The URL can be used to link to this page

Home My WebLink AboutO-2005-2858 J REQUEST FOR CITY COUNCIL AGENDA ITEM I Bude:et Agenda Date Requested: December 12. 2005 Requested By: Michllel Dolhy r Source of Funds: N/A Department: FiQ.a~e Account Number: Report: Resolution: ~b5t Ordinance: xx Amount Budgeted: Exhibits: Bond Attorney Opinion Letter Amount ReqUeLJ... Budgeted ltem~ NO Exhibits: Exhibits SUMMARY & RECOMMENDATION On September 12, 2005, City Council approved an Inter-local Agreement with City of Pearland and Hughes Supply, Inc. for Water Meter Change-out & Retrofit Program and New Meter Supply Contract. Staff was also directed to research financing options and we have determined that a private placement would be the best option to finance this project. We currently have an offer from Wachovia Bank for a loan of $2,625,000 dollars at 3.74% interest rate for a ten year term. Action Reauired bv Council: No action required Approve the $2,625,000 Public Property Finance Contractual Obligation, Series 2006 with Wachovia Bank. Approved for City Council Aeenda ~,lM,OJJk~a~ ebra Feazelle /:)-~--DS- Date CERTIFICATE FOR ORDINANCE THE STATE OF TEXAS COUNT Y OF HARRIS CITY OF LA PORTE 9 9 9 We, the undersigned officers of the City of La Porte, Texas (the "City"), hereby certify as follows: 1. The City Council of the City convened in a regular meeting on December 12,2005, at the regular meeting place thereof, within the City, and the roll was called of the duly constituted officers and members of the City Council, to wit: Alton E. Porter Peter Griffiths Barry Beasley Mike Mosteit Chuck Engelken Howard Ebow Tommy Moser Louis Rigby Mike Clausen Mayor Council Member Council Member Council Member Council Member Council Member Council Member Council Member Council Member and all of such persons were present except J'eJe ( e ('\ {")\ #5 , thus constituting a quorum. Whereupon, among other business, the following was transacted at said meeting: a written ORDINANCE AUTHORIZING AND ORDERING THE ISSUANCE OF CITY OF LA PORTE, TEXAS, PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS, SERIES 2006; AND CONTAINING OTHER MATTERS INCIDENT THERETO (the "Ordinance") was duly introduced for the consideration of the City Council. It was then duly moved and seconded that the Ordinance be adopted; and, after due discussion, such motion, carrying with it the adoption of the Ordinance, prevailed and carried by the following vote: AYES: <3 NAYS: D ABSTENTIONS: D 2. That a true, full and correct copy of the Ordinance adopted at the meeting described in the above and foregoing paragraph is attached to and follows this certificate; that the Ordinance has been duly recorded in the City Council's minutes of such meeting; that the above and foregoing paragraph is a true, full and correct excerpt from the City Council's minutes of such meeting pertaining to the adoption of the Ordinance; that the persons named in the above and foregoing paragraph are the duly chosen, qualified and acting officers and members of the City Council as indicated therein; that each of the officers and members of the City Council was du1y and sufficiently notified officially and personally, in advance, of the date, hour, place and subject of the aforesaid meeting, and that the Ordinance wou1d be introduced and considered for HOU:2525723.1 adoption at such meeting, and each of such officers and members consented, in advance, to the holding of such meeting for such purpose; that such meeting was open to the public as required by law; and that public notice of the date, hour, place and subject of such meeting was given as required by the Open Meetings Law, Chapter 551, Texas Government Code. SIGNED AND SEALED this December ~005. ~ . lJ)1~a~ City Se retary City of La Porte, Texas (SEAL) S-l HOU:2525723.1 ORDINANCE AUTHORIZING ISSUANCE OF CITY OF LA PORTE, TEXAS, PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS, SERIES 2006 Dated December 12, 2005 HOU:2516661.4 TABLE OF CONTENTS ARTICLE I FINDINGS AND DETERMINA TIONS.....................................................................1 Section 1.1: Findings and Determinations ...................................................................... 1 ARTICLE II DEFINITIONS AND INTERPRETATIONS ............................................................1 Section 2.1 : Definitions................................................................................................... 1 Section 2.2: Interpretations............................................................................................. 3 ARTICLE III TERMS OF THE OBLIGA TIONS...........................................................................3 Section 3.1: Section 3.2: Section 3.3: Section 3.4: Section 3.5: Section 3.6: Section 3.7: Section 3.8: Section 3.9: Section 3.10: Amount. Purpose and Authorization........................................................... 3 Designation. Date and Interest Payment Dates........................................... 3 Numbers. Denomination. Interest Rates and Maturities............................. 4 Redemption Prior to Maturity ...... ............ ...... ............................................. 4 Manner of Payment. Characteristics. Execution and Authentication ......... 4 Authentication............................................................................................. 7 Ownership ......... ...... ........ ................... ... ... ........ .............. ........ ... .................. 7 Registration. Transfer and Exchange ............ ............................. ................. 7 Replacement Obligations .............................. .......... .................................... 8 Cancellation.... ............................................................................................ 9 ARTICLE IV FORM OF OBLIGATIONS ...................................... ............ ............ ...... ..... ........ ....9 ARTICLE V SECURITY FOR THE OBLIGATIONS...................................................................9 Section 5.1: Pledge and Levy of Taxes........................................................................... 9 Section 5.2: Debt Service Fund.... ........................ .................... ............. ........................ 10 Section 5.3: Construction Fund............ ................ ................ .... ........... .......... ................ 10 Section 5.4: Further Proceedings.................................................................................. 10 ARTICLE VI CONCERNING THE PAYING AGENT/REGISTRAR .......................................11 Section 6.1: Acceptance ................................................................................................ 11 Section 6.2: Trust Funds ............ .......... ...... ........................ ....... .................................... 11 Section 6.3: Obligations Presented ............................................................................... 11 Section 6.4: Unclaimed Funds Held bv the Paying Agent/Registrar ............................ 11 Section 6.5: Paving Agent/Registrar May Own Obligations ........................................ 12 Section 6.6: Successor Paving Agents/Registrars......................................................... 12 ARTICLE VII PROVISIONS CONCERNING SALE AND APPLICATION OF PROCEEDS OF OBLIGATIONS ...................... ............ .......................... ................ ...... ...12 Section 7.1: Sale of Obligations; Insurance ............. ............................. ............. ........... 12 Section 7.2: Approval. Registration and Delivery ........................................................ 12 Section 7.3: Application of Proceeds of Obligations; Appropriation ........................... 12 Section 7.4: Tax Exemption............... ............. .......................... ........ ...... ........ .............. 13 Section 7.5: Qualified Tax-Exempt Obligations........................................................... 15 Section 7.6: Related Matters..... .......................... ............................ ............ .................. 16 ARTICLE VIII COVENANTS...................... .... ........ .............................................. .................... .16 Section 8.1: Financial Reporting. ............... ............. ..... ........................... ...... .......... ...... 16 HOU:2516661.4 1 Section 8.2: Determination of T axabilitv...................................................................... 16 ARTICLE IX MISCELLANEOUS ....... ........................................ ..................... ..... ..... ..... .......... .17 Section 9.1 : Section 9.2: Section 9.3: Section 9.4: Section 9.5: Section 9.6: Section 9.7: Section 9.8: Section 9.9: Section 9.10: HOU :2516661.4 Defeasance.......... ...................................................................................... 17 Ordinance a Contract - Amendments........................................................ 17 Legal Holidays.......................................................................................... 18 No Recourse Against City Officials ......................................................... 18 Further Proceedings ................... .................. ............ ....... .......................... 18 Power to Revise Form of Documents ....................................................... 18 Severability ........... .............. ................. ..................................................... 18 Open Meeting................................................ ....... ........ ........... ...... ..... ....... 19 Repealer.............. ...................................................................................... 19 Effective Date. ........ ....... ........ ......... ...... ........ .................... ........... ... .......... 19 11 ORDINANCE AUTHORIZING AND ORDERING THE ISSUANCE OF CITY OF LA PORTE, TEXAS, PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS, SERIES 2006; AND CONTAINING OTHER MATTERS INCIDENT THERETO BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LA PORTE, TEXAS: ARTICLE I FINDINGS AND DETERMINATIONS Section 1.1: Findings and Determinations. The City Council hereby officially finds and determines that: (a) The City of La Porte, Texas (the "City"), acting through its City Council, is authorized by its Home Rule Charter and the Constitution and laws of the State of Texas, particularly the Public Property Finance Act, Chapter 271, Subchapter A, Texas Local Government Code, as amended (the "Act"), to execute, perform and make payments under contracts with any person for the use, purchase or other acquisition of personal property, or the financing thereof, as described in the Act; (b) The Act permits the City Council of the City to execute contracts in any form deemed appropriate by the City Council in connection with the use, purchase or other acquisition of personal property; (c) The City Council of the City desires to purchase personal property, described in Exhibit A attached hereto, or such other personal property, appliances, equipment, facilities, furnishings or interests therein, whether movable or fixed, deemed by the City Council to be necessary, useful and/or appropriate for the purposes of the City; and (d) The City Council of the City is of the opinion and hereby affirmatively finds that it is in the best interests of the City to adopt this Ordinance and issue the obligations herein authorized as permitted by the Act. ARTICLE II DEFINITIONS AND INTERPRETATIONS Section 2.1: Definitions. As used herein, the following terms shall have the meanings specified, unless the context clearly indicates otherwise: "Act" shall mean Chapter 271, Subchapter A, Texas Local Government Code, as amended. HOU:2516661.4 "Attorney General" shall mean the Attorney General of the State of Texas. "Authorized Denomination" shall mean $100,000 and any integral multiple of $5,000 in excess thereof. "City" shall mean the City of La Porte, Texas and, where appropriate, its City Council. "City Council" shall mean the governing body of the City. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. "Construction Fund" shall mean the Public Property Finance Contractual Obligations, Series 2006 Construction Fund established by the City and described in section 5.3 of this Ordinance. "Debt Service Fund" shall mean the Public Property Finance Contractual Obligations, Series 2006 Debt Service Fund established by the City and described in section 5.2 of this Ordinance. "Fiscal Year" shall mean the City's then designated fiscal year, which currently is the twelve-month period beginning on the first day of October of a calendar year and ending on the last day of September of the next succeeding calendar year and each such period may be designated with the number of the calendar year in which such period ends. "Interest Payment Date," when used in connection with any Obligation, shall mean July 25, 2006, and each January 25 and July 25 thereafter until maturity or earlier redemption of such Obligation. "Issuance Date" shall mean the date on which the Obligations are delivered to and paid for by the Purchaser. "Obligation" or "Obligations" shall mean any or all of the City of La Porte, Texas, Public Property Finance Contractual Obligations, Series 2006, authorized by this Ordinance. "Ordinance" shall mean this Ordinance and all amendments hereof and supplements hereto. "Outstanding," when used with reference to the Obligations, shall mean, as of a particular date, all Obligations theretofore and thereupon delivered pursuant to this Ordinance except: (a) any Obligations canceled by or on behalf of the City at or before such date; (b) any Obligations defeased pursuant to the defeasance provisions of this Ordinance or otherwise defeased as permitted by applicable law; and (c) any Obligations in lieu of or in substitution for which a replacement Obligation shall have been delivered pursuant to this Ordinance. "Paying AgentJRegistrar" shall mean Wachovia Bank, National Association, Austin, Texas, and its successors in that capacity. 2 HOU:2516661.4 "Paying Agent/Registrar Agreement" shall mean the agreement between the City and the Paying Agent/Registrar as described more particularly in Section 6.1 hereof. "Record Date" shall mean the close of business on the tenth day of the month next preceding the applicable Interest Payment Date. "Register" shall mean the registration books for the Obligations kept by the Paying Agent/Registrar in which are maintained the names and addresses of, and the principal amounts registered to, each Registered Owner of Obligations. "Registered Owner" shall mean the person or entity in whose name any Obligation is registered in the Register. "Purchaser" shall mean Wachovia Bank, National Association. Section 2.2: Interpretations. All terms defined herein and all pronouns used in this Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the articles and sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof. This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Obligations and the validity of the levy of ad valorem taxes to pay the principal of and interest on the Obligations. ARTICLE III TERMS OF THE OBLIGATIONS Section 3.1: Amount, Purpose and Authorization. The Obligations shall be issued in fully registered form, without coupons, under and pursuant to the authority of the City's Home Rule Charter and the Act in the total authorized aggregate principal amount of TWO MILLION SIX HUNDRED TWENTY FIVE THOUSAND AND NOIlOO DOLLARS ($2,625,000) for the purpose of paying (a) all or a portion of the City's contractual obligations to be incurred in connection with the use, purchase or other acquisition of personal property, and (b) costs of issuance of the Obligations, all in accordance with the provisions of the Act. Section 3.2: Designation. Date and Interest Payment Dates. The Obligations shall be designated as the "City of La Porte, Texas, Public Property Finance Contractual Obligations, Series 2006," and shall be dated January 1,2006. The Obligations shall bear interest at the rates set forth in Section 3.3 below, from the later of the Issuance Date, or the most recent Interest Payment Date to which interest has been paid or duly provided for, calculated on the basis of a 360-day year of twelve 30-day months, payable on July 25, 2006, and each January 25 and July 25 thereafter until maturity or earlier redemption. If interest on any Obligation is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Paying Agent/Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Paying AgentlRegistrar shall establish a Special Record Date when funds to make such interest payment 3 HOU:2516661.4 are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each affected Registered Owner as of the close of business on the day prior to mailing of such notice. Section 3.3: Numbers. Denomination. Interest Rates and Maturities. (a) The Obligations shall be initially issued bearing the numbers, in the principal amounts and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance. The Obligations shall mature on January 25, 2016. Obligations delivered in transfer of or in exchange for other Obligations shall be numbered in order of their authentication by the Paying Agent/Registrar, shall be in Authorized Denominations and shall mature on the same date and bear interest at the same rate as the Obligation or Obligations in lieu of which they are delivered. Obligation Number R-I Year of Maturity 2016 Principal Amount $2,625,000 Interest Rate 3.74% (b) To the extent required by Section 8.2 of this Ordinance, and in addition to the interest owed pursuant to Section 3.3(a) above, Obligations shall bear interest at a rate per annum, not to exceed the maximum interest rate allowed by law (currently 15% per annum), which will provide the holders of the Obligations with an after-tax yield (for federal income tax purposes) equivalent to the tax-exempt yield (the "Tax-Exempt Yield") on the Obligations. The Tax-Exempt Yield is the yield (exclusive of interest owed pursuant to Section 3.3(a) above) that would have resulted to a holder of an Obligation if such Obligation had maintained its tax- exempt status, taking into account all penalties, fines, interest and additions to federal income tax imposed on a holder of an Obligation as a result of a determination of taxability. Section 3.4: Redemption Prior to Maturity. (a) The Obligations are subject to redemption prior to maturity (a "Break Event"), at the option of the City, in whole or in part, on any date (each a "Break Date"), at par plus accrued interest to the date fixed for redemption, plus a Breakage Fee, if any, defined and determined as follows. For each Break Date, a Breakage Fee shall be due only if the rate under "A" below exceeds the rate under "B" below and shall be determined as follows: "Breakage Fee" = the Present Value of ((A-B) x C) + LIB OR Breakage, where: A = A rate per annum equal to the sum of (i) the bond equivalent yield (bid side) of the U.S. Treasury security with a maturity closest to the Maturity Date as reported by The Wall Street Journal (or other published source) on November 2, 2005 ( the "Lock In Date"), plus (ii) the corresponding interest rate swap spread of a Registered Owner on the Lock In Date for a fixed rate payor to pay a Registered Owner the fixed rate side of an interest rate swap of that maturity, plus (iii) .25%. B = A rate per annum equal to the sum of (i) the bond equivalent yield (bid side) of the 4 HOU:2516661.4 U.S. Treasury security with a maturity closest to the Maturity Date as reported by The Wall Street Journal (or other published source) on the Break Date, plus (ii) the corresponding swap spread that a Registered Owner determines another swap dealer would quote to the Registered Owner on the Break Date for paying to the Registered Owner the fixed rate side of an interest rate swap of that maturity. C = The sum of the products of (i) each Affected Principal Amount for each Affected Principal Period, times (ii) the number of days in that Affected Principal Period divided by 360. "Affected Principal Amount" for an Affected Principal Period is the principal amount of the Obligations scheduled to be outstanding during that Affected Principal Period determined as of the relevant Break Date before giving effect to the Break Event on that Break Date, and for any prepayment, multiplying each such principal amount times the Prepayment Fraction. "Affected Principal Period" is each period from and including a Scheduled Due Date to but excluding the next succeeding Scheduled Due Date, provided that the first such period shall begin on and includes the Break Date. "Applicable Rate" is 3.74%, or such higher interest rate on the Obligations as may permitted by Section 8.2 hereof. "LIB OR Breakage" is any additional loss, cost or expense that Registered Owner may incur with respect to any hedge for the Applicable Rate based on the difference between a London interbank offered rate (for U.S. dollar deposits of the relevant maturity) available in the London interbank market at the beginning of the interest period in which the Break Date occurs and that which is available in that market on the Break Date. "Maturity Date" is the date on which the final payment of principal of the Obligations would, but for any Break Event, have become due. "Prepayment Fraction" is a fraction equal to the principal amount being prepaid over the principal amount of the Obligations outstanding immediately prior to that prepayment on the Break Date. "Present Value" is determined as of the Break Date using "B" above as the discount rate. "Scheduled Due Date" means the date that the principal of an Obligation subject to a Break Event would, but for the Break Event, have become due, whether at maturity or pursuant to the mandatory sinking fund redemption provisions described below. Breakage Fees are payable as liquidated damages, are a reasonable pre-estimate of the losses, costs and expenses a Registered Owner would incur in the event of any optional redemption of the Obligations, are not a penalty, will not require claim for, or proof of, actual damages, and a Registered Owner's determination thereof shall be conclusive and binding in the absence of manifest error. For any Break Event hereunder, the foregoing Breakage Fee provisions supersede any breakage compensation agreement that City and a Registered Owner may have executed with respect to the Obligations. 