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HomeMy WebLinkAbout17035 RES - 05/12/19824 ' CERTIFICATE FOR RESOLUTION THE STATE OF TEXAS COUNTY OF NUECES CITY OF CORPUS CHRISTI .• : We, the undersigned officers of the City Council of the City of Corpus Christi, Texas, hereby certify as follows: 1. The City Council o MEETING ON THE AZ -DAY OF meeting place, and the roll wa tuted officers and members of s said City convened in , 1982, at the designated called of the duly consti- id City Council, to -wit: Luther Jones, Mayor Betty N. Turner Bob Gulley Herbert L. Hawkins, Jr. Edward A. Martin, City Manager Bill G. Read, City Secretary Cliff Zarsky Jack K. Dumphy Dr. Charles W. Kennedy, Jr. J. Bruce Aycock, City Attorney and all of said persons were present, except the following absentees: thus constituting a quorum. Whereupon, among other busi- ness, the following was transacted at said Meeting: a written RESOLUTION APPROVING AN AGREEMENT BY CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION TO ISSUE A BOND FOR MASTER HOST INN - SANDY SHORES AND THE BOND RESOLUTION PROVIDING FOR THE ISSUANCE OF SUCH BOND was duly introduced for the consideration of said City Council and read in full. It was then duly moved and seconded that said Resolution be adopted; and, after due discussion, said motion, carrying with it the adoption of said Resolution, prevailed and carried by the following vote: AYES: All members of said City Council shown pres nt above voted "Aye" except NOES: ABSTENTIONS: 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 Certifi- cate; that said Resolution has been duly recorded in said City Council's minutes of said Meeting pertaining to the adoption of said Resolution; that the persons named in the IViiCROFILMED 1903.5 sEp 2 8 iQR4 7.) above and foregoing paragraph are the duly chosen, qualified and acting officers and members of said City Council as indicated therein; and that each of the officers and members of said City Council was duly and sufficiently notified officially and personally, in advance, of the time, place and purpose of the aforesaid Meeting, and that said Resolu- tion would be introduced and considered for adoption at said Meeting; and that said Meeting was open to the public, and public notice of the time, place and purpose of said meeting was given, all as required by Vernon's Ann. Civ. St. Article 6252-17, as amended. SIGNED AND SEALED the a day of V.-T.)1Th, 1982. C.4).7 Secretary Maye (SEAL) APPROVED: day of , 1982. J. Bruce Aycock, City Attorney By: , / i v V , RESOLUTION APPROVING AN AGREEMENT BY CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION TO ISSUE A BOND FOR MASTER HOST INN - SANDY SHORES AND THE BOND RESOLUTION PROVIDING FOR THE ISSUANCE OF SUCH BOND WHEREAS, Corpus Christi Industrial Development Corpora- tion was created under the auspices of the City of Corpus Christi, Texas; and WHEREAS, it is deemed necessary and advisable that this Resolution be adopted. THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS THAT: Section 1. The "Loan Agreement between Corpus Christi Industrial Development Corporation and Master Host Inn - Sandy Shores," in substantially the form and substance as attached to this Resolution and made a part hereof for all purposes, is hereby approved, and the Bond in the principal amount of $7,200,000 may be issued pursuant thereto for the purpose of paying the cost of acquiring, constructing, equipping and furnishing or causing to be acquired, con- structed, equipped and furnished the Project as defined and described therein. Section 2. The "Resolution Authorizing the Issuance of Corpus Christi Industrial Development Corporation Revenue Bond, Series 1982 and the Execution of a Trust Indenture (Master Host Inn - Sandy Shores Project)," in substantially the form and substance attached to this Resolution and made a part hereof for all purposes, is hereby specifically approved, and the Bond may be issued as provided for therein. Section 3. The necessity to approve the Agreement of the Corpus Christi Industrial Development ,Corporation to issue a bond for Master Host Inn - Sandy Shores, and the Bond Resolution providing for the issuance of such bond creates a public emergency and an imperative public neces- sity requiring the suspension of the Charter rule that no ordinance or resolution shall be passed finally on the date of its introduction but that such ordinance or resolution shall be read at three several meetings of the City Council, and the Mayor, having declared that such emergency and necessity exist, having requested the suspension of the Charter rule and that this Resolution be passed finally on 17035 ' the date of its introduction and take effect and be in full force and effect from and after its passage, IT IS ACCORD- INGLY SO RESOLVED. - LOAN AGREEMENT BETWEEN CORPUS CHRISTI INDusTRIAL DEVELOPMENT CORPORATION AND MASTER HOST INN - SANDY SHORES ******************** The Corpus Christi Industrial Development Corporation has granted a security interest in and assigned to RepublicBank Dallas, National Association, as Trustee under the Trust Indenture dated as of the date hereof, all of its interests in all "Installment Loan Payments", "Liquidated Damages Payments", and certain other payments, due pursuant to and under this Loan Agreement to secure its Revenue Bond, Series 1982 (Master Host Inn - Sandy Shores Project). DEBTOR: Master Host Inn - Sandy Shores 3200 Surfside Blvd. Corpus Christi, Texas 78408 ASSIGNEE: SECURED PARTY: Corpus Christi Industrial Development Corporation 302 South Shoreline Corpus Christi, Texas 78408 RepublicBank Dallas, National Association, as Trustee Pacific and Ervay Street Dallas, Texas 75201 r TABLE OF CONTENTS (The Table of Contents is not a part of the Loan Agree- ment but is for convenience of reference only.) PAGE Parties 1 ARTICLE I DEFINITIONS; GENERAL RECITALS, FINDINGS, AND REPRESENTATIONS Section 1.01. Definitions 1 Section 1.02. General Recitals, Findings, 4 and Representations ARTICLE II THE PROJECT Section 2.01. Approvals and Permits 6 Section 2.02. Acquisition and Construction 6 ARTICLE III FINANCING THE PROJECT; TITLE AND OPERATION Section 3.01. The Loan 8 Section 3.02. Security for the Loan 8 Section 3.03. Repayment of Loan 8 Section 3.04. Title 10 Section 3.05. Operation 10 Section 3.06. Indemnities 10 Section 3.07. Issuer's Limited Liability 11 ARTICLE IV THE BONDS Section 4.01. Issuance of Bonds 12 Section 4.02. Refunding of Bonds 13 PAGE Section 4.03. Redemption of Bonds 13 Section 4.04. Installment Loan Payments 13 Section 4.05. No Arbitrage 14 Section 4.06. Tax -Exempt Status of Interest on 14 the Bonds and Mandatory Redemption Section 4.07. Payments to Issuer 18 ARTICLE V COVENANTS AND REMEDIES Section 5.01. Covenant 19 Section 5.02. Trustee and Remedies 19 Section 5.03. General Provisions 19 Section 5.04. Amendment of Agreement 20 ARTICLE VI SPECIAL COVENANTS Section 6.01. Partnership Existence 22 Section 6.02. Assignment 22 Section 6.03. Financial Reports 22 Section 6.04. Term of Agreement 23 Section 6.05. Termination 23 Section 6.06. Notices 23 Section 6.07. Severability 24 Execution by the Issuer 24 Execution by the User 25 Exhibit A 26 LOAN AGREEMENT This Loan Agreement dated as of May 1, 1982, between Corpus Christi Industrial Development Corporation and Master Host Inn - Sandy Shores. W ITNESSETH: ARTICLE I DEFINITIONS; GENERAL RECITALS, FINDINGS, AND REPRESENTATIONS Section 1.01. DEFINITIONS. In addition to all other words and terms defined herein, and unless a different meaning or intent clearly appears from the context, the following words and terms shall have the following meanings, respectively, whenever they are used herein: Act - The Development Corporation Act of 1979, as amended (Article 5190.6, V.A.T.C.S.). Agreement - This Loan Agreement, together with Exhibit A attached to this Loan Agreement, and all amendments and supplements to this Loan Agreement. Approving Officer - Any person or persons at the time designated to act on behalf of the User by a written certif- icate, containing a specimen signature of such person or persons, which is signed on behalf of the User by a general partner of the User and is furnished to the Issuer and Trustee. Article - Any subdivision of this Agreement designated with a roman numeral. Board or Board of Directors - The lawfully qualified board of directors of the Issuer. Bondholder - The bearer of any Bond not registered as to principal (or registered as to bearer) or the owner of any Bond registered as to principal (except to bearer) or the owner of any fully registered Bond. Bond Counsel - An attorney or firm of attorneys experi- enced in matters relating to municipal bond law and the tax exemption of interest on bonds of states and their political subdivisions, selected by the Issuer and satisfactory to the Trustee and the User. Bond Resolution - The Initial Bond Resolution and each resolution of the Board of Directors authorizing the issuance of Bonds (including the Trust Indenture prescribed and authorized to be executed in the Initial Bond Resolution) together with any supplemental resolutions or amendments to such resolutions or such Trust Indenture. Bonds - Any and all revenue bonds of the Issuer issued and delivered to finance and pay for all or any part of the Cost of the Project pursuant to the Act and this Agreement, including initial series or issues of revenue bonds and revenue bonds issued to finance and pay for all or any part of the Cost of completing the Project, and any revenue bonds issued for the purpose of refunding or replacing any Bonds. Code -The Internal Revenue Code of 1954, as amended. Commission - The Texas Industrial Commission, and its successors and assigns. • Construction Fund - The segregated account or accounts into which certain proceeds from the sale and delivery of each series of Bonds will be deposited as provided in each Bond Resolution (excepting any Bond Resolution authorizing revenue bonds to refund any Bonds). Cost - With respect to the Project, the cost of acqui- sition, construction, reconstruction, improvement, and expansion of the Project as provided in the Act, including, without limitation, the cost of the acquisition of all land, rights-of-way, property rights, easements, and interests, the cost of all machinery and equipment, financing charges, interest during construction, necessary reserve funds, cost of estimates and of engineering and legal services, plans, specifications, surveys, estimates of cost and of revenue, other expenses necessary or incident to determining the feasibility and practicability of acquiring, constructing, reconstructing, improving, and expanding any such Project, administrative expense, and such other expense as may be necessary or incident to the acquisition , construction, reconstruction, improvement, and expansion thereof, the placing of the same in operation, and the financing of the Project. Debt Service Fund - The segregated account or accounts in which Installment Loan Payments, Liquidated Damages Payments and certain other payments will be deposited as provided in each Bond Resolution. Deed of Trust - The Deed of Trust (with Security Agree- ment and Assignment of Rents and Leases), dated as of May 1, 1982, executed by the User as security for the bonds. 2 Governmental Unit - City of Corpus Christi, Texas, a political subdivision of the State of Texas. Inducement Date - November 4, 1981. Initial Bond Resolution - The Bond Resolution adopted by the Board of Directors, authorizing the issuance and delivery of Corpus Christi Industrial Development Corpora- tion Revenue Bond, Series 1982 (Master Host Inn - Sandy Shores Project) in the principal amount of $7,200,000. Issuer - Corpus Christi Industrial Development Corpora- tion. Installment Loan Payments - Payments required to be made by the User to amortize each series or issue of Bonds, as provided for in the applicable Bond Resolution, including the principal of, redemption premium, if any, and interest on such Bonds when due (whether at stated maturity, upon redemption prior to stated maturity, or upon acceleration of stated maturity). Liquidated Damages Payments - Payments required to be made by the User to the Trustee on behalf of the Bond- holders, in amounts sufficient to pay all liquidated damages due and owing to the holders and former holders of the Bonds. Loan - The loan of the proceeds of the sale of the Bonds as described in Section 3.01. Paying Agent - The Trustee and any other paying agent for an issue or series of Bonds named in the Bond Resolution authorizing such Bonds. Project - The land, buildings, equipment, facilities, and improvements described in Exhibit A to this Agreement. Project Location - The City of Corpus Christi, Texas. Registrar - The registrar for the Bonds named in the Bond Resolution. Regulations - The regulations promulgated by the United States Treasury Department pursuant to the Code. Section - Any subdivision of this Agreement designated by arabic numerals. Trust Indenture - The trust indenture, including all supplements and amendments thereto, prescribed in and 3 executed and delivered pursuant to the Initial Bond Resolu- tion. Trustee - The corporate trustee named under the Trust Indenture, and its successors or assigns. User - Master Host Inn - Sandy Shores, a joint venture partnership organized and existing under the laws of the State of Texas and fully qualified to transact business in the State of Texas, and its herein permitted successors and assigns. References in the singular number in this Agreement shall be considered to include the plural, if and when appropriate. Section 1.02. GENERAL RECITALS, FINDINGS, AND REPRE- SENTATIONS. (a) The Issuer is a nonstock, nonprofit industrial development corporation organized and existing under the laws of the State of Texas, including particularly the Act. (b) The Issuer is a duly constituted authority and public instrumentality of the Governmental Unit, a political subdivision of the State of Texas, within the meaning of the Regulations and the rulings of the Internal Revenue Service prescribed and promulgated pursuant to Section 103 of the Code, and the Issuer is functioning and acting solely on behalf of the Governmental Unit. (c) The User is fully qualified to transact business in the State of Texas, and is fully authorized by law to execute this Agreement. (d) This Agreement is authorized and executed pursuant to applicable laws, including the Act. (e) The User has requested the Issuer to finance the Cost of the Project. (f) The Issuer has determined, in the public interest, that it will finance the Cost of the Project, and loan money to the User for such purpose in the manner provided in the Act and this Agreement. (g) The governing body of the Governmental Unit has approved this Agreement by written resolution as required by the Act. (h) The Issuer and the User have taken all action and have complied with all provisions of law with respect to the execution, delivery and performance of this Agreement and 4 the due authorization of the consummation of the transac- tions contemplated hereby, and this Agreement has been duly executed and delivered by, and constitutes a valid and legally binding agreement of, the Issuer and the User, enforceable against the respective parties in accordance with its terms. (i) The execution of this Agreement and the perform- ance of the transactions contemplated hereby will not violate any law or regulation, or any joint ventureagree- ment, Articles of Incorporation, Charter, or Bylaws, or any judicial order, judgment, decree, or injunction, or contra- vene the provisions of or constitute a default under any agreement, indenture, bond resolution, or other instrument to which the Issuer or the User is a party. (j) The User represents to the Board and the Commis- sion that (1) the Project will contribute to the economic growth or stability of the Governmental Unit by (aa) in- creasing or stabilizing employment opportunities in the Governmental Unit, (bb) significantly increasing or stabi- lizing the property tax base of the Governmental Unit and (cc) promoting commerce within the Governmental Unit and the State of Texas; (2) it has no present intention of disposing of or abandoning the Project; and (3) it has no present intention of directing the Project to a use other than the purposes represented to the Governmental Unit and the Commission. (k) The User further represents to the Board and the Commission that (1) the Project is located within or adja- cent to a designated blighted area; (2) the City of Corpus Christi has approved the Project and has found that the Project will (aa) contribute significantly to the fulfill- ment of the redevelopment objectives of the city for the designated blighted area and (bb) is in furtherance of the public purposes of the Act; and (3) it will not, while the Bonds are outstanding, direct the Project to a use not authorized within the eligible blighted area, as defined by the Act, and the rules promulgated by the Commission pursu- ant to the Act. NOW THEREFORE, in consideration of the covenants and agreements herein made, and subject to the conditions herein set forth, the Issuer and the User contract and agree as follows: 5 ARTICLE II THE PROJECT Section 2.01. APPROVALS AND PERMITS. The Issuer and the User agree to use their best efforts to obtain the necessary approval of this Agreement by the Commission as required by the Act, prior to the issuance of the Bonds, and to obtain all other permits necessary with respect to the acquisition, construction, equipping, and furnishing of the Project. .Section 2.02. ACQUISITION AND CONSTRUCTION. (a) The Project shall be acquired, constructed, equipped, and fur- nished with all reasonable dispatch, and the User will use its best efforts to cause such acquisition, construction, equipping, and furnishing to be completed as soon as practi- cable, delays incident to strikes, riots, acts of God, or the public enemy, or other causes beyond the reasonable control of the User only excepted; but if for any reason there should be delays in such acquisition, construction, equipping, and furnishing there shall be no diminution in or postponement of the Installment Loan Payments, Liquidated Damages Payments, and other payments to be made by the User hereunder, and no resulting liability on the part of the Issuer. (b) The User shall acquire, construct, equip, and furnishthe Project or cause the Project to be acquired, constructed, equipped, and furnished and the Issuer shall have no responsibility or liability whatsoever with respect to the Project and the acquisition, construction, equipping, and furnishing thereof. It is agreed and understood that the User has entered into and executed and will enter into and execute all agreements and contracts necessary to assure and accomplish the actual acquisition, construction, equip- ping, and furnishing of the Project (and that the Issuer shall not execute any such agreements or contracts) and that the User will carry out, pay, supervise, and enforce all such agreements and contracts, and will provide for such insurance on and in connection with the acquisition, con- struction, equipping, and furnishing of the Project as it deems necessary or advisable or as is required by law and this Agreement. The User shall pay, from proceeds from the sale and delivery of the Bonds loaned to it pursuant to this Agreement, and from any available income or earnings derived therefrom, and from other funds of the User to the extent necessary, the entire Cost of the Project. The User shall promptly pay all taxes, including specifically all sales' taxes and ad valorem taxes, in connection with the Project and the acquisition, construction, equipping, and furnishing thereof. The Issuer shall loan certain proceeds from the 6 • sale of the Bonds to the User to be used by the User to pay all or part of the Cost of the Project, in accordance with procedures to be established in any applicable Bond Resolu- tion, including provisions for reimbursing the User for paying all or any part of such Cost under the aforesaid agreements and contracts for the acquisition, construction, equipping, and furnishing of the Project prior to the User's receipt of the Loan as hereinafter provided. It is specifi- cally provided, however, that none of the proceeds from the sale of the Bonds will be used to reimburse the User for, or to pay (and the User hereby covenants and agrees not to request reimbursement of or payment for) any part of the Cost of the Project if such use or payment would result in a violation of any of the User's covenants contained in Section 4.06. Each Bond Resolution (excepting any Bond Resolution authorizing revenue bonds to refund any Bonds) shall contain appropriate provisions with respect to the Construction Fund, to be drawn on and administered as provided in such Bond Resolution. 