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HomeMy WebLinkAboutO-1991-1755 e . ORDINANCE NO. 1755 ORDINANCE AUTHORIZING TilE ISSUANCE OF CITY OF LA PORTE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 1991, AND ALL OTHER MATTERS RELATED THERETO WHEREAS, the City of La Porte (the "City" or the "Issuer") has heretofore issued its City of La Porte, Texas, Waterworks and Sewer System Revenue Bonds, Series 1985 (the "Series 1985 Bonds"); and WHEREAS, In the ordinance authorizing the issuance of the Series 1985 Bonds the City reserved the right to issue revenue bonds on a parity therewith, and pursuant to such right has heretofore issued its City of La Porte, Texas, Waterworks and Sewer System Revenue Bonds; Series 1990 (together with the Series 1985 Bonds, the "Previously Issued Parity Bonds"); and WHEREAS, the City intends to advance refund 'certain of the Previously Issued Parity Bonds, being the "City of La Porte Waterworks and Sewer System Revenue Bonds, Series 1985", maturing in the years 1996 ,10'" through 2005, in the outstanding principal amount of' $3,000,000 (the "Refunded Obligations") and to 'call the Refunded Obligations prior to their maturities; and " WHEREAS, all the Refunded Obligations mature or are subject to redemption prior to maturity within 20 years of the date of the bonds hereinafter authorized; and WHEREAS, the Bonds are to be issued and delivered pursuant to the Char~er of the City and Article 717k and Articles 1111 through 1118, inclusive, V. A. T . C. S., as amended, for the purposes set forth above. THEREFORE, BE IT ORDAINED BY THE, CITY COUNCIL OF THE CITY OF LA PORTE, TEXAS, THAT; SECTION 1. BONDS AUTHORIZED. The City's bonds designated as the "City of La Porte, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 1991" (the "Bonds") are hereby authorized to be issued in the aggregate principal amount of $3,425,000 for the purpose of providing funds to refund the Refunded Obligations and pay costs of issuance. SECTION 2. DATES AND MATURITIES. The Bonds shall be dated April 15, 1991, shall be in the denomination of $5,000 or any integral multiple thereof, shall be numbered consecutively from R-1 upward, and shall mature on the maturity date, in each of the years, and In the amounts, respectively, as set forth In the following schedule: . . MATURITY DATE: MARCH 15 YEARS 1992 1993 1994 1995 1996 1997 1998 AMOUNTS $ 15,000 15,000 15,000 20,000 365,000 360,000 355,000 YEARS 1999 2000 2001 2002 2003 2004 2005 AMOUNTS $345,000 340,000 335,000 325,000 320,000 310,000 305,000 SECTION 3. RIGHT OF PRIOR REDEMPTION. The City reserves the right to redeem the Bonds maturing on or after March 15, 2000, in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on March 15, 1999, or on any date selected by the City thereafter, at the redemption prices, on the dates, and in the manner described in the FORM OF BOND set forth in this Ordinance SECTION 4. INTEREST. The Bonds scheduled to mature during the years, respectively, set forth below shall bear interest at the following rates per annum: maturities 1992, 5.00% maturities 1999, 6.25% maturities 1993, 5.25% maturities 2000, 6.30% maturities 1994, 5.50% maturities 2001, 6".40% maturities 1995, 5.70% maturities 2002, 6.50% maturities 1996, 5.90% " maturities 2003, 6.50% maturities 1997, 6.00% maturities 2004, 6.70% maturities 1998, 6.10% maturities 2005, 6.70% payable September 15, 1991, and semiannually thereafter on March 15 and September 15 of each year. Said interest shall be payable to the registered owner of any such Bond in the manner provided in the FORM OF BOND set forth in this Ordinance. SECTION 5. CHARACTERISTICS OF THE BONDS. (a) Ree;istra- tion, Transfer, and Exchane:e; Authentication. The Issuer shall keep or cause to be kept at the principal corporate trust office of First City, Texas _ Houston, N .A., Houston, Texas (the "Paying Agent/Registrar") books or records for the registration of the transfer and exchange of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent' to keep such books or records and make such registrations of transfers and exchanges under such reasonable regulations as the Issuer and Paying Agent/Registrar may pre- scribe; and the Paying Agent/Registrar shall make such registrations, transfers, and exchanges as herein provided. The Mayor and the City Secretary are authorized to enter into a Paying Agent/Registrar Agreement substantially in the form of Exhibit A, attached hereto. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the 2 e . duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. To the extent possible and under reasonable circumstances, all transfers of Bonds shall be made within three business days after request and presentation thereof. The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential lind, unless otherwise required by law, shall not permit their inspection by any other entity. The Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, exchange and delivery of a substitute Bond or Bonds shall be paid as provided in the FORM OF BOND set forth in this Ordinance. Registration of assignments, transfers, and exchanges of Bonds shall be made in the manner provided and with the effect stated in the FORM OF BOND set forth in this Ordinance. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. Except as provided in (c) below" an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the Paying Agent/Registrar's Authentication Certifi- cate, and no such Bond shall, be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for transfer and exchange. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing transfer and exchange of any Bond or portion thereof, and the Paying Agent/ Regislrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Vernon's Ann. Tex. Civ. St. Art. 717k-6, and particularly Section 6 thereof, the duty of transfer and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of said certificate, the transferred and exchanged Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which initially were issued and delivered pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. (b) Payment of Bonds and Interest. The Issuer hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, all as provided in this Ordinance. The Paying Agent/ Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds. (c) In General. The Bonds (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the registered owners thereof, (ii) may be redeemed prior to their scheduled maturities, (Iii) may be transferred and assigned, (iv) may be exchanged for other Bonds, (v) shall have the 3 e e characteris tics, (vi) shall be signed, sealed, executed, and au then tica ted, (vii) shall have the principal of and interest on the Bonds be payable, and (viii) shall be administered and' the Paying Agent/Registrar and the Issuer shall have certain duties and responsibilities with respect to the Bonds, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF BOND set forth in this Ordinance. The Bonds initially issued and delivered pursuant to this Ordinance numbered R-l through R- 14 (collectively, the "Initial Bonds") shall be delivered to the initial purchaser and are not required to be, and shall not be, authenticated by the Paying Agent/Registrar, but on each substitute Bond issued in ex- change for the Initial Bonds or any Bond or Bonds issued under this Ordinance the Paying Agent/Registrar shall execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE, in the form set forth in the FORM OF BOND. (d) Substitute Payine; Ae;ent/Ree;istrar. The Issuer covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act.. as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity. The Issuer reserves the right to~' and may, at its option, change the Paying Agent/Registrar upon not less than 120 days written notice' to the Paying Agent/Registrar, to be effective not later than 60 days prior to the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar (or ..its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the Issuer covenants that 'promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall 'transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books 'and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the Issuer. ,Upon any change in the Paying Agent/Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/ Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. SECTION 6. FORMS. The form of all Bonds, including the form of Paying Agent/Registrar's Certificate, the Form of Assignment, the form of Statement of Insurance, and the form of the Comptroller's Registration Certificate to accompany the Bonds on the initial delivery thereof, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance: 4 . e FORM OF BOND: NO. R- $ United States of America State of Texas CITY OF LA PORTE; TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BOND, SERIES 1991 INTEREST RATE % MATURITY DATE ISSUE DATE April 15, 1991 CUSIP NO. REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS ON THE MATURITY DATE, specified above, THE CITY OF LA PORTE, TEXAS, a home rule city and municipal corporation of the State of Texas (the "City"), hereby promises to pay to the Registered" Owner, specified above, or the registered assignee hereof (hereinafter called the "registered owner") the Principal Amount, specified above, and to pay interest thereon calculated on' the basis of a 360 day year of twelve 30 day months, from the Issue Date, specified above, to the date of its' scheduled maturity or the date of its redemption prior to scheduled maturity, at the Interest Rate per annum, specified above, with said interest being payable on September 15, 1991, and semiannually on each March 15., and September 15 thereafter. THE TERMS AND PROVISIONS of this Bond are continued on the reverse side hereof and shall for all purposes have the same effect as though fully set forth at this place. THE PRINCIPAL OF AND INTEREST. ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to maturity, at the principal corporate trust office of FIRST CITY, TEXAS - HOUSTON, N .A., Houston, Texas, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof as shown by the Registration Books kept by the Paying Agent/Registrar at the close of business on the Record Date (hereinafter described) by check drawn by the Paying Agent/ Registrar on, and payable solely from, funds of the City required to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, postage prepaid, on each such interest payment date, to the registered owner hereof at its address as it appears on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. The record date ("Record Date") for the interest payable on any interest payment date means the last calendar day of the month next preceding such interest payment date. In the event of a non-payment of interest on a scheduled payment date, and for 30 calendar days thereafter, a new record date for such 5 e e interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, If and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each registered owner of a Bond appearing on the books of the Paying Agent/Registrar at the close of business on the last business day next preceding, the date of mailing of such notice. The City covenants with the registered owner of this Bond that no later than each principal payment date and interest payment date for this Bond it will make available to the Paying Agent/Registrar the amounts required to provide for the payment, in immediately available funds by wire transfer or other means acceptable to the Paying Agent/Registrar, of all principal of and interest on the Bonds, when due, in the manner set forth in the ordinance authorizing the issuance of this Bond adopted by the City Council of the City on May 14, 1991 (the "Ordinance"). IF THE DATE for the payment of the principal of or int~rest on this Bond shall be a Saturday, a Sunday, a legal holiday, or a 'day on which banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. THIS BOND is one of a series of bonds of like tenor and effect, except as to denomination, number, maturity, interest rate, and right of prior redemption, issued in the aggregate principal amount of $3,425,000 for the purpose of providing funds to refund the outstanding City of La Porte Waterworks and ,Sewer System Revenue Bonds, Series 1985 maturing in the years 1996 through 2005 and to pay costs of issuance. THE BONDS of this Series scheduled to mature on and after March 15" 2000 may be redeemed prior to their scheduled maturities, in whole, or in part in principal amounts of $5,000 or any integral multiple thereof, at the option of the City, on March 15, 1999, or on any date selected by the City thereafter, at the redemption price of the par value plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed by the City, the City shall determine the maturity or maturities and the amounts therewith to be redeemed and shall direct the Paying Agent/ Registrar to call by lot Bonds, or portions thereof, within such maturity or maturities and in such principal amounts, for redemption. AT LEAST 30 days prior to the date for any such redemption, a notice of such redemption shall be published one time in a financial journal or publication of general circulation in the United States of America carrying as a regular feature notices of municipal Bonds called for redemption. Such notice also shall be sent by the Paying Agent/Registrar by United States mail, first class, postage prepaid, at least 30 days prior to the date fixed 6 . e for any such redemption, to the registered owner of each Bond, or portion thereof to be redeemed, at its address as it appeared on the Registration Books on the 45th day prior to such redemption date and to major securities depositories, national bond rating agencies, and bond information services; provided, however, that the failure to send, mail, or receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond, and the publication of notice as described above shall be the only notice actually required in connection with or as a prerequisite to the redemption of any Bonds. By the date fixed for any such redemption, due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required redemption price for this Bond or the portion hereof which is to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such notice of redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so redeemed, thereby automatically shall be redeemed prior to its scheduled maturity, and shall not bear interest after the date fixed for its redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar 'shall record in the Registration Books all such redemptions of principal of this Bond or any portion hereof.' If a portion of any Bond shall be redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the ..written request of the registered owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Ordinance. ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons,' in the denomination of any integral multiple of $5,000. As provided in the Ordinance, this Bond, or any unredeemed portion hereof, may, at' the request of the registered owner or the' assignee or assignees hereof, be assigned, transferred, and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Aaail(nment printed or endorsed on this Bond may be executed by 7 e e the registered owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any portion or portions hereof from time to time by the registered owner. The City shall pay the Paying Agent/Registrar's reasonable standard or customary fees and charges for transferring, converting, and exchanging any Bond or portion thereof; provided, however, that any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such transfer, conversion, and exchange. In any circumstance, neither the City nor the Paying Agent/Registrar shall be required (1) to make any transfer or exchange during a period beginning at the opening of business 15 calendar days before the day of the first mailing of a notice of redemption of bonds and ending at the close of business on the day of such mailing or (2) to transfer or exchange any Donds so selected for redemption when such redemption Is scheduled to occur within 30 calendar days; provided, however, that such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the City, resigns, or otherwise ceases to act as such, the City has covenanted in the Ordin'ance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds. BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions of the Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Ordinance is duly recorded and available for inspection in the official minutes and records of the City, and agrees that the terms and provisions of this Bond and the Ordinance constitute a contract between each registered "owner hereof and the City. THE CITY has reserved the right, subject to the restrictions stated in. the Ordinance, to issue additional parity revenue bonds which also may be made payable from, and secured by a first lien on and pledge of, the "Pledged Revenues'~ (as defined in the Ordinance). THE REGISTERED OWNER HEREOF shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation, or from any source whatsoever other than the Pledged Revenues. IT IS HEREBY certified and covenanted that this Bond has been duly and validly authorized, issued, and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed, and been done in accordance with law; that this Bond is a special obligation; and that the principal of, redemption premium, if any, and interest on this Bond are payable from, and secured by a first lien on and pledge of, the Pledged Revenues, which include the Net Re"Qi\uOR of the City'. oombined Waterworks and Sewer System. 