ORD 1992-27 - Issuance of COH Waterworks and Sanitary Sewer Revenue Bonds 1992 04-28-1992ORDINANCE 92 -27
ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF HUNTSVILLE,
TEXAS, WATERWORKS AND SANITARY SEWER SYSTEM REVENUE
REFUNDING BONDS, SERIES 1992; AUTHORIZING THE REDEMPTION
PRIOR TO MATURITY OF CERTAIN OUTSTANDING BONDS;
AUTHORIZING THE ADVANCE REFUNDING OF CERTAIN OUTSTANDING
OBLIGATIONS AND THE EXECUTION AND DELIVERY OF AN ESCROW
AGREEMENT AND THE SUBSCRIPTION FOR AND PURCHASE OF
CERTAIN ESCROWED SECURITIES
THE STATE OF TEXAS §
COUNTY OF WALKER §
CITY OF HUNTSVILLE §
WHEREAS, the City has heretofore issued its Waterworks and
Sanitary Sewer System Revenue Bonds, Series 1983 (the "Prior
Bonds "); and
WHEREAS, the City desires to refund a portion of the Prior
Bonds (the "Refunded Bonds "), in advance of their maturities; and
WHEREAS, Article 717k, Vernon's Texas Civil Statutes, as
amended, authorizes the City to issue refunding bonds without an
election for the purpose of refunding the Refunded Bonds in advance
of their maturities, and to accomplish such refunding by depositing
directly with any paying agent for the Refunded Bonds the proceeds
of such refunding bonds, together with other available funds, in
an amount sufficient to provide for the payment or redemption of
the Refunded Bonds, and provides that such deposit shall constitute
the making of firm banking and financial arrangements for the
discharge and final payment or redemption of the Refunded Bonds;
and
WHEREAS, the City desires to authorize the execution of an
escrow agreement and provide for the deposit of proceeds of the
refunding bonds, together with other funds, to pay the Refunded
Bonds; and
WHEREAS, upon the issuance of the refunding bonds herein
authorized and the deposit of funds referred to above, the Refunded
Bonds shall no longer be regarded as being outstanding, except for
the purpose of being paid pursuant to such deposit, and the
pledges, liens, trusts and all other covenants, provisions, terms
and conditions of the ordinance authorizing the issuance of the
Refunded Bonds shall be, with respect to the Refunded Bonds,
discharged, terminated and defeased; Now, Therefore
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF HUNTSVILLE:
ARTICLE I
RECITALS; CONSIDERATION
Section 1.1: Recitals; Consideration. It is hereby found
and determined that the matters and facts set out in the preamble
to this Ordinance are true and correct.
It is hereby found and determined that the transactions
contemplated in this Ordinance result in a savings in the debt
service payable by the City and that such benefit is sufficient
consideration for the refunding of the Refunded Bonds.
ARTICLE II
DEFINITIONS AND INTERPRETATIONS
Section 2.1: Definitions. Throughout this Ordinance the
following terms and expressions as used herein shall have the
meanings set forth below:
"Act" shall mean Article 717k, Vernon's Texas Civil Statutes,
as amended.
"Additional Bonds" shall mean the additional parity revenue
bonds permitted to be issued by the City pursuant to Article VI of
this Ordinance.
"Bonds" or "Series 1992 Bonds" shall mean the City of
Huntsville, Texas, Waterworks and Sanitary Sewer System Revenue
Refunding Bonds, Series 1992, authorized by this Ordinance.
"Business Day" shall mean any day which is not a Saturday,
Sunday, or a day on which the Registrar is authorized by law or
executive order to close.
"City" shall mean the City of Huntsville, Texas, and where
appropriate, the City Council thereof and any successor to the City
as owner of the System.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Comptroller" shall mean the Comptroller of Public Accounts
of the State of Texas.
"Escrow Agent" shall mean First Interstate Bank of Texas,
N.A., Houston, Texas (formerly Allied Bank of Texas, Houston,
Texas).
"Escrow Agreement" shall mean the agreement between the City
and the Escrow Agent relating to the escrow of funds to pay the
Refunded Bonds.
"Insurer" shall mean Municipal Bond Investors Assurance
Corporation.
"Interest Payment Date ", when used in connection with any
Bond, shall mean October 1, 1992, and each April 1 and October 1
thereafter until maturity.
"Net Revenues" shall mean the gross revenues of the System
less the reasonable expense of operation and maintenance of the
System, including all salaries, labor, materials, repairs and
extensions necessary to render efficient service, provided,
however, that only such repairs and extensions, as in the judgment
of the City Council, reasonably and fairly exercised, are necessary
to keep the plant or utility in operation and render adequate
service to the City and the inhabitants thereof, or such as might
be necessary to meet some physical accident or condition which
would otherwise impair the Outstanding Bonds, the Bonds and the
Additional Bonds shall be deducted in determining Net Revenues.