7 ARTICLE III FINANCING THE PROJECT; TITLE AND OPERATION Section 3.01. THE LOAN. The Issuer shall make the Loan to the User by depositing into the Construction Fund (or such other fund as specifically provided in the Bond Resolution) the proceeds from the sale of Bonds in such 'amount as is provided in each Bond Resolution. The amounts so deposited shall be advanced in the manner provided in the Bond Resolution; and the User shall repay the Loan by making the Installment Loan Payments as provided in this Agreement and the Bond Resolution. Section 3.02. SECURITY FOR THE LOAN. The obligations of the User under this Agreement shall be direct general obligations of the User. Prior to or simultaneously with the issuance of the Bonds, the Issuer will assign to the Trustee under the terms of the Trust Indenture all of the Issuer's right, title, and interest in and to the Install- ment Loan Payments, Liquidated Damages Payments, and certain other payments. In addition, it is recognized and under- stood that the Deed of Trust has been given by the User as additional security for the payment of Installment Loan Payments, Liquidated Damages Payments, and certain other payments for the benefit of the owners of the Bonds. Section 3.03. REPAYMENT OF LOAN AND OTHER AMOUNTS. (a) Notwithstanding any provision expressly or inferenti- ally to the contrary contained herein, the User uncondition- ally agrees that it shall make Installment Loan Payments, Liquidated Damages Payments, and other payments provided for in the Bond Resolution and herein, to the Trustee (pursuant to the aforesaid assignment by the Issuer) .in lawful money of the United States of America, and in such amounts and at such times as shall be necessary to enable the Trustee to make full and prompt payment of the principal of, redemption premium, if any, and interest on all Bonds when due (whether at stated maturity, upon redemption prior to stated matur- ity, or upon acceleration of stated maturity), any agreed Liquidated Damages Payments owed by the User to the Bond- holders, and all fees and expenses of the Trustee, the Registrar, and any Paying Agent for such Bonds, and of all other amounts required to be paid by this Agreement, each Bond Resolution and the Trust Indenture. Upon the issuance and delivery of Bonds to the initial purchaser thereof, and the deposit of the proceeds derived therefrom into the' accounts established in the Bond Resolution, the User shall have received, and the Issuer and the Bondholders shall have given, full and complete consideration for the User's obligation hereunder to make Installment Loan Payments, 8 Liquidated Damages Payments, and other payments. The obligations of the User to make the payments required by this Agreement shall be absolute and unconditional (except as provided in Sections 6.01 and 6.02),, and shall not be subject to diminution by set-off, recoupment, counterclaim, abatement, or otherwise; and until such time as all Install- ment Loan Payments, Liquidated Damages Payments, and other payments provided for in the Bond Resolution and herein shall have been made or provision therefor shall have been made in accordance with each Bond Resolution and the Trust Indenture, the User: (i) will, not suspend or discontinue, or permit the suspension or discontinuance of, any payments provided for in this Agreement; (ii) will perform and observe all of its other agreements contained in this Agreement; and (iii) will not terminate this Agreement for any cause including, without limiting the generality of the foregoing, failure of the Project to comply with the plans and specifications therefor, any acts or circumstances that may constitute failure of consideration, destruction of, or damage to the Project, frustration of commercial purpose, any change in the tax or other laws or administrative rulings of or administrative actions by the United States of America, or the State of Texas, or any political subdivision of either, or any failure of the Issuer to perform and observe any agreement, whether expressed or implied, or any duty, liability, or obligation arising out of or in connec- tion with this Agreement. Nothing contained in this Section shall be construed to release the Issuer from the perform- ance of any of the agreements on its part contained herein; and in the event the Issuer shall fail to perform any such agreement on its part, the User may institute such action against the Issuer as the User may deem necessary to compel performance, provided that no such action shall violate the agreements on the part of the User contained in this Section or postpone or diminish the amounts required to be paid by the User pursuant to this Agreement. (b) Notwithstanding the foregoing, it is the intention of the parties hereto to conform strictly to the applicable usury laws of the State of Texas and the United States of America, and any provision for any payment contained herein and in such Bonds and the interest coupons appertaining thereto, if any, shall be held to be subject to reduction to the amount allowed under said usury laws as now or hereafter construed by the courts having jurisdiction. This provision shall be held to operate to deny the Issuer and the owners of the Bonds and the interest coupons appertaining thereto, if any, the right, in any event, to collect usury with respect to the Loan or any Bonds. Section 3.04. TITLE. The Issuer shall have no right, title, or interest in and to the Project. Except for making 9 the Loan to the User from the source and in the manner provided in this Agreement, the Issuer shall not be respon- sible or liable in any manner for any claims, losses, damages, penalties, costs, taxes, or fines with respect to the acquisition, construction, equipping, furnishing, installation, operation, maintenance, or ownership of the Project. Section 3.05. OPERATION. The User represents and covenants that it will operate and maintain the Project, or cause the Project to be operated and maintained, and will pay, or cause to be paid, all costs and expenses of opera- tion and maintenance of the Project, including all applica- ble taxes, and that it will keep, or cause to be kept, in force adequate insurance, including self-insurance, on the Project as is customarily carried by persons engaged in the same business and operating facilities like the Project. It is understood and agreed that the Issuer shall have no duties or responsibilities whatsoever with respect to the operation or maintenance of the Project, or the performance of the Project for its designed purposes. Section 3.06. INDEMNITIES. The User releases the Commission, its directors, employees and agents, the Issuer, its officers, directors, employees, agents, and attorneys and the Governmental Unit, its officers, agents, attorneys, employees and the members of its governing body (collec- tively the "Indemnified Parties") from, and the Indemnified Parties shall not be liable for, and the User agrees and shall protect, indemnify, defend, and hold the Indemnified Parties harmless from any and all liability, cost, expense, damage or loss of whatever nature (including, but not limited to, attorneys' fees, litigation and court costs, amounts paid in settlement, and amounts paid to discharge judgments) directly or indirectly resulting from, arising out of, in connection with, or related to (i) the issuance, offering, sale, or delivery of the Bonds, the Bond Resolu- tion, the Trust Indenture, and this Agreement and the obligations imposed on the Issuer hereby and thereby; or the design, construction, installation, operation, use, occu- pancy, maintenance, or ownership of the Project; (ii) any written statements or representations made or given by the User or any of its officers or employees, to the Indemnified Parties, the Trustee, or any underwriters or purchasers of any of the Bonds, with respect to the Issuer, the User, the Project, or the Bonds, including, but not limited to, statements or representations of facts, financial informa- tion, or corporate affairs; (iii) damage to property or any injury to or death of any person that may be occasioned by any cause whatsoever pertaining to the Project; and (iv) any loss or damage incurred by the Issuer as a result of viola- tion by the User of the provisions of Sections 4.05 or 4.06. 10 The provisions of the preceding sentence shall remain and be in full force and effect even if any such liability, cost, expense, damage or loss or claim therefor by any person, directly or indirectly results from, arises out of, or relates to or is asserted to have resulted from, arisen out of, or related to, in whole or in part, one or more negli- gent acts or omissions of the Issuer or the Governmental Unit or its officers, directors, employees, agents, ser- vants, or any other party acting for or on behalf of the IsSuer or the Governmental Unit in connection with the matters set forth in clauses (i) through (iv) of said sentence. Section 3.07. ISSUER'S LIMITED LIABILITY. It is recognized that the Issuer's only source of funds with which to carry out its commitments with respect to the Project and this Agreement will be from the proceeds from the sale of the Bonds; and it is expressly agreed that the Issuer shall have no liability, obligation, or responsibility with respect to this Agreement or the Project except to the extent of funds available from such Bond proceeds. If, for any reason, the proceeds from the sale of the Bonds are not sufficient to pay all the Cost of the Project, the User shall complete the Project and pay all such Cost from its own funds, but it shall not be entitled to reimbursement therefor unless additional Bonds are issued for such pur- pose, or to any diminution in or postponement of any pay- ments required to be made by the User hereunder. 11 ARTICLE IV THE BONDS Section 4.01. ISSUANCE OF BONDS. (a) In considera- tion of the covenants and agreements set forth in this Agreement, and to enable the Issuer to issue the Bonds to carry out the intents and purposes hereof, this Agreement is executed to assure the issuance of such Bonds, and to provide for the due and punctual payment by the User to the Trustee of the Installment Loan Payments, the Liquidated Damages and certain other payments. The User shall make the Installment Loan Payments, the Liquidated Damages Payments and certain other payments for the benefit of each series or issue of Bonds, to the Trustee for deposit into the Debt Service Fund as provided in each Bond Resolution. (b) Simultaneously with the authorization of this Agreement by the Board of Directors, such Board has adopted the Initial Bond Resolution. The User hereby approves the Initial Bond Resolution, including the Trust Indenture authorized therein. Each Bond Resolution authorizing addi- tional Bonds shall be subject to the written approval of the Approving Officer and the provisions of any such Bond Resolution shall not be binding or effective upon the User unless and until such approval is given. It is hereby agreed that the foregoing approval of the Initial Bond Resolution and the Trust Indenture, and any approval of any Bond Resolution authorizing the issuance of additional Bonds constitutes the acknowledgment and agreement of the User that such Bonds, when issued and delivered as provided in such Bond Resolution, will be issued in accordance with and in compliance with this Agreement, notwithstanding any other provisions of this Agreement or any other contract or agreement to the contrary. Any Bondholder is entitled to rely fully and unconditionally on any approvals. Notwith- standing any provisions of this Agreement or any other contract or agreement to the contrary, the User's approval of any Bond Resolution (including the Trust Indenture authorized by the Initial Bond Resolution), shall be the User's agreement that all covenants and provisions in such Bond Resolution and the Trust Indenture affecting the User shall, upon the delivery of such Bonds and the Trust Inden- ture, become unconditional, valid, and binding covenants and obligations of the User so long as said Bonds and the interest thereon are outstanding and unpaid. Particularly, the obligation of the User to make, promptly when due, all Installment Loan Payments, Liquidated Damages Payments, and other payments specified in each Bond Resolution and the Trust Indenture shall be absolute and unconditional, and said obligation may be enforced as provided in each Bond Resolution and the Trust Indenture, regardless of any other 12 provisions of this Agreement or any other contract or agreement to the contrary. Upon the request of the User, and only upon its request, the Issuer may, when, in the opinion of the Issuer, it becomes necessary or advisable, authorize and use its best efforts to sell and deliver additional Bonds, in one or more series or issues, in aggre- gate principal amounts sufficient to pay the Cost of the Project. Section 4.02. REFUNDING OF BONDS. After the issuance of any Bonds, the Issuer shall not refund any of the Bonds or change or modify the Bonds in any way, except as provided for in the Bond Resolution, without the prior written approval of the Approving Officer; nor shall the Issuer redeem any Bonds prior to their scheduled maturities, or change or modify any Bond Resolution, without the prior written approval of the Approving Officer, unless such redemption is required by a Bond Resolution. Section 4.03. REDEMPTION OF BONDS. Provision shall be made in each Bond Resolution for the redemption of Bonds prior to maturity, under such terms and conditions as shall be set forth therein. The redemption of any outstanding Bonds prior to maturity at any time shall not relieve the User of its unconditional obligation to pay each remaining Installment Loan Payment, Liquidated Damages Payment, and other payment as specified in any Bond Resolution or the Trust Indenture. The User also shall comply with and be bound by all provisions of this Agreement and of each Bond Resolution and the Trust Indenture with respect to the mandatory and optional redemption of Bonds. Section 4.04. INSTALLMENT LOAN PAYMENTS AND OTHER PAYMENTS. (a) Payment of all Installment Loan Payments, Liquidated Damages Payments and other payments shall be made and deposited as required by each Bond Resolution and the Trust Indenture including all such payments which may come due because of the acceleration of the maturity or maturi- ties of any Bonds upon default, or otherwise, under the provisions of the Trust Indenture. If any available funds in excess of current requirements are held on deposit in the Debt Service Fund at the time payment of any Installment Loan Payment, Liquidated Damages Payment, or other payment is due, such payment may be reduced by the amount of the funds so held on deposit. The User shall have the right to prepay all or a portion of any Installment Loan Payment at any time. Any such prepayment by the User shall not relieve it of liability for each remaining Installment Loan Payment, Liquidated Damages Payment, or other payment as provided in this Agreement and each Bond Resolution and the Trust Indenture. 13 (b) Recognizing that the Installment Loan Payments, Liquidated Damages Payments, and other payments will be the Issuer's sole source for the payment and performance of its obligations to the Trustee, any Paying Agent and the Bond- holders under each Bond Resolution and the Trust Indenture, when any Bonds are delivered, the User shall be uncondition- ally obligated to make and pay, or cause to be made and paid, each Installment Loan Payment, Liquidated Damages Payment, or other payment regardless of whether or not the User actually acquires or completes the Project, or whether or not the User actually approves, purchases, receives, accepts, or uses the Project; and such payments shall not be subject to any abatement, set-off, recoupment, or counter- claim; and the Bondholders shall be entitled to rely on this agreement and representation, notwithstanding any provisions of this Agreement or any other contract or agreement to the contrary, and regardless of the validity of, or the perform- ance of, the remainder of this Agreement or any other contract or agreement. Section 4.05. NO ARBITRAGE. The Issuer and the User hereby covenant with each other and with the Bondholders that they will make no use of the direct or indirect pro- ceeds of the Bonds at any time which will cause the Bonds to be arbitrage bonds within the meaning of Section 103(c) of the Code or the Regulations pertaining thereto; and by this covenant the Issuer and the User are obligated to comply with the requirements of the aforesaid Section 103(c) and the pertinent Regulations. Section 4.06. TAX-EXEMPT STATUS OF INTEREST ON THE BONDS AND MANDATORY REDEMPTION. (a) The Issuer covenants that it shall, prior to the issuance of the Bonds, duly elect to have the provisions of Section 103(b)(6)(D) of the Code apply to such issue, and such election shall be made in accordance with the applicable Regulations. The User cove- nants that it shall furnish to the Issuer whatever informa- tion is necessary for the Issuer to make any such election and the User shall file with the Internal Revenue Service such supplemental statements and other information as are required by the applicable Regulations with respect to all capital expenditures made, paid, or incurred by or on behalf of the User or any person related to the User, within the meaning of Section 103(b)(6)(C) of the Code, in the Project Location, and in any other political jurisdiction contiguous thereto with respect to any facilities contiguous to or integrated with any facilities in the Project Location, within the meaning of Sections 1.103-10(b)(2)(ii)(e) and 1.103-10(d) (2)(i) of the Regulations (collectively the "Project Area"). 14 (b) The User hereby covenants that (i) substantially all the proceeds (within the meaning of Section 103(b)(6) of the Code) from the sale of the Bonds will be used and expended for amounts paid or incurred after the Inducement Date for the acquisition, construction, reconstruction, or improvement of land or property of a character subject to the allowance for depreciation under the Code, and (ii) except as otherwise set forth in a certificate or statement furnished to the Issuer and its Bond Counsel prior to the issuance of Bonds, the acquisition, construction, recon- struction, or improvement of the Project did not begin before the Inducement Date, nor was any work performed or any costs paid or incurred by the User or any other entity in connection with such acquisition, construction, recon- struction, or improvement before the Inducement Date. (c) The User represents (i) that all of the proceeds of the Bonds are to be used with respect to the Project, which will be located wholly within the Governmental Unit; (ii) that, except for any person related to the User within the meaning of Section 103(b)(6)(C) of the Code, the User will be the only principal user of the Project within the meaning of Section 103(b)(6) of the Code; and (iii) that, except for the Bonds, there will not be outstanding on the date of delivery of the Bonds any obligations of any state, territory, or possession of the United States, or any poli- tical subdivision of the foregoing or of the District of Columbia constituting "exempt small issues" within the meaning of Section 1.103-10 of the Regulations, the proceeds of which have been or are to be used primarily with respect to facilities located in the Project Location, or in any contiguous political jurisdiction with respect to any contiguous or integrated facilities, and which are to be used principally by the User (including any person related to the User within the meaning of Section 103(b)(6)(C) of the Code). (d) The User further covenants and represents that it has not made, paid, or incurred, and will not make, pay, or incur any capital expenditures which would cause the interest on the Bonds to become subject to federal income taxes pursuant to the provisions of Section 103(b) of the Code. The User further covenants that it has not taken any action or permitted any action to be taken, and that it will not take any action or permit any action to be taken, which would result in a Determination of Taxability, as hereinaf- ter defined, and that the User has not failed to take and will not fail to take any action required to prevent the occurrence of such Determination of Taxability. (e) The User acknowledges that the capital expendi- tures referred to in the preceding paragraphs include all 15 capital expenditures within the Project Area and all capital expenditures incurred elsewhere relating to the Project, including, without limitation, research and development costs, which may, under any rule or election under the Code, be treated as a capital expenditure (whether or not such expenditure is so treated). (f) The User further covenants that it shall furnish to the Issuer and its Bond Counsel, prior to the issuance of the Bonds, a certificate or statement of the aggregate amount of capital expenditures (other than those to be financed from the proceeds of the Bonds) made, paid, or incurred in the Project Area or made,.paid, or incurred elsewhere with respect to the Project ("Included Capital Expenditures") during the period beginning three years before the date of delivery of such issue. The User cove- nants that it will furnish to the Trustee (i) a copy of supplemental statements required to be filed with the Internal Revenue Service by Section 1.103-10 of the Regula- tions listing by date and amount any Included Capital Expenditures (other than those mentioned in Section 103(b)(6)(F) of the Code) during the three-year period beginning as of the date of issuance of the Bonds, including all such Included Capital Expenditures not listed on the capital expenditure certificate filed with the Internal Revenue Service prior to the issuance of the Bonds, and (ii) within 30 days after it has made, paid, or incurred the maximum amount of capital expenditures permitted under Section 103(b)(6)(D) of the Code, a statement to that effect. Such supplemental statements shall be filed with the District Director of Internal Revenue or the Director of the regional service center of the Internal Revenue Service with whom the User's federal income tax return is required to be filed on the due date prescribed for filing such return (without regard to any extensions of time). Each such supplemental statement shall set forth a description of those capital expenditures which are capital expenditures under Section 103(b)(6)(D)(ii) of the Code and shall take into account facilities referred to in Section 103(b)(6)(E) of the Code in computing such capital expenditures. This covenant shall survive the termination of this Agreement. (g) The User covenants that a Determination of Tax- ability shall not occur, whether or not as a result of any action or inaction by the User. (h) A "Determination of Taxability" as used herein, and in the Initial Bond Resolution and in the Form of Bond included therein shall mean any of the following: (i) It is determined (in an opinion of Bond Counsel) that interest paid in respect of a Bond 16 is includable for federal income tax purposes in the gross income of a holder or former holder of a Bond (other than the User, or a "substantial user" or a "related person" as those terms are used in Section 103 of the Code; or (ii) The Internal Revenue Service issues a "notice of deficiency" or similar notice to any such holder or former holder assessing a tax in respect of any interest on the Bonds; or (iii) The Internal Revenue Service enters into any settlement agreement with any holder or former holder of any Bonds under which a tax, penalty or interest in respect of any interest on such Bonds is to be assessed. (i) The User shall have no right to require any holder or former holder of any Bond to contest or pursue any appeal of, or have any communication with the Internal Revenue Service concerning a Determination of Taxability or any notice from .the Internal Revenue Service or any agent thereof proposing that interest on the Bonds be taxable, and no holder or former holder of any Bond shall have a duty to make any such contest or pursue any such appeal or have any such communication. In the event that a holder or former holder of any Bond, in the exercise of his, her or its sole discretion, does contest or appeal or have any communication with the Internal Revenue Service concerning a Taxable Event or a Determination of Taxability, or any notice from the Internal Revenue Service or an agent thereof proposing that interest on the Bonds be taxable, the holder or former holder of the Bond shall retain full control over the settlement or other disposition of any and all issues before the Internal Revenue Service with respect to the Bonds. (j) Should a Determination of Taxability occur, there shall be a prompt mandatory redemption prior to maturity of the entire outstanding and unpaid principal and accrued interest of the Bonds, and the payment by the User to the Bondholders of appropriate and sufficient agreed Liquidated Damages Payments (for loss of a bargain and not as a pen- alty) all as shall be provided for in, and in accordance with the provisions of, each Bond Resolution. Such payment of liquidated damages shall be a direct obligation of the User to the Bondholders and shall be paid to the Trustee for the benefit of such Bondholders during the term of this Agreement and thereafter shall be paid by the User directly to such Bondholders. Section 4.07. PAYMENTS TO ISSUER. At the time of delivery of each series or issue of Bonds, and from the 17 proceeds of the sale and delivery of such Bonds, there shall be paid all of the fees, expenses and costs required to be so paid by the Issuer's local regulations and policies. Also, the User agrees to pay directly to the Issuer such other amounts at the time and in the manner required by the Issuer's local regulations. 