5 HOU:2516661.4 (b) The Obligations are subject to mandatory sinking fund redemption in the following amounts (subject to reduction as hereinafter provided), on the following dates, in each case at a redemption price equal to the principal amount of the Obligations or the portions thereof so called for redemption plus accrued interest to the date fixed for redemption: Mandatory Redemption Dates January 25, 2007 January 25, 2008 January 25,2009 January 25,2010 January 25,2011 January 25, 2012 January 25, 2013 January 25,2014 January 25, 2015 January 25,2016 Principal Amounts $262,500 262,500 262,500 262,500 262,500 262,500 262,500 262,500 262,500 262,500 The particular Obligations to be redeemed shall be selected by the Registrar by lot or other customary random selection method, on or before December 10 of each year immediately preceding a mandatory redemption date. The principal amount of Obligations to be mandatorily redeemed in each year shall be reduced by the principal amount of such Obligations that have been optionally redeemed pursuant to subparagraph (a) above on or before December 10 of such year and which have not been made the basis for a previous reduction. (c) Obligations may be redeemed only in such amounts as will result in the unredeemed balance of Obligations being outstanding in Authorized Denominations. Upon presentation and surrender of any Obligation for redemption in part, the Paying AgentfRegistrar, in accordance with the provisions of this Ordinance, shall authenticate and deliver in exchange therefor an Obligation or Obligations of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Obligation so surrendered. (d) Not less than thirty (30) days prior to a redemption date for the Obligations, a notice of redemption will be sent by U.S. mail, first class postage prepaid, in the name of the City to each Owner of an Obligation to be redeemed in whole or in part at the address of such Owner appearing on the Register at the close of business on the business day next preceding the date of mailing; provided, however, that so long as Wachovia Bank, National Association, is the Paying Agent/Registrar and the sole Registered Owner of the Obligations, no such notice shall be required. Such notices shall state the redemption date, the redemption price, the place at which Obligations are to be surrendered for payment and, if less than all Obligations Outstanding are to be redeemed, the numbers of Obligations or portions thereof to be redeemed. Any notice of redemption so mailed as provided in this Section will be conclusively presumed to have been duly given, whether or not the Registered Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Paying AgentfRegistrar for payment of the redemption price of the Obligations or portions thereof to be redeemed. When Obligations have been called for redemption in whole or in part and notice of redemption has been given as herein provided, the Obligations or portions thereof so redeemed shall no longer be regarded to be Outstanding, except for the purpose of receiving payment solely from the funds so provided for redemption, and interest which would otherwise accrue after the redemption date on any HOU:2516661.4 6 Obligation or portion thereof called for redemption shall terminate on the date fixed for redemption. Section 3.5: Manner of Payment. Characteristics. Execution and Authentication. The Paying Agent/Registrar is hereby appointed the paying agent for the Obligations. The Obligations shall be payable, shall have the characteristics and shall be executed, sealed, registered and authenticated, all as provided and in the manner indicated in the FORM OF OBLIGATIONS set forth in Article IV of this Ordinance. If any officer of the City whose manual or facsimile signature shall appear on the Obligations shall cease to be such officer before the authentication of the Obligations or before the delivery of the Obligations, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. The approving legal opinion of Andrews Kurth LLP, Houston, Texas, Bond Counsel, may be printed on the back of the Obligations over the certification of the City Secretary, which may be executed in facsimile. CUSIP numbers also may be printed on the Obligations, but errors or omissions in the printing of either the opinion or the numbers shall have no effect on the validity of the Obligations. Section 3.6: Authentication. Except for the Obligations to be initially issued, which need not be authenticated by the Paying Agent/Registrar, only such Obligations as shall bear thereon a certificate of authentication, substantially in the form provided in Article IV of this Ordinance, manually executed by an authorized representative of the Paying Agent/Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Obligation so authenticated was delivered by the Paying Agent/Registrar hereunder. Section 3.7: Ownership. The City, the Paying Agent/Registrar and any other person may treat the person in whose name any Obligation is registered as the absolute owner of such Obligation for the purpose of making and receiving payment of the principal thereof and interest thereon and for all other purposes, whether or not such Obligation is overdue, and neither the City nor the Paying Agent/Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Registered Owner of any Obligation in accordance with this Section shall be valid and effective and shall discharge the liability of the City and the Paying Agent/Registrar upon such Obligation to the extent of the sums paid. Section 3.8: Registration. Transfer and Exchange. The Paying Agent/Registrar is hereby appointed the registrar for the Obligations. So long as any Obligation remains Outstanding, the Paying Agent/Registrar shall keep the Register at its office in Austin, Texas in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of the Obligations in accordance with the terms of this Ordinance. Each Obligation shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Paying Agent/Registrar, accompanied by an assignment duly executed by the Registered Owner or his authorized representative in form satisfactory to the Paying Agent/Registrar. Upon due presentation of any Obligation for transfer, the Paying 7 HOU:2516661.4 Agent/Registrar shall authenticate and deliver in exchange therefor, within seventy-two (72) hours after such presentation, a new Obligation or Obligations, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Obligation or Obligations so presented and surrendered. All Obligations shall be exchangeable upon the presentation and surrender thereof at the office of the Paying Agent/Registrar for a Obligation or Obligations, maturity and interest rate and in any authorized denomination, in an aggregate principal amount equal to the unpaid principal amount of the Obligation or Obligations presented for exchange. The Paying Agent/Registrar shall be and is hereby authorized to authenticate and deliver exchange Obligations in accordance with the provisions of this Section. Each Obligation delivered by the Paying Agent/Registrar in accordance with this Section shall be entitled to the benefits and security of this Ordinance to the same extent as the Obligation or Obligations in lieu of which such Obligation is delivered. All Obligations issued in transfer or exchange shall be delivered to the Registered Owners thereof at the principal corporate trust office of the Paying Agent/Registrar or sent by United States mail, first class, postage prepaid. The City or the Paying AgentlRegistrar may require the Registered Owner of any Obligation to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Obligation. Any fee or charge of the Paying AgentlRegistrar for such transfer or exchange shall be paid by the City. Section 3.9: Replacement Obligations. Upon the presentation and surrender to the Paying AgentlRegistrar of a damaged or mutilated Obligation, the Paying AgentlRegistrar shall authenticate and deliver in exchange therefor a replacement Obligation, of the same maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. The City or the Paying AgentlRegistrar may require the Registered Owner of such Obligation to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the Paying AgentlRegistrar and the City. If any Obligation is lost, apparently destroyed or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and ordinances of the City, and in the absence of notice or knowledge that such Obligation has been acquired by a bona fide purchaser, shall execute, and the Paying AgentlRegistrar shall authenticate and deliver, a replacement Obligation of the same maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding, provided that the Registered Owner thereof shall have: (a) furnished to the City and the Paying AgentlRegistrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Obligation; (b) furnished such security or indemnity as may be required by the Paying AgentlRegistrar and the City to save and hold them harmless; 8 HOU:2516661.4 (c) paid all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Paying AgentJRegistrar and any tax or other governmental charge that may be imposed; and (d) met any other reasonable requirements of the City and the Paying AgentJRegistrar . If, after the delivery of such replacement Obligation, a bona fide purchaser of the original Obligation in lieu of which such replacement Obligation was issued presents for payment such original Obligation, the City and the Paying AgentJRegistrar shall be entitled to recover such replacement Obligation from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or the Paying AgentJRegistrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Obligation has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Obligation, authorize the Paying Agent/Registrar to pay such Obligation. Each replacement Obligation delivered in accordance with this Section shall be entitled to the benefits and security of this Ordinance to the same extent as the Obligation or Obligations in lieu of which such replacement Obligation is delivered. Section 3.10: Cancellation. All Obligations paid in accordance with this Ordinance, and all Obligations in lieu of which exchange Obligations or replacement Obligations are authenticated and delivered in accordance herewith, shall be canceled and destroyed upon the making of proper records regarding such payment. The Paying Agent/Registrar shall periodically furnish the City with certificates of destruction of such Obligations. ARTICLE IV FORM OF OBLIGATIONS The Obligations, including the Form of Comptroller's Registration Certificate, Form of Paying AgentJRegistrar's Authentication Certificate, and Form of Assignment, shall be in substantially the form of Exhibit B hereto, with such omissions, insertions and variations as may be necessary or desirable, and not prohibited by this Ordinance. ARTICLE V SECURITY FOR THE OBLIGATIONS Section 5.1: Pledge and Levy of Taxes. (a) To provide for the payment of principal of and interest on the Obligations, there is hereby levied, within the limits prescribed by law, for the current year and each succeeding year thereafter, while the Obligations or any part of the principal thereof and the interest thereon remain outstanding and unpaid, an ad valorem tax upon all taxable property within the City 9 HOU:2516661.4 sufficient to pay the interest on the Obligations and to create and provide a sinking fund of not less than 2% of the principal amount of the Obligations or not less than the principal payable out of such tax, whichever is greater, with full allowance being made for tax delinquencies and the costs of tax collection, and such taxes, when collected, shall be applied to the payment of principal of and interest on the Obligations by deposit to the Debt Service Fund and to no other purpose. (b) The City hereby declares its purpose and intent to provide and levy a tax legally sufficient to pay the principal of and interest on the Obligations, it having been determined that the existing and available taxing authority of the City for such purpose is adequate to permit a legally sufficient tax. As long as any Obligations remain outstanding, all moneys on deposit in, or credited to, the Debt Service Fund shall be secured by a pledge of security, as provided by law for cities in the State of Texas. Section 5.2: Debt Service Fund. (a) The Public Property Finance Contractual Obligations, Series 2006 Debt Service Fund (the "Debt Service Fund") is hereby created as a special fund solely for the benefit of the Obligations. The City shall establish and maintain such fund at an official City depository