05-07-12-Resolution-Industrial Development Corp Texas Pellets Project Series 2012 Bonds-06/18/2012RESOLUTION 05-07-2012
CERTIFICATE FOR RESOLUTION
We, the undersigned officers of the City Council of the City of Sanger, Texas, hereby certify as
follows:
1. That on the 18t1' day of June, 2012, the City Council of the City of Sanger, Texas (the
"Council") convened in a REGULAR MEETING at its regular meeting place at City Hall, 502 Elm
Street, Sanger, Texas$ the duly constituted officers and members of the Council being as follows:
Thomas Muir
Marjory Johnson
Gary Bilyeu
Russell Martin
Robert Patton
Scott Stephens
OFFICE
Mayor
Councilmember
Councilmember
Councilmember
Councilmember
Councilmember
and all of said persons were present, except the following: ,
thus constituting a quorum. Among other business considered at said meeting, the attached Resolution
entitled:
A RESOLUTION approving the adoption by the Sanger Texas Industrial Development
Corporation of "A RESOLUTION authorizing the issuance of "Sanger Texas Industrial
Development Corporation Industrial Development Revenue Bonds (Texas Pellets
Project), Series 2012'; approving and authorizing an Indenture of Trust, a Loan
Agreement, a Limited Offering Memorandum, a Tax Certificate and Agreement, and
Contracts of Purchase; authorizing the execution of documents and instruments necessary
or convenient to carry out the issuance of the Bonds; and other matters in connection
therewith"
was duly introduced for the consideration of said Council. 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: J
NOES: C
ABSTENTIONS: Q
2. That a true, full, and correct copy of the aforesaid 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 recorded in said Council's minutes of said Meeting; that the above and
foregoing paragraph is a true, full, and correct excerpt from said 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 the Council as indicated
therein; that each of the officers and members of the Council was duly and sufficiently notified officially
and personally, in advance, of the time, place and purpose of the aforesaid Meeting; that said Meeting was
conducted in accordance with all applicable laws, 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
{01879361.DOC / }
PLLC
400 Austin .4venue
ATTORNEYS AT LAW Suite 600
P.O. Box 1470
Waco, Texas 76703
254)755.4100
Faz 254 754-6331
May 24, 2012 offices in:
o Austin
fort Worth
® Harker Heights
Sanger Texas Industrial Development Corporation Temple
c/o Government Capital Securities Corporation a wa o
559 Silicon Drive, Suite 102
Southlake, T2XaS 76092 www.namanho Nell.com
Peter Leibold
Chief Executive Officer
Texas Pellets, Inc.
164 CR 1040
Woodville, Texas 75979
Re: Sanger Texas Industrial Development Corporation Industrial Development Revenue
Bonds (Texas Pellets Project), Series 2012 in the aggregate principal amount not to
exceed $200,000,000
Dear Sirs:
The purpose of this letter is to confirm with you our understanding with respect to legal
representation in connection with the above -referenced transaction in order for our firm to act as bond
counsel.
We have been asked to serve as Bond Counsel for the proposed Bonds (the "Bonds") to be issued
by the Sanger Texas Industrial Development Corporation (the "Corporation") in two or more series from
time to time, the proceeds of which would be loaned by the Corporation to Texas Pellets, Inc. (the
"Borrower") to be used to (i) finance the acquisition, construction, improvement, and equipment of a 65-
acre solid waste disposal and biomass pellet manufacturing facility located near Woodville, Tyler County,
Texas, (ii) finance the construction, improvement, and equipment of a five -silo biomass pellet storage
facility located at the Port of Port Arthur in Port Arthur, Jefferson County, Texas, and (iii) pay the cost of
issuance of the Bonds. Because the role of Bond Counsel in financings such as this is sometimes
misunderstood and may vary from one transaction or firm to another, we think it advisable to outline for
you here our understanding of our responsibilities and expectations as to payment of our fees.
Our principal responsibility as Bond Counsel is to provide an expert opinion, upon which the
bondholders and the Placement Agent may rely, as to the validity of Bonds, Any opinion regarding the
exemption of interest on the Bonds from federal income taxes will be given in reliance upon the opinion
of counsel to the Borrower. In addition, as Bond Counsel we will review the financing documents and
assume principal responsibility for drafting the documents for the Corporation such as resolutions,
notices, and closing papers.
{01880402.DOC / }
Established 1917
Sanger Texas Industrial Development Corporation
Texas Pellets, Inc.
May 24, 2012
Page 2
Before proceeding with this transaction, we want to be sure that you are clear on the following:
1. The Sanger Texas Industrial Development Corporation has engaged our firm to act as
bond counsel in this transaction. Naman Howell Smith & Lee, PLLC, will be representing solely the
Sanger Texas Industrial Development Corporation with regard to the above -referenced transaction as
Bond Counsel,
2. The Borrower will be responsible for payment of our fees and disbursements and
statements for services rendered will be sent directly to the Borrower. Naman Howell Smith & Lee,
PLLC, will receive compensation for its services as bond counsel, as agreed for an amount equal to
$120,000. Of this amount, $60,000 shall be due at the closing of the Series A Bonds and $60,000 shall be
due at the settlement of the forward bond purchase agreement for the Series B Bonds,
3. The Borrower will be responsible for the application fees of the Texas Bond Review
Board ($500.00 per application, per facility — expected to total $1,500.00), the examination fees of the
Texas Attorney General ($9,500.00 per series of bonds), the costs of publication of all notices (estimated
to be $750.00), and all other out-of-pocket costs of Naman Howell Smith & Lee, PLLC, with regard to
the Bonds. The Borrower may deposit such amounts to the trust fund of the firm.
4, We do not expect to give any opinion with respect to the Bon•ower's participation in the
financing or as to the status of title or the priority of any mortgage lien or security interest securing the
Bonds. As to these and other matters, we will be relying upon the opinion to be given by counsel to the
Borrower.
Lastly, each of our opinions as bond counsel will be executed and delivered by us in written form
on the date each series of the Bonds are closed or settled and will be based on facts and law existing as of
its date. Upon delivery of our opinions, our responsibilities as bond counsel will be concluded with
respect to legal and tax matters relating to the Bonds.
The State Bar of Texas investigates and prosecutes complaints of professional misconduct against
attorneys licensed in Texas. A brochure entitled Attorney Complaint Information is available at all of our
offices and is likewise available upon request. A client that has any questions about the State Bar's
disciplinary process should call the Office of the General Counsel of the State Bar of Texas at 1-800-932-
1900 (toll free).
If these arrangements are acceptable to you, please sign this letter and return it by email or fax as
soon as possible.
We look forward to working on this financing and if you have any questions regarding the
contents of this letter please do not hesitate to contact me.
Sincerely,
41
1(Gr/ Z 000Jt
Marshall T. White
{01880402.DOC / }
Sanger Texas Industrial Development Corporation
Texas Pellets, Inc.
May 24, 2012
Page 3
The foregoing arrangements are understood and accepted.
SANGER TEXAS INDUSTRIAL DEVELOPMENT CORPORATION
By:
Its:
{01880402.DOC / }
Sanger Texas Industrial Development Corporation
Texas Pellets, Inc.