18 ARTICLE V COVENANT AND REMEDIES Section 5.01. COVENANT. The User unconditionally agrees and covenants with the Issuer and the Trustee that it will pay, or cause to be paid, when due, each Installment Loan Payment, Liquidated Damages Payment, and other payment required and prescribed to be paid by it pursuant to each Bond Resolution. The User further unconditionally agrees and covenants to pay all reasonable expenses and charges, legal or otherwise (including court costs and attorneys' fees), paid or incurred by the Issuer and the Trustee in realizing upon any of the said payments to be made by the User or in enforcing the provisions of this Agreement or any Bond Resolution or the Trust Indenture. Section 5.02. TRUSTEE AND REMEDIES. (a) The User is advised and recognizes that the Issuer will assign all of its right, title, and interest in and to all the Installment Loan Payments, Liquidated Damages Payments, and certain other payments, required to be made pursuant to this Agree- ment, and the right to receive and collect same, to the Trustee. The Trustee, or the Bondholders to the extent provided in the Bond Resolution and the Trust Indenture, may enforce the obligations of the User under this Agreement, the Bond Resolution, and the Trust Indenture in the manner provided in the Trust Indenture, without the necessity of making the Issuer a party. (b) In the event of a default in the payment of any Installment Loan Payment, Liquidated Damages Payment, or other payment, or in the performance of any agreement or covenant contained herein or in any Bond, any Bond Resolu- tion, or the Trust Indenture, such payment and performance may be enforced by mandamus or by the appointment of a receiver in equity with power to charge and collect Install- ment Loan Payments, Liquidated Damages Payments, and other payments and to apply such revenues in accordance with this Agreement, the Bonds, each Bond Resolution, and the Trust Indenture. Section 5.03. GENERAL PROVISIONS. (a) The terms of this Agreement may be enforced as to one or more breaches either separately or cumulatively. (b) No remedy conferred upon or reserved to the Issuer, the Trustee, or the Bondholders in this Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy now or hereafter existing at law or in equity or by statute. No 19 delay or omission to exercise any right or power accruing upon any default, omission, or failure of performance hereunder shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In the event any provision contained in this Agreement should be breached by the User and thereafter duly waived, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach of this Agreement. No waiver by either party of any breach by the other party of any of the provisions of this Agreement shall be construed as a waiver of any subsequent breach, whether of the same or of a different provision of this Agreement. (c) Headings of the Articles and Sections of this Agreement have been inserted for convenience of reference only and in no way shall they affect the interpretation of any of the provisions of this Agreement. (d) This Agreement is made for the exclusive benefit of the Issuer, the Trustee, the Bondholders, and the User, and their respective successors and assigns herein permit- ted, and not for any other third party or parties; and nothing in this Agreement, expressed or implied, is in- tended to confer upon any party or parties other than the Issuer, the Trustee, the Bondholders, and the User, and their respective successors and assigns herein permitted, any rights or remedies under or by reason of this Agreement. (e) The validity, interpretations, and performance of this Agreement shall be governed by the laws of the State of Texas. Section 5.04. AMENDMENT OF AGREEMENT. No amendment, change, addition to, or waiver of any of the provisions of this Agreement shall be binding upon the parties hereto unless in writing signed by the Approving Officer and the President of the Board of Directors. In addition to amend- ments for any other purpose, it is specifically understood that this Agreement may be amended, if deemed necessary or advisable by the User and the Issuer, to change the defini- tion and scope of the term "Project", as used herein, so as to permit the acquisition, construction, equipping, and furnishing of other or additional facilities, at the same or other locations, or improvements related to the Project, pursuant to this Agreement and in accordance with applicable laws, with the same effect as if they had been described originally in Exhibit A hereto. Notwithstanding any of the foregoing, it is covenanted and agreed, for the benefit of the Bondholders and the Trustee, that (without the concur- rence of all of the Bondholders and the Trustee) the 20 provisions of this Agreement shall not be amended, changed, added to, or waived in any way which would relieve or abrogate the obligations of the User to make or pay, or cause to be made, or paid, when due, all Installment Loan Payments, Liquidated Damages Payments, or other payments with respect to any then outstanding Bonds in the manner and under the terms and conditions provided herein and in any Bond Resolution or the Trust Indenture, or which would materially change or affect Sections 4.04, 4.05, 4.06, 6.01, or 6.02. 21 ARTICLE VI SPECIAL COVENANTS Section 6.01. PARTNERSHIP EXISTENCE. The User agrees that during the term of this Agreement it will maintain its existence as a general partnership under the laws of the State of Texas, and will not terminate or otherwise dispose of all or substantially all of its assets. It is understood that Exeter Investment Company and Luxury Lodges, Inc., partners in the User, will be permitted to sell 10% each of their ownership in the User to their employees. Section 6.02. ASSIGNMENT. The User shall not assign its interest in this Agreement or any of its rights or obligations hereunder except as specifically provided in this Agreement. The User may assign its interest in this Agreement to another party provided that the User shall remain and be primarily responsible and liable for all of its obligation hereunder, including particularly the making of all payments required hereunder, when due. Section 6.03. FINANCIAL REPORTS. The User shall have annual financial statements made by its regular independent certified public accountants, and shall furnish the Trustee either a copy of such financial statements within 90 days after the end of the fiscal year for which such financial statements were made. In addition, said statements shall be accompanied by a review opinion of said certified public accountants that said financial statements so furnished fairly present the financial condition of the User. Section 6.04. TERM OF AGREEMENT. The term of this Agreement shall be from the date hereof until all payments required to be made by the User pursuant hereto shall have been made, provided, however, that the provisions of Sec- tions 3.06, 4.04, 4.05 and 4.06 shall survive the termina- tion of this Agreement and shall continue in effect regard- less of the termination of this Agreement. Section 6.05. TERMINATION. This Agreement may be terminated by mutual agreement at any time prior to the delivery of and payment for any Bonds. However, if any Bonds have been issued and delivered, the term of this Agreement shall be as set forth in Section 6.04, and this Agreement may not and shall not be sooner terminated by either or both parties hereto. Section 6.06. NOTICES. Any notice, request, or other communication under this Agreement shall be given in writing and shall be deemed to have been given by either party to the other party upon either of the following dates: 22 (a) One business day after the date of the mailing thereof, as shown by the post office receipt, if mailed to the other party hereto by registered or certified mail at the applicable address as follows: Corpus Christi Industrial Development Corporation Attention: President 302 South Shoreline P. 0. Box 9271 Corpus Christi, Texas 78408 Master Host Inn - Sandy Shores Attention: Stern Feinberg 3200 Surfside Corpus Christi, Texas 78408 With copy to: Exeter Investment Company Attention: David Hill P. 0. Box 2206 Lufkin, Texas 75901 or the latest address specified by such other party in writing; or (b) The date of the receipt thereof by such other party if not so mailed by registered or certified mail. Any notice, request, or other communication made or given under this Agreement shall be given to the Trustee by registered or certified mail at the applicable address as follows: RepublicBank Dallas, National Association Attention: Corporate Trust Department P. O. Box 2964 Dallas, Texas 75221 or the latest address specified by said Trustee in writing. Section 6.07. SEVERABILITY. If any clause, provision, or Section of this Agreement should be held illegal or invalid by any court of competent jurisdiction, the invalid- ity of such clause, provision, or Section shall not affect any of the remaining clauses, provisions, or Sections hereof and this Agreement shall be construed and enforced as if such illegal or invalid clause, provision, or Section had not been contained herein. In case any agreement or obliga- tion contained in this Agreement should be held to be in violation of law, then such agreement or obligation shall be deemed to be the agreement or obligation of the Issuer and 23 the User, as the case may be, to the full extent permitted by law. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed in multiple counterparts, each of which shall be considered an original for all purposes, as of the day and year first set out above. CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION By President, Board of Directors ATTEST: Secretary, Board of Directors (SEAL) 24 MASTER HOST INN - SANDY SHORES Luxury Lodges, Inc., Partner By Title ATTEST: Secretary (SEAL) ATTEST: Exeter Investment Company, Partner By Title Secretary (SEAL) 25 Exhibit A Description of the Project The Project consists of the expansion of the existing 115 room hotel/restaurant facility. It involves the con- struction of a six -story tower which will contain 139 new guest rooms and suites adjacent to the present location at 3200 Surfside Blvd., Corpus Christi, Texas. In addition to the new guest rooms, the tower will house the new lobby/registration area, administrative offices, gift shop, coffee shop, club and dining room and meeting/banquet rooms seating 300 persons. A new kitchen facility will service the new banquet rooms, coffee shop and restaurant. An existing building will be completely reno- vated and will contain an enclosed swimming pool and addi- tional meeting facilities. A-1 , : RESOLUTION AUTHORIZING THE ISSUANCE OF CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION REVENUE BOND, SERIES 1982 AND THE EXECUTION OF A TRUST INDENTURE (MASTER HOST INN - SANDY SHORES PROJECT) TABLE OF CONTENTS (The Table of Contents is not a part of the Resolution but is for convenience of reference only) PAGE Title 1 Recitals 1 Resolution 3 SECTION 1. DESIGNATION, AMOUNT, AND PURPOSE 3 OF THE BONDS SECTION 2. DATE, DENOMINATION, NUMBERS, AND 3 MATURITIES OF THE BONDS SECTION 3. INTEREST ON THE BONDS 3 SECTION 4. GENERAL CHARACTERISTICS OF BONDS 4 (a) In General 4 (b) Registration Books 4 (c) Payment of Registered Owner 5 (d) Notation of Prepayment 5 (e) Temporary Bonds 5 SECTION 5. FORM OF BONDS 6 SECTION 6. PLEDGE 16 SECTION 7. DEBT SERVICE FUND 16 (a) Establishment of Debt Service 16 Fund (b) Accrued Interest 16 (c) Installment Loan Payments 17 (d) Liquidated Damages Payments 18 (e) Trustee, Registrar and Paying 18 Agent Payments (f) Other Payments 19 (g) Redemption 19 (h) Payments from Debt Service 19 Fund (i) Immediately Available Funds 20 (j) Investment of Funds 20 SECTION 8. SECURITY FOR FUNDS SECTION 9. TBE USER'S PAYNENTS PAGE 21 21 (a) Unconditional Obligation 21 (b) Prepayments 21 SECTION 10. ADDITIONAL PARITY BONDS 21 (a) Additional Bonds 21 (b) Amendments to Trust Indenture 23 Unnecessary SECTION 11. SPECIAL COVENANTS 23 (a) Installment Loan Payments, 23 Liquidated Damages Payments and Certain Other Payments Pledged to Bonds Only (b) Non -Encumbrance 23 (c) Performance by Issuer 24 (d) Certain Modifications 24 Prohibited SECTION 12. BONDS ARE SPECIAL OBLIGATIONS 24 SECTION 13. AMENDMENTS 24 (a) Amendment with Consent of 24 Owners of 66 2/3% of Bonds (b) Notice of Amendment 25 (c) Consent to Amendment 25 (d) Effect of Amendment 26 (e) Consent of Bondholders 26 (f) Ownership of Bonds 26 (g) Amendments Without Consent 27 SECTION 14. ESTABLISHMENT OF CONSTRUCTION FUND 27 (a) Deposit of Bond Proceeds into 27 Construction Fund (b) Investment of Money in 27 Construction Fund (c) Deposit of Accrued Interest, 28 Income, and Profits PAGE SECTION 15. PAYMENTS FROM CONSTRUCTION FUND 28 (a) Issuer's Administrative Overhead 28 Expenses and Other Costs (b) Reimbursements for and Payment 28 of Cost of Project (c) Reliance by Trustee 30 SECTION 16. SURPLUS CONSTRUCTION FLTNDS 30 (a) Disposition of Surplus Funds 30 (b) Disposition of Construction 30 Fund upon Acceleration and Redemption SECTION 17. DAMAGED, MUTILATED, LOST, STOLEN, OR 31 DESTROYED BONDS (a) Replacement Bonds 31 (b) Application for Substitute 31 Bonds (c) No Default Occurred 31 (d) Charge for Issuing Substitute 31 Bonds (e) Authority for Issuing Substitute 31 Bonds SECTION • 18. NO ARBITRAGE 32 SECTION 19. FINDINGS 32 SECTION 20. SALE OF THE BONDS 32 SECTION 21. TRUST INDENTURE 32 RESOLUTION AUTHORIZING THE ISSUANCE OF CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION REVENUE BOND, SERIES 1982, AND THE EXECUTION OF A TRUST INDENTURE (MASTER HOST INN - SANDY SHORES PROJECT) lilt STATE OF TEXAS CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION WHEREAS, Corpus Christi Industrial Development Corpora- tion (the "Issuer") is a nonstock, non-profit industrial development corporation organized and existing under the laws of the State of Texas, including particularly the Development Corporation Act of 1979, as amended (Article 5190.6, V.A.T.C.S.) (the "Act"); and WHEREAS, the Issuer is a duly constituted public instrumentality of the City of Corpus Christi, 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 Service prescribed and promulgated pursuant to Section 103 of the Internal Revenue Code of 1954, as amended (the "Code"), and the Issuer is functioning and acting solely on behalf of the Governmental Unit; and WHEREAS, a "Loan Agreement between Corpus Christi Industrial Development Corporation and Master Host Inn - Sandy Shores", dated as of May 1, 1982 (such agreement, as amended from time to time, being hereinafter the "Agree- ment"), has been or will be duly executed between the Issuer andMaster Host Inn - Sandy Shores (the "User"); and WHEREAS, the User is a joint venture organized and existing under the laws of the State of Texas, and is fully qualified to transact business in the State of Texas; and WHEREAS, the Agreement, is hereby adopted by reference for all purposes, with the same effect as if it had been set forth in entirety in this bond resolution (this "Initial Bond Resolution"); and WHEREAS, the Agreement was executed to provide for the acquisition, construction, equipping, and furnishing of a project (as defined by the Act) and to provide a loan to the User for such purpose; and WHEREAS, this preamble and the trust indenture (the "Trust Indenture") hereinafter set forth in this Initial Bond Resolution shall constitute an integral part of this Initial Bond Resolution; and WHEREAS, the corporate trustee under the Trust Inden- ture (the "Trustee") will have the duties and obligations hereinafter provided; and WHEREAS, the bonds authorized to be issued by this Initial Bond Resolution (the "Bonds") are to be issued and delivered pursuant to applicable laws, including the Act; and WHEREAS, the User and the Trustee have entered into a Deed. of Trust (with Security Agreement and Assignment of Rents and Leases) dated as of May 1, 1982 (the "Deed of Trust"), providing further security for the payment of the Installment Loan Payments, Liquidated Damages Payments and certain other payments for the benefit of the owners of the Bonds; and WHEREAS, the User will have duly approved and agreed to be bound by this Initial Bond Resolution (including the Trust Indenture) prior to the delivery of the Bonds; and WHEREAS, as provided in the Agreement, by such approval of this Initial Bond Resolution (including the Trust Inden- ture) the User will have agreed and acknowledged that the Bonds, when issued, sold, and delivered as provided in this Initial Bond Resolution, will be issued in accordance and compliance with the Agreement, and that, upon the issuance, sale, and delivery of the Bonds, and the execution and delivery of the Trust Indenture, the User will be uncondi- tionally obligated to the Issuer and the Trustee to make or pay, or cause to be made or paid, without set-off, recoup- ment, or counterclaim, to the Trustee the "Installment Loan Payments" required by the Agreement and by this Initial Bond Resolution (including the Trust Indenture) in amounts suffi- cient to pay the principal of, redemption premium, if any, and interest on the Bonds, when due, agreed liquidated damages, if any, all fees and expenses of the Trustee and Registrar and the paying agents for the Bonds, and all other amounts required to be paid by the Agreement, this Initial Bond Resolution, and the Trust Indenture, all as hereinafter set forth; and WHEREAS, for purposes of this Initial Bond Resolution, the definitions of terms in the Agreement, the Deed of Trust, and the Trust Indenture are hereby adopted, and the terms given herein shall have the same meanings as such terms are given in said Agreement, Deed of Trust, and Trust Indenture unless a different meaning is given herein. THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION THAT: 2 Section 1. DESIGNATION, AMOUNT, AND PURPOSE OF THE BONDS. The Issuer's bond designated and to be known as CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION REVENUE BOND, SERIES 1982 (MASTER HOST INN - SANDY SHORES PROJECT) (the "Bond" or the "Bonds") is hereby authorized to be issued in the aggregate principal amount of $7,200,000 on behalf of THE CITY OF CORPUS CHRISTI, TEXAS TO PAY PART OF THE COST OF ACQUIRING, CONSTRUCTING, EQUIPPING, AND FURNISH- ING, OR CAUSING TO BE ACQUIRED, CONSTRUCTED, EQUIPPED, AND FURNISHED A PROJECT (THE "PROJECT") IN Jait, CITY OF CORPUS CHRISTI, TEXAS, FOR MASTER HOST INN - SANDY SHORES (THE "USER") FOR THE SPECIFIC PURPOSE OF THE PROMOTION AND ENCOURAGEMENT OF EMPLOYMENT AND THE PUBLIC WELFARE. Section 2. DATE, DENOMINATION, NUMBER, AND MATURITIES OF THE BONDS. The Bond initially authorized hereby shall be dated May 1, 1982, shall be issued and delivered in the form of a single fully registered bond, without coupons, payable in installments to the registered owner thereof, or its registered assigns, all in the manner hereinafter provided, with the Bond to be numbered R-1 and to be in the denomina- tion and principal amount of $7,200,000 and initially payable to REPUBLICBANK DALLAS, NATIONAL ASSOCIATION, DALLAS, TEXAS The principal of said Bond to be payable in quarterly installments on the dates and in the amounts as set forth in the FORM OF BOND in Section 5. Section 3. INTEREST ON THE BOND. (a) The Bond initi- ally authorized hereby shall bear interest on the unpaid balance of the principal amount thereof from the date of delivery to the initial purchaser thereof (which date shall be indicated by the Trustee in the Delivery Certificate appearing on the Bond) to the scheduled due date, or date of prepayment or redemption prior to the scheduled due date, of the principal installments of the Bond, at the rate, and calculated, as set forth in the FORM OF BOND. The interest shall be payable on the dates and in the manner provided in the FORM OF BOND set forth in Section 5. (b) In substitution of the floating interest rate specifically set forth in the FORM OF BOND in Section 5, on any date conditioned upon the User's designating a purchaser of the Bond in accordance with the FORM OF BOND in Section 5, the Issuer and the User may, by mutual agreement, and approval thereof by Bond Counsel, fix the interest rate borne by the Bond at a specific rate not to exceed a Net Effective Interest Rate of 15% (as calculated pursuant to 3 Article 717k-2, V.A.T.C.S. as it exists on the date of issuance of the Bond); upon such agreement the Bond shall bear interest at such fixed rate from the date of purchase by such designated purchaser; the agreement to fix the interest rate borne by the Bond shall be accomplished by an amendment to this Initial Bond Resolution adopted by the Issuer and agreed upon in writing by the User, the provi- sions of Section 13 hereof notwithstanding, amending the provisions of this Section 3, stating the rate of interest to be borne by the Bond; upon the execution of any such amendatory resolution the Bond shall be endorsed by the Trustee to indicate the rate of interest to be borne by the Bond thereafter. Section 4. GENERAL CHARACTERISTICS. (a) In General. The Bond initially authorized hereby shall be issued,. shall be payable, may or shall be prepaid or redeemed prior to the scheduled principal installment payment dates, may be trans- ferred and assigned, shall have the characteristics, and shall be signed and executed (and the Bond shall be sealed), all as provided, and in the manner indicated, in the FORM OF BOND set forth in Section 5. After the Bond has been authorized to be issued by the Board of Directors of the Issuer, and prior to the delivery of the Bond, the Trustee shall authenticate the Bond by executing the Trustee's Certificate of Authentication appearing on the Bond as provided in Section 5. In addition, on the date of delivery of the Bond to the initial purchaser thereof, the Trustee shall fill in the date of delivery of the Bond in the Delivery Certificate appearing on the Bond as provided in Section 5. (b) Registration Books. The Issuer shall keep or cause to be kept at the principal corporate trust office of the Trustee books for the registration and transfer of Bonds (the "Bond Registration Books") and the Issuer hereby appoints the Trustee as its registrar and transfer agent (the "Registrar") to keep such books and make such registrations and transfers under such reasonable regulations as the Issuer and Registrar may prescribe; and the Registrar will register or transfer as herein provided, any Bonds upon presentation thereof at such office. The User, and each Bondholder shall have the right to inspect such Bond Registration Books during the normal business hours of the Trustee upon giving reasonable notice. Registration of the Bonds may be transferred only on the Bond Registration Books upon surrender thereof by the registered owner in person or by his duly authorized attorney, by proper written instrument of transfer, in the form and with guaranty of signatures satisfactory to the 4 Registrar, duly executed by such owner or attorney. Upon such surrender for transfer of registration, the Registrar shall make notation of such transfer on the Bonds in the Assignment section appearing thereon and in the Bond Registration Books. Such transfers of registration shall be made without charge to the owner of such Bonds, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the Bondholder requesting such transfer of registration, as a condition precedent to the exercise of such privilege. The Trustee shall not be required to make transfers of any Bond within ten (10) days prior to an interest payment date or redemption date or subsequent to the date of mailing of notice of redemption of such Bond or a portion thereof (until after the date set for such redemption), anything in such Bond to the contrary notwithstanding. (c) Payment to Registered Owner. The person in whose name any Bond shall be registered on the Bond Registration Books may be deemed and treated as the absolute owner thereof for all purposes of this Initial Bond Resolution and the Trust Indenture whether or not such Bond shall be overdue, and the Issuer, the Trustee, and the User shall not be affected by any notice to the contrary; and payment of, or on account of, the principal of, premium, if any, agreed Liquidated Damages Payments, if any, and interest on any such Bond shall be made only to such registered owner thereof; but such registration may be changed as provided herein. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. (d) Notation of Prepayment. The Issuer hereby ap- points the Trustee as the Paying Agent for the Bonds. Upon the prepayment or partial redemption of any Bond, the Trustee, as Registrar and Paying Agent, shall note in the Prepayment Record appearing on such Bond the amount of such prepayment or redemption, the date said payment was made and the remaining unpaid principal balance of said Bond and shall then have said entry signed by an authorized official of the Trustee. The Trustee shall also record such informa- tion in the Bond Registration Books, and the Trustee shall also record in the Bond Registration Books all payments of principal,installments on the Bonds when made on their respective due dates. (e) Temporary Bonds. Until 'Bonds in definitive form are ready for delivery, the Issuer may execute, and upon its request, the Trustee shall authenticate and deliver in lieu of any thereof, and subject to the same provisions, 5 limitations, and conditions, one or more printed, lithographed, or typewritten Bonds in temporary form, substantially of the tenor of the Bonds as provided in the FORM OF BOND set forth in Section 5 and with appropriate omissions, variations, and insertions. Such Bond or Bonds in temporary form may be for such principal amount as the Issuer may determine. Until exchanged for Bonds in definitive form, such Bonds in temporary form shall be entitled to the lien and benefit of this Initial Bond Resolution and the Trust Indenture. The Issuer shall, without unreasonable delay, prepare, execute, and deliver to the Trustee, and thereupon, upon the presentation and surrender of the Bond or Bonds in temporary form, Issuer shall, without unreasonable delay, prepare, execute, and deliver to the Trustee, and thereupon, upon the presentation and surrender of the Bond or Bonds in temporary form, the Trustee shall authenticate and deliver, in exchange therefor, a Bond or Bonds in definitive form in authorized denominations of the same maturity and interest rate for the same aggregate principal amount as the Bond or Bonds in temporary form surrendered. Such exchange shall be made by the Issuer at its own expense and without making any charge therefor. When and as interest is paid upon Bonds in temporary form the fact of such payment shall be noted thereon by the Registrar. Section 5. FORM OF BOND. The form of the Bonds, together with the forms of the various certificates and forms to appear on the Bonds, shall be, respectively, substantially as follows, with necessary and appropriate variations, omissions, and insertions as permitted or required by this Initial Bond Resolution: FORM OF BOND NO. R-1 $7,200,000 UNITED STATES OF AMERICA STATE OF TEXAS CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION REVENUE BOND SERIES 1982 (MASTER HOST INN- SANDY SHORES PROJECT) CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION (the "Issuer"), being a nonstock, nonprofit industrial develop- ment corporation organized and existing under the laws of the State of Texas, including particularly the Development Corporation Act of 1979, as amended (Article 5190.6, V.A.T.C.S.) (the "Act"), and acting on behalf of the City of 6 Corpus Christi, Texas, hereby promises to pay to Republic- Bank Dallas, National Association, Dallas, Texas, or its registered assigns, the aggregate principal amount of SEVEN MILLION TWO HUNDRED THOUSAND DOLLARS in installments, of $72,000 each commencing on September 1, 1984 and on the 1st day of each December, March, June and September thereafter through March 1, .2007 with the final installment of $648,000 due on June 1, 2007 and to pay interest on the unpaid principal balance hereof from the date of delivery hereof (which date appears in the Delivery Certificate endorsed on this Bond) which interest (unless and until otherwise fixed as hereinafter provided) shall be based on the number of days actually elapsed at a per annum rate determined daily on the basis of a 360 day year equal to 65% of the Prime Rate (hereinafter defined) (the "Formula Rate") as announced from time to time by RepublicBank Dallas, National Association (the "Bank"), until the principal hereof may become due and payable, and at a rate of 15% per annum (based on a 365 or 366 day year, as appropriate) on overdue principal, and overdue amounts of liquidated damages, if any, and, to the extent legally permissible, on overdue interest; provided however, that, on any date, if the Formula Rate shall be such that the Net Effective Interest Rate (as defined and calculated in accordance with Article 717k-2, V.A.T.C.S., as it exists on the date of issuance of the Bonds, the "Net Effective Interest Rate") from the date of delivery of the Bonds to such date shall exceed 15%, the Formula Rate shall be that interest rate which produces a Net Effective Interest Rate from the date of delivery of the Bonds to that date of 15% and on each date thereafter, the Formula Rate shall be that interest rate which produces a Net Effective Interest Rate from the date of delivery of the Bonds to such date of 15% until such future date as the Net Effective Interest Rate from the date of delivery of the Bonds to such future date is the same as it would have been but for this proviso. Any change in the Prime Rate shall automatically and without notice to the Issuer be effective for the purpose of chang- ing the rate of interest which this Bond bears as of the date of any such change. Provided, that interest payable on this Bond, together with any other costs or considerations that constitute interest under applicable law, shall not exceed the maximum amount of interest ,permitted to be paid on this Bond under applicable law. The interest to be paid on this Bond on any date on which interest is payable on this Bond shall be calculated by first determining the amount of interest on the unpaid principal balance of this Bond from time to time outstanding at the Formula Rate in effect from time to time from the date of delivery of this 7 Bond through the corresponding Calculation Date (hereinafter defined) then deducting any interest previously paid on this Bond to determine the amount of interest payable on such interest payment date. The interest on this Bond is payable on August 1, 1982 and monthly thereafter on the 1st day of each month while this Bond is outstanding by check or draft mailed to, or wire transfer to, the registered owner at its address as it appears on the Bond Registration Books of the Issuer kept by the Registrar (provided that in the alterna- tive such payment may be made by any other method requested in writing by the registered owner, subject to the approval of the Trustee), in each case solely from the sources and in the manner hereinafter described. Both principal and interest are payable, without exchange or collection charges in lawful money of the United States of America. For the purposes of this Bond, "Prime Rate" shall be defined as the rate announced from time to time by the Bank as of the close of the business day as the Prime Rate of the Bank. THE TRUSTEE (hereinafter defined) shall notify the User, pursuant to the notice provisions of. the Agreement (hereinafter defined), of the Prime Rate, the Formula Rate and the total interest due on the balance of the principal amount outstanding on the Bond (the "Interest Calculation") on a date (the "Notice Date") no less than 5 days prior to the next date (the "Payment Date") fixed for any payment of interest or unpaid principal amount of the Bond which Interest Calculation shall represent the full amount of interest due on said Payment Date. 'The Interest Calculation with respect to a particular Payment Date shall be made on a date (the "Calculation Date") 10 days prior to such Payment Date. Provided, however, with respect to the Payment Date on which the User shall pay the entire outstanding principal balance of this Bond both the Notice Date and the Calcula- tion Date shall be the same as such Payment Date with the Interest Calculation to be made on such Payment Date, and the Trustee to provide the User with telephonic notice of such Interest Calcuation. The final payment of principal on this Bond shall be paid only upon surrender of this Bond to the Trustee for cancellation. THIS BOND is dated as of May 1, 1982 and was authorized and issued in the aggregate principal amount of $7,200,000 pursuant to a resolution adopted by the Board of Directors of the Issuer (the "Initial Bond Resolution") on behalf of THE CITY OF CORPUS CHRISTI, TEXAS TO PAY PART OF THE COST OF ACQUIRING, CONSTRUCTING, EQUIPPING, AND FURNISHING, OR CAUSING TO BE ACQUIRED, CONSTRUCTED, EQUIPPED, AND FURNISHED A PROJECT (THE "PROJECT") IN THE CITY OF CORPUS CHRISTI, TEXAS, FOR MASTER HOST INN - SANDY SHORES (THE "USER") FOR 8 THE SPECIFIC PURPOSE OF TBE PROMOTION AND ENCOURAGEMENT OF EMPLOYMENT AND THE PUBLIC WELFARE. ON ANY DATE, the unpaid principal installments of this Bond are subject to optional prepayment or redemption and may be prepaid or redeemed prior to their scheduled due dates, by the Trustee at the option of the User, with funds furnished by the User at a prepayment or redemption price equal to the principal amount thereof plus accrued interest thereon to the date of prepayment or redemption, and without premium, upon written notice of the exercise of the option to prepay or redeem delivered to the Trustee by the User not later than the 45th day prior to the date of prepayment or redemption. Such unpaid principal installments may be so prepaid or redeemed as a whole on any date, or in part on any interest payment date (and, if in part, such install- ments shall be prepaid or redeemed in inverse chronological order of their scheduled due dates, and in amounts not less than all of an unpaid principal installment). Provided further any prepayment or redemption of any presentation of this Bond to the Trustee who shall make notation of such prepayment or redemption in the Prepayment Record endorsed on this Bond. ON ANY DATE ON AND AFTER MARCH 1, 1987, the Bond is subject to mandatory redemption by the Trustee, with funds provided by the User upon receipt by the Trustee of 180 days written notice from the initial registered owner only of the Bond, that said owner as the current owner of the Bond intends to exercise its right, hereby granted, to put the Bond to the Trustee for redemption at a price equal to the principal amount thereof plus accured interest thereon to the date of redemption, and without premium. ON ANY DATE prior to the mandatory redemption date described in the preceding paragraph, the User may furnish evidence to the Trustee of a binding commitment on the part of a purchaser to buy the Bond under the terms of which said purchase is to be consummated on or prior to said mandatory redemption date. By the purchase and acceptance of this Bond, the initial registered owner hereof agrees to enter into a timely, binding commitment to sell in accordance with the terms of this paragraph and to sell this Bond to such purchaser as the User may designate at a price equal to the unpaid principal installments hereof plus accrued interest hereon to the date of such sale, and without premium. Pursuant to Section 3(b) of the Initial Bond Resolu- tion, the interest rate borne by the Bond may, upon the purchase of the Bond by a designated purchaser as provided for in the immediately preceding paragraph hereof, be fixed 9 at a fixed interest rate not to exceed a Net Effective Interest Rate of 15%. Any such fixing of the interest rate shall be accomplished by an amendment to the Initial Bond Resolution mutually agreed to by the Issuer and User solely, any other provision of this Bond or the Initial Bond Reso— lution to the contrary notwithstanding. Upon the execution of any such amendatory resolution, the Trustee shall endorse hereon the interest rate to be borne by the Bond thereafter. ON ANY DATE, the unpaid principal installments of this Bond are subject to mandatory prepayment or redemption, as a whole, and shall be prepaid or redeemed prior to their scheduled due dates, by the Trustee, with funds which shall be furnished by the User, on the earliest practicable date, and in all events within sixty days, following the occur- rence of a Determination of Taxability as defined and provided for in the Agreement (hereinafter defined). The prepayment or redemption price in such event shall be equal to the unpaid principal amount of this Bond so prepaid or redeemed, plus accrued interest to the date of prepayment or redemption. In addition, there shall be due and owing an additional amount calculated by subtracting (i) the amount of interest paid or accrued on the Bond between the earliest date (the "Taxable Date") from which interest paid in respect of this Bond is determined to be includible for federal income tax purposes in the gross income of the holder of this Bond and the redemption date (the "Inclusion Period") from (ii) the quotient of the amount of said interest divided by one minus the Maximum Federal Corporate Tax Rate (hereinafter defined); plus the amount of interest or penalties which are payable by the holder of this Bond in connection with the Determination of Taxability; plus the reasonable costs and expenses incurred by the holder of this Bond and the Trustee in connection with the Determination of Taxability, with all such additional amounts being the agreed liquidated damages (for loss of a bargain and not as a penalty) which the owner of this Bond will be due, and which shall be a direct obligation of the User. "Maximum Federal Corporate Tax Rate" is defined to mean the maximum rate of income taxation to which a corporation is subject under the Internal Revenue Code of 1954, as amended, as in effect from time to time. Any change in the Maximum Federal Corporate Tax Rate which applies to the Inclusion Period shall automatically be reflected in the calculation of agreed liquidated damages. IN ADDITION, if there shall be a Determination of Taxability, the User shall be obligated to, and promptly shall, pay an additional amount to the Trustee for the sole benefit of (i) any prior registered owner of this Bond, if this Bond was transferred prior to the mandatory redemption 10 dated described in the preceding paragraph or (ii) any registered owner of this Bond with respect to principal installments which were paid, prepaid or redeemed during the Inclusion Period. Such payment shall be sufficient in aggregate to pay in respect of this Bond or principal installments hereof the amount the owner thereof would have received as agreed liquidated damages if, and assuming that, the aforesaid mandatory redemption date had occurred on the actual date of payment, prepayment, transfer or redemption of this Bond or portion hereof. The Trusee shall pay such additional amount to each such owner or prior owner during the applicable period, as shown by the Bond Registration Books. ON ANY DATE, the unpaid principal installments of this Bond are subject to prepayment or redemption, and may be prepaid or redeemed prior to the scheduled due dates by the Trustee, in inverse chronological order of their scheduled due dates (in the denominations of $1,000 or any integral multiple thereof), at a prepayment or redemption price equal to the principal amount thereof to be prepaid or redeemed plus accrued interest thereon to the date of prepayment or redemption, and without premium, with and to the extent of any surplus funds remaining in the Construction Fund (created by the Initial Bond Resolution) after the completion of the Project, as provided and required by Section 16 of the Initial Bond Resolution. THE AGREEMENT provides that any provision for any payment contained in the Agreement or this Bond shall be held to be subject to reduction to the amount allowed under the applicable usury laws of the State of Texas and the United States of America, as now or hereafter construed by the courts having jurisdiction, and it is agreed by the Issuer and the owner of this Bond that in no event shall usury be paid or collected with respect to this Bond. AT LEAST 30 DAYS PRIOR to the date fixed for any pre- payment or redemption of the unpaid principal installments of this Bond, the Trustee shall cause a written notice of such redemption to be mailed to the registered owner of this Bond addressed to such owner at the address appearing on the Bond Registration Books. By the date fixed for any such prepayment or redemption, due provision shall be made by the User with the Trustee and the Paying Agent for the payment of the principal amount of this Bond which is to be prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemption, plus any required prepayment or redemption premium, and any other amounts due the owner of this Bond. If such written notice of prepayment or redemption is given and if due provision for payment of the 11 redemption price is made, all as provided above, the unpaid principal installments of this Bond which are to be prepaid or redeemed thereby automatically shall be deemed to have been prepaid or redeemed prior to their scheduled due dates, and they shall not bear interest after the date fixed for prepayment or redemption, and they shall not be regarded as being outstanding except for the right of the owner thereof to receive the redemption price from the Paying Agent out of the funds provided for such payment. Upon presentation of this Bond to the Paying Agent, such unpaid principal installments which are to be prepaid or redeemed, shall be paid at the redemption price. IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date of payment. IT IS HEREBY CERTIFIED AND COVENANTED that this Bond has been duly and validly authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law; that this Bond is a special revenue obligation of the Issuer, and that the principal of and interest on this Bond are payable from and secured by a first lien on and pledge and assignment of the payments designated as "Installment Loan Payments", "Liquidated Damages Payments" and certain other payments to be made or paid, or caused to be made or paid, to the Trustee, pursuant to the Initial Bond Resolu- tion, the Trust Indenture and the "Loan Agreement between the Corpus Christi Industrial Development Corporation and Master Host Inn - Sandy Shores", dated as of May 1, 1982 (such Loan Agreement, as amended from time to time, being herein the "Agreement"). The User, a Texas joint venture, is unconditionally obligated to make or pay, or cause to be made or paid, without set-off, recoupment, or counterclaim, to the Trustee each such Installment Loan Payment for deposit into the Debt Service Fund created for the benefit of the owners of the Bonds by the Initial Bond Resolution, in aggregate amounts sufficient to pay and redeem, and provide for the payment and redemption of, the principal of and interest on this Bond, and to pay all other amounts required by the Agreement, the Initial Bond Resolution, and 12 the Trust Indenture when due, subject to and as required by the provisions of the Agreement, the Initial Bond Resolu- tion, and the Trust Indenture. THIS BOND is secured by a Trust Indenture dated as of May 1, 1982 (the "Trust Indenture"), whereunder RepublicBank Dallas, National Association, or its successor, as Trustee, is custodian of the Debt Service Fund and is obligated to enforce the rights of the owner of this Bond and to perform other duties in the manner and under the conditions stated in the Trust Indenture. In case an "Event of Default", as defined in the Trust Indenture, shall occur, the unpaid principal installments of this Bond may be declared to be due and payable immediately upon the conditions and in the manner provided in the Trust Indenture. This Bond is addi- tionally secured by a Deed of Trust and Security between the User and the Trustee (the "Deed of Trust") relating to certain property of the User pledged to secure the payment of this Bond. Reference is hereby made to the Initial Bond Resolution, the Trust Indenture, the Deed of Trust, and the Agreement for additional provisions with respect to the nature and extent of the security, the rights, duties, and obligations of the User, the Issuer, the Trustee, and the owner of this Bond, the terms upon which this Bond is issued and secured, and the modification of any of the foregoing. THE ISSUER has reserved the right, subject to the restrictions stated in the Initial Bond Resolution, to issue additional parity revenue bonds ("Additional Bonds") which, when issued and delivered, shall be payable from the Debt Service Fund, and shall be payable from and secured by a first lien on and pledge of Installment Loan Payments, Liquidated Damages Payments and certain other payments pursuant to the Agreement and entitled to the benefits of and secured by the Trust Indenture, and the Deed of Trust in the same manner and to the same extent as, and be on a parity with, this Bond and all then outstanding Additional Bonds. THE ISSUER also has reserved the right to amend the Initial Bond Resolution and the Trust Indenture, as provided therein; and under some (but not all) circumstances amend- ments thereto must be approved by the owners of 66 2/3% in aggregate principal amount of this Bond then outstanding and any Additional Bonds then outstanding. THE OWNER HEREOF shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation or from any source whatsoever except the payments and amounts described in this Bond, the Initial Bond Resolution, the Trust Indenture, the Agreement, and the 13 Deed of Trust. Except for the lien on and the assignment and pledge of such property, payments, and amounts, no property of the Issuer is encumbered by any lien or security interest for the benefit of the owner of this Bond. Neither the State of Texas, the City of Corpus Christi, 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 obli- gated to pay the principal of this Bond, any premium or payment with respect to—this Bond, or the interest hereon; and neither the faith and credit, nor the taxing power, of the State of Texas, the City of Corpus Christi, Texas, nor any other political corporation, subdivision, or agency of the State of Texas, is pledged to the payment of the princi- pal of this Bond, any premium or payment with respect to this Bond, or the interest hereon. THIS BOND may be assigned and shall be transferred only on the Bond Registration Books of the Issuer kept by the Trustee, as Registrar, upon the terms and conditions set forth in the Initial Bond Resolution, the Trust Indenture and the Assignment provisions endorsed hereon. Such transfers shall be without expense to the owner hereof, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the owner requesting such transfer as a condition precedent to the exercise of such privilege. The Trustee shall not be required to make transfers of this Bond within ten (10) days prior to an interest payment date or prepayment or redemption date or subsequent to the date of mailing of notice of prepayment or redemption of any principal installments of this Bond, anything in this Bond to the contrary notwithstanding. The registered owner of this Bond may be deemed and treated by the Issuer, the Trustee, and the User, as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer, the Trustee, and the User shall not be affected by any notice to the contrary. THIS BOND shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Trust Indenture, until the Trustee's Certificate of Authentication hereon shall have been signed by the Trustee and the Delivery Certificate hereon shall have been com- pleted. IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signatures of the President and the 14 Secretary of the Board of Directors of the Issuer, and the official seal of the Issuer has been duly impressed, or placed in facsimile, on this Bond. Secretary, Board of Directors President, Board of Directors (ISSUER'S SEAL) FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Bond is the Bond initially issued under the pro- visions of the within mentioned Agreement, Initial Bond Resolution, and Trust Indenture. REPUBLICBANK DALLAS, NATIONAL ASSOCIATION, Trustee By Authorized Signature FORM OF ASSIGNMENT ASSIGNMENT FOR VALUE RECEIVED, the registered owner of this Bond last listed below sells, assigns, and transfers the within Bond to the Assignee last listed below, and hereby autho- rizes the transfer of this Bond on the Bond Registration Books of the Trustee. Such assignment shall not be effec- tive until such Assignee presents this Bond to the Trustee for verification of such assignment and gives the Trustee its address to which payments shall be made and the Trustee makes notation of such Assignment below. 