8 e, '. IN TESTIMONY WHEREOF, the City Council has caused the seal of the City to be duly impressed or placed in facsimile hereon, and this Bond to be signed with the imprinted facsimile signature of the Mayor and countersigned by the facsimile signature of the City Secretary. COUNTERSIGNED: xxxxxxxx City Secretary, City of La Porte, Texas xxxxxxxx Mayor, City of La Porte, Texas (SEAL) [FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE] PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Ordinance described in this Bond; and that this Bond has been issued in exchange for 'or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Da ted F1RST CITY, TEXAS - HOUSTON, N.A., . Houston, Texas, Paying Agent/Registrar By Authorized Representative [FORM OF STATEMENT OF INSURANCE] STATEMENT OF INSURANCE Municipal Bond Guaranty Insurance Policy No. (the "Policy") with respect to payments due for principal of and interest on this Bond has been issued by AMBAC Indemnity Corporation ("AMBAC Indemnity"). The Policy has been delivered to the United States Trust Company of New York, New York, New York, as the Insurance Trustee under said Policy and will be held by such Insurance Trustee or any successor insurance trustee. The Policy is on file and available for inspection at the principal office of the Insurance Trustee and a copy thereof may be secured from AMBAC Indemnity or the Insurance Trustee. All payments required to be made under the Polley shall be made in accordance with the provisions thereof. The owner of this Bond acknowledges and consents to the subrogation rights of AMBAC Indemnity as more fully set forth in the Policy. 9 e e [FORM OF ASSIGNMENT] .' ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this bond or duly authorized representative or attorney thereof, hereby assigns this bond to I I (Assignee's Social Security or Taxpayer Identification Number) (print or typewrite Assignee's name and address, including zip code) and hereby irrevocably constitutes and appoints attorney to transfer the registration of this bond on the Bond Registration Books with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: The signature of the Registered Owner must be gua-' ranteed by a member of the New York Stock Exchange or a commercial bank or trust company. Regis tered Owner,' NOTICE: This signature : mus't correspond with the name of the Registered Owner appearing on the face of this bond in every particular way without alter- a tion . or enlargement or any change whatsoever The following abbreviations, when used in the assignment above or on the face of the within Bond, shall be construed as though they were written out in full according to applicable laws or regulations: T EN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - Custodian (Cust) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may also be used though not in the list above. 10 e e [FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS]. .To be printed or attached to Initial Bonds only , COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General of the S ta te of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this Comptroller of Public Accounts of the State of Texas COMPTROLLER'S SEAL SECTION 7. DEFINITIONS. As used in this Ordinance, the following terms shall ,have the meanings set forth below, unless the text hereof specifically indicates otherwise: (a) The term "Additional "Bonds" shall mean the additional parity obligations which the City reserves the right to issue in the future, as provided in Section 15 of this Ordinance. (b) ,The term "AMBAC Indemnity" shall mean AMBAC Indemnity Corporation, a Wisconsin-domiciled stock insuran~e company. (c) The terms "Bond" or "Bonds" shall mean one or more, as the case may be, of the Bonds authorized to be issued by this Ordinance. (d) The terms "City" and "Issuer" shall mean the City of La Porte, Texas, or where appropriate the City Council thereof. (e) The term "City Council" shall mean the governing body of the City. (f) The term "Interest and Sinking Fund" means the fund provided for in Section 11 hereof. (g) The term "Municipal Bond Guaranty Insurance Policy" shall mean the municipal bond guaranty insurance policy issued by AMBAC Indemnity Insuring the payment when due of the principal of and interest on the Bonds as provided therein. (h) The term "Net Revenues" means all gross revenues of the System after deducting the necessary and reasonable expenses of operation 11 e e and maintenance of the System, including all salaries, labor, material, repairs, and extensions necessary to render efficient service; provided, however, that only such repairs and extensions, as in the judgment of the City Council, reasonably and fairly exercised, are necessary to keep the System in operation and render adequate service to the City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise Impair the Parity Bonds shall be deducted in determining the "Net Revenues". Depreciation and payments into and out of the Interest and Sinking Fund and the Reserve Fund shall never be considered as expenses of operation and maintenance. (1) The term "Parity Bonds" shall mean collectively the Previously Issued Parity Bonds, the Bonds, and any Additional Bonds. (D The term "Parity Bonds Ordinances" shall mean collectively the ordinances au thorlzlng the Previously Issued Parity Bonds, the Bonds, and any Additional Bonds. (k) The term "Previously Issued Parity Bonds" shall ~ean the outstanding "City of La Porte, Texas, Waterworks and Sewer' System Revenue Bonds, Series 1985" originally issued in the aggregate principal amount of $6,000,000 and th~ "City of La Porte, Texas, Waterworks and Sewer System Revenue Bonds, Series 1990, originally issued il1 the aggregate principal amount of $2,100,000. (1) The term "Reserve Fund" shall mean that, fund described in Section 12 hereof. (m) T'he term "System" shall mean the City's entire existing waterworks and sanity sewer system, together with all future extensions, enlargements, additions, replacements, and improvements thereto. (n) The "System Fund" shall mean that fund described in Section 10 hereof. (0) The term "Year" or "fiscal year" shall mean the regular fiscal year used by the City In connection with the operation of the System, which may be any 12 consecutive months period established by the City. SECTION 8. PLEDGE. The Parity Bonds, redemption premium, if any, and any interest payable thereon, are and shall be secured by and payable from a first lien on and pledge of the Net Revenues, and the Net Revenues are further pledged irrevocably to the establishment and maintenance of the Funds created by the Parity Bonds Ordinances. The Parity Bonds are not and will not be secured by or payable from a mortgage or deed of trust on any real, personal, or mixed properties constituting the System. The Registered Owner of the Parity Bonds shall never have the right to demand payment of such obligations out of any funds raised or to be raised by taxation, or from any source whatsoever other than the Net Revenues. This Ordinance shall not be construed as requiring the City to expend any funds which are derived from sources other than the operation of the System, but nothing herein shall be construed as preventing the City 12 e e from doing so. SECTION 9. RA TES. The City covenants and agrees with the holders of the Parity Bonds that it will: (a) fix and maintain rates and collect charges for the facilities and services afforded by the System which will provide revenues sufficient a t all times: (l) To pay all operation, maintenance, depreciation, replacement, and betterment charges of the System; (2) To establish and maintain the Interest and Sinking Fund; (3) To generate in each year Net Revenues equal to one and twenty-five hundredths (1. 25) times the maximum annual requirement for the payment of the principal of and interest on the Parity Bonds at the time outstanding (although amounts shall be paid into the Interest and Sinking Fund and the Reserve' Fund only in accordance with Sections 10 and 12 hereof); and (4) To pay all indebtedness outstanding against the System, other than the Parity Bonds, as and when the same become due; and (b) deposit as collected all revenues derived from the operation of the System into. the System Fund. . SECTION 10. SYSTEM FUND. There has been created and established on t,he books of the City, and accounted for separate and apart from all other 'funds of the City, a special fund entitled the "City of La Porte, Texas, Waterworks and Sewer System 'Fund" (the "System Fund"). All gross revenues are and shall be credited to the System Fund immediately upon re~eipt. The necessary and reasonable expenses of operation and maintenance of the System shall first be paid from the System Fund upon approval of the City Council and, from the Net Revenues available in the System Fund, the City shall then make substantially equal monthly payments into the Interest and Sinking Fund (commencing with respect to the Bonds and any Additional Bonds on the date of delivery to the initial purchaser thereof) during each year in which any of the Parity Bonds are outstanding in an aggregate amount equal to 100% of the amounts required to meet the interest and principal payments falling due on or before the next maturity date of the Parity Bonds. The City shall, at least five days prior to September 15, 1991, and each March 15 and September 15 thereafter, deposit into the Interest and Sinking Fund any additional Net Revenues available in the System Fund which may be necessary to pay in full the interest on and principal, if any, coming due on such March 15 or September 15. In no event shall any amount in excess of the amounts stated above be placed in the Interest and Sinking Fund for the payment of the interest on or principal of the Parity Bonds, and any amount so placed may be withdrawn by the City and replaced in the System Fund. Any funds remaining in the 13 . e " System Fund, after provision for the necessary and reasonable cost of operating and maintaining the System, and after paying the aforesaid amounts required to be paid' into the Interest and Sinking Fund and the Reserve Fund, may be used by the City for any lawful purpose. SECTION 11. INTEREST AND SINKING FUND. For the sole purpose of paying the principal of and interest on the Parity Bonds, as the same come due, there has been created and established on the books of the City a separate fund entitled the "City of La Porte, Texas, Waterworks and Sewer System Bonds Interest and Sinking Fund" (the "Interest and Sinking Fund") . SECTION 12. RESERVE FUND. There has been created and established on the books of the City at the City's depository bank a separate fund entitled the "City of La Porte, Texas, Waterworks and Sewer System Bonds Reserve Fund" (the "Reserve Fund"). The Reserve Fund shall be used to pay the principal of and interest on any Parity Bonds when and to the extent the amounts in the Interest and Sinking Fund available for such payment are insufficient for such purpose, and may be used for the purpose of finally retiring the last of any Parity Bonds. Beginning on June 15, 1991 and ending May 31" 1996, the City shall, from the Net Revenues in the System Fund, deposit hito the Reserve Fund an amount of money in equal monthly amounts (the "Monthly Reserve Deposit") to achieve the Reserve Requirement (hereinafter described). Notwithstanding any provision hereof to the contrary, no deposits shall be made into the Reserve Fund at a time when there is a deficiency in the amount on dep'osit in the Interest and Sinking Fund nor shall any deposits be made into the Reserve Fund at any time it contains an amount equal to or greater than the Reserve Requirement. If and whenever the balance in the Reserve Fund is reduced below the Reserve Requirement, or if the City should fail timely to make any Monthly Reserye Deposit in full, then and in either such event, the City shall, from the' first available and unallocated Net Revenues of the following month or months, cause amounts equal in the aggregate to any such deficiency to be set apart and transferred into the Reserve Fund and such transfers shall be in addition to the amounts otherwise required to be deposited into such Fund during such month or months. Surplus funds in the Reserve Fund resulting Crom any reduction oC the Reserve Requirement or otherwise shall be promptly transferred Crom the Reserve Fund into the Interest and Sinking Fund, and payments into the Interest and Sinking Fund from the System Fund shall be reduced accordingly. As used herein "Reserve Requirement" shall be the lesser of (1) 10% of the face amount of the Parity Bonds, (2) 100% of the maximum annual debt service for the Parity Bonds, or (3) 125%, of average annual debt service for the Parity Bonds. SECTION 13. INVESTMENTS. Money in any Fund established by the Parity Bonds Ordinances may, at the option of the City, be placed or invested in "Permitted Investments" as defined and used herein to mean, to the extent permitted by Texas law: (1) direct obligations of (including obligations issued or held in book entry form on the books of) the Department of Treasury of the United 14 e' e States of America. (2) oblIgations of" any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: Export - Import Bank Farmers Home Administration U.S. Maritime Administration Small Business Administration Government National Mortgage Association (GNMA) U.S. Department of Housing and Urban Development (PHA's) Federal Housing Administration. (3) bonds, notes, or other evidences of indebtedness rated "AAA" by Standard & Poor's Corporation ("S&P") and "Aaa" by Moody's Investor Services ("Moodys") issued by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation with ,.r,emaining maturities not exceeding three years; or (4) U. S. dollar denominated deposit accounts, federal funds, and banker's acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of "A-I" or "A-1+" by S&P and liP-I" by Moody's and maturing no more than 360 days after the date of purchase. (Ratings on holding ,companies are not considered as the rating of the' bank); Any obligation in which money from the Interest and Sinking Fund or the Reserve Fund are so invested shall be kept and held in the depository bank of the City in escrow and in trust for the benefit of the owners of the 'Parity Bonds, and shall be promptly sold and the proceeds of sale applied to the making of any payments required to be made from the Interest and Sinking Fund or Reserve Fund, as the case may be. Except as described in Section 20, all such investments shall at all times be a part of the Fund from which the money used to acquire said investments shall have come and all earnings on such investments shall be credited to, and losses thereon charged against, such Fund. Notwithstanding any provision hereof to the contrary, any investment of money in the Interest and Sinking Fund shall be made so as to mature or be subject to redemption at the option of the owner or holder thereof on or prior to the date or dates on which money therefrom will be required. SECTION 14. FUNDS SECURED. Money in all Funds created by this Ordinance, to the extent not invested, shall be secured in the manner prescribed by law for securing funds of the City. SECTION 15. ADDITIONAL BON OS. In addition to inferior lien bonds authorized by Article 1111a, Vernon's Texas Civil Statutes, as amended, the City expressly reserves the right hereafter to issue additional parity bonds and other evidences of indebtedness now or hereafter authorized by the Legislature of Texas (collectively, the "Additional 15 ,e ,e Bonds"), and the Additional Bonds, when Issued, may be secured by and payable from a first lien on and pledge of the Net Revenues In the same manner and to' the same extent as the outstanding Parity Bonds but subject to the remaining provisions hereof, and the Previously Issued Parity Bonds, the Bonds, and the Additional Bonds may be In all respects of equal dignity. It is provided, however, that no Additional Bonds shall be Issued unless: (a) The Interest and Sinking Fund, the Reserve Fund, and any similar fund or funds created by the ordinance authorizing any Parity Bonds at the time outstanding shall each contain the amount then required to be on deposit therein, and a certificate of such effect shall be executed and delivered by the Mayor' and City Secretary. (b) As long as any of the Series 1985 Bonds are outstanding, the "net earnings" (defined below) of the System for the fiscal year next preceding the month In which the ordinance authorizing such Additional Bonds Is adopted, were equal to each of the provisions following in items (c) (i) and (Ii) below, determined Independently and certified. by an independent firm of certified public accountants, based upon an annual audit of the books of the System. (c) After the Series 1985 Bonds are no longer 'outstanding, an independent firm of certified public accountants, based upon an audit of the books of the System, certifies that the net earnings of the System for the previous fiscal year, or for any 12 consecutive month period ending not more than 90 days prior to the date, of ,the adoption of the ordinance authorizing the Additional Bonds, were equal to each of the following determined independently: , (i) at least 1.50 times the average annual requirements for the' payment of the principal of and interest on the Parity Bonds then outstanding and on such Additional Bonds, when issued, sold, and delivered; and (ii) at least 1.25 times the maximum annual requirement for the payment of the principal of and interest on the Parity Bonds then outstanding and on such Additional Bonds, when issued, sold, and delivered; provided, however, should the certificate of the accountant certify that the net earnings of the System for the period covered thereby were, in either case, less than required above, and a change In the rates and charges for the services afforded by the System became effective at least 60 days prior to the scheduled date of adoption of the ordinance authorizing such Additional Bonds, then such Additional Bonds may nevertheless be issued if an independent engineer or engineering firm having a favorable reputation with respect to such matters certifies that, had such change in rates and charges been effective for the entire period covered by the accountant's certificate, the net earnings for the System for the fiscal year covered by the accountant's certificate would have met the tests specified in (i) and (ii) above. 