"Ordinance" shall mean this bond ordinance and all amendments
hereof and supplements hereto.
"Outstanding Bonds" shall mean the City's Waterworks and
Sanitary Sewer System Revenue Bonds, Series 1991, and the
unrefunded portion of the City's Waterworks and Sanitary Sewer
System Revenue Bonds, Series 1983.
"Owner" or "Registered Owner ", when used with respect to any
bond shall mean the person or entity in whose name such bond is
registered in the Register for the issue of which such bond is a
part. When used in connection with any bond issued in bearer form,
such term shall mean the bearer of such bond.
"Paying Agent" shall mean the Registrar.
"Record Date" shall mean the 15th calendar day of the month
next preceding each Interest Payment Date.
"Register" shall mean the books of registration kept by the
Registrar in which are maintained the names and addresses of, and
the principal amounts of Bonds registered to, each Owner.
"Registrar" shall mean First Interstate Bank of Texas, N.A.,
Houston, Texas, and its successors in that capacity.
"Refunded Bonds" shall mean the City's Waterworks and Sanitary
Sewer System Revenue Bonds, Series 1983, dated April 1, 1983, in
the aggregate principal amount of $1,650,000, maturing on October 1
in each of the years 1994 through 2002, both inclusive.
"Report" shall mean the report of KPMG Peat Marwick, Certified
Public Accountants, verifying the accuracy of certain mathematical
computations relating to the Bonds and the Refunded Bonds.
"Reserve Fund" shall mean the reserve fund for the Outstanding
Bonds, the Bonds and Additional Bonds, which fund is established
and confirmed in the ordinances authorizing the Outstanding Bonds
and this Ordinance.
"System" shall mean the waterworks and sanitary sewer system
of the City, including all present and future extensions,
additions, replacements and improvements thereto.
"Underwriter" shall mean Masterson Moreland Sauer Whisman,
Inc.
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 Bonds and the validity of the lien on and pledge
of the Net Revenues to secure the payment of the Bonds, the
Outstanding Bonds, and the Additional Bonds.
ARTICLE III
TERMS OF THE BONDS
Section 3.1: Authorization and Authorized Amount. The Bonds
shall be issued, pursuant to the Act, in fully registered form in
the principal amount of One Million Eight Hundred Sixty Thousand
Dollars ($1,860,000) for the purpose of refunding the Refunded
Bonds.
Section 3.2: Designation. Date. and Interest Payment Dates.
The Bonds shall be designated as "City of Huntsville, Texas,
Waterworks and Sanitary Sewer System Revenue Refunding Bonds,
Series 1992," and shall be dated April 1, 1992. The Bonds shall
bear interest at the rates set out in Section 3.3 of this Ordinance
from the later of April 1, 1992, 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 October 1, 1992, and semiannually thereafter on April 1
and October 1 of each year until maturity.
Section 3.3: Numbers. Denomination, Interest Rates and
Maturities. The Bonds 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 Bonds shall mature
on October 1 in each of the years and in the amounts set out in
such schedule. Bonds delivered on transfer of or in exchange for
other Bonds shall be numbered in order of their authentication by
the Registrar, shall be in the denomination of $5,000 or integral
multiples thereof, and shall mature on the same date and bear
interest at the same rate as the Bond or Bonds in lieu of which
they are delivered.
Bond Principal Year of Interest
Number Amount Maturity Rate
R- 1 $ 35,000 1992 3.50%
R- 2 35,000 1993 3.90%
R- 3 155,000 1994 4.25%
R- 4 160,000 1995 4.60%
R- 5 175,000 1996 4.90%
R- 6 185,000 1997 5.00%
R- 7 200,000 1998 5.30%
R- 8 210,000 1999 5.50%
R- 9 215,000 2000 5.65%
R -10 240,000 2001 5.80%
R -11 250,000 2002 5.90%
Section 3.4: Execution of Bonds; Seal. The Bonds shall be
signed on behalf of the City by the Mayor and countersigned by the
City Secretary, by their manual, lithographed, or facsimile
signatures, and the official seal of the City shall be impressed
or placed in facsimile thereon. Such facsimile signatures on the
Bonds shall have the same effect as if each of the Bonds had been
signed manually and in person by each of said officers, and such
facsimile seal on the Bonds shall have the same effect as if the
official seal of the City had been manually impressed upon each of
the Bonds. If any officer of the City whose manual or facsimile
signature shall appear on the Bonds shall cease to be such officer
before the authentication of such Bonds or before the delivery of
such Bonds, such manual or facsimile signature shall nevertheless
be valid and sufficient for all purposes as if such officer had
remained in such office.