15 DATE OF REGISTERED SIGNATURE OF ASSIGNMENT OWNER ASSIGNEE REGISTRAR FORM OF DELIVERY CERTIFICATE DELIVERY CERTIFICATE THIS BOND was delivered to and paid for by the pur- chaser hereof on FORM OF PREPAYMENT RECORD PREPAYMENT RECORD Date Principal Remaining Name & Title of Signature of of Prepayment or Principal Authorized Officer Authorized Payment Redemption Balance Making Entry Officer ENDORSEMENT AS TO INTEREST RATE Pursuant to Section 3(b) of the Initial Bond tion, the interest rate borne by this Bond shall be from and after this day of Resolu - REPUBLICBANK DALLAS, NATIONAL ASSOCIATION, Trustee By Authorized Officer 16 Section 6. PLEDGE. The Bonds and the interest thereon are and shall be payable from and secured by a first lien on and pledge and assignment of the payments designated as Installment Loan Payments, Liquidated Damages Payments and certain other payments to be made or paid, or caused to be made or paid, to the Trustee by the User, pursuant and subject to the terms and provisions of this Initial Bond Resolution, the Trust Indenture, and the Agreement; and such Installment Loan Payments, Liquidated Damages Payments and certain other payments are further pledged and assigned irrevocably to the establishment and maintenance of the Debt Service Fund hereinafter created. Section 7. DEBT SERVICE FUND. (a) Establishment of Debt Service Fund. A separate and special trust fund to be designated and known as the "Debt Service Fund" shall be established by the Issuer with the Trustee for the benefit of the owners of the Bonds pursuant to the Agreement and the Trust Indenture, and maintained as provided in this Initial Bond Resolution and the Trust Indenture, as long as any of the Bonds, or interest thereon, is.outstanding and unpaid. (b) Accrued Interest. Immediately after the delivery of the Bond to the initial purchaser thereof, all accrued interest, if any, received from the proceeds from the sale and delivery of the Bond, shall be transferred by the Trustee into the Debt Service Fund. (c) Installment Loan Payments. The User shall make or pay, or cause to be made or paid, to the Trustee, which shall deposit into the Debt Service Fund, Installment Loan Payments as follows: (1) On or before each interest payment date as provided in the FORM OF BOND set forth in Section 5, an amount which, together with any other amounts then on deposit therein and available for such purpose, will be sufficient to pay the interest coming due on the Bond on each interest payment date; and (2) On or before each principal payment date as provided in Section 2 and in the FORM OF BOND set forth in Section 5, an amount which, together with any other amounts then on deposit therein and available for such purpose, will be sufficient to pay the principal of the Bond scheduled to be paid on each principal payment date; and (3) On or before any optional or mandatory prepayment or redemption date as permitted or required in the 17 FORM OF BOND set forth in Section 5, an amount which, together with any other amounts then on deposit and available for such purpose, will be sufficient to pay the prepayment or redemption price (but not including any agreed liquidated damages) specified therein; and (4) On any date on which the Bonds are declared to be .immediately due and payable pursuant to the Trust Indenture, an amount which, together with any other amounts then on deposit and available for such purpose, will be sufficient to pay the prin- cipal of all Bonds then outstanding and the interest accrued thereon to such date. In the event the User should fail to make or pay, or cause to be made or paid, any of the required Installment Loan Payments set forth in this Section, each such required payment shall continue as an obligation of the User until fully paid, and the User agrees to pay the same to the Trustee, for the benefit of the owners of the Bonds, with interest thereon, to the extent legally permissible, at the rate of fifteen percent (15%) per annum (based on a 365 or 366 day year, as appropriate) from the date any such payment was due until payment thereof. (d) Liquidated Damages Payments. The User shall make or cause to be made or paid, to the Trustee, which shall deposit into a separate fund held for that purpose within the Debt Service Fund, Liquidated Damages Payments (for loss of a bargain and not as a penalty) as follows: (1) Promptly after the occurrence of a Determination of Taxability, resulting in a mandatory prepayment or redemption of Bonds, an amount which, together with any other amounts then on deposit and available for such purpose, will be sufficient to pay the agreed liquidated damages as provided in the FORM OF BOND set forth in Section 5 due and owing with respect to the Bonds to be prepaid or redeemed on such mandatory prepayment or redemption date; and (2) Promptly after the occurrence of a Determination of Taxability, resulting in a mandatory prepayment or redemption of Bonds, the additional amount necessary to pay the agreed liquidated damages as provided in the FORM OF BOND set forth in Section 5 due and owing to the registered owner or owners of the Bonds which were paid, transferred, or redeemed, in whole or in 18 part, prior to such mandatory prepayment or redemption as specified in the FORM OF BOND set forth in Section 5. In the event the User should fail to make or pay, or cause to be made or paid, any of the required Liquidated Damages Payments set forth in this Section, each such required payment shall continue as an obligation of the User until fully paid, and the User agrees to pay the same to the Trustee, for the benefit of the owners of the Bonds, with interest thereon, to the extent legally permissible, at the rate of fifteen percent (15%) per annum (based on a 365 or 366 day year, as appropriate) from the date any such payment was due until payment thereof. (e) Trustee, Registrar and Paying Agent Payments. Promptly after receipt of each statement and request for payment, the User shall make or pay, or cause to be made or paid, to the Trustee, which shall deposit into the Debt Service Fund, Trustee, Registrar and Paying Agent Payments in an amount equal to the charges of the Trustee for performing the duties of Trustee and Registrar, and the charges of the Paying Agent for the Bonds, as designated in the FORM OF BOND set forth in Section 5, for paying or redeeming principal installments of the Bonds, and paying the interest thereon. In the event the User should fail to make or pay, or cause to be made or paid, any of the required Trustee, Registrar, and Paying Agent Payments set forth in this Section, each such required payment shall continue as an obligation of the User until fully paid, and the User agrees to pay the same to the Trustee, for the benefit of the owners of the Bonds, with interest thereon, to the extent legally permissible, at the rate of fifteen percent (15%) per annum (based on a 365 or 366 day year, as appropriate) from the date any such payment was due until payment thereof. (f) Other Payments. The User shall make or pay, or cause to be made or paid, to the Trustee, which shall deposit into the Debt Service Fund, payments (other than those provided for in subsections (c), (d) and (e), above) in an amount sufficient to pay, at the required time, all other payments required to be paid by the User under the terms of this Initial Bond Resolution, the Agreement or the Trust Indenture. In the event the User should fail to make or pay, or cause to be made or paid, any of the required payments set forth in this subsection, each such required payment shall 19 continue as an obligation of the User until fully paid, and the User agrees to pay the same to the Trustee, for the benefit of the owners of the Bonds, with interest thereon, to the extent legally permissible, at the rate of fifteen percent (15%) per annum (based on a 365 or 366 day year, as appropriate) from the date any such payment was due until payment thereof. (g) Redemption. The Bonds initially authorized hereby shall be subject to redemption, and may or shall be redeemed, as specified in the FORM OF BOND set forth in Section 5. (h) Payments from Debt Service Fund. Except as other- wise specifically provided in this Initial Bond Resolution or the Trust Indenture, the Debt Service Fund shall be used by the Trustee only to pay the principal of, and prepayment or redemption premium, if any, agreed liquidated damages, if any, and interest on the Bonds, when due, and the charges of the Trustee, Registrar, and Paying Agent; and the Trustee shall make available to the Paying Agent, out of the Debt Service Fund, the amounts required to pay or redeem the principal of and interest on the Bonds when due, and the Trustee shall make all other payments as required by this Initial Bond Resolution and the Trust Indenture. (i) Immediately Available Funds. The User shall make all Installment Loan Payments, Liquidated Damages Payments, and other payments provided for herein, in funds that will be immediately available and allow the Paying Agent to pay, in lawful money of the United States of America, the principal, interest, and other amounts with respect to the Bonds, when due. (j) Investment of Funds. Any money held as part of the Debt Service Fund shall be invested or reinvested by the Trustee, upon the written direction of the Approving Officer in any obligations, including certificates of deposit. The Trustee shall make no investments except as specifically directed by the Approving Officer. The investments of the Debt Service Fund shall be deemed to be a part of such Fund, and, for the purpose of determining the amount of money in such Fund, such investments shall be valued at their cost or market value, whichever is lower. The income and profits, including realized discount on obligations purchased, received from such investments shall be deposited in or credited to the Debt Service Fund, and any losses on investments thereon shall be charged against the Debt Service Fund. If at any time it shall become necessary that some or all of the investments made with the moneys from the Debt Service Fund be redeemed or sold to raise moneys 20 necessary to comply with the provisions of this Initial Bond Resolution or the Trust Indenture, the Trustee shall, without further authorization, effect such redemption or sale, employing, in the case of a sale, any commercially reasonable method of effecting the same. The Trustee shall not be liable or responsible for any loss resulting from any such investment or resulting from the redemption or sale of any such investment as herein authorized; except that the Trustee shall be liable for (1) any loss resulting from its willful or negligent failure, within a reasonable time after receiving the written direction from the Approving Officer to make, redeem, or sell any investment in the manner provided for herein, and (2) except for any redemption or sale made pursuant to the next preceding sentence of this paragraph, for any loss resulting from the making, redeem- ing, or selling of any investment which was not authorized by written direction of the Approving Officer. If the Trustee is unable, after reasonable effort and within a reasonable time, to make, redeem, or sell any such invest- ment, it shall so notify in writing the Approving Officer and thereafter the Trustee shall be relieved of all respon- sibility with respect thereto. In the event of any such loss, the User shall make additional deposits to restore same if and to the extent required to enable the Trustee to make all payments required to be made from the Debt Service Fund, and such additional deposits shall constitute addi- tional amounts of Installment Loan Payments. Section 8. SECURITY FOR FUNDS. All uninvested money in all Funds established pursuant to this Initial Bond Resolution (including the Debt Service Fund and the Con- struction Fund), shall be secured by the Trustee in such manner and to such extent as is required of national banks when acting in a fiduciary capacity. Section 9. THE USER'S PAYMENTS. (a) Unconditional Obligation. The User has covenanted in the Agreement, and, by the approval of this Initial Bond Resolution, the User further has unconditionally obligated itself and agreed, regardless of and notwithstanding any provisions of the Agreement, other than Sections 6.01 and 6.02 thereof relat- ing to merger, consolidation, transfer of assets, and assignment, and regardless of the provisions of any other agreement or contract to the contrary, to make or pay, or cause to be made or paid, without set-off, recoupment, or counterclaim, the Installment Loan Payments, the Liquidated Damages Payments, and certain other payments to the Trustee in the amounts required by Sections 7(c), 7(d), 7(e) and 7(f) to be made into the Debt Service Fund, and to make such payments on or before the dates specified in this Initial Bond Resolution and the Trust Indenture; and said payments 21 by the User shall be and constitute the Installment Loan Payments the Liquidated Damages Payments, and certain other payments as contemplated and required by the Agreement. Each Bondholder is and shall be entitled to rely uncondi- tionally on the agreements, covenants, and representations set forth in this Initial Bond Resolution and the Trust Indenture. (b) Prepayments. It is further understood that the User may prepay all or any part of each Installment Loan Payment, and any such prepayment, and any earnings thereon, shall be applied by the Trustee to the payment of each Installment Loan Payment; provided .that the prepayment or redemption at any time of any unpaid principal installments of the Bonds prior to their due dates, with funds from any source (whether from Installment Loan Payments or otherwise), shall not relieve the User of its obligation to make or pay, or cause to be made or paid, each Installment Loan Payment as specified in Section 9(a), when due with respect to any remaining unpaid principal installments of the Bonds. Section 10. ADDITIONAL PARITY BONDS. (a) Additional Bonds. The Issuer reserves the right, upon the request of the User, to issue additional parity revenue bonds ("Addi- tional Bonds") in any amounts, for any lawful purpose or purposes, including the refunding of any outstanding Bonds. Such Additional Bonds, along with the Bond authorized by this Initial Bond Resolution, shall be considered, constitute, and be "Bonds" as defined in, and for all purposes of, the Agreement and the Trust Indenture. Furthermore, for all purposes of this Initial Bond Resolution, the term "Bonds" shall mean and include the Bond authorized hereby and any Additional Bonds, unless the context otherwise indicates. When issued and delivered such Additional Bonds, the redemption premium, if any, agreed liquidated damages, if any, and the interest thereon, shall be payable from the Debt Service Fund, and shall be payable from and secured by a first lien on and pledge and assign- ment of Installment Loan Payments pursuant to the Agreement, and secured by the Trust Indenture and the Deed of Trust in the same manner and to the same extent as, and be on a parity with, all then outstanding Bonds and Additional Bonds. Such Additional Bonds may be issued in one or more series or issues, in various principal amounts, maturing at different times, bearing interest at different rates, be payable in installments or otherwise be redeemable prior to maturity, with or without redemption premium, on whatever terms or prices, and may contain such other provisions as may be provided in any Bond Resolution authorizing the issuance of such Additional Bonds. It is provided, however, 22 that no series or issue of Additional Bonds shall be issued unless: (i) In the opinion of Bond Counsel (A) the issuance of such Additional Bonds will not adversely affect the exemption from federal income taxation of the interest on the then outstanding Bonds and Additional Bonds, or affect the validity of the then outstanding Bonds or Additional Bonds and (B) such Additional Bonds are secured in the same manner and to the same extent as and are on a parity with all then outstanding Bonds and Additional Bonds; (ii) A certificate is executed by the President and Secretary of the Board of Directors of the Issuer to the effect that, to their best knowledge and belief, no default or event of default exists in connection with the Bonds or the Trust Indenture (or any amendment or supplement thereto) or with any of the covenants or requirements of this Initial Bond Resolution or the Bond Resolutions (or any amendments or supplements thereto) authorizing the issuance of all then outstanding Bonds and Additional Bonds, and that the Debt Service Fund contains the amount then required to be on deposit therein; (iii) The Bond Resolution authorizing the issuance of such series or issue of Additional Bonds provides for additional Installment Loan Payments, Liquidated Damages Payments, and certain other payments to be deposited into the Debt Service Fund in amounts sufficient to pay all principal of, redemption premium, if any, agreed liquidated damages, if any, and interest on such Additional Bonds, together with all Trustee, Registrar, and Paying Agent fees and expenses attributable to such Additional Bonds; (iv) The Approving Officer approves in writing the Bond Resolution authorizing the issuance of such series or issue of Additional Bonds, as required by the Agreement; (v) The principal and interest payment dates during any year in which principal and interest on such Additional Bonds are scheduled to be paid, are the same for the Additional Bonds and the Bonds; and (vi) The Texas Industrial Commission expressly gives its prior approval to the issuance of such Addi- tional Bonds. 23 (b) Amendments to Trust Indenture Unnecessary. It shall not be necessary or required that the Trust Indenture be amended or supplemented to cause any series or issue of Additional Bonds to be secured by the Trust Indenture. All that shall be necessary or required to cause any such Addi- tional Bonds to be secured by the Trust Indenture is for the Issuer to deliver, in addition to the documents required in Section 10(a) to the Trustee a certified copy of the Bond Resolution authorizing their issuance prior to the delivery of such Additional Bonds. Section 11. SPECIAL COVENANTS. The Issuer further covenants as follows: (a) Installment Loan Payments, Liquidated Damages Payments and Certain Other Payments Pledged to Bonds Only. Other than for the payment of the Bonds, as provided in this Initial Bond Resolution and the Trust Indenture, the In- stallment Loan Payments, Liquidated Damages Payments and certain other payments have not in any manner been pledged or assigned to the payment of any debt or obligation of the Issuer; (b) Non -Encumbrance. While any of the Bonds is out- standing, the Issuer will not (except with respect to the Bonds and any Additional Bonds and except as provided in the Agreement, any Bond Resolution, or the Trust Indenture) in any manner whatsoever create, assume, or suffer to exist, directly or indirectly, any mortgage, lien, encumbrance, pledge, or charge against the Debt Service Fund, the Installment Loan Payments, the Liquidated Damages Payments or certain other payments, the Construction Fund, or any property or moneys deposited with or assigned to the Trustee; (c) Performance by Issuer. The Issuer will carry out all of its covenants and obligations under this Initial Bond Resolution; and the Issuer may be required to carry out such covenants and obligations by all legal and equitable means, including, but without limitation, actions for specific per- formance and the use and filing of mandamus proceedings, in any court of competent jurisdiction, against the Issuer, its Board of Directors, and its officials and employees; and (d) Certain Modifications Prohibited. The Issuer covenants and agrees that it will not execute or permit the execution of any contract or agreement, or terminate or amend the Agreement, in any manner that would relieve or abrogate the obligations of the User to make or pay, or cause to be made or paid, when due, all Installment Loan Payments, Liquidated Damages Payments, and other payments, 24 in the manner and to the extent required by the Agreement, this Initial Bond Resolution, and the Trust Indenture, or which would change or affect Sections 4.04, 4.05, 4.06, 6.01 and 6.02 of the Agreement without the written consent of all of the Bondholders and the Trustee. Section 12. BONDS ARE SPECIAL OBLIGATIONS. The Bonds are and shall be special revenue obligations of the Issuer payable solely from payments to be made under the Agreement, this Initial Bond Resolution, the Deed of Trust, and the Trust Indenture; and the Bondholders shall never have the right to demand payment thereof or the interest thereon out of funds raised or to be raised by taxation, or from any source whatsoever other than the foregoing. The Bonds are not and shall never be considered as obligations of the State of Texas, the Governmental Unit, or any other politi- cal subdivision or agency of the State of Texas, or of the Board of Directors of the Issuer, either individually or collectively. Section 13. AMENDMENTS. (a) Amendment with Consent of Owners of 66 2/3% of Bonds. Subject to approval in writing by the Approving Officer of the User, the owners of 66 2/3% in aggregate principal amount of the then outstanding Bonds shall have the right from time to time to approve any amendment to any Bond Resolution, or to the Trust Indenture (provided that the Trustee must approve any amendment to the Trust Indenture), which may be deemed necessary or desirable by the Issuer; provided, however, that nothing herein contained shall permit or be construed to permit the amendment, without the consent of the owner of each of the then outstanding Bonds affected thereby, of the terms and conditions of any Bond Resolution, the Bonds, or the Trust Indenture, so as to: (1). change the Debt Service Fund requirements, interest payment dates, or the due date or dates, or the maturity or maturities of the outstanding Bonds; (2) reduce the rate of interest borne by any of the outstanding Bonds; (3) reduce the amount of the principal of, redemption premium, if any, liquidated damages, if any, or interest on the outstanding Bonds, or impose any conditions with respect to such payments; (4) modify the terms of payment of principal of, redemption premium, if any, liquidated damages, if any, or interest on the outstanding Bonds, or 25 (5) impose any conditions with respect to such pay- ments; affect the rights of the owners of less than all of the Bonds then outstanding; (6) decrease the minimum percentage of the principal amount of Bonds necessary for consent to any such amendment; or (7) alter the obligations of the User to pay Install- ment Loan Payments, Liquidated Damages Payments, and other payments in the manner and to the extent provided in the Agreement, the Bond Resolution, and the Trust Indenture. (b) Notice of Amendment. If at any time the Issuer shall desire to amend any Bond Resolution, or the Trust Indenture, under this Section, the Issuer shall file a copy of the proposed amendment at the principal office of the Trustee and shall cause notice of the proposed amendment to be given in writing to each owner of the Bonds. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Trustee for inspection by all owners of Bonds. (c) Consent to Amendment. Whenever at any time not less than 30 days, and within one year, from the date of the service of written notice the Issuer shall receive an instrument or instruments executed by the owners of at least 66 2/3% in aggregate principal amount of all Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and shall specifically consent to and approve such amendment, the Issuer may adopt the amendatory resolution in substantially the same form. (d) Effect of Amendment. Upon the adoption of any amendatory resolution pursuant to the provisions of this Section, any such Bond Resolution, or the Trust Indenture, shall be deemed to be amended in accordance with such amendatory resolution, and the respective rights, duties, and obligations under such amendatory resolution, or the Trust Indenture, of all the Bondholders shall thereafter be determined and exercised subject in all respects to such amendments. (e) Consent of Bondholders. Any consent given by a Bondholder pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of 26 the giving of the notice provided for in this Section, and shall be conclusive and binding upon all future owners of the same Bond during such period. Such consent may be revoked at any time after six months from the date of the giving of such notice by the Bondholder who gave such consent, or by a successor in title, by filing notice thereof with the Trustee and the Issuer, but such revocation shall not be effective if the owners of 66 2/3% in aggregate principal amount of the then outstanding Bonds have, prior to the attempted revocation, consented to and approved the amendment. (f) Ownership of Bonds. For the purpose of this Section, the fact of being a Bondholder and the amount and numbers of such Bonds, and the date of being a Bondholder, may be conclusively presumed, or may be proved by an affi- davit satisfactory to the Issuer and the Trustee of the person claiming to be such Bondholder, or by a certificate executed by any trust company, bank, banker, or any other depository wherever situated showing that at the date there- in mentioned such person has on deposit with such trust company, bank, banker, or other depository, the Bonds des- cribed in such certificate, or in any other manner, whether or not the Bonds -are so deposited, as the Trustee may ap- prove. The Issuer may conclusively presume that the status of any Bondholders will continue until written notice to the contrary is served upon the Issuer. (g) Amendments Without Consent. Notwithstanding the provisions of (a) through (f) of this Section, and without notice of the proposed amendment and without the consent of the Bondholders, but subject to approval of the Approving Officer and, in the case of any amendment to the Trust Indenture, with the approval of the Trustee, the Issuer may, at any time, amend any Bond Resolution, or the Trust Inden- ture, to cure any ambiguity or cure, correct, or supplement any defective or inconsistent provision contained therein, or make any other change that does not in any respect materially and adversely affect the interest of the Bond- holders, provided that no such amendment shall be made contrary to the proviso to Section 13(a), and a duly certi- fied or executed copy of each such amendment shall be filed with the Trustee. Section 14. ESTABLISHMENT OF CONSTRUCTION FUND. (a) Deposit of Bond Proceeds into Construction Fund. Prior to or immediately after the sale and delivery of the Bonds authorized hereby, the Issuer shall establish the Construc- tion Fund with the Trustee, as defined in and required by the Agreement. The Issuer shall deposit all of the proceeds from the sale and delivery of the Bonds authorized hereby 27 into the Construction Fund. The Trustee shall draw on and use the Construction Fund as hereinafter provided. The amount so deposited into the Construction Fund shall consti- tute the Loan made to the User by the Issuer as contemplated and provided in the Agreement. (b) Investment of Money in Construction Fund. Any money held as part of the Construction Fund, other than the amounts described in Section 15(a), shall be invested or reinvested by the Trustee upon the written direction of the Approving Officer in any obligations, including certificates of deposit (including certificates of deposit issued by any holder of any Bonds or the Trustee). The Trustee shall make no investments except as specifically directed in writing by the Approving Officer. The investments of the Construction Fund shall be deemed to be a part of the Construction Fund, and for the purpose of determining the amount of money in the Construction Fund, such investments shall be valued at their cost or market value, whichever is lower. The income and profits, including realized discount on obligations purchased, received from such investments shall be deposited in or credited to the Construction Fund, and any losses on investments shall be charged against the Construction Fund. Upon the written direction of the Approving Officer the Trustee shall redeem or sell all or any designated part of such investments employing, in the case of a sale, any commercially reasonable method of effecting the same. The Trustee shall not be liable or responsible for any loss resulting from the redemption or sale of any such investment as herein authorized; except that (notwithstanding any provcsions of the Agreement) the Trustee shall be liable for: (1) any loss resulting from its willful or negligent failure, within a reasonable time after receiving the written direction from the Approving Officer, to make, redeem, or sell any investment in the manner provided for herein, and (2) any loss resulting from the making, redeeming, or selling of any investment which was not authorized by written direction of the Approving Officer. If the Trustee is unable, after reasonable effort and within a reasonable time after receipt of the required written direction, to make, redeem, or sell any such investment, it shall so notify in writing the Approving Officer, and thereupon the Trustee shall be relieved of all liability or responsibility with respect thereto. (c) Deposit of Accrued Interest, Income, and Profits. Any accrued interest received from the sale of the Bonds; and, upon the written direction of the Approving Officer and to the extent that such use is consistent with the require- ments of Section 15(b)(v), all income and profits received from the investment of the Construction Fund, shall (as soon 28 as practicable after any receipt thereof has been deposited in or credited to the Construction Fund) be transferred by the Trustee and deposited into the Debt Service Fund to be used to pay interest on the Bonds during the period of construction of the Project. Section 15. PAYMENTS FROM CONSTRUCTION FUND. (a) Issuer's Administrative Overhead Expenses and Other Costs. Immediately after the delivery of the Bonds authorized hereby the Trustee shall pay directly to the Issuer the amount of $15,000 in accordance with the Agreement, being the amount required to reimburse the Issuer for its adminis- trative and overhead expenses directly attributable and chargeable to the costs of issuance of the Bonds authorized hereby and the acquisition, construction, equipping, and furnishing of the Project. Also, immediately after the delivery of the Bonds authorized hereby, the Trustee shall pay directly out of the Construction Fund, promptly after receiving the bills or statements therefor, all of the actual expenses and costs of issuance of such Bonds, includ- ing, without limitation, financing charges, printing and engraving expenses, the fees and expenses of accountants, financial advisors, and attorneys, and the initial fees and expenses of the Trustee. (b) Reimbursement for and Payment of Cost of Project. Subject and subordinate to making the payments required by the preceding paragraph, the Trustee shall make an initial payment, if requested by the User, and authorized by RepublicBank Dallas, National Association, Real Estate Division (the HPurchaser") pursuant to the Construction Loan Agreement dated May 1, 1982 executed between the User and the Purchaser, in the manner described below for payments from the Construction Fund, to reimburse the User for any Cost of the Project, paid by the User prior to such date of delivery. The Trustee shall make such initial payment, if requested, and shall make any subsequent payments from the Construction Fund to enable the User to pay, or to reimburse the User for paying, any Cost of the Project, from time to time upon receipt by the Trustee of a request of the User signed by the Approving Officer and authorized by the Purchaser pursuant to the Construction Loan Agreement. Such request shall be accompanied by a certificate stating with respect to each payment as follows: (i) the expenditures, in summary form, for which payment is to be made or for which reimbursement is requested; (ii) that the amounts requested are to be, or have been paid, by the User for property or to contractors, 29 subcontractors, materialmen, engineers, architects, or other persons who will perform or have performed neces- sary or appropriate services or will supply or have supplied necessary or appropriate materials for the acquisition, construction, equipping, and furnishing of the Project, as the case may be, and that, to the best of his knowledge, the fair value of such property, services, or materials is not exceeded by the amounts requested to be paid; (iii) that no part of the several amounts requested to be paid to the User, as stated in such certificate, has been or is the basis for the payment of any money in any previous or then pending request; (iv) that the payment of the amounts requested will not result in a breach of any of the covenants of the User contained in the Agreement, and particularly those covenants in Sections 4.05 and 4.06 thereof, which relate to the Code and the Regulations; and (v) that the expenditure of such amounts to be paid, when added to all previous disbursements from the Construction Fund, will result in at least 90% of the total of such disbursements, other than disbursements for issuance expenses, being used to provide land or property of a character subject to the allowance for depreciation under the Code (which expenditures are amounts paid or incurred which are, for federal income tax purposes, chargeable to the Project's capital account or would be so chargeable either with a proper election by the User [for example, under Section 266 of the Code] or but for a proper election by the User to deduct such amounts). (c) Reliance by Trustee. The Trustee shall rely fully on any such request and certificate delivered pursuant to this Section and shall not be required to make any investigation in connection therewith. If amounts paid by the Trustee with respect to any portion of the Project should exceed the cost thereof, the User shall promptly repay such overpayment into the Construction Fund. Section 16. SURPLUS CONSTRUCTION FUNDS. (a) Disposi- tion of Surplus Funds. The completion of the Project shall be conclusively evidenced, and the date of completion shall be established by a written certificate of completion to be signed by the Approving Officer and delivered to the Trustee immediately upon completion of the Project. If, upon the completion of the Project, there shall be any surplus funds remaining in the Construction Fund not required to provide 30 for the payment of the Cost of the Project, or if any funds are on hand in the Construction Fund at the time of the release of the Trust Indenture under the terms thereof, then any such funds shall be used immediately to prepay or redeem principal installments of the Bonds, in inverse chronological order, in the manner set forth in the FORM OF BOND in Section 5 for the prepayment or redemption of principal installments of the Bonds with surplus Construction Fund moneys, to the extent of any such available funds; provided that prior t� such use, the Issuer and the Trustee shall have been furnished with an unqualified opinion of Bond Counsel to the effect that the use of moneys from the Construction Fund for such purpose will be lawful and will not impair the exemption of interest on the Bonds from federal income taxation; and provided, further, that the User shall deposit into the Construction Fund prior to such prepayment or redemption an amount sufficient to cause the total amount in the Construction Fund to be equal to an integral multiple of $1,000. (b) Disposition of Construction Fund upon Acceleration and Redemption. If the Trustee shall declare the principal of the Bonds and the interest accrued thereon immediately due and payable as the result of an Event of Default spec- ified in the Trust Indenture, or if the Bonds are optionally or mandatorily prepaid or redeemed prior to maturity as a whole in accordance with their terms, any amounts remaining in the Construction Fund shall be used immediately by the Trustee for the purpose of paying principal of, redemption premium, if any, agreed liquidated damages, if any, and interest on the Bonds when due. Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) Replacement Bonds. In the event any of the outstanding Bonds authorized hereby is damaged, mutilated, lost, stolen, or destroyed, the Issuer shall execute, and the Trustee shall authenticate, a new bond of the same principal amount and maturity of the damaged, mutilated, lost, stolen, or destroyed Bond in exchange and substitution for such Bond or in lieu of and substitution for such Bond. (b) Application for Substitute Bonds. Application for exchange and substitution of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made to the Issuer. In every case, the applicant for a substitute bond shall furnish to the Issuer and to the Trustee such security or indemnity as may be required by them to save each of them and the Paying Agent harmless. In every case of loss, theft, or destruction of a Bond, the applicant shall also furnish to the Issuer and to the Trustee evidence to their 31 satisfaction of the loss, theft, or destruction, and of the ownership of such Bond. In every case of damage or mutilation of a Bond, the applicant shall surrender the Bond SO damaged or mutilated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, agreed liquidated damages, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a substitute Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Substitute Bonds. Prior to the issuance of any substitute bond, the Issuer and the Trustee may charge the owner of such Bond with all legal, printing, and other expenses in connection therewith. Every. substitute bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractural obligation of the Issuer whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of the Trust Indenture and this Initial Bond Resolution equally and proportionately with any and all other Bonds duly issued under this Initial Bond Resolution. (e) Authority for Issuing Substitute Bonds. This Ini- tial Bond Resolution shall constitute sufficient authority for the issuance of any such substitute bonds without neces- sity of further action by the Board of Directors of the Issuer or any other body or person, and the issuance of such substitute bonds is hereby authorized, notwithstanding any other provisions of this Initial Bond Resolution, except to the extent otherwise required by law. Section 18. NO ARBITRAGE. The Issuer and the User have covenanted to and with the purchasers of the Bonds that they will make no use of the direct or indirect proceeds thereof at any time throughout the term thereof which would cause the Bonds to be arbitrage bonds within the meaning of Section 103(c) of the Code or any Regulations or rulings pertaining thereto; and by this covenant the Issuer and the User are obligated to comply with the requirements of the aforesaid Section 103(c) and all applicable and pertinent Regulations relating to arbitrage bonds. 32 Section 19. FINDINGS. Based upon the representations made by the User in the Agreement, the Board of Directors hereby affirmatively finds that (i) the Project is suitable for the promotion of commercial, industrial or manufacturing development and expansion, (ii) the Project will have a direct, positive and favorable impact on employment in the Governmental Unit, and (iii) that the Project is in further- ance of the public purposes as set forth in the Act. Section 20. SALE OF THE BONDS. At the specific request of the User, the Bonds are hereby authorized to be sold, and shall be delivered to RepublicBank Dallas, National Association, for the price of par and any accrued interest to the date of payment and delivery. Section 21. TRUST INDENTURE. For the purpose of addi- tionally securing the payment of the Bonds, the redemption premium, if any, the agreed liquidated damages, if any, and the interest thereon, and for the purpose of providing for and fixing in more detail the rights of the owners of the Bonds and any interest coupons appertaining thereto, and of the Issuer, the User, and the Trustee, and for the purpose of making more effective the first lien on and pledge of the payments to be made pursuant to the Agreement and this Initial Bond Resolution, a Trust Indenture in substantially the following form and substance shall be signed, sealed, and otherwise executed and delivered, for and on behalf of the Issuer, by the President and the Secretary of its Board of Directors, after which the Trust Indenture shall be executed by the Trustee and shall become effective upon the delivery of the Bonds authorized hereby: 33 TRUST INDENTURE BETWEEN CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION AND REPUBLICBANK DALLAS, NATIONAL ASSOCIATION (MASTER HOST INN - SANDY SHORES PROJECT) ********************************. Pursuant to and under this Trust Indenture the Corpus Christi Industrial Development Corporation has granted a security interest in and assigned to RepublicBank Dallas, National Association, as Trustee, all of its interests in all "Installment Loan Payments," "Liquidated Damages Pay- ments" and certain other payments due pursuant to and under the "Loan Agreement between Corpus Christi Industrial Development Corporation and Master Host Inn - Sandy Shores" to secure its Revenue Bond, Series 1982 (Master Host Inn - Sandy Shores Project). DEBTOR: Corpus Christi Industrial Development Corporation 302 South Shoreline Corpus Christi, Texas 78408 SECURED PARTY: RepublicBank Dallas, National Association Pacific and Ervay Streets Dallas, Texas 75201 TABLE OF CONTENTS (The Table of Contents is not a part of the Trust Inden- ture but is for convenience of reference only) PAGE Parties 1 Recitals 1 Granting Clause 3 ARTICLE 1. ACCEPTANCE OF TRUST 3 ARTICLE 2. DEBT SERVICE FUND AND CONSTRUCTION 3 FUND ARTICLE 3. NOTICE TO THE USER 4 ARTICLE 4. ACCOUNTS AND RECORDS 4 (a) Separate Records to be Kept 4 (b) Annual Report 4 (c) Right to Inspect 5 ARTICLE 5. ENFORCEMENT OF RIGHTS IN CASE OF 5 DEFAULT (a) Appointment of Trustee and 5 Rights of Holder (b) Control by Trustee 5 (c) Events of Default 6 (d) Declaration of Principal 8 and Interest Due (e) Enforcement by Trustee 8 (f) Remedies Non -Exclusive 9 (g) Waiver of Defaults 9 (h) Discretion of Trustee 9 (i) Application of Moneys 9 (j) Judicial Proceedings 11 (k) Enforcement of Remedies 11 Without Possession of Bonds (1) Direction by Majority in 11 Principal Amount of Bondholders (m) Notice by Trustee 12 (n) Concurrence of Bondholders 12 (o) Default of Payments 12 (p) Notice to User of Past Due 12 Payments PAGE ARTICLE 6. CONCERNING THE TRUSTEE 13 (a) Not Accountable for Bond 13 Proceeds (b) Reliance by Trustee 13 (c) Compensation of Trustee from 13 Debt Service Fund (d) Limited Responsibilities 14 (e) Advice 14 (f) Trustee May Own Bonds 15 (g) Fees 15 ARTICLE 7. SUCCESSOR TRUSTEE 15 (a) Resignation of Trustee 15 (b) Removal of Trustee 15 (c) Appointment of Successor 15 Trustee (d) Transfer to Successor Trustee 16 (e) Merger or Consolidation of 17 Trustee ARTICLE 8. RELEASE OF INDENTURE AND SATISFACTION 17 OF INDEBTEDNESS ARTICLE 9. AMENDMENTS 17 ARTICLE 10. MISCELLANEOUS PROVISIONS 17 (a) Acknowledgements and 17 Ownership of Bonds (b) Trustee May Require Proof 18 of Ownership (c) Consent of Bondholders 18 (d) Survival of Valid Bonds 19 (e) Unclaimed Funds 19 (f) Rights of Parties 19 (g) Severability 20 (h) Law 20 ARTICLE 11. RECORDING 20 (a) Trustee to Record 20 (b) Non -Encumbrance 20 ARTICLE 12. NOTICE TO TEXAS INDUSTRIAL COMMISSION 21 Execution by the Issuer 21 Execution by the Trustee 22 TRUST INDENTURE THE STATE OF TEXAS CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION THIS TRUST INDENTURE, dated as of May 1, 1982, executed by and between Corpus Christi Industrial Development Corpo- ration (the "Issuer"), a nonstock, nonprofit industrial development corporation organized and existing under the laws of the State of Texas, including particularly the Development Corporation Act of 1979, as amended (Article 5190.6, V.A.T.C.S.) (the "Act"), and RepublicBank Dallas, National Association, Dallas, Texas, a national banking association duly organized and existing under the laws of the United States of America and having its principal office in the City of Dallas, Texas, as Trustee (such bank or any successor to it as Trustee hereunder being the "Trustee"): WITNESSETH THAT: WHEREAS, a "Loan Agreement between Corpus Christi Industrial Development Corporation and Master Host Inn - Sandy Shores", dated as of May 1, 1982 (such Loan Agreement, as amended and supplemented from time to time, being the "Agreement") has been duly executed between the Issuer and Master Host Inn - Sandy Shores (the "User"), with the User being a joint venture partnership organized and existing under the laws of the State of Texas, being fully qualified to transact business in the State of Texas; and WHEREAS, an executed copy of the Agreement has been filed with the Trustee; and WHEREAS, pursuant to the Agreement the Board of Direc- tors of the Issuer has duly adopted a "RESOLUTION AUTHORIZ- ING THE ISSUANCE OF CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION REVENUE BOND, SERIES 1982 AND THE EXECUTION OF A TRUST INDENTURE (MASTER HOST my - SANDY SHORES PROJECT)", which, together with any amendment thereto, is hereinafter called and designated the "Initial Bond Resolution"; and WHEREAS, the Initial Bond Resolution authorized the issuance of CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORA- TION REVENUE BOND, SERIES 1982 (MASTER HOST INN - SANDY SHORES PROJECT), in the aggregate principal amount of $7,200,000, which together with any replacement bonds and any additional parity revenue bonds ("Additional Bonds") authorized to be issued by the Initial Bond Resolution, are hereinafter collectively called the "Bonds"; and WHEREAS, a certified copy of the Initial Bond Resolu- tion has been duly filed with the Trustee; and WHEREAS, pursuant to the Initial Bond Resolution, a certified copy of each resolution authorizing the issuance of each series or issue of Additional Bonds shall be filed with the Trustee prior to the delivery thereof; and WHEREAS, as used in this Trust Indenture the word "Bond Resolution" shall mean and include collectively the Initial Bond Resolution (including the Trust Indenture prescribed and authorized to be executed in the Initial Bond Resolu- tion) and, when adopted and filed with the Trustee, each resolution authorizing the issuance of Additional Bonds together with any supplemental resolutions or amendments to such resolutions or the Trust Indenture; and WHEREAS, pursuant to the Agreement and the Bond Resolu- tion and subject to the terms and provisions thereof, the Bonds, the redemption premium, if any, agreed liquidated damages, if any, and the interest thereon, are and shall be payable from and secured by a first lien on and pledge of the payments designated "Installment Loan Payments" and "Liquidated Damages Payments" as well as certain other payments, to be made or paid, or caused to be made or paid, by the User (or its successors or assigns under certain circumstances) to the Trustee; and WHEREAS, the User has entered into a Deed of Trust (with Security Agreement and Assignment of Rents and Leases) dated as of May 1, 1982 (the "Deed of Trust"), between the User and the Trustee, such Deed of Trust providing further security for the payment of the Installment Loan Payments, Liquidated Damages Payments and certain other payments for the benefit of the owners of the Bonds; and WHEREAS, for purposes of this Trust Indenture, the definitions of terms in the Agreement, the