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HomeMy WebLinkAboutRES 82-445 .e (b) . RESOLUTION OF THE CITY COUNCIL APPROVING THE ISSUANCE OF A NOTE BY THE BEAUMONT INDUSTRIAL DEVELOPMENT COR- PORATION TO FINANCE A PROJECT FOR JOHN Q. HAMMONS WHEREAS, by ordinance the City Council (the "Governing Body") of the City of Beaumont, Texas (the "Unit" ) , authorized and ap- proved the creation of the Beaumont Industrial Development Corpora- tion (the "Issuer" ) as a nonprofit industrial development corporation under the provisions of the Development Corporation Act of 1979, Article 5190 . 6 , Vernon ' s Annotated Texas Civil Statutes, as amended (the "Act") ; and WHEREAS, by Resolution adopted on August 24 , 1982, the Governing Body approved a resolution authorizing the issuance of industrial development revenue bonds by the Issuer to finance the cost of facilities (the "Project") for John Q. Hammons (the "User"' ) , which Project was described in said Resolution; and WHEREAS , the Governing Body found and determined in said Resolution, and now hereby confirms such findings and determina- tions, that the issuance of the Note (as hereinafter defined) to finance the Project will accomplish the specific public purpose for which the Issuer was created; and WHEREAS, in accordance with the terms of such Resolution of the Issuer, the Issuer now desires to sell and provide for the issuance and sale of its $9 ,800 , 000 Industrial Development Revenue Note, Series 1982 (Holiday Inn Project) (the "Note") , by adopting a Resolution substantially in the form attached hereto as Exhibit "A" (the "Issuer Resolution" ) ; and WHEREAS, the Act provides that the Governing Body must, by written resolution adopted no more than sixty (60) days prior to the date of the delivery of the Note, specifically approve the resolution of the Issuer providing for the issuance of the Note; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CI`.PY OF BEAUMONT, TEXAS , THAT: Section 1 . The proposed Issuer Resolution providing for the sale and issuance of the Note, substantially in the form attached hereto as Exhibit "A" , is hereby specifically approved. Section 2 . The Governing Body hereby finds and determines that the issuance of the Note to finance the Project will accom- plish the specific public purpose for which the Issuer was created. Section 3 . The Governing Body has considered evidence of the posting of notice of this meeting and officially finds, determines, recites and declares that a sufficient written notice of the date,, hour and place of this meeting and of the subject of this Resolution was posted on a bulletin board at a place convenient to the public in the City Hall of the Unit for at least 72 hours preceding the convening of such meeting; such place of posting was readily acces- sible to the general public at all times from such time of posting until the convening of such meeting; and such meeting was open to the public as required by law at all times during which the Resolution and the subject matter thereof were discussed, considered and formally acted upon, all as required by the Open Meetings Law, Article 6252-17 , Vernon ' s Annotated Texas Civil Statutes, as amended. ADOPTED AND APPROVED thisA3,4,t day of November, 1982 . <Z�Aj -�.A� Mayor RESOLUTION AUTHORIZING THE ISSUANCE OF BEAUMONT INDUSTRIAL DEVELOPMENT CORPORATION REVENUE NOTE , SERIES 1982 (HOLIDAY INN PROJECT) THE STATE OF TEXAS BEAUMONT INDUSTRIAL DEVELOPMENT CORPORATION WHEREAS , Beaumont Industrial Development Corporation (the "Issuer" ) is a nonstock, nonprofit industrial development corporation organized and existing under the laws of the State of Texas , including particularly the Development Corporation Act of 1979 Art . 5190 . 6 TEX.REV. CIV. STAT.ANN. (Vernon 1982) , as amended, (the "Act") ; and WHEREAS , the Issuer is a duly constituted public instru- mentality and authority of the City of Beaumont , Texas (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 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 Beaumont Industrial Development Corporation and John Q. Hammons" in such form and substance as are approved by the President and Secretary of the Issuer (the "Agreement") , will be duly executed between the Issuer and John Q. Hammons (the "User" ) before the issuance of the Note pursuant to this Resolution; and WHEREAS , the Agreement , in such form as is approved, executed, and delivered by the President and Secretary of the Issuer, shall be incorporated by reference herein for all purposes , with the same effect as if it were set forth in entirety in this note resolution (this "Initial Note Resolution" ) ; and WHEREAS , the Agreement will provide for the construction, equipping , and furnishing of a commercial project and for a loan to the User for such purpose ; and WHEREAS , this preamble shall constitute an integral part of this Initial Note Resolution; and WHEREAS , as defined in the Act , the term "Bonds" includes bonds , notes , and other evidences of indebtedness , and Ile— —�J� EXHIBIT "A" includes obligations authorized by this Initial Note Resolution in the form of a Note ; and WHEREAS , the note authorized to be issued by this Initial Note Resolution (the "Note" ) is to be executed and delivered pursuant to applicable laws , including the Act ; and WHEREAS , the User and the owner of the Project Site , Steinhagen Oil Company, a Texas limited partnership , will enter into a Deed of Trust and Security Agreement in such form and substance as are approved by the President and Secretary of the Issuer (the "Deed of Trust") , and the First National Bank and Trust Company of Oklahoma City (the "Bank" ) , before the issuance of the Note , providing security for the payment of the Loan Payments for the benefit of the Issuer, and its assigns ; and for the performance of the obligations and duties of the User under the Agreement ; and WHEREAS , the User will secure and deliver to the Issuer as security for the performance of the User' s obligations under the Agreement , the Deed of Trust and the Initial Note Resolution, before issuance of the Note, an assignable, irrevocable stand-by letter of credit (the "Letter of Credit" ) as required by the Agreement ; and WHEREAS , upon the execution and delivery of the Note authorized herein, the Issuer, Steinhagen Oil Company , and the User will duly execute and deliver a Collateral Assignment and Security Agreement (the "Collateral Assignment" ) in such form > and substance as are approved by the President and Secretary of the Issuer and the