May 24, 2012
Page 4
Confirmation of Borrower
As the Borrower with respect to the project referenced in the engagement letter to which this
consent is attached, Texas Pellets, Inc. hereby agrees and confirms the Borrower shall be obligated to pay
for the services rendered by Naman Howell Smith & Lee, PLLC, on behalf of the Sanger Texas Industrial
Development Corporation, as set forth in paragraph 2 of the attached engagement letter.
The Borrower acknowledges that payment for services rendered to Naman Howell Smith & Lee,
PLLC, in no way creates a professional responsibility between Naman Howell Smith & Lee, PLLC, and
the Borrower and Naman Howell Smith & Lee, PLLC, Is sole professional responsibility shall be to the
Sanger Texas Industrial Development Corporation,
TEXAS PELLETS, INC.
By:
Peter Leibold
Chief Executive Officer
{01880402.DOC / }
CERTIFICATE OF PUBLIC HEARING
I, the undersigned, hereby certify in connection with the issuance by the Sanger Texas Industrial
Development Corporation (the "Corporation") of its revenue bonds (the "Bonds") for the purpose of
loaning the proceeds of the Bonds to Texas Pellets, Inc. (the "Borrower") to finance the cost of
acquisition, construction, improvement, and equipment of (1) a 65-acre solid waste disposal and biomass
pellet manufacturing facility located at 164 County Road 1040, Woodville, Texas (the "Manufacturing
Facility") and (ii) a five -silo pellet storage facility located at 498A West Lakeshore Drive, Port Arthur,
Texas (the "Storage Facility" and, together with other financed facilities, the "Project"), among other
things, as follows:
1. I served as Hearing Officer for the City Council of the City of Sanger, Texas for the
purpose of conducting a public hearing on the Bonds and the use of the proceeds thereof to provide a loan
to the Borrower to be used to finance the costs of the Project.
2. Such hearing was, conducted commencing at 10:00 a.m. on June 14, 2012 at the City
Hall, 502 Elm Street, Sanger, Texas, which building and room were open to the public for purposes of the
hearing.
3. At the time of commencement of the hearing, comments, either orally or in writing, were
publicly requested on the Project, the Bonds, and the loan of the proceeds of the Bonds to the Borrower to
finance the costs of the Project.
4. At the hearing,
no persons presented comments orally ar• in writing.
[ ] the comments summarized in Attachment 1 were made orally by the persons
listed
therein.
[ ] the written comments attached hereto were presented.
5. No time limitations were imposed on any public comments.
IN WITNESS WHEREOF, I have hereunto set my hand this , 2012.
Mike Brice
Hearing Officer
{01896110.DOC / }
Terms of the Series A Bonds
Exhibits Page
,
Terms of the Series B Bonds
Exhibits Page
Series A Closing Transaction Documents
1. Phase I —Woodville
2. Phase I —Port Arthur
3. Phase II —Woodville
4. Phase II —Port Arthur
5. Fichtner Report
6. Woodville Real Estate Purchase Contract (GPTX/TPI)
7. Woodville Special Warranty Deed (GPTX/TPI)
8. Termination of NAPCO Option
9. Port Arthur Ground Lease
10. Site Plan —Port Arthur
11. Site Plan —Woodville
12. Title Commitment —Woodville
13. Title Commitment —Port Arthur
14. Lender's Title Policy —Woodville
15. Lender's Title Policy — Port Arthur
16. Closing Instruction Letter
17. Survey — Woodville
18. Survey — Port Arthur
19. Zoning Verification Letter —Woodville
20. Zoning Verification Letter — Port Arthur
21. EPC Contract
22. First Amendment to EPC Contract
23. Second Amendment to E.N. Contract
24. Construction Budget
25. Construction Monitor Agreement
26. Lien Waiver and Release from GPTX
27
28.
29
Lien Waiver and Release from Reynolds
Lien Waiver and Release from any other subcontractor
Issuer Resolution
Exhibits Page
30. TEFRA approval letters from Sanger City, Tyler County, and City of Port Arthur
31. Certificate of Reservation - 2012A Bonds
32. Certificate of Allocation- 2012A Bonds
33. Approving Opinion of Texas Attorney General - 2012A Bonds
34. Comptroller's Registration Certificate - 2012A Bonds
35. DTC Blanket Letter of Representations
36. Closing Memorandum
37. 2012A Bond
38. Continuing Disclosiue Agreement
39. Deed of Trust - Woodville
40. Deed of Trust -Port Arthur
41. Security Agreement
42. Indenture of Trust
43. Master Glossary of Terms
44. Loan Agreement
45. Note - 2012A Bonds
46. Continuing Disclosure Agreement
47. Borrower Assignment of Contracts
48. GPTX Assignment of Contracts
49. Consent Subordination and Attornment Agreement -GPTX
50. Consent, Subordination and Attormnent Agreement - Port Arthur Navigation District
51. Consent, Subordination and Attornment Agreement - NAPCO
5I Consent, Subordination and Attornrnent Agreement - German Pellets GmbH
53. Consent, Subordination and Attorimlent Agreement - Drax
54. UCC-1 Financing Statement(s)
55. Form 8038 and Evidence of Filing
56. Facilities License Agreement
57. GPTX Wood Supply Purchase Agreement
58. GPTX Pellets Purchase Agreement
59. NAPCO Wood Supply Agreement
60. Drax Pellet Sales Contract
61. German Pellets GmbH Guarantee of Pellet Sales Contract
62. Consent to Assignment of German Pellets Guarantee of Pellet Sales Contract
Exhibits Page
63. German Pellets GmbH Pellet Sales Contract
64. Insurance Certificates
Exhibits Page
Series B Closing Transaction Documents
1. C% i % a %e of Reservation — 2012B Bonds
2. Certiiicate of Allocation— 2012B Bonds
3. Approving Opinion of Texas Attorney General — 2012B Bonds
4. Comptroller's Registration Certificate — 2012B Bonds
5, Closing Memorandum
6, 2012B Bond
7. Note — 2012B Bonds
Exhibits Page
Borrower Documents
1. Loan Agreement
2. Series A Note
I Series B Note
4. EPC Contract
5. Drax Purchase Contract
6. GP Purchase Contract
7. Borrower Assignment of Contracts
8. License Agreement
9. GPTX Wood Products Purchase Agreement
10. GPTX Wood Supply Contract
11. Port Arthur Lease
Exhibits Page
We, the undersigned, President and Secretary of the Sanger Texas Industrial Development
Corporation (the "Issuer"), acting in our official capacity, hereby certify with respect to the Issuer's
$50,000,000 Industrial Development Revenue Bonds (Texas Pellets Project), Series 2012A (the
"Bonds"), as follows:
1. This certificate is being given pursuant to Section 2(d)(vi) of the Bond Purchase
Agreement, dated July 2012, entered into among Raymond James & Associates, Inc., as Underwriter,
the Issuer, and Texas Pellets, Inc., as borrower, in connection with the Bonds (the "Agreement").
Capitalized terms used herein and not defined have the meanings given such terms in the Agreement.
2. We certify that the representations and warranties of the Issuer contained in the
Agreement are true and correct in all material respects as of the Series A Closing Date and that
the Issuer has performed its obligations thereunder.
