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e e SALES AND USE TAX RETENTION AGREEMENT This SALES AND USE TAX RETENTION AGREEMENT (the "Agreement") is dated as of March 15,2000 and entered into between the CITY OF LA PORTE, TEXAS (the "City") and the CITY OF LA PORTE DEVELOPMENT CORPORATION, a nonprofit corporation created by the City pursuant to Section 4B, Article 5190.6, Vernon's Texas Civil Statutes, as amended (the "Act") (the "Corporation"). WITNESSETH: WHEREAS, the City has levied a sales and use tax for the benefit of the Corporation as authorized by Section 4B(d) of the Act, and; WHEREAS, the City plans to issue its "City of La Porte, Texas Certificates of Obligation, Series 2000" (the "Certificates") in part to finance the improvements described in Exhibit "A" attached hereto (the "Project"); and WHEREAS, the Project is a "Project" as defined in Section 48 of the Act and as such, is a Project for which the Corporation may expend sales and use tax revenues; and WHEREAS, the issuance of the Certificates by the City will result, generally, in a lower cost of financing for the Project over the costs the Corporation might incur in financing the Project; and WHEREAS, the Corporation wishes to finance the Project at the lowest possible cost and, therefore, intends that the City retain a portion of the sales and use tax receipts from the sales and use tax levied by the City for the benefit of the Corporation to pledge to the Certificates and for use in making payments of principal of and interest on the Certificates when due, when redeemed prior to maturity, or when defeased in accordance with the provisions of the City's ordinance authorizing the sale of the Certificates (the "Ordinance"); NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and the Corporation hereby agree as follows: Section 1. Incorporation of the Preambles. The preambles to this Agreement are incorporated by reference and are hereby included in this Agreement as though set forth in full at this place. Section 2. Incorporation of the Ordinance. The Ordinance is incorporated by reference and is hereby included in this Agreement as though set forth in full at this place., : \ 1 ~ Section 3. Retention of Sales and Use Tax Receipts b.V'~~~. (a) The Board of Directors of the Corporation hereby agrees that the sales and use taxllevied by the City for the benefit of the Corporation, in an amount necessary to pay the Certificates. Such portion of the sales and use tax revenues is to be irrevocably retained by the City from the effective date of this Agreement until the Certificates are paid in full, whether at maturity or redemption prior to maturity, or until sufficient money and/or securities have been set aside in an irrevocable escrow fund for payment of the Certificates in full, all in accordance with the Ordinance; provided, however, if the City issues refunding bonds or certificates to redeem the Certificates prior to maturity or to defease the Certificates, as permitted in accordance with the Ordinance, such sales and use tax revenues are to be continued to be retained by the City to pledge to and pay in full the refunding bonds or certificates.