Bank, assigning and granting to the Bank or to a Trustee for the benefit of the holder of the Note , a security interest in the Agreement , including, but not limited to , the payments to be made pursuant to the Agreement (the "Loan Payments" ) , and the liens and other matters securing the same , the Deed of Trust , the Letter of Credit , and the proceeds from the issuance of the Note held in the Construction Fund pursuant to this Resolution; and WHEREAS , upon issuance of the Note, the Issuer may , if requested by the User and the First National Bank and Trust Company of Oklahoma City , execute a trust indenture or construction fund agreement pertaining . to the Note , the proceeds thereof , and other matters for the benefit and security of the holder of the Note , which trust indenture or construction fund agreement shall be in such form and substance as are approved by the President and Secretary of the Issuer and the Bank, and when approved, executed, and delivered by such officers shall be incorporated by reference -2- herein for all purposes , with the same effect as if it were set forth in its entirety in this Initial Note Resolution; WHEREAS , the User has or will have duly approved this Note Resolution prior to the execution and delivery of the Note , as required by the Agreement ; and WHEREAS , as provided in the Agreement , by such approval of this Initial Note Resolution, the User will agree and acknowledge that the Note , when executed and delivered as provided in this Initial Note Resolution, will be in accor- dance and compliance with the Agreement , and that , upon the execution of the Note by the Beaumont Industrial Development Corporation, the User will be unconditionally obligated to the Issuer and the holder of the Note to make or pay, or cause to be made or paid, without set-off , recoupment , or counterclaim, (i) the , Loan Payments" required by the Agreement and by this Initial Note Resolution in amounts sufficient to pay the principal and interest on the Note, when due , and (ii) all other amounts required to be paid by the Agreement , the Note , and this Initial Note Resolution, as hereinafter set forth, and all other obligations contained in any other documents executed in connection with the Note; and WHEREAS , for purposes of this Initial Note Resolution, the definitions of terms in the Agreement are hereby adopted, and the terms given herein shall have the same meanings as such terms are given in said Agreement and Note unless a different meaning is given herein. THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF BEAUMONT INDUSTRIAL DEVELOPMENT CORPORATION THAT : Section 1 . DESIGNATION, AMOUNT AND -PURPOSE OF THE NOTE. The Issuer is hereby authorized to execute a note in the principal amount of $9 , 800 ,000 on behalf of the City of Beaumont , Texas designated and to be known as BEAUMONT INDUSTRIAL DEVELOPMENT CORPORATION REVENUE NOTE , SERIES 1982 (HOLIDAY INN PROJECT) (the "Note" ) . THE PROCEEDS OF THE NOTE ARE TO BE USED TO PAY THE COST OF CONSTRUCTING , EQUIPPING , AND FURNISHING , OR CAUSING TO BE CONSTRUCTED, EQUIPPED, AND FURNISHED A COMMERCIAL PROJECT CONSISTING OF A HOLIDAY INN AND RELATED FACILITIES , (THE "PROJECT") IN THE CITY OF BEAUMONT , TEXAS , FOR John Q. Hammons (THE "USER") FOR THE SPECIFIC PURPOSE OF THE PROMOTION AND ENCOURAGEMENT OF EMPLOYMENT AND THE PUBLIC WELFARE. Based solely on representations made by the User to the Issuer, the Issuer has officially found and determined and - 3- hereby officially finds and determines (i) that the Issuer' s financing the Cost of the Project , in the manner provided in the Act and the documents which will be executed by the Issuer relating to the Note , will constitute the carrying out of a vital public purpose , under the Act and the Texas Constitution, which will benefit and protect the health, safety, right to gainful employment , and general welfare of the people of the State of Texas , (ii) that the Project constitutes a "Project" within the meaning of the Act and the Texas Industrial Commission' s Rules and is required or suitable for the promotion of commercial or industrial development and expansion, the promotion of employment , and for use by commercial , manufacturing, or industrial enterprises , (iii) that the Project is in furtherance of the public purpose of the promotion and development of new and expanded commercial , industrial , and manufacturing enterprises to promote and encourage employment and the public welfare , (iv) that the User has the business experience , financial resources , and responsibility to provide reasonable assurance that the Note and the interest thereon will be paid from Payments to be made by the User under the Agreement as the same become due , and any and all other amounts due in connection with any of the other documents executed in connection herewith; (v) that the Project will contribute to the economic growth or stability of the Governmental Unit by increasing or stabilizing the property tax base , and promoting commerce within the Governmental Unit and Texas , and (vi) that the Project to be financed will contribute significantly to the fulfillment of the redevelopment objectives of the Governmental Unit for the blighted or economically depressed area within which it is located and is in furtherance of the public purposes of the Act . Section 2 . DATE, PRINCIPAL AMOUNT AND MATURITY OF THE NOTE. The Note authorized hereby shall be dated December 15 , 1982, and shall be in the principal amount of $9 , 800 , 000 . The principal amount of the Note shall be payable to the order of the First National Bank and Trust Company of Oklahoma City, or its assigns , on the dates and in the amounts as set forth in the FORM OF NOTE in Section 5 . Section 3 . INTEREST ON THE NOTE. The outstanding principal balance of the Note shall bear interest during the term of the Letter of Credit , at a rate (the "Rate Tt) equal to sixty-five percent (65%) of the prime rate quoted by the First National Bank and Trust Company of Oklahoma City from time to time as its prime rate (the "Prime Pate" ) , and thereafter at a rate equal to seventy percent (70°0) of Prime Rate , following release or expiration of the Letter of Credit in accordance -4- with the Agreement , but in no event shall the Pate exceed the maximum rate of non-usurious or lawful interest allowed from time to time by law as is now or to the extent allowed by law as may hereafter be in effect , with adjustments of such Pate to be made on the same day as any change in the Prime Pate and adjustments due to the changes in the highest lawful rate to be made on the effective date of any change in the highest lawful rate. In addition, if at any time during the term of the Note the maximum rate of federal income taxation imposed on the income of corporations pursuant to Section 11 of the Internal Revenue Code of 1954 , as amended (the "Code" ) is increased or decreased over the current 46% rate , the Pate shall be increased or decreased commencing with the interest payment date next succeeding the effective date of such change in the maximum corporate income tax rate as follows : such percentage rate used to calculate the Rate of interest on this Note (i) shall be increased by 1. 