(01944239.DOC / }
July L—J, 2012
Sanger Texas Industrial Development Corporation
Sanger, Texas
Texas Pellets, Inc.
Woodville, Texas
Re: Sanger Texas Industrial Development Corporation Industrial Development Revenue
Bonds (Texas Pellets Project), Series 2012 A&B
Ladies and Gentlemen:
Raymond James &Associates, Inc. (the "Initial Purchaser") offers to enter into this
Bond Purchase Agreement (this "Agreement") with the Sanger Texas Industrial Development
Corporation (the "Issuer"), which, upon acceptance of this offer, will be binding upon the Issuer
and the Initial Purchaser. Terms not otherwise defined herein shall have the same meanings as
set forth in the Indenture (hereinafter defined).
This offer is made subject to your mutual acceptance of this Agreement on or before 3:00
pm Eastern time on the date hereof, and if not so accepted, will be subject to withdrawal by the
Initial Purchaser upon notice to the Issuer at any time prior to the acceptance hereof by the
Issuer.
Section 1. The Transaction.
(A) Upon the terms and conditions and in reliance upon the respective representations,
warranties, and covenants herein, the Initial Purchaser hereby agrees to purchase from the Issuer
and the Issuer hereby agrees to sell and deliver to the Initial Purchaser all, but not less than all, of
the above referenced bonds (the "Bonds") in the original principal amounts of $[ ]
for the 2012A Bonds (the "Series A Bonds"), and $[ ] for the 2012B Bonds (the
"Series B Bonds"), to be issued pursuant to an Indenture of Trust (the "Indenture"), between the
Issuer and Wells Fargo Bank, N.A., as trustee (the "Trustee") dated as of July 1, 2012. The
Bonds shall have the terms and features (including redemption) set forth in the Indenture and the
Limited Offering Memorandum, and will mature as set forth on Exhibit A and Exhibit B,
respectively, attached hereto. The purchase price of the Bonds will be equal to the [par amount /
premium/discount provisions as applicable] of the Bonds (the "Purchase Price").
(B) The Bonds will be payable solely from the Trust Estate in accordance with the
Indenture. The Series A Bonds are expected to be delivered on or before July [�, 2012. The
Series B Bonds are expected to be delivered on or before August r], 2012. The proceeds of the
Bonds will be loaned by the Issuer to the Borrower pursuant to a Loan Agreement dated as of
July 1, 2012 (the "Loan Agreement"),
-1-
(C) Pursuant to the Indenture, the Issuer will pledge and assign to the Trustee, for the
benefit of the owners of the Bonds, all the right, title, and interest of the Issuer in and to the Loan
Agreement, the Deeds of Trust, the Security Agreement, and the Assignments, and all amounts
payable thereunder to the Issuer (except for certain rights reserved under the Indenture), and the
moneys, securities, and funds and accounts to be held by the Trustee for the benefit of the Bonds
pursuant to the Indenture.
(D) The sale of the Bonds will be made without registration of the Bonds under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon exemption from,the
registration requirements of the Securities Act. The Bonds shall have the terms and features set
forth in the Indenture and the Limited Offering Memorandum. The purchase price of the Bonds
will be equal to the par amount of the Bonds (the "Purchase Price").
(E) The maturities and interest rates for the Series A Bonds and Series B Bonds are
set forth on Exhibit A and Exhibit B, respectively. Documents associated with the Project and
entered into by various participants in the Project contemporaneously with the issuance of the
Bonds (the "'Transaction Documents") are identified on Exhibit C4 and C-2 hereto (with
respect to the Series A Bonds and Series B Bonds respectively.
(F) At least one Business Day prior to the Closing, the Borrower, acting on behalf of
the Issuer, shall deliver to the Initial Purchaser such reasonable number of copies as the Initial
Purchaser may request of the final Limited Offering Memorandum (together with any
amendments or supplements thereto) relating to the Bonds with only such changes therein as
shall have been approved by the Initial Purchaser and the Issuer. Such Limited Offering
Memorandum, including all appendices thereto and financial and statistical information included
therein, and with such changes, supplements, and amendments thereto as are made in accordance
with this Section or are otherwise consented to in writing by the Initial Purchaser and the Issuer,
is herein called the "Limited Offering Memorandum." Delivery of such copies of the Limited
Offering Memorandum shall constitute the Issuer's authorization of the distribution of the
Limited Offering Memorandum, and the use of the information contained therein and the
documents referred to therein, in accordance with applicable law, in connection with the
placement of the Bonds by the Initial Purchaser.
Section 2. Conditions of Purchase and Series A Closing.
The Initial Purchaser's obligations to purchase the Series A Bonds are conditioned upon
the performance by the Issuer and the Borrower of their respective obligations to be performed
hereunder and the following additional conditions:
(A) the representations and warranties of the Issuer and the Borrower hereunder shall
be true, complete, and correct in all material respects on the date hereof and as of the Series A
Closing Date as if made on the Series A Closing Date;
(B) as of the Series A Closing Date, (i) the Transaction Documents listed in Exhibit
C-1 have been delivered to the hlitial Purchaser and the Trustee and shall be in full force and
effect and shall be in the forms previously furnished to the Initial Purchaser except for such
changes as may have been agreed to by the Initial Purchaser, and (ii) there shall be in full force
-2-
and effect such ordinances and resolutions as, in the opinion of Bond Counsel, shall be necessary
in connection with the transactions contemplated hereby;
(C) none of the following shall have occurred between the date hereof and the Series
A Closing Date:
(i) legislation shall have been enacted by the Congress of the United
States of America or the legislature of the State of Texas or shall have been
reported out of committee of either body or be pending in a committee of either
body, or shall have been recommended to the Congress of the United States of
America or otherwise endorsed for passage (by press release, other form of notice
or otherwise) by the President of the United States, the Treasury Department of
the United States, the Internal Revenue Service or the Chairman or ranking
minority member of the Committee on Finance of the United States Senate or the
Committee on Ways and Means of the United States House of Representatives, or
legislation shall have been proposed for consideration by either such Committee
or by the staff of the Joint Committee on Taxation of the Congress of the United
States, or legislation shall have been favorably reported for passage to either
House of the Congress of the United States by a Committee of such House to
which such legislation has been referred for consideration, or a decision shall
have been rendered by a court of the United States or of the State of Texas or the
United States Tax Court, or a ruling shall have been made or a regulation or
temporary regulation shall have been proposed or made or any other release or
announcement shall have been made by the Treasury Department of the United
States or any branch thereof or the Internal Revenue Service, with respect to
federal or the State of Texas taxation upon revenues or other income of the
general character to be derived by the Issuer or upon interest received on
obligations of the general character of the Bonds, which in the reasonable
judgment of the Initial Purchaser, materially adversely affects the market for the
Bonds;
(ii) there shall exist any event or condition that, in the reasonable
judgment of the Initial Purchaser, either' (1) makes untrue or incorrect in any
material respect as of such time any statement or information contained in the
Limited Offering Memorandum or (2) is not reflected in the Limited Offering
Memorandum but should be reflected therein in order to make the statements and
information contained therein not misleading;
(iii) in the reasonable judgment of the Initial Purchaser, the market
price or marketability of the Bonds or the ability to enforce contracts for the sale
of Bonds shall have been materially adversely affected by an amendment of or
supplement to the Limited Offering Memorandum, notwithstanding the Initial
Purchaser's approval of such amendment or supplement prior to its distribution;