Section 3.5: Approval By Attorney General; Rectistration by
Comptroller. The Bonds to be initially issued shall be delivered
to the Attorney General of Texas for examination and approval and
shall be registered by the Comptroller. The manually executed
registration certificate of the Comptroller substantially in the
form provided in Section 4.1 of this Ordinance shall be affixed or
attached to the Bonds to be initially issued.
Section 3.6: Authentication. Except for the Bonds to be
initially issued, which need not be authenticated, only such Bonds
as shall bear thereon a certificate of authentication substantially
in the form provided in Section 4.1 of this Ordinance, manually
executed by an authorized representative of the 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 Bond so
authenticated was delivered by the Registrar hereunder.
Section 3.7: Payment of Principal and Interest. The
Registrar is hereby appointed as the paying agent and registrar for
the Bonds. The principal of the Bonds shall be payable, without
exchange or collection charges, in any coin or currency of the
United States of America which on the date of payment is legal
tender for the payment of debts due the United States of America,
upon their presentation and surrender as they respectively become
due and payable at the principal corporate trust office of the
Registrar. The interest on each Bond shall be payable on each
Interest Payment Date, by check mailed by the Registrar on or
before the Interest Payment Date to the Owner of record as of the
Record Date, to the address of such Owner as shown on the Register,
or by such other method acceptable to the Registrar, requested by,
and at the risk and expense of the Owner.
If the date for payment of the principal of or interest on any
Bond is not a Business Day, then the date for such payment shall
be the next succeeding Business Day with the same force and effect
as if made on the date payment was originally due.
Section 3.8: Successor Registrars. The City covenants that
at all times while any Bonds are outstanding it will provide a
bank, trust company, financial institution, or other entity duly
qualified and legally authorized to serve as and perform the duties
and services of the Registrar and Paying Agent for the Bonds. The
City reserves the right to change the Registrar for the Bonds on
not less than 60 days written notice to the Registrar, so long as
any such notice is effective not less than 60 days prior to the
next succeeding principal or interest payment date on the Bonds.
Promptly upon the appointment of any successor Registrar, the
previous Registrar shall deliver the Register or copies thereof to
the new Registrar, and the new Registrar shall notify each Owner,
by United States mail, first class postage prepaid, of such change
and of the address of the new Registrar. Each Registrar hereunder,
by acting in that capacity, shall be deemed to have agreed to the
provisions of this Section.
Section 3.9: Special Record Date. If interest on any Bond
is not paid on any Interest Payment Date and continues unpaid for
thirty (30) days thereafter, the Registrar shall establish a new
record date for the payment of such interest, to be known as a
Special Record Date. The Registrar shall establish a Special
Record Date when funds to make such interest payment 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 Owner of record as of the close of
business on the day prior to the mailing of such notice.
Section 3.10: Ownership; Unclaimed Principal and Interest.
The City, the Registrar and any other person may treat the person
in whose name any Bond is registered as the absolute owner of such
Bond for the purpose of making and receiving payment of the
principal of or interest on such Bond, and for all other purposes,
whether or not such Bond is overdue, and neither the City nor the
Registrar shall be bound by any notice or knowledge to the
contrary. All payments made to the person deemed to be the Owner
of any Bond in accordance with this Section 3.10 shall be valid and
effectual and shall discharge the liability of the City and the
Registrar upon such Bond to the extent of the sums paid.
Amounts held by the Registrar which represent principal of and
interest on the Bonds remaining unclaimed by the Owner after the
expiration of three years from the date such amounts have become
due and payable shall be reported and disposed of by the Registrar
in accordance with the applicable provisions of Texas law
including, to the extent applicable, Title 6 of the Texas Property
Code, as amended.
Section 3.11: Registration. Transfer. and Exchange. So long
as any Bonds remain outstanding, the Registrar shall keep the
Register at its principal corporate trust office and, subject to
such reasonable regulations as it may prescribe, the Registrar
shall provide for the registration and transfer of Bonds in
accordance with the terms of this Ordinance.
Each Bond shall be transferable only upon the presentation and
surrender thereof at the principal corporate trust office of the
Registrar, duly endorsed for transfer, or accompanied by an
assignment duly executed by the registered Owner or his authorized
representative in form satisfactory to the Registrar. Upon due
presentation of any Bond for transfer, the Registrar shall
authenticate and deliver in exchange therefor, within three
Business Days after such presentation, a new Bond or Bonds,
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 Bond
or Bonds so presented.