204 of a percentage point for each one percentage point by which the maximum corporate income tax rate is decreased or (ii) shall be decreased by 1.204 of a percentage point for each one percentage point by which the maximum corporate income tax rate is increased. Notwithstanding the foregoing, if at any time the Rate exceeds the maximum net interest cost which will produce a net effective interest rate of fifteen percent (15%) per annum, as such maximum cost and rate are defined in Article 717k-2 , Vernon' s Annotated Texas Civil Statutes , as amended, the Rate to accrue shall be limited to such maximum; and if at any time the Rate should fall below 7% per annum, the Rate will never be less than 7% per annum. The interest shall be payable on the dates and in the manner provided in the FORM OF NOTE set forth in Section 5 . Section 4 . GENERAL CHARACTERISTICS . The Note authorized hereby shall be issued, shall be payable , may or shall be prepaid, shall have the characteristics , and shall be signed and executed all as provided, and in the manner indicated, in the FORM OF NOTE set forth in Section 5 . Section 5 . FORM OF NOTE. The form of the Note shall be as follows : -5- FORM OF NOTE BEAUMONT INDUSTRIAL DEVELOPMENT CORPORATION REVENUE NOTE, SERIES 1982 $9 , 800 , 000 . 00 BEAUMONT, TEXAS December 15 , 1982 FOR VALUE RECEIVED, the undersigned, BEAUMONT INDUSTRIAL DEVELOPMENT CORPORATION (the "Issuer" ) , being a nonstock, nonprofit industrial development corporation organized and existing under the laws of the State of Texas , including particularly the Development Corporation Act of 1979 , Art . 5190 . 6 TEX. REV. CIV. STAT . ANN. (Vernon 1982) (the "Act" ) , and acting on behalf of , and as a constituted authority of the City of Beaumont , Texas , hereby promises to pay to the order of First National Bank and Trust Company of Oklahoma City , at its office in Oklahoma City, Oklahoma, or its assigns , in lawful money of the United States of America, the principal sum of $9 ,800 , 000 , together with interest on the unpaid principal amount thereof , as hereinafter provided for. The outstanding principal balance of this Note is due and payable in quarterly installments , the first principal installment being due and payable on the earlier of (i) the first quarterly interest installment payment date on or after 18 months from the date of this Note, or (ii) the first quarterly interest installment payment date on or after 90 days after the Project , as defined in the Agreement , is open to the public , and continuing thereafter on the first day of each quarter. The first of such principal installments will be in the amount set forth below with each successive installment of principal during the term of this Note being in the amounts indicated below until the maturity of this Note , when the outstanding principal balance will be due and payable in full . Payment Payment No . Principal Amount No . Principal Amount 1. 5 , 617 . 03 21. 11 , 176 . 70 2 . 5 , 813 . 63 22 . 11, 567 . 89 3 . 6 , 017 . 10 23 . 115972 . 76 4. 6 , 227 . 70 24 . 12 , 391 . 81 5 . 6 ,445 . 67 25 . 12 , 825 . 52 6 . 6 , 671 . 27 26 . 13 , 274. 42 7 . 6 , 904 . 76 27 . 13 , 739 . 02 8 . 75146 . 43 28 . 14 , 219 . 89 -6- Payment Payment No . Principal Amount No . Principal Amount 9 . 7 , 396 . 56 29 . 14 , 717 . 58 10 . 7 , 655 . 44 30 . 15 ,232 . 70 11. 7 , 923 . 38 31. 15 , 765 . 84 12 . 8 , 200 . 69 32 . 16 , 317 . 65 13 . 8 ,487 . 72 33 . 16 , 888 . 77 14. 8 , 784 . 79 34. 17 ,479 . 87 15 . 9 , 092 . 26 35 . 18 , 091. 67 16 . 9 ,410 . 48 36 . 18 , 724 . 88 17 . 9 , 739 . 85 37 . 19 , 380 . 25 18 . 10 , 080 . 75 38 . 20 , 058 . 56 19 . 10 ,433 . 57 39 . 20 , 760 . 61 20 . 109798 . 75 40 . 21 ,487 . 23 This Note shall mature on, and the outstanding principal balance of this Note, and all accrued and unpaid interest shall be due and payable on December 1, 1992 . It is recog- nized that , at the date of maturity , all payments set forth in the preceding schedule may not have been paid, due to the date the first principal installment is due . The outstanding principal balance of this Note shall bear interest during the term of the Letter of Credit at a rate (the "Rate" ) (i) equal to sixty-five .percent (65%) of the prime rate quoted by the First National Bank and Trust Company of Oklahoma City ("Bank" ) from time to time as its prime rate (the "Prime Rate" ) and (ii) thereafter at a rate equal to seventy percent (70%) of Prime Rate following release or expiration of the Letter of Credit in accordance with the Agreement , but in no event shall the Rate exceed the maximum rate of non-usurious or lawful interest allowed from time to time by law as is now or to the extent allowed by law as may hereafter be in effect , with adjustments of such Rate to be made on the same day as any change in the Prime Rate and adjustments due to the changes in the highest lawful rate to be made on the effective date of any change in the highest lawful rate. In addition, if at any time during the term of this Note the maximum rate of federal income taxation imposed on the income of corporations pursuant to Section 11 of the Internal Revenue Code of 1954 , as amended (the "Code" ) , is increased or decreased over the current 46% rate , the Rate shall be increased or decreased commencing with the interest payment date next succeeding the effective date of such change in the maximum corporate income tax rate as follows : such percentage rate used to calculate the Rate of interest on this Note (i) shall be increased by 1 . 204 of a percentage point for each one percentage point by which the maximum corporate income tax rate is decreased or (ii) shall be decreased by -7- 1. 