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HomeMy WebLinkAboutIndustrial Development Certificate of Resolutions Agreement to Issue Bonds t.' ... . ~ ~~nta MOTOR INNS. INC. R r ('!, ...~,. . f ... 0 L L~.' :', J :) .~ 10/139275 1599 LaPorte ~!ZJ/JJ !; y CJTY i~:~:...... vi-FleE Date: October 25, 1985 CERTIFICATION AS TO COMPLETION From: La Quinta Motor Inns, Inc. First City Bank of Houston Box 809 Houston, TX 77001 Attn: Corp. Trust Division $3,800,000 City of La Porte Industrial Development Corporation Industrial Development Revenue Bonds, Series 1983 (La Quinta Motor Inns, Inc. Project) To: Re: This Certificate is being delivered to you pursuant to the provlslons of Section 3.6 of that certain Loan Agreement between the City of La Po rte Industr ial Development Co rporation (the "Is suer") and La Quinta Motor Inns, Inc. (the "User"), dated as of November 1, 1983 the "Agreement") relating to the $3,800,000 City of La Porte Industrial Development Corporation Industrial Development Revenue Bonds Series 1983 (La Quinta Motor Inns, Inc. Project). The terms used in this Certificate shall have the meaning ascribed in the Agreement. The undersigned duly appointed ,Authorized Representative of the User hereby certifies as follows: 1. As of July 31, 1985 (the "Completion Date") the Project has been completed substantially in accordance with. the plans and all costs of such acquisition, construction, furnishing and equipment have been authorized for payment. 2. Of the original proceeds actually disbursed from the Issuer not including any retainage described in paragraph 3 below), not more than the Insubstantial Amount was used to pay other than Quali fy ing Costs. ~ 3. The Trustee is hereby directed to retain $ -0- in the Construction Fund for future disbursement to pay Issuance Costs or Project Costs not now due and payable or the liability for payment of which the User is contesting. 4. The sum of Quali fying Costs plus the Insubstantial Amount exceeds the amount of Or iginal Proceeds heretofore disbursed to pay Project Costs; the User, therefore, directs that on July 23, 1985 when the investments in the construction fund mature: Office of the General Counsel La Quinta Plaza. P. O. Box 32064 · San Antonio, Texas 78216 · 512-366-6000 ... . e ..t - (A) -0- which amount has been Issuance Costs and has under Section 3.5 of the of such excess be disbursed to the User, expended by the User for Project Costs or not previously been paid by a disbursement Agreement, and (B) -0- be disbursed for deposit in the Bond Fund to pay interest on the Bonds for no more than one year after the Completion Date. 5. -0- representing remaining Original Proceeds shall be disbursed for placement in escrow in a separate account in the Debt Service Fund to be used solely for the purpose of paying the principal component, or portions thereof, in a redemption date as prov ided in Section 3.03 of the Indenture; provided, that the amount so placed in escrow shall not be invested so as to violate any of the arbitrage rules relating to Industrial Development Revenue Bonds. 6. If any funds in excess of the sum of the above monies (Sections 4(A), 4(B) and 5) remain in the Construction Fund, then those remaining funds shall also be placed in the Bond Fund for payment of interest. Notwithstanding the foregoing, this Completion Certificate is being given without prejudice to any rights against third parties which exist of even date herewith or which may subsequently come into being. J, Alan Vice Pr ident-General Counsel (Authorized Representative) 'NS, INC. cc: Walter Biegler Maxine Glasberg Twyla Lord Mary King Lauren Kinzie Deborah A. Wear-Rios cc: City of La Porte Industrial Development Corporation 604 W. Fairmont Parkway La Porte, TX 77571 Attn: President ~ \ It .. . " RESOLUTION OF CITY COUNCIL APPROVING AGREEMENT TO ISSUE BONDS BY AND BETWEEN CITY OF LA PORTE INDUSTRIAL DEVELOPMENT CORPORATION AND LA QUINTA MOTOR INNS, INC. WHEREAS, the City of La Porte, Texas (the "Unit"), a political subdivision, has approved and authorized the creation of the City of La Porte Industrial Development Corporation (the "Corporation") as a Texas nonprofit industrial development corporation, pursuant to the provisions of the Development Corporation Act of 1979, Article 5190.6, Vernon's Annotated Texas Civil Statutes, as amended (the "Act"), to act on behalf of the Unit to promote and develop industrial, manufacturing and commercial enterprises to promote and encourage employment and the public welfare; and WHEREAS, the Corporation is authorized by the Act to issue indus- trial development revenue bonds on behalf of the Unit for the purpose of paying all or part of the cost of a "project," as defined in the Act, and to sell or lease the project or to loan the proceeds of the bonds to finance all or part of the costs of the proj ect; and WHEREAS, the Corporation entered into an Agreement to Issue Bonds with La Quinta Motor Inns, Inc. (the "User"), pursuant to which the Corporation agreed, subject to certain conditions, to issue its tax exempt industrial development revenue bonds in the aggregate principal amount (excluding bonds issued to refund any of the Bonds) now estimated not to exceed $4,700,000, to provide funds to defray all or part of the cost of acquiring and constructing certain industrial, manufacturing or commercial facilities to be constructed by or to be leased or sold to the User; and WHEREAS, the City Council has reviewed the form and substance of the proposed Agreement to Issue Bonds between the Corporation and the User and intends, by adoption of this written Resolution, to approve said Agreement to Issue Bonds; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LA PORTE, TEXAS, THAT: Section 1: The Agreement to Issue Bon4s, in the form attached hereto, entered into by and between the Corporation and the User, pursuant to which the Corporation agreed, subject to the conditions stated therein, to authorize and issue its industrial development revenue bonds in the aggregate principal amount (excluding bonds issued to refund any of the Bonds) now estimated not to exceed $4,700,000, to provide funds to defray all or part of the cost of the acquisition and construction of the industrial, manufacturing or commercial facility i . - described in Exhibit "A" to said Agreement to Issue Bonds, is hereby approved. Section 2: This Resolution is adopted for the purpose of satisfy- ing the conditions and requirements of the Act and Section 103 of the Internal Revenue Code of 1954, as amended, and the regulations promul- gated thereunder and for the benefit of the Corporation, the Unit, the owners or holders from time to time of the obligations of the Corpora- tion and all other interested persons. Section 3: The Governing Body has considered evidence of the posting of notice of this meeting and officially finds, determines, recites and declares that a sufficient written notice of the date, hour and place of this meeting and of the subject of this Resolution was posted at a place convenient to the public on a bulletin board located at a place convenient to the public in the City Hall of the City of La Porte, Texas, for at least 72 hours preceding the scheduled time of such meeting; the place of posting was readily accessible to the general public at all times from such time of posting until the scheduled time of such meeting; and such meeting was open to the public as required by law at all times during which the Resolution and the subject matter thereof were discussed, considered and formally acted upon, all as required by the Open Meetings Law, Article 6252-17, Vernon's Annotated Texas Civil Statutes, as amended. PASSED AND APPROVED this ~ day of April, 1983. ----------------------------------------------------------------------- -2- ... e Exhibit "A" e AGREEMENT TO ISSUE BONDS . THIS AGREEMENT TO ISSUE BONDS, entered into as of the 4th day of April, 1983, by and between the City of La Porte Industrial Development Corporation (the. "Corporation"), created pursuant to the authority of the Development Corporation Act of 1979, Article 5190.6, Vernon's Annotated Texas Civil Statutes, as amended (the "Act"), and La Quinta Motor Inns, Inc., a Texas corporation (the "User"), for the purpose of carrying out the public purpose set forth in the Act, including the promotion and development of industrial, manufacturing and commercial enterprises to promote and encourage employment and the public welfare; ~ I 1: ~ ~ ~ ~ ~ 1: !!: WHEREAS, the City of La Porte, Texas (the "Unit"), has authorized and approved the creation of the Corporation to act on behalf of the Unit for the public purpose of furthering on behalf of the Unit the promotion and development of industrial, manufacturing and commercial enterprises to promote and encourage employment and the public weifare; and WHEREAS, the Corporation is authorized by the Act to acquire, construct, improve, maintain, equip and furnish and to lease or sell "projects," as such term is defined in the Act, or to make loans for the purpose of providing financing for all or part of the costs of a proj- ect, and the Corporation is further authorized to issue its bonds for the purpose of paying all or part of the costs of a project; and WHEREAS, the User desires to acquire and construct a facility, more particularly described in Exhibit "A" attached hereto, within the Unit (the "Project"), which Project is suitable for the promotion of commercial development and expansion, the promotion of employment in the Unit and for use by commercial enterprises; and WHEREAS, pursuant to the Act, the Corporation is authorized to issue the bonds hereinafter described, which bonds shall never con- stitute an indebtedness or pledge of the faith and credit of the State of Texas (the "State"), of the Unit, or of any other political corpora- tion, subdivision or agency of the State within the meaning of any State constitutional or statutory provision, shall never be paid in whole or in part out of any funds raised or to be raised by taxation or any other funds of the Unit, and shall never be paid in whole or in part out of any funds of the Corporation except those derived from or in connection with the sale or lease of the Project or the loan of funds to finance the Project; and .... e e WHEREAS, to promote and encourage employment and 'the public wel- fare, the Corporation agrees to issue, at the request of the User, one or more series of the Corporation's industrial development revenue bonds (the "Bonds") for the purpose of paying all or part of the cost of con- structing and acquiring the Project, or for the purpose of loaning the proceeds' to the User in order to provide temporary or permanent financ- ing of all or part of the cost of constructing and acquiring the Proj- ect, and the C9rporation and the User deem it desirable and proper that this Agreement to Issue Bonds constitute a formal record of such agree- ment and understanding in order that the User may proceed with or pro- vide for the acquisition and construction of the Project; and WHEREAS, the User has evidenced a desire to cooperate with the Corporation in the acquisition and construction of the Project and for the Corporation to authorize and issue the Bonds in the aggregate prin- cipal amount now estimated not to exceed $4,700,000, to provide the funds to defray all or part of the cost of the acquisition and con- struction of the Project; and WHEREAS, the Corporation and the User contemplate that the Project will be sold on an installment payment basis or leased to the User or that proceeds of the Bonds will be loaned to the User in order to pro- vide temporary or permanent financing of all or part of the costs of the Project and that the installment purchase, rental or loan payments therefor will be sufficient to pay the principal of and any premium and interest on the Bonds; and WHEREAS, it is the desire of the Corporation that the acquisition and construction of the Project occur at the earliest possible time so as to promote and encourage employment and the public welfare within the Unit; and WHEREAS, it is intended that this Agreement to Issue Bonds shall constitute "some other similar official action" toward the issuance of the Bonds within the meaning of Section 1.103-8(a)(5) of the Treasury regulations issued pursuant to Section 103(b) of the Internal Revenue Code of 1954, as amended (the "Code"); NOW, THEREFORE, in consideration of the premises and other good and valuable consideration and of the mutual benefits, covenants and agree- ments herein expressed, the Corporatior. and the User agree as follows: 1. The User shall commence with the acquisition and construction of the Project, which Project will be in furtherance of the public purposes of the Corporation and the Unit as aforesaid, and the User will provide, or cause to be provided, at its expense, the necessary interim financing to expedite the commencement of the acquisition and -2- '" e e construction of the Project. On or prior to the issuance of the Bonds, the User will enter into a purchase, lease or loan agreement on an installment payment basis (herein called the "Agreement") with the Corporation under which the Corporation will sell or lease the Project to the User or make a loan to the User for the purpose of providing temporary or permanent financing of all or part of the costs of the Project and the User will make installment payments sufficient to pay the principal of and any premium and interest on such series of Bonds. The Bonds shall never constitute an indebtedness or pledge of the faith and credit of the State, of the Unit, or of any other political corporation, subdivision or agency of the State within the meaning of any State constitutional or statutory provision, and the Bonds shall never be paid in whole or in part out of any funds raised or to be raised by taxation or any other funds of the Unit, and shall be payable from the funds of the Corporation derived from or in connection with the sale or lease of the Project or the loan of the proceeds of the Bonds. 2. On receipt of a ruling from the Internal Revenue Service (or the opinion of nationally recognized bond counsel) that interest paid on the Bonds is exempt from federal income taxation, the Corporation hereby agrees to issue, pursuant to the terms of the Act, the Bonds, or from time to time the portion thereof as may be the subject of such a ruling or opinion as aforesaid, in an appropriate principal amount not exceed- ing that which is the subject of a ruling or opinion as aforesaid, maturing in such amount and times, bearing interest at the rates, pay- able on the dates and having such optional and mandatory redemption features and prices as are approved in writing by the User. The Cor- poration will deliver the Bonds to the purchaser designated by the User and will cooperate to the fullest extent in facilitating delivery of the Bonds. 3. The Corporation and the User agree that the Bonds may be issued either at one time or in several series from time to time as the User shall request in writingj provided, however, that the parties agree that the Bonds will be issued in an aggregate principal amount as will not exceed the amount which is the subject of a ruling or rulings or opinion or opinions as aforesaid. A request in writing for issuance of one or more series of Bonds shall not affect the obligation hereunder of the Corporation to issue the remaining Bonds as written requests there- for are received. It is further agreed that the proceeds of the Bonds or portions thereof whether or not issued in a series, shall not be invested so as to constitute the Bonds or a portion thereof as arbitrage bonds within the meaning of Section 103(c) of the Code and applicable regulations promulgated pursuant thereto. 4. The payment of the principal of and any premium and interest on the Bonds shall be made solely from moneys realized from the sale or -3- ,{ e e lease of the Project or from moneys realized from the loan of the pro- ceeds of the Bonds to finance all or part of the costs of the Project. 5. The costs of the Project (hereinafter the "Project Costs") may include any cost of acquiring, constructing, reconstructing, improving and expanding the Project. Without limiting the generality of the foregoing. the Project Costs shall specifically include 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 prior to and during construction and for one year after com- pletion of construction whether or not capitalized. necessary reserve funds, costs of estimates and of engineering and legal services, plans, specifications, surveys, estimates of cost and of revenue, other expen- ses necessary or incident to determining the feasibility and practic- ability of acquiring, constructing, reconstructing, improving and ex- panding the Project, administrative expenses and such other expenses as may be necessary or incident to the acquisition, construction, recon- struction, improvement and expansion of the Project, the placing of the Project in operation and all incidental expenses, costs and charges relating to the Project not enumerated above. The parties agree. upon request, to provide or to cause to be provided to each other any data or information which may be reasonably required to verify any of the Pro- ject Costs enumerated in this paragraph. The User agrees that it will be responsible for and pay any Project Costs incurred prior to issuance of the Bonds and will pay all Project Costs which are not or cannot be paid or reimbursed from the proceeds of the Bonds. 