All Bonds shall be exchangeable upon presentation and
surrender thereof at the principal corporate trust office of the
Registrar for a Bond or Bonds of the same maturity and interest
rate and in any authorized denomination, in an aggregate amount
equal to the unpaid principal amount of the Bond or Bonds presented
for exchange. The Registrar shall be and is hereby authorized to
authenticate and deliver exchange Bonds in accordance with the
provisions of this Section 3.11. Each Bond delivered in accordance
with this Section 3.11 shall be entitled to the benefits and
security of this Ordinance to the same extent as the Bond or Bonds
in lieu of which such Bond is delivered.
The City or the Registrar may require the Owner of any Bond
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 Bond. Any fee or charge of the Registrar for such
transfer or exchange shall be paid by the City.
Section 3.12: Mutilated. Lost. or Stolen Bonds. Upon the
presentation and surrender to the Registrar of a mutilated Bond,
the Registrar shall authenticate and deliver in exchange therefor
a replacement Bond of like maturity, interest rate, and principal
amount, bearing a number not contemporaneously outstanding. If any
Bond is lost, apparently destroyed, or wrongfully taken, the City,
pursuant to the applicable laws of the State of Texas and in the
absence of notice or knowledge that such Bond has been acquired by
a bona fide purchaser, shall authorize and the Registrar shall
authenticate and deliver a replacement Bond of like maturity,
interest rate and principal amount, bearing a number not
contemporaneously outstanding.
The City or the Registrar may require the Owner of a mutilated
Bond 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 Registrar. The City or the Registrar may require the Owner of
a lost, apparently destroyed or wrongfully taken Bond, before any
replacement Bond is issued, to:
(1) furnish to the City and the Registrar satisfactory
evidence of the ownership of and the circumstances
of the loss, destruction or theft of such Bond;
(2) furnish such security or indemnity as may be
required by the Registrar and the City to save them
harmless;
(3) pay all expenses and charges in connection
therewith, including, but not limited to, printing
costs, legal fees, fees of the Registrar and any
tax or other governmental charge that may be
imposed; and
(4) meet any other reasonable requirements of the City
and the Registrar.
If, after the delivery of such replacement Bond, a bona fide
purchaser of the original Bond in lieu of which such replacement
Bond was issued presents for payment such original Bond, the City
and the Registrar shall be entitled to recover such replacement
Bond 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 Registrar in connection therewith.
If any such mutilated, lost, apparently destroyed or
wrongfully taken Bond has become or is about to become due and
payable, the City in its discretion may, instead of issuing a
replacement Bond, authorize the Registrar to pay such Bond.
Each replacement Bond delivered in accordance with this
Section 3.12 shall be entitled to the benefits and security of this
Ordinance to the same extent as the Bond or Bonds in lieu of which
such replacement Bond is delivered.
Section 3.13: Cancellation of Bonds. All Bonds paid in
accordance with this Ordinance, and all Bonds in lieu of which
exchange Bonds or replacement Bonds are authenticated and delivered
in accordance herewith, shall be cancelled and destroyed upon the
making of proper records regarding such payment. The Registrar
shall furnish the City with appropriate certificates of destruction
of such Bonds.
Section 3.14: Optional Redemption. The Bonds are not
optional for prior redemption.
ARTICLE IV
FORM OF BONDS
Section 4.1: Forms. The form of the Bonds, including the
form of the Registrar's Authentication Certificate, the form of
Assignment, the form of bond insurance legend, and the form of
Registration Certificate of the Comptroller, which shall be
attached or affixed to the Bonds initially issued, shall be,
respectively, substantially as follows, with such additions,
deletions and variations as may be necessary or desirable and not
prohibited by this Ordinance:
NUMBER
R-
REGISTERED
INTEREST RATE:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
(Face of Bond)
United States of America
State of Texas
CITY OF HUNTSVILLE, TEXAS
WATERWORKS AND SANITARY SEWER
SYSTEM REVENUE REFUNDING BOND
SERIES 1992
MATURITY DATE:
DENOMINATION
REGISTERED
ISSUE DATE: CUSIP:
April 1, 1992
DOLLARS
The City of Huntsville, Texas (the "City ") promises to pay,
but solely from certain Net Revenues, as described herein, to the
registered owner identified above, or registered assigns, on the
date specified above, upon presentation and surrender of this Bond
at the principal corporate trust office of First Interstate Bank
of Texas, N.A., Houston, Texas (the "Registrar "), the principal
amount identified above, payable in any coin or currency of the
United States of America which on the date of payment is legal
tender for the payment of debts due the United States of America,
and to pay, solely from such Net Revenues, interest thereon at the
rate shown above, calculated on the basis of a 360 day year of
twelve 30 day months, from the later of April 1, 1992, or the most
recent interest payment date to which interest has been paid or
duly provided for. Interest on this Bond is payable by check on
-10-
October 1 and April 1, beginning on October 1, 1992, mailed to the
registered owner of record as of the 15th calendar day of the month
next preceding each interest payment date, or by such other method
acceptable to the Registrar, requested by and at the risk and
expense of the Owner.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE
THE SAME FORCE AND EFFECT AS IF SET FORTH AT THIS PLACE.