(iv) there shall have occurred any outbreak or escalation of hostilities
or other national or international calamity or crisis, the effect of such outbreak,
escalation, calamity or crisis on the financial markets of the United States being
-3-
such as, in the reasonable judgment of the Initial Purchaser, materially adversely
affects the market for the Bonds;
(v) there shall be in force a general suspension of trading on Lite New
York Stock Exchange or minimum or maximum prices for trading shall have been
fixed and be in force, or maximum ranges for prices for securities shall have been
required and be in force on the New York Stock Exchange, whether by virtue of a
determination by that Exchange or by order of the Securities and Exchange
Commission or any other governmental authority having jurisdiction;
(vi) there shall be any material adverse change in the affairs of the
Issuer or the Borrower that, in the reasonable judgment of the Initial Purchaser,
affects materially and adversely the market price or the marketability of the
Bonds;
(vii) there shall be established any new material restrictions on
transactions in securities (including the imposition of any limitation on interest
rates) or the sale of the Bonds by the Issuer as contemplated by this Purchase
Agreement;
(viii) any legislation shall be enacted or proposed, any decision of any
federal or state court or any ruling or regulation (final, temporary or proposed) of
the Securities and Exchange Commission or other governmental agency shall
have been made or issued that would (1) make the Bonds or any securities of the
Issuer• or of any similar body subject to the registration requirements of the
Securities Act of 1933, as amended, or (2) require the qualification of an
indenture with respect to the Bonds or any such securities under the Trust
Indenture Act of 1939, as amended;
(D) at or prior to the Series A Closing Date, the Initial Purchaser shall have received
the following documents, in each case satisfactory in form and substance to the Initial Purchaser
and its counsel;
(i) the unqualified opinion of the Attorney General of Texas, dated as
of the Series A Closing Date;
i
(ii) the unqualified opinion[s], dated as of the Series A Closing Date,
of Naman Howell Smith & Lee PLLC as Bond and Issuer's Counsel;
(iii) the opinion of Orrick, Herrington &Sutcliffe LLP, counsel to the
Borrower, dated as of the Series A Closing Date;
(iv) the opinion of Winstead PC, as special Texas local counsel, dated
as of the Series A Closing Date;
(v) the opinion of Haynes &Boone, LLP, as Trustee's counsel, dated
as of the Series A Closing Date;
-4-
(vi) a certificate of Issuer, dated as of the Series A Closing Date, to the
effect that the representations and warranties of the Issuer contained herein are
true and correct in all material respects as of the Series A Closing Date and that
the Issuer has performed its obligations hereunder;
(vii) a certificate of Borrower, dated as %J the Series A Closing Date, to
the effect that the representations and warranties of the Borrower contained herein
are true and correct in all material respects as of the Series A Closing Date and
that the Borrower has performed its obligations hereunder and certifying (1) that
attached thereto is a copy of the charter, articles, or certificate of incorporation of
the Borrower, and all amendments thereto, certified as of a recent date by the
Secretary of State of the State of Texas, and that such documents have not been
amended since such date; (2) that attached thereto is a true and correct copy of the
Bylaws of the Borrower, as in effect on the date of such certification, and (3) that
attached thereto is a true and correct copy of the resolutions of the Board of
Directors of the Borrower authorizing the execution and delivery of all documents
to which it is a party and all transactions contemplated by the Limited Offering
Memorandum and this Agreement;
(viii) such additional legal opinions, consents, certificates, proceedings,
instruments and other documents as the Initial Purchaser, counsel for the Initial
Purchaser, or Bond Counsel may reasonably request to evidence compliance by
the Issuer, the Borrower with legal requirements, the truth and accuracy, as of the
Series A Closing Date, of the representations of the Issuer and the Borrower
herein and the due performance or satisfaction by the Issuer and the Borrower at
or prior to such time of all agreements then to be performed and all conditions
then to be satisfied by the Issuer and the Borrower.
If there shall be a failure to satisfy the conditions to the Initial Purchaser's obligations
contained in this Purchase Agreement or if the Initial Purchaser's obligations shall be terminated
for any reason permitted under this Purchase Agreement, this Purchase Agreement shall
terminate, and the Initial Purchaser, the Issuer and the Borrower shall have no further obligation
hereunder, except as provided in Sections 7, 8, and 10.
Section 3. Conditions of Purchase and Series B Closing.
The hiitial Purchaser's obligations to purchase the Series B Bonds are conditioned upon
the performance by the Issuer and the Borrower of their respective obligations to be performed
hereunder and the following additional conditions:
(A) the representations and warranties of the Issuer and the Borrower hereunder shall
be true, complete, and correct in all material respects on the date hereof and as of the Series B
Closing Date as if made on the Series B Closing Date;
(B) (i) the Series A Bonds shall have been delivered, (ii) all conditions to closing on
the Series A Bonds listed in Section 2 hereof shall have been fulfilled, and (iii) no material
-5-
amendments or alterations of the transaction documents listed in Exhibit C4 have been made
without the approval of the Initial Purchaser and the Trustee;
(C) as of the Series B Closing Date, (i) the Transaction Documents listed in Exhibit
C-2 have been delivered to the Initial Purchaser and the Trustee and shall be in full force and
effect and shall be in the forms previously furnished to the Initial Purchaser except for such
changes as may have been agreed to by the Initial Purchaser, and (ii) there shall be in full force
and effect such ordinances and resolutions as, in the opinion of Bond Counsel, shall be necessary
in comiection with the transactions contemplated hereby;
(D) none of the following shall have occurred between the Series A Closing Date and
the Series B Closing Date:
(i) legislation shall have been enacted by the Congress of the United States of
America or the legislature of the State of Texas or shall have been
reported out of committee of either body or be pending in a committee of
eitlier body, or shall have been recommended to the Congress of the
United States of America or otherwise endorsed for passage (by press
release, other form of notice or otherwise) by the President of the United
States, the Treasury Department of the United States, the Internal Revenue
Service or the Chairman or ranking minority member of the Committee on
Finance of the United States Senate or the Committee on Ways and Means
of the United States House of Representatives, or legislation shall have
been proposed for consideration by either such Committee or by the staff
of the Joint Committee on Taxation of the Congress of the United States,
or legislation shall have been favorably reported for passage to either
House of the Congress of the United States by a Committee of such House
to which such legislation has been referred for consideration, or a decision
shall have been rendered by a court of the United States or of the State of
Texas or the United States Tax Court, or a ruling shall have been made or
a regulation or temporary regulation shall have been proposed or made or
any other release or announcement shall have been made by the Treasury
Department of the United States or any branch thereof or the Internal
Revenue Service, with respect to federal or the State of Texas taxation
upon revenues or other income of the general character to be derived by
the Issuer or upon interest received on obligations of the general character
of the Bonds, which in the reasonable judgment of the Initial Purchaser,
materially adversely affects the market for the Bonds;
(ii) there shall exist any event or condition that, in the reasonable judgment of
the Initial Purchaser, either (1) makes untrue or incorrect in any material
respect as of such time any statement or information contained in the
Limited Offering Memorandum or (2) is not reflected in the Limited
Offering Memorandum but should be reflected therein in order to make
the statements and information contained therein not misleading;
-6-