6. The User agrees that it will at all times indemnify and hold. harmless the Corporation, the Board of~Directors of the Corporation, the Unit, the City Council of the Unit and any of the officers, directors, employees, agents, servants and any other party acting for or on behalf of the Corporation or the Unit (such parties being hereinafter referred to as the "Indemnified Parties") against any and all losses. costs. damages, expenses and liabilities (collectively herein called "Losses") of whatsoever 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 or relating to one or more Claims, as hereinafter defined, even if such Losses or Claims. or both. directly or indirectly result from, arise out of or relate to, or are asserted to have resulted from, arisen out of or related to, in whole or in part, one or more negligent acts or omissions of the Indemnified Parties in connection with the issuance of the Bonds or in connection with the Project. The term "Claims" as used herein shall mean all claims, lawsuits, causes of action and other legal actions and proceedings of whatsoever nature. including but not limited to claims, lawsuits. causes of action and other legal actions and proceedings, involving bodily or personal injury or death of any person -4- it- e e or damage to any property (including, but not limited to, persons employed by the Corporation, the Unit, the User or any other person and all property owned or claimed by the Corporation, the Unit, the User, any affiliate of the User or any other person) or involving damages relating to the issuance, offering, sale or delivery of the Bonds brought against any Indemnified Party or to which any Indemnified Party is a party, even if groundless, false or fraudulent, that directly or indirectly result from, arise out of or relate to the issuance, offering, sale or delivery of the Bonds or the design, construction, installation, operation, use, occupancy, maintenance or ownership of the Project or any part thereof. The obligations of the User shall apply to all Losses or Claims, or both, that result from, arise out of or are related to any event, occurrence, condition or relationship prior to termination of this Agreement to Issue Bonds, whether such Losses or Claims, or both, are asserted prior to termination of this Agreement to Issue Bonds or thereafter. None of the Indemnified Parties shall be liable to the User for, and the User hereby releases each of them from all liability to the User for, all injuries, damages or destruction of all or any part or parts of any property owned or claimed by the User that directly or indirectly result from, arise out of or relate to the design, construction, operation, use, occupancy, maintenance or ownership of the Project or any part.thereof, even if such injuries, damages or destruction directly or indirectly result from, arise out of or relate to, in whole or in part, one or more negligent acts or omissions of the Indemnified Parties in connection with the issuance of the Bonds or in connection with the Project. Each Indemnified Party, as appropriate, shall reimburse the User for payments made by the User to the extent of any proceeds, net of all expenses of collection, actually received by them from any insurance with respect to the Loss sustained. Each Indemnified Party, as appropriate, shall have the duty to claim any such insurance proceeds and the Indemnified Party, as appropriate, shall assign its respective rights to such proceeds, to the extent of such required reimbursement, to the User. In case any action shall be brought or to the knowledge of any Indemnified Party, threatened against any of them in respect of which indemnity may be sought against the User, the Indemnified Party shall promptly notify the User in writing and the User shall have the right to assume the investigation and defense thereof, including the employment of counsel and the payment of all expenses. The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the investigation and defense thereof, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (a) the employment of such counsel has been specifically authorized by the User, in writing, (b) the User has failed to assume the defense and to employ counselor (c) the named parties to any such action (including any impleaded parties) include both an Indemnified Party and the User, and said Indemnified Party shall have been advised by such counsel that there may be one or more legal -5- o' e e defenses available to it which are different from or additional to those available to the User (in which case, if the Indemnified Party notifies the User in writing that it elects to employ separate counsel at the User's expense, the User shall not have the right to assume the defense of such action on behalf of such Indemnified Party, it being understood, however, that the User shall not, in connection with anyone such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys for the Indemnified Parties [provided that any Indemnified Party which has been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to any other Indemnified Party shall have the right to employ separate counsel whose fees and expenses shall be paid by the User], which firm shall be designated in writing by said Indemnified Party). The Indemnified Party, as a condition of such indemnity, shall use its best efforts to cooperate with the User in the defense of any such action or claim. The User shall not be liable for any settlement of any such action without its consent but, if any such action is settled with the consent of the User or if there be final judgment for the plaintiff in such action, the User agrees to indemnify and hold harmless the Indemnified Party from and against any Loss by reason of such settlement or judgment. The provi- sions of this paragraph shall survive the expiration or termination of this Agreement to Issue Bonds. 7. If within three (3) years from the date hereof (or such later date as shall be mutually satisfactory to the Corporation and the User) the Corporation and the User shall not have agreed to mutually accept- able terms for the Bonds and for the sale and delivery thereof and mutually acceptable terms and conditions of the Agreement, the User agrees that it will pay the Corporation for all unpaid Project Costs which the Corporation shall have incurred and this Agreement to Issue Bonds shall thereupon terminate. In the event that the User elects, prior to any such termination, not to proceed with the issuance of the Bonds for any reason, it shall so notify the Corporation in writing and shall promptly pay to the Corporation all Project Costs incurred by the Corporation prior to such notification, and if payment is so made, the User's obligations under paragraph 5 above shall terminate from and . after the date of such notification. 8. The User may, without the consent of the Corporation, transfer or assign this Agreement to Issue Bonds or transfer or assign any or all of its rights and delegate any or all of its duties hereunder to any of its subsidiaries or affiliates currently existing or hereafter created, but no such transfer, assignment or delegation shall, without the writ- ten consent and approval of the Corporation, relieve the User of its -6- .& e e liability for payment of Project Costs under paragraphs 5 and 7 hereof or indemnification under paragraph 6 hereof. This Agreement to Issue Bonds and accompanying authorizing resolu- tion shall be deemed and construed a resolution authorizing the issuance of the Bonds and other similar official action of the Corporation, acting by and through its Board of Directors, toward the issuance of the Bonds as herein contemplated. IN WITNESS WHEREOF, the City of La Porte Industrial Development Corporation, acting pursuant to a resolution of its Board of Directors, and La Quinta Motor Inns, Inc. have caused this Agreement to Issue Bonds to be executed and attested by their duly authorized officers as of the year and date first above written. CITY OF LA PORTE INDUSTRIAL DEVELOPMENT CORPORATION By President A'ITEST: Secretary )>S'EAL) -- LA QUINTA MOTOR INNS, INC. By Title: A'ITEST: Title: (SEAL ) -7- ... " e e EXHIBIT "A" The project to be financed with the proceeds of the Bonds (the "Project") is the construction of (i) a two-story, 114-room motor inn with parking facilities for approximately 130 cars and (ii) a free- standing restaurant to accommodate approximately 150 patrons' with on-premises parking facilities for approximately 55 cars. The project will include acquisition and tmprovement of the Project site, construc- tion of the motor inn facility containing approximately 130,092 square feet and the restaurant containing approximately 2600 square feet, landscaping and acquisition and installation of various items of fur- nishings, fixtures, equipment and improvements functionally related and subordinate to the foregoing. The Project will be located in the southeast quadrant of the intersection of US Highway 146 and Fairmont Parkway in the City of La Porte, Texas. .. e: -.I . e i" ~. ~ CERTIFICATE OF RESOLUTION THE STATE OF TEXAS CO~~ OF HARRIS I, the undersigned officer of the City of La Porte, Texas (the "Unit"), do hereby execute and deliver this Certificate for the benefit of all persons interested in proceedings of the City Council (the "Governing Body") of the Unit and the validity thereof, and do certify as follows: 1. I am the duly chosen, qualified and acting officer of the Unit for the office shown below my signature; as such I am familiar with the facts herein certified; and I am duly authorized to execute and deliver this Certificate. 2. The Governing Body convened in regular Session on the 6th day of April, 1983, at the regular meeting place thereof, and the roll was called of the duly constituted officers and members of the Governing Body and a quorum was present. Whereupon, among other business, the following was transacted at said meeting: a written resolution was introduced for the consideration of the Governing Body. 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 Resolu- tion, prevailed and carried by vote of the officers and members of the Governing Body present and voting with the number of such officers and members voting for such Resolution being at least equal to a majority of the entire number of officers and members of the Governing Body that are entitled to vote. 3. A true and complete copy of the aforesaid Resolution adopted at the meeting is'attached to and follows this Certificate. 4. Such Resolution has been duly and lawfully adopted by the Governing Body and has been duly recorded in the minutes of the Govern- ing Body for such meeting. 5. Written notice of the date, hour, place and subject of the meeting of the Governing Body was posted on a bulletin board located at a place convenient to the public in the City Hall of City of La Porte, Texas, for at leas't 72 hours preceding the scheduled time of such meeting; the place of posting was readily accessible to the general public at all times from such time of posting until the scheduled time of such meeting; and such meeting was open to the public as required by ... -I .... ~.. e e law at all times during which the Resolution and the subject matter thereof were discussed, considered and formally acted upon, all as required by the Open Meetings Law, Article 6252-17, Vernon's Annotated Texas Civil Statutes, as amended. '3IGNED AND SEALED this 6th day of April , 1983. tf!.PtlJZ~A/ ....~.. . (SEAL) . _ . ~ / .- --.:- (5) Execution Copies: City Secretary Seal To be left with City Secretary and returned to Vinson & Elkins -2- . . e e ,~ ./ AGREE~IENT TO ISSUE BONDS THIS AGREE~IENT TO ISSUE BONDS, entered into as of the lOb'1 day of August, 1982, by and between the City of La Porte Industrial Development C~rporation (the "Corporation"), created pursuant to the authority of the Development Corporation Act of 1979, Article 5190.6, Vernon's Anno- tated Texas Civil Statutes, as amended (the "Act"), and Bayshore National Bank of La Porte, a national banking association (the "User"), for the purpose of carrying out the public purpose set forth in the Act, includ- ing the promotion and development of industrial, manufacturing and commercial enterprises to promote and encourage employment and the public welfare; WIT N E SSE T H: ---------- \\THEREAS, the City of La Porte, Texas (the "Unit"), has authorized and approved the creation of the Corporation to act on behalf of the Unit for the public purpose of furthering on behalf of the Unit the promotion and development of industrial, manufacturing and commercial enterprises to promote and encourage employment and the public welfare; and \\THEREAS, the Corporation is authorized by the Act to acquire, construct, improve, maintain, equip and furnish and to lease or sell "projects," as such term is defined in the Act, or to make loans for the purpose of providing financing for all or part of the costs of a project, and the Corporation is further authorized to issue its bonds for the purpose of paying all or part of the costs of a proj ect; and \o.THEREAS, the User desires to acquire and construct a facility, more particularly described in Exhibit "A" attached hereto, within the Unit (the "Project"), ~'hich Project is suitable for the promotion of commer- cial development and expansion, the promotion of employment in the Unit and for use by commercial enterprises; and \o,THEREAS, pursuant to the Act, the Corporation is authorized to issue the bonds hereinafter described, which bonds shall never consti- tute an indebtedness or pledge of the faith and credit of the State of Texas (the "State"), of the Unit, or of any other political corporation, subdivision or agency of the State within the meaning of any State constitutional or statutory provision, shall never be paid in whole or in part out of any funds raised or to be raised by taxation or any other funds of the Unit, and shall never be paid in whole or in part out of any funds of the Corporation except those derived from or in connection ~ith the sale or lease of the Project or the loan 0: funds to finance the Project; and '& .;,a. e e . \\THE~AS, to promote and encourage employment and the public welfare, the Corporation agrees to issue, at the request of the User, one or more series of the Corporation's industrial development revenue bonds (the "Bonds") for the purpose of paying all or part of the cost of constructing and acquiring the Project, or 'for the purpose of loaning the proceeds to the User in order to provide temporary or permanent financing of all or part of the cost of constructing and acquiring the Project, and the Corporation and the User deem it desirable and proper that this Agreement to Issue Bonds constitute a formal record of such agreement and understanding in order that the User may proceed with or provide for the acquisition and construction of the Project; and WHEREAS, the User has evidenced a desire to cooperate with the Corporation in the acquisition and construction of the Project and for the Corporation to authorize and issue the Bonds in the aggregate prin- cipal amount now estimated not to exceed $2,750,000, to provide the funds to defray all or part of the cost of the acquisition and construc- tion of the Project; and \\THEREAS, the Corporation and the User contemplate that the Project will be sold on an installment payment basis or leased to the User or that proceeds of the Bonds will be loaned to the User in order to provide temporary or permanent financing of all or part of the costs of the Project and that the installment purchase, rental or loan payments " t~erefor will be sufficient to pay the principal of and any premium and interest on the Bonds; and WHEREAS, it is the desire of the Corporation that the acquisition and construction of the Project occur at the earliest possible time so as to promote and encourage employment and the public welfare within the Unit; and \\~REAS, it is intended that this Agreement to Issue Bonds shall constitute "some other similar official action" toward the issuance of the Bonds within the meaning of Section 1.103-8(a)(5) of the Treasury regulations issued pursuant to Section 103(b) of the Internal Revenue Code of 1954, as amended (the "Code"); NOW, THEREFORE, in consideration of the premises and other good and valuable consideration and of the mutual benefits, covenants and agree- ments herein expressed, the Corporation and the User agree as follows: . 1. The User shall commence with the acquisition and construction of. the Project, which Project will be in furtherance of the public purposes of the Corporation and the Unit as aforesaid, and the User will provide, or cause to be pro~ided, at its expense, the necessary interim -2- ( e e financing to expedite the commencement of the acquisition and construc- tion of the Project. On or prior to the issuance of the Bonds, the User will enter into a purchase, lease or loan agreement on an installment . payment basis (herein called the ."Agreement") with the Corporation under which the Corporation will sell or lease the Project to the User or make a loan to the User for the purpose of providing temporary or permanent financing of all or part of the costs of the Project and the User will make installment payments sufficient to pay the principal of and any premium and interest on such series of Bonds. The Bonds shall never constitute an indebtedness or pledge of the faith and credit of the State, of the Unit, or of any other political corporation, subdivision or agency of the State within the meaning of any State constitutional or statutory provision, and the Bonds shall never be paid in whole or in part out of any funds raised or to be raised by taxation or any other funds of the Unit, and shall be payable from the funds of the Corpor- ation derived from or in connection with the sale or lease of the Project or the loan of the proceeds of the Bonds. 2. On receipt of a ruling from the Internal Revenue Service (or the opinion of nationally recognized bond counsel) that interest paid on the Bonds is exempt from federal income taxation, the Corporation hereby agrees to issue, pursuant to the terms of the Act, the Bonds, or from time to time the portion thereof as may be the subject of such a ruling or opinion as aforesaid, in an appropriate principal amount not exceeding that which is the subject of a ruling or opinion as aforesaid, maturing in such amount and times, bearing interest at the rates, payable on the dates and having such optional and mandatory redemption features and prices as are approved in writing by the User. The Corporation will deliver the Bonds to the purchaser designated by the User and will cooperate to the fullest extent in facilitating delivery of the Bonds. 