IN WITNESS WHEREOF, this Bond has been signed with the manual
or facsimile signature of the Mayor and countersigned with the
manual or facsimile signature of the City Secretary, and the
official seal of the City has been duly impressed, or placed in
facsimile, on this Bond.
(AUTHENTICATION
CERTIFICATE)
(SEAL) CITY OF HUNTSVILLE, TEXAS
Mayor
City Secretary
(Back Panel of Bond)
THIS BOND is one of a duly authorized issue of Bonds,
aggregating $1,860,000 (the "Bonds "), issued for the purpose of
refunding a portion of the City's outstanding Waterworks and
Sanitary Sewer System Revenue Bonds, Series 1983, pursuant to an
ordinance adopted by the City Council on April 28, 1992 (the
"Ordinance ").
THIS BOND AND THE SERIES OF WHICH IT IS A PART are special
obligations of the City that are payable from and, together with
the City's Waterworks and Sanitary Sewer System Revenue Bonds,
Series 1991 and the unrefunded portion of the City's Waterworks and
Sanitary Sewer System Revenue Bonds, Series 1983 (the "Outstanding
Bonds "), are equally and ratably secured by a first lien on the
"Net Revenues" collected and received by the City from the
operation and ownership of the City's waterworks and sewer system,
as defined and provided in the Ordinance, which Net Revenues are
required to be set aside and pledged to the payment of the
Outstanding Bonds, the Bonds, and all additional bonds issued on
a parity therewith, in the Interest and Sinking Fund and the
Reserve Fund maintained for the payment of all such Bonds, all as
more fully described and provided for in the Ordinance. This Bond
and the series of which it is a part, together with the interest
thereon, are payable solely from such Net Revenues and do not
constitute an indebtedness or general obligation of the City. The
owner hereof shall never have the right to demand payment of this
obligation out of any funds raised or to be raised by taxation.
THIS BOND is transferable only upon presentation and surrender
at the principal corporate trust office of the Registrar, duly
endorsed for transfer or accompanied by an assignment duly executed
by the registered owner or his authorized representative, subject
to the terms and conditions of the Ordinance.
THE BONDS are exchangeable at the principal corporate trust
office of the Registrar for bonds in the principal amount of $5,000
or any integral multiple thereof, subject to the terms and
conditions of the Ordinance.
THIS BOND shall not be valid or obligatory for any purpose or
be entitled to any benefit under the Ordinance unless this Bond is
either (i) registered by the Comptroller of Public Accounts of the
State of Texas by registration certificate attached or affixed
hereto or (ii) authenticated by the Registrar by due execution of
the authentication certificate endorsed hereon.
THE REGISTERED OWNER of this Bond, by acceptance hereof,
acknowledges and agrees to be bound by all the terms and conditions
of the Ordinance.
THE CITY has covenanted in the Ordinance that it will at all
times provide a legally qualified registrar for the Bonds and will
cause notice of any change of registrar to be mailed to each
registered owner.
THE CITY HAS RESERVED THE RIGHT to issue additional parity
revenue bonds, subject to the restrictions contained in the
Ordinance, which may be equally and ratably payable from, and
secured by a first lien on and pledge of, the aforesaid Net
Revenues in the same manner and to the same extent as this Bond and
the series of which it is a part.
IT IS HEREBY DECLARED AND REPRESENTED that this Bond has been
duly and validly issued and delivered; that all acts, conditions,
and things required or proper to be performed, exist, and be done
precedent to or in the issuance and delivery of this Bond have been
performed, existed, and been done in accordance with law; that the
Bonds do not exceed any statutory limitation; and that provision
has been made for the payment of the principal of and interest on
this Bond and all of the Bonds by the creation of the aforesaid
lien on and pledge of the Net Revenues.
FORM OF REGISTRATION CERTIFICATE
OF COMPTROLLER OF PUBLIC ACCOUNTS
COMPTROLLER'S REGISTRATION CERTIFICATE:
REGISTER NO.
I hereby certify that this Bond has been examined, certified
as to validity, and approved by the Attorney General of the 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 this
(SEAL)
xxxxxxxxxx
Comptroller of Public Accounts
of the State of Texas
FORM OF AUTHENTICATION CERTIFICATE
AUTHENTICATION CERTIFICATE
It is hereby certified that this Bond has been delivered
pursuant to the Bond Ordinance described in the text of
this Bond.