(iii) there shall be established any new material restrictions on transactions in
securities (including the imposition of any limitation on interest rates) or
the sale of the Bonds by the Issuer as contemplated by this Agreement;
(iv) any legislation shall be enacted or proposed, any decision of any federal or
state court or any ruling or regulation (final, temporary or proposed) of the
Securities and Exchange Commission or other governmental agency shall
have been made or issued that would (1) make the Bonds or any securities
of the Issuer or of any similar body subject to the registration requirements
of the Securities Act of 1933, as amended, or (2) require the qualification
of an indenture with respect to the Bonds or any such securities under the
Trust Indenture Act of 1939, as amended;
(E) at or prior to the Series B Closing Date, the Initial Purchaser shall have received
the following documents, in each case satisfactory in form and substance to the Initial Purchaser
and its counsel:
(i) the unqualified opinion of the Attorney General of Texas, dated as of the
Series B Closing Date;
(ii) the unqualified opinion[s], dated as of the Series B Closing Date, of
Naman Howell Smith & Lee PLLC as Bond and Issuer's Counsel;
(iii) the opinion of Oiuick, Herrington &Sutcliffe LLP, counsel to the
Borrower, dated as of the Series B Closing Date;
(iv) the opinion of Winstead PC, as special Texas local counsel, dated as of the
Series B Closing Date;
(v) the opinion of Haynes &Boone, LLP, as Trustee's counsel, dated as of the
Series B Closing Date;
(vi) a certificate of Issuer, dated as of the Series B Closing Date, to the effect
tI at the representations and warranties of the Issuer contained in the
certificate of Issuer delivered in connection with the issuance of the Series
A Bonds are true and correct as of the Series B Closing Date;
(vii) a certificate of Borrower, dated as of the Series B Closing Date, to the
effect that the representations and warranties of the Borrower contained in
the certificate of Borrower delivered in connection with the issuance of the
Series A Bonds are true and correct as of the Series B Closing Date;
(viii) such additional legal opinions, consents, certificates, proceedings,
instruments and other documents as the Initial Purchaser, counsel for the
Initial Purchaser, or Bond Counsel may reasonably request to evidence
compliance by the Issuer and the Borrower with legal requirements, the
truth and accuracy, as of the Series B Closing Date, of the representations
of the Issuer and the Borrower herein and the due performance or
-7-
satisfaction by the Issuer and the Borrower at or prior to such time of all
agreements then to be performed and all conditions then to be satisfied by
the Issuer and the Borrower,
If there shall be a failure to satisfy the conditions to the Initial Purchaser's obligations
contained in this Agreement or if the Initial Purchaser's obligations shall be terminated for any
reason permitted under this Agreement, this Agreement shall terminate, and the Initial Purchaser,
the Issuer, and the Borrower shall have no further obligation hereunder, except as provided in
Sections 7. 8. and 10.
(A) On July �], 2012, or such other date as mutually agreed to by the parties hereto
(the "Series A Closing Date"), the Transaction Documents will be delivered to the respective
parties thereto and the Issuer will deliver, or cause to be delivered, the Series A Bonds, to the
Trustee, as one or more certificates, duly executed by the Issuer, and the Trustee will accept such
delivery. The Initial Purchaser will pay for the Bonds by delivering to the Trustee a wire transfer
in federal fields in the amount of $[ ], which is equal to the aggregate par amount of
the Bonds less the hiitial Purchaser's Fee and DTC registration fees. Upon receipt by the Trustee
of both the purchase price for the Series A Bonds and all Transaction Documents, the Trustee
will register and authenticate the Series A Bonds and deliver them to the Initial Purchaser and
deliver fiends to the Issuer.
(B) On August [�, 2012, or such other date as mutually agreed to by the parties
hereto (the "Series B Closing Date"), the Issuer will deliver, or cause to be delivered, the Series
B Bonds, to the Trustee, as one or more certificates, duly executed by the Issuer, and the Trustee
will accept such delivery. The Initial Purchaser will pay for the Bonds by delivering to the
Trustee a wire transfer in federal finds in the amount of $[ ], which is equal to the
aggregate par amount of the Bonds less the Initial Purchaser's Fee, and DTC registration fees.
Upon receipt by the Trustee of both the purchase price for the Series B Bonds, the Trustee will
register and authenticate the Series B Bonds and deliver them to the Initial Purchaser and deliver
Funds to the Issuer.
(C) The activities relating to the final execution and delivery of the Bonds and
payment therefore and the delivery of the Transaction Documents shall occur at the offices of
Winstead PC in Austin, Texas, or such other location as is mutually acceptable. Such payment
and delivery is herein called the "Series A Closing" or the "Series B Closing," as applicable
(and as each may be referred to generally, a "Closing"), and the date of each Closing is herein
called the "Closing Date." Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligations of the Initial
Purchaser hereunder in conjunction with the conditions of Section 2 herein, unless the Issuer and
the Initial Purchaser shall agree in writing to extend any Closing Date.
(D) The Bonds shall be delivered in definitive form, bearing proper CUSIP numbers,
duly executed on the Issuer's behalf and authenticated by the Trustee under the Indenture in fully
registered form in minimum denominations of $100,000, and in integral multiples of $5,000 in
excess thereof, registered in the name of Cede & Co. as nominee for the Depository Trust
-8-
Company ("ITC"), in the form and otherwise as hereinafter described, together with the other
documents hereinafter mentioned, and, subject to the terms and conditions hereof, the Initial
Purchaser will accept such delivery and pay the purchase price of the Bonds as set forth herein.
The Trustee, on behalf of the Issuer, will retain the Bonds in book -entry form pursuant to the
FAST procedures of DTC for the benefit of the Initial Purchaser. It is anticipated that CUSIP
identification numbers (to be obtained by the Initial Purchaser) will be assigned to the Bonds, but
neither the failure to obtain such numbers nor any error with respect thereto shall constitute a
cause for failure or refusal by the Initial Purchaser to accept delivery of the Bonds in accordance
with the terms of this Agreement.
Section 5. Representations, 'Warranties and Covenants of the Issuer.
The Issuer makes the following representations, warranties and covenants, all of which
shall survive delivery of the Bonds, and agrees with the Purchasers that:
(A) The Issuer is and will be at the Closing Date an economic development
corporation created by the city of Sanger, Texas (the "City") under the laws of the State of Texas
and existing under the Constitution and laws of the State of Texas with the power and authority
under the constitution and laws of the State of Texas to issue the Bonds and to execute, deliver
and perform its obligations hereunder and under the Indenture and the Loan Agreement, to
pledge the property described in the Indenture and to be pledged thereby in the manner and to the
extent therein set forth; all actions required for the issuance of the Bonds and the execution and
delivery of, and the performance of its obligations under, this Agreement and under the Loan
Agreement, the Indenture and the Bonds have been, or as of the Closing Date will have been,
duly and. effectively taken; this Agreement has been and the Loan Agreement and the Indenture
will, as of the Closing Date, have been duly executed, issued and delivered and, assuming the
due authorization, execution and delivery by the other parties thereto are, or will, as of the
Closing Date, be valid, binding and enforceable agreements of the Issuer, except as the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally; the Limited Offering Memorandum will, as of the
Closing Date, have been duly delivered and its use by the Initial Purchaser in connection with the
sale of the Bonds shall have been authorized; and the Bonds will, as of the Closing Date, have
been duly authorized, executed, issued and delivered, and will constitute, legal, valid and binding
limited obligations of the Issuer, enforceable in accordance with their respective terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.