3. The Corporation and the User agree that the Bonds may be issued either at one time or in several series from time to time as the User shall request in writing; provided, however, that the parties agree that the Bonds will be issued in an aggregate principal amount as will not exceed the amount which is the subject of a ruling or rulings or opinion or opinions as aforesaid. A request in writing for issuance of one or more series of Bonds shall not affect the obligation hereunder of the Corporation to issue the remaining Bonds as written requests therefor are received. It is further agreed that the proceeds of the Bonds or portions thereof whether or not issued in a series, shall not be invested so as to constitute the Bonds or a portion thereof as arbitrage bonds within the meaning of Section l03(c) of the Code and applicable regula- ti9ns promulgated pursuant thereto. -3- e e 4. .The payment of the principal of and any premium and interest on the Bonds shall be made solely from moneys realized from the sale or lease of the Project or from moneys realized from the loan of the proceeds of the Bonds to finance all or part of the costs of the Proj ect. , 5. The costs of the Project (hereinafter the "Project Costs") may include any cost of acquiring, constructing, reconstructing, improving and expanding the Project. Without limiting the generality of the foregoing, the Project Costs shall specifically include 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 prior to and during construction and for one year after comple- tion of construction whether or not capitalized, necessary reserve funds, costs 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 the Project, administrative expenses and such other expenses as may be necessary or incident to the acquisition, construction, reconstruction, improvement and expansion of the Project, the placing of the Project in operation and all incidental expenses, costs and charges relating to the Project not enumerated above. The parties agree, upon request, to provide or to cause to be provided to each other any data or information which may be reasonably required to verify any of the Project Costs " e~umerated in this paragraph. The User agrees that it will be respon- sible for and pay any Project Costs incurred prior to issu~nce of the Bonds and will pay all Project Costs which are not or cannot be paid or reimbursed from the proceeds of the Bonds. 6. The User agrees that it will at all times indemnify and hold harmless the Corporation, the Board of Directors of the Corporation, the Unit, the City Council of the Unit and any of the officers, directors, employees, agents, servants and any other party acting for or on behalf of the Corporation or the Unit (such parties being hereinafter referred to as the "Indemnified Parties ") against any and all losses, costs, damages, expenses and liabilities (collectively herein called "Losses") of whatsoever 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 or relating to one or more Claims, as hereinafter defined, even if such Losses or Claims, or both, directly or indirectly result from, arise out of or relate to, or are asserted to have resulted from, arisen out of or related to, in whole or in part, one or more negligent acts or om~ssions of the Indemnified Parties in connection with the issuance of the Bonds or in connection with the Project. The term "Claims" as used herein shall mean all claims, lawsuits, causes of action and other legal actions and proceedings of whatsoever nature, including but not limited . -4- .: e e l. to claims, la~'suits, causes of action and other legal actions and proceedings, involving bodily or personal injury or death of any person . or damage to any property (including, but not limited to, persons employed by the Corporation, the .Unit, the User or any other person and all property owned or claimed by the Corporation, the Unit, the User, ~y affiliate of the User or any other person) or involving damages relating to the issuance, offering, sale or delivery of the Bonds brought against any Indemnified Party or to which any Indemnified Party is a party, even if groundless, false or fraudulent, that directly or indirectly result from, arise out of or relate to the issuance, offering, sale or delivery of the Bonds or the design, construction, installation, operation, use, occupancy, maintenance or ownership of the Project or any part thereof. The obligations of the User shall apply to all Losses or Claims, or both, that result from, arise out of or are related to any event, occurrence, condition or relationship prior to termination of this Agreement to Issue Bonds, whether such Losses or Claims, or both, are asserted prior to termination of this Agreement to Issue Bonds or thereafter. None of the Indemnified Parties shall be liable to the User for, and the User hereby releases each of them from all liability to the User for, all injuries, damages or destruction of all or any part or parts of any property owned or claimed by the User that directly or indirectly result from, arise out of or relate to the design, construc- tion, operation, use, occupancy, maintenance or ownership of the Project or any part thereof, even if such injuries, damages or destruction directly or indirectly result from, arise out of or relate to, in whole or in part, one or more negligent acts or omissions of the Indemnified Parties in connection ~ith the issuance of the Bonds or in connection ~Tith the Project. Each Indemnified Party, as appropriate, shall reimburse the User for payments made by the User to the extent of any proceeds, net of all expenses of collection, actually received by them from any insurance with respect to the Loss sustained. Each Indemnified Party, as appropria~e, shall have the duty to claim any such insurance proceeds and ~he Indemnified Party, as appropriate, shall assign its respective rights to such proceeds, to the extent of such required reimbursement, to the User. In case any action shall be brought or to the knowledge of any Indemnified Party, threatened against any of them in respect of ~Thich indemnity may be sought against the User, the Indemnified Party shall promptly notify the User in writing and the User shall have the right to assume the investigation and defense thereof, including the employment of counsel and the payment of all expenses. The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the investigation and defense thereof, but the fees and expenses of such counsel shall be paid by the Indem- nified Party unless (a) the employment of such counsel has been speci- fically authorized by the User, in writing, (b) ~he user has failed to assume the defense and to employ counselor (c) the named parties to any such action (including any impleaded parties) include both an Indem- nified Party and the User, and said Indemnified Par~y shall have been -5- . . e e adv~sed by' such counsel that there may be one or more legal defenses available to it which are different from or additional to those avail- able to the User (in which case, if the Indemnified Party notifies the User in writing that it elects to employ separate counsel at the User's expense, the User shall nQt have the right to assume the defense of such action on behalf of such Indemnified Party, it being understood, however, that the User shall not, in connection with anyone such action or separate but substantially similar or related actions in the same juris- diction arising out of the same general allegations or circumstanc~s, be iiable for the reasopable fees and expenses of more than one separate firm of attorneys for the Indemnified Parties [provided that any Indemnified Party which has been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to any other Indemnified Party shall have the right to employ separate counsel whose fees and expenses shall be paid by the User], which firm shall be designated in writing by said Indemnified Party). The Indemnified Party, as a condition of such indemnity, shall use its best efforts to cooperate with the User in the defense of any such action or claim. The User shall not be liable for any settlement of any such action without its consent but, if any such action is settled with the consent of the User or if there be final judgment for the plaintiff in such action, the User agrees to indemnify and hold harmless the Indemnified Party from and against any Loss by reason of such settlement or judgment. The provisions of this paragraph. s~all survive the expiration or termination of this Agreement to Issue Bonds. 7. If within three (3) years from the date hereof (or such later date as shall be mutually satisfactory to the Corporation and the User) the Corporation and the User shall not have agreed to mutually accept- able terms for the Bonds and for the sale and delivery thereof and mutually acceptable terms and conditions of the Agreement, the User agrees that it will pay the Corporation for all unpaid Project Costs which the Corporation shall have incurred and this Agreement to Issue Bonds shall thereupon terminate. In the event that the User elects, prior to any such termination, not to proceed with the issuance of the Bonds for any reason, it shall so notify the Corporation in writing and shall promptly pay to the Corporation all Project Costs incurred by the Corporation prior to such notification, and if payment is so made, the User's obligations under paragraph 5 above shall terminate from and after the date of such notification. - 8. The User may, without the consent of the Corporation, transfer or ,assign this Agreement to Issue Bonds or transfer or assign any or all of its rights and delegate any or all of its duties here~~der to any of its subsidiaries or affilia~es currently existing or here~fter created, -6- . . e e .. but no such transfer, assignment or delegation shall, without the written consent and approval of the Corporation, relieve the User of its liabil- ity for payment of Proj ect Costs under paragraphs 5 and 7 hereof or indemnification under paragraph 6. hereof. This Agreement to Issue Bonds and accompanying authorizing reso- lution shall be deemed and construed a resolution authorizing the issuance the Bonds and other similar official action of the Corporation, acting by and through its Board of Directors, toward the issuance of the Bonds as herein contemplated. IN \HTNESS WHEREOF, the City of La Porte Industrial Development Corporation, acting pursuant to a resolution of its Board of Directors, and Bayshore National Bank of La Porte, have caused this Agreement to Issue Bonds to be executed and attested by their duly authorized officers as of the year and date first above written. CITY OF LA PORTE INDUSTRIAL DEVELOP~ffiNT CORPORATION BY~~~// Sec (SEAL) BAYSHORE NATIONAL BANK OF LA PORTE ,. BYY'< d E. ~- - . <04<< President ~. Cashi:e'r~---'<_ /: ';'" (/" '.. . - CSE'~~ ~: ~ . _. ....'-0.... _~ -7- e e EXHIBIT II A" The project to be financed with the proceeds of the Bonds (the "project") is a new 24,000 square foot main banking quarters for Bayshore National Bank of La Porte, together with a 2,700 square foot drive-in facility with fifteen (l5) pneu- matic drive-in lanes and one (1) drive-up automated teller position. The main banking house will be located at the intersection of state Highway 146 and West Fairmont Parkway, and the drive-in facility and automated teller position will be located at the intersection of South 8th Street and West Fairmont Parkway, all in the City of La Porte, Harris County, Texas. The Project will include associated driveways and parking facilities at both installations, security devices, vault and teller equipment, data communications equipment, data records facilities, telephone equipment, signs, landscaping, and var- ious other items of equipment, furnishings and improvements that are functionally related to and subordinate to the foregoing described banking facilities. ~. [ . e K N 0 X W. ASK INS. J. D.. P. C. ATTORNEY AT LAW '<, .JOHN O. A~MST~ONG. .J.D. "SSOCI..TE 702 W. FA,R"ONT P..RKWAY P. O. BOIC 1218 LA PORTE. TEXAS 77571-1218 TELEPtiONE 713 471-1SSe November 24, 1982 Executive Director Texas Industrial Commission P. O. Box 12728 Austin, Texas 78711 Re: City of La Porte Industrial Development Corporation Gentlemen: As required by you Rules and Regulations, I enclose herewith for filing, the form of application which has been duly adopted by the board of directors of the City of La Porte Industrial Development Corporation. I would appreciate your acknowledging filing of this document, by placing your file stamp on the enclosed duplicate of this letter, and returning same to me in the enclosed stamped self- addressed envelope. Thank you for your kind assistance in this matter. / Kt~A/csr Enclosures cc: Mr. Dan Lyons Attorney at Law Vinson & Elkins First City Tower, 27th Floor Houston, Texas 77002 The Board of Directors City of La Porte Industrial Development Corporation c/o City Hall La Porte, Texas 77571 e . DUMAS, HUGUENIN, BOOTHMAN & MORROW FULBRIGHT & .JAWORSKI OFFICES DALLAS, TEXAS 75201 TELEPHONE 12141 741-3458 BANK OF THE SOUTHW~ST BUILDING HOUSTON. TEXAS 77002 TELEPHONE(7IJ, 651-5'51 TELEX 76-2829 AMERICAN BANK TOWER, SUITE 1740 221 WEST SIXTH STREET AUSTIN. TEXAS 78701 TELEPHONE '5121474.5201 1212 KIR8Y 8UILDING 1509 MAIN STREET 1150 CONNECTICUT AVE.,N.W. WASHINGTON, D.C. 20036 TELEPHONE 12021452-6800 TELEX 89-2802 LANDMARK BUILDING. SUITE 200 70S EAST HOUSTON AVENUE SAN ANTON 10. TEXAS 78205 TELEPHONE 15121224-5575 ELBERT M. MORROW PARTNER 2 $T. JAMES'S PLACE LONDON.SWIA INP TELEPHONE 1011629-1207 TELEX 28310 November 11, 1982 Mr. Knox W. Askins City Attorney - La Porte P. O. Box l2l8 La Porte TX 7757l-l2l8 Dear Mr. Askins: My apologies' for not replying to your letter of September 27th 'promptly but we have been working on some varous forms and formats' to determine if the bas'ic fee could be reduced with respect to indistrial development bonds that are less than $500,000. Work has been continuing on that part of the project but we have had to set that as'ide at 'least until after the first of the year because of the volume of transactions that must be completed and bonds delivered prior to December 31st. Enclosed is a copy of the normal letter that we utilize which outlines' the type of service that we normally perform as well as the customary fees. Our objective in working on the listed forms would De to reduce the amount of paper work and time required to complete a transaction to determine if .the minimum .fee could be cut in half. At this point we have not determined whether that effort would be success'ful but we anticipate returning to that project the first part of January. If you feel that it would be appro- priate to discuss the matter in January, if you would drop us a note we would be pleased to get in touch with you when our work on the proj ect has' been completed. With kind personal regards and best wishes, we are, Very truly yours, EMM:fs Enclosure ~- r ., e e AUSTIN OF"P"'CE 100' F"IRST CITY NATIONAL BANK BUILDING AUSTIN,TEXAS 79701 (512) 472-811' LIDDELL, SAPP, ZIVLEY, BROWN & LABoON ATTORNEYS TEXAS COMMERCE TOWER HOUSTON, TEXAS 77002-309S (713) 226-1200 TELEX 76-2616 TELECOPIER (713) 223-3717 DALLAS OF"F"ICE 2300 DIAMOND SHAMROCK TOWER CALLAS. TEXAS 76201-6592 (214) 742-3232 October 20, 1982 Mr. Knox W. Askins, J.D., Attorney at Law 702 W. Fairmont Post Office Box La Porte, Texas P.C. Parkway l2l8 77571-1218 Dear Mr. Askins: I am wri ting in response to your letter to Mr. Frank A. Liddell, Jr. of this firm. We certainly would be interested in representing prospective users of industr ial development bonds in La Porte. We have relevant experience in serving as bond counsel, or as counsel to development corporations, users, trustees, bond purchasers or issuers of letters of credit in such transactions. Where we serve as bond counsel, our usual fee is one-half of one per~ent of the bond proceeds up to $5,000,000 and one-fourth of one percent of the next $5,000,000 of bond proceeds. Our minimum fee is $lO,OOO. Where we serve as counsel to the user, our fee is based upon the time and effort expended, based upon customary hourly rates for our lawyers having differing levels of experience, ranging from $70 to $200 per hour. It has been our experience that the fee charged to users has ranged from approximately $2,500 to approximately $lO,OOO, depending upon the complexities of the situation presented. The scope of our representation as bond counsel would consist of the preparation of all bond and financing documents, including such secur i ty documents as deeds of trust, secur i ty agreements, collateral assignments of leases and the like, supervision and assistance in the preparation of an application to the Texas Industrial Commission, preparation of resolutions for the Development Corporation and the City Council, including attendance at any necessary meetings, handling of opinions as to the validity of the bonds and their tax-exempt character, and handling such other materials as is usual and customary for bond counsel. i' . :. e e Mr. Knox W. Askins, J.D. P.C. October 20, 1982 Page Two The scope of our representation of users would range from handling all matters incident to the bond issue itself, including opinions on behalf of the user, to handling any collateral materials which might be involved, including securities laws compliance. As a firm of some 75 lawyers, we have broad experience in all phases of commercial practice. We would be very interested in participating in smaller issues of less than $500,000, either as bond counsel for a fee of $10,000 or as counsel to the user, in which instance we would strive to minimize our time and effort so as to facilitate a modest fee. Thank you very much for your letter of inquiry, and please do not hesitate to contact me at any time. Very truly yours, Carroll Shaddock For the Firm CSSjebr e e FULBRIGHT & .JAWORSKI BANK OF THE SOUTHWEST BUILDING 1150 CONNECTICUT AVE.,N. W. WASHINGTON. D. C. 20036 TELEPHONE (202) 452-6800 TtLEX 89-2602 HOUSTON, TEXAS 77002 TELEPHONE (713) 651-5151 TELEX 76-2829 LANDMARK BUILDING. SUITE 200 705 EAST HOUSTON AVENUE SAN ANTONIO. TEKAS 78205 TELEPHONE (512) 224 -5575 AMERICAN BANK TOWER. SUITE 1740 221 WEST SIKTH STREET AUSTIN. TEXAS 78701 TELEPHONE (512) 474-5201 IN DALLAS DUMAS, HUGUENIN, BOOTHMAN & MORROW 1509 MAIN STREET DALLAS. TEXAS 7S201 TELEPHONE (214) 741-3458 2 ST. JAMES'S PLACE LONDON, 5WIA INP TELEPHONE (Oil 629-1207 TELEX 28310 October 19, 1982 RICHARD D. HUFF PARTNER Re: City of LaPorte Industrial Development Corporation Mr. Knox W. Askins City Attorney City of LaPorte LaPorte, Texas 77571 Dear Mr. Askins: This letter is in response to your letter of September 27, 1982 regarding the interest of our firm in representing prospective users of industrial development bonds in LaPorte, particularly on small. issues of $500,000 or less. In this regard, we are currently working closely with Mr. Mike McAndrew of RPC, Inc. in Austin to develop bond document forms that will enhance the feasibility of industrial development bond issues of $500,000 or less by reducing the cost of issuance. Mr. McAndrew or I would be more than happy to discuss this program with you and any members of the Board of Directors of the LaPorte Industrial Development Corporation who may be interested at your convenience. Please feel free to contact either of us if we can be of any assistance to you in this matter. Yours very truly, ~ RDH/rl cc: Mr. Mike McAndrew " l;.. r--'.