Deed of Trust, and the Bond Resolution are hereby adopted, and the terms used herein shall have the same meanings as such terms are given in said Agreement, Deed of Trust, and Bond Resolution unless a different meaning is given herein; and WHEREAS, the Trustee has accepted the trusts created by this Trust Indenture, and in evidence thereof has joined. in the execution hereof; and WHEREAS, this Preamble constitutes an integral part of this Trust Indenture. NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH: 2 That the Issuer in consideration of the premises and the acceptance by the Trustee of the trusts hereby created, and of the purchase and acceptance of the Bonds by the owners thereof, and for other good and valuable considera- tion, the receipt of which is hereby acknowledged, and for the purpose of securing and providing for the payment of the principal of, redemption premium, if any, and interest on the Bonds at any time issued and outstanding, when due, any agreed liquidated damages, all fees and expenses of the Trustee and Registrar, and the Paying Agents for the Bonds, and all other payments required to be made by the User under the Agreement and the Bond Resolution, has granted a secur- ity interest in, assigned, transferred, pledged, set over, and confirmed, and by these presents does grant a security interest in, assign, pledge, set over, and confirm unto the Trustee, and to its successor or successors in said trust, and to its or their assigns, all and singular (i) all of its right, title, and interest in and to the Installment Loan Payments, Liquidated Damages Payments and all other payments required to be made to the Debt Service Fund as required and provided in the Agreement and the Bond Resolution, and (ii) all of its right, title and interest to the Debt Service Fund and the Construction Fund created by the Initial Bond Resolution, and the Issuer and the Trustee have agreed, and they hereby agree and covenant with the respective owners from time to time of the Bonds, and the interest coupons, if any, appertaining thereto, as follows, to -wit: Article 1. ACCEPTANCE OF TRUST. The Trustee hereby accepts the trusts, duties, obligations, and requirements imposed on it by the Bond Resolution and this Trust Inden- ture, and agrees to carry Out and perform, punctually and effectively, such duties, obligations, and requirements for the benefit of the Issuer, the User, and the owners of the Bonds and the interest coupons, if any, appertaining there- to. It is further specifically agreed that (i) the Trustee will act as a Paying Agent for the Bonds at all times while it is Trustee, (ii) the Trustee will act as Registrar for the Bonds at all times while it is Trustee, (iii) the Trustee will authenticate each of the Bonds by executing the Trustee's Certificate of Authentication appearing on each of the Bonds, as provided in the Bond Resolution, and it will so authenticate the Bonds when requested by the Issuer, prior to the delivery of the Bonds, at such time and in such manner as directed by the Issuer, and (iv) the Trustee will remain the beneficiary under the Deed of Trust so long as it is the Trustee hereunder. Article 2. DEBT SERVICE FUND AND CONSTRUCTION FUND. The Debt Service Fund and the Construction Fund created by the Initial Bond Resolution are hereby confirmed and estab- lished, respectively, intrust, with the Trustee, and the 3 Trustee agrees to hold, administer, deposit, secure, invest, and use said funds in all respects as provided and required by the Agreement, the Bond Resolution, and this Trust Inden- ture. Article 3. NOTICE TO THE USER. On or before the 5th day prior to each date upon or before which each Installment Loan Payment, Liquidated Damages Payment or other payment is required by each Bond Resolution to be deposited into the Debt Service Fund, the Trustee shall give written notice to the User, by hand delivery or first class mail, postage prepaid, at such address as the User shall from time to time designate and file in writing with the Trustee, of the amount, if any, of each Installment Loan Payment, Liquidated Damages Payment or other payment required by each Bond Resolution to be made by the User to the Trustee and depos- ited by the Trustee into the Debt Service Fund, on or before such date. Such notice shall give a brief statement of the manner in which the amount due was calculated, including a showing of all credits on account of available moneys in the Debt Service Fund. The failure of the Trustee to give, or the User to receive, any such notice shall not relieve the User of its unconditional duty and obligation to make all deposits or payments of Installment Loan Payments, Liqui- dated Damages Payments and other payments to the Trustee as required by the Agreement and each Bond Resolution. Article 4. ACCOUNTS AND RECORDS (a) Separate Records to be Kept. The Trustee shall keep proper books of records and accounts, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to the Installment Loan Payments, Liquidated Damages Payments and other payments, the Debt Service Fund, and the Construction Fund. (b) Annual Report. Within 90 days after each anniver- sary date of this Indenture, the Trustee will furnish to the Issuer, the User, and any owner of any outstanding Bonds who may so request, a copy of a report by the Trustee covering the twelve months ending on such anniversary date, showing the following information: (1) a detailed statement concerning the receipt and disposition of all Installment Loan Payments, Liquidated Damages Payments and other payments and the disposition of the amounts in the Construction Fund (until the Construction Fund shall have been fully disposed of). (2) an asset statement or balance sheet of the Debt Service Fund and of the Construction Fund (until 4 the Construction Fund shall have been fully disposed of). (c) Right to Inspect. The Issuer, the User, and the owners of any Bonds shall have the right, at all reasonable times and upon reasonable notice, to inspect all records, accounts, and data of the Trustee relating to the Debt Service Fund and the Construction Fund. Article 5. ENFORCEMENT OF RIGHTS IN CASE OF DEFAULT. (a) Appointment of the Trustee and Rights of the Holder. The Trustee is hereby irrevocably appointed the special agent and representative of the owners of the Bonds and vested with full power in their behalf to effect and enforce the Agreement, this Trust Indenture, and the Bond Resolution for their benefit as provided herein and in the Bond Resolu- tion; but anything contained in this Trust Indenture to the contrary notwithstanding, the owners of a majority in aggregate principal amount of the Bonds then outstanding, in case of any subsisting Event of Default (hereinafter de- fined) or of any other event entitling the Trustee to proceed hereunder, shall have the right from time to time to direct and control the Trustee in connection with the enforcement of any of the provisions of the Agreement, this Trust Indenture, and the Bond Resolution, and any other proceedings taken by virtue of any provisions of the afore- said instruments, including the right to have withdrawn and discontinued at any stage thereof any proceedings taken hereunder by the Trustee, provided that the Event of Default upon which such proceedings were based and all other Events of Default hereunder shall have been remedied and made good. Anything contained in this Trust Indenture to the contrary notwithstanding, each owner of any Bond shall have a right of action to enforce the payment of all amounts due with respect to any Bond owned by him when or after the same shall have become due, at the place, from the sources, and in the manner expressed in the Agreement, the Bond Resolu- tion, or this Trust Indenture; provided that no right of action shall exist subsequent to the time of waiver of an Event of Default in the payment of any such amount so due and such Event of Default having been remedied and made good, as provided in Article 5(g) . (b) Control by Trustee. Except as otherwise provided in this Article, the rights of action with respect to this Trust Indenture shall be exercised by the Trustee and no owner of any Bond shall have any right to institute any suit, action or proceeding at law or equity for the appoint- ment of a receiver or for any other remedy hereunder or by reason hereof unless and until in addition to the fulfill- ment of all other conditions precedent specified in this Trust Indenture, the Trustee shall have received the written 5 request of the owners of not less than 25% in aggregate principal amount of the Bonds then outstanding and shall have been offered indemnity satisfactory to the Trustee and shall have refused, or for 60 days thereafter neglected, to institute such suit, action, or proceeding; and it is hereby declared that the making of such request and the furnishing of such indemnity are in each case conditions precedent to the execution and enforcement by any owner of any Bond of the powers and remedies given to the Trustee hereunder and to the institution and maintenance by any owner of any Bond of any action or cause of action for the appointment of a receiver or for any other remedy hereunder; but the Trustee may, in its discretion, or when duly requested in writing by the owners of at least 25% in aggregate principal amount of the Bonds then outstanding and upon being furnished indem- nity satisfactory to the Trustee against expenses, charges, and liability shall, forthwith take such appropriate action by judicial proceedings or otherwise to enforce the cove- nants of the User, and the Issuer as the Trustee may deem expedient in the interest of the owners of the Bonds. (c) Events of Default. Any one or more of the follow- ing events shall constitute and hereinafter shall be called an "Event of Default": (1) the failure by the Issuer to make due and punctual payment of principal of, redemption premium, if any, and interest on the Bonds, whether payment is required at maturity or by call for redemption or otherwise within fifteen days of the date on which such payment becomes due. (2) the failure of the User to make or pay, or cause to be made or paid, any Installment Loan Payment, any Liquidated Damages Payment or any other payment, or any part of any of the foregoing, when and to the extent due and required by the Agreement or the Bond Resolution within fifteen days of the date on which suchpayment becomes due. (3) the User defaulting in the observance or performance of any other of its covenants, conditions, or obligations in the Bonds, the Agreement, the Bond Resolution, or this Trust Indenture, and the User not remedying such default within 30 days after written notice to do so has been received by the User from the Trustee or the owners of the Bonds; and the Trustee may serve such notice, in its discretion, or shall serve such notice at the written request of the owners of not less than 25% in aggregate principal amount of the Bonds then outstanding. 6 (4) the dissolution or liquidation of the User in any manner not specifically authorized by the Agree- ment, or failure by the User promptly to lift or suspend any execution, garnishment, or attachment of such consequence as will materially impair its ability to carry out its obligations under the Agreement or the Bond Resolution, or the entry by the User into an agreement of composition with its creditors. (5) an order of relief shall be issued by the Bankruptcy Court of the United States District Court having valid jurisdiction, granting the User relief under the provisions of the Bankruptcy Reform Act of 1978, as amended, or any other court having valid jurisdiction shall issue an order or decree under applicable federal or state law providing for the appointment of a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the User or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days. (6) the User shall have consented to or caused the institution of proceedings in bankruptcy against it, or the User shall have consented to or caused the institution of any proceeding against it under any federal or state insolvency laws, or the User shall have consented to or caused the filing of any petition, application or complaint seeking the appointment of a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the User or of any substantial part of its property, or the User shall have made an assignment for the benefit of creditors, or the User shall generally not pay its debts as they become due. (7) a final judgment or judgments for the payment of money aggregating in excess of $50,000 is or are outstanding against the User and any such judgment has been outstanding for more than 30 days from the date of its entry and has not been discharged in full or stayed. (8) the User fails to make any payment due on any indebtedness or other Security (which term shall have the same meaning herein as the term "Security" as defined in the Securities Act of 1933, as amended) or any event shall occur or any condition shall exist in respect of any indebtedness or other Security of the User or under any agreement securing or relating to 7 such indebtedness or other Security, the effect of which is to cause (or permit any holder of such indebtedness or other Security or a trustee to cause) such indebtedness or other Security, or a portion thereof, to become due prior to its stated maturity or prior to its regularly scheduled dates of payment. (9) the occurrence of any "Event of Default" as defined in the Deed of Trust. (10) the User shall have ceased to exist in violation of its covenants in Section 6.01 of the Agreement. (11) the occurrence of any "Event of Default" as defined in the Guarantee and Indemnification Agreement, dated as of May 1, 1982, executed among the Trustee, Exeter Investment Company and Luxury Lodges, Inc. (d) Declaration of Principal and Interest Due. Upon the happening of an Event of Default, the Trustee may, in its discretion, or upon the written request of the owners of at least 25% in aggregate principal amount of the Bonds then outstanding, and upon being indemnified to the satisfaction of the Trustee, shall, declare the principal of all Bonds then outstanding and the interest accrued thereon immedi- ately due and payable, and such principal and interest, together with any applicable agreed liquidated damages, and any applicable redemption premium, and any other 'amounts then due, shall thereupon become and be immediately due and payable, anything in the Bonds, the Agreement, the Bond Resolution, or this Trust Indenture to the contrary notwith- standing. (e) Enforcement by Trustee. Upon the happening of an Event of Default, the Trustee may, in its discretion, or upon the written request of the owners of at least 25% in aggregate principal amount of the Bonds then outstanding, and upon being indemnified to the satisfaction of the Trustee, shall, take such appropriate action by judicial proceedings or otherwise to cure the Event of Default and/or to require the User, or the Issuer to carry out its or their covenants and obligations under and with respect to the Bonds, the Agreement, the Bond Resolution, or this Trust Indenture, including without limitation, the use and filing of actions for specific performance, and mandamus proceedings, in any court of competent jurisdiction, against the Issuer, its Board of Directors, and its officers, employees, and/or agents, and to obtain judgments against the User for any Installment Loan Payments, Liquidated Damages Payments or other payments due but unpaid into the Debt Service Fund, or for any other amounts due hereunder, 8 under the Bond Resolution, or under the Agreement, including all amounts due with respect to the Bonds then outstanding if declared due and payable as provided herein. (f) Remedies Non -Exclusive. No remedy herein con- ferred upon or reserved to the Trustee is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Agreement, the Bonds or the Bond Resolution, or now and hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon the happening of an Event of Default continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of.any such Event of Default or acquiescence therein, and every such right and power may be exercised from.time to time and so often as may be deemed expedient. (g) Waiver of Defaults. The Trustee may, and upon the written request of the owners of at least 80% of the aggre- gate principal amount of the Bonds then outstanding shall, waive any Event of Default hereunder and its consequences, except that an Event of Default in the payment of Install- ment Loan Payments, Liquidated Damages Payments or other payments, or in the payment of any amounts with respect to the Bonds when and as the same shall become due and payable, may be waived only if, the Event of Default therein shall have been remedied and made good. In case of any such waiver, the Issuer, the User, the Trustee, and the owners of the Bonds shall be restored to their former position and rights hereunder respectively, but such waiver shall not extend to any subsequent or other Event of Default or impair any right consequent thereon. (h) Discretion of Trustee. In the event the Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of owners of Bonds, each representing less than a majority of the aggregate principal amount of Bonds then outstanding, the Trustee in its sole discretion may determine what action, if any, shall be taken, or may choose to take no action, notwithstanding any other provisions of this Trust Indenture. (i) Application of Moneys. All money collected by the Trustee pursuant to the exercise of the remedies and powers provided in this Article, together with all other sums which then may be held by the Trustee under any provision of this Trust Indenture or the Deed of Trust as security for the Bonds, shall be applied as follows: 9 FIRST: to the payment of the costs and expenses of the proceedings whereunder such money was collected, including a reasonable compensation to the Trustee, its agents, attorneys, and all other necessary or proper expenses, liabilities, and advances incurred or made by the Trustee under this Trust Indenture, and to the payment of all taxes, assessments, and liens superior to the lien of this Trust Indenture. SECOND: to the payment of matured interest on the Bonds, including, to the extent legally 'permissible, interest thereon at the rate of 15% per annum, based on a 365 or 366 day year, as appropriate, from due date to date of payment. THIRD: to the payment of principal of, redemption premium, if any, and agreed liquidated damages, if any, on the Bonds which have been called for redemption as permitted or required by the Bond Resolution or have matured as provided thereby, and interest thereon, to the extent legally permissible, at the rate of 15% per annum, based on a 365 or 366 day year, as appropriate, from the date of redemption or maturity to date of payment. FOURTH: to the payment of principal on the Bonds which have become due by virtue of the declaration of the Trustee pursuant to Article 5(d), and interest thereon, to the extent legally permissible, at the rate of 15% per annum, based on a 365 or 366 day year, as appropriate, from the date declared due to date of payment. FIFTH: to the payment of the surplus, if any, to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct. If in making distribution pursuant to the order above stated, the amount available for distribution in a particu- lar classification shall be insufficient to pay in full all of the items in such classification, the amount available for distribution to items in such classification shall be prorated among such items in the proportion that the amount each item bears to the total of all such items. Notwith- standing anything contained in this Trust Indenture to the contrary, if the Trustee shall declare the principal of all Bonds then outstanding and the interest accrued thereon immediately due and payable as the result of an Event of Default, or if the Bonds are to be redeemed as a whole pursuant to mandatory redemption provisions provided in the Bond Resolution, or if the User shall exercise any option to 10 redeem the Bonds as a whole in accordance with their terms, any amounts remaining in the Construction Fund shall be deposited in the Debt Service Fund and applied by the Trustee as provided in this subsection (i). Any Liquidated Damages Payments shall be kept by the Trustee within the Debt Service Fund separate and apart from all other funds received hereunder and shall be paid directly to the holders of the Bonds as provided in the Bond Resolution. (j) Judicial Proceedings. In any judicial proceeding in which the Issuer is a party and which, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of the owners of the Bonds, the Trustee, if permitted by the court having jurisdiction over such pro- ceeding, may, in its discretion, or upon the written request of the owners of at least 25% in aggregate principal amount of the Bonds then outstanding, and upon being indemnified to the satisfaction of the Trustee, shall, intervene on behalf of the owners of the Bonds to assert the rights of such owners. (k) Enforcement of Remedies Without Possession of Bonds. All rights of action or other rights under this Trust Indenture or otherwise may be brought by the Trustee in its own name as Trustee of an express trust and may be enforced by the Trustee without the possession of any of the Bonds or any interest coupons appertaining thereto, or the production thereof on the trial or other proceedings rela- tive thereto. (1) Direction by Majority in Principal Amount of Bondholders. It is expressly provided, however, that the owners of a majority in aggregate principal amount of the Bonds then outstanding, or a committee representing, pursu- ant to a written appointment filed with the Trustee, the owners of a majority in aggregate principal amount of the Bonds then outstanding, shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the Trustee's rights and remedies under the Agreement or the rights of the owners of the Bonds or the Trustee's rights and remedies under the Bond Resolution and this Trust Indenture, and may exercise any right or perform any action hereunder, with the same effect as the Trustee under this Trust Indenture, provided, that such direction shall not be otherwise than in accordance with the provisions of law and of this Trust Indenture, and provided that the Trustee shall be indemnified to its satisfaction. 13. (m) Notice By Trustee. The Trustee shall not be re- quired to take notice nor be deemed to have notice of any default specified in this Trust Indenture, except for those Events of Default specified in Article 5(c)(1) and 5(c)(2), unless specifically notified in writing of such default by the owners of at least 25% in aggregate principal amount of the Bonds then outstanding. (n) Concurrence of Bondholders. In determining whether the owners of a requisite aggregate principal amount of Bonds outstanding have concurred in any request, demand, authorization, direction, notice, consent, or waiver under this Trust Indenture or the Bond Resolution, Bonds owned by or for the account of the User or any person controlled by, controlling, or under common control of the User, shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided however, that for the purpose of determining whether the Trustee shall be pro- tected in relying upon any such request, demand, authoriza- tion, direction, notice, consent, or waiver, only Bonds of which the Trustee has actual knowledge of such ownership shall be so disregarded. (o) Default of Payments. In the event of a default in the payment of any Installment Loan Payment, Liquidated Damages Payment or other payment, or in the performance of any agreement or covenant contained in the Bonds, the Agreement, the Bond Resolution, or this Trust Indenture, such payment and performance may be enforced by the Trustee by mandamus, specific performance, or by the appointment of a receiver (in equity with power to charge and collect Installment Loan Payments, Liquidated Damages Payment or other payment) in accordance with the Agreement, the Bond Resolution and this Trust Indenture. (p) Notice to User of Past Due Payments. Pursuant to the Agreement, Installment Loan Payments, Liquidated Damages Payment or other payment are to be paid by the User directly to the Trustee. In the event that any such payments are not timely made, the Trustee shall immediately notify the User by mail at the address provided in the Agreement or by telephonic notice with confirmation of such notice by mail, that payment has not been made. Such notice shall be deemed given at the time the mailing is received or telephonic notice is given, whichever is earlier. Failure of the Trustee to give, or the User to receive, such notice shall not relieve the User of any covenant or obligation under the Agreement, the Bond Resolution or this Trust Indenture and shall not constitute a waiver of any Event of Default under this Trust Indenture. . 