204 of a percentage point for each one percentage point by which the maximum corporate income tax rate is increased. Notwithstanding the foregoing, if at any time the Rate exceeds the maximum net interest cost which will produce a net effective interest rate of fifteen percent (15%) per annum as such maximum cost and rate are defined in Article 717k-2 , Vernon' s Annotated Texas Civil Statutes , as amended, the Rate to accrue on the Note shall be limited to such maximum; and if at any time the Rate should fall below 7% per annum, the Rate will never be less than 7% per annum. The accrued interest on the Note is payable in quarterly installments commencing on March 1 , 1983 , and continuing regularly on the first day of each subsequent quarter until maturity or prepayment in full as provided herein. The holder of this Note shall notify the User, as defined herein, of the Rate payable on this Note . The principal of and interest on the Note are payable solely from the sources and in the manner hereafter described, and solely as authorized and provided in the Act . The Issuer is authorized to execute this Note in the principal amount of $9 ,800 , 000 on behalf of the City of Beaumont , Texas . This Note is designated and to be known as BEAUMONT INDUSTRIAL DEVELOPMENT CORPORATION REVENUE NOTE , SERIES 1982 (HOLIDAY INN PROJECT) (the "Note" ) , and is issued pursuant to a resolution adopted by the Board of Directors of the Issuer (the "Initial Note Resolution" ) . THE PROCEEDS OF THE NOTE ARE TO BE USED TO PAY THE COST OF CONSTRUCTING , EQUIPPING , AND FURNISHING , OR CAUSING TO BE CONSTRUCTED, EQUIPPED, AND FURNISHED A COMMERCIAL PROJECT CONSISTING OF A HOLIDAY INN AND RELATED FACILITIES , (THE "PROJECT" ) IN THE CITY OF BEAUMONT, TEXAS , FOR John Q. Hammons ( THE "USER" ) FOR THE SPECIFIC PURPOSE OF THE PROMOTION AND ENCOURAGEMENT OF EMPLOYMENT AND THE PUBLIC WELFARE . THE UNPAID PRINCIPAL amount of this Note is subject to prepayment at the option of the Issuer in full or in part on any interest payment date subsequent to the execution and delivery of this Note. If any principal is prepaid, it shall be applied to the principal installments- in inverse chrono- logical order of their scheduled due dates . All prepayments shall be without penalty or premium. At the time of any prepayment , all accrued and unpaid interest must be paid in full. -8- THE HOLDER of this Note , at its option, may elect to cause the mandatory prepayment in full of the then unpaid principal amount of the Note together with accrued interest thereon to the date of prepayment , on any date subsequent to December 1 , 1990 , provided that the Issuer and User be furnished written notice of the election of the holder of the Note to cause mandatory prepayment at least 180 days prior to the date prepayment is desired by the holder. Notice to the Issuer and User shall be by certified mail , return receipt requested, addressed to Issuer at P. 0. Box 3827 , Beaumont , Texas 77704, and to User at the address provided in the Deed of Trust and Security Agreement between User, Steinhagen Oil Company, and William Trussell , or to the most recent addresses of Issuer and User as reflected on the records of the holder of the Note . The addresses of the User and Issuer to which notice must be directed may be changed by giving the holder of the Note notice of such change in the manner provided for the giving of notice pursuant to this paragraph. Prepayment shall be without penalty or premium. ON JANUARY 2 , 1988 , and for a period of sixty (60) days thereafter, the holder of this Note, at its option, may elect to cause the mandatory prepayment in full of the unpaid principal balance of this Note, together with accrued and unpaid interest , if the Project has not attained and main- tained an average Coverage Ratio of 1 . 15 for any period of twelve consecutive months preceding January 2 , 1988 , and if the Project ' s room department gross operating profit is not at least 70% of the total gross operating profit of the Project during such twelve-month period. The Coverage Ratio shall be calculated as the ratio by which the average cash flow from the Project before debt service bears . to the debt service on the Project during such twelve month period. Lease payments under the ground lease between the Steinhagen Oil Company and the User covering the land on which the Project is situated (the "Project Site") shall not be deducted in calculating average cash flow for the Project . The term "debt service" is the amount required to pay the interest and principal as provided in this Note . In the event that the holder of this Note elects to cause mandatory prepayments as hereinabove provided, the holder of this Note shall give written notice of such election to Issuer and the User, and the Issuer shall , within sixty days of such notice , prepay the outstanding principal balance and all accrued and unpaid interest in full . The holder of this Note may call the outstanding principal of the Note and all accrued and unpaid interest , by giving written notice thereof to the Issuer and the User, in the event (i) that this Note becomes void, unenforceable , or -9- impossible of performance as a result of any change in law or legislative, judicial , or administrative action, or (ii) that the interest on the Note becomes includable for any reason in the gross income of the holder (other than a substantial user or related party) . The unpaid principal amount of this Note shall be prepaid in full, together with accrued interest thereon, within sixty days following the occurrence of a Taxable Event and a Final Determination of Taxability as defined and provided for in the Agreement . Such prepayment shall constitute the entire amount due with respect to this Note as a result of the occurrence of a Taxable Event and a Final Determination of Taxability. THE UNPAID PRINCIPAL AMOUNT of this Note shall be prepaid together with accrued interest thereon to the date of prepay- ment with and to the extent of any surplus funds remaining in the Construction Fund after the completion of the Project , as provided and required by, and subject to the conditions in Section 14 of the Initial Note Resolution. If any principal is prepaid, it shall be applied to principal installments in inverse chronological order of their scheduled due dates . At the time of any prepayment , all accrued and unpaid interest must be paid in full . IF A DEFAULT OCCURS under any instrument now or hereafter executed in connection with or as security for the Note; thereupon at the option of Holder of this Note , this Note and any and all other indebtedness of Issuer to Holder of this Note shall become and be due and payable upon demand and notice of