and shall keep such fund separate and apart from all other funds and accounts ofthe City. Any amount on deposit in the Debt Service Fund shall be maintained by the City in trust for the Registered Owners of the Obligations. Such amount, plus any other amounts deposited by the City into such fund and any and all investment earnings on amounts on deposit in such fund, shall be used only to pay the principal of, premium, if any, and interest on the Obligations. (b) The City agrees that, so long as the Purchaser is the Registered Owner of the Obligations, principal and interest payments due on the Obligations shall be deducted automatically on each Interest Payment Date from the Debt Service Fund held in a checking account of the City held by the Purchaser or another financial institution (the "Checking Account"). All payments pursuant to this paragraph shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. The Purchaser shall debit the Checking Account on each Interest Payment (or such later date in accordance with Section 9.3 hereof) in the amount of all interest and principal, if any, due on such date. The City shall maintain sufficient funds in the Checking Account on such dates. If there shall be insufficient funds in the Checking Account on any such date, the Purchaser may, without limiting any other remedies it may have under this Ordinance, reverse the debit. Section 5.3: Construction Fund. The Public Property Finance Contractual Obligations, Series 2006 Construction Fund (the "Construction Fund") is hereby created as a special fund of the City. Money on deposit in the Construction Fund shall be used only for the purposes set forth in Section 3.1 of this Ordinance. Money on deposit in the Construction Fund may, at the option of. the City, be invested as permitted by Texas law, provided that all such deposits and investments shall be made in such manner that the money required to be expended from the Construction Fund will be available at the proper time or times. Section 5.4: Further Proceedings. After the Obligations to be initially issued have been executed, it shall be the duty of the Mayor to deliver the Obligations to be initially issued and all 10 HOU:2516661.4 pertinent records and proceedings to the Attorney General for examination and approval. After the Obligations to be initially issued shall have been approved by the Attorney General, they shall be delivered to the Comptroller for registration. Upon registration of the Obligations to be initially issued, the Comptroller (or a deputy lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's registration certificate prescribed herein to be affixed or attached to the Obligations to be initially issued, and the seal of said Comptroller shall be impressed, or placed in facsimile, thereon. ARTICLE VI CONCERNING THE PAYING AGENT/REGISTRAR Section 6.1: Acceptance. Wachovia Bank, National Association, Austin, Texas, is hereby appointed as the initial Paying AgentlRegistrar for the Obligations pursuant to the terms and provisions of the Paying AgentlRegistrar Agreement by and between the City and the Paying AgentlRegistrar. The Paying AgentlRegistrar Agreement shall be substantially in the form attached hereto as Exhibit C, the terms and provisions of which are hereby approved, and the Mayor is hereby authorized to execute and deliver such Paying AgentlRegistrar Agreement on behalf of the City in multiple counterparts and the City Secretary is hereby authorized to attest thereto and affix the City's seal. Such initial Paying AgentlRegistrar and any successor Paying AgentlRegistrar, by undertaking the performance of the duties of the Paying AgentlRegistrar hereunder, and in consideration of the payment of any fees pursuant to the terms of any contract between the Paying AgentlRegistrar and the City and/or the deposits of money pursuant to this Ordinance, shall be deemed to accept and agree to abide by the terms of this Ordinance. Section 6.2: Trust Funds. All money transferred to the Paying AgentlRegistrar in its capacity as Paying AgentlRegistrar for the Obligations under this Ordinance (except any sums representing Paying AgentlRegistrar's fees) shall be held in trust for the benefit of the City, shall be the property of the City and shall be disbursed in accordance with this Ordinance. Section 6.3: Obligations Presented. Subject to the provisions of Section 6.4, all matured Obligations presented to the Paying AgentlRegistrar for payment shall be paid without the necessity of further instructions from the City. Such Obligations shall be canceled as provided herein. Section 6.4: Unclaimed Funds Held by the Paying AgentlRegistrar. Funds held by the Paying AgentlRegistrar that represent principal of and interest on the Obligations remaining unclaimed by the Registered Owner thereof after the expiration of three years from the date such funds have become due and payable (a) shall be reported and disposed of by the Paying AgentlRegistrar in accordance with the provisions of Title 6 of the Texas Property Code, as amended, to the extent such provisions are applicable to such funds, or (b) to the extent such provisions do not apply to the funds, such funds shall be paid by the Paying AgentlRegistrar to the City upon receipt by the Paying AgentlRegistrar of a written request therefor from the City. The Paying AgentlRegistrar shall have no liability to the Registered Owners of the Obligations by virtue of actions taken in compliance with this Section. 11 HOU:2516661.4 Section 6.5: Paying Agent/Registrar Mav Own Obligations. The Paying Agent/Registrar in its individual or any other capacity, may become the owner or pledgee of Obligations with the same rights it would have if it were not the Paying Agent/Registrar. Section 6.6: Successor Paving Agents/Registrars. The City covenants that at all times while any Obligations are Outstanding it will provide a legally qualified bank, trust company, financial institution or other agency to act as Paying Agent/Registrar for the Obligations. The City reserves the right to change the Paying Agent/Registrar for the Obligations on not less than sixty (60) days' written notice to the Paying Agent/Registrar, as long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Obligations. Promptly upon the appointment of any successor Paying Agent/Registrar, the previous Paying Agent/Registrar shall deliver the Register or a copy thereof to the new Paying AgentlRegistrar, and the new Paying AgentlRegistrar shall notify each Registered Owner, by United States mail, first class, postage prepaid, of such change and of the address of the new Paying AgentlRegistrar. Each Paying AgentlRegistrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Ordinance. ARTICLE VII PROVISIONS CONCERNING SALE AND APPLICATION OF PROCEEDS OF OBLIGATIONS Section 7.1: Sale of Obligations. The sale of the Certificates to the Purchaser at a price of the par value thereof is hereby approved, and delivery of the Obligations to the Purchaser shall be made upon payment therefor in accordance with the terms of the Investor Letter attached hereto as Exhibit D, which price and terms are hereby found and determined to be the most advantageous reasonably obtainable by the City. The Mayor, Mayor Pro- Tem and all other officials, agents and representatives of the City are hereby authorized to do any and all things necessary or desirable to provide for the issuance and delivery of the Obligations. Section 7.2: Approval. Registration and Delivery. The Mayor is hereby authorized to have control and custody of the Obligations and all necessary records and proceedings pertaining thereto pending their delivery, and the Mayor and other officers and employees of the City are hereby authorized and directed to make such certifications and to execute such instruments as may be necessary to accomplish the delivery of the Obligations and to assure the investigation, examination and approval thereof by the Attorney General and the registration of the initial Obligations by the Comptroller. Upon registration of the Obligations, the Comptroller (or the Comptroller's certificates clerk or an assistant certificates clerk lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificates prescribed herein to be attached or affixed to each Obligation initially delivered and the seal of the Comptroller shall be impressed or printed or lithographed thereon. Section 7.3: Application of Proceeds of Obligations; Appropriation. Proceeds from the sale of the Obligations shall, promptly upon receipt by the City, be applied as follows: 12 HOU:2516661.4 (1) A portion of the proceeds shall be applied to pay expenses arising in connection with the issuance of the Obligations; and (2) The remaining proceeds shall be deposited into the Construction Fund created in Section 5.3 of this Ordinance and used for the purposes described in Section 3.I(a) hereof. Section 7.4: Tax Exemption. The City intends that the interest on the Obligations shall be excludable from gross income of the owners thereof for federal income tax purposes pursuant to Sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as amended, (the "Code") and all applicable temporary, proposed and final regulations (the "Regulations") and procedures promulgated thereunder and applicable to the Obligations. For this purpose, the City covenants that it will monitor and control the receipt, investment, expenditure and use of all gross proceeds of the Obligations (including all property the acquisition, construction or improvement of which is to be financed directly or indirectly with the proceeds of the Obligations) and take or omit to take such other and further actions as may be required by Sections 103 and 141 through 150 of the Code and the Regulations to cause interest on the Obligations to be and remain excludable from the gross income, as defined in Section 61 of the Code, of the owners of the Obligations for federal income tax purposes. Without limiting the generality of the foregoing, the City shall comply with each of the following covenants: ( a) The City will use all of the proceeds of the Obligations (1) to provide funds for the purposes set forth in Section 3.1 of this Ordinance, which property will be owned and operated by the City, and (ii) to pay the costs of issuing the Obligations. The City will not use any portion of the proceeds of the Obligations to pay the principal of or interest or redemption premium on any other obligation of the City or a related person. (b) The City will not directly or indirectly take any action or omit to take any action, which action or omission would cause the Obligations to constitute "private activity bonds" within the meaning of Section 141 (a) of the Code. (c) Principal of and interest on the Obligations will be paid solely from ad valorem taxes collected by the City, investment earnings on such collections, and as available, proceeds of the Obligations. (d) Based upon all facts and estimates now known or reasonably expected to be in existence on the date the Obligations are delivered, the City reasonably expects that the proceeds of the Obligations will not be used in a manner that would cause the Obligations or any portion thereof to be an "arbitrage bond" within the meaning of Section 148 of the Code; (e) At all times while the Obligations are outstanding, the City will identify and properly account for all amounts constituting gross proceeds of the Obligations in accordance with the Regulations. The City will monitor the yield on the investments of the proceeds of the Obligations and, to the extent required by the Code and the Regulations, will restrict the yield on such investments to a yield which is not materially higher than