16 . . The term "net earnings" as used in this Section shall mean all of the Net Revenues of the System, exclusive of income received specifically for capital items, and operation and maintenance expenses shall exclude expenditures which under standard accounting practice should be charged to capital expenditures or depreciations. (c) Such Additional Bonds are made to mature on March 15th in each of the years in which they are scheduled to mature. (d) The City shall es tablish a reserve fund for such Additional Bonds by providing a cash reserve fund therefor, a surety bond In lieu thereof, or a combination of such cash reserve fund and surety bond, all as the City Council deems reasonable and appropriate provided that (I) the amount of any such cash reserve fund or the coverage of any surety bond in lieu thereof or the amount of such cash reserve fund and the coverage of such surety bond when added together shall at least equal the maximum annual debt service requirements of such Additional Bonds, not to exceed the maximum permitted by applicable regulations, procedures, or published rulings of the Internal Revenue Service (the "Reserve Minimum"); (Ii) if any cash reserve fund is funded by making transfers of Net Revenues in the System Fund, such transfers shall be made each month in an amount reasonably sufficient to reach the Reserve Minimum (or the' portion thereof which is to be provided by such cash reserve fund) within a period of not more than five years after such Additional Bonds are sold and delivered; (Hi) any such cash reserve fund may be combined with ,the Reserve Fund herein provided for the Bonds and witl~ the cash reserve fund provided for any Additional Bo~ds then outstanding'in order ratably to secure all Parity Bonds then outstanding and the Additional Donds then being issued; (iv) any such surety bond provided in lieu of a cash reserve fund shall be issued by an h~surance company or association of companies whose insured obligations are rated by Moody's Investors Service and by Standard 8& Poor's Corporation in their highest rating categories; and (v) any such surety bond may be written (or amended) to provide coverage not only for such Addition"l Bonds but also pro rata for the Parity Bonds then outstanding, provided, any existing cash reserve Cund or surety fund in lieu thereof which secures any such outstanding Parity Bonds is extended ratably to secure the Additional Bonds then being issued. It is the City's intention hereby to provide maximum flexibility with respect to the reserve fund to be, provided for any Additional Bonds which may be issued hereafter and the foregoing provisions shall be liberally construed In order to achieve that objective without materially prejudicing the rights and interests of the owners of any Parity Bonds at the time outstanding. SECTION 18.' GENERAL COVENANTS. The City further covenants, warrants, and agrees that in accordance with and to the extent required or permitted by law while the Parity Bonds are outstunding and unpaid: (a) Performance. It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in each Parity Bonds Ordinance, and in each and every Parity Bond; it will 17 . . promptly payor cause to be paid the principal of and Interest on every Parity Bond, on the dates and in the places and manner prescribed In the Parity Bonds Ordinances; and, it will, at the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the Interest and Sinking Fund and the Reserve Fund; and any holder of the Parity Bonds may require the City, its officials and employees to carry out, respect, or enforce the covenants and obligations of the Parity Bonds Ordinances by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings in any court of competent jurisdiction against the City, its officials and employees. (b) City's Le~al Authority. It is a duly created and existing home rule city of the State of Texas, and Is duly authorized under the laws of the State of Texas to create and issue the Parity Bonds; it has the lawful power to pledge the revenues supporting the Bonds and has lawfully exercised said power under the Constitution and laws of the State of Texas, including said power existing under Articles 1111 to 1118, both inclusive, nevised Civil Statutes of the State of Texas, as amended; the Bond.s issued hereunder shall be ratably secured by said pledge of income, in such manner that one Bond shall have no preference over any other Bond; all action on its part for the creation and issuance of said obligations has been duly and effectively taken; and said obligations in the hands' of the holders and owners thereof are and will be valid and enforceable special obligations of the City in accordance with their terms. (c) Title. It has or will obtain lawful title to the lands, buildings, structu~es, and facilities cOlistituting the System; it will defend the title to all the aforesaid lands, buildings, structures, and facilities, and every part thereof, for the benefit of the holders and owners of the Parity Bonds, against the claims and demands of all persons whomsoever; it is lawfully qualified to pledge the Net Revenues to the payment of the Parity Bonds in the manner prescribed herein; and it has lawfully exercised such rights. ( d) Liens. It will from time to time and before the same become delinquent pay and discharge all taxes, assessments and governmental charges, if any, which shall be lawfully imposed upon it or the System; it will pay all lawful claims for rents, royalties, labor, materials, and supplies which if unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner provided herein; and it will not create or suffer to be created any mechanic's, laborer's, materialman's or other lien or charge which might or could be prior to the liens bereof, or do or suffer any malleI' or thing whereby the liens hereof might or could be Impaired; provided, however, that no such tax, assessment, or charge, and that no such claims which might be used as the basis of a mechanic's, laborer's, materialman's, or other lien or charge, shall be required to be paid so long as the validity of the same shall be contested in good faith by the City. 18 e . (e) Operation of System; No Free Service. It shall continuously and efficiently operate the System and maintain the System in good condition, repair, and working order, all at reasonable cost. No free service of the System shall be allowed, and should the City or any of its agencies or instrumentalities, lessees, or concessionaires make use of the services and facilities of the System, payment monthly of the standard retail price of the services provided shall be made by the City or any of its agencies or Instrumentalities, lessees, or concessionaires out of funds from sources other than the revenues of the System, unless made from surplus Net Revenues. (f) Further Encumbrance. Other than for the payment of the Parity Bonds, the rents, revenues, and income of the System have not in any manner been pledged to the payment of any debt or obligations of the City or of the System; and it shall not additionally sell or encumber the Net Uevenues in' any manner, except os permitted in the Parity Bonds Ordinances in connection with Additional Bonds, unless said encumbrance is mude junior and subordinate in all respects to the liens, pledges, cov- enants, and agreements of the Parity Bonds Ordinances; but the .right of the City to issue revenue bonds payable from a subordinate lien on the surplus Net Revenues is specifically recognized and retained. (g) Sale or Disposal of Property. It shall not sell, convey, mOl.tgage, encumber, lease, or in any manner transfer title to, or dedicate to other use, or otherwise dispose of the System, or any significant or substantial port thereof; provided, however, that whenever the City deems it necessary to dispose of any other property, machinery, fixtures, or equipment, or dedicate such property :to other use, it may do so either when it has made' arrangements to replace the same or provide substitutes therefor, or it is determined by resolution of the City Council that no such replacement or s,ubsUtute is necessary. (h) Insurance. It agrees to maintain insurance on the System, for the benefit of the registered owner or owners of the Parity Bonds of a kind and in an amount which usually would be carried by private companies engaged in a similar type of business in the same area. (I) Records and Audits. It shall keep proper books and records and accounts, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to the System. Upon written request mode not more than 60 days following the close of the fiscal year, the City sholl furnish to OilY holder of any Parity Bonds, complete financial statements of the System in reasonable detail covering such fiscal year, certified by the City's Auditor. Any holders of 25% in principal amount of the Parity Bonds at the time outstanding shall have the right at all reasonable times to inspect the System and all records, accounts, and data of the City relating thereto. (j) Governmental Agencies. It has or will obtain and keep in full force and effect all franchises, permits, authorization, and other requirements applicable to or necessary with respect to the acquisition, construction, equipment, operation, and maintenance of the System, and it will comply with all of the terms and conditions of any and all franchises, 19 e e permits and authorizations applicable to or necessary with respect to the System. (k) No Competition. To the extent it legully may, it will not operate, grant any franchise, or permit the acquisition, construction, or operation of, any facilities which would be in competition with the System, and to the extent that it legally may, the City will prohibit any such competing facilities. SECTION 17. AMENDMENT OF ORDINANCE. (a) The holders of the Parity Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding Parity Bonds shnll have the right from time to time to approve any amendment to this Ordinance which may be deemed necessary or desirable by the City; provided, however, that without the consent of the holders of all of the Parity Bonds at the time outstanding, nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in this Ordinance or in the Parity Bonds so as to: (1) Make any change in the maturity of the outstanding Parity Bonds; (2) Reduce the rate of interest borne by any of the ou ts tanding' Purity Bonds; (3) Reduce the amount of the principal', payable on the ou ts tanding Purity Bonds; (4) Modify the terms of payment of principal of or interest on the outstanding Parity Bonds or impose any conditions with respect to such payment; (5) Affect the rights of the holders of less than all of the Parity Bonds then outstanding; (6) Change the minimum percentage of the principal amount of Parity Bonds necessary for consent to such amendment. (b) If at any time the City shall desire to amend the Ordinance under this Section, the City shall cause notice of the proposed amendment to he published in a financial newspaper or journal published in The City of New York, New York, once during each calendar week for at least two successive calendar weeks. Such notice sholl briefly set forth the nature of the proposed amendment and shull state that a copy thereof is on file at the principal office of the Paying Agentl Registrar for inspection by all holders of Parity Bonds. Such publication is not required, however, If notice in writing is given to each holder of the Previously Issued Parity Bonds, Honds, and Additional Bonds'. (c) Whenever at any lime not less than 30 days, and within one year, from the date of the first publication of, said notice or other service of written notice the City shall receive all instrument or Instruments executed 20 . ., by the holders of at least 51\ in aggregate principal amount of all Parity Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described 'in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying Agentl Registrar, the City Council may pass the amendatory ordinance in substantially the same form. (d) Upon the passage of any amendatory ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be amended in llccordllnce with such amendatory ordinance, and the respective rights, duties and obligations under this Ordinance of the City and nil the holders of then outstanding Parity Bonds shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such amendments. (e) Any consent given by the holder of a Parity Bond pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders of the same Parity Bond during such period. Such consent may be re,voked at any time after six months from the date oC the first publication of such nolice by the holder who gave such consent, or by a successor in title, by filing notice thereof with fhe Paying Agent and the City, but such revocation shall not be effective if the holders of 51% in aggregate principal amount of the then outstanding Parity Bonds as in. this Section defined have, prior to the attempted revocation, consented to and approve the amendment. (f) For the purpose of thl~ Section the fact of the holding of Parity Bonds issued In registered form without coupons and the amounts and numbers oC such Parity Bonds and the dute of their holding same shall be proved by the, Registration Books of the Paying Agent/Registrar. For purposes of this Section, the holder of a Parity Bond shall be the owner thereof as shown on such Registration Books.. The City may conclusively assume that such ownership continues until written notice to the contrary is served upon the City. (g) The foregoing provisions of this Section notwithstanding, the City by action of the City Council may amend this Ordinance for anyone or more of the following purposes: (1) To add to the covenants and agreements of the City in this Ordinance contained, other covenants and agreements thereafter to be observed, grant additional rights or remedies to bondholders, or to surrender, restrict, or limit any right or power herein reserved to or conCerred upon the City j (2) To make such provisions for the purpose of curing any ambiguity, or curing, correcting, or supplementing any defective provision contained in this Ordinance, or in regard to clarifying matters or questions arising under this Ordinance, as are neces- sary or desirable and not contrary to or inconsistent with this Ordinance and which shall not adversely affect the interests of 21 e e the holders of the Parity Bonds; (3) To modify any of the provisions of this Ordinance in any other respect whatever, provided that (I) such modification shall be, and be expressed to be, effective only after all Parity Bonds outstanding at the date of the adoption of such modi- fication shall cease to be outstanding, and (Ii) such modification shall be specifically referred to in the text of all Additional Bonds issued after the date of the adoption of such modification. SECTION 18. DAMAGED, MUTILATED. LOST, SOTLEN. OR DESTROYED BONDS. (a) In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for replacement of damaged, mutilat{ld, lost, stolen, or destroyed Bonds shall be mode to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the applicant for a replacement bond shall furnish to the City and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every cose of los9, theft, or destruction of a Bond, the applicant shall furnish to the City and to the Paying Agent/Registrar evidence to lI}(~ir satisfaction of the los9, theft,' or destruction of such Bond, as the case may be. In every case of damage' or mutilation of a Dond, the applicant shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) "Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured,' and no default has occurred which is then continuing in the payment of the principal of, redemption premium,. if any, or interest on the Bond, the City may authorize the payment of the same (without surrender thereof expect in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity i9 furnished as above provided in this Section. (d) Prior to the issuance of any replacement bond, the Paying Agent/ Registrar shall charge the owner of such Bond with all legal, printing, ami other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the City whether or not the lost, stolen or destroyed Dond shall be found at any time, or be enforceable by anyone, and sholl be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance. (e) In accordance with Section 6 of Article 717k-6, V.A.T.C.S., this Section of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the 22 e e governing body of the City or any other body or person, and the duty of the replacement of sucb bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such bonds i.n the form and manner and with the effect, as provided in Section 4 (d) of this Ordinance for Bonds issued in exchange for other Bonds. SECTION 19. DEFEASANCE OF TilE BONDS. (a) Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of this Ordinance, except to the extent provided in subsection (d) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemption, or otherwise) either (I) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption), or (il) shall have been provided for on or before such due date by irrevocably depositing wilh or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United Slates of America sufficient to make such payment or (2) direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, and which may be book entry form (herein "Government Obligations") which mature as to principal and interest in such amounts and at such time as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrongements have been made by the City with the Paying Agcnt/Registrar for the payment of its services until all Defeased Bonds shall have become' due and payable. At such time as a Bond shall be deemed to bea Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of,: the revenue herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any money so deposited with the Paying Agent/Registrar may at the written direction of the City also be invested as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to the City, or deposited as directed in writing by the City. (c) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perCorm the scrvices of Paying Agent/Registrar for such DefeBsed Bonds the same as if they had not been deCeased, and the City shall make proper arrangements to provide and pay for such services as required by this Ordinance. (d) In the event that the principal and/or interest due on the Bonds shall be paid by AMBAC Indemnity p~rsuant to the municipal bond guaranty insurance policy issed by AMBAC Indemnity insuring the payment 23 . e when due of the principal of and Interest on the Bonds as provided therein (the "Munlcipnl Bond Guaranty Insurance Policy"), the Bonds shall remnin outstanding for all purposes, not be deCeased or otherwise satisfied, and not be considered paid by the City, and the assignment and pledge of the proceeds of pledged revenues and all covenants, agreements, and other