default or of intent to accelerate the maturity hereof to Issuer. THE AGREEMENT provides that any provision for any payment contained in the Agreement or this Note shall be held to be subject to reduction to the amount allowed under the usury laws , and laws limiting the maximum rate of interest payable by the Issuer (both state and federal to the extent appli cable) as now or hereafter construed by the courts having jurisdiction, and it is agreed by the Issuer and the holder of this Note that in no event shall usury or interest in excess of the maximum payable be paid or collected with respect to this Note. IF THE DATE for the payment of the principal of or interest on this Note shall be a Saturday, Sunday, a legal holiday, then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday , -10- 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 Note has been duly and validly authorized, issued, and delivered; that all acts and conditions required or proper to be performed or exist precedent to or in the authorization, issuance , execution, and delivery of this Note have been performed and exist , in accordance with law; that this Note is a special revenue obligation of the Issuer, and that the principal of and interest on this Note are payable from and only from and secured by a first lien on and pledge of the payments desig- nated as "Loan Payments" to be made or paid, or caused to be made or paid, to the Issuer, pursuant to the Initial Note Resolution, and the "Loan Agreement between the Beaumont Industrial Development Corporation and John Q. Hammons" approved by such Initial Note Resolution (the "Agreement" ) and by an assignment (the "Collateral Assignment") of the Agree- ment , which said Agreement is secured by that certain Deed of Trust and Security Agreement between Steinhagen Oil Company, User, and William Trussell , as Trustee , relating to certain property of the User and Steinhagen Oil Company (such Company joining for the sole purpose of imposing a lien against the property and without any liability to the Issuer or its assigns under the Agreement or otherwise) , the Construction Fund required to be established by the Issuer' s Resolution Authorizing the Issuance of Beaumont Industrial Development Corporation Revenue Note , Series 1982 (Holiday Inn Project) , and an irrevocable Letter of Credit . The User is unconditionally obligated to make or pay, or cause to be made or paid, without set-off , recoupment , or counterclaim, each such "Loan Payment" in aggregate amounts sufficient to pay the principal of and interest on this Note, and to pay all other amounts required by the Agreement , and the Initial Note Resolution, when due, subject to and as required by the provisions of the Agreement and the Initial Note Resolution. REFERENCE IS HEREBY MADE to the Initial Note Resolution for additional provisions with respect to the rights , duties , and obligations of the Issuer, and the terms upon which this Note is issued and secured. UPON THE OCCURRENCE of an "Event of• Default" as defined in the Agreement , the Deed of Trust , or the Collateral Assign- ment , the outstanding principal amount of this Note may, at the option of the holder hereof, be accelerated and shall become due and payable in full , together with accrued interest thereon to the date of payment , plus any other amounts due pursuant to the Agreement or Deed of Trust . - 11- THE ISSUER has reserved the right , subject to (i) the restrictions stated in the Initial Note Resolution, (ii) the consent of the holder of the Note , and (iii) while it is in effect and thereafter if a draw has been made thereon, by the issuer of the Letter of Credit , to issue additional parity revenue notes ("Additional Notes" ) which, when issued and delivered, shall be payable from and secured by a first lien on the pledge of "Loan Payments" pursuant to the Agreement and entitled to the benefits of and secured by the Collateral Assignment in the same manner and to the same extent as , and be on a parity with, this Note and all then outstanding Additional Notes . If this Note is not paid at maturity whether by acceleration or otherwise and is placed in the hands of an attorney for collection, or suit is filed hereon, or pro- ceedings are had in probate, bankruptcy , receivership, reorganization, arrangement or other legal proceedings for collection hereof, Issuer and each other liable party agree to pay the holder of this Note its collection costs , including a reasonable amount (which is agreed to be an additional amount equal to fifteen percent (15%) of the unpaid principal and interest hereof) for attorneys ' fees , but in no event to exceed the maximum amount permitted by law. Issuer and each other liable party hereby expressly waive bringing of suit and diligence in taking any action to collect any sums owing hereon and in the handling of any security, and Issuer and each other liable party hereby consent to and agree to remain liable hereon regardless of any renewals , extensions for any period, or rearrangements hereof , or partial prepayments hereon, or any release or substitution of security herefor, in whole or in part , with or without notice, from time to time, before or after maturity. This Note has been executed and delivered pursuant to the terms of that certain Agreement of even date herewith between Issuer and User, and the holder of this Note is entitled to the benefits of and security provided for in the Agreement . The Loan by Issuer to User shall be governed by the terms and provisions of the Agreement , the Initial Note Resolution, and any additional agreements entered into by User and the Bank. Any default under the terms of the Agreement by Issuer or under the terms of any other document or instruments executed in connection with the Loan by Issuer to the User or this Note will automatically be a default hereunder. This Note is secured by all trust indentures , security agreements , collateral assignments , mortgages and lien instru- ments , executed by the User (or by any other party) in favor - 12- of the Issuer and assigned to the Bank otherwise , or in favor of or for the benefit of the holders of the Note , including those executed simultaneously herewith, those executed here- tofore and those hereafter executed. This Note is secured by a Deed of Trust and Security Agreement of even date herewith given to William Trussell , Trustee, for the benefit of the Issuer, which has been assigned to the Bank by the Collateral Assignment , covering the property described in Appendix "A" to the Deed of Trust and Security Agreement , sometimes referred to as "Project Site . " THIS NOTE CONSTITUTES A SPECIAL REVENUE OBLIGATION OF THE ISSUER, AND THE HOLDER HEREOF SHALL NEVER HAVE THE RIGHT TO DEMAND OR OBTAIN PAYMENT OF THIS OBLIGATION OR ANY AMOUNTS OR COSTS OF COLLECTION PAYABLE WITH RESPECT TO THIS OBLIGATION OUT OF ANY FUNDS RAISED OR TO BE RAISED BY TAXATION OR FROM ANY SOURCE WHATSOEVER EXCEPT THE PAYMENTS AND COLLATERAL DESCRIBED IN THIS NOTE, THE INITIAL NOTE RESOLUTION, THE AGREEMENT, THE DEED OF TRUST AND SECURITY AGREEMENT , AND ANY OTHER DOCUMENT EXECUTED HERETOFORE OR HEREAFTER FOR THE SECURITY OF THE NOTE. 