First Interstate Bank of Texas, N.A.
By
Authorized Signature
Date of Authentication
FORM OF ASSIGNMENT
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 said 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.
FORM OF STATMENT OF INSURANCE
The Municipal Bond Investors Assurance Corporation (the
"Insurer ") has issued a policy containing the following provisions,
such policy being on file at First Interstate Bank of Texas, N.A.
Houston, Texas.
The Insurer, in consideration of the payment of the premium
and subject to the terms of this policy, hereby unconditionally and
irrevocably guarantees to any owner, as hereinafter defined, of the
following described obligations, the full and complete payment
required to be made by or on behalf of the Issuer to First
Interstate Bank of Texas, N.A., Houston, Texas, or its successor
(the "Paying Agent ") of an amount equal to (i) the principal of
(either at the stated maturity of by any advancement of maturity
pursuant to a mandatory sinking fund payment) and interest on, the
Obligations (as that term is defined below) as such payment shall
become due but shall not be so paid (except that in the event of
any acceleration of the due date of such principal by reason of
mandatory or optional redemption or acceleration resulting from
default or otherwise, other than any advancement of maturity
pursuant to mandatory sinking fund payment, the payments guaranteed
hereby shall be made in such amounts and at such times as such
payments of principal would have been due had there not been any
such acceleration); and (ii) the reimbursement of any such payment
which is subsequently recovered from any owner pursuant to a final
judgment by a court of competent jurisdiction that such payment
constitutes an avoidable preference to such owner within the
meaning of any applicable bankruptcy law. The amounts referred to
in clauses (i) and (ii) of the preceding sentence shall be referred
to herein collectively as the "Insured Amounts." "Obligations"
shall mean: $1,860,000 City of Huntsville, Texas, Waterworks and
Sanitary Sewer System Revenue Refunding Bonds, Series 1992.
Upon receipt of telephonic or telegraphic notice, such notice
subsequently confirmed in writing by registered or certified mail,
or upon receipt of written notice by registered or certified mail,
-14-
by the Insurer from the Paying Agent or any owner of any Obligation
the payment of an Insured Amount for which is then due, that such
required payment has not been made, the Insurer on the due date of
such payment or within one business day after receipt of notice of
such nonpayment, whichever is later, will make a deposit of funds,
in an account with Citibank, N.A., in New York, New York, or its
successor, sufficient for the payment of any such Insured Amounts
which are then due. Upon presentment and surrender of such
Obligations or presentment of such other proof of ownership of the
Obligations, together with any appropriate instruments of
assignment to evidence the assignment of the Insured Amounts due
on the Obligations as are paid by the Insurer, and appropriate
instruments to effect the appointment of the Insurer as agent for
such owners of the Obligations in any legal proceeding relating to
payment of Insured Amounts on the Obligations, such instruments
being in a form satisfactory to Citibank, N.A., Citibank, N.A.
shall disburse to such owners or the Paying Agent payment of the
Insured Amounts due on such Obligations, less any amount held by
the Paying Agent for the payment of such Insured Amounts and
legally available therefor. This policy does not insure against
loss of any prepayment premium which may at any time be payable
with respect to any Obligation.
As used herein, the term "owner" shall mean the registered
owner of any Obligation as indicated in the books maintained by the
Paying Agent, the Issuer, or any designee of the Issuer for such
purpose. The term owner shall not include the Issuer or any party
whose agreement with the Issuer constitutes the underlying security
for the Obligations.
Any service of process on the Insurer may be made to the
Insurer at its offices located at 113 King Street, Armonk, New York
10504.
This policy is non - cancellable for any reason. The premium
on this policy is not refundable for any reason including the
payment prior to maturity of the Obligations.
DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the
Insurer is unable to fulfill its contractual obligation under this
policy or contract or application or certificate or evidence of
coverage, the policyholder or certificateholder is not protected
by an insurance guaranty fund or other solvency protection
arrangement.
MUNICIPAL BOND INVESTORS ASSURANCE CORPORATION
Section 4.2: Legal Opinion and Cusip Numbers; Bond Insurance.
The approving opinion of Vinson & Elkins L.L.P., Houston, Texas,
and CUSIP Numbers may be printed on the Bonds, but errors or
-15-
omissions in the printing of such opinion or such numbers shall
have no effect on the validity of the Bonds.
The purchase of and payment of the premium for municipal bond
insurance by the City, in accordance with the terms of a commitment
for such insurance presented to and hereby approved by the City
Council is hereby authorized. All officials and representatives
of the City are authorized and directed to execute such documents
and to do any and all things necessary or desirable to obtain such
insurance, and the printing on the Bonds of an appropriate legend
regarding such insurance is hereby approved.