the yield on the Obligations. To the extent 13 HOU:2516661.4 necessary to prevent the Obligations from constituting "arbitrage bonds," the City will make such payments as are necessary to cause the yield on all yield-restricted nonpurpose investments allocable to the Obligations to be less than the yield that is materially higher than the yield on the Obligations. (f) The City will not take any action or knowingly omit to take any action which, if taken or omitted, would cause the Obligations to be treated as "federally guaranteed" obligations for purposes of Section 149(b) of the Code; (g) The City represents that not more than fifty percent (50%) of the proceeds of the Obligations will be invested in nonpurpose investments (as defined in Section 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more within the meaning of Section 149(g)(3)(A)(ii) of the Code, and the City reasonably expects that at least eighty-five percent (85%) of the spendable proceeds of the Obligations will be used to carry out the governmental purpose of the Obligations within the three-year period beginning on the respective dates of issue of the Obligations. (h) The City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the gross proceeds of the Obligations, if any, be rebated to the federal government. Specifically, the City will (i) maintain records regarding the receipt, investment, and expenditure of the gross proceeds of the Obligations as may be required to calculate such excess arbitrage profits separately from records of amounts on deposit in the funds and accounts of the City allocable to other obligations of the City or moneys which do not represent gross proceeds of any obligations of the City and retain such records for at least six years after the day on which the last outstanding Obligation is discharged, (ii) account for all gross proceeds under a reasonable, consistently applied method of accounting, not employed as an artifice or device to avoid in whole or in part, the requirements of Section 148 of the Code, including any specified method of accounting required by applicable Regulations to be used for all or a portion of any gross proceeds, (iii) calculate, at such times as are required by applicable Regulations, the amount of excess arbitrage profits, if any, earned from the investment of the gross proceeds of the Obligations and (iv) timely pay, as required by applicable Regulations, all amounts required to be rebated to the federal government. In addition, the City will exercise reasonable diligence to assure that no errors are made in the calculations required by the preceding sentence and, if such an error is made, to discover and promptly correct such error within a reasonable amount of time thereafter, including payment to the federal government of any delinquent amounts owed to it, interest thereon and any penalty . (i) The City will not directly or indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Obligations that might result in a reduction in the amount required to be paid to the federal government because such 14 HOU:2516661.4 arrangement results in smaller profit or a larger loss than would have resulted if such arrangement had been at arm's length and had the yield on the Obligations not been relevant to either party. G) The City will timely file or cause to be filed with the Secretary of the Treasury of the United States the information required by Section 149( e) of the Code with respect to the Obligations on such form and in such place as the Secretary may prescribe. (k) The City will not issue or use the Obligations as part of an "abusive arbitrage device" (as defined in Section 1.148-10(a) of the Regulations). Without limiting the foregoing, the Obligations are not and will not be a part of a transaction or series of transactions that attempts to circumvent the provisions of Section 148 of the Code and the Regulations by (i) enabling the City to exploit the difference between tax-exempt and taxable interest rates to gain a material financial advantage, or (ii) increasing the burden on the market for tax-exempt obligations. (1) Proper officers of the City charged with the responsibility for issuing the Obligations are hereby directed to make, execute and deliver certifications as to facts, estimates or circumstances in existence as of the Issue Date and stating whether there are facts, estimates or circumstances that would materially change the City's expectations. On or after the Issue Date, the City will take such actions as are necessary and appropriate to assure the continuous accuracy of the representations contained in such certificates. (m) The covenants and representations made or required by this Section are for the benefit of the holders of the Obligations and any subsequent holder of the Obligations, and may be relied upon by the holder of the Obligations and any subsequent holder of the Obligations and bond counsel to the City. In complying with the foregoing covenants, the City may rely upon an unqualified opinion issued to the City by nationally recognized bond counsel that any action by the City or reliance upon any interpretation of the Code or Regulations contained in such opinion will not cause interest on the Obligations to be includable in gross income for federal income tax purposes under existing law. Notwithstanding any other provision of this Ordinance, the City's representations and obligations under the covenants and provisions of this Section 7.4 shall survive the defeasance and discharge of the Obligations for as long as such matters are relevant to the exclusion of interest on the Obligations from the gross income of the owners thereof for federal income tax purposes. Section 7.5: Qualified Tax-Exempt Obligations. The City hereby designates the Obligations as "qualified tax-exempt obligations" as defined in Section 265(b )(3) of the Code. With respect to such designation, the City represents the following: (a) that during the calendar year 2006, the City (including all entities which issue obligations on behalf of the City), has not designated nor will designate obligations, which when aggregated with the Obligations will 15 HOU:2516661.4 result in more than $10,000,000 of "qualified tax-exempt obligations" being issued and (b) that the City has examined its fmancing needs for the calendar year 2006 and reasonably anticipates that the amount of bonds, leases, loans or other obligations, together with the Obligations and any other tax-exempt obligations heretofore issued by the City (plus those of all entities which issue obligations on behalf of the City) during the calendar year 2006, when the higher of the face amount or the issue price of each such tax-exempt obligation issued for the calendar year 2006 by the City is taken into account, will not exceed $10,000,000. Section 7.6: Related Matters. In order that the City shall satisfy in a timely manner all of its obligations under this Ordinance, the Mayor, City Secretary and all other appropriate officers, agents, representatives and employees of the City are hereby authorized and directed to take all other actions that are reasonably necessary to provide for the issuance and delivery of the Obligations, including, without limitation, executing and delivering on behalf of the City all certificates, consents, receipts, requests, notices, and other documents as may be reasonably necessary to satisfy the City's obligations under this Ordinance and to direct the transfer and application of funds of the City consistent with the provisions of this Ordinance. ARTICLE VIII COVENANTS Section 8.1: Financial Reporting. The City shall provide annual audited financial statements of the City to the Purchaser within 180 days of the close of each Fiscal Year. Section 8.2: Determination of Taxability. (a) Upon (i) receipt of written notice from the Internal Revenue Service which, in the opinion of bond counsel to the City, has the effect of rendering interest on the Obligations includible in the gross income of the holders thereof, or (ii) receipt by the Purchaser of a written opinion of bond counsel selected by the Purchaser and approved by the City (which approval shall not be unreasonably withheld) to the effect that interest on the Obligations is includible in the gross income of the holders thereof, the City shall pay interest (including interest for prior years from the date of determination of taxability, if applicable) to the holders of the Obligations at a rate per annum determined in accordance with Section 3.3(b) hereof; provided, however, that payment of interest on the Obligations pursuant to Section 3.3(b) shall be required only to the extent and during the period of time that interest on an Obligation is determined to includible in the gross income of the holder thereof. (b) To the extent that the City is required to pay interest at an increased rate pursuant to subsection (a) of this Section 8.2 (and in the absence of other available funds on hand to pay such interest), the amount of such increase in interest shall be due (i) on the first Interest Payment Date which (A) occurs during the first Fiscal Year in which the City is able to include an amount in its annual ad valorem debt service tax rate to provide for payment of such increased interest and (B) next follows the last date on which a taxpayer may pay such ad valorem tax without 16 HOU:2516661.4 incurring a penalty for late payment thereof, and (ii) on each succeeding Interest Payment Date thereafter, so long as the City is required to pay such increased interest. (c) Upon the occurrence of an event that results in the City being required to pay interest pursuant to subsection (a) of this Section 8.2, on any date following such event the Obligations shall be subject to redemption, in whole or in part, at the option of the City at a redemption price of the par value thereof plus accrued interest (including any interest owed pursuant to Section 3.3(b) hereof) to the date of redemption. ARTICLE IX MISCELLANEOUS Section 9.1 : Defeasance. The City may defease the provisions of this Ordinance and discharge its obligations to the Registered Owners of any or all of the Obligations to pay the principal of and interest thereon in any manner now or hereafter permitted by law, including by depositing with the Paying Agent/Registrar or with the Comptroller either: (a) cash in an amount equal to the principal amount of such Obligations plus interest thereon to the date of maturity; or (b) pursuant to an escrow or trust agreement, cash and/or (i) direct noncallable obligations of United States of America, including obligations that are unconditionally guaranteed by the United States of America; (ii) noncallable obligations of an agency or instrumentality of the United States, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the issuer adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent; or (iii) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the issuer adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, which, in the case of (i), (ii) or (iii), may be in book-entry form, and the principal of and interest on which will, when due or redeemable at the option of the holder, without further investment or reinvestment of either the principal amount thereof or the interest earnings thereon, provide money in an amount which, together with other moneys, if any, held in such escrow at the same time and available for such purpose, shall be sufficient to provide for the timely payment of the principal of and interest thereon to the date of maturity. Upon such deposit, such Obligations shall no longer be regarded to be Outstanding or unpaid. Any surplus amounts not required to accomplish