>o~.' e e BUTLER, BINION, RICE, COOK M KNAPP A PAR.TNER.SHIP INCLUDINC PR.OFESSIONAL COR.PORATfONS ATTORNEYS AT LAW ESPER.SON BUILDINCS 1747 PENNSYLVANIA AVENUE, N. W. WASHINCTON,D.C.20006 (202) 466 -6900 HOUSTON, TEXAS 77002 OF COUNSEL (713) 237-3111 LUIS J. CREEL, JR. MEXICO CITY TELEX 775532--TWX 8813CS28 CABLE: LERION October 13, 1982 Mr. Knox W. Askins Knox W. Askins, J.D., P.C. 702 W. Fairmont Parkway P. O. Box 1218 La Porte, Texas 77571 Dear Mr. Askins: I am writing to express the interest of this firm in representing prospective users of industrial development bonds in La Porte, Texas. We have an extensive practice in the industrial development bond area and are in the Daily Bond Buyer I s "Red Book", which list nationally recognized bond counsel. Our bond practice presently includes representation of both users and purchasers of industrial development bonds, and during the past year we have represented eleven different users of bonds. Because of our expertise in the bond area, we would propose to represent users from the preliminary planning stage of the financing (during which period we could assist in structuring the financing) through the closing. We would prefer to base our fees upon the actual number of hours worked on any transaction. We would, however, consider the following fee schedule: $5,000 for financings of $500,000 or less, $6,000 for financings of $l,OOO,OOO or less and $7,000 for financings of $l,OOO,OOO or less, such amount to increase by $1,000 for each additional $1,000,000 of bonds issued. For your information in considering the alternative of basing fees on hours worked, recent fees calculated on that basis averaged $ 5,700. The lawyer in this firm who has developed our bond practice and who would represent the users of bonds discussed in z" . _ ~ . e Mr. Knox W. Askins October 13, 1982 Page Two e this letter is Ann Jacobs. Either she or I would be pleased to discuss this matter further with you at any time. 443C03/UU tr~~ O~ Oaks .~ e e '0 . >) REYNOLDS, ALLEN & COOK INCORPORATED . ATTORNEYS WASHINGTON OFFICE ALAN H. RAYNOR HOUSTON, TEXAS 77002 713-65I-1300 TELEX: RAC HOU 79-1164 1707 r. STREET. N.W. WASHINGTON. D.C. 20036 /2021 223-4880 1100 Mll..AM BUII.DING. 16TH FI.OOH October 5, 1982 Knox W. Askins, J.D., P.C. Attorney at Law 702 West Fairmont Parkway P. O. Box 1218 La Porte, Texas Dear Mr. Askins: Mr. Joe Reynolds has referred to me your letter to him of September 27, 1982, inquiring into whether our firm would be interested in providing legal services in connection with financings by the City of La Porte Industrial Development Corporation (the "Development Corporation"). We have assumed that your request is with respect to whether we would be interested in serving as bond counsel for such financings. Attached is a proposed engagement letter outlining the scope of our involvement as bond counsel and our fee schedule. Such fee schedule is for a financing which involves documentation of the type normally used in such financings and does not cover additional charges which might have to be made for services beyond the scope outlined therein. You have specifically indicated interest in financings involving issues of $500,000 or less. We recognize that such issues are of great importance to many cities. However, it has been our experience that, to a great extent, the fact that an issue is of a lesser principal amount does not necessarily decrease the amount of legal work required on the part of bond counsel to bring the issue to a successful conclusion. In fact, we have often experienced the opposite to be the case. We certainly do appreciate the inquiry which you have made of our firm and hope that we have been responsive to your request. If you heed any further information, please do not hesitate to contact Mr. M. Paul Martin or the undersigned. cc: Mr. Joe Reynolds Mr. M. Paul Martin " e e ", City of La Porte Industrial Development Corporation c/o Knox W. Askins, J. D., P. C. 702 West Fairmont Parkway P. O. Box 1218 La Porte, Texas Ladies and Gentlemen: We are submitting this letter to describe the duties and to set forth the basis of our compensation for professional services to be rendered as Bond Counsel in connection with the authorization, sale, and delivery of bonds by the City of La Porte Industrial Development Corporation (the "Issuer") and, when, if requested, as special counsel to the Issuer. BOND COUNSEL We will perform all usual and necessary legal services as Bond Counsel. Specificially, we will prepare and direct legal proceedings and perform other necessary legal services with reference to the authorization, sale, and delivery of bonds, including the following: 1. Prepare all resolutions and other instruments pursuant to which bonds will be authorized, sold, and delivered in consultation with the governing body and other representatives of the Issuer, the Underwriter with respect to the bonds, the Finane ial Adv isor, and any other person wi th a direct pecun iary interest in the issuance of the bonds, if any. 2. Prepare any agreements authorizing or securing the bonds, including any trust indentures. 3. Attend meetings of the governing body of the Issuer to the extent required or requested with reference to the issuance of the bonds. 4. Attend meetings with prospective bond purchasers and meetings with bond rating agencies to the extent required Or requested. 5. Obtain approval of the bonds and the project to be financed fram the Texas Industrial Commission, as required by law. 6. Supervise the execution of the bonds and delivery thereof to the original purchasers. '. e e '. 7. When so del i vered, render our opinion covering the val idi ty of the bonds and the tax exempt status of the interest thereon under federal income tax laws. For each separate installment or series of bonds, our fee covering legal services as Bond Counsel will be as follows, based on the principal amount of each such installment or series: For the first $1,000,000 thereof (with a minimum fee of $20,000) 1% For the next $7,000,000 thereof 1/2 of 1% The additional fee for an issue in excess of $10,000,000 will be the subject of a specific supplement to this Agreement. This fee does not include our actual expenses and disbursements reasonably and necessarily incurred in connection with the authorization, sale, and delivery of the bonds for which we expect reimbursement. Our fees and expenses - as Bond Counsel will be payable at the time of the delivery of, and payment for, the bonds. ADDITIONAL SERVICES We will act as special counsel upon specific request therefor and the above fees do not include any special services not normally included in the legal services performed by Bond Counsel such as fees for any litigation; fees for legal services involving direct responsibility for proceedings before administrative agencies, including, by way of example, the Internal Revenue Service, the Securities and Exchange Commission, and State Securities Administrator; fees for the preparation of any prospectuses, official statements, or other materials which must be prepared in accordance with various securities laws; fees for title examinations or title opinions; and fees for negotiating any special or unusual contracts not necessary for the security for or issuance of the bonds. Our fees for such additional services will be on an hourly basis for which we will maintain complete records. Such fees will consider the difficulty and complexity of the tasks involved and the level of experience of the attorney rendering the services. Each bill ing will contain information concerning the services and the amounts billed therefor and a description of out- of-pocket expenses for which reimbursement is requested * * * - 2 - . '. . .. " 11"'"\... .' y ~ ' e e Our compensation as Bond Counsel shall be due and payable only out of proceeds of the sale of bonds or from the user of the project to be financed, and there shall be no individual liability on any member of the governing body of the Issuer for the payment of any amounts due hereunder. This agreement may be terminated either by you or by us at any time, in which event, of course, we expect to be paid any compensation earned and expenses incurred to the date of such termination. A place is provided below for your acceptance of this agreement, and if you so agree, we ask that two copies of the letter be signed and returned to us for our files. If you have any questions concerning any portion of the letter, please contact the undersigned. We look forward to working with you to the successful issuance of the bonds. Very truly yours, The foregoing agreement is hereby accepted on behal f of , pursuant to due authorization thereof on . CITY OF LA PORTE INDUSTRIAL DEVELOPMENT CORPORATION By - 3 - , .C( CD . N .. In c( ... 0( ..J > x ~ 0( ~ W ~ - ::I: W .... CJ ~ a: :f ~ o W Do ~ ~ 0( 0( ...I c( ~ ...J In ./ :0( .....6 ~~t- ~1. t-1.~ LA PORTE PLAZA -1 TRANGALEE DEVELOPMENT; INC. LE. GROUP ARCHJTECTS ..., - - - - - .......... - - - - - - - - PRClIEC' IrIQ .".84 c( e N CO ., II) c( ... <( ...J >- )( n.. <( w ~ ..... W :I: ui ~ CJ ..... a: :;: II: 0 W 0 A- n.. ..... <( <( c( ..... ..... ...J II) ltr-~ La CIIOUP AtIIOI1TI:CTW e PAO&Cr AFCHI'ECI =e; SMEll fIIO hLi:o ! ! ~~~~ S ..- ~D , -r--l~- : ~ ~ -@ .,;jj\- == c=. '-~ ~ ~ ~ ~ '--, --- ~ -::::8.: ~ - - - -- -_.~ _ _4_ - - - -- ..- ...-..- -~._- ~. ~ -.- - - ---!L = -- -- - _ __ - --- -;:;A~;~'G~WAY 146 , __..-f'- I USE IIUIoUWlY ---~. ~- NO:. ........ CENTER DEVELOPIIENT ..24 ACRE; RESEAYED lIEVn_T JOTAl~i II; CINEMA ,_..~.-..Ti"EACMi .0./00 ii:"'" ~ _e 1.400 81.. . - IlULDMlII: ::::: =:: ----.. ... ::= :;: __c:--l.EME lIPACE 11.200 e.F. TOTAL ~~ P_ ue C..... P__ RATIO..... -.-'- - . - -,. fRON1AGE I'OAD __ - - - __" ~.___ - __0 LT~NORTH ~T> SITE P.LAN ~ e e TRANGALEE DEVELOPMENT, INC. DEVElOPERS · PLANNERS · ARCHITECTS. BUILDERS. CONSULTANTS IA PORTE PLA7A lAND USE SUMMARY lAND : Shopping Center Development Reserved Developnent Total BUTI.DING A: Cinema I, II, III (300 seats eaCh) Anusement Games Lease Space BUILDING B: Lease Space BUILDING C: Lease Space Total PROJECI' COST: Land: 271,812 @ 4.00/SF = Construction Cost: 60,400 @ 26.00/SF = Developnent Cost: 64,400 @ 10.00/SF = Total Proj ect Cost 12 GREENWAY PLAZA SUITE 902 405 BROADWAY 512/222-9401 SAN ANTONIO. TEXAS 78205 6. 24 Acres 1.46 Acres 7. 7 Acres 10,000 SF 5,400 SF 10,000 SF 19,200 SF 19,200 SF 64,400 SF 1,087,248.00 1,570,400.00 624~400.00 $ 3,282,048.00 HOUSTON. TEXAS 77046 n3/552-1991 4910 SAN BERNADO 512/772-52n LAREDO. TEXAS 78041 o < X W I- ui I- a: o l1. < ..J ....- PAOJl!:C' ~ 8:P- 113 W I- a: o a.. <C .,.: ...J 0 W :i C!l l- e ffl o ;: ...J W > <C a: I- I ITRAVELODGE LA PORTE o. J J L- - _.. -- - NORTH 8 TN .TAIIET -l - -. -- . .. OT . I .. J .. .. c .. . ; % .. . .. . .J L ~ t--: - .. LA FRONt ~OE AO~D - HOTEL --- --- no --- 146 ,., --- STATE HIGHWAY --- --- SITE PLAN ~TH PAO.n:Cl' "A('~f"EC' ;;::::'i;' - ~Hf[1 "0 ;u-::o en 0( x w ~ aU ~ a: o a.. 0( ...I _.... PROJECT AACHI1'EC' DRAWN BY SHEEl NO i:'iU'HD AEvtSION ...: en :i ~ en w ~ -.ocT NO W I- a: o a.. c:( ...J W C) C o ...J W > <( a: I- TRAVELODGE LA PORTE ---- -' ~ ~ --- ~ i ~ ~ / /' TRANGALEE DEVELOPMENT, INC. LE.GROUP ARCHITECTS e e lR'AV.ELODGE LA PO-RTE l. , ....e... ....... ~ . . ..~ ~ , 10 TYPiCAL'ROOM .TRANGALEE DEVELO'PM.ENT, INC. LEeGROUP ARCHITECTS e e TRANGALEE DEVELOPMENT, INC. DEVELOPERS · PLANNERS · ARCHITECTS · BUILDERS · CONSULTANTS TRAVELOIx;E IA PORTE DESCRIPITON OF PROPOSED PROJECT The proposed 120-~oan Travelodge & Restaurant is to be built on a tract of 2.5 acres located on the Frontage Rd. east of Hwy. 146, on the South West quadrant of the intersection of North 8th street and North H Street near Morgans Point in La. Porte. Architectural renderings depict a two building scheme for the hotel. The main building faces the comer of North H and Frontage Rd. on State Hwy. 146, and is a two story building. It will contain the Hotel's administration offices, lobby and two guest wings of 120 room capacity with 161 car parki.ng. The second building located between the ''wings'' of the main building will contain the Restaurant and lounge/bar "facilitY overlook:i11g the pool area. We reccmnend that the configuration of 120 rooms' is as follows: Type of Roan Consisting of Size Ntmber of Bedrooms Double-double 2 Queen-sized Beds 12 '8''x25 '6" 72 King 1 King-sized Bed 12 '8''x25 '6" 46 Suite 16' 0''x25 , 6" 2 Total Bedrooms 120 Food and beverage facilities for the proposed Travelodge include: Seat' Square S~Se Footage Facility ~ F tag P t _ "Gapacit:y 00 e ea 100 Main Dining roan 1,600 16. Lounge/Bar 100 1,800 18. 12 GREENWAY PLAZA SUITE 902 405 BROADWAY 512/222-9401 SAN ANTONIO, TEXAS 78205 HOUSTON, TEXAS 77046 713/552-1991 4910 SAN BERNADO 512/772-5271 LAREDO, TEXAS 78041 e e TRANGALEE DEVELOPMENT, INC. DEVElOPERS · PLANNERS · ARCHITECTS. BUILDERS · CONSULTANTS TRAVELOIx;E IA PORTE PROFORMA lAND COST 2.5 Acres = 108,900 sf. @ 5.50 sf = 598,950.00 OONSTRUCTION COST = 120 Roams and Support Facilities 55,388 sf. @ 35.000 sf. = 1,938,580.00 Restaurant = 3;400 sf. @ 70.00 = Parldng = Landscaping = FUrnishing = Architect and Engineer = Interim Interest * Point and Fee (3% of loan) = Constroction CNerllead (8%) = Legal, Tax = Contingency Total Cost = 238,000.00 65,000.00 10,000.00 360,000.00 80,000.00 276,000.00 66,000.00 176,800.00 30,000.00 200,000.00 4,039,330.00 Cost Per Roan = 33,600.00 12 GREENWAY PLAZA SUITE 902 405 BROADWAY 512/222-9401 SAN ANTONIO. TEXAS 78205 HOUSTON. TEXAS 77046 n3/552-1991 4910 SAN BERNADO 512/772-S2n LAREDO. TEXAS 78041 e e TRANGALEE DEVELOPMENT, INC. DEVELOPERS · PLANNERS · ARCHITECTS · I3UILDERS · CONSULTANTS PETER T. s. TRANG D.E.D. .1. PROFESSIONAL. EXPERIENCE A. In the United States .of America * 1980 to Present l. CHAIRMAN' OF. TIlE BOI\RD AND PRESIDENT TRANGALEE DEVELOPt-1EN1". INC.. Hous ton . Texas 2. UJAIRMt\N OF TIlE BOARD. H. B . V. TEXAS cx)RP. 3. Q-JAIRMAN OF TIm BOARD AND PRESIDENT. mALEXACO. INC. 4. UlAIRM'\N OF TIlE BOARD AND PRESIDENT TEXAS GLOBAL TRADING, INC. 5. CHAIRMAN OF TIlE BO!\RD AND PRESIDENT NBD - ASm.o HCMES, INC. * 1975 to Present GJNER 5 Travelodge Motel, Hotel in - Texas: . Houston, San Antonio, Laredo Califomia: La Jolla, San Diego - Florida: Jacksonville I 12 GREENWAY PLAZA SUITE 902 405 I1ROADWAY 512/222.')401 SAN ANTONIO. TEXAS 78205 HOUSTON, TEXAS 770.$& 71)'552.1991 . 4910 SAN BfRNADO 512,772.5271 LAREDO. TEXAS 7/1041 .~ ~ . . B. In South Vietnam 1963 1975 Judge - Vietnam Supreme Court Brigadier General - Vieorurnm Armed Force~. 1962' - 1975 - 'o..JNER OF GRAND HarEL AND PAlACE HarEL. - a.JNER OF 5 RUBBER PLANfATIONS - OWNER OF 2 PHARl"'ACIES II. EDUCATION - OOCTEUR EN DROIT, Montpellier University, France. _ MASTER IN lAW, Saigon University, Vietnam. III. PROFESSIONAL AFFTI..IATIOOS: MEMBERSHIP: - American Hotel 110tel Association - Texas Hotel Motel Association _ Califonda Hotel Motel Association - Florida Hotel Motel Association , . . - TRANGALEE DEVELOPMENT, INC.. DEVHOPERS . PLANNERS . ARCHITECTS . BUILDERS . CONSU1.TANTS LE, QUI PHONG ARCHITECT DPLG - AJA I. PROFESSIONAL E>CPERIENCE A. In the United States-of America 1980 to Present 1. CHAIRMAN OF .1lIE BOARD 1 EXEClITlVE VICE-PRESIDENT TRANGALEE DEVElDPMENI', INC., 'Hous ton, Texas 2. CHAIRMAN OF 1lIE BOARD / EXECUTIVE VICE-PRESIDENT TRALEXACO, INC. 3. rnAIRMAN OF 1lIE BOARD / EXEClITlVE VICE-PRESIDENT NED-ASTRO Ha-tES, INC. 4 . LE-GRQUP ARCHITEcrS, AJA / PRINCIPAL Trangalee Developnent, Inc. is a finn of Developers, Planners Architects, Builders and Hotel Managememt. It's Subsidiaries include Trangalee Construction 'Co. (Residential and Cannercial General Contractor), LE-GRQUP AIA Architect & Planner Finn, Trangalee Properties Co. (Real Es tate Consul ting and Land Development) . 1978 to 1980 FURD ENTERPRISES, Houston, Texas Vice President. As Principal in charge of proj ects , have been responsible for architectural design, land planning and site analysis. Responsibility also involve project management, client relations, and architectural control of construction. Ford Enterprises, Inc.' is a firm of developers, planners, architects, builders and consultants. Its sub- sidiaries include Tectonic Corporation (residential construction), Woods tone Properties, Inc. (res- dential construction and land development) and Dar - Tec (real estate consulting and R.E.I.T. asset management. hJJQ \\ l~1 LOOI' ~Olml sum 955 oIll5 HROl\D\'...\\' 512.'.22:!.9401 ~."N ^~Tn~IO, TE~..\S ;6.205 1lH.I.AIf{[ (l.tOUSl ON\lL \;:\S 7;0101 /' \.I,:(,('S-1I9019 4911l SAN IUR~^D() 51~..711.S:!i1 , I.AREnO, HXA~ ;8().11 ... ~ 1975 - 1977 B. In South Vietnam 1966 - 1975 1965 - 1966 1964 - 1965 " II. EDUCATION . 1958 - 1964 1956 - 1958 III. C. E. U. 'So . e FORD ENTERPRISES, Hotis ton, Texas FORD AND HEESCH, INC. Worked as Design Architect. LE, QUI PHONG & ASSOCIATES, Saigon, Vietnam President and Manager of own architecutral firm. Worked extensively on ccmnercial as well as residential projects. DIRECIDRATE GENERAL OF REOONSTRUCITON AND URBANISM, GOVERNMENT OF VIETNAM Director in charge of plarming and construction for urban renewal adn developnent proj ects . DIRECI'ORATE GENERAL OF REOONSTRUCTION AND URBANISM, GOVERNMENT OF VIETNAM Served as design architect. - ECOLE SUPERIEURE n' ARCHITECI'URE FRANC'AISE - SCHOOL OF ARCHITECTURE, UNIVERSITY OF SAIGON, VIETNAM Followed 6 - year architectural program. Graduated lv.i.th degree in Architecture with highest honors (Grade: Ou~standing) in 1964 FACULTY OF SCIENCE, UNIVERSITY OF SAIGON Followed science and mathematics curriculum. - Mas ter Spec Seminar - Guidelines Workshop - Cost Ccmpensation Seminar - Housing Seminar 4 e e IV. PROFESSIONAL AFFll..IATIONS: - Membership of Greater Houston Builders Association - Merrber of National Association of Home Builders - Merrber of Texas Builder Association V. AWARD Prism award of GHBA _..