(B) There is no action, suit, proceeding, inquiry or investigation at law or in equity or
before or by any court, public board or body pending, or, to the best knowledge of the Issuer,
threatened against or affecting the Issuer wherein an unfavorable decision, ruling or finding
would adversely affect (i) the transactions contemplated by, or the validity or enforceability of,
the Bonds, the Indenture, the Loan Agreement or this Agreement, or (ii) the tax-exempt status of
interest on the Bonds.
(C) The execution and delivery by the Issuer of the Bonds, the Indenture, the Loan
Agreement, and this Agreement and the performance by the Issuer of its obligations thereunder
(i) do not violate applicable provisions of the constitution, statutory laws or regulations of the
S�
State of Texas, (it) do not violate its activating resolution or bylaws, (iii) do not breach or result
in a default under any other agreement to which it is a party, and (iv) do not violate the terms of
any judicial or administrative judgment, order, decree or arbitral decision that names the Issuer
and is specifically directed to it or its properties, and no approval or other action by, or filing or
registration with, any governmental authority or agency is required in connection therewith that
has not been obtained or accomplished or will not be obtained or accomplished by the Closing
Date.
(D) The information relating to the Issuer contained in the Limited Offering
Memorandum or incorporated by reference in the Limited Offering Memorandum or otherwise
supplied in writing by the Issuer for inclusion therein does not contain any untrue statement of a
material fact and does not omit to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not misleading.
(E) Each of the representations of the Issuer contained in the Loan Agreement and the
Indenture are and will, as of the Closing Date, be true and correct in all material respects and are
hereby made to the Initial Purchaser as if set forth herein.
(F) The Issuer will not take or omit to take any action, which action or omission
might in any way result in the inclusion of the interest on the Bonds in gross income of the
owners thereof for federal income tax purposes,
(G) Any certificate signed by any officer or official of the Issuer and delivered to the
Initial Purchaser shall be deemed a representation and warranty by the Issuer as to the statements
made therein.
(H) The Issuer is not in default in the payment of the principal of or interest on any of
its other indebtedness for borrowed money or under any instrument under or subject to which
any indebtedness has been incurred and the Issuer has no knowledge that any event has occurred
or is continuing that, with the lapse of time or the giving of notice, or both, would constitute an
event of default under any such indebtedness or instrument.
Section 6. Representations, Warranties and Covenants of the Borrower.
The Borrower makes the following representations, warranties and covenants, all of
which shall survive delivery of the Bonds, and agrees with the Purchasers that:
(A) The Borrower is and will be on the Closing Date a duly organized and validly
existing corporation in good standing under the laws of the State of Delaware and has full power
and authority to own its properties and operate its business, as presently conducted; the Borrower
has taken all necessary corporate action to authorize, execute and deliver this Agreement, and the
Borrower has, or as of the Closing Date will have, taken all necessary corporate action to
authorize, execute and deliver the documents listed in Exhibit D attached hereto (collectively, the
"Borrower Documents"); the Borrower has approved the terms of the Indenture and has duly
approved the Limited Offering Memorandum and the use thereof by the Initial Purchaser in
connection with the sale and remarketing of the Bonds; and this Agreement has been, and the
Alter Borrower Documents, as of the Closing Date, will have been duly executed and delivered
by the Borrower, and will constitute the legal, valid and binding obligations of the Borrower,
-10-
enforceable against the Borrower in accordance with their respective terms except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and the application of
general principles of equity.
(B) There is no action, suit, proceeding, inquiry or investigation at law or in equity or
before or by any court, public board or body pending, or, to the best knowledge of the Borrower,
threatened against or affecting the Borrower wherein an unfavorable decision, ruling or finding
would have a material adverse effect on the financial condition of the Borrower or would
adversely affect (1) the transactions contemplated by, or the validity or enforceability of, the
Borrower Documents, the Bonds, the Indenture or the Limited Offering Memorandum or (ii) the
tax-exempt status of interest on the Bonds.
(C) The execution and delivery by the Borrower of this Agreement and the other
Borrower Documents and the performance by the Borrower of its obligations thereunder are
within the corporate powers of the Borrower and (i) do not violate provisions of statutory laws or
regulations applicable to the Borrower, (ii) do not violate its articles of incorporation or bylaws,
(iii) do not breach or result in a default under any other agreement to which it is a party, and (iv)
Jo not violate the terms of any judicial or administrative judgment, order, decree or arbitral
decision that names the Borrower and is specifically directed to it or its properties, the breach,
default or violation of which could have a material adverse effect on the business or financial
condition of the Borrower, and no approval or other action by, or filing or registration with, any
governmental authority or agency is required in connection therewith that has not been obtained
or accomplished or will not be obtained or accomplished by the Closing Date.
(D) The information relating to the Borrower and the Project contained or
incorporated by reference in the Limited Offering Memorandum or otherwise supplied by the
Borrower in writing for inclusion therein does not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
(E) Each of the Borrower's representations and warranties contained in the Loan
Agreement are and will, as of the Closing Date, be true and correct in all material respects and
are hereby made to the Initial Purchaser as if set forth herein.
(F) The Borrower will not take or omit to take any action, which action or omission
might in any way result in the inclusion of interest on the Bonds in gross income of the owners
thereof for federal income tax purposes.
(G) Any certificate signed by any officer of the Borrower and delivered to the Initial
Purchaser shall be deemed a representation and warranty by the Borrower as to the statements
made therein.
(H) The Borrower is not in default in the payment of the principal of or interest on any
other of its indebtedness for borrowed money or under any instrument under or subject to which
any indebtedness has been incurred and no event has occurred and is continuing that, with the
-11-
lapse of time or the giving of notice or both, would constitute an event of default under any such
instrument.
s•�ii�i��� I �� I UW=
(A) The Borrower agrees to pay at Closing all fees and expenses associated with the
issuance of the Bonds, including, but not limited to, (1) the Initial Purchaser's fee (ii) all
reasonable out-of-pocket costs and expenses of the Initial Purchaser incurred in connection with
the issuance and sale of the Bonds and the preparation, execution, delivery and filing of the
Transaction Documents and any other documents contemplated to be delivered in connection
herewith or therewith, (iii) all fees and expenses incurred in connection with the preparation,
execution, delivery and filing of the Transaction Documents and any other document that may be
delivered in connection herewith or therewith, including, but not limited to, the fees and
expenses of Bond Counsel, counsel for the Initial Purchaser, Initial Purchaser, Borrower, and
Issuer, and the fees and expenses of the Issuer and the Trustee, the cost of printing and delivery
of the Bonds and the Limited Offering Memorandum, and rating agency fees, if any.