such defeasance shall be returned to the City. Section 9.2: Ordinance a Contract - Amendments. This Ordinance shall constitute a contract with the Registered Owners from time to time, be binding on the City, and shall not be amended or repealed by the City so long as any Obligation remains Outstanding except as permitted in this Section. The City may, without the consent of or notice to any Registered 17 HOU:25 16661.4 Owners, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Registered Owners, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may, with the consent of Registered Owners who own in the aggregate 51 % of the principal amount of the Obligation then Outstanding, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Registered Owners of Outstanding Obligations, no such amendment, addition, or rescission shall (i) extend the time or times of payment of the principal of and interest on the Obligations, reduce the principal amount thereof, or the rate of interest thereon, or in any other way modify the terms of payment of the principal of or interest on the Obligations, (ii) give any preference to any Obligation over any other Obligation, or (iii) reduce the aggregate principal amount of Obligations required to be held by Registered Owners for consent to any such amendment, addition, or rescission. Section 9.3: Legal Holidays. In any case where the date interest accrues and becomes payable on the Obligations or principal of the Obligations matures or a Record Date shall be in the City a Saturday, Sunday, legal holiday or a day on which banking institutions are authorized by law to close, then payment of interest or principal need not be made on such date, or the Record Date shall not occur on such date, but payment may be made or the Record Date shall occur on the next succeeding day which is not in the City a Saturday, Sunday, legal holiday or a day on which banking institutions are authorized by law to close with the same force and effect as if (i) made on the date of maturity and no interest shall accrue for the period from the date of maturity to the date of actual payment or (ii) the Record Date had occurred on the fifteenth day of that calendar month. Section 9.4: No Recourse Against City Officials. No recourse shall be had for the payment of principal of or interest on any Obligations or for any claim based thereon or on this Ordinance against any official of the City or any person executing any Obligations. Section 9.5: Further Proceedings. The Mayor, City Secretary and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary and/or convenient to carry out the terms of this Ordinance. Section 9.6: Power to Revise Form of Documents. Notwithstanding any other provision of this Ordinance, the Mayor is hereby authorized to make or approve such revisions, additions, deletions, and variations to this Ordinance and in the form of the documents attached hereto as exhibits as, in the judgment of the Mayor, and in the opinion of Obligation Counsel to the City, may be necessary or convenient to carry out or assist in carrying out the purposes of this Ordinance, or as may be required for approval of the Obligations by the Attorney General of Texas; provided, however, that any changes to such documents resulting in substantive amendments to the terms and conditions of the Obligations or such documents shall be subject to the prior approval of the City Council. Section 9.7: Severability. If any Section, paragraph, clause or proVISIon of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. 18 HOU:2516661.4 Section 9.8: Open Meeting. It is hereby found, determined and declared that a sufficient written notice of the date, hour, place and subject of the meeting of the City Council at which this Ordinance was adopted was posted at a place convenient and readily accessible at all times to the general public at City Hall for the time required by law preceding this meeting, as required by the Open Meetings Law, Chapter 551, Texas Government Code, and that this meeting has been open to the public as required by law at all times during which this Ordinance and the subject matter thereof has been discussed, considered and formally acted upon. The City Council further ratifies, approves and confirms such written notice and the contents and posting thereof. Section 9.9: Repealer. All orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. Section 9.10: Effective Date. This Ordinance shall be in force and effect from and after its passage on the date shown below. [Remainder of this page intentionally left blank) 19 HOU:2516661.4 PASSED AND ADOPTED this December 12,2005. ATTEST l ~~!;; cllrffiJ (SEAL) Exhibits: Exhibit A - Description of Property Exhibit B - Form of Obligation Exhibit C - Paying Agent/Registrar Agreement Exhibit D - Investor Letter HOU:25 16661.3 CITY OF LA PORTE, TEXAS ~y~ Mayor S-1 EXHIBIT A DESCRIPTION OF PROPERTY Automatic meter reading equipment and related components. A-I HOU:2516661.4 EXHIBIT B FORM OF OBLIGATION UNITED STATES OF AMERICA STATE OF TEXAS CITY OF LA PORTE, TEXAS, PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATION, SERIES 2006 NUMBER 1R_ REGISTERED DENOMINATION $ REGISTERED INTEREST RATE: DATED DATE: ISSUANCE DATE: MATURITY DATE: 3.74% January 1,2006 January 25,2006 January 25,2016 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS THE CITY OF LA PORTE, TEXAS, a municipal corporation of the State of Texas (the "City"), for value received, hereby promises to pay to the Registered Owner identified above or its registered assigns, on the Maturity Date specified above upon presentation and surrender of this Obligation at the principal corporate trust office of Wachovia Bank, National Association, Austin, Texas, or its successor (the "Paying AgentlRegistrar"), the principal amount identified above payable in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due to the United States of America, and to pay interest thereon at the rate shown above (as may be adjusted pursuant to the terms of the Ordinance), calculated on a basis of a 360-day year composed of twelve 30-day months, from the later of the Issue Date identified above or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Obligation is payable on July 25, 2006, and each January 25 and July 25 thereafter until maturity or earlier redemption of this Obligation, by check sent by United States mail, first class, postage prepaid, by the Paying AgentlRegistrar to the Registered Owner of record as of the close of business on the tenth day of the month next preceding the applicable interest payment date, as shown on the registration books kept by the Paying AgentlRegistrar. Any accrued interest payable at maturity shall be paid upon presentation and surrender of this Obligation at the office of the Paying AgentlRegistrar . I Initial Obligation shall be numbered T -1. B-1 HOU:25 16661.4 THIS OBLIGATION IS ONE OF A DULY AUTHORIZED SERIES OF OBLIGATIONS (the "Obligations") in the aggregate principal amount of $2,625,000 issued pursuant to an ordinance adopted by the City Council of the City on December 12, 2005 (the "Ordinance") for the purpose of paying (a) all or a portion of the City's contractual obligations to be incurred in connection with the use, purchase or other acquisition of personal property, under and pursuant to the authority of Chapter 271, Subchapter A, Texas Local Government Code, as amended, and the City's Home Rule Charter. Proceeds of the Obligations will also be used to pay costs of issuance of the Obligations and other professional services related thereto. 2REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS OBLIGATION SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT THIS PLACE. 3THIS OBLIGATION shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Obligation is authenticated by the Paying Agent/Registrar by due execution of the authentication certificate endorsed hereon. IN WITNESS WHEREOF, the City has caused its corporate seal to be impressed or placed in facsimile hereon and this Obligation to be signed by the Mayor and countersigned by the City Secretary by their manual, lithographed or printed facsimile signatures. CITY OF LA PORTE, TEXAS ~~~~ ~~-e~ Mayor (SEAL) COUNTERSIGNED: ~r;" ;1M City Secretary * * * [REVERSE OF OBLIGATION] THE CITY RESERVES THE RIGHT, at its option, to redeem, prior to their maturity, Obligations, in whole or in part, on any date at a price of par plus accrued interest to the date 2 This paragraph shall be omitted from the initial Obligation and any other Obligation for which text does not appear on the back of a printed bond. 3 In the initial Obligation, this paragraph shall read as follows: "THIS OBLIGA nON shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Obligations is registered by the Comptroller of Public Accounts of the State of Texas by due execution of the registration certificate endorsed hereon." B-2 HOU:2516661.4 fixed for redemption, plus a Breakage Fee, if any, as defined and determined in accordance with the Ordinance. THE OBLIGATIONS ARE subject to mandatory sinking fund redemption in the following amounts (subject to reduction as hereinafter provided), on the following dates, in each case at a redemption price equal to the principal amount of the Obligations or the portions thereof so called for redemption plus accrued interest to the date fixed for redemption: Mandatory Redemotion Dates January 25, 2007 January 25, 2008 January 25, 2009 January 25,2010 January 25,2011 January 25,2012 January 25,2013 January 25, 2014 January 25, 2015 January 25,2016 Princioal Amounts $262,500 262,500 262,500 262,500 262,500 262,500 262,500 262,500 262,500 262,500 THE PARTICULAR OBLIGATIONS to be redeemed shall be selected by the Registrar by lot or other customary random selection method, on or before December 10 of each year immediately preceding a mandatory redemption date. The principal amount of Obligations to be mandatorily redeemed in each year shall be reduced by the principal amount of such Obligations that have been optionally redeemed pursuant to subparagraph (a) above on or before December 10 of such year and which have not been made the basis for a previous reduction. OBLIGATIONS MAY BE REDEEMED only in such amounts as will result in the unredeemed balance of Obligations being outstanding in Authorized Denominations. Upon presentation and surrender of any Obligation for redemption in part, the Paying AgentlRegistrar, in accordance with the provisions of this Ordinance, shall authenticate and deliver in exchange therefor an Obligation or Obligations of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Obligation so surrendered. NOTICE OF ANY SUCH REDEMPTION, identifying the Obligations or portions thereof to be redeemed, shall be sent by United States mail, first class, postage prepaid, to the Registered Owners thereof at their addresses as shown on the books of registration kept by the Paying AgentlRegistrar, not less than thirty (30) days before the date fixed for such redemption; provided, however, that so long as Wachovia Bank, National Association, is the Paying Agent/Registrar and the sole Registered Owner of the Obligations, no such notice shall be required. By the date fixed for redemption, due provision shall be made with the Paying Agent/Registrar for the payment of the redemption price of the Obligations called for redemption. If such notice of redemption is given, and if due provision for such payment is made, all as provided above, the Obligations which are to be so redeemed thereby automatically shall be redeemed prior to their scheduled maturities, they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the purpose of being paid with the funds so provided