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 HOLDER OF THIS NOTE. NEITHER THE STATE OF TEXAS , THE CITY OF BEAUMONT, TEXAS , 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 NOTE, OR THE INTEREST HEREON; AND NEITHER THE FAITH AND CREDIT, NOR THE TAXING POWER, OF THE STATE OF TEXAS , THE CITY OF BEAUMONT, TEXAS , OR ANY OTHER POLITICAL CORPORATION, SUBDIVISION, OR AGENCY OF THE STATE OF TEXAS IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF THIS NOTE, OR THE INTEREST THEREON, OR ANY OTHER AMOUNTS OR COSTS OF COLLECTION PAYABLE WITH RESPECT TO THIS NOTE . NOTICE TO TEXAS INDUSTRIAL COMMISSION In the event the User fails to timely make or pay any payment called for in this Note or the Agreement , or if an Event of Default as defined in the Agreement and the Deed of Trust , shall occur, or if the owner of the Note, the Issuer, or the User receives notice from the Internal Revenue Service that the interest on the Note is or may be subject to federal income taxation, the owner of the Note shall immediately inform the Texas Industrial Commission and the User of such an -13- occurrence , by sending written notice to the following addresses : Texas Industrial Commission Attention: Executive Director 410 East Fifth Street Box 12728 Capitol Station Austin, Texas 78711 John Q. Hammons 1525 South Glenstone Springfield, Missouri 65805 or the latest addresses specified by said Commission or User in writing. IN WITNESS WHEREOF, this Note 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 Note . Secretary, President , Board of Directors Board of Directors (ISSUER' S SEAL) Section 6 . SECURITY. The Note and the interest thereon are and shall be payable from and secured by the payments designated as Loan Payments to be made or paid by the User pursuant to the terms and provisions of the Agreement and secured' by an assignment of the Deed of Trust lien on the Project , the Agreement , the Letter of Credit , and the funds held in the Construction Fund pursuant to this Resolution. The Issuer will assign the Bank a first lien security position in the Loan Payments and in the collateral received by the Issuer, securing the obligations of the User under the Agreement . The Note may be further secured by a trust indenture for the benefit of the holders of the Note , if approved, executed and delivered by the President and Secretary of the Issuer pursuant to their authority in the Initial Note Resolution. -14- Section 7 . PREPAYMENT . The Note authorized hereby - shall be subject to prepayment as specified in the FORM OF NOTE set forth in Section 5 . Section 8 . THE USER' S PAYMENTS . Unconditional Obligation. The User shall covenant in the Agreement , and, by the approval of this Initial Note Resolution and the assign- ment of this Agreement , the Deed of Trust , and the Letter of Credit by the Issuer to the First National Bank and Trust Company of Oklahoma City, the User further shall uncondi- tionally obligate himself and agree , regardless of and notwithstanding any provisions of the Agreement , and regard- less 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 Loan Payments to such Bank, or its assigns , and to make such payments on or before the dates specified in the Agreement or the Note . Such Bank and its assigns are and shall be entitled to rely unconditionally on the agreements , covenants , and representations set forth in this Initial Note Resolution, the Agreement , the Note, the Deed of Trust and Security Agreement , the Collateral Assignment , and all security agreements , collateral assignments , mortgages and lien instruments executed by the Issuer (or by any other party) in favor of the Bank, including those executed simultaneously herewith, those executed heretofore and those hereafter executed. Section 9 . ADDITIONAL NOTES . The Issuer reserves the right , upon the request of the User, but only with the prior written consent of the holder of the Note and, while it is in effect and thereafter if a draw has been made thereon, by the issuer of the Letter of Credit , to issue additional parity revenue notes ("Additional Notes" ) in any amounts , for any lawful purpose or purposes , including the refunding of any outstanding Notes . Such Additional Notes , along with the Note authorized by this Initial Note Resolution, shall be considered, constitute , and be "Notes" as defined in, and for all purposes of , the Agreement and the Deed of Trust and when issued, executed, and delivered, such Additional Notes shall be payable from and secured by a first lien on and pledge of Loan Payments pursuant to the Agreement , and the assignment (the "Collateral Assignment") of the Agreement , the Deed of Trust , and the Letter of Credit , in the same manner and to the same extent as , and be on a parity with, all then outstanding Notes and Additional Notes . Such Additional Notes 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 prepaid prior to maturity, with or without penalty or premium, - 15- on whatever terms or amounts , and may contain such other provisions as may be provided in any Note Resolution authorizing the issuance of such Additional Notes . It is provided, however, that no series or issue of Additional Notes shall be issued unless : (i) In the opinion of Bond Counsel (A) the issuance of such Additional Notes will not adversely affect the exemption from federal income taxation of the interest on the then outstanding Notes and Additional Notes or affect the validity of the then outstanding Notes or Additional Notes and (B) such Additional Notes are secured in the same manner and to the same extent as and are on a parity with all then outstanding Notes and Additional Notes ; (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 Agreement , Notes , Collateral Assignment , or the Deed of Trust (or any amendment or supplemental thereto) or with any of the covenants or requirements of this Initial Note Resolution or the Note