-" -- ~ e e LE, QUI PHONG SELECI'ED PROJECTS IN 1HE U. S .A. PlAZA DEL OORAOO - 240 Arce Mast(:!r Plan at Nuevo Laredo, Mexico. DEl. NORTE PlACE, I.AREDO TEXAS - 60 Acre Project Development (450 Unit Apartment, 136 Townhomes). TRA VELODGE MJrEL HarEL, l.AREOO, TEXAS - 200 Room - El Matador Club (120 seats) - Rodeo Grill (200 Seats) TRA VELOIX;E 10 - FAST HOUSTON, TEXAS - Desing of Hotel of 125 Units with restaurant, swimning pool, Conference Facilities for 200 Persons. TRAVELOIX;E I - 45 Houston, Texas - Design 165 Units Hotel Motel, with restaurant, club and conference facilities for 300 persons. STONEY CREEK ON MEMJRIAL, HOUSTON, TEXAS - 20 Luxury Custom Townhames in 250,000 to 500,000 price range. \mDlAKE FOREST IV, SECITON C, HOUsroN, TEXAS - 36 Luxury Townhomes in 240,000 to 360,000 price range. NEW 'cHINATONN HOUSTON. TEXAS - 14 Acre Project Development: 18,000 SF Olinatown Supennarket, Oriental Plaza, Lido Theaters 1 & 2, Professional Building, Hotel, O1inatown Bank. CYClDNE ANAYA' S MEXICAN RESTAURANT , HOUsroN. TEXAS - 8,000 SF Mexican Restaurant (300 Seats) and Club (80 Seats). PHOENIX RESTAURANT, CHINESE RESTAURANT, HOUSTON, TEXAS - 5.000 SF with 200 seats FlAGSHIP HarEL ~ GALVESTON, TEXAS - RenDdeli.ng Restaurant (300 Seats) and Night Club (200 Seats). " 'ji . e \oXX>DSTONE III, HOUSTON, TEXAS Architectural design and supervision of architectural production for 60 luxury custom townhouses in $150,000 to 380,000 price range. AMBIANCE ON MEM)RIAL, HOUSTON, TEXAS Land planning architectural design for development of 16.5 acres on Mem:>rial Drive (117. townhouses on portion fo the land) lAPlS HIGH-RISE CONro1INIUM, HOUSIDN, TEXAS Architectural design for 8 - story condominium building with 160 tmits on Richm::md, near downtown Houston. TAMAN IlA.YU, FAST JAVA, INOONESIA Land planning of 7,400 acres for new recreational resort, town center, and residential coommity in East Java, Indonesia. SMl'lli PlAZA, HOUSTON, ~ Design concept for development of 20 acres in Astrodome area,' to include hotel:and high- rise condominium~ SAN FELIPE OJNIXMINIUM, HOUSTON, TEXAS Design of 8 - story luxury condominium with one tmit per floor (5600 sq. ft. per unit), in the River Oaks Ccnmtry Club area. INOOCHINA PlAZA, HOUSIDN, TEXAS Design for renovation of shopping center into an oriental center wi th supennarket, shops, offices, and res taurant - club. AUSTIN RESIDENCE, HOUSTON, TEXAS Design and architectural control of construction for private residence of SCJl'l}e 14, 000 sq. ft. on 2.4 acres of land, with budget of about $1.8 million. ll\KE CHARLES HILTON HOTEL, LAKE CHARLES, TEXAS Design of hotel of 212 units on shore of Lake Charles (12 acres), with termis courts, swinming pool, restaurant and conference facilities for 600 persons. :> v ," e e M)NTCI.AIR <DNOOMlNIUM, HOUSTON, TEXAS . Design for 5 - story condominium with 30 tmits in Medical Center area. RICHMJND <DNlXMINIUM, HOUSTON, TEXAS Design for 6 - story condominium with 288 tmits on l2 acres. POINT AQUARIUS, lAKE CONROE, TEXAS Project arChitect - Project includes development of residential and recreational improvanents (cluster housing, clubhouse and yacht club) FARB RESIDENCE, HOUSTON, TEXAS Project arChitect. Private residence with 30,000 sq. ft. River Oaks Country Club area. DESERT HOUSE, PAlM SPRINGS, CALIFORNIA ArChitect in charge. Private residence in Palm Springs, California. \ I, ..~ ;j 1966 - 1972 1966 1966 - 1970 1970 - 1972 1969 - 1972 1972 - 1974 .,' 1972 - 1974 1973 - 1974 1970 - 1972 197.3 - 1975 197.3 - 1975 1973 - 1975 1973 - 1975 1974 - 1975 1973 - 1974 . e LE, QUI PHONG SELECTED ARCHITECTURAL PROJECTS IN SOUTH VIETNAM CHODAM, CENTRAL SUPERMARKET OF NHA TRANG PROVINCE 480,000 sq. ft. DANANG PALACE HOTEL (96 rooms and 4 stories - night club, restaurant) PALACE HOTEL IN VUNGT AU SEA SIDE (140 rooms, 10 stories with restaurant, night club, swimming pool, convention room) PALACE HOTEL IN SAIGON (408 room~,-15 stories, restaurant, night club, pool, banquet room and convention room) MIRRAMAR HOTEL IN SAIGON (120 rooms, 8 stories, restaurant, night club, banquet room) REX - HOTEL IN VUNGTAU SEASIDE RESORT (126 rooms, 8 stories, night club, pool and banquet) THAITHACH BUILDING IN SAIGON (bank, offices, 10 stories, 106,000 sq. ft.) SUPER K HOTEL IN SAIGON (240 rooms, 12 stories, night club, restaurant, pool and international conference room) DAI A BANK (I2 stories, 120,000 sq. ft.) HOTRACO HOTEL, BAMETHUOT (102 rooms, 8 stories, restaurant and hunting club) NHA TRANG HOTEL (I03 rooms, 9 stories, night club, restaurant, pool, banquet) MANDARIN HOTEL IN SAIGON (162 rooms, 10 stories, night club, japanese restaurant, conference room, pool) BUILDING 72, SAIGON (I40 unit apartment building, 12 stories). THANH TRUC GLASS FACTORY IN SAIGON (160,000 sq. ft., under construction) PANATICO ALUMIMUM FACTORY, SAIGON 002,000 sq. ft.) . ... . e e ( Selected Architectural Projects in South Vietnam - (Continued) 1974 - 197.5 . PANASITRI FACTORY, SAIGON (140,000 sq. ft.) 1973 _ 197.5 VINAHOSTlNCO HOTEL MOTEL, VUNG TAU SEASIDE RESORT (casino, hotel motel, '6.50 units, and yacth club, under construction) 1973 - 197 .5 VICTORY HOTEL (29 st~ries, hotel, shopping center, under construction) ,J ( \ -~;, ~ " e e TRANGAlEE DEVELOPMENT, INC. DEVElOPERS · PLANNERS · AI~CHITECTS · BUILDERS. CONSULTANTS TRANGALEE DEVELOPMENT, INC. BALANCE SHEET as of: September 30, 1982 I. ASSETS l. Current Assets: - Cash/CD - AccOlmts Receivable - Escrow Total Current Assets 2. Fixed Assets: - T..and Sterling Green Stoney Creek/Memorial Woodhollow El Brazos/Rosenberg Cypress - House Inventories Stoney Crecl</Menorial Woodhollow Total Fixed Assets 3. Properties - Office Equipment Total Properties 'j U 11\1.. ASSETS 11 (:1\11 O'.\\..\) 1'1".1,\ "'UIII. ')m .Utr'1 IU~I \ 'I '\\" "d,I.'.I.lll.UII .,,\f: \I.lt I:." I 11'..\'. "".'11'1 $ 575,000.00 328,000.00 30,000.00 $ 933,000.00 $ 1,500,000.00 470,000.00 225,000.00 423,000.00 3 , OL, G , 000. 00 1,960,000.00 810,000.00 $ 8,428,000.00 $ 65,000.00 $ 65,000.00 $ 9 ,1,26,000. 00 / _ . C"""-/..- ~ ?- IIOll...' llN II ~."', .. .1111. :11 '..: ' "II ,1"111 1..\( l nil.':: \111 I .I" I ,':1 1/\1;1 I" I ,,\,\', ":1111 ~~ ...1- e II. LIABILITIES 1 . Cons truc tion Loan - Allied Bank of Texas Strnley Cre~t/Memorial Woodhollow Total Constructirnl JA)an 2. Land Notes - Stoney Creek - Sterling Green South - El Brazos/Rosenberg - Cypress ..-~ Total Land Notes 3. Development Loan - Woodforest Na.tional Bank - Mercantile Barnt Total Development Loan TOTAL LIABILITIES Net Worth TOTAL LIABILITIES & NET WOR1H '" r-rM.-04:S ~----?....t\., .. S. Ll\.~~\ Dr. Peter T. S. Trang President ~ ~ Le, Qui Pho g Executive Vice President e $ 700,000.00 500,OOO~00 $ 1,200,000.00 $ 500.00 800,000.00 155,000.00 l,825,OOO.0Q. $ 2,780,000.00 $ 200,000.00 160,000.00 $ 360,000.00 $ 4,340,000.00 5,086,000.00 $ 9,426,000.00 .."... I ... ..... ~ .. '. . ; .' r' c."i' ,f / /,7 &? ,. :,,<. ' : ,.. It PORT TRUCK SERVICE CENTER Land - 36,790 sq. ft. @ $5.00 a square foot Site Work Concrete slab and parking Building - 97' x 80' Metallic Building, Equipment, Plumbing, Electrical, Offices TOTAL PROJECT COST e $183,950.00 20,000.00 75,000.00 130,600.00 $409,550.00 -.. . e .. CERTIFICATE OF RESOLUTION THE STATE OF TEXAS COUNTY OF HARRIS I, the undersigned officer of the City of La Porte Industrial Development Corporation (the "Corporation") do hereby make and execute this certificate for the benefit of all persons interested in the validity of all actions and proceedings of the Corporation. I do hereby certify as follows: 1. I am the duly chosen, qualified and acting officer of the Corporation for the office shown beneath my signature, and in such capacity I am familiar with the matters contained in this Certificate. 2. The Board of Directors of the Corporation convened its meeting on the 3rd day of August, 1982, and the roll was called of the duly constituted officers and members of the Board of Directors and a quorum was present. Whereupon, among other business, the following was trans- acted at said meeting~ a written resolution was introduced for the consideration of the Board of Directors. 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 vote of the officers and members of the Board of Direc- tors present and voting with the number of such officers and members voting for such Resolution being at least equal to a majority of the entire number of officers and members of the Board of Directors that are entitled to vote. 3. The attached and following is a true, correct and complete copy of said Resolution; the original of said Resolution is on file in the official records of the Corporation; and said Resolution has not been amended and is in full force and effect. 4. The members of the Board of Directors referred to in the above and foregoing paragraph were the duly qualified and acting members of the Board of Directors of the Corporation; and each member of the Board of Directors received notice of the meeting of the Corporation to the extent required by the Bylaws of the Corporation in accordance with the requirements of the Development Corporation Act of 1979, Article 5190.6, Vernon's Annotated Texas Civil Statutes, as amended. WITNESS MY HAND AND THE day of August, 1982. , - Secretary (SEAL) ... e e RESOLUTION OF BOARD OF DIRECTORS PRESCRIBING THE FORM AND SUBSTANCE OF AN AGREEMENT TO ISSUE BONDS; AUTHORIZING THE EXECUTION OF SUCH AGREEMENT; AND CONTAINING OTHER PROVISIONS RELATING TO THE SUBJECT WHEREAS, the City of La Porte Industrial Development Corporation (the "Corporation") is authorized by the Development Corporation Act of 1979, Article 5190.6, Vernon's Annotated Texas Civil Statutes, as . amended (the "Act") J to issue revenue bonds for the purpose of paying all or part of the cost of a "proj ect, II as defined in the Act, and to sell or lease the project to others or loan the proceeds of the bonds to others to finance all or part of the cost of the project; and WHEREAS, the Corporation now desires to authorize, issue and sell its tax exempt industrial development revenue bonds, to the extent authorized by law, to provide funds to defray all or part of the cost of acquiring and constructing certain facilities to be constructed by or to be leased or sold to Bayshore National Bank of La Porte (the "User"), but the Corporation anticipates that construction of such facilities will commence prior to the sale and delivery of such bonds; and WHEREAS, the User and the Corporation desire that the Corporation adopt a bond resolution with respect to the bonds or take some other~ similar official action toward the issuance of such bonds prior to the commencement of construction or acquisition of such facil.ities; and WHEREAS, the City of La Porte, Texas (the "Unit"), has authorized and approved creation of the Corporation to act on its behalf to further certain public purposes of the Unit and has approved or will approve the attached Agreement to Issue Bonds between the Corporation and the User; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF LA PORTE INDUSTRIAL DEVELOPMENT CORPORATION, THAT: Section 1: The Corporation hereby authorizes and agrees that it \l'ill issue and sell its industrial development revenue bonds (the "Bonds") from time to time in one or more series pursuant to the pro- visions of Texas law in a principal amount sufficient to pay all or part of the cost of acquiring and constructing the project described in Exhibit "A" to the Agreement to Issue Bonds attached hereto (the "Pro- ject"), together with all costs of authorization, sale and issuance of the Bonds. The Bonds will be issued and sold as more fully provided in the Agreement to Issue Bonds in an aggregate principal amount (excluding bonds issued to refund any of the Bonds) now estimated to be not more than $2,750,000. . ~ e tit Section 2: The proceeds of the Bonds will be used to acquire, construct, improve, maintain, equip and furnish the Project or will be loaned to the User to pay all or part of the costs of acquiring, con- . structing, improving, maintaining, equipping and furnishing the Project. Section 3: The Corporation will enter into a lease, sale or loan agreement with the User providing for the lease or sale of the Project to the User or for the financing of all or part of the cost of the Project, as more fully described in the Agreement to Issue Bonds. Section 4: The Board of Directors of the Corporation (the "Board of Directors") hereby finds, determines and declares that the Project is required and suitable for the promotion of manufacturing development and expansion and for the industrial development and expansion of industrial facilities and facilities which are related thereto or for commercial development and expansion and for use by commercial enterprises and in furtherance of the public purposes of the Act. . Section 5: The Agreement to Issue Bonds by and between the Corpor- ation and the User in substance and in form substantially as shown in the attachment hereto is hereby approved and the President or Vice President and Secretary of the Corporation are hereby authorized to execute and attest such Agreement to Issue Bonds for and on behalf of the Corporation. Section 6: This Resolution, together with the Agreement to Issue Bonds attached hereto, shall be deemed and construed as a resolution authorizing the issuance of the aforesaid Bonds or some other similar official action toward the issuance of the Bonds within the meaning of 26 C.F.R. Section 1.I03-8(a)(5). PASSED AND APPROVED this 3rd day of August, 1982. -2- .. e e ...._~.:- " AGREE~IENT TO ISSUE BONDS THIS AGREE~ffiNT TO ISSUE BO~~S, entered into as of the 3rd day of August, 1982, by and between the City of La Porte Industrial Development C?rporation (the "Corporation"), created pursuant to the authority of the Development Corporation Act of 1979, Article 5190.6, Vernon's Anno- tated Texas Civil Statutes, as amended (the "Act"), and Bayshore National Bank of La Porte, a national banking association (the "User"), for the purpose of carrying out the public purpose set forth in the Act, includ- ing the promotion and development of industrial, manufacturing and commercial enterprises to promote and encourage employment and the public welfare; WIT N E SSE T H: ---------- \mEREAS, the City of La Porte. Texas (the "Unit"). has authorized and approved the creation of the Corporation to act on behalf of the Unit for the public purpose of furthering on behalf of the Unit the promotion and development of industrial, manufacturing and commercial enterprises to promote and encourage employment and the public welfare; and \\T}{EREAS. the Corporation is authorized by the Act to acquire, construct. improve. maintain, equip and furnish and to lease or sell "projects." as such term is defined in the Act, or to make loans for the purpose of providing financing for all or part of the costs of a project, and the Corporation is further authorized to issue its bonds for the purpose of paying all or part of the costs of a project; and WHEREAS, the User desires to acquire and construct a facility. more particularly described in Exhibit "A" attached hereto. ~dthin the Unit (the "Project"). to.'hich Project is suitable for the promotion of commer- cial development and expansion, the promotion of employment in the Unit and for use by commercial enterprises; and \~nEREAS, pursuant to the Act. the Corporation is authorized to issue the bonds hereinafter described, which bonds shall never consti- tute an indebtedness or pledge of the faith and credit of the State of Texas (the "State"), of the Unit. or of any other political corporation, subdivision or agency of the State within the meaning of any State constitutional or statutory provision, shall never be paid in whole or in part out of any funds raised or to be raised by taxation or any other funds of the Unit, and shall never be paid in whole or in part out of any funds of the Corporation except those derived from or in connection ~ith the sale or lease of the Project or the loan of funds to finance the Project; and i6 e e WHE~AS, to promote and encourage employment and the public welfare, the Corporation agrees to issue, at the request of the User, one or more series of the Corporation's industrial development revenue bonds (the "Bonds") for the purpose of paying all or part of the cost of constructing and acquiring the Project, or 'for the purpose of loaning the proceeds to the User in order to provide temporary or permanent financing of all or part of the cost of constructing and acquiring the Project, and the Corporation and the User deem it desirable and proper that this Agreement to Issue Bonds constitute a formal record of such agreement and understanding in order that the User may proceed with or provide for the acquisition and construction of the Project; and WHEREAS, the User has evidenced a desire to cooperate with the Corporation in the acquisition and construction of the Project and for the Corporation to authorize and issue the Bonds in the aggregate prin- cipal amount now estimated not to exceed $2,750,000, to provide the funds to defray all or part of the cost of the acquisition and construc- tion of the Project; and ~T}{EREAS, the Corporation and the User contemplate that the Project will be sold on an installment payment basis or leased to the User or that proceeds of the Bonds will be loaned to the User in order to provide temporary or permanent financing of all or part of the costs of the Project and that the installment purchase, rental or loan payments, therefor will be sufficient to pay the principal of and any premium and interest on the Bonds; and ~T}{EREAS, it is the desire of the Corporation that the acquisition and construction of the Project occur at the earliest possible time so as to promote and encourage employment and the public welfare within the Unit; and ~T}{EREAS, it is intended that this Agreement to Issue Bonds shall constitute "some other similar official action" toward the issuance of the Bonds within the meaning of Section 1.103-8(a)(5) of the Treasury regulations issued pursuant to Section 103(b) of the Internal Revenue Code of 1954, as amended (the "Code"); NOW. THEREFORE. in consideration of the premises and other good and valuable consideration and of the mutual benefits, covenants and agree- ments herein expressed, the Corporation and the User agree as follows: - 1. The User shall commence with the acquisition and construction of. the Project, which Project will be in furtherance of the public purposes of the Corporation and the Unit as aforesaid. and the User will provide, or cause to be pro~ided, at its expense, the necessary interim -2- . " e e financing to expedite the commencement of the acquisition and construc- tion of the Project. On or prior to the issuance of the Bonds, the User will enter into a purchase, lease or loan agreement on an installment . payment basis (herein called the ."Agreement") with the Corporation under which the Corporation will sell or lease the Project to the User or make a loan to the User for the purpose of providing temporary or permanent financing of all or part of the costs of the Project and the User will make installment payments sufficient to pay the principal of and any premium and interest on such series of Bonds. The Bonds shall never constitute an indebtedness or pledge of the faith and credit of the State, of the Unit, or of any other political corporation, subdivision or agency of the State within the meaning of any State constitutional or statutory provision, and the Bonds shall never be paid in whole or in part out of any funds raised or to be raised by taxation or any other funds of the Unit, and shall be payable from the funds of the Corpor- ation derived from or in connection with the sale or lease of the Project or the loan of the proceeds of the Bonds. 