for such payment. HOU:2516661.4 B-3 THIS OBLIGATION IS TRANSFERABLE only upon presentation and surrender at the principal corporate trust office of the Paying Agent/Registrar, accompanied by an assignment du1y executed by the Registered Owner or its authorized representative, subject to the terms and conditions of the Ordinance. THIS OBLIGATION IS EXCHANGEABLE at the principal corporate trust office of the Paying Agent/Registrar for a Obligation or Obligations of the same maturity and interest rate and in the principal amount of $100,000 or any integral mu1tiple of $5,000 in excess thereof, subject to the terms and conditions of the Ordinance. THE CITY OR PAYING AGENT/REGISTRAR may require the Registered Owner of any Obligation to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of a Obligation. Any fee or charge of the Paying Agent/Registrar for a transfer or exchange shall be paid by the City. THE REGISTERED OWNER of this Obligation by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. IT IS HEREBY DECLARED AND REPRESENTED that this Obligation has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, exist and to be done precedent to or in the issuance and delivery of this Obligation have been performed, exist and have been done in accordance with law; that the Obligations do not exceed any constitutional or statutory limitation; and that annual ad valorem taxes sufficient to provide for the payment of the interest on and principal of this Obligation, as such interest comes due and such principal matures, have been levied and ordered to be levied, within the limits prescribed by law, against all taxable property in the City and have been irrevocably pledged for such payment. REFERENCE IS HEREBY MADE TO THE ORDINANCE, a copy of which is filed with the Paying Agent/Registrar, for the full provisions thereof, to all of which the Registered Owners of the Obligations assent by acceptance of the Obligations. B-4 HOU:2516661.4 * * * FORM OF COMPTROLLER'S REGISTRATION CERTIFICATE The following form of Comptroller's Registration Certificate shall be attached or affixed to each of the Obligations initially delivered: OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS THE STATE OF TEXAS ~ ~ ~ REGISTER NO. I hereby certify that this bond has been examined, certified as to validity and approved by the Attorney General of the State 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 OF OFFICE this (SEAL) Comptroller of Public Accounts of the State of Texas * * * FORM OF PAYING AGENTIREGISTRAR'S AUTHENTICATION CERTIFICATE The following form of authentication certificate shall be printed on the face of each of the Obligations: AUTHENTICATION CERTIFICATE This Obligation is one of the Obligations described in and delivered pursuant to the within mentioned Ordinance; and, except for the Obligations initially delivered, this Obligation has been issued in exchange for or replacement of a Obligation, Obligations, or a portion of a Obligation or Obligations 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. Wachovia Bank, Austin, Texas as Paying AgentlRegistrar By Authorized Signature Date of Authentication: B-5 HOU:2516661.4 * * * FORM OF ASSIGNMENT The following form of assignment shall be printed on the back of each of the Obligations: ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer such bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. Registered Owner NOTICE: The signature above must correspond to the name of the Registered Owner as shown on the face of this bond in every particular, without any alteration, enlargement or change whatsoever. * * * B-6 HOU:2516661.4 EXHIBIT C PAYING AGENTIREGISTRAR AGREEMENT HOU:2516661.4 PASSED AND ADOPTED this December 12,2005. ATTEST (SEAL) Exhibits: Exhibit A - Description of Property Exhibit B - Form of Obligation Exhibit C - Paying Agent/Registrar Agreement Exhibit D - Investor Letter HOU :2516661.3 CITY OF LA PORTE, TEXAS ~L~ Mayor S-l PAYING AGENTIREGISTRAR AGREEMENT THIS PAYING AGENT/REGISTRAR AGREEMENT dated as of January 1, 2006 (together with any amendments or supplements hereto, the "Agreement") is entered into by and between the CITY OF LA PORTE, TEXAS (the "City"), and WACHOVIA BANK, NATIONAL ASSOCIATION, AUSTIN, TEXAS, as paying agent/registrar (together with any successor in such capacity, the "Bank"). WITNESSETH: WHEREAS, the City has duly authorized and provided for the issuance of its City of La Porte, Texas, Public Property Finance Contractual Obligations, Series 2006 (the "Obligations") to be issued as fully registered obligations. WHEREAS, all things necessary to make the Obligations the valid obligations of the City, in accordance with their terms, will be done upon the issuance and delivery thereof; WHEREAS, the City and the Bank wish to provide the terms under which the Bank will act as Paying Agent to pay the principal of, redemption premium, if any, and interest on the Obligations, in accordance with the terms thereof, and under which the Bank will act as Registrar for the Obligations; and WHEREAS, the City and the Bank have duly authorized the execution and delivery of this Agreement; and all things necessary to make this Agreement the valid agreement of the parties, in accordance with its terms, have been done. NOW, THEREFORE, it is mutually agreed as follows: ARTICLE I. APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.1. Appointment. The City hereby appoints the Bank to act as Paying Agent with respect to the Obligations, to pay to the Registered Owners of the Obligations, in accordance with the terms and provisions of this Agreement and the Ordinance, the principal of, redemption premium, if any, and interest on all or any of the Obligations. The City hereby appoints the Bank as Registrar with respect to the Obligations. The Bank hereby accepts its appointment, and agrees to act as Paying Agent and Registrar with respect to the Obligations. HOU:2S19047.2 Section 1.2. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the City hereby agrees to pay the Bank the fees set forth in the Bank's fee schedule attached as Exhibit A hereto. The Bank reserves the right to amend the fee schedule at any time, provided the Bank shall have furnished the City with a written copy of such amended fee schedule at least 75 days prior to the date that the new fees are to become effective. ARTICLE II. DEFINITIONS Section 2.1. DefInitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Bank" means Wachovia Bank, National Association, Austin, Texas, a commercial bank duly organized and existing under the laws of the United States of America. "Obligation" or "Obligations" means anyone or all of the "City of La Porte, Texas, Public Property Finance Contractual Obligations, Series 2006" authorized by the Ordinance. "City" means the City of La Porte, Texas, and, where appropriate, its City Council. "Ordinance" means the ordinance adopted by the City Council of the City authorizing the issuance of the Obligations. "Paying Agent" means Wachovia Bank, National Association, Austin, Texas. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government or any entity whatsoever. "Registrar" means the Bank when it is performing the function of registrar. "Registered Owner" means the Person in whose name any Obligation is registered in the books of registration maintained by the Bank under this Agreement. All other capitalized terms shall have the meanings assigned to them in the Ordinance. ARTICLE III. DUTIES OF THE BANK Section 3.1. Initial Delivery of the Obligations. The Obligations will be initially registered and delivered by the Bank to the purchaser designated by the City as set forth in the Ordinance. If such purchaser delivers a written request 2 HOU:2519047.2 to the Bank not later than five business days prior to the date of initial delivery, the Bank will, on the date of initial delivery, exchange the Obligations initially delivered for Obligations of authorized denominations, registered in accordance with the instructions in such request and the Ordinance. Section 3.2. Duties of Paying Agent. As Paying Agent, the Bank shall, provided adequate funds have been provided to it for such purpose by or on behalf of the City, timely pay on behalf of the City the principal of and interest on each Obligation in accordance with the provisions of the Ordinance. If the issue is to be Depository Trust Company (DTC) eligible, the Paying Agent will comply with all eligibility requirements as outlined and agreed upon in the eligibility questionnaire. Section 3.3. Duties of Registrar. The Bank shall provide for the proper registration of the Obligations and the timely exchange, replacement and registration of transfer of the Obligations in accordance with the provisions of the Ordinance. Any changes to Registered Owners for such exchange, replacement and registration shall be made by the Bank only in accordance with the Ordinance. The Bank will maintain the books of registration in accordance with the Ordinance and the Bank's general practices and procedures in effect from time to time. Section 3.4. Unauthenticated Obligations. The City shall provide an adequate inventory of unauthenticated Obligations to facilitate transfers. The Bank covenants that it will maintain such unauthenticated Obligations in safekeeping and will use reasonable care in maintaining such Obligations in safekeeping, which shall be not less than the care it maintains for debt securities of other government entities or corporations for which it serves as registrar, or which it maintains for its own bonds. Section 3.5. Reports. Upon request of the City, the Bank will provide the City reports which will describe in reasonable detail all transactions pertaining to the Obligations and the books of registration for the period of time specified by the City. The City may also inspect and make copies of the information in the books of registration and such other documents related to the Obligations and in the Bank's possession 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. The Bank will not release or disclose the content of the books of registration to any person other than to, or at the written request of, an authorized officer or employee of the City, except upon receipt of a subpoena, court order or as otherwise required by law. Upon receipt of a subpoena, court order or other lawful request, the Bank will notify the City immediately so that the City may contest the subpoena, court order or other request if it so chooses. 3 HOU:25 19047.2 Section 3.6. Canceled Obligations. All Obligations surrendered for payment, redemption, transfer, exchange or replacement, if surrendered to the Bank, shall be promptly canceled by it and, if surrendered to the City, shall be delivered to the Bank and, if not already canceled, shall be promptly canceled by the Bank. The City may at any time deliver to the Bank for cancellation any Obligations previously authenticated and delivered which the City may have acquired in any manner whatsoever, and all Obligations so delivered shall be promptly canceled by the Bank. All canceled Obligations held by the Bank shall be destroyed and evidence of such destruction shall be furnished to the City. Section 3.7. 