ARTICLE V
SECURITY AND SOURCE OF
PAYMENT FOR ALT.,, PARITY BONDS
Section 5.1: Pledge and Source of Payment. All of the Net
Revenues of the waterworks and sanitary sewer system with the
exception of those in excess of the amounts required to establish
and maintain the funds as hereafter provided are hereby irrevocably
pledged for the payment of the Bonds, the Outstanding Bonds, and
the Additional Bonds if issued under the conditions and in the
manner specified in this Ordinance, and the interest thereon, and
it is hereby ordained that the Bonds, the Outstanding Bonds, and
Additional Bonds if so issued, and the interest thereon shall
constitute a first lien upon the Net Revenues.
Section 5.2: Rates. The City covenants and agrees with the
original purchasers of the Bonds and the Additional Bonds if and
when issued:
(a) That it will at all times charge and collect for services
rendered by the System rates sufficient to pay all operating,
maintenance, depreciation, replacement and betterment expense and
other costs deductible in determining "Net Revenues" as herein
defined, and to produce Net Revenues equal to at least one and one -
half times the average annual requirement for the payment of
principal of and interest on the Bonds, the Outstanding Bonds, and
the Additional Bonds if issued.
(b) If the Additional Bonds are issued, or if the System
should become legally liable for any other indebtedness, the City
will fix and maintain rates and collect charges for the services
of the System sufficient to discharge such indebtedness.
Section 5.3: Special Funds. All revenue derived from the
operation of the System shall be kept separate from other funds of
the City. To that end, the creation of the following special
Funds is hereby confirmed.
(a) City of Huntsville Waterworks and Sewer System
Revenue Fund, hereinafter called "Revenue Fund."
(b) City of Huntsville Waterworks and Sewer System
Revenue Bonds Interest and Sinking Fund, hereinafter
called "Interest and Sinking Fund."
(c) City of Huntsville Waterworks and Sewer System
Revenue Bonds Reserve Fund, hereinafter called
"Reserve Fund."
Section 5.4: Revenue Fund. All revenues of every nature
received through the operation of the System shall be deposited
from day to day as collected, into the Revenue Fund, and the
reasonable and proper expenses of operating and maintaining the
System, including salaries, labor and materials shall be paid
therefrom upon approval of the City Council. The City Treasurer
shall not make any disbursement from said Fund for repairs in
excess of $1,000.00 or for extensions, except pursuant to a
resolution adopted by the City Council declaring that it is the
judgment of the City Council that such repairs or extensions are
necessary to keep the plant or system in operation and render
adequate service to the City and the inhabitants thereof, or that
such repairs or extensions are necessary to meet some physical
accident or condition which would otherwise impair the Bonds, and
such resolution, in either case, shall recite the facts and reasons
for such judgment. Certified copies of such resolution shall be
furnished without cost to Owners requesting the same. Such
resolution shall be binding or conclusive upon any Owner. All
revenues of the System not actually required to pay expenses and
costs incurred as permitted by this Section shall be deposited in
the other Funds set forth in this Ordinance, each of which shall
have priority thereto in the order in which they are treated in the
following sections.
Section 5.5: Additional Payments into the Interest and
Sinking Funj. After the payment of all maintenance and operation
expenses of the System, as provided in Section 5.4, and in addition
to and at the same time as the payments into the Interest and
Sinking Fund required by the ordinances authorizing the Outstanding
Bonds, on or before the 1st day of each month, from moneys in the
Revenue Fund, the City shall make the following deposits into the
Interest and Sinking Fund:
Beginning in May, 1992, to pay the interest maturing on
October 1, 1992, and the principal maturing on October 1,
1992, there shall be deposited in substantially equal
monthly installments an amount sufficient to pay, in
addition to other amounts therein and available for such
purposes, such principal and interest as it matures.
Beginning in October, 1992, with respect to interest
payments, and in October, 1992, with respect to principal
payments, and continuing until all of the Bonds have been
paid, there shall be deposited an amount which, in
addition to other amounts therein and available for such
purpose, is not less than one -sixth (1/6) of the next
maturing interest on the Bonds and one - twelfth (1/12) of
the next maturing principal of the Bonds.
If in any month the City shall, for any reason, fail to pay into
said Interest and Sinking Fund the full amounts above stipulated,
the amounts equivalent to such deficiencies shall be set apart and
paid into said Interest and Sinking Fund from the first available
and unallocated revenues of the following month or months and such
payments shall be in addition to the amounts hereinabove provided
to be otherwise paid into said Interest and Sinking Fund each
month.