Resolutions (or any amendments or supplements thereto) authorizing the issuance of all then outstanding Notes and Additional Notes ; (iii) The agreements relating to the issuance of such series or issue of Additional Notes provide for addi- tional Loan Payments in amounts sufficient to pay all principal of, prepayment penalties or premiums , if any, agreed liquidated damages , if any , and interest on such Additional Notes . (iv) The Texas Industrial Commission expressly gives its prior approval to the issuance of such additional Notes . Section 10 . SPECIAL COVENANTS . The Issuer further covenants as follows : (a) Loan Payments Pledged to Note Only. The Loan Payments , the Agreement , and the collateral securing the same, have not been and will not be in any manner pledged by the Issuer to the payment of any debt or obligation of the Issuer or the User except pursuant to the Collateral Assignment for the benefit of the Bank and its assigns . (b) Non-Encumbrance. While the Note is outstanding, the Issuer will not (except for the security interests created for the benefit of the holder of the Note and any Additional - 16- Ile 4��-s Notes) in any manner whatsoever create , assume , or suffer to exist , directly or indirectly , any mortgage , lien, encumbrance, pledge, or charge against the Agreement , the Loan Payments , the Construction Fund, or the Project . (c) Performance by Issuer. The Issuer will carry out all of its covenants and obligations under this Initial Note 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 performance 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 cove- nants 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 without the consent of the holder of the Note and, while it is in effect and thereafter if a draw has been made thereon, by the Issuer of the Letter of Credit . Section 11. NOTE IS SPECIAL OBLIGATION. The Note is and shall be a special revenue obligation of the Issuer payable solely from payments to be made under the Agreement , this Initial Note Resolution, the Deed of Trust and Security Agreement and the Letter of Credit ; and the holder of the Note 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 Note is 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 . No past , present or future Commissioner, member, officer or employee of the Texas Industrial Commission shall be held liable for the performance of any agreement , covenant or obligation under the Note , the Initial Note Resolution, the Agreement , the Collateral Assignment , the Deed of Trust and Security Agreement , or the Letter of Credit , or for any claim based thereon or otherwise with respect thereto . Section 12 . ESTABLISHMENT OF CONSTRUCTION FUND. (a) Deposit of Note Proceeds into Construction Fund. Immediately upon execution and delivery of the Note , the Issuer will establish the Construction Fund with the First National Bank and Trust Company of Oklahoma City as defined in and required by the Agreement , with such provisions with - 17- regard thereto as may also be agreed upon in any construction fund agreement or trust indenture which is entered into by the Issuer relating thereto . The Issuer shall deposit all of the proceeds from the Note into the Construction Fund. The User shall draw on and use the Construction Fund as hereinafter provided and as provided in any trust indenture or construc- tion fund agreement pertaining thereto . The amount so deposited into the Construction Fund shall 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 shall be invested or reinvested by the Bank upon the written direction of the User in obligations of the United States government or its agencies or in certificates of deposit of banks approved by the Bank, including certificates of deposit of the Bank, provided however, that no investment of disposition of Construction Fund moneys shall be made which would cause the Note issued pursuant to this Resolution, or any part thereof, to become arbitrage bonds within the meaning of Section 103 (c) of the Code or any regulations or rulings pertaining thereto . The Bank shall make no investments or dispositions of investments except as specifically directed in writing by the User. Any such written direction may be given by letter, telegram, telex, telecopy, or any other means acceptable to the Bank and Issuer. 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 , including realized discount on obligations purchased, received from such investments shall be deposited in or credited to the Construc- tion Fund, and any losses on investments shall be charged against the Construction Fund. Upon the written direction of the User the Bank shall redeem or sell all or any designated part of such investments employing, in the case of a sale , any commercially reasonable method of effecting the same . The Bank shall not be liable or responsible for any loss resulting from the redemption or sale of any such investment as herein authorized; except that , (notwithstanding any provisions of the Agreement ) , the Bank shall be liable for any loss resulting from its willful or negligent- failure , within a reasonable time after receiving the written direction from the User to make , redeem, or sell any investment in the manner provided for herein. If the Bank is unable , after reasonable effort and within a reasonable time after receipt of the required written direction, to make , redeem, or sell any such investment , it shall so notify in writing the User and there- - 18- upon the Bank shall be relieved of all liability or responsi- bility with respect thereto . Section 13 . PAYMENTS FROM CONSTRUCTION FUND. (a) Issuer' s Administrative Overhead Expenses and Other -Costs . Immediately after the delivery of the Note the User shall withdraw from the Construction Fund and pay directly to the Issuer in the amount of the invoice submitted by the Issuer at that time , being the amount required to reimburse the Issuer for its administrative and overhead expenses directly attri- butable to the execution and delivery of the Note authorized hereby. Also , immediately after the delivery of the Note, the User shall withdraw from the Construction Fund, promptly after receiving the bills or statements therefor, and pay directly all of the actual expenses and all costs related to the execution and delivery of such Note and the closing of the transaction, including, without limitation, financing charges , the fees and expenses of accountants , financial advisors , and attorneys , and all of the expenses and costs of the Bank related to the Note