obligations of the City to the registered owners shall continue to exist and shall run to the benefit of AMBAC Indemnity, and AMBAC Indemnity shall be subrogated to the rights of such registered owners. SECTION 20. TAX COVENANTS. The City covenants to take any action to assure, or refrain from any action which would adversely affect, the treatment of the Bonds as obligntions described in section 103 oC the Code, the interest on which is not includable In the "gross income" of the holder Cor purposes of federal income taxation. . In furtherance thereof, the City covenants as follows: (a) to take any action to assure that no more than 10% of the proceeds of the Bonds (less amounts deposited to a reserve fund, If any) are used for any "private business l;lse", as defined in section 141(b)(G) of the Code or, if more than 10\ of the proceeds are so used, that amounts, whether or not received by the City, with' respect to such private business use, do not, under the terms of this Ordinance or auy underlying arrangement. directly or indirectly, secure or provide for the payment of more than 10% of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code;.. (b) to take any action" to assure that in the event that the "privat'e business use" described in subsection (a) hereof exceeds 5% of the proc(~eds of the Bonds (less amounts deposited into a reserve fund, if any) then the amount in excess of 5% is used for a "private business use" which is "related" and not "disproportionate", within the meaning of section 141 (b)(3) of the Code, to the governmental use; (c) to take any action to assure that no amount which is grea tel' than the lesser of $5,000,000, or 5% oC the proceeds of the Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (d) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" withIn the meaning of section 141(a) of the Code; (e) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (f) to refrain from using allY portion of the proceeds of the Bonds, directly or indirectly. to acquire or to replace Cunds 24 . . which were used, directly or indirectly, to acquire investment property (as defined in section 148(b) (2) of the Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquired with -- (1) proceeds of the Bonds invested for a reosonable temporary period of three years or less until such proceeds are needed for the purpose for which the bonds are issued, (2) amounts invested in a bona fide debt service fund, within the meaning of section 1.10J-13(b)(12) of the Treasury Regulations, and (3) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10% of the proceeds of the Bonds; (g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so t1u~.t the Bonds do not otherwise contravene the requirements of section 148 of the Code (reluting to arbitrage) and, to the extent applicable, section 149(d)' of the Code (relating to advance refundings); (h) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the. Bonds) an amount that is at least equal to 90% of the "Excess Earnings", within the meaning of section 148(f) of the Code and to pay to the United Stutes of America, not luter limn 60 days after the Bonds have been paid in full, 100% of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code; and (1) to maintain such records as will enable the City to fulfill its responsibilities under this section and section 148 of the Code and to retain such records for at least six years following the final payment of principal and interest o~ the Bonds. It Is the understanding of the City that the covenants contained herein are intended to assure compliance with the Code and any reglllutions or rulings promulgated by the U.S. Department of the Treasury pursuant thereto. In the event thot regulations or rulings are hereafter promulgated which modify, or expand provisions of the Code, as applicable to the Bonds, the City will not be required to comply with any covenant contained herein to the extent that such modification or expansion, in the opinion of nationally- recognized bond counsel, will not adversely affect the exemption from federal income taxation of interest on the Bonds under section 103 or the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the City agl'ees to comply with the additional requirements to the extent necessary, in the 25 . e opinion of. nationally-recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. SECTION 21. DESIGNATION AS QUALIFIED TAX-EXEMPT BONDS. The City hereby designates the Bonds as "qualified tax-exempt bonds" as defined in section 265(b)(3) of the Internal Revenue Code of J 986, as ameilded (the "Code"). III furtherance of such designation, the City represents, covenants, and warrants the following: (a) during the calendar year in which the Bonds are issued, the City (Including any subordinate entities) has not designated nor will designate bonds, which when aggregated with the Bonds, will result in more than $10,000,000 of "qualified tax-exempt bonds" being issued; (b) the CJty reusonably anticipates that the amount of tux-exempt obligations issued during the calendar year in which the Bonds are issued by the City (or any subordinate entities) will not exceed $10,000,000; and (c) the City will take such action or refrain from such action as necessary in order that the Bonds will not be considered "pl'ivate activity bonds" within the meaning of section 41 of the Code. SECTION 22. SALE OF BONDS. The Bonds are hereby sold and shull be delivered to Masterson Moreland Sauer Whisman, Inc. (the "Initial Purchaser"), pursuunt to the terms and provisions of the Purchase Contrnct attached hereto as Exhibit B and the Mayor is hereby authorized to execute and deliver such Purchase Contract. The Bonds shall initially be registercd in the name of Masterson Moreland Sauer Whisman, Inc. The officers of the Issuer ore hereby authorized .and directed to execute and deliver such certificates, instructions, or other Instruments as are required 01' necessary to accomplish the purposes of this Ordinance. SECTION 23. PROCEEDS OF SALI~. The proceeds of the Bonds shall be placed 'into the Interest and Sinking Fund and the Escrow Fund of the Issuer as follows: (a) Interest and Sinkine: Fund. An amount equal to the accrued interest on the Bonds from the date of the Bonds to the date of delivery to the Initial Purchaser shall be deposited in the Interest and Sinking Fund. (b) Escrow Fund. The proceeds of the Bonds remaining after the above described deposit into the Interest and Sinking Fund shall be placed in the Escrow J."'und (after created) to be used by the Issuer for the purposes described in the Escrow Agreement hereafter authorized. SECTION 24. APPROVAL OF OFFICIAL STATEMENT. The Issuer hereby approves the form and content of the Official Statement relating to the Bonds, and any addenda, supplement, or amendment thereto and approves the distribution of such Official Statement in the reoffering of the Bonds by the Initial Purchasers in final form, with such changes therein or additions thereto as the officer executing the same may deem advisable, such determination to be conclusively evidenced by his execution thereof. It Is further officially found determined and declared that the statemcnts and representotions contained in said Official Stafement are true and correct in 26 e e all material respects to the best knowledge and belief of the Council. SECTION 25. CONSIDERATIONS OF REFUNDING. The Council hereby finds that by refunding the Refunded Obligations the Issuer will (i) lower the annual debt service requirements with respect to its revenue supported obligations and (U) restructure its debt service in a manner which will allow the issuance of additional bond issues without a utility rate increase or with a smaller increase than would otherwise be required, SECTION 26. NOTICE OF REDEMPTION TO PAYING AGENT AND REGISTERED OWNERS AND PUBLICATION. The principal of and accrued interest on the Refunded Obligations shall be paid on the earliest redemption date, March 15, 1995, with proceeds of the Bonds, and the Refunded Obligations are hereby called for redemption on said elate. First City , Texas - 1I011ston, N.A., Houston, Texlls, is hereby directed to make appropriate arrangements so that the principal" of and accrued interest on such Refunded Obligations may be redeemed at said bank on such redemption date. Unless notice is waived by the owners thereof, a copy of the Notice of Prior Redemption, substantially in the form attached hereto as Exhibit D, shall be delivered to the paying agent bank for the Refunded O~ligations and a copy of such Notice of Prior Redemption shall be mailed to the registered owner thereof, or otherwise given as provided in the appropriate order, resolution, or ordlnanC?e authorizing the Refunded Obligations. SECTION 27. ESCROW AGREEMENT. The discharge of the Refunded Obligations shall be effectuated pursuant to the terms and provisions of the Escrow Agreement, the terms and provi!.?ions of which are hereby approved, subject to such In~ertions, additions, alld modin(~ations as shall be necessary (a) to carry' out the program designed for the City by Masterson Moreland Sauer Whisman, Inc. and which shall be certified as to IIl[\lhematicul accuracy by Deloitte Be Toudle, Certified Public Accountonts, whose verification report (the "Report") shall be delivered with the Escrow Agreement, (b): to maximize the City's present value savings and/or minimize tho City costs of refunding, (c) to comply ,with all applicable laws and regulations relating to the refunding of the Refunded Obligations, and (d) to carry out the other intents and purposes of this Ordinance, and the Mayor is' hereby authorized to execute and deliver the Escrow Agreement attached hereto as Exhibit C on behalf of the City in multiple counterparts and the City Secretary is hereby authorized to attest thereto and affix the City's seal. SECTION 28. SOURCE OF CITY FUNDS USED IN REFUNDING. The amount of $67,115.83 available funds of the City are hereby appropriated and sholl be deposited to the Escrow Fund, which together with certin proceeds of the Bonds shall be used to refund the Uefunded Obligations. "SECTION 28. PURCHASE OF UNITED STATES TREASURY OBLIGATIONS. To assure the purchase of the Escrowed Securities referred to in the Escrow Agreement, the Mayor, the City's Chief Financial Officer, and the Escrow Agent ore hereby authorized to subscribe for, agree to purchase, and purchase non-callable obligations of the United States of America, in such amounts and maturities and" bearing Interest at such rates as may be provided for In the Report, and to execu te Bny and all 27 e . subscriptions, purchase agreements, commitments, letters of authorization, and other documents necessary to effectuate the foregoing, and any actions heretofore taken for such purpose are hereby ratified and approved. SECTION 29. MATTERS RELATED TO REFUNDING. In order that the Issuer shall satisfy in a timely manner all of its obligations under this Ordinonce, the Mayor and all other appropriate officers and agents of the Issuer are hereby authorized and directed to take all other actions that are reasonably necessary to provide for the refunding of the Refunded Obligations, including without limitation, executing and delivering on behalf of the Issuer all certificates, consents, receipts, requests, notices, and other documents as may be reasonably necessary to satisfy the Issuer's obligations under this Ordinance and to direct the transfer and application of funds of the Issuer .consistent with the provisions of this Ol'dinonce. SECTION 30. APPROVAL AND REGISTRATION OF BONDS. The Mayor of the City is hereby authorized to have control of the Bonds and all necessary records and proceedings pertaining to the Bonds pending their delivery and their investigation, examination, and approval by the .Attorney General of the State of Texas, and their registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Bonds, said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate. The Bonds thus registered shall remain in the custody of the M~yor (or his designee) until delivered to the purchaser thereof. SECTION 31. FURTHER ,PROCEDURES. The Moyor, the City Secretary, and all other officers, employees ~ and agents of the City, and eoch of them, shall be and they are hereby expressly au thorized, empowered, and directed form time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalf of the City all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance. The Official Statement, dated May 14, 1991, and other documents used in cOllnectioil with the sale of the Bonds are hereby approved and the Mayor of the City is hereby directed and authorized to execute on behalf of the City, and the City Secretary is hereby authorized to attest, the Official Statement and other sale documents. SECTION 32. SEVERABILITY. The provisions of this Ol'dillance are severable; and in case anyone or more of the provisions of this Ordinance or the application thereof to any person or circumstance should be held to be invalid, unconstJtu tional, or Ineffective as to any person or circumstance, the remainder of this Ordinance nevertheless shall be valid, and the application of any such invalid provision to persons or circumstances other than those as to which it Is held invalid shall not be affected thereby. SECTION 33. PAYMENT PROCEDURE PURSUANT TO MUNICIPAL BOND GUARANTY INSURANCE POLICY. As long as the bond guaranty insurance shall be in full force and effect, the City and the Paying Agent/Registrar agree to comply with the following provisions: 28 e e (a) If payment of principal or interest due on the nonds has not been made to the Paying Agent/Registrar in time to pay the registered owners of the Bonds, the Paying Agent/Registrar or any registered owner to whom such payment is due shall so notify AMIlAC Indemnity Corporation, by telephonic or telegraphic notice, subsequently confirmed in writing, or written notice by registered or certified mail. Such notice shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency is applicable, and whether such Bonds will be deficient as to principal or interest, or both. AMBAC Indemnity, on the later of the date due for payment or within one business day after receipt of notice of nonpayment, will deposit sufficient money with the United States Trust Company of New York, as insurance trustee for AMBAC Indemnity or any successor insurance trustee (the "Insurance Trustee"). (b) The Paying Agent/Uegistrar shall, after giving notice to AMBAC Indemnity as provided in (a) above, make avallnble to AMBAC Indemnity and, at AMBAC Indemnity's direction, to the Insurance Trustee, the registration books of the City maintained by the Paying Agent/Registrar, and all records relating to the Funds and Accounts maintained under this Ordinance. (c) The Paying Agent/Registrar shall provide AMBAC Indemnity and the Insurance Trustee with a list of registered owners of Bonds entitlcd to receive principal or interest payments from AMBAC Indemnity uncleI' the terms of the municipal bond guaranty insul'Unce policy issued by AMDAC Indemnity insuring the payment 'when' dlJe of ,the principal of and interest on the Bonds as prQvided therein (the "Municipal Bond Guaranty Insurance Policy"), and shall make arrangements with the Insurance Trustee (i) to mail checks or drafts to the registered owners of Bonds entitled to receive full or partial interest payments from AMBAC Indemnity and (Ii) to pay prin- cipal llpon Bonds surrendered to the Insurance Trustee by the registered owners of Bonds entitled to receive full or pa'rtial principal payments from AMBAC Indemnity. (d) The Paying Agent/Registrar shall, at the time it provides notice to AMBAC Indemnity pursuant to (a) above, notify registered owners of Donds entitled to receive the payment of principal or interest thereon from AMllAC Indemnity (I) as to the fact of such entitlement; (Ii) that AMBAC Indemnity will remit to them all or a part of the interest payments next coming duc; (Hi) that should they be entitled to receive full pnyment of principal from AMllAC Indemnity, they mllst present and surrender their Bonds together with any appropriate instrument of assignment for payment to the Insurance Trustee, and not the Paying Agent/Registrar; and (Iv) that should they be entitled to receive partial payment of principal from AMBAC Indemnity, they must prescnt and surrender their Bonds for payment thereon first to the Paying Agent/Registrar, who shall note on such Bonds the portion of the principal paid by the Paying Agent/R(3gistror, and then, along with an appropriate instrument of assignment, to the Insurance Trustee, which will then pay the unpaid portion of principal. The Insurance Trustee shaH disburse to registered owners of Bonds, or the Paying Agent/Registrar, the payment due less any amount held by the 29 . . Paying Agent/ Registrar for payment of principal of or interest on Bonds and legally available therefor. (e) In the event that the Paying Agent/ Registrar has notice that any payment of principal of or interest on a Bond which has become due for payment and which is made to a registered owner by or on behalf of the City has' been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by 8 trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Paying Agent/Registrar shall, at the time AMBAC Indemnity is notified pursuant to (a) above, notify all registered owners that in the event that any registered owner's payment is so recovered, such registered owner will be entitl~d to payment from AMOAC Indemnity to the extent of such recovery if sufficient funds are not otherwise available, and the Paying Agent/Registrar shall furnish to AMBAC Indemnity its records evidencing the payments of principal of and interest 011 the Bonds which have been made by the Paying Agent/Registrar and subsequently recovered from registered owners and the dates on which such payments were made. (f) In addition to those rights granted AMBAC Indemnity under this Ordinance, AMBAC Indemnity shall, upon remittance and transfer of Bonds or appropriate instruments of assignment, become the' owner thereof, and to evidence such ownership (i) In the case of clllims for past due interest, the Paying Agent/Registrar shall note AMBAC Indemnity right's as owner on the Registration Books upon receipt from AMBAC Indemnity of proof of the payment of interest thereon to the registered owners of the Bonds and (il) In the case of claims "for past due principal, the Paying Agent/Registrar shall note AMDAC Indemnity's rights as owner on the Uegistration Books upon surrender of the Bonds by the registered owners thereof together with proof of the payment of principal thereof. SECTION 34. NOTICES TO BE GIVEN TO AMBAC INDEMNITY. While the Municipal Bond Guaranty Insurance Policy is in effect, the City shall furr~ish to AMBAC Indemnity: (8) as soon as practicable after the filing thereof, a copy of any financial statement of the City and a copy of any audit and annual report of the City; (b) a copy of any notice to be given to the registered owners of the Bonds, including, without limitation, notice of any redemption of or defeasance of Bonds, and any certificate rendered pursuant to this Ordinance relating to the security for the Bonds; and (c) such additional Information it may reasonably request. The City will permit AMBAC Indemnity to discuss the affairs, finances, and accounts of the City or any information AMBAC Indemnity may reasonably request regarding the security for the Bonds wlth appropriate officers of the City. The City will permit AMBAC Indemnity to have access to and to make copies of all books and records relating to the Bonds at any 30 e. . reasonable time. Notwithstanding any. other provIsIon of this Ordinance the Paying Agent/Registrar shall immediately notify AMBAC Indemnity if at any time there is insufficient money to make any payments of principal and/or interest as required hereunder. SECTION 35. IMMEDIATE EFFECT. effect immediately upon its adoption. This Ordinance shall take PASSED AND APPROVED this , 1991. ATTEST: ~&uU City Secretary, City of La Porte, Texas 31 e . EXHIBIT A PAYING AGENT/REGISTRAR AGREEMENT e EXHIBIT A e PAYING AGENT/REGISTRAR AGREEMENT THIS AGREEMENT is entered into as of April 15, 1991 (the "Agreement"), by and between the CITY OF LA PORTE, TEXAS (the "Issuer"), and FIRST CITY, TEXAS - HOUSTON, N. A., Houston, Texas (the "Bank"), a national banking association duly organized and operating under the laws of the United States of America. WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of La Porte, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 1991" (the "Securities"), such Securities to be issued in fully registered form only as to the payment of principal and interest thereon; and WHEREAS, the Securities are scheduled to be delivered to the initial purchasers thereof on or about June 11, 1991; and WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection" with the payment of the principal of, premium, if any, and in teres t on the Securi ties and with respect to the regis tra tion , transfer, and exchange thereof by the registered owners thereof; and WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securitie's; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE ONE APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities. As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof, aU in accordance with this Agreemen~ and the "Ordinance" (hereinafter defined). The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the Ordinance. The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current . e fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year' of the Issuer, and shall be effective upon the firs t day of the following Fiscal Year. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel) . ARTICLE TWO DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Acceleration Date" on any Security means, if applicable, the date on and after which the principal or any or all installments of in teres t, or both, are due and payable on any Security which has become accelerated pursuant to the terms of the Security. "Bank Office" means the principal corporate trust office of the Bank as indicated on the signature page hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Fiscal Year" means the fiscal year of the Issuer, ending December 31. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Order" means a written request or order signed in the name of the Issuer by the Mayor of the Issuer, the Director of Finance of the Issuer, the City Manager, or the City Secretary of the Issuer, anyone or more of said officials, delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "Ordinance" means the ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the City Secretary or any other officer of the Issuer and delivered to the Bank. "Person" means any individual, corporotion, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security 2 , . has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Ordinance). "Redemption Date" when used with respect to any Bond to be redeemed means the date fixed for such redemption pursuant to the terms of the Ordinance. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice-Chairman of the Board of Directors, the Chairman or Vice- chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust malter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register" means a register maintained by the Bank 'on behalf of the Issuer providing for the registration and transfer of the Securities. "Stated Maturity" means" the date specified in the Ordinance the principal of a Security is scheduled to be due and payable. Section 2.02. Other Definitions. The terms "Bank," Issuer," and "Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. '. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE THREE PAYING AGENT Section 3.01. Duties of Paying Agent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the Bank Office. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and preparing and sending checks by United States mail, first class postage prepaid, on each payment date, to the Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the address appearing on the Security Register or by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. 3 . . ,', Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Ordinance. ARTICLE FOUR REGISTRAR Section 4.01. Security Register - Transfers and Exchanges. The Dank agrees to keep and maintain for and on behalf of the Issuer at the Bunk Office books and records (herein sometimes referred to as the "Security Register") for recording the names and addresses of the Holders of the Securities, the transfer, exchange, and replacement of the Securities, and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges, and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall" be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guarantee~ by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentatioli' it feels necessary to effect a re-registration, transfer, or. ,exchange of the Securities. To the extent possible and under reasonable circumstances, the Bunk agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the' Holder or the assignee of the Holder in not mote than three business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchnnge duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02. Certificates. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept ill safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Security Register. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer, and exchange of the Securities in accordance with the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. 4 . e The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. Unless required by law, the Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Cancelled Certificates. The Bank will, at such reasonable intervals as it determines, surrender to the Issuer, Securities in lieu of which or in exchange for which other Securities have been issued, or which have been paid. Section 4.06. Mutilated, Destroyed, Lost J or Stolen Securities. The Issuer hereby instructs the Bank, subject to the applicable provisions of the Ordinance, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an over issuance. In case any Security shall be mutilated, or destroyed, lost, or stolen, the Bank, in its discretion, may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed, lost, or stolen Security, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss, or theft of such Security, and of the authenticity of the ownership thereof and (ll) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution, and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost, or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. 5 . e ARTICLE FIVE THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents, Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its 'rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. " (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, "note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be, signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counselor any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. 6 .' . The Bank shall in no event be liable to the Issuer, any Holder or Holders. of any Security, or any other Person for any amount due on any Security from its own funds. . '. Section 5.04. May Hold Securities. The Bank, in its individual or any other. capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Money Held by Bank. The Dank shall deposit any money received from the Issuer into a trust account to be held in a fiduciary capacity for the payment of the Securities, with such money in the account that exceeds the deposit insurance, available to the Issuer, provided by the Federal Deposit Insurance Corporation to be fully collateralized with securities or obligations that are eligible under the laws of the State of Texas to secure and be pledged as collateral for trust accounts until the principal and interest on such securities have been presented for payment and paid to the owner thereof. Payments made from such trust account shall be made by check drawn on such trust account. All funds at any time a~d from time to lime provided to or held by the Bank hereunder shall be deemed, construed, and considered for all purposes as being provided to or held by the Bank in trust and as a trustee for the benefit of the Security Holders. The Bank acknowledges, covenants, and represents that it is acting herein in a fiduciary capacity in relation to such funds, and is not accepting, holding, administering, or applying such funds as a banking depository, but solely as trustee and fiduciary for and on behalf of the Security thereto, except as trustee pursuant to the terms of this Agreement. The Holders shall be entitled to the same preferred claim and first lien on the funds so provided as are enjoyed by the beneficiaries of trust funds generally.. The funds provided to the Bank hereunder shall not be subject to warrants, drafts, or checks drawn by the Issuer and, except as expressly provided herein, shall not be subject to compromise, setoff, or other charge or diminution by the Bank. The Bank shall be under no liability for interest on any money received by it hereunder. Subject to the unclaimed property laws of the State of Texas and any provisions in the Ordinance to the contrary, any money deposited with the Bank for the .payment of the principal, premium (if any), or interest on any Security and remaining unclaimed for four years after final maturity of the Security has become due and payable will be paid by the Bank to the Issuer, and the Holder of such Security shall thereafter look only to the Issuer for payment thereof, and all liability of the Bank with respect to such money shall thereupon cease. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability 7 . . in connection with the exercise or performance of any of its powers or du ties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where either the Bank Office or the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Dill of Interpleader in any court of competent jurisdiction to determine the rights of any Person claiming any interest herein. Section 5.08. Depository Trust Company Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements," effective August 1, 1987, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements. for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE SIX MISCELLANEOUS PROVISIONS Section 6.01. Amendment. This" Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on the signature page of this Agreement. Section 6.04. Effect of Headings. The Article and Section headings herein are fo'r convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severablllty. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legali ty , and enforceability of the remaining provisions shall not in any woy be affected or impaired thereby. Section 6.07. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors 8 , . hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire Agreement. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between his Agreement and the Ordinance, the Ordinance shall govern. Secti~n 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate on the date of final payment of the principal of and interest on the Securities to the Holders thereof or may be earlier terminated by either party upon 60 days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer, mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay, or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to, the Securities, to the successor Paying Agent/Regi~trar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. Section 6.J1. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of t day and year first above written. FIRST CITY, TEXAS - HOUSTON, N. A. Houston, Texas By IJlu A ,f"", ,J . C~._r:j,~ _0 Title .CORPORATE TRUST OFFICER Address: 1301 Fannin - 21st Floor Houston, Texas 77002 By Title ASSISTANT VICi p~~SlDENT ... TRUST OFIi'ICER [BANK SEAL] Attest: , ~ By ~ 1 City Secretary CITY~PORTE~ ~ By , ~L/-1 a or [ISSUER SEAL] Address: 604 W. Fairmont Parkway La Porte, Texas 77572 9 ... . . . EXHIBIT A ~IR5TCI~XR5. FIRST CITY BANOORPORATION OF TEXAS Trust P,O, Box 809 Houston, Texas 77001 (713) 658-6011 MUNICIPAL PAYING ~/REGISl'RAR SERVICES SCHEDULE OF FEFS CIlY OF LAPORTE WW&SS, SERIES 1991 Initial Acceptance Per Issue Accepted: (One-Time Fee Payable at Closing) This charge covers canplete study and consideration of all usual documents authorizing and supporting the issuance of bonds, the acceptance of the account, and authentication of the bonds. Annual Administration Per Issue: 'Ibis 'charge cover normal administrative services per- formed. It is charged on a semi-annual basis. Bondholder Account Maintenance Per Account Maintained: Armual Minim.nn Per Issue: This charge includes maintaining of addresses of holders, placement and rerooval to stops, posting of all certificates issued cancelled, furnishing. of daily transfer reports, issuance of semi-annual interest checks, and withholding and tax reporting to IRS and bondholder. M.mi.cipal Bond Transfer and Registrar Charge per original issuance and registration: Olarge per transfer and registration: $ 750.00 $1,500.00 $ 5.00 $ 200.00 $ $ 1.50 1.75 . .- Retirement of Bonds For retirement of maturity, or by call as a whole: Per Bond Extraordinary Services Charges for perfomd.ng any service not specifically covered in this schedule will be determined by an appraisal of the services rendered. Additional Charges The fees shown in this schedule do not include counsel fees or any other expenses or disbursements. All out-of-pocket expenses such as stationery, binders, checks, fonns, printing, and envelopes will be added at cost, to the regular fee for services. Postage, registered mail and insurance charges will be billed in addition to all other fees and charges. Billing Accounts are billed on a semi-armual basis. Atootmts billed are considered due on receipt. -2- $ 5.~O e EXHIBIT B PURCHASE CONTRACT . e EXHIBIT B . $3,425,000 CITY OF LA PORTE Waterworks and Sewer System Revenue Refunding Bonds, Series 1991 BOND PURCHASE AGREEMENT May 14, 1991 City Council City of La Porte 604 W. Fairmont Parkway La Porte, Texas 77571 Dear Mayor and Members of the City Council: The undersi~ned (the "Underwriter"), offers to enter into this Bond Purchase ~reement with City of La Porte (the "City"). This offer is made subject to the CIty'S acceptance of this Bond Purchase Agreement on or before 9:00 p.m., Central Daylight Savings Time on May, 14, 1991. 1. Purchase and Sale of the Bonds. Upon the terms and conditions and upon the basis of the representations set forth herein, the Underwriter hereby agrees to purchase from the City, and the City hereby agrees to sell and deliver to the Underwriter an aggregate of $3,425,000.00 princi{>al amount of City of La Porte Waterworks and Sewer System Revenue Refundmg Bonds, Series 1991 (the "Bonds"). The Bonds shall be dated April 15, 1991, shall have the maturities and bear interest at the rate or rates per annum as shown on the cover page of the Official Statement (hereinafter defined), such interest being payable on September 15, 1991., and semiannually thereafter on March 15 and September 15 in each year until maturity or prior redemption. The purchase price for the Bonds shall be $3,402,025.84 (representing the par amount of the Bonds of $3,425,000, less an original issue discount of $7,730.10, less an underwriter's fee of $48,819.95 and plus interest accrued on the Bonds from their date to the date of the payment for and delivery of the Bonds (the "Closing") of $33,575.89). Exhibit A hereto is the Official Statement, including the cover page and Appendices thereto, of the City, dated May 14, 1991, with respect to the Bonds. The Official Statement, including the cover page and Appendices thereto, as further. amended only in the manner hereinafter provided, is hereinafter called the "Official Statement." . .' . e Delivered to the City herewith is a corporate check of Mason Road Bank, payable to the City, in the amount of $68,500, as security for the performance by the Underwriter of their obligations to accept delivery of and pay for the Bonds at the Closing in accordance with the provisions of this Bond Purchase Agreement. If this offer is accepted by the City, saId check shall be held by the City uncashed until the Closing. Concurrently with the delivery of and payment for the Bonds at the Closing, such check shall be returned uncashed to the Underwriter. In the event the City does not accept this offer, or upon the City's failure to deliver the Bonds at the Closing, or if the conditions to the obligations of the Underwriter contained in this Bond Purchase ~eement shall be unsatisfied (unless waived by the Underwriter), or if such obligatiOns shall be terminated for any reason permitted by this Bond Purchase Agreement, the check shall be immediately returned to the Underwriter. In the event that the Underwriter fails (other than for a reason permitted under this Bond Purchase Agreement) to accept delivery of and pay for the Bonds at the Closing, the check shall be cashed by the City and the City shall retain the amount of the check as full liquidated damages for such failure and for any and all defaults hereunder of the part of the Underwriter, and shall constitute full release and discharge of all claims and rights hereunder of the City against the Underwriters. The Underwriter hereby agrees not to stop or cause payment on said check to be stopped unless the City has breached any of the terms of this Bond Purchase Agreement. 