Money in the Interest and Sinking Fund shall be used only to
pay the principal of and interest on the Bonds, the Outstanding
Bonds and any Additional Bonds.
Section 5.6: Additional Payments into Reserve Fund. If the
balance required to be in the Reserve Fund by the ordinances
authorizing the Outstanding Bonds is ever reduced to an amount less
than required by such ordinances, monthly payments as provided in
such ordinances shall be resumed and continued until said balance
is again reached and maintained. If in any month the City shall,
for any reason, fail to pay into said Reserve Fund the full amount
above stipulated, amounts equivalent to such deficiencies shall be
set apart and paid into said Reserve Fund from the first available
and unallocated revenues of the following month or months and shall
be in addition to the amount otherwise paid into said Reserve Fund
each month. Money in the Reserve Fund shall be used to pay the
principal of and interest on the Bonds, Outstanding Bonds, and any
Additional Bonds at any time that the balance in the Interest and
Sinking Fund is insufficient for such purposes.
Section 5.7: Deficiencies in Funds. If in any fiscal year
the City shall, for any reason, fail to pay into the Interest and
Sinking Fund or Reserve Fund the full amounts above stipulated,
amounts equivalent to such deficiencies shall be set apart and paid
into said Funds from the first available and unallocated revenues
of the following fiscal year or years, and such payment shall be
in addition to the amounts hereinabove provided to be otherwise
paid into said Funds during such fiscal year or years.
Section 5.8: Excess Revenues. Any revenues in excess of
those required to establish and maintain the Funds as above
required may be used for the redemption of Bonds, Outstanding
Bonds, or Additional Bonds, or for any lawful purpose.
Section 5.10: Security of Funds. All funds described in this
Ordinance shall be secured in the manner and to the fullest extent
permitted by the laws of Texas for the security of public funds,
and such funds shall be used only for the purposes permitted in
this Ordinance.
ARTICLE VI
ADDITIONAL BONDS,
In addition to inferior lien bonds, the City reserves the
right to issue Additional Bonds, in one or more series, and said
Additional Bonds, when issued, may be secured by and payable from
a first lien on and pledge of the Net Revenues of the System in the
same manner and to the same extent as are the Outstanding Bonds and
the Bonds, and such Additional Bonds may in all respect be of equal
dignity with the Outstanding Bonds and the Bonds. No Additional
Bonds may be issued unless:
(a) Each of the Funds set forth above contains the amount of
money then required to be on deposit therein,
(b) The Net Revenues of the System for either of the
following periods:
the 12 -month period ending on the last day of the month
preceding the month in which the bond ordinance is
adopted authorizing such Additional Bonds,
or
the then last preceding fiscal year (being the last
completed fiscal year preceding the month in which the
bond ordinance is adopted authorizing such Additional
Bonds),
were equal to at least 1 -1/2 times the average annual principal and
interest requirements on all bonds payable from the revenues of the
System which will be outstanding after the Additional Bonds then
proposed to be issued are issued, sold and delivered.
(c) An independent professional engineer registered under the
laws of the State of Texas makes a projection of the income of the
System during the life of all bonds payable from the revenues of
-19-
the System then outstanding and the Additional Bonds proposed to
be issued and such projection shows that, in the engineer's
opinion, the average annual Net Revenues of the System will equal
at least 1 -1/2 times the average annual principal and interest
requirements of all bonds payable from the revenues of the System
which will be outstanding after the Additional bonds then proposed
to be issued are issued, sold and delivered.
The term "Net Revenues" as used in this Section shall mean all
of the net revenues of the System (excluding income received
specifically for capital items) after deduction of the reasonable
expenses of operation and maintenance of the System (excluding
expenditures for capital items).
ARTICLE VII
COVENANTS AND PROVISIONS RELATING TO THE SYSTEM
Section 7.1: Maintenance and Operation - Insurance. The City
will maintain the System in good condition and operate the same in
an efficient manner and at a reasonable cost. So long as any of
the Bonds are outstanding, the City agrees to maintain insurance,
for the benefit of the Owners of the Bonds, on the System of a kind
and in an amount which usually would be carried by private
companies engaged in a similar type of business. Nothing in this
Ordinance shall be construed as requiring the City to expend any
funds which are derived from sources other than the operation of
the System, but nothing herein shall be construed as preventing the
City from doing so.
Section 7.2: Accounts and Fiscal Year. The City shall keep
proper books of records and accounts (separate from all other
records and accounts of the City) in which complete and correct
entries shall be made of all transactions relating to the System.
The City will operate the System and will keep its books of records
and accounts on the basis of a fiscal year ending September 30,
unless otherwise ordained by the City Council.
Section 7.3: Accounting Reports. Within ninety days after
the close of each fiscal year hereafter, the City will furