, 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 appointment 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 power may be exercised from time to time and as often as may 18 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, the Commission and the User, and their respective successors and assigns herein permitted, and not for any other third party or parties; and nothing in this Agreement, expressed or im- plied, is intended to confer upon any party or parties other than the Issuer, the Trustee, the Bondholders, the Commis- sion 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 an Approving Officer and the President of the Board of Directors and approved in writing by the Trustee. In addition to amendments for any other purpose, it is specifically understood that this Agreement may be amended, if deemed necessary or advisable by the User, Trustee, and the Issuer, to change the definition 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 loca- tions, 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 B hereto. Notwithstanding any of the foregoing, it is covenanted and agreed, for the benefit of the Bondholders and the Trustee, that (without the concurrence of all of the Bondholders and the Trustee) the provisions of this Agree- ment shall not be amended, changed, added to, or waived in any way which would relieve, abrogate, impair or diminish 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, 6.02, 6.03, or 6.04. 20 ARTICLE VI SPECIAL COVENANTS Section 6.01. EXISTENCE. (a) The User agrees that during the term of this Agreement it will maintain its partnership existence, will not dissolve or otherwise dispose of all or substantially all of its assets, and will not consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge into it; provided, that the User may with the prior express written approval of the Trustee, at the direction of the holders of 100% in principal amount of the Bonds and without violating the agreement contained in this Section, consolidate with or merge into another entity, or permit one or more such entities to consolidate with or merge into it, or sell or otherwise transfer to another entity 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 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 (such instrument of assumption to be in from and substance acceptable to the Trustee in the exercise of its sole discretion), 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 pur- suant to paragraph (a) above, that it (i) will continue to be a partnership 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 as specifically provided in this Agreement. The User may, with the express prior written consent of the Trustee, at the direction of the Bondholders assign its interest in this Agreement to another party provided that the User shall remain and be primarily responsible and liable for all of its obligation hereunder, 21 including particularly the making of all payments required hereunder including, but not limited to, the Installment Loan Payments, when due. The User may, however, assign its interest in this Agreement to another party in connection with the transfer of all or substantially 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 maintain proper books of record and accounting in which a complete and true account of all transactions shall be kept. The User shall permit the Trustee and the Issuer, or their respective representatives or accountants, to inspect any books and records and make copies of same upon reasonable notice, and at reasonable times during User's normal business hours. The User agrees to provide the Trustee as soon as available and in any event within forty -five (45) days after the close of each quarterly accounting period in each fiscal year, a copy of its (i) balance sheet of the User as of the end of each such quarterly accounting period, (ii) statements of income and retained earnings of the User for such quarterly accounting period, and (iii) statements of changes in financial position of the User for such quarterly accounting period; all in reasonable detail and certified by an Approving Officer, together with a statement of such Approving Officer to the effect that in preparing such financial statements he has obtained no knowledge of the occurrence of any condition or event which constitutes, or which, with notice or lapse of time or both, would constitute an "Event of Default," within the meaning of the Trust Indenture, or if such Approving Officer has obtained knowledge of any such condition or event, he shall specify in such statement all such conditions and events and the nature and status thereof. All such financial statements shall be prepared in accordance with generally accepted accounting principles applied on a consistent basis, subject only to year end adjustments. 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 Sections 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 22 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 the other party hereto by registered or certified mail at the applicable address as follows: Euless Industrial Development Authority 201 North Ector Drive Euless, Texas 76039 Kuelbs Investments c/o Leo Kuelbs, Gregory Kuelbs and John Kuelbs 3227 West Euless Boulevard Euless, Texas 76040 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. Section 6.07. ADDITIONAL DOCUMENTS AND SECURITY. Prior to the initial delivery of the Bonds (the "Closing Date ") to the purchasers thereof pursuant to the Initial Bond Resolution, the User shall secure and deliver to the Trustee, for the benefit of the holders of such Bonds, the following: (a) Partnership Agreement of User. A copy of the partnership agreement, and all amendments thereto, of the User, accompanied by a certificate of the User, dated the Closing Date, to the effect that such copy is correct and complete. (b) Opinion of Counsel for User. Opinion of counsel for the User, dated the Closing Date, to the effect that they have examined the documents, instruments, certificates or agreements to be executed and delivered by the User pursuant to this Agreement and such other documents and matters as they deemed necessary to reach the conclusions stated in their opinion, which conclusions shall include the matters stated in Exhibit "B" attached hereto. Any notice, request, or other communication made or given under this Agreement shall be given to the Trustee by 23 registered or certified mail at the applicable address as follows: Allied Lakewood Bank Attention: Corporate Trust Department 6301 Gaston Avenue Dallas, Texas 75214 or the latest address specified by said Trustee in writing. Section 6.08. SEVERABILITY. If any clause, provision, or Section of this Agreement should be held illegal or invalid by any court of competent jurisdiction, the invalidity 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 obligation 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. 24 EULESS INDUSTRIAL DEVELOPMENT AUTHORITY By President, Board of Directors ATTEST: Secretary, Board of Directors (SEAL) KUELBS INVESTMENTS, a general partnership Leo Kuelbs, General Partner Gregory Kuelbs, General Partner John Kuelbs, General Partner EXHIBIT A Description of the Project The Project will consist of the construction of a 23,000 square foot building of tilt wall construction with modern front elevation. It will be located at 3227 West Euless Boulevard in Euless, Texas. It will serve as the User's home office and include a warehouse for the User's catalogue and will call customers. Exhibit B Opinion of Counsel EXHIBIT B (LETTERHEAD OF SHANNON, GRACY, RATLIFF & MILLER) November , 1984 Euless Industrial Development Authority 201 North Ector Drive Euless, Texas 76039 Allied Lakewood Bank 6301 Gaston Avenue Dallas, Texas 75214 Allied Bank Irving 800 West Airport Freeway Irving, Texas 75061 Re: $800,000 Euless Industrial Development Authority Revenue Bonds, Series 1984 (Kuelbs Investments Project) Gentlemen: We have acted as counsel to Kuelbs Investments, a Texas general partnership (the "Partnership "), and Chrome Specialties, Inc., a Texas corporation ( "Guarantor "), in connection with the issuance by Euless Industrial Development Authority (the "Issuer ") of $800,000 aggregate principal amount of its Revenue Bonds (Kuelbs Investments Project), Series 1984 (the "Bonds "). In such capacity, we have examined (i) the Loan Agreement dated as of November 1, 1984, between the Issuer and the Partnership (the "Loan Agreement "), (ii) the resolution adopted by the Board of Directors of the Issuer on November 13, 1984 (the "Bond Resolution ") entitled RESOLUTION AUTHORIZING THE ISSUANCE OF EULESS INDUSTRIAL DEVELOPMENT AUTHORITY REVENUE BOND, SERIES 1984 AND THE EXECUTION OF A TRUST INDENTURE (KUELBS INVESTMENTS PROJECT), (iii) the Deed of Trust, Security Agreement and Assignment of Rents, dated as of November 1, 1984, from the Partnership to the mortgage trustees named therein for the ultimate benefit of the owners of the Bonds (the "Deed of Trust "), (iv) the Guaranty and Indemnification Agreement (the "Guaranty ") dated as of November 1, 1984 between Allied Lakewood Bank, as Trustee (the "Trustee ") for the owners of the Bonds and Guarantor, (v) Assignment of Rents and Leases, dated November 31, 1984 from Partnership to the Trustee, and Euless Industrial Development Authority Allied Lakewood Bank Allied Bank Irving November , 1984 Page 2 (vi) such other documents and matters of law as we deem necessary for purposes hereof. Those instruments described and identified above in items (i) through (vi) inclusive are hereinafter collectively referred to as the "Bond Documents ". Based upon the examinations referenced above, we are of the opinion that: 1. The Partnership is a partnership duly organized and existing under the laws of the State of Texas and entitled to do business in the State of Texas. 2. Each of the Loan Agreement, the Bond Resolution, the Deed of Trust and the other Bond Documents to which the Partnership is a party have been duly authorized, executed and delivered by the Partnership and constitutes a valid, binding and enforceable obligation of the Partnership, subject to (i) bankruptcy, insolvency, moratorium, reorganization and other laws relating to or affecting enforcement of creditors' rights generally and (ii) the exercise of equitable or judicial discretion. 3. Guarantor is a corporation organized, validly existing and in good standing under the laws of the state of its incorporation recited in the Bond Documents and has all requisite power and authority and other material authorization to own and operate its property and to carry out its business as now conducted. Guarantor is duly qualified and authorized to do business and is in good standing as a foreign corporation in all jurisdictions wherein properties of such corporation owned or located or in which the transaction of its business makes such qualification necessary. 4. The Guaranty constitutes legal, valid, and binding obligations of Guarantor, enforceable according to its terms. The execution, delivery, and performance of the Guaranty by Guarantor does not and will not violate any law, regulation, ordinance, or court order applicable to such corporation and no consent, approval, or other action is now or will be required of any court, governmental agency, or third party. The Guaranty has been duly executed and delivered by a duly authorized officer of such corporation and constitutes Euless Industrial Development Authority Allied Lakewood Bank Allied Bank Irving November , 1984 Page 3 the legal, valid and binding obligation of such corporation enforceable in accordance with its terms, subject to (i) bankruptcy, insolvency, moratorium, reorganization and other laws relating to or affecting enforcement of creditors' rights generally and (ii) the exercise of equitable or judicial discretion. 5. Neither the execution and delivery by Guarantor of the Guaranty, nor the consummation by such corporation of the transactions contemplated thereby nor compliance by such corporation with the provisions thereof, conflicts with or results in a breach of any of the provisions of the Articles of Incorporation or the Bylaws of such corporation, of any applicable law, judgment, order, writ, injunction, decree, rule or regulation of any court of administrative agency, or of any other instrument to which Guarantor is a party or by which it is bound. 6. The execution, delivery and performance of the Guaranty by Guarantor does not and will not violate, contravene, or constitute an event of default, under any provision of any promissory note, loan agreement, line of credit agreement, indenture, deed of trust, mortgage, guarantee, indemnification agreement, lease, contingent liability agreement, or any other instrument, document, or writing to which such corporation or any substantial portion of its assets is bound or affected. 7. Neither the execution and delivery of the Loan Agreement, the Bond Resolution, the Deed of Trust and the other Bond Documents to which the Partnership is a party, nor the performance by the Partnership of its obligations under any of such documents (i) constitutes a violation of any law, rule, regulation, judgment, order or decree to which the Partnership or any of its property is subject, (ii) constitutes a default under or a breach of the Agreement and Certificate of Limited Partnership of the Partnership, or (iii) to our knowledge, after making a reasonable inquiry, constitutes a default under, or a breach of, any contract, agreement, indenture, deed of trust, note, lease or other instrument to which the Partnership is a party or by which the Partnership or any of its property is bound. 8. To our knowledge, after making reasonable inquiry, there is no action, suit, proceeding, inquiry I1 Euless Industrial Development Authority Allied Lakewood Bank Allied Bank Irving November , 1984 Page 4 or investigation, pending or threatened, at law or in equity, before or by an judicial or administrative court or agency, against or affecting Guarantor or the Partnership or its general partners, in which an unfavorable decision, ruling or finding (i) materially and adversely would affect the validity or enforceability, against the Partnership, of the Loan Agreement, the Bond Resolution, the Deed of Trust or the other Bond Documents, or any transaction contemplated by the issuance or sale of the Bonds, or (ii) materially and adversely would affect the results of operations of the Partnership or Guarantor or the financial condition, property or business prospects of the Partnership or Guarantor. 9. No approval, consent or other order of any governmental authority or agency which has not already been obtained legally is required of the Partnership for the execution and delivery of the Loan Agreement, the Bond Resolution, the Deed of Trust and the other Bond Documents to which it is a party or for the performance of the obligations of the Partnership thereunder. 10. The Deed of Trust is in adequate and proper form to create a valid first lien on and security interest in the Mortgaged Property, (as such term is defined in the Deed of Trust) for the benefit of the owners of the Bonds, subject only to (1) "Permitted Encumbrances" (as such term is defined in the Deed of Trust) and (2) to encumbrances of record which have been revealed in a title commitment delivered to the Trustee prior to closing of the transactions contemplated by the Bond Documents, and no additional instruments of conveyance, assignment or transfer are necessary to effectuate the liens and security interest intended to be created by the Deed of Trust. 11. Based upon a search of the Uniform Commercial Code Records and Deed of Trust Records (as to fixture filings) of Tarrant County, Texas, and of the Uniform Commercial Code Records of the Secretary of State of Texas, there are no encumbrances of record in the applicable Uniform Commercial Code Records on those items of the Mortgaged Property (as defined in the Deed of Trust) which are subject to the Uniform Commercial Code other than Permitted Encumbrances (as defined in the Deed of Trust). The lien of the Trustee on such items has been validly perfected, and constitutes a Euless Industrial Development Authority Allied Lakewood Bank Allied Bank Irving November , 1984 Page 5 binding first lien as of the date hereof, subject to (1) the Developer having rights in such items (for which we have made no investigation); (2) Permitted Encumbrances with respect to the Mortgaged Property; (3) other encumbrances, including but not limited to purchase money security interests or tax liens, which as a matter of law have priority over the lien of the Trustee; (4) the continuing location of these items at the User's principal place of business, in Tarrant County, Texas; and (5) possession by the Trustee of any items in which perfection may occur by possession. 12. The transactions contemplated by Bond Documents are not usurious under the applicable laws of the State of Texas or the United States of America. This opinion is as of the date hereof, and we undertake no, and hereby disclaim any, obligation to advise you of any change in any matter set forth herein. Further this opinion is for the benefit of the above listed addressees and this opinion may not be relied upon in any manner, nor used, by any other person. Respectfully submitted,