(B) Such costs, fees, and expenses (except the fees of the Initial Purchaser) shall be
paid by the Borrower whether or not the Bonds are issued or sold. All such fees and expenses, to
the extent they are identifiable and billed, shall be paid on the Closing Date, and the remainder
shall be paid promptly upon receipt of statements therefor. The obligations of the Borrower
under this Section shall survive the issuance and maturity of the Bonds and any termination of
this Agreement.
Section �. Indemnity.
(A) The Borrower agrees to indemnify and hold harmless the Initial Purchaser, the
City, and the Issuer and any member, officer, director, employee or agent of the Initial Purchaser
or the Issuer and each person, if any, who controls the Initial Purchaser, the City or the Issuer
within the meaning of Section 15 of the Securities Act of 1933, as amended (the "Securities
Act"), or Section 20 of the Securities Exchange Act of 1934 (the "1934 Act"), as amended
(collectively, the "Indemnified Parties"), against any and all losses, claims, damages, liabilities
or expenses whatsoever (collectively, "Loss") caused by, or which arise out of or relate to, any
breach (or alleged breach) by the Borrower of its representations, warranties or covenants set
forth herein, or any untrue statement or misleading statement of a material fact contained in the
Limited Offering Memorandum or incorporated therein by reference or supplied by the Borrower
in writing in connection with the sale of the Bonds in accordance with the terms hereof
(collectively, the "Borrower Disclosure Materials"), or which arise out of or relate to, any
omission or alleged omission from such Borrower Disclosure Materials of any material fact
required to be stated therein or necessary in order to make the statements contained therein, in
lI
ght of the circumstances under which they were made, not misleading.
(B) In case any action (including any governmental investigation) shall be brought
against one or snore of the Indemnified Parties in respect of which indemnity may be sought as
provided herein, such hndemnified Party or Indemnified Parties shall promptly notify the person
or persons from whom indemnity is sought (each, an "Indemnifying Party") in writing and such
person or persons shall promptly assume the defense thereof, including the employment of
-12-
counsel reasonably satisfactory to such Indemnified Party or Indemnified Parties, and payment
of all expenses; but the omission to notify an Indemnifying Party as provided herein shall not
relieve such Indemnifying Party from any liability that it may have (i) under the preceding
paragraph of this Section, so long as such Indemnifying Party is given the reasonable opportunity
to defend such claim and (ii) otherwise than under this Section. Anyone or more of the
Indemnified Parties shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Indemnified Parties unless (1) the employment of such
counsel has been specifically authorized in writing by the Indemnifying Party or Indemnifying
Parties, or (ii) the named parties to any such action (including any impleaded parties) include
both one or more Indemnifying Parties and such Indemnified Party or Indemnified Parties and
representation of both such Indemnifying Party or Indemnifying Parties and such Indemnified
Party or Indemnified Parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. An Indemnifying Party shall not be liable for any
settlement of any such action effected without its consent, but if settled with such consent or if
there is a final judgment in any such action with or without consent, such Indemnifying Party
agrees to indemnify and hold harmless the Indemnified Parties from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Party shall, without the
consent of each Indemnified Party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim in which.
indemnification or contribution may be sought hereunder (whether or not such Indemnified Party
is an actual or potential party to such action or claim) unless such settlement, compromise or
judgment (1) includes an unconditional release of such Indemnified Party from all liability arising
out of such action or claim and (ii) does not include a statement as to or admission of fault,
culpability or a failure to act, by or on behalf of such Indemnified Party.
(C) If the indemnification provided for in this Section is unavailable to or insufficient
to hold harmless an Indemnified Party in respect of any Loss as provided in this Section, then
each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified
Party as a result of such Loss in such proportion as is appropriate to reflect the relative benefits
received by the Borrower on the one hand and the Initial Purchaser on the other from the offering
of the Bonds. If, However, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnification provided for in this Section is unavailable
on account of the Indemnified Party having failed to give the notice required in the preceding
paragraph, then each Indemnifying Party shall contribute to such amount paid or payable by such
Indemnified Party in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Borrower on the one hand and the Initial Purchaser on the other
in comiection with the statements or omissions which resulted in such Loss, as well as any other
relevant equitable considerations. The relative benefits received by the Borrower on the one hand
and the Initial Purchaser on the other shall be deemed to be in the same proportion as the total
net proceeds from the sale of the Bonds received by the Borrower (which is the aggregate
purchase price set forth in Section 1) bear to the Fee received by the Initial Purchaser with
respect to the Bonds (referred to in Section 1). The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information supplied by the
Borrower on the one hand or the Initial Purchaser on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or
-13-
omission. The Borrower and the Initial Purchaser agree that it would not be just and equitable if
contributions pursuant to this paragraph were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations referred to
above in this paragraph. The amount paid or payable by an Indemnified Party as a result of a
Loss which is subject to this paragraph shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating or defending the
action or claim that resulted in such Loss. Notwithstanding the provisions of this paragraph, the
Initial Purchaser shall not be required to contribute any amount in excess of the amount by which
the total price at which the Bonds were offered to the public exceeds the amount of any damages
which the Initial Purchaser has otherwise been required to pay by reason of such untrue or -
alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section I I (f) of the Securities Act) shall be entitled to
indemnification or contribution from any person who was not guilty of such fraudulent
misrepresentation.
(D) The obligations under this Section shall survive the issuance and the maturity of
the Bonds and any termination of this Agreement. The obligations under this Section are in
addition to any other liabilities that the parties may otherwise have.
Section 9. Notices.
(A) All notices, demands, and form actions hereunder shall be in writing and mailed,
facsimiled, or delivered to:
Issuer:
Attention:
Borrower:
Attention:
Initial Purchaser:
Attention:
(A) This Agreement may be amended from time to time only by an instrument in
writing executed by all the parties hereto.
(B) The headings contained herein are for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
-14-
(C) Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating any other provision hereof, and any such prohibition or
nenforceability in any jurisdiction shall not invalidate or render unenforceable such provision i
un
any other jurisdiction
(D) This Agreement may be signed in any number of counterparts, each of which
shall be an original, and by the parties hereto on separate counterparts, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
(E) This Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns, except that no party hereto may assign any of
its rights or obligations hereunder without the consent of the other parties.
(F) The agreements, representations, warranties and covenants set forth in this
Agreement will remain in frill force and effect, and will survive delivery of and payment for the
Bonds, the maturity of the Bonds and any termination of this Agreement.
(G) This Agreement shall become effective upon the execution of the acceptance
hereof by the parties hereto,
-1.5-
$50,000,000 July _, 2012
TEXAS PELLETS, INC. (the "Borrower") acknowledge themselves indebted to, and for value
received hereby promise to pay to the order of, the SANGER TEXAS INDUSTRIAL
DEVELOPMENT CORPORATION (the "Issuer") and its successors and assigns, the principal sum of
Fifty Million and 00/100 dollars ($50,000,000) and to pay interest on the unpaid principal amount hereof
from the date of this Note calculated on the same basis as interest is calculated on the Bonds (as
hereinafter defined) and the purchase price of the Bonds tendered or deemed tendered for purchase and
not remarketed. The unpaid principal amount hereof shall be equal to the outstanding aggregate principal
amount of the Bonds.