and supporting documents . (b) Reimbursement for and Payment of Cost of Project . Subject and subordinate to making the payments required by the preceding paragraph, the User may draw from the Construction Fund amounts for reimbursement or payment of Costs of the Project upon satisfaction by the User of the following requirements and such additional requirements as may be agreed upon by the Bank and the User. Each request for withdrawal shall be accompanied by a certificate stating with respect to each payment as follows : (i) the expenditures , in summary form, for which withdrawal 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 costs of the Project as defined in the Act , the Rules of the Texas Industrial Commission, and the Agreement , and that , to the best of his knowledge, the fair value of such interest , 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 withdrawn by the User, as stated in such certifi- cate has been or is the basis for the withdrawal of any money in any previous or then pending request ; -14- (iv) that the withdrawal of the amounts requested will not result in a breach of any of the covenants of the User contained in the Agreement , and particularly those covenants which relate to the Code and the Regula- tions ; and (v) that the expenditure of such amounts to be withdrawn, when added to all previous withdrawals from the Construction Fund, will result in at least 90% (or 95% if so specified by Bond Counsel to the Issuer) of the total of such withdrawals , other than withdrawals for issuance expenses , being used to provide land or property of a character subject to the allowance for depreciation under Section 167 of 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) . The User shall deliver with such certificates copies of invoices and other reasonable supporting documentation cover- ing the expenditures . The User agrees not to request with- drawals from the Construction Fund for the payment of construction costs which are subject to retainage , other than for final payment thereof, in excess of ninety percent (90%) of such costs expended to date on the Project . (c) Reliance by Bank. The Bank may request from time to time, and the User shall furnish, supporting documentation for any amounts requested under Section 13 (b) , including, but not limited to A. I . A. Form G702. If amounts withdrawn by the User with respect to any portion of the Project should exceed the cost thereof, the User shall promptly repay to the Bank such overwithdrawal into the Construction Fund. Section 14. 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 User and delivered to the Bank 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 Deed of Trust under the terms thereof, then any such funds shall be used immediately to pay any accrued and unpaid interest and -20- then to prepay principal payments in inverse chronological order according to their payment dates ; to the extent of any such available funds ; provided that prior to such use, the Issuer and the Bank 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 Note from federal income taxation; and provided, further, that the User shall deposit into the Construction Fund prior to such prepayment . (b) Disposition of Construction Fund upon Acceleration and Prepayment . If the owner of the Note shall declare the principal of the Note and the interest accrued thereon imme- diately due and payable as the result of an Event of Default , as allowed in the Note or documents securing same , or the Agreement , or if the Note is optionally or mandatorily prepaid prior to maturity as a whole in accordance with its terms , any amounts remaining in the Construction Fund shall be used immediately by the Bank for the purpose of paying the princi- pal of, and accrued and unpaid interest on the Note . Section 15 . NO ARBITRAGE . The Issuer and the User have covenanted to and with the purchasers of the Note that they will make no use of the direct or indirect proceeds thereof or any other funds at any time throughout the term thereof which would cause the Note to be considered an arbi- trage bond 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 16 . EXECUTION AND DELIVERY OF THE NOTE AND AUTHORIZATIONS . At the specific request of the User, the Note is hereby authorized to be issued and shall be delivered to the First National Bank and Trust Company of Oklahoma City for the principal amount as set forth in Section 5 , FORM OF NOTE . The Board hereby approves and hereby authorizes the President and Secretary of the Issuer to approve the Note , Agreement , Collateral Assignment , and a construction fund agreement with the User and the Bank, and if the President and Secretary deem it necessary or appropriate in their discretion to enter into one, the trust indenture, and authorizes the execution and delivery thereof by the President , duly attested and sealed by the Secretary of the Issuer, in such form and substance as they may approve , execution by them being conclusive evidence of the approval and authorization thereof by such officers and -21- this Board. The Board further authorizes such officers to execute all documents , instruments , agreements , financing statements , and certificates and to take all action as they may deem necessary or appropriate to consummate the transac- tions contemplated in this Initial Note Resolution. Section 17 . RIGHT OF SUBSTITUTION. Upon (i) the written request of all of the owners of the Note , (ii) payment by such owners or the User of the Issuer' s costs and expenses to do so , (iii) delivery of the Note to the Issuer for cancellation, and (iv) agreement by such owners to any amendments of the Agreement and other related documents and action by the Governmental Unit and the Texas Industrial Commission deemed necessary by Bond Counsel to the Issuer, the Issuer will issue in substitution for the then outstanding principal balance of the Note an equivalent obligation in the form of a bond. Such bond or bonds shall be in typewritten form or in printed $5 ,000 denominations , in all cases in such registered form and otherwise as may be required by applicable law in the opinion of Bond Counsel to the Issuer to maintain the tax-exempt status of the bonds under applicable federal law. In the event of such substitution then all references to the Note in this Initial Note Resolution shall be deemed to be references to such bonds . ADOPTED this day of 1982 ATTEST: BEAUMONT INDUSTRIAL DEVELOPMENT CORPORATION By Secretary, Board of President , Board of Directors Directors -22-