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 by the City. (b) The Bank shall not be liable to the City for actions taken under this Agreement as long as it acts in good faith and exercises due diligence, reasonableness and care, as prescribed by law, with regard to its duties hereunder. (c) This Agreement is not intended to require the Bank to expend its own funds for performance of any of its duties hereunder. (d) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys. Section 3.8. Money Held by Bank. Money held by the Bank hereunder shall be held in trust for the benefit of the Registered Owners of the Obligations. The Bank shall be under no obligation to pay interest on any money received by it hereunder. All money deposited with the Bank hereunder shall be secured in the manner and to the fullest extent required by law for the security of funds of the City. Any money deposited with the Bank for the payment of the principal of or interest on any Obligations and remaining unclaimed by the Registered Owner after the expiration of three years from the date such funds have become due and payable shall be reported and disposed of by the Bank in accordance with the provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. To the extent such provisions of the Property Code do not apply to the funds, such funds shall be paid by the Bank to the City upon receipt of a written request therefor from the City. The Bank shall have no liability to the Registered Owners of the Obligations by virtue of actions taken in compliance with the foregoing provision. 4 HOD :251904 7.2 ARTICLE IV. MISCELLANEOUS PROVISIONS Section 4.1. May Own Obligations. The Bank, in its individual or any other capacity, may become the owner or pledgee of Obligations with the same rights it would have if it were not the Paying Agent and Registrar for the Obligations. Section 4.2. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereof. Section 4.3. Assi~nment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 4.4. Notices. Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted hereby to be given or furnished to the City or the Bank shall be mailed or delivered to the City or the Bank, respectively, at the addresses shown herein, or such other address as may have been given by one party to the other by 15 days' written notice. Section 4.5. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 4.6. Successors and Assigns. All covenants and agreements herein by the City and the Bank shall bind their successors and assigns, whether so expressed or not. This Agreement shall not be assigned by the Bank without the prior written consent of the City. Section 4.7. Severability. If any provision of this Agreement shall be invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not in any way be affected or impaired. Section 4.8. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy or claim hereunder. 5 HOU:25 19047.2 Section 4.9. Ordinance Govern Conflicts. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent and Registrar and if any conflict exists between this Agreement and the Ordinance, the Ordinance shall govern. The Bank agrees to be bound by the terms of the Ordinance with respect to the Obligations. Section 4.10. Term and Termination. This Agreement shall be effective from and after its date and may be terminated for any reason by the City or the Bank at any time upon 60 days' written notice; provided, however, that no such termination shall be effective until a successor has been appointed and has accepted the duties of the Bank hereunder. In the event of early termination, regardless of circumstances, the Bank shall deliver to the City or its designee all funds, Obligations and all books and records pertaining to the Bank's role as Paying Agent and Registrar with respect to the Obligations, including, but not limited to, the books of registration. Section 4.11. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Section 4.12. Governing Law. This Agreement shall be construed in accordance with and shall be governed by the laws of the State of Texas. 6 HOU:2519047.2 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. ATTEST: (SEAL) HOU:2519047.2 CITY OF LA PORTE, TEXAS By: ~?~~ Alton E. Porter, Mayor ADDRESS: 604 West Fairmont Parkway La Porte, Texas 77571 W ACHOVIA BANK, NATIONAL ASSOCIA nON By: Title: ADDRESS: 98 San Jacinto Blvd., Suite 850 Austin, Texas 78701 Attn: Corporate Trust Department S-l EXHIBIT D INVESTOR LETTER HOD :2516661.4 GENERAL CERTIFICATE STATE OF TEXAS COUNTY OF HARRIS CITY OF LA PORTE ~ ~ ~ We, the undersigned officers of the City of La Porte, Texas (the "City"), do hereby make and execute this certificate for the benefit of the Attorney General of the State of Texas and all other persons interested in the CITY OF LA PORTE, TEXAS, PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS, SERIES 2006, dated as of January 1, 2006 (the "Obligations"), now in the process of issuance, as follows: (1) The City is a home rule municipality operating under its own charter, which has not been amended, repealed, changed or altered since the date of approval by the Attorney General of the State of Texas of the most recent obligations issued by or on behalf of the City. (2) From December 12, 2005, to the date hereof, the following individuals have been the duly elected and qualified Mayor and City Council of the City holding the offices opposite their names: Alton E. Porter Peter Griffiths Barry Beasley Mike Mosteit Chuck Engelken Howard Ebow Tommy Moser Louis Rigby Mike Clausen Mayor Council Member Council Member Council Member Council Member Council Member Council Member Council Member Council Member (3) From December 12,2005, to the date hereof, Martha Gillette has been the duly appointed and qualified City Secretary of the City. (4) Attached to this certificate as Exhibit A is a true, full and correct debt service schedule for all of the City's outstanding tax-supported debt, including the Obligations. The principal amount of the City's total outstanding tax-supported debt, including the Obligations, is $ (5) The currently effective ad valorem tax appraisal roll of the City (the "Tax Roll") is the Tax Roll prepared and approved during the calendar year 2005, being the most recently approved Tax Roll of the City; the taxable property in the City has been appraised, assessed and valued as required and provided by the Texas Constitution and Property Tax Code (collectively, "Texas law"); the Tax Roll for the year has been submitted to the City Council of the City as required by Texas law, and has been approved and recorded by the City Council; and according to the Tax Roll for the year, the net aggregate taxable value of taxable property in the City (after deducting the amount of all applicable exemptions required or authorized under Texas law), upon which the annual ad valorem tax of the City has been or will be imposed or levied, is $ [Signature Page Follows.] HOU:2525728.1 SIGNED AND SEALED this 12th day of December, 2005. CITY OF LA PORTE, TEXAS BY:~Y~ Alton E. Porter, Mayor ATTEST: ~ liml ll. j Martha illette, City Secretary (SEAL) [Signature Page] HOU:2525728.! EXHIBIT A DEBT SERVICE SCHEDULE FOR ALL OF THE CITY'S OUTSTANDING TAX-SUPPORTED DEBT HOU :2525728.1 SIGNED AND SEALED this 12th day of December, 2005. CITY OF LA PORTE, TEXAS By:~~7~ Alton E. Porter, Mayor ATTEST: 0Y1~ ~ Martha Gillette, ity Secretary (SEAL) [Signature Page] HOU:2525728.1 SIGNATURE IDENTIFICATION AND NO-LITIGATION CERTIFICATE THE STATE OF TEXAS COUNTY OF HARRIS CITY OF LA PORTE ~ ~ ~ We, the undersigned officers of the City of La Porte, Texas (the "City"), certify that we officially signed, by our manual or facsimile signatures, on behalf of the City, the following described obligations, to wit: CITY OF LA PORTE, TEXAS, PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS, SERIES 2006, dated January 1, 2006 (the "Obligations"). That the Obligations have been duly and officially executed by the undersigned with their manual or facsimile signatures in the same manner appearing hereon, and the undersigned hereby adopt and ratify their respective signatures in the manner appearing on each of the Obligations, whether in manual or facsimile form, as the case may be, as their own signatures. That on the date of such signing and on the date hereof, we were and are the duly chosen, qualified and acting officers authorized to execute the Obligations, and holding the official titles set forth below opposite such signatures. We further certify that no litigation is pending or, to our knowledge, threatened in any court to restrain or enjoin the issuance or delivery of the Obligations, or the levy, collection or application of the ad valorem taxes pledged or to be pledged to pay the principal of and interest on the Obligations, or the pledge thereof, or in any way contesting or affecting the validity of the Obligations, the ordinance dated December 12,2005, authorizing the issuance, sale and delivery of the Obligations (the "Ordinance"), or contesting the powers of the City or the authorization of the Obligations or the Ordinance. We further certify that the seal that has been impressed, or placed in facsimile, upon each of the Obligations is the legally adopted, proper and only official seal of the City, such official seal being impressed upon this certificate. We further certify that no petition or other request has been filed with or presented to any official of the City requesting that any of the proceedings authorizing the Obligations be submitted to a referendum or other election. We further certify that the information and data contained in the General Certificate dated December 12,2005, remain true and correct as of this date. t HOU :2525788.1 WITNESS OUR HANDS AND TIIE SEAL OF TIIE CITY this /J;i If Ik 6?d/'t{J , 2006. SIGNATURES TITLE OF OFFICE ~:-p~ Alton E. Porter, Mayor City of La Porte, Texas ,-111 f!jjjr[, ~14 Martha Gillette, City Secretary City of La Porte, Texas (CITY SEAL) Before me, on this day personally appeared the foregoing individuals, known to me to be the persons whose names were subscribed in my presence to the foregoing instrument. Given under my hand and seal of office this I WOftM Sf_lION __ CommIIIlon .... 0Ct0tler 21. 2GOt ~ JJJu,hl4J~) Otary Public Typed or Printed Name: jVOkJtJE 6AJ!J2.JSDJJ ,"' @ My Commission Expires: ()f!tMLvv JK) rtDCA (Notary Seal) ~. HOU:2525788.I CLOSING CERTIFICATE CITY OF LA PORTE, TEXAS PUBLIC PROPERTY FINANCE CONTRACTUAL OBLIGATIONS SERIES 2006 STATE OF TEXAS ~ COUNTY OF HARRIS ~ CITY OF LA PORTE ~ I, the undersigned, Mayor of the City of La Porte, Texas (the "Issuer"), acting solely in my official capacity, hereby certify as follows: 1. the representations and warranties of the Issuer contained in the ordinance (the "Ordinance") authorizing the issuance of the Issuer's Public Property Finance Contractual Obligations, Series 2006 (the "Obligations") are true and correct in all material respects on and as of this date as if made on this date; 2. no litigation or proceeding or tax challenge against the Issuer is pending or, to my knowledge, threatened in any court or administrative body nor is there a basis for litigation which would (a) contest the right of the council members or officials of the Issuer to hold and exercise their respective positions, (b) contest the due organization and valid existence of the Issuer, (c) contest the validity, due authorization and execution of the Obligations or the Ordinance or (d) attempt to limit, enjoin or otherwise restrict or prevent the Issuer from assessing, levying or collecting the taxes pledged or to be pledged to pay the principal of and interest on the Obligations, or the pledge thereof; 3. the Ordinance has been duly adopted by the Issuer, is in full force and effect and has not been modified, amended or repealed; and 4. there has not been any material adverse change in the financial condition of the Issuer since September 30, 2004, the latest date as of which audited financial information is available. [Signature page follows.) HOU:2525801.1 EXECUTED ON BEHALF OF THE ISSUER as of January 25, 2006. Ci~iv~ Name: Alton E. Porter Title: Mayor 2 HOU:2525801.1