This Note is issued to evidence the obligation of the Borrower pursuant to, and shall be governed
by and construed in accordance with, the terms and conditions of the Loan Agreement, dated as of July 1,
2012, by and between the Borrower and the Issuer (the "Loan Agreement") for the repayment of the loan
in the amount of $50,000,000 made by the Issuer to the Borrower thereunder from the proceeds of the
Issuer's $50,000,000 Industrial Development Revenue Bonds (Texas Pellets Project) Series 2012A (the
"Bonds") and the payment of interest thereon, including provision for repayment of the loan in certain
cases. All capitalized words and terms not defined herein shall have the respective meanings and be
construed herein as provided in the Loan Agreement.
The Issuer has assigned the Loan Agreement (together with this Note) to the Trustee pursuant to
the Indenture, reserving certain of its rights thereunder. Such assignment is made as security for the
payment of the Bonds.
This Note is entitled to all of the benefits and is subject to all of the provisions of the Loan
Agreement, which provisions are hereby incorporated herein by reference thereto including provisions
relating to credits on payments due under the Loan Agreement, which shall also become credits under this
Note. Subject to the provisions hereof, the obligations of the Borrower to make or cause to be made the
payments required hereunder shall be absolute and unconditional without defense or set-off as more fully
set forth in the Loan Agreement.
This Note is subject to prepayment in whole or in part as provided in the Loan Agreement.
If an "Event of Default" occurs under the Loan Agreement, the principal of this Note may be
declared due and payable in the manner and with the effect provided in the Loan Agreement.
Whenever payment or provision thereof has been made in respect of the principal of, premium, if
any, and interest on all Bonds in accordance with the Loan Agreement and all other amounts due under
the Loan Agreement, this Note shall be deemed paid in full and shall be canceled and returned to the
Borrower.
All payments of principal, premium, if any, purchase price and interest shall be made to the
Trustee at its principal office in Dallas, Texas in such coin or currency of the United States of America as
at the time of payment shall be legal tender for the payment of public and private debts. All payments
shall be in the full amount required hereunder unless and to the extent the Borrower is entitled to a credit
under the Loan Agreement or the hndenture.
Payment of the redemption price of any of the Bonds pursuant to the provisions for redemption in
the liidenture shall constitute payment of principal, or any portion thereof, any premium thereon and
accrued interest thereon due on this Note. Any payment of interest or principal on the Bonds pursuant to
the Loan Agreement shall constitute a corresponding interest or principal payment on this Note.
{01924286.DOCX / }
In case the Trustee or the Issuer shall have proceeded to enforce its rights under this Note, the
Loan Agreement and/or the Indenture and such proceedings shall have been discontinued or abandoned
for any reason or shall have been determined adversely to the Trustee or the Issuer or in the case of any
waiver of an event of default or any rescission of any declaration of acceleration, then and in every case
the Borrower and the Trustee or the Issuer shall be restored respectively to their respective positions and
rights hereunder, and all rights, remedies and powers of the Borrower and the Trustee or the Issuer shall
continue as though no such proceedings had been taken.
In case there shall be pending proceedings for the bankruptcy or for the reorganization of the
Borrower under the federal bankruptcy laws or any other applicable law, or in case a receiver or trustee
shall have been appointed for the property of the Borrower or in the case of any other similar judicial
proceedings relating to the Borrower, or to the creditors or property of the Borrower, the Trustee shall be
entitled and empowered, by intervention in such proceedings or otherwise, to file and provide a claim or
claims for the amounts owing and unpaid in respect of this Note and, in case of any judicial proceedings
relative to the Borrower, its creditors or its property, and to collect and receive any moneys or other
property payable or deliverable on any such claims, and to distribute the same after the deduction of its
charges and expenses; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Trustee, and to pay to the Trustee any amount due it for
compensation and expenses, including counsel fees incurred by it up to the date of such distribution.
This Note shall be governed by the laws of the State of Texas.
THE UNDERSIGNED AND ALL ENDORSERS, SURETIES AND GUARANTORS HEREOF,
JOINTLY, SEVERALLY AND INDIVIDUALLY WAIVE PRESENTMENT, DEMAND FOR
PAYMENT, NOTICE OF DISHONOR, NOTICE OF PROTEST AND PROTEST AND ALL OTHER
NOTICES AND DEMANDS IN CONNECTION WITH THE DELIVERY, ACCEPTANCE,
PAYMENT, PERFORMANCE, DEFAULT, ENDORSEMENT OR GUARANTEE OF THIS NOTE,
AND HEREBY AUTHORIZE THE HOLDER, WITHOUT NOTICE, TO GRANT EXTENSIONS IN
THE TIME OF PAYMENT HEREOF OR CHANGES IN THE RATE OF INTEREST ON ANY
MONIES OWING ON THIS NOTE.
Notwithstanding any provision to the contrary contained in this Note or in any of the other
Borrower Documents, it is expressly provided that in no case or event shall the aggregate of (a) all
interest on the unpaid balance of this Note, accrued or paid from the date hereof and (b) the aggregate of
any other amounts accrued or paid pursuant to this Note or any of the other Borrower Documents, which
under applicable laws are or may be deemed to constitute interest upon this Note or any other
indebtedness due hereunder or under the other Borrower Documents (the "Debt") from the date hereof,
ever exceed the maximum rate of interest which could lawfully be contracted for, charged or received on
the unpaid principal balance of the Debt. In this connection, it is expressly stipulated and agreed that it is
the intent of the Borrower, the Issuer, and the Trustee to contract in strict compliance with the applicable
usury laws of the State of Texas and of the United States (whichever permit the higher rate of interest)
from time to time in effect. In furtherance thereof, none of the terms of this Note or any of the other
Borrower Documents shall ever be construed to create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess of the Ceiling Rate (as defined in the Loan
Agreement). The Borrower or other Persons now or hereafter becoming liable for payment of the Debt
shall never be liable for interest in excess of the Ceiling Rate. If under any circumstances the aggregate
amounts paid on the Debt include amounts which by law are deemed interest which would exceed the
Ceiling Rate, the Borrower stipulates that such amounts will be deemed to have been paid as a result of an
error on the part of the Borrower, the Issuer, and the Trustee, and the Person receiving such excess
payment shall promptly, upon discovery of such error or upon notice thereof from the Person making
such payment, refund the amount of such excess or, at the Trustee's option, credit such excess against the
{01924286.DOCX / }
unpaid principal balance of this Note. In addition, all sums paid or agreed to be paid to the holder or
holders of the Debt for the use, forbearance, or detention of the Debt shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the full term of the Debt. The
provisions of this paragraph shall control all agreements, whether now or hereafter existing and whether
written or oral, among the Borrower, the Issuer, and the Trustee.
{01924286.DOCX / }
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed as of the date set
forth above.
TEXAS PELLETS, INC.
Name:
{01924286.DOCX / }
DATED as of July _, 2012.
BANGER TEXAS INDUSTRIAL DEVELOPMENT
CORPORATION
Attest:
Secretary
{01944239.DOC / } ISSUER CLOSING CERTIFICATE
Sanger Texas Industrial Development Corporation
Revenue Bonds (Texas Pellets Project), Series 2012A