2. Bond Ordinance. The Bonds shall be as described in and shall be issued and secured under the provisions of the Bond Ordinance adopted by the City on May 14, 1991 (the "Bond Ordinance"). The Bonds shall be secured and payable as provided in the Bond Ordinance. 3. Public Offering. It shall be a condition of the obligations of the City to sell and deliver the Bonds to the Underwriter, and of the obligations of the Underwriter to purchase and accept delivery of the Bonds, that the entire principal amount of the Bonds authorized by the Bond Ordinance shall be sold and delivered by the City and accepted and paid for by the Underwriter at the Closing. The Underwriter agrees to make a bona fide public offering of all of the Bonds, at prices not in excess of the initial public offering prices, as set forth on the cover page of the Official Statement, plus interest accrued thereon from the date of the Bonds and confirm in writing to the City the principal amount of each maturity and the corresponding price for each maturity at which the Bonds were sold pursuant to such bona fide public offering. 4. Official Statement. The City hereby authorizes the Escrow Agreement, hereinafter defined, the Bond Ordinance and the Official Statement and the information therein contained to be used by the Underwriter in connection with the public offering and sale of the Bonds. The City confirms its consent to theiuse by the Underwriter prior to the date hereof of the Preliminary Official Statement dated May 6, 1991 (the "Preliminary Official Statement") in connection with the public offering and sale of the Bonds. 5. Representation, Warranties and Agreements of City. On the date hereof, the City represents, warrants and agrees as follows: -2- . . (a) The City is a political subdivision of the State of Texas and has full legal right, power and authority (i) to issue the Bonds and to enter into the escrow agreement described in the Bond Ordinance (the "Escrow Agreement") and this Bond Purchase Agreement, (ii) to authorize and approve the Preliminary Official Statement and the Official Statement and to authorize and approve their distribution by the Underwriter, (Hi) to enter into this Bond Purchase Agreement, (iv) to adopt the Bond Ordinance and to carry out and consummate the actions contemplated thereby, and (v) to carry out and consummate all other transactions contemplated by each of the aforesaid documents; (b) The City has complied, and will be at the date of Closing in compliance, in all material respects, with the Constitution and laws of the State of Texas in connection with the authorization, issuance and sale of the Bonds; (c) By official action of the City prior to or concurrently with the acceptance hereof, the City has duly adopted the Bond Ordinance, has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations contained in the Bonds, the Escrow Agreement and this Bond Purchase Agreement and has duly authorized and approved the performance by the City of its obligations contained in the Bond Ordinance, the Escrow Agreement and in thIS Bond Purchase Agreement; (d) The City is not in breach of or default under any applicable law or admimstrative regulation of the State of Texas or the United States or any applicable judgment or decree or any loan agreement, note, resolution, agreement or other instrument, except as may be disclosed in the Official Statement, to which the City is a party or is otherwise subject, which would have a material and adverse effect uJ?on the business or financial condition of the City; and the execution and delIvery of the Escrow Agreement and this Bond Purchase Agreement by the City and the execution and delivery of the Bonds and the adoption of the Bond Ordinance by the City and compliance with the provisions of each thereof will not violate or constitute a material breach of or default under any existing law, administrative regulation, judgment, decree or any agreement or other instrument to which the City is a party or, to the knowledge of the City, is otherwise subject; (e) Except for the approval of the Bonds by the Attorney General of Texas and the registration thereof by the Comptroller of Public Accounts of the State of Texas, all approvals, consents and orders of any governmental authority or agency having jurisdiction which approval, consent or order would constitute a condition precedent to the performance by the City of its obligation to issue the Bonds hereunder will have been obtained prior to the Closing; (f) At the time of the City's acceptance hereof the Official Statement does not, and at the time of Closing, the Official Statement will not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; -3- . . (g) The audited financial statements of the City contained in the Official Statement present fairly the financial position of the City as of September 30, 1990, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles; (h) Between the date of this Bond Purchase Agreement and Closing, the City will not, without the prior written consent of the Underwriter, issue any additional bonds, notes or other obligations for borrowed money payable in whole or in part from ad valorem taxes, and the City will not incur any material liabilities, direct or contingent, nor will there be any adverse change of a material nature in the financial position of the City; (i) Except as described in the Official Statement, no litigation is pending or, to the knowledge of the City, threatened in any court affecting the corporate existence of the City, the tItle of its officers to their respective offices, or seeking to restrain or enjoin the issuance or delivery of the Bonds, the levy or the collection of taxes pledged or to be pled~ed to pay the principal of and interest on the Bonds, or in any way contestmg or affecting the issuance, execution, delivery payment, security or validity of the Bonds, or in any way contesting or affecting the validity or enforceability of the Bond Ordinance, the Escrow Agreement, or this Bond Purchase Agreement, or contesting the powers of the City, or any authority for the Bonds, the Bond Ordinance, the Escrow Agreement, or this Bond Purchase Agreement or contesting in any way the completeness, accuracy or fairness of the Preliminary Official Statement or the Official Statement; (j) The City will cooperate with the Underwriter, at the Underwriter's request and expense, in arrangin~ for the qualification of the Bonds for sale and the determination of their elIgibility for investment under the laws of such jurisdictions as the Underwriter designates, and will use its best efforts to continue such qualifications in effect so long as required for distribution of the Bonds; provided, however, that the City will not be required to execute a general consent to service of process or to qualify to do business in connection with any such qualification in any jurisdiction; (k) The description contained in the Official Statement of the Bonds, the Escrow Agreement and the Bond Ordinance accurately reflect the provisions of such Instruments, and the Bonds, when validly executed, authenticated and delivered in accordance with the Bond Ordinance and sold to the Underwriter as provided herein, will be validly issued and outstanding direct obligations of the City entitled to the benefits of, and subject to the limitations contained in, the Bond Ordinance; and (1) If prior to the Closing an event occurs affecting the City which is materially adverse for the purpose for which the Official Statement is to be used and is not disclosed in the Official Statement, the City shall notify the Underwriter, and if in the opinion of the City or the Underwriter such event requires a supplement or amendment to the Official Statement, the City will supplement or amend the Official Statement in a form and in a manner approved by the Underwriter. 6. Closing. At 10:00 A.M., Central Daylight Savings Time, on June 11, 1991 (the "Closing"), or such later time as shaH be agreeable to the Underwriter and -4- ~ e . the City, the City will deliver the initial bond or bonds (as defined in the Bond Ordinance) to the Underwriter and, provided the Underwriter shall have given written instructions to the Registrar for the Bonds as hereinafter provided, will have available for immediate exchange the Bond in definitive form, duly executed and authenticated, together with the other documents hereinafter mentioned, and the Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Paragraph 1 hereof in immediately available funds. Delivery and payment as aforesaid shall be made at the offices of First City, Texas-Houston N.A, in Houston, Texas, or such other place, as shall have been mutually agreed upon by the City and the Underwriter. The Bonds (except for the initial bonds which may be typed) shall be printed or. lithographed; shall be prepared and delivered as fully registered bonds in the denominatIOns of $5,000 or any integral multiple thereof; shall be registered in the names as shall be requested by written instructions of the Underwriter to the Registrar for the Bonds at least five business days prior to the Closing; and, if the Underwriter shall so request, shall be made available to the Underwriter at least one business day before the Closing for the {>urpose of inspection in Houston, Texas, or such other place as shall be mutually satisfactory to the City and the Underwriter. 7. Conditions. The Underwriter has entered into this Bond Purchase Agreement in reliance upon the representations and warranties of the City contained herein and to be contained in the documents and instruments to be delivered at the Closing, and upon the performance by the City of its obligations hereunder, both as of the date hereof and as of the date of Closing. Accordingly, the Underwriter's obligations under this Bond Purchase Agreement to purchase and pay for the Bonds shall be subject to the performance by the City of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the following conditions: (a) The representations and warranties of the City contained herein shall be true, complete and correct in all material respects on the date hereof and on and as of the date of Closing, as if made on the date of Closing; (b) At the time of the Closing, the Bond Ordinance and the Escrow Agreement shall be in full force and effect, and the Bond Ordinance and the Escrow Agreement shall not have been amended, modified, or supplemented and the Official Statement shall not have been amended, modified or supplemented, except as may have been agreed to by the Underwriter; (c) At the time of the Closing, all official actions of the City related to the Bond Ordinance shall be in full force and effect and shall not have been amended, modified or supplemented; (d) The City shall not have failed to pay principal or interest when due on any of its outstanding obligations for borrowed money; -5- . . (e) At or prior to the Closing, the City shall have subscribed to the United States Treasury for the purchase of State and Local Government Treasury Obligations required to be deposited with the Escrow Agent (as hereinafter defined) pursuant to and as defined in the Escrow Agreement and the subscription for the securities to be escrowed shall have been honored by the Bureau of Public Debt of the United States Treasury Department on the Date of Closing; and (f) At or prior to the Closing, the Underwriter shall have received each of the following documents: (1) The Official Statement of the City executed on behalf of the City by the Mayor of the City; (2) The Bond Ordinance certified by the City Secretary under its seal as having been duly adopted by the City and as being in effect, with such changes or amendments as may have been agreed to by the Underwriter; . (3) The opinion, dated the date of Closing, of McGinnis, Lochridge & Kilgore, Bond Counsel, in form and substance acceptable to the Underwriter concerning the validity of the Bonds under Texas law and the excludability from gross income, for federal tax purposes, of interest on the Bonds; (4) An opinion or certificate, dated on or J?rior to the date of Closing, of the Attorney General of Texas, approvmg the Bonds as required by law; (5) A certificate, dated the date of Closing, signed by the Mayor of the City in his official capacity, to the effect that (i) the representations and warranties of the City contained herein are true and correct in all material respects on and as of the date of Closing, as if made on the date of closing; (ii) except to the extent disclosed in the Official Statement, no litigation is pending or, to the knowledge of such persons, threatened in any court to restrain or enjoin the issuance or delivery of the Bonds, or the levy or collection of the taxes pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity of the Bonds, the Bond Ordinance, the Escrow Agreement, or this Bond Purchase Agreement, or contesting the powers of the City or contesting the authorization of the Bonds or the Bond Ordinance, or contesting in any way the accuracy, completeness or fairness of the Preliminary Official Statement or the Official Statement (but in lieu of or in conjunction with such certificate, the Underwriter may, in its sole discretIOn, accept certificates or opinions of counsel of the City that, in his or her opinion, the issues raised in any such pending or threatened litigation are without substance or that the contentions of all plaintiffs therein are without merit); (iii) to the best of his knowledge, no event affecting the City has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purpose for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any respect; (iv) there has not -6- . . . e been any material and adverse change in the affairs or financial condition of the City since September 30, 1990 the latest date as to which audited financial information is available; (6) A certificate, dated the date of Closing, of an appropriate official of the City to the effect that, on the basis of the facts, estimates and circumstances in effect on the date of delivery of the Bonds, it is not expected that the proceeds of the Bonds will be used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; (7) A copy of a special report prepared by the independent Certified Public Accountants named in the Official Statement, addressed to the City, Bond Counsel and the Underwriter verifying the arithmetical computations of the adequacy of the maturing principal and interest on the escrowed securitIes and uninvested cash on hand under the Escrow Agreement to pay, when due, the principal of and interest on the bonds bein~ refunded and the computation of the yield with respect to such seCUrIties and the Bonds; (8) Such additional legal opinions, certificates, instruments and other documents as Bond Counselor the Underwriter may reasonably request to evidence the truth, accuracy and completeness, as of the date hereof and as of the date of Closing, of the City's representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance and satisfaction by the District at or prior to the date of Closing of all agreements then to be performed and all conditions then to be satisfied by the City. All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in comJ?liance with the provisions hereof if, but only if, they are satisfactory to the UnderwrIter. If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds, as set forth in this Bond Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate, and neither the Underwriter nor the City shall be under further obligation hereunder, except that the respective obligations of the City and the Underwriter set forth in Paragraphs 8 and 10 hereof shall continue in full force and effect. 8. Termination. The Underwriter may terminate its obligation to purchase the Bonds at any time before Closing if any of the following should occur: -7- e . (a) (i) Legislation shall have been enacted by the Congress of the United States, or recommended to the Congress for passage by the President of the United States, or favorably reported for passage to either House of the Congress by any Committee of such House, or (ii) a decision shall have been rendered by a court established under Article lIt of the Constitution of the United States or by the United States Tax Court, or (iii) an order, ruling or regulation shall have been issued or proposed by or on behalf of the Treasury Department of the United States or the Internal Revenue Service or any other agency of the United States, or (iv) a release or official statement shall have been issued by the President of the United States or by the Treasury Department of the United States or by the Internal Revenue Service, the effect of which, in any such case described in clause (i), (ii), (ill), (iv), would be to impose, directly or indirectly, federal income taxation upon interest received on obligations of the general character of the Bonds or upon income of the general character to be derived by the City, other than any imposition of federal income taxes upon interest received on obligations of the general character as the Bonds on the date hereof and other than as disclosed in the Official Statement, in such a manner as in the judgment of the Underwriter would materially impair the marketability reduce the market price of obligations of the general character of the Bonds. (b) Any action shall have been taken by the Securities and Exchange Commission or by a court of competent jurisdiction which would require registration of any security under the Securities Act of 1933, as amended, or qualification of any indenture under the Trust Indenture Act of 1939, as amended, in connection with the public offering of the Bonds, or any action shall have been taken by any court or by any governmental authority of competent jurisdiction suspending the use of the Preliminary Official Statement or the Official Statement or any amendment or supplement thereto, or any proceeding for that purpose shall have been imtiated or threatened in any such court or by any such authority. (c) (i) The Constitution of the State of Texas shall be amended or an amendment shall be proposed, or (ii) legislation shall be enacted, or (Hi) a decision shall have been rendered as to matters of Texas law, or (iv) any order, ruling or regulation shall have been issued or proposed by or on behalf of the State of Texas by an official, agency or deJ?artment thereof, affecting the tax status of the City, its property or income, Its bonds (includin~ the Bonds) or the interest thereon, WhICh in the judgment of the UnderwrIter would materially affect the market price of the Bonds. (d) (i) A general suspension of trading in securities shall have occurred on the New York Stock Exchange, or (it) the United States shall have become engaged in hostilities which have resulted in the declaration, on or after the date of this Bond Purchase Agreement, of a national emergency or war, the effect of which, "in either case described in clause (i) and (ii), is, in the judgment of the Underwriter, so material and adverse as to make it impractIcable or inadvisable to proceed with the public offering or the delivery of the Bonds on the terms and in the manner contemplated in this Bond Purchase Agreement and the Official Statement. (e) An event described in Paragraph 5(1) hereof occurs which, in the opinion of the Underwriter, requires a supplement or amendment to the -8- ;r . . Official Statement and the City will not cooperate in the preparation and distribution of a supplement or amendment. (f) A general banking moratorium shall have been declared by authorities of the United States, the State of New York or the State of Texas. 9. Expenses. (a) At or promptly following the Closing, the City shall pay (and the Underwriter shall be under no obligation to pay), any expenses mcident to the rerformance of the City's obligations hereunder, IncludIng but not limited to: (i the cost of the preparation,Jrinting and distribution of the Preliminary Official Statement and the Offici Statement (ii) the cost of the preparation and printing of the Bonds; (ill) the fees and expenses of Bond Counsel to the City; and (IV) Fees and expenses of the Escrow Agent for the refunded bonds; (v) Fees and expenses of the paying agent for the Bonds; (vi) the insurance premium for municipal bond insurance on the bonds; (vii) the fees and disbursements of the Attorney General of Texas and the Ci!1s accountants, advisors, and any other experts or consultants retained by the CIty, including the fee of the independent ce:rtified accountants named in the Official Statement for the preparation of the verification report relating to the refunding. (b) The Underwriter shall pay: (i) all advertising expenses in connection with the offering of the Bonds; (ii) the cost of the preparation and printing of all the underwriting documents, including this Bond Purchase Agreement; and (ill) all other expenses incurred by it in connection with its offering and distribution of the Bonds. (c) In the event that the Bonds are not purchased by the Underwriter, except as otherwise permitted in Paragraph 7 hereof, the Underwriter shall be responsible for the payment of all costs and expenses of the City incident to the authorization, issuance and delivery of the Bonds. 10. Notices. Any notice or other communication to be given to the City under this Bond Purchase Agreement may be given by delivering the same in writing at the address for the City set forth above, and any notice or other communication to be ~iven to the Underwriter under this Bond Purchase Agreement may be given by delIvery the same in writing to Masterson Moreland Sauer Whisman, Inc., 333 Clay Street, Suite 4000, Houston, Texas 77002, Attention: Drew K. Masterson. The approval of the Underwriter when required hereunder or the determination of their satisfaction as to any document referred to herein shall be in writing, signed by the Underwriter and delivered to the City. 11. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of the City and the Underwriter (including the successors or assigns of the Underwriter) and no other person shall acquire or have the right hereunder or by virtue hereof. The City's representations, warranties and agreements contained in this Bond Purchase Agreement shall remain operative and in full force and effect, regardless of (i) any investigations made by or on behalf of the Underwriter and (ii) delivery of any payment for the Bonds hereunder; and the City's representation and warranties contained in Paragraph 5 of this Bond Purchase Agreement shall remain operative and in full force and effect, regardless of any termination of this Bond Purchase Agreement. -9- " . . . e . 12. Effective Date. This Bond Purchase Agreement shall become effective upon the execution of the acceptance hereof by the Mayor of the City and shall be valid and enforceable as of the time of such acceptance. Very truly yours, MASTERSON MORElAND SAUER WHISMAN, INC. ~~e: ~~ Accepted: This 14th day of May, 1991 CITY OF LA PORTE By: ~/m4 P' ayor ., . Attest: ~~ . . Ity ecretary -10- e EXHIBIT C ESCROW AGREEMENT . . EXHIBIT C e ESCROW AGREEMENT THIS ESCROW AGREEMENT, dated as of June 1, 1991 (herein, together with any amendments or supplements hereto, called the "Agreement") is entered into by and between the CITY OF LA PORTE, TEXAS (herein called the "Issuer") and FIRST CITY, TEXAS - HOUSTON, N. A., Houston, Texas, as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent"). The addresses of the Issuer and the Escrow Agent are shown on Exhibit "A" attached hereto and made a part hereof. WIT N E SSE T H: WHEREAS, the Issuer heretofore has issued or assumed and there presently remain outstanding the obligations described in Exhibit "B" attached hereto (the "Refunded Obligations"); and WHEREAS, the Refunded Obligations are scheduled to bear interest at such rates and be payable at such times and in such amounts as are set forth in Exhibit "C" attached hereto. and made a part hereof; and WHEREAS, when firm banking arrangements have been made for the payment of all principal and interest of the Refunded Obligations when due, then the Refunded Obligations shall no longer be regarded as outstanding except for the purpose of receiving payment from the funds provided for such purpose; and WHEREAS, Vernon's Ann. Tex. Civ. St. Article 717k, as amended ("Article 717k") authorizes the Issuer to issue refunding bonds and to deposit the proceeds from the sale thereof, and any other available funds or resources, directly with any place of payment (paying agent) for any of the Refunded Obligations, and such deposit, if made before such payment dates and in suffi- cient amounts, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Refunded Obligations; and WHEREAS, Article 717k further authorizes the Issuer to enter into an escrow agreement with any such paying agent for any of the Refunded Obligations with respect to the safekeeping, investment, administration, and disposition of any such deposit, upon such terms and conditions as the Issuer and such paying agent may agree, provided that such deposits may be invested only in direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and which may be in book entry form, and which shall mature and/or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment of principal and interest on the Refunded Obligations when due; and WHEREAS, the Escrow Agent is a paying agent for the Refunded Obligations and this Agreement constitutes an escrow agreement of the kind authorized and required by Article 717k; and e . WHEREAS, Article 717k makes it the duty of the Escrow Agent to comply with the terms of this Agreement and timely make available to the other places of payment (paying agents) for the Refunded Obligations the amounts required to provide for the payment of the principal of and interest on such obligations when due, and in accordance with their terms, but solely from the funds, in the manner, and to the extent provided in this Agreement; and WHEREAS, the issuance, sale, and delivery of the "City of La Porte, Texas, General Obligation Refunding Bonds, Series 1991" (the "Refunding Obligations") have been duly authorized to be issued, sold, and delivered partially for the purpose of obtaining the funds required to provide for the payment of the principal of and interest on the Refunded Obligations when due; and WHEREAS, the Issuer desires that, concurrently with the delivery of the Refunding Obligations to the purchasers thereof, certain proceeds of the Refunding Obligations, together with certain other available funds of the Issuer, shall be applied to purchase certain direct obligations of the United States of America hereinafter defined as the "Escrowed Securities" for' deposit to the credit of the Escrow Fund created pursuant to the terms of this Agreement and to establish a beginning cash balance (if needed) in such Escrow Fund; and . WHEREAS, the Escrowed Securities shall mature and the interest thereon shall be payable at such times and in such amounts so as to provide money which, together with cash balances from time to time on deposit in the Escrow Fund, will be sufficient to pay 'interest, on the Refunded Obligations as it accrues and becomes payable and the principal of the Refunded Obligations as it becomes due and payable; and WHEREAS, to facilitate the receipt and transfer of proceeds of the Escrowed Securides, particularly those in book entry form, the Issuer desires to establish the Escrow Fund at the principal corporate trust office of the Escrow Agent; and WHEREAS, the Escrow Agent is a party to this Agreement to acknowledge its acceptance of the terms and provisions hereof; NOW, THEREFORE, in consideration of the mutual undertakings, promises, and agreements herein contained, the sufficiency of which hereby are acknowledged, and to secure the full and timely payment of principal of and the interest on the Refunded Obligations, the Issuer and the Escrow Agent mutually undertake, promise, and agree for themselves and their respective representatives and successors, as follows: ARTICLE I DEFINITIONS AND INTERPRET A TIONS Section 1.01. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Agreement: 2 . .e "Escraw Fund" means the fund created by this Agreement t.o be administered by the Escraw Agent pursuant ta the pravisians .of this Agreement. "Escrawed Securities" means the cash and nancallable United States Treasury abligatians described in Exhibit "D" attached ta this Agreement. . Sectian 1. 02. Other Definitians. The terms "Agreement", "Issuer", "Escraw Agent", "Refunded Obligatians", and "Refunding Obligatians", when they are used in this Agreement, shall have the meanings assigned ta them in the preamble ta this Agreement. Sectian 1.03. Interpretatians. The titles and headings .of the articles and sectians .of this Agreement have been inserted far canvenience and reference .only and are nat ta be considered a part hereaf and shall nat in any way madify .or restrict the terms hereaf. This Agreement and all .of the terms and pravisians hereaf shall be liberally canstrued ta effectuate the purpases set farth herein and ta achieve the intended purpase .of praviding far the refunding .of the Refunded Obligatians in accardance with applicable law. ARTICLE II DEPOSIT OF FUNDS AND ESCROWED SECURITIES Cancurrently with the sale and delivery .of the Refunding Obligatians the Issuer shall depasit, .or cause ta be depasited, with the Escraw Agent, far depasit in the Escraw Fund, the maney and Escrawed Securities described herein, and the Escraw Agent shall, up,an the receipt thereaf, acknawledge such receipt ta the Issuer in writing. ARTICLE III CREA TION AND OPERATION OF ESCROW FUND Sectian 3.01. Escraw Fund. The Escraw Agent has created an its baaks a special trust fund and irrevacable escraw ta be knawn as the "City .of La Parte, Texas, General Obligatian Refunding Bands Escraw Fund" (the "Escraw Fund"). The Escraw Agent hereby agrees that upan receipt thereaf it will depasit ta the credit .of the Escraw Fund the funds and the Escrawed Securities described in Exhibit "D" attached hereta. Such depasit, all praceeds there- fram, and all cash balances fram time ta time an depasit therein (a) shall be the praperty .of the Escraw Fund, (b) shall be applied .only in strict can- farmity with the terms and canditians .of this Agreement, and (c) are hereby irrevacably pledged ta the payment .of the principal .of, redemption premium, if any, and interest an the Refunded Obligatians, which payment shall be made by timely transfers .of such amaunts at such times as are pravided far in Sectian 3.02 hereaf. When the final transfers have been made far the payment .of such principal .of and interest an the Refunded Obligatians, any balance then remaining in the Escraw Fund shall be transferred ta the Issuer, and the Escraw Agent shall thereupan be discharged fram any further duties hereunder. Sectian 3.02. Payment of Principal and Interest; Money Transmitted ta Issuer. The Escraw Agent is hereby irrevacably instructed to transfer from the cash balances fram time ta time an depasit in the Escraw Fund, the amaunts 3 e e required to pay the principal of, redemption premium, if any, and interest on the Refunded Obligations to their redemption date in the amounts and at' the times shown in Exhibit "C" attached hereto. Immediately following such payments the remaining money in the Escrow Fund less the amount specified in Section 7.03 shall be transmitted to the Issuer by the fastest available method. Section 3.03. Sufficiency of Escrow Fund. The Issuer represents that the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balance on deposit from time to time in the Escrow Fund will be at all times sufficient to provide money for transfer to the respective paying agent at the times and in the amounts required to pay the principal of, redemption premium, if any, and interest on the Refunded Obligations on the redemption date all as more fully set forth in Exhibit "E" attached hereto. If, for any reason, at any time, the cash balances on deposit or scheduled to be on deposit in the Escrow Fund shall be insufficient to transfer the amounts required by each place of payment (paying agent) for the Refunded Obligations to make the payments set forth in Section 3.02 hereof, the Issuer shall timely deposit in the Escrow Fund, from any funds that are lawfully available therefor, additional funds in the amounts required .to make such payments. Notice of any such insufficiency shall be given promptly as hereinafter provided, but the Escrow Agent shall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the Issuer's failure to make additional deposits thereto. Section 3.04. Trust Fund. The Escrow Agent shall hold at all times the Escrow Fund, the Escrowed Securities, and all other assets of the Escrow Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow Agent as trust funds for the benefit of the owners of the Refunded Obligations, and a special account thereof shall at all times be maintained on the books of the Escrow Agent. The owners of the Refunded Obligations shall be entitled to the same preferred claim and first lien upon the Escrowed Securities, the proceeds thereof, and all other assets of the Escrow Fund to which they are entitled as owners of the Refunded Obligations. The amounts received by the Escrow Agent under this Agreement shall not be considered as a banking deposit by the Issuer, and the Escrow Agent shall have no right to title with respect thereto except as a constructive trustee and Escrow Agent under the terms of this Agreement. The amounts received by the Escrow Agent under this Agreement shall not be subject to warrants, drafts, or checks drawn by the Issuer or, except to the extent expressly herein provided, by any paying agent. Section 3.05. Security for Cash Balances. Cash balances from time to time on deposit in the Escrow Fund shall, to the extent not insured by the Federal Deposit Insurance Corporation or its successor, be continuously secured by a pledge of direct obligations of, or obligations unconditionally guaranteed by, the United States of America, having a market value at least equal to such cash balances. 