12 • . • Article 6. CONCERNING THE TRUSTEE. The Trustee accepts the trust imposed upon it by this Trust Indenture, but only upon and subject to the following express terms and conditions: (a) Not Accountable for Bond Proceeds. In no event shall the Trustee be liable except for its negligence or willful misconduct in relation to its duties under this Trust Indenture and the Bond Resolution. The Trustee shall not be responsible for any recitals herein, in the Bonds, the interest coupons, if any, appertaining thereto, the Bond Resolution, the Agreement, or for the sufficiency of the security for the Bonds or interest coupons, if any, apper- taining thereto. The Trustee shall have no responsibility hereunder except to the extent of the duties placed upon the Trustee to hold, administer, deposit, secure, invest, and use the Debt Service Fund and the Construction Fund as expressly required by the Bond Resolution, to the extent funds for such purposes are received by the Trustee, and to perform the other express covenants and agreements made by the Trustee under the provisions of this Trust Indenture and the Bond Resolution. (b) Reliance by Trustee. The Trustee may rely and shall be protected in acting or refraining from acting in accordance with the provisions of this Trust Indenture and the Bond Resolution upon any notice, requisition, request, consent, certificate, order, affidavit, letter, telegram, or other paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and the Trustee shall not be bound to recognize any person as an owner of Bonds or to take any action at his request, unless the Bond or Bonds owned by such owner of Bonds shall be deposited with the Trustee, be registered in the name of such owner on the Bond Registration Books kept by the Trustee, or submitted to it for inspection. Any action taken by the Trustee pursuant to this Trust Indenture upon the request or authority or consent of any person who, at the time of making such request, or giving such authority or consent, is the owner of any Bond secured hereby, shall be conclusive and binding upon all future owners of the same Bond and of Bonds issued in exchange therefor or in place thereof. (c) Compensation of Trustee from Debt Service Fund. There shall be paid from the Debt Service Fund the Trustee's reasonable compensation, and its reasonable expenses, ad- vances, and counsel fees, and its liabilities incurred in and about the execution of the trusts hereby created and the exercise and performance of the powers and duties of the Trustee hereunder (except liabilities incurred as a result of the negligence or willful misconduct of the Trustee, or 13 . • . as provided in the Bond Resolution), and the reasonable cost and expenses, including counsel fees, of defending against liabilities. (d) Limited Responsibilities. The responsibilities of the Trustee elsewhere set forth herein shall be further limited as follows: FIRST: the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with a direction of the owners of Bonds pursuant to any provision of this Trust Indenture relating to the time, method, and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Trust Indenture. SECOND: no provision of this Trust Indenture shall require the Trustee (1) to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it, nor (2) to take any action, whether or not directed to take such action by the owners of Bonds, pursuant to this Trust Indenture, which in the judgment of the Trustee would conflict with any rule of law, or with the terms of this Trust Indenture, or would be unjustly prejudicial to the owners of Bonds not taking part in such direc- tion. When acting pursuant to the direction of any owners of Bonds pursuant to this Trust Indenture, the Trustee may take other action deemed proper by the Trustee which is not inconsistent with such direction; provided, however, that the terms of this subparagraph SECOND shall not impose any additional duties or responsibilities upon the Trustee and shall not be construed to limit the effect of subparagraph FIRST of this paragraph (d). (e) Advice. The Trustee may act upon the professional opinion or advice of any legal counsel, engineer, account- ant, or other expert, reasonably believed by the Trustee to be qualified in relation to the subject matter, whether retained by the Trustee or the Issuer or otherwise, and the Trustee shall not be responsible for anything suffered or done or not done by it in good faith in accordance with any such opinion or advice. (f) Trustee May Own Bonds. Except as prohibited by law, the Trustee may become the owner of any of the Bonds 14 secured by this Trust Indenture with the same rights which it would have ifitwere not the Trustee; and nothing herein contained shall be construed to prohibit the Trustee, either as principal or agent, from engaging in or being interested in any financial or other transaction with the Issuer or the User or from acting as depository, trustee, or agent for any committee or body of owners of the Bonds or of other obliga- tions of the Issuer as freely as if it were not the Trustee. (g) Fees. The Issuer has agreed with the User in the Agreement and the Bond Resolution provides that the User shall pay to the Trustee its charges for performing the duties of Trustee, Registrar, and Paying Agent for the Bonds. The User hereby agrees to pay the charges as set forth in Exhibit A, as said Exhibit A may be amended from time to time by the Trustee, and to pay the reasonable extraordinary charges of the Trustee, Registrar and Paying Agent for the Bonds for services performed hereunder, under the Bond Resolution and under the Bonds. It is agreed by the Trustee that the User may, without causing or creating a default or Event of Default hereunder, contest in good faith (and withhold payment of the contested amount until such contest is resolved) the reasonableness of any of the fore- going charges for services. All payments due the Trustee for such charges, fees, or expenses shall be paid by the User and no such charges, fees, or expenses shall be charged against or be payable by the Issuer, except the initial fees and expenses of the Trustee which are paid as part of the costs of issuance of the Bonds. Article 7. SUCCESSOR TRUSTEE. (a) Resignation of Trustee. The Trustee at the time acting hereunder may at any time resign and be discharged from all trusts created by this Trust Indenture by giving not less than 30 days written notice to the Issuer, the User, and to any owners of Bonds as shown on the Bond Registration Books and any other list of owners of Bonds kept by the Trustee, and such resignation shall take effect upon the appointment of a successor Trustee by the owners of Bonds or by the Issuer as hereinaf- ter provided. (b) Removal of Trustee. The Trustee may be discharged and removed at any time by an instrument or concurrent instruments in writing, delivered to the Trustee and to the Issuer, and signed by the owners of a majority in aggregate principal amount of the then outstanding Bonds. (c) Appointment of Successor Trustee. In case the Trustee hereunder shall resign or be removed, or be dis- solved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case the Trustee shall be taken under the control of any 15 public officer or officers, or of a receiver appointed by a court, a successor may be appointed by the owners of a majority in aggregate principal amount of the then outstand- ing Bonds by an instrument or concurrent instruments in writing, signed by such owners of Bonds, or by their attor- neys in fact duly authorized in writing, and delivered to the Issuer; provided, nevertheless, that in any such event the Issuer by an instrument executed by authority of a resolution of its Board of Directors and signed by the President and by the Secretary of such Board, may appoint a temporary Trustee to fill such vacancy until a successor Trustee shall be appointed by the owners of Bonds in the manner above provided, and any such temporary Trustee so appointed by the Issuer shall immediately and without further act be superseded by the Trustee so appointed by such owners of Bonds. Every such successor or temporary Trustee shall be a trust company or bank in good standing located in the State of Texas, and having a capital and surplus of not less than Fifty Million Dollars ($50,000,000), if there be such a trust company or bank willing, qualified, and able to accept the trust upon reasonable and customary terms. In the event that no appointment of a temporary or successor Trustee shall be made pursuant to the foregoing provisions of this Article within 30 days after the Trustee gives written notice of resignation or the Trustee is removed, any owner of Bonds or any retiring Trustee may apply to any court of competent juri6diction for the appointment of a successor Trustee, and such court may thereupon, after such notice, if any, as it shall deem proper, prescribe or appoint a successor Trustee. (d) Transfer to Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge, and deliver to its predecessor, the Issuer, and the 'User an instrument in writing accepting such appointment hereunder, and thereupon such successor Trustee, without any further act, deed, or conveyance, shall become fully vested with all the estates, rights, powers, trusts, duties, and obligations hereunder of its predecessor; but such predecessor shall nevertheless, on the written request of the Issuer, execute and deliver an instrument transferring to such successor Trustee all of the estates, rights, powers, and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and money held by it to its successor; provided, however, that before any such delivery is required or made, all reasonable, customary, and legally accrued fees, advances, and expenses of such predecessor Trustee shall be paid in full. Should any deed, assignment, or instrument in writing from the Issuer be required by any successor Trustee for more fully and certainly vesting in such Trustee the estates, rights, powers, and duties hereby vested or intended to be vested in the predecessor Trustee, 16 any and all such deeds, assignments, and instruments in writing shall, on request, be executed, acknowledged, and delivered by the Issuer. (e) Merger or Consolidation of Trustee. Any corpora- tion or association into which the Trustee, or any successor to it in the trusts created by this Trust Indenture, may be merged or converted or with which it or any successor to it may be consolidated, or any corporation or association resulting from any merger, conversion, or consolidation to which the Trustee or any successor to it shall be a party, shall be the successor Trustee under this Trust Indenture without the necessity of the execution orfiling of any paper or any other act on the part of any of the parties hereto anything herein to the contrary notwithstanding. Article 8. RELEASE OF INDENTURE AND SATISFACTION OF INDEBTEDNESS. If, when the Bonds shall have become due and payable in accordance with their terms or otherwise as provided in this Trust Indenture or shall have been duly called for redemption, and the whole &mount of the princi- pal, redemption premium, if any, and the interest so due and payable upon all of the Bonds, and the agreed liquidated damages, if any, with respect to the Bonds then due, shall be paid, or sufficient money shall be held by the Trustee for such purpose, and provision shall also be made for paying all other sums payable hereunder and/or under the Agreement and/or the Bond Resolution by the User, then and in that case all right, title, and interest of the Trustee in these presents and the estate and rights hereby granted shall thereupon cease, determine, and become void, and the Trustee in such case shall release this Trust Indenture and shall execute such documents to evidence such release as may be reasonably required by the Issuer and the User, and shall turn over any surplus funds held by it to whomsoever may then be entitled pursuant to the Bond Resolution, the Agreement, or by law to receive the same; and thereupon this Trust Indenture shall terminate and be of no effect; pro- vided, that until the Bonds are finally paid, the Trustee shall continue to act as Paying Agent and Registrar for the Bonds. Article 9. AMENDMENTS. This Trust Indenture may be amended only as provided in the Bond Resolution; provided, however, that Additional Bonds may be issued pursuant to the Bond Resolution as provided therein, and may be secured by this Trust Indenture without the necessity of amending or supplementing this Trust Indenture. Article 10. MISCELLANEOUS PROVISIONS. (a) Acknowl- edgments and Ownership of Bonds. Any request, direction, consent, or other instrument required by this Trust 17 Indenture to be signed or executed by owners of Bonds may be in any number of concurrent writings of similar tenor and may be signed or executed by such owners of Bonds in person or by an agent appointed in writing. Proof of the execution of any instrument, or of the writing appointing such agent, and of the ownership of the Bonds, if made in the following manner, shall be sufficient for any purpose of this Trust Indenture and shall be conclusive in favor of the Trustee with regard to any action taken by it under such instrument: (i) the fact, date, and due authorization of the execution by any person of any such instrument may be proved by the certificate of any officer in any juris- diction, who, by the laws thereof, has power to take acknowledgments within such jurisdiction to the effect that the person signing such instrument acknowledged before him the execution thereof, or by an affidavit of a witness to such execution. (ii) the fact of the owning of the Bonds by any owner thereof, the amount and numbers of such Bonds, and the date of his owning same may be proved by (A) with respect to bearer Bonds, the affidavit of the person claiming to be such owner, if such affidavit shall be deemed by the Trustee to be satisfactory, or by a certificate executed by any trust company, bank, banker, or any other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein men- tioned such person had on deposit with such trust company, bank, banker, or other depositary, the Bonds described in such certificate or in any other manner, whether or not the Bonds are deposited, as the Trustee may approve or (B) with respect to registered Bonds, the appropriate entries in the Bond Registration Books maintained by the Trustee as Registrar. The Trustee may conclusively assume that such ownership continued until written notice to the contrary is served upon the Trustee. (b) Trustee May Require Proof of Ownership. Nothing contained in this Article shall be construed as limiting the Trustee to the proof hereinabove specified, it being in- tended that the Trustee may accept any other evidence of the matters herein stated which it may deem sufficient. (c) Consent of Bondholders. Unless otherwise provided in the Bond Resolution, any request or consent of any owner of Bonds shall bind every future owner of the same Bond in respect of anything done by the Trustee in pursuance of such request or consent. In the event of the dissolution of the Issuer, all of the covenants, stipulations, promises, and 18 agreements in this Trust Indenture contained by, on behalf of, or for the benefit of the Issuer, shall bind or inure to the benefit of the successor or successors of the Issuer from time to time and any officer, board, or commission to whom or to which any power or duty affecting such covenants, stipulations, promises, and agreements shall be transferred by or in accordance with law. (d) Survival of Valid Bonds. If any Bond shall not be presented for payment when the principal thereof becomes due, either at maturity or at the date fixed for redemption thereof or otherwise, or in the event any coupons shall not be presented for payment at the due date, thereof, all liability of the Issuer and the User to the owners thereof and to the Trustee for the payment of such Bond or coupons, as the case may be, shall forthwith cease, determine, and be completely discharged whenever funds sufficient to pay such Bond or coupons shall be paid to the Trustee by the User, and such funds shall be segregated by the Trustee and held in trust, without interest, for the benefit of the owners of such Bond or coupons, as the case may be, who shall thereaf- ter be restricted exclusively to such funds for the satis- faction of any claim of whatever nature on their part relating to such Bond or coupons. (e) Unclaimed Funds. Any money deposited with the Trustee in trust for the payment of the principal of, redemption premium, if any, agreed liquidated damages, if any, or interest on any Bond and remaining unclaimed for six years after such principal of, redemption premium, if any, agreed liquidated damages, if any, or interest on such Bond has become due and payable shall be paid to the User; provided, however, that before the Trustee shall be required to make any such repayment, the Trustee may at the expense of the User cause to be published at least once, in a financial newspaper, journal, or publication of general circulation in The City of New York, New York, or in the State of Texas, a notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the User. After the payment of such unclaimed moneys to the User, the owner of such Bond or the owner of the relevant coupon shall thereafter look only to the User for the payment thereof, and all liability of the Trustee with respect to such money shall thereupon cease. (f) Rights of Parties. Except as herein otherwise expressly provided, nothing in this Trust Indenture ex- pressed or implied is intended or shall be construed to confer upon any person, firm, or corporation other than the User, the Issuer, the Trustee, and the owners of Bonds, any 19 right, remedy, or claim, legal or equitable, under or by reason of this Trust Indenture or any covenant, condition, or stipulation contained herein. (g) Severability. In case any one or more of the provisions of this Trust Indenture or of the Bonds, or any interest coupons appertaining thereto, shall be held to be invalid or ineffective as to any person or circumstance, the remainder thereof and the application of such provision to persons or circumstances other than those as to which it is held invalid shall not be affected thereby. (h) Law. The validity, interpretation, and perform- ance of this Trust Indenture shall be governed by the laws of the State of Texas. Article 11. RECORDING. (a) Issuer and Trustee to Record. The Issuer shall cause the Agreement and this Trust Indenture to be filed in such manner and in such places as are now required by law to establish initially the lien of this Trust Indenture, and the priority thereof. Thereafter, the Trustee shall (1) cause each memorandum, financing statement, or continuation statement with respect to the Agreement and this Trust Indenture to be filed, registered, and recorded and to be refiled, reregistered, and rerecorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien of this Trust Indenture and to publish notice of and to protect the rights and security of the owners of the Bonds and the rights of the Trustee under the Agreement, the Bond Resolution, and this Trust Indenture and (2) perform or cause to be performed from time to time any other act as required by law, and execute and file or cause to be executed and filed any and all instruments of further assurance, that may be necessary for such publica- tion and protection. The Issuer shall, when so requested by the Trustee, execute all such instruments, memoranda, or statements necessary to maintain, protect, or preserve the interests assigned to the Trustee under this Trust Inden- ture. The Trustee may obtain an opinion or advice of counsel selected with reasonable prudence with respect to any actions or documents that may be required by this Article. Any act performed or documents obtained or prepared by the Trustee in reliance upon such opinion or advice of counsel shall be deemed satisfactory performance by the Trustee of its obligations under this Article with respect to the matters covered by such opinion or advice. (b) Non -Encumbrance. This Trust Indenture is, and always will be kept, a direct lien and security interest upon the Installment Loan Payments, Liquidated Damages Payments and other payments, the Debt Service Fund, and the 20 Construction Fund, and the Issuer will not create or suffer to be created any lien prior to or on a parity with the lien of this Trust Indenture or any part thereof. Article 12. NOTICE TO TEXAS INDUSTRIAL COMMISSION. If the User fails timely to make or pay any Installment Loan Payment, Liquidated Damages Payment or other payment, or upon receiving notice that a Determination of Taxability has occurred, the Trustee promptly shall inform the Texas Industrial Commission of such an occurrence, by sending written notice to the following address: Texas Industrial Commission Attention: Executive Director 410 East Fifth Street Box 12728, Capitol Station Austin, Texas 78711 or the latest address specified by said Commission in writing. IN WITNESS WHEREOF, the Issuer acting through its Board of Directors, has caused this Trust Indenture to be executed in multiple counterparts, each of which shall be considered an original for all purposes, in its name, and for and on its behalf, by the President of such Board and attested by the Secretary of such Board, and its corporate seal to be hereto affixed; and the Trustee, to evidence its acceptance of the trusts hereby created and.vested in it, has caused this Trust Indenture to be executed in multiple counter- parts, each of which shall be considered an original for all purposes, in its behalf by one of its Vice Presidents, attested by one of its Trust Officers, and its corporate seal to be hereunto affixed, all as of the date first above written. CORPUS CHRISTI INDUSTRIAL DEVELOPMENT CORPORATION By President, Board of Directors ATTEST: Secretary, Board of Directors (SEAL) 21 1 -t f REPUBLICBANK DALLAS, NATIONAL ASSOCIATION, TRUSTEE By Vice President ATTEST: (SEAL) Trust Officer 22 STATE OF TEXAS, County of Nueces. }Ss: PUBLISHER'S AFFIDAVIT v. 366465 CITY OF C.C. --)c.).5 Before me, the undersigned, a Notary Public, this day personally came BILLIE J. HENDERSON ACCOUNTING CLERK , who being first duly sworn, according to law, says that he is the of the Corpus Christi Caller and The Corpus Christi Times, Daily Newspapers published at Corpus Christi, Texas, in said County and State, and that the publication of NOTICE OF A PUBLIC HEARING OF THE of which the annexed is a true copy, was published in CORPUS CHRISTI CALLER TIMES 26th APRday one on the IL 82day of 19 , and once each thereat tt-i- for day consecutive. one Times. 16.20 • Alef-Le2s..4e2:2.......____L. Subscribed and sworn to before me this 29th day of 19.... 1. AP IL ueces County, Texas _r:"7 EDNA KOSTER :'•••• • _,4 .7•0••••••.. •v• ,.