2. On receipt of a ruling from the Internal Revenue Service (or the opinion of nationally recognized bond counsel) that interest paid on the Bonds is exempt from federal income taxation. the Corporation hereby agrees to issue, pursuant to the terms of the Act, the Bonds, or from time to time the portion thereof as may be the subject of such a ruling or opinion as aforesaid. in an appropriate principal amount not exceeding that which is the subject of a ruling or opinion as aforesaid, maturing in such amount and times, bearing interest at the rates. payable on the dates and having such optional and mandatory redemption features and prices as are approved in writing by the User. The Corporation will deliver the Bonds to the purchaser designated by the User and will cooperate to the fullest extent in facilitating delivery of the Bonds. 3. The Corporation and the User agree that the Bonds may be issued either at one time or in several series from time to time as the User shall request in writing; provided, however, that the parties agree that the Bonds will be issued in an aggregate principal amount as will not exceed the amount which is the subject of a ruling or rulings or opinion or opinions as aforesaid. A request in writing for issuance of one or more series of Bonds shall not affect the obligation hereunder of the Corporation to issue the remaining Bonds as written requests therefor are received. It is further agreed that the proceeds of the Bonds or portions thereof whether or not issued in a series. shall not be invested so as to constitute the Bonds or a portion thereof as arbitrage bonds within the meaning of Section 103(c) of the Code and applicable regula- ti9ns promulgated pursuant thereto. -3- ~ e e . 4. .The payment of the principal of and any premium and interest on the Bonds shall be made solely from moneys realized from the sale or lease of the Proj ect or from moneys realized from the loan of the proceeds of the Bonds to finance all or part of the costs of the Proj ect. , 5. The costs of the Project (hereinafter the "Project Costs") may include any cost of acquiring, constructing, reconstructing, improving and expanding the Project. Without limiting the generality of the foregoing. the Project Costs shall specifically include the cost of the "acquisition of all ~and, rights-of-way, property rights, easements and interests, the cost of all machinery and equipment, financing charges, interest prior to and during construction and for one year after comple- tion of construction whether or not capitalized, necessary reserve funds, costs 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 the Project, administrative expenses and such other expenses as may be necessary or incident to the acquisition, construction, reconstruction. improvement and expansion of the Project, the placing of the Project in operation and all incidental expenses, costs and charges relating to the Proj ect not enumerated above. The parties agree, upon request, to provide or to cause to be provided to each other any data or information which may be reasonably required to verify any of the Project Costs , e~umerated in this paragraph. The User agrees that it will be respon- sible for and pay any Project Costs incurred prior to issu~nce of the Bonds and will pay all Project Costs which are not or cannot be paid or reimbursed from the proceeds of the Bonds. 6. The User agrees that it will at all times indemnify and hold harmless the Corporation. the Board of Directors of the Corporation, the Unit. the City Council of the Unit and any of the officers. directors. employees, agents. servants and any other party acting for or on behalf of the Corporation or the Unit (such parties being hereinafter referred to as the "Indemnified Parties") against any and all losses. costs, damages, expenses and liabilities (collectively herein called "Losses") of whatsoever 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 or relating to one or more Claims. as hereinafter defined, even if such Losses or Claims, or both, directly or indirectly result from, arise out of or relate to. or are asserted to have resulted from, arisen out of or related to, in whole or in part, one or more negligent acts or om~ssions of the Indemnified Parties in connection with the issuance of the Bonds or in connection with the Project. The term "Claims" as used herein shall mean all claims, lawsuits, causes of action and other legal actions and proceedings of whatsoever nature, including but not limited - -4- ~ e e to claims. lawsuits, causes of action and other legal actions and proceedings, involving bodily or personal injury or death of any person or damage to any property (including, but not limited to, persons . employed by the Corporation, the Unit, the User or any other person and all property owned or claimed by the Corporation, the Unit, the User, any affiliate of the User or any other person) or involving damages relating to the issuance, offering, sale or delivery of the Bonds brought against any Indemnified Party or to which any Indemnified Party is a party, even if groundless. false or fraudulent, that directly or indirectly result from, arise out of or relate to the issuance, offering, sale or delivery of the Bonds or the design. construction, installation, operation, use, occupancy, maintenance or ownership of the Project or any part thereof. The obligations of the User shall apply to all Losses or Claims, or both, that result from. arise out of or are related to any event, occurrence, condition or relationship prior to termination of this Agreement to Issue Bonds, whether such Losses or Claims, or both, are asserted prior to termination of this Agreement to Issue Bonds or thereafter. None of the Indemnified Parties shall be liable to the User for, and the User hereby releases each of them from all liability to the User for. all injuries, damages or destruction of all or any part or parts of any property owned or claimed by the User that directly or indirectly result from, arise out of or relate to the design. construc- tion, operation, use, occupancy, maintenance or ownership of the Project or any part thereof. even if such injuries, damages or destruction directly or indirectly result from, arise out of or relate to, in whole or in part, one or more negligent acts or omissions of the Indemnified Parties in connection with the issuance of the Bonds or in connection to.'i th the Proj ect. Each Indemnified Party, as appropriate, shall reimburse the User for payments made by the User to the extent of any proceeds. net of all expenses of collection, actually received by them from any insurance with respect to the Loss sustained. Each Indemnified Party. as appropriate. shall have the duty to claim any such insurance proceeds and the Indemnified Party. as appropriate. shall assign its respective rights to such proceeds, to the extent of such required reimbursement. to the User. In case any action shall be brought or to the knowledge of any Indemnified Party, threatened against any of them in respect of to.'hich indemnity may be sought against the User, the Indemnified Party shall promptly notify the User in writing and the User shall have the right to assume the investigation and defense thereof. including the employment of counsel and the payment of all expenses. The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the investigation and defense thereof. but the fees and expenses of such counsel shall be paid by the Indem- ni~ied Party unless (a) the employment of such counsel has been speci- fically authorized by the User, in writing, (b) the User has failed to assume the defense and to employ counselor (c) the named parties to any such action (including any impleaded parties) incluce both an Indem- nified Party and the User. and said Indemnified Party shall have been -5- ... e e . :;, adv~sed by' such counsel that there may be one or more legal defenses available to it which are different from or additional to those avail- able to the User (in which case, if the Indemnified Party notifies the User in writing that it elects to employ separate counsel at the User's expense, the User shall n~t have the right to assume the defense of such action on behalf of such Indemnified Party, it being understood, however, that the User shall not, in connection with anyone such action or separate but substantially similar or related actions in the same juris- diction arising out of the same general allegations or circumstances, be iiable for the reasonable fees and expenses of more than one separate firm of attorneys for the Indemnified Parties [provided that any Indemnified Party which has been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to any other Indemnified Party shall have the right to employ separate counsel whose fees and expenses shall be paid by the User]. which firm shall be designated in writing by said Indemnified Party). The Indemnified Party, as a condition of such indemnity. shall use its best efforts to cooperate with the User in the defense of any such action or claim. The User shall not be liable for any settlement of any such action without its consent but, if any such action is settled with the consent of the User or if there be final judgment for the plaintiff in such action, the User agrees to indemnify and hold harmless the Indemnified Party from and against any Loss by reason of such settlement or judgment. The provisions of this paragraph. s~all survive the expiration or termination of this Agreement to Issue Bonds. 7. If within three (3) years from the date hereof (or such later date as shall be mutually satisfactory to the Corporation and the User) the Corporation and the User shall not have agreed to mutually accept- able terms for the Bonds and for the sale and delivery thereof and mutually acceptable terms and conditions of the Agreement. the User agrees that it will pay the Corporation for all unpaid Project Costs which the Corporation shall have incurred and this Agreement to Issue Bonds shall thereupon terminate. In the event that the User elects, prior to any such termination. not to proceed with the issuance of the Bonds for any reason. it shall so notify the Corporation in writing and shall promptly pay to the Corporation all Project Costs incurred by the Corporation prior to such notification. and if payment is so made, the User's obligations under paragraph 5 above shall terminate from and after the date of such notification. - 8. The User may, without the consent of the Corporation, transfer or .assign this Agreement to Issue Bonds or transfer or assign any or all of its rights and delegate any or all of its duties here~~der to any of its subsidiaries or affilia~es currently existing or here~fter created, -6- ~ . ~ ~ e e but no such transfer, assignment or delegation shall, without the written consent and approval of the Corporation, relieve the User of its liabil- ity for payment of Project Costs under paragraphs 5 and 7 hereof or indemnification under paragraph 6.hereof. This Agreement to Issue Bonds and accompanying authorizing reso- lution shall be deemed and construed a resolution authorizing the issuance the Bonds and other similar official action of the Corporation, acting by and through its Board of Directors, toward the issuance of the Bonds as herein contemplated. IN ~JITNESS WHEREOF, the City of La Porte Industrial Development Corporation, acting pursuant to a resolution of its Board of Directors, and Bayshore National Bank of La Porte. have caused this Agreement to Issue Bonds to be executed and attested by their duly authorized officers as of the year and date first above written. CITY OF LA PORTE INDUSTRIAL DEVELOP~ffiNT CORPORATION >~~ By ..) 'V'-/ Presid nt (SEAL) BAYSHORE NATIONAL BANK OF LA PORTE . B~ E. ~.._,~..~ President ~ /'J. ..,.~~~ Cas h1...e'r . '-"'/: \...~ /' (SEAL) ~ :" ~. ".-.. IV) ~:.- -7- ., J ,. . - .. e - CITY OF LA PORTE INDUSTRIAL DEVELOP~ffi~'T CORPORATION (a nonprofit corporation) APPLICATION FOR FINA~CING \ The purpose of this application is to present to the Ci~y of La Por~e Industrial Development Corporation (the' "Corporation") a reasonably 'comprehensive outline of the proje9t (the "Project") for which financing is being requested'. Fill in all blanks, using "None" or "Not Applicable" ~here necessary. If additional space is needed, attach separate sheets as exhibits. The completed application, ~ith supporting documents, is to be submitted in duplicate to the City Secretary of the City of La Port~ ~ Texas, at the follo""ing address: Ci t)' Secretary, City of La Porte, Texas, 604 West Fairmont Pk~)., P.O. Box 1115, La Porte, Texas i7571 Re: Application for Industrial Development Revenue Bonds. -In adcition, one copy of the completed application should be submitted to counsel to the Corporation, Knox W. Askins, J.D.. P.C., 702 West Fair- mon: Pkwy., P.O. Box 121B, La Porte. Texas 77571. At the time 'this application is submitted a non-refundable application fee must be paid to the Corporation as follows: if the amount of financing applied for is equal to or less than $500,000. then the fee is $500; if the amount of financing applied for is greater than $500,000. then the fee is $1,000. All applications for financing must be submitted to the Corporation fer review and recommendation at least one (1) week prior to a meeting of the Board of Directors during which action upon said application will be taken. 1. General Information e. Legal name, address and telephone number of Applicant. Trangalee DeveloJIIlent, Inc. (713)552-1991 12 Greenway Plaza, 11902, Houston, Texas 77046 State of incorporation or other form of organization or as- sociation. Texas ." . b. c. Registered agent for service of process for the Applican~. I d. Person to ~horn questions and correspondence should be directed. Peter. T. S. Trang . . DEVELOPtlE?\T CORPORATION ; Aieiication for rinancin~ " , e e. Name, address and telephone number of co~nsel for Applicant ".(this does not mean bond counsel). Arm c. Jacob~Butler, Binion, Rice, Cook & Knapp 1100 Esperson Bldg. . Halston, Texas 77002 f. Name, address and telephone number of accounting firm. ~ g. Name, address and telephone number for bond counsel (if one has been chosen). .2. Description of Project B. Amount of financing applied for: $ 8,000,000 Total cost.of Project: $ 8,000,000 . . b. c. Brief narrBtive description of the Project including ~hether land acquisition is included and the major components of the Project, the estimated number and type of ne"" jobs' to be created in the City of La Porte by the Proje~t and ~he annual payroll of employees ~orking at the Project. The proj ect will consist of a 120 roan rootor hotel, a restaurant and a retail shopping center containing approximately 64,400 square feet and a truck and automobile service center. '!he ,proj ect. will be located on State Highway 146 near the inter- section;of Barbo-ur's Cut Blvd. '!he project will include the acquistion of land which is expected to cost approximately $ 1,500,000.. ' It is estimated that approximately 130 jobs will be created ~ the operation of the project and that the armual payroll of. employees wo:rking at the project will be approximately $ ,1,500,000. '". ... i " . I I DE\'ELOPHr~T CORPORATION ~pplication for Financ4lt e d. If the Applicant is relying "on the "small issue II exemption as the basis for the interest. of the bonds being exempt. from federal income taxes, complete and attach to this application the Indus~rial Development. Bond Financing Questionnaire atLached to this application as Exhibit A. Any questions in t.his regard should be addressed to bond counsel (if kno~n). 3." Financial Arran~ements ~ a. Summarize 'the financing arrangements as planned as of :this daLe including name and address of Lhe f~nancial instituLion(s) (bank, investment banking firm, etc.), if determined, which may be interested in purchasing the bonds if and when such bonds may be approved for sale: (It is t.he responsibility of the Applicant to arrange for the marketing of the bonds if the financing is approved, with the Corporat.ion's concurrence.) Bonds will be purchased by Bank; hCJ'Vl7ever, Bank has not yet been detennined. b. If the Applicant has credit rating, please state the rating and agency: None c. Explain how the Project will be financed if all or a portion of the amount. of the financing applied for herein is denied: "Conventional Financing will be used or project will be reduced in Financial Statements size. 4. a. Attach most recent Form lO-K to the Securities and Exchange Commission, together with the most recent Form lO-Q. OR 1. A brief' description of the form of organization and organizational structure. including parent, subsidiaries and affiliates; and " . 