4 . e (2) an unqualified OpInIOn of nationally recognized municipal bond counsel to the effect that (i) such investment will not make the interest on the Refunding Obligations or the Refunded Obligations subject to federal income taxation, and (ii) such reinvestment complies with the laws of the State of Texas and with all relevant documents relating to the issuance of the Refunding Obligations and the Refunded Obligations. Section 4.02. Excess Balances. The Escrow Agent may from time to time transfer amounts held in the Escrow Fund to or on the order of the Issuer provided that the Issuer delivers to the Escrow Agent the following: (1) an opinion by an independent certified public account that, after the transfer of such excess, the principal amount of securities In the Escrow Fund, together with the interest thereon and other available money, will be sufficient to pay, as the same become due, in accordance with Exhibit "D", the principal of, redemption premium, if any, and interest on the Refunded Obligations relating to the Escrow Fund which have not previously been paid, and (2) an unqualified opinion of nationally recognized bond counsel to the effect that (a) suc~ transfer will not make the interest on the Refunding Bonds or the Refunded Obligations subject to federal income taxation and (b) such transfer complies with the laws of the State of Texas and with all relevant documents relating to the issuance of such Refunded Obligations and the Refunding Bonds. Section 4.03. Allocation of Certain Escrowed Securities. The maturing principal of and interest on the Escrowed Securities may be applied to the payment of any Refunded Obligations and no allocation or segregation of the receipts of principal or interest from such Escrowed Securities is required. ARTICLE V APPLICATION OF CASH BALANCES Except as provided Sections 3.01, 3.02, 4.01, and 4.02 hereof, no with- drawals, transfers, or reinvestment shall be made of cash balances in the Escrow Fund. ARTICLE VI RECORDS AND REPORTS Section 6.01. Records. The Escrow Agent will keep books of record and account in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocations, and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such books shall be available for inspection at reasonable hours and under reasonable conditions by the Issuer and the owners of the Refunded Obligations. Section 6.02. Reports. While this Agreement remains in effect, the Escrow Agent annually shall prepare and send to the Issuer a written report summarizing all transactions relating to the Escrow Fund during the preceding 6 . e year, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities and transfers from the Escrow Fund for payments on the Refunded Obligations or otherwise, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. ARTICLE VII CONCERNING THE PAYING AGENTS AND ESCROW AGENT Section 7.01. Representations. The Escrow Agent hereby represents that it has all necessary power and authority to enter into this Agreement and undertake the obligations and responsibilities imposed upon it herein, and that it will carry out all of its obligations hereunder. Section 7.02. Limitation on Liability. The liability of the Escrow Agent to transfer funds for the payment of the principal of and interest on the Refunded Obligations shall be limited to the proceeds of the Escrowed Securities and the cash balances from time to time on deposit in the Escrow Fund. Notwithstanding any provision contained herein to the contrary, neither the Escrow Agent nor the Paying Agent shall have any liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund or any failure of the obligors of the Escrowed Se'curities to make timely payment thereon, except for the obligation to notify the Issuer promptly of any such occurrence. The recitals herein and in the proceedings authorizing the Refunding Obligations shall be taken as the statements of the Issuer .and shall not be considered as made by, or imposing any obligation or liability upon, the Escrow Agent. The Escrow Agent is not a party to the proceedings authorizing the Refunding Obligations or the Refunded Obligations and is not responsible for nor bound by any of the provisions thereof (except as a place of payment and paying agent and/or a Paying Agent/Registrar therefor). In its capacity as Escrow Agent, it'is agreed that the Escrow Agent need look only to the terms and provisions of this Agreement. The Escrow Agent makes no representations as to the value, condition, or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the Issuer thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to any of such matters. It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers .hereunder. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable except for its own action, neglect, or default, nor for any loss unless the same shall have been through its negligence or want of good faith. 7 . e Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the Issuer with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund, and to dispose of and deliver the same in accordance with this Agreement. If, however, the Escrow Agent is called upon by the terms of this Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated, in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determination th~ Escrow Agent shall be liable only for its own misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the Issuer or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and in this connection may make inquiries of, and consult with, among others, the Issuer at any time. Section 7.03. Compensation. (a) At the delivery of the Refunding Obligations, the Issuer shall pay to the Escrow Agent $ J to. Ono ,the sufficiency of which is hereby acknowledged by the Escrow Agent, (a) as a fee for performing the services hereunder and for all expenses incurred or to be incurred by the Escrow Agent in the administration of this Agreement and (b) for its services in its capacity as the paying agent for the Refunded Obligations. In the event that the Escrow Agent is requested to perform any extraordinary services hereunder, the Issuer hereby agrees to pay reasonable fees to the Escrow Agent for such extraor,dinary services and to reimburse the Escrow Agent for all expenses incurred by the Escrow Agent in performing such extraordinary services, and the Escrow Agent hereby agrees to look only to the Issuer for the payment of such fees and reimbursement of such expenses. The Escrow Agent hereby agrees that in no event shall it ever assert any claim or lien against the Escrow Fund for any fees fpr its services, whether regular or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its expenses. . , (b) In addition, listed on Exhibit F are the names of the paying agents for the Refunded Obligations, which are the places of payment (paying agents) for the Refunded Obligations. The Escrow Agent acknowledges that it has received full payment due each paying agent listed in Exhibit F for providing the services of paying agent and registrar for the Refunded Obligations. The Escrow Agent shall be obligated to make available to such other paying agents for the Refunded Obligations amounts from the Escrow Funds sufficient to pay when due the principal of, redemption premium, if any, and interest on any Refunded Obligations presented to them for payment, and to pay all charges of all paying agents for the Refunded Obligations for such paying agency services. (c) Upon receipt of. the aforesaid specific sums stated in this Section 7.03 for Escrow Agent and paying agency fees, expenses, and services, the Escrow Agent shall acknowledge such receipt to the Issuer in writing. 8 . e Section 7.04. Successor Escrow Altents. If at any time the Escrow Agent or its legal successor or successors should become unable, through operation or law or otherwise, to act as escrow agent hereunder, or if its property and affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith exist in the office of Escrow Agent hereunder. In such event the Issuer, by appropriate action, promptly shall appoint an Escrow Agent to fill such vacancy. If no successor Escrow Agent shall have been appointed by the Issuer within 60 days, a successor may be appointed by the owners of a majority in principal amount of the Refunded Obligations then outstanding by an instrument or instruments in writing filed with the Issuer, signed by such owners or by their duly. authorized attorneys- in-fact. If, in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred, the owner of any Refunded Obligation may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent. Any successor Escrow Agent shall be a corporation organized and doing business under the laws of the United States or the State of Texas, authorized under such laws to exercise corporate trust powers, having its principal office and place of business in the State of Texas, having a combined capital and surplus of at least $5,000,000 and subject to the supervision or examination by Federal or State authority. Any successor Escrow Agent shall ~xecute, acknowledge, and deliver to the Issuer and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to the terms of this Agreement, all the rights, powers, and trusts of the Escrow Agent hereunder. Upon the request" of any such successor Escrow Agent, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights, powers, and duties. The Escrow Agent shall pay over to its successor Escrow Agent a proportional part of the Escrow Agent's fee hereunder. ARTICLE VIII MISCELLANEOUS Section 8.01: Notice. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid addressed to the Issuer or the Escrow Agent at the address shown on Exhibit "A" attached hereto. The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten days prior notice thereof. Section 8.02. Termination of Responsibilities. Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow Agent shall have 9 e e Section 8.04. Severability. In case anyone or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal . or unenforceable in any respect,. such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 8.05. Texas Law Governs. This Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Texas. Section 8.06. Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Agreement. Section 8.07. Chanv;es in Av;reement Generally Prohibited. This Agreement is made for the benefit of the Issuer and the holders or owners from time to time of the Refunded Obligations, and it shall not be repealed, revoked, altered, or amended without the written consent of all such holders or owners and the written consent of the Escrow Agent; provided, however, that the Issuer and the Escrow Agent may, without the consent of, or notice to, such holders or owners and as shall not be inconsistent with the terms and provisions of this Agreement amend this Agreement to cure any ambiguity or formal defect or omission in this Agreement. Notwithstanding the foregoing, this Agreement may' not be amended without the prior written consent of any rating agency which has rated the Refunded Obligations and a final copy of any such amendment shall be sent to any such rating agency. Section 8.08. Counterparts. This Agreement may be executed in any number of counterparts, each of whicli shall be deemed an original for all purposes, and all counterparts shall together constitute one and the same instrument. EXECUTED as of the date first written above. CI~F LA PORTE ~~~ Mayor, CIty of a Porte, Texas ATTEST: ~~ City Secretary, City of La Porte, Texas (SEAL) 10 ATTES : e Name: n I' Title: ASSIST Ai\i f '~'i..'.: ~J:n~SI9ENT. (SEAL) ,. THU~.f ufFICER e FIRST CITY, TEXAS - HOUSTON" N. A. Houston, Texas 1/ ' () By ^*J."v\.J:J..,u.. 1-1 ,. L<. _(}.)<.J.v Name: DE~WARD Title: CORPORATE TRUGT Of-flr.r~ ESCROW AGREEMENT EXECUTION PAGE e e . EXHIBIT "A" ADDRESSES OF THE ISSUER AND ESCROW AGENT ISSUER Ci ty of La Porte, Texas 604 West Fairmont Parkway La Porte, TX 77571 Attention: City Manager ESCROW AGENT First City, Texas - Houston, N.A. 1301 Fannin Suite 2100 Houston, TX 77002 Attention: Corporate Trust Department A-1 e . EXHIBIT "B" DESCRIPTION OF THE REFUNDED OBLIGATIONS City of La Porte, Texas, Waterworks and Sewer System Revenue Bonds, Series 1985 B-1 $3,000,000 It EXHIBIT "C" e DEBT SERVICE REQUIREMENTS OF THE REFUNDED OBLIGATIONS REFUNDED DEIT SERVICE - SERIES 1985 DATE PRINCIPAL COOPON INTEREST TOTAL DEBT SERVICE ............................................................................................ ESCROWED DEIT SERVICE ........................................................_............~...................... 1'-JI.n-91 15-Sep-91 1140,475.00 "40,475.00 1"0,475.00 15-Mlr-92 140,475.00 140,475.00 140,475.00 15-Sep-92 140,475 .00 140,475 .00 140,475.00 15-Mlr-93 140,475.00 140,475.00 140,475.00 15-Sep-93 140,475.00 140,475_00 140,475.00 15-Mlr-94 140,475.00- 140,475.00 140,475.00 15-Sep-94 140,475.00 140,475.00 140,475.00 15-Mlr-95 140,475.00 140,475_00 3,140,475.00 15-Sep-95 140,475.00 14Q,475.oo 15-Mlr-96 5300,000.00 9.1001 140,475.00 440,475 .00 15-Sep-96 126,825.00 126,825.00 15-Mlr-97 300,000.00 9_2001 126,825.00 426,825.00 15-Sep-97 113,025.00 113,025.00 15-Mlr-98 300,000.00 9.4001 113,025.00 413,025.00 15-Sep-98 98,925.00 98,925.00 15-Mlr-99 300,000.00 9.5001 98,925.00 398,925.00 15-Sep-99 84,675.00 84,675.00 n-Mlr.2000 300,000.00 9.500X 84,675.00 384,675.00 15-Sep-2000 70,425.00 70,425.00 15-Mlr-2001 300,000.00 9.600X 70,425.00 370,425.00 15-Sep-2001 56,025.00 56,025.00 15-Mlr-2002 300,000.00 9.6501 56,025.00 356,025.00 n-Sep-2002 41,550.00 41,550.00 15-Mlr-2003 300,000.00 9.7001 41,550.00 341,550.00 15-Sep-2003 27,000.00 27,000.00 15-Mlr-2004 300,000.00 9.0001 27,000.00 327,000.00 15-Sep-2004 13,500.00 13,500.00 n-Mer-2005 300,000.00 9.0001 13,500.00 313,500.00 TOTAL 53,000,000.00 ...-----..-......----_.._-........---~-..-..-............................................... 52,668,650.00 55,668,650.00 54,123,800.00 ....e......e...e............................................................................ ..... . . . .................................. OEIT SERVICE TO CALL . SERIES 1985 ...................---.-............--..-.-...---...--..........-........................... DATE MATURING PRINCIPAL (1) CALL 'REM I lit (2) INTEREST (1) PRINCIPAL TO CALL .............-.............................................................................. ESCRCNED DElT SERVICE 11-JI.n-91 15-Sep-91 15-Mllr-92 15-Sep-92 15-Mlr-93 15-Sep-93 15-Mllr-94 15-Sep-94 15-Mer-95 5140,475.00 140,475.00 140,475.00 140,475.00 140,475 .00 140,475.00 140,475.00 140,475.00 53,000,000.00 "40,475.00 140,475.00 140,475_00 140,475.00 140,475.00 140,47'5.00 140,475.00 3,140,475.00 TOTAL ",123,800.00 $3,000,000.00 .........................................-.................................................. 14,123,800.00 .................ss......................................................................... C-l " It e EXHIBIT "D" ESCROW DEPOSIT I. CASH $20.81 II. GOVERNMENTAL OBLIGATIONS ..--.-.-....-.....---... SLGS CASH fLOW AND YIELD .---......--..-......-....--.......-...............--....................................... SLGS (1) DATE PRINCIPAL COOPON INTEREST SLas CASH fLOW PRESENT VALUE SLGS CASH flOW A' 6.497127X ............................................. . ..---........--.........................-................................................... 11-Jun-'1 15-Sep-91 186,800.00 153,700.36 '140,500.36 '138.174.18 15-M8r-'2 37,600.00 102,925.69 140,525.69 1]3.850.86 15-Sep-92 37.500.00 102,925.69 140,425.69 129.547.19 15-M8r-93 37,600.00 102,925.69 140.525.69 125,560.53 15-Sep-93 37.500.00 102,925.69 140.425.69 121.523.41 15-M8r-94 37.600.00 102,925.69 1'0.525.69 117.783.67 15-Sep-94 37,500.00 102,925.69 140,425.69 113.996.61 15-M8r-95 3,037,500.00 6.777X 102,925.69 3.140.425.69 2.469.163.55 ...........--......------..........-....-......-......---................................... TOTAL 13,349,600.00 . 1774,180.19 14.123,780.19 13,349,600.00 ..............s............................................................................. (1) SLGS ESCROW fUND YIELD IS 6.4971271 D-l . e EXHIBIT "E" e ESCROW FUND CASH FLOW City of La Porte, Texas Waterworks and Sewer System Revenue Refunding Bonds, Series 1991 ESCROW CASH FLOW DATE 11-Jun-91 15-Sep-91 15-Mer-92 15-Sep-92 15-Mer-93 15-Sep-93 1S-Mer-94 15-Sep-94 15-Mer-95 SLGS CASH FLOW 5140,500.36 140,525.69 140,425.69 140,525.69 140,425.69 140,525.69 140,425.69 3,140,425.69 ESCR~D DEBT SERVICE 5140,475.00 . 140,475.00 140,475.00 140,475.00 140,475.00 140,475.00 140,475.00 3,140,475.00 ENDING BALANCE 520.81 46.17 96.86 47.55 98.24 48_93 99.62 50.31 1.00 TOTAL .....----............-.......-...-...------......-.....-....- S1.00 14,123,780.19 14,123,800.00 ==.==............=....==..=..:======..as..................... E-l . EXHIBIT D REDEMPTION NOTICES e " .. ... . ~ . ". '.. EXHIBIT D NOTICE 01" PRIOU REIJEMP'fION To the Holders of TilE FOLLOWING NAMED SERIES OF CITY OF LA PORTE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 1985 NOTICE IS HEREBY GIVEN that City of La Porte, TexAs, R political subdivision of the State of Texas (the "Issuer") has en 110<<.1 for redemption on the date described below, the following described outstanding Jtevenue Donds (t.he "Bonds") of the Issuer as follows: SERIES 1985, DATED SEPTEMBER 15, 1985, ON MARCH 15, 1995, AT PAR MATURITY DATES (AUGUST) 1996 1997 1998 1999 2000 2001 2092 2003 2001 2005 PRINCIPAL AMOUNT ~300,000 300,000 300,000 300,000 300,000 300,QOO 300,000 300,000 300,000 300,000 CUSIP NO. · 501120BM7 50'1l20BN5 501120BPO 504120nQG 504120n ItG 504120nS1 504120BT2 504120nU9 504 ,I20n V7 504120nW5 NOTICE IS ,,'URTIII~R GIVEN thnt due and proper arrangements hnve been made for providing First City, Texas - Houston, N.A. of Houston, Texas, the Paying Agent for the Bonds called for redemption, with funds sufficient to pay the redemption price of the Bonds equal to the principal amount of the Bonds and the Interest thereon to the redemption date. In the event the Bonds, or any of them are not presented for redemption by the date fixed for their redemption, they shull not the l'eufte l' bear interest. If due provision for the pnyment of the redemption price is mnde, then the Honds automatically shall be deemed to huve been redeemed prior to their scheduled maturity, and they shull not beur interest after the redemption dute, and they shall not be regarded as being outstanding except for the right of the owner thereof to receive the redemption p~ice from the Paying Agent. TillS NOTICE is issued und given pursuant to the redemption provi- sions in the proceedings au thorizing the issuance of the Bonds and in accordance with the recitals amI provisions of each of the Donds. 0-1 . "\- e e NOTICE IS FURTHER GIVEN THAT the Bonds will be payable at and should be submitted either in person or by certified or registered mail to the following address: First City, Texas - Houston, N .A. Atln: Redemption Department/Corporate Trust 1301 Fannin, Suite 2200 Houston, TX 77Q02 (in person) OR P.O. Box 3856 Houston, TX 77253 (by mail) EXECUTED UNDER MY HAND and seal of office this June 11, 1991. / s / Norman Malone Mayor, La Porte, Texas IMPORTANT NOTICE: IN COMPLIANCE WITH THE INTEREST AND DIVIDEND COMPLIANCE ACf OF 1983, PA YING AGENTS ARE REQUIRED TO WITIIHOLD 20\ OF GROSS PAYMENTS TO BONDIIOLlJERS WHO FAIL TO PROVIDE A VALID TAXPAYER IDENTIFICATION NUMBER ON OR BEFORE TilE DATE UPON WIIICI-I BONDS ARE PRESENTED FOR PAYMENT. DONDIIOLL>ERS ARE ADDITIONALLY SUBJECf 1'0 A PENALTY OF $50.00 rOI{ FAILURE TO PROVIDE SUCH' NUMBER. PLEASE PROVIDE A TAXPAYER IDENTIFICATION NUMBER WilEN PRESENTING BONDS FOR REDEMPTION, AND PLEASE sunMIT WITII SUCII' SECURITIES A SUBSTITUTE FORM W-9 TO A VOID TI"IIS WITIIIIOLDING FROM YOUR PAYMENT. ". ANY QUESTIONS REGARDING TI-IIS NOTICE MAYBE ADDRESSED TO (713) 658:-7641. FIRST CITY, TEXAS - HOUSTON, N. A. , AS ESCROW AGENT . TilE ABOVE REFERENCED CUSIP NUMBERS ARE PROVIDED FOR TilE CONVENIENCE OF HIE BONDHOLDERS. NEITHER THE PAYING AGENT, THE ESCROW AGENT, NOR TilE ISSUER ARE "RESPONSIBLE FOR ANY ERROR OF ANY NATURE RELATING TO CUSIP NUMBERS. D-2