2.. A brief statement of the history and t)'pe of business engaged in; and ,3. The names and ages of execuLive or managing oific,ers and direcLors and a brief accounL of all business experience of each such officer or direct.or. including his principal occupat.ions and employment. and the name and principal t 'j I . i "'" y. .. ......, ...,. . -.,.... .......... . . ... .... ... DEVELOP~!ENT CORPORATION ~\?plication for financ~ " e business of the corporation or ot.her organization in which such occupations and employment were carried on; and, b. t.. Audited financial statements' (or if audited financial statements are not available, unaudited financial state- ments) for each of the, three preceding fiscal years. ~ . Detail change~ or events subsequent to the date of the most recent. financial statements (including but not limit.ed. to pending or threatened litigation, claims" assessments, commit- ments, subsequent information regarding uncollectibility of receivables, valuation-of assets, changes in corporate struc- ture o~ statements of prior period financial statements) which may have 2 'ma1:;crial effect on the Applicant's financial position: None 5. Agreements of Applicant .' . a. Indemnity: ~y its execution of this Application, the Applicant. agrees that it. will at all times indemnify and hold harmless the Corporation, the Board of Directors of the Corporation, the City of La Porte, Texas (the "Unit"), the City Council of the Unit and any of the officers, directors, employees, agents, servan~s and any other party acting for or on behalf of the Corporation ,or the Unit (such parties being hereinafter referred to as the "Indemnified Parties") against. any and all losses, costs, damages, expenses and liabilit.ies (collectively herein called "Losses") of whatsoever nat.ure (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 ~ut of or relating to one or more Claims, as hereinafter defined, even if such Losses or Claims, or both, directly or indirectly result from, arise out of or relate to, or are asserted to have resulted from, arisen out of or related to, ,in ",'hole or in part, one or more negligent acts or omissions of the In- demnified Parties in connection with the issuance of the Bonds or in connection with the Project. The term "Claims" as used herein shall mean all claims, lawsuits, causes of action and other legal actions and proceedings of whatsoever nature, .. . '... . " .;:... .. j(;::'~' :~:-:', .:.":...... . . :.~. .':: . '. .::;: '. -.. .-. '. .~.' . '. :.1 .. ": ...~ DEVELOP~1ENT . CORPORA T1 ON Application for Fin4IJ~ng L-"l)C J e including but not limited to claims, lawsuits, causes of action and other legal actions and proceedings, involving bodily or personal injury or death of any person or damage to any property (inclUding, but not limited to, persons employed' by the Corporation, the Unit, th'e' applicant or any other' person and .all property owned or claimed by the Corporation, 'the Unit, the Applicant, any affiliate of the Applicant or any other person) or involving d~mages relating to the issuance, offering. sale or delivery of the Corporation's bonds to finance 'the Project (the "Bonds") brought against any Indemni- fied Party or which any Indemnified Party is a party, even if groundless, fals.e or fr.audulent, tha t directly or indirectly result from, arise out' of or relate to tbe issuance offering, sale or' delivery of the Bonds or the design, construction, installatio~" operation, use, occupancy, maintenance or o\o'Iler- ship of tbiProject or any part thereof. None of tbe Indemnified Parties sball be liable to the Appli- cant for, and the Applicant hereby releases each of them from all liability to the Applicant for all injuries, damages or destruction of all or any part or parts of any property owned or claimed by tbe Applicant that directly or indirectly'result from, arise out of or relate to the design, construction, operation, use, occupancy,' maintenance or ownersbip of the Project or any part thereof, even if such injuries, damages or destruction di,rectly or indirectly resul~ from, arise out of or relate to, in whole or in part, one or more negligent acts or omissions of the Indemnified Parties in connection with the issuance of the Bonds or in connection with the Proj ect. ,. , Eacb Indemnified Party, as appropriate, shall reimburse the Applicant for pa)~ents made by t~e Applicant to the extent of any proceeds" net of all expenses of collection, actually received by them from any insuranc~ with respect to the Loss sustained. Such Indemnified Party, as appropriate, sball have the duty to claim any such insurance proceeds and the Indemni- fied Party, as, appropriate, shall assign its respective rights to such proceeds, to the extent of such required reimbursement, to tbe Applicant. In case any action shall be brought or to the knowledge of any Indemnified Party, threa~ed against any of ,them in respect of which indemnity may be sought against the Applicant, the Indemnified Party shall promptly 'notify the Applicant in writing and the Applicant shall have the right to assume the investigation and defense thereof, including the employment of counsel and the payment of all expenses. The Indemnified Party shall have tbe right to employ separate counsel in any such action and participate in the investi- . . .. ...u.... "" DEVELOPl-lENT COHPORATION Application for Fin~~n~ " 0', e gation and defense there~f, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (a) the employment of such counsel has been specifically authorized by the Applicant, i,n writing, (b) the Applicant has failed to assume the defense and to employ counselor (c) the named, parties to.any such action (including any impleaded'parties) include bot~ 'an Indemnified Party and the Applicant, and said Indemnified Party shall have Qeen advised by such counsel that there may be one or more legal. defenses available to it which are different from or additional to those available to .the Applicant (in which case, if the Indemnif~ed Party notifies the Applicant in writing that it elects to employ separate counsel at the Applicant's expense, the Applicant shall not have the right to assume the defense of such action on bebalf of such Indemnified Party, it being u~derstoodJ however, that the Appli ca'tit shall not, in connection with anyone such action or separa.te but substantially similar or related actions in the same jurisdiction arising out of the same general al~egations or circumstances I be liable fo~. the recsonable fees and expenses of more than one separate firm of attorneys for the Indemnified Party, which firm shall be designated in writing by said Indemnified Party), The Indem- nified Party, a~ a condition of such indemnity, shall 'use its best efforts to cooperate with the Applicant in th~ defens~~of any such action or claim. The Applicant.. shall not be laible for any settlement of any such action without its consent but, if any such action is settled with the consent of the Applicant or if there be final judgment for the plaintiff in any such action, the Applicant agrees to indemnify and hold harmless the Indemnified Parties from and against any Loss by reason of such settlement or judgment. b. Fees and Expenses: Applicant agrees to pay all reasonable and necessary costs, expenses and fees incurred by the Corporation in connection. with the issuance 'of'the bonds or in connection with the Project, including but not limited to the out-of-pocket expenses incurred by the Corporation's personnel; fees for legal services and out-of-pockit expenses of ~he Corporation's General Counsel and any special counsel (such legal services to be charged at the normal hourly rate multiplied by the number of hours spent);' fees and out-of-pocke.t expenses for consulting advice of the Corporation's consuling engineers; fees and expenses required in connection ~ith the underwriting or placement of the Bonds; fees and out-of-pocket expenses of Bond Counsel; fees and out-of-pocket expenses of the trustee; all recording cpsts i Blue Sky and legal investment survey costs, rating agencies j fees and printing costs j and all ~ \.oJ A oJ V.I .1...1\ J \'J\ J I'. J"UJLldl"~"I. . I- l-I L Qt:VELOPHENT CORPORATJ ON ~.'" ." ~PP; icati on for Fi.nance . incidental expenses, costs and charges relating to the Project and the issuance of the Bonds not enumera t.ed above. The Corporation will upon request provide or cause to be provided to the trustee under the indenture of trust. and/or the Applicant any data or information which may be reasonably required to . verify any of. the costs and ,expenses and fees enumerated above. With respect to the costs, expenses and fees enumerated above, the Applicant shall at\the Corporation's request advance on a monthly basis the amounts incurred by the Corporation pending reimbursement out of the proceeds from the sale of the Bonds; To the extent that the cost.s, expenses and fees enumerat.ed abo~e are ~ot or cannot be paid or reimbursed from the proceeds of the bonds or if bonds are not issued, the Applicant shall pay the same. In addition, at the time the Application is forwarded to the Texas lndustrial Commission, the Applicant will be required to pay to the Texas lndustrial Commission a $1,500.00 application fee on behalf. qf the Corporat.ion as required by the Texas Industrial Commission~s lndustrial Revenue Bond Program Rules. The undersigned verifies that he is duly authorized to submit the foregoing application on behalf of the Applicant and that the foregoing information is true and, correct t.o the best of his lalo,,'.ledge and belief submitt.ed on the 'day of October , 1982. Trangalee Develorment, Inc. Applicant By Peter T. S. Trang Presiden~ ~'~ -. - ~~ <. "Tit~e .. . Le, Qui Phong Executive Vice President .. ,e e . e INDUSTRIAL DEVELOPMENT BOND FINANCING QUESTIONNAIRE 1. A. Name, address and employer identification number of the enti ty ~(the ::Pri.l1cipal U&t:.!'II) that will purchase or lease the Project to be acquired or constructed with the proceeds of the bonds. .. B. 'Form of organization of Pri~cipal User (check one): corporation .- partne~ship sole proprietorship : ;, io ~ ,:--. 2. List the name and address .of any entity which, actually or constructively, ,is owned more_.than 50% by the Princi- pal. User. In addition, list the name and address ~f-any person and entity which, actually or constructively, owns more than 50% of the Principal User. List all c>ther enti ti,es in which such "more than 50%" owner actually or constructively has a greater than 50% interest and all family members (i.e., brothers and sisters, husband and wife, ancestors and lineal descendants) of such ."more than 50%" owner. If the Principal User is not a partnership, list any partner- ship in which such "more'than 50%" owner has any actual or constructive interest. If the Principal User is a . partnership, list the name and address of all the part- ners. List all other entities in which any partrier in the Principal User has a greater than 50% actual or constructive interest and all family members (as des- cribed above) of any partner. (The person and entities required to be l:i,sted should be considered "Related Persons" to the Erincipar User for purposes of this questionnaire.) ... - e . e i- 3. Location of project: Address Incorporated Municipality . . '". . Township if any County The Incorporated Municipality or the County (if the Project is in an unicorporated area) in which the Project is located will be referred to as the "Politi- cal Jurisdiction.1I Please indicate whether the Project site is, (a) entirely within an incorporated municipality, (b) entirely within the unicorporated area of the county or (c) partially-in each. If there "is any question. ~s to the location of th~Project site, please so indicate. . ..." _ 4. Provide the following information regarding previous' tax-exempt financing used to finahce the Project or any other facilities used by the Pri~ipal User or Related Persons wholly or partly within~the Political Jurisdiction. ':'-- . Date of Issue Amount. of Issue ..... Amount outstanding as of Estimated Date of Issue of the Bonds 4a. Please list all tax-exempt financings in the past year and all tax-exempt financings currently being considered in which the Company has or will be a user of the facili- ties being financed with bond proceeds. s. Is the Project site part of an industrial park that has been financed with tax exempt bonds? :r 6. Were or will any of the ~tilities for the Project site (gas, electricity, water, sewage, telephone) be provided by a public utility or a state or local government unit? How will they be paid for by the Principal User? . e . e 7. Is the Project site owned or leased by the Principal User? A. If owned: Date of option 'contract Amount of option payment Date of purchase (i.e., c'losing date) Purchased from Purchase price Amount of mortgage Mortgagee B. If leased: Lessor Date of lease Terms Is th,er~ an option to purchafe? c. If Principal "User does not n~w own the Project ,site, but has an option to ~urchase the site, please state: ~. Date option "agreement'siqned,' with owner - Amount of downpayment or option payment Purchase price Estimated purchase date (i.e., closing date) D. will all of the property purchased or leased be used for the project? If not, give number of acres that will be used for Project Is there any relationship legally or by virtue of common control _ between the Principal User and the seller ~f the Project Site? - :r 8. Describe the .Project. (NUmber and size of buildings, equipment, expected use, etc.) -3- - e . e 9. What is the expected date of issuance of the bonds? 10. Expected use of bond proceeds: '.' '.: ,.. Paid or incurred prior to expected issue date of Bonds Paid or incurr '. after expected issue date of Bonds Item Engineering Architecture Building(s) Machinery and Equipment Land Acquisition (including legal and title fees) site Improvement capitalizeable interes~ and taxes Issuance expenses Underwriter's discount or placem~nt agent's fees $ $ .. TOTAL - ~ -:--. 11. will any of the bond proceeds be used for other than the acquisition, construction, reconstruction or improvement of land or depreciable 'property? [Acquisi- tion, construction" reconstruction or improvement of ~and or depreciable property includes, among others, the following: (a) modifying and installing equipment moved from another location and (b) the acquisition of stock of a corporation if the corporation is liquidated and the tax basis of the corporation's assets is stepped up to the acquirer's basis in the stock under IRC ~ 334(b)(2). Representative examples of the use of bond proceeds for other than the acquisition" con- struction, reconstruction or improvement of land or depreciable property include, among others, the following: (a) financing working capital or inventory; (b) refinancing an existing mortgage ~r outstanding loan; or (c) moving of ~xisting equipment from one of the Principal User's (or Related Person's) other facilities to the Projec~.] -4- . e . e 12. List actual and reasonably expected capital expendi- tures (not including those expenditures funded out of the bond proceeds) paid or incurred by anyone with respect to the Project. (All capital expenditures, wheth~r or.not made. by th~ Principal User or a Related Person, must 'be" included. )' " . " Paid or Incurred in Three Years After and Including Date of Issue of Bonds Items organizational Expenditures Engineering Architecture Research and Development Building(s) Machinery 'and Equipment Land (including legal and ti tIe fees) site Improvement Capitalizeable Interest and Taxes _ Bond Issuance Expenses Underwriter's Discount or Placement Agent's Fee Other Total Paid or Incurred in Three Years Prior to Date of Issue of Bonds .' : ~ ;. .---. ..... $ $ EI-:~nditures are capital expenditures if they are ' ! .:>perly chargeable to the capital account or may be ~apitalized under any prqvision of the Internal Revenue Code. Attached as Exhibit "A" is a memorandwn which sets out examples of capital and non-capital expendi- tures. 13. What capital expenditures (other than' those for the Project as liste~ ~n Par~graph 10 and 12 or those financed with bonds listed in Question 4) have been or -5- . . . e will be paid or incurred within the 6 year period described in Question 12 within the Political Jurisdiction for property used in connection with other facilities to be used by the Principal Us~r or a Rela,tedPerson?. [All. capital ,expenditur.es, whether or . not made by the.Principal User or a Related Person, must be included (e.g., if the Principal User or a related person leases space in another building within the Political Jurisdiction, any capital expenditures by the lessor for the leased property made or to be made within the 6-year period must be included).] 14. A. If any equipment or other facilities to be used in connection with the Project will be leased, please describe such items. Also, describe the lease terms and include a copy of the existing or proposed lease if. available. If any equipment will be moved from another location, please describe. f B. -: '= ~ ,:,,--. 15. Type of Work Date B'egun -- site Clearance Foundation Buildings 16. On what date was official action taken by the Develop- ment corporation that will issue the bonds? 17. What costs have been oaid or incurred on the Project prior to the date in 16. above? Please state to whom such expenditures where made and the purpose of such expenditures. 18. On what date we~ contracts entered into for fabrica- tion of major "COmponents of the Project or for con- struction of the.building(s) for the Project? -6- - e . e On what date did fabrication, manufacturing or construc- . tion begin? . 19.- If any. part o.f ,the. Project .will be lease.d .to other than the Principal User, please indicate: 20. A. 4/81 (a) total square footage of ~roject: (b) Amount to be leased to each tenant (if more than 10% in space or in value). On what date will the development and construction work with respect to the real property in connec- tion with the PrQject be completed? B. On wnat date will the-personal property in connec- tion with the Project be installed or first put into use by the Principal -'User, whichever is ' later. . f . ~ ~ . ~. "- . 1 .... . e . e Exhibit A Treas. Reg. Sl.103-10(b)(2)(ii)(e) Capital Expenditures . . .".. . . ". . .. ," "Section 103(b)(6)(D) capital expenditures" are defined in Treas. Reg. Sl.l03-10(b)(2)(ii). That regulation states for an expenditure to be a "section 103(b)(6)(D) capi- tal expenditure'~, inter alia, it must be properly chargeable to the capital account without regard to any rule of the Internal Revenue Code which permits the expenditure to be treated as a current expense or it must be able to be capi- .talized under , any rule or election uride~ the Code. The following are representative examples of ex- penditures which, within the meaning of Treas. Reg. Sl.103- 10 (b) (2)( ii) (e), are prop~rly chargea1?"le to the capital account or may be capitalized under the Code: 1. f Costs allocable - to the acquisit.ion, construction, or erection of buildings, machin~ry and equipment, furni- ture and fixtures, and similar~~9perty having a useful life substantially beyond the taxable year~ See Treas. Reg. Sl.263(a)-2(a). See also Addressograph-Multigraph Core., 4 T.C.M. 147 (1945) (legal fees paid to acquire assets in a reorganization must be capitalized); Missis- sipoi Valley Trust Co. v. U.S., 61 F.Supp. 451 (E.D. Mo. 1945), rev'd on other issues sub nom. Buelterma~~ v. U.S., 155 F.2d 597 (8th Cir. 1946) (appraisal costs paid for possession of premises must be capitalized); Southeastern Express Co., 19 B.T.A. 490 (1930), aco. as to issue 1, X-1 C.B. 61 (1931) (one-half of corporate general coun- sel's salary, representing time spent in connection with organization of a corporation must be capitalized). 2'. Interest on a construction loan, interest on a loan to purchase real property, interest on a loan to purchase, transport, or install personal property, and interest on a mortgage of unimp~oved and unprDductive real pro- perty and other items (including certain taxes and insurance payments) permit~ed to be capitalized under Section 266 of the Code 1 and the regulations thereunder" even though deduoted as expenses on principal user's tax return. Rev: Rul.; 75-185, 1975-1 C.B. 43; Rev. Rul. 77-262, 1977-2 C.B~ 41 (amount' of capital expendi- tures not offset by income from investing proc~eds . . . e during the temporary period). See also Treas. Reg. 91.266-1(b) (1) (iv) (taxpayer permitted to capitalize "any other taxes and carrying charges with respect .to property, which in the opinion of the Commissioner, ar~, under sound accounting principles, chargeable to , capital accountH')." . " ' 3. Issuance costs (underwriting fees, legal fees, printing costs, etc.); but, of course, only if paid other than out of ' the bond proceeds. Rev. Rul. 77-234, 1977-2 C.B. 39. . . 4. ~.mounts' expended for securing a copyright and plates that remain the property of the person making the ,pay- ments. See Treas. Reg. 91.263(a)-~(b). 5. Cost of defending or-perfecting title to property. See Treas. Reg. 91-263(a)-2(c~. 6. Amounts expended for architect'~ services. See TreaS. Reg. 91.263(a)-2(d). f 7.' A corporation's cash acquisi ti_ob of stock of another ::, "corporation followed by a liqui~:tion of the acquired corporation to which Section 334(b)(2) of the. Code ap- plies is in substance an ,acquisition of underlying as- sets, and, therefore is a capitai expenditure with re- spect to the acquired corporation's facilities to-th~ extent of the percentage of the corporation's fixed assets located in the county (or incorporated munici- pality). The capital expenditure, however, is reduced by the amount expended by the acquired corporation from proceeds of an outstanding prior small issue for depre- ciable tangible assets located in the county (or incor- porated municipality). LTR 7916021. 8. Commissions paid in purchasing stock as descr~bed in "5." above. See Treas. Reg. 91.263(a)-2(e). 9. Cost of goodwill or a covenant not to compete in con- nection with the acquisition of the assets of a going concern. Rev. Rul. 81-56, 1981-8 I.R.B. 7; Rev. Ru1. 81-55, 1981-8 I.R.B. 6. See Treas. Reg. 9l.263(a)-2(h). ,. - 10. Trademark and tradenarne exnenditures even though amor- tizable under Section 177 of the Code. " 14. 15. 16. 17. . . . e 11. Cost of railroad rolling stock even if amortizable under section 184 of the Code. 12. Advertising costs which result in the acquisition of an . c;sset having. a, .us~fu,l ,li~e substan-t;ially beyond the taxable year. See A. V. simonson,S T.C.M. 718 (1946) (cost of a promotional film not currently deductible). Cost of trucks based at a trucking terminal facility with respect to the terminal facility. Treas. Reg. S 1.103-10(f), Example (11). Comoare Rev. Rul. 80-12 (expenditures for trucks are not capital expenditures because they are not allocable to any specific facil- i ty) . 13. - Expenditures for equipment or machinery which is moved into the county or municipality within three years of the bond -issue; however, 'only if,. the expenditures for the equipment are made wi thin the" six-year period. Treas. Reg. ~1.103-l0(f), Example (1~). f Cost of molds us~d to manufact~e custom plastic pro- ducts wi~~ respect to the man~acturing facility, re- - 'gardles-s of whether the manufacturer or the customers take title to the molds, if the molds have a useful life substantially beyond the ~nd of the taXable year. Rev. Rul. 77-224, 1977-1 C.B. 25~ If the principal user of a facility orders equipment for.the facility from a manufacturer, expenditures paid or incurred by the manufacturer are considered to have been incurred concurrently by the principal user. The amount which must be taken into account as a caoita1 expenditure is determined by multiplying (a) the"total purchase price payable for the equipment by the prin- cipal user times (b) the percentage of the manufactur- er's total expenditures paid 'within three years of the bond issue. Rev. Rul. 78-347, 1978-2 C.B. 101. See also Rev. Rul. 74-485, 1974-2 C.B. 32 (capital expendi- tures by construction contractor attributed to prospec- tive owner .of building). Note that merely placing the purchase order or entering the construction contract does not incur any capital expenditure by itself. " ,. . Cost of timber ineurred under a pay-as-cut timber con- tract when the timber is'cut. Rev. Rul. 76-132, 1976-1 C.B. 16.' . e . . 18. Cost of mobile buildings for use as temporary offices. even though the mobile buildings later are sold to un- related parties. Rev. Rul. 75-208, 1975-1 C.B. 46. 19. . Research and, .experimenta1 expenditures (including com-, puter software,.Rev. Proc. 69-21, 1969-2 C.B. 303) allo- cable to facilities where rnanufactu=ing will occur even though deducted as expenses. Rev. Ru1. 77-27, 1977-1 C.B. 23; LTR 8052071. See Rev. Ru1. 77-253, 1977-2 C.B. 40'. See also LTR 8042136 (definition of research and experimental expenditures). 20. Circulation expenditures even though deductible under section 173 of the Code. 21. Intangible drilling co~ts even though deductible under Section 263(c) of the Code. . . ," 22. Cost.of property obtained under a iease which is treated as a sale for federal income ta~ purposes. Treas. Reg. ~1.103-10(b)(iii);' Treas. Reg. ~~.103-10(f) Example 13. . ~ ~ Assumption of liabilities in c~rtnection with the pur- " chas'e' of proper'ty. ',' See' Crane- ~- Commissioner, 331 ' U . S . 1 (1947). 24. Organizatior. expenditures of a.~orporation or a PA~~ nership, even though amortized under sections 248 or 709, respectively, of the Code. But see LTR 8014111 (~rganization expenditures not paid or-Incurred with respect to facilities in the city in which the financed facility is located and, therefore, not section 103(b) (6)(D) capital expenditures). 23:. 25. Interest prepayments' of a cash (or accrual) basis tax- payer. See IRC ~461(g). 26. In the case of an individual (including a partner), a subchapter S corpor~tion or a personal holding company, real property and const'ruction period interest and taxes required to be capitalized under Section 189 of the Code. 27. Cost of real property including water rights, ease- ments (see Rev. Ru1. 80~100, 1980-1 C.B. 25) and the ne~ cos~f demolition of an existing building (LTR 8024079). . e . e 28. Origination fee in connection with a lease. 29. Fair market value of property given up in section 1031 like-kind exchange. 30. Expenditures to retire a' portion of a' '.prior exempt small issue; however, only to the extent paid or in- curred wi thin the six-year period. Treas. Reg. . ~1.103-l0(f) Example 10; Rev. Rul. 76-98, 1976-1 C.B. 31. The following are representative examples of ex- penditures which are not "section 103(b)(6)(D) capital ex- pendi ture s II : . - 1. Administrative costs, everhead, and wages -(unless allo- cable to the acquisition, construction, or erection of property described in "1. 1I above); 2. Cost of incidental repairs or maintenance. See Treas. Reg. sl.263(a)-1(b). f' r 3.' Cost of property which would p~bperly be included in 'inventory if on "hand at the ertd~of the taxable year [i.e., direct inventory costs]. LTR 8015025. See IRC !!1221(1), 1231('b).(1)(A).. ' , '- - 4. Purchase of cash, accounts receivable and prepaid expenses. LTR 8015025. 5. Cost of property held primarily for sale to customers in the ordinary course of a trade or business if not used in the trade or business until sold. See IRe ~~1221(1), 1231(b)(1)(B); Rev. Rul. 62-141, 1962-2 C.B. 182. , 6. Cost of supplies (defined as property which does not have a useful life substantially beyond the taxable year when acauired). 7. Periodic rent payments under a true lease for federal income tax purposes (Rev. Rul. 77-353, 1977-2 C.B. 44); but lessor's expenditures for the leased item are capi- tal expendi tur.es. if made wi thin the six-year period unless the leased - item is described in "7." below. . e - . 8. Cost to the lessor of personal property leased under a . true lease for federal income tax purposes either from the manufacturer or from a person in the trade or'busi- ness of leasing similar property provided, pursuant to .general Qusines$ practice, prope~ty of this type Qrdi- , narily is the s~ject of a lease. Treas. Reg. 91.103- 10{b){2){iv){b)i LTR 7925037. However, if ~~c prin- cipal user of a facility purchases the personal prop- erty within three years of the bond issue, sells it to a leasing company, and re-leases it, a capital expendi- ture was incurred on the occasion of the purchase in the amount thereof regardless of the subsequent sale and re-'lease. 'Rev. Rul. 79-248, 1979-34 I.R.B. 5. But see Rev. Rul. 80-162, 1980-25 I.R.B. 5 (no actual pur- chase even though purchase order submitted and down payment made). In a4dition, expenditures by the ground lessor with respect to the facility on the leased ground are capi t-al expenditures;' but,' of' course, only if made within three years of the date of the bond issue. LTR 7833014; LTR 7951067; LTR 8011062. . - f 9. Issuance of stock or securitieSrfor property in a tax- free incorporation or other eiehange under Section '351(a) of'the Code. T'reas. Reif. ~1.103-10{b){2)(v)(c).':- If'Section 351(a) applies to a transfer during the 6- year period surrounding the dat~ of issue, and if, with respect to the property transfe~red, expenditures made' within such period would have been Section 103(b)(oJ1D) capital expenditures if the transferor and the trans- (eree corporation had been related persons for such period, then such expenditures shall be considered to' be section l03(b)(6)(D) capital expenditures made by the transferee corporation. In addition, if a trans- feror and transferee are related persons immediately following such transfer, such transferor and transferee shall also be treated as having been related persons for the portion of such 6-year period preceding the date of such transfer. Treas. Reg. 91.103-10 (b) (2) (v.){d). Furthermore, the purchase by the shareholder or security holder of such property is a capital expen- diture if made within the 6-year period. 10. Exchange of consideration for assets in a tax-free-re- organization or ~iquidation which qualifies under Sec- tion 38l(a) of the Code (relating to carryover of tax attributes); but the tr'ansferor and transferee are treated as related throughout the portion of the six- , . .. e . e year period preceding the date of exchange. Treas. . Reg. sl.103-l0(b)(2)(v)(a), (b)i Treas. Reg. ~1.103-l03- 10(f) Example 17 ("A" reorganization with boot). 11. " Exchange, 9f stock ip.. q. tax-free "B" reorg~nizationi put the parent and ~ubsidiary are treated as related through- out the six-year period. Rev. Rul. 75-411, 1975-2 C.B. 41. 12. A corporation's cash pu~chase of 100 percent of the stock of another corporation (which later finances a facility with tax-exempt bonds) which will not be liqui- dated within two years, but which will be operated as an autonomous subsidiary of the acquiring corporation. The corporations will, however, be. treated as related parties throughout the-six-year period at 'least if they are related on the date of the issue. LTR 8008136. 13. Issuance of a partnership interest ~n tax-free exchange under ,section 721 of the Code f.or property, at least where the p'artner purchased thet property more than 3 vears before th~ issuance of the bonds. Rev. Rul. 77-146, 1977-1 C.B. 24. ~~ - ~. 14. If the present owner purchased the facility within the six-year period; the purohase price is a capital ex- penditure, but the prior owner~s'capital expenditures with respect to the facility may be disregarded to the extent they are reflected in the purchase price. Rev. Rul~ 76-427, 1976-2 C.B. 28. See LTR 8011062. 15. Cost to replace property damaged or destroyed by fire, storm, or other casualty to the extent not in excess of the fair market value (determined immediately before the casualty) of the property replaced. Treas. Reg. gl.103-10(b) (2) (iv) (c). 16. Expenditu=es by a Section 501(c)(3) charitable organiza- tion for cha=itable activities are not Section 103(b) (b)(D) capital expenditures for purposes of a related person's small issue financing of an unrelated facility. Rev. Rul. 74-289, 1974-1 C.B. 32. See LTR 8011062. 17. Expenditures by a politieal subdivision paid or incurred in carrying out 11;s statutory purposes are not Section 103 (b) (6) (D) capital expenditures for purposes of a small issue financing of an unrelated facility. LTR 8012090. .. . . .W e .. e 18. Expenditures by a public utility which is not the prin-. cipal user ,of the bond-financed facility with respect to property of such company or by a state or local gov- ernmental unit with respect~o the property of such uni t, ,i,t: the. f~llowing copd,i t,ioD;S are met: (i). Such property is use~ to provide gas, water, sewage disposal ser/ices, electric energy, or telephone servicas; (ii) - such property, though installed in or connected to the facility, is not an integral part of the facility such that the cost of such property is ordinarily included as part of the acquisition, construction, or reconstruc- tion cost of such facility; and (iii) such property is of a type normally paid for in the form of periodic fees based upon time or use. Treas Reg. sl.103-10(b) (2 )(iv) (a). 19. Cost of moving equipment or machinery (including removal and installation i:osts?) 'except for taxes and carrying charges which may be capitalized under Section 266 of the Code. See Eastern Shoe Manufacturing Co~ 8 B.T.~. 1169- (1927), ~., VlI-1fC.B. 9; Addressograph- !'t!ultlgraoh Corn.,. 4 T.C.M. 147 ~(a945). :. ~ ;. 20. Thebretical interest of' a taxpayer. using his own funds. See Treas. Reg. ~1.266-l(b}(1}(iv). 5/81 . 1 .... i": . '. · ; 6A,/The HOU5ton P05t/Wed., May 2,6, 198~', ~ C:~ty Coun~i,l app-,;oves guidelines ':!f~~ issuing,~n~ustJrial ,revenu~ bonds . f .J ' ,~" . . . . M MABK CARREAU . ' L ',r' The policies would not allow a restaurant pist KeP;Ol1er ...' owner or a groups such as doctOl'S, lawyers P ,.,;.", . . -:' or accountants to seek bond financ!.ng for of- The, ijouston City Council Tuesday agreed... fice space, ',: .' to guidelines for the Issuance of tax-exempt, . .' -. , Industrial revenue bonds that are intended to " Ot~er s.1fe~ualds..adopt.ed by the ~ouncll , encourage development of blighted areas and requIre apphcan~s for b?~~ finanCing to spur employment without prompting abuses. . ~ develop a nelg.hbolhOOd a~essm~nt that sug- . Earli~ this year, the council desigri,.'lted ' gests h~w thell' com~erctal pl'OJCCt w~1I re- much df. the city ~ithiri Loop 610 as well- as ,move bh~ht and proVIde em'ploy~ent without areas outside the loop as blighted and eligible. t~reatemng sUI'~ollndln? resIdential areas, lor con'imbrcial projects funded through bond ':' :'Applicants also ~ust provide proof 'their sales,.. '''\'. . proposal would not violate the deed rcstric- ' Guur~!mes adopted Tu~sday would prevent, tions in fOl'ce at the project site. . ':. ", . the use ,of the bonds to finance free-standing' " ' : . , "', liquor stotes, golf courses or country clubs, . In the event housing with occupants would ~ racquetball courts or health clubs, race- be eliminitled by Ii project, the applicants tracks 'and' hot tub or suntan facilities as well would be obligated to pt'ovide limited relo<;a-, as builiJiiigs used for the sale of pornographic. . . tion assistance. That. help might include moy- materi~~.:l . .' '. ". ' '..~.".' ing expenses and deposits for utilities, ' . '; I .' . ~. e . ~ ..1. ..... Appi~catlons for bond financing wui be made to the nine-member Houston Industrial Development Corp. Final approval of projects must come from the City Council, and prWects rejected by the development corporaTIon's board could be appealed to the council for consideration., . ' ......-. : '" Tuesda~, :~he council a'PPointed' to ~~e I." . . . development corporation F. Max Schuette, an' ". '.:. . attorney; Sheila Jackson Lee, cOl'porate ':..: . attorney:,' Joseph Ryan, an attorney; and . Evangelt'ne Acevedo, a I'eal estate. ,sales'forria~;. ~; , . . Also James' P. Hayden, ,certified pu'blic ac~ ' countant; Thad Hutcheson Jr., an attorney' Constantine Kaldis, a real estate saleswoma~ ~:;~"'~~;"'. and developer; Robert Sakowitz. Sakowitz boa~d chairman; and Fl'ank F. Thompson, an engmeer, ..', ... .... , ',_.J. -- - -- '. '. - .: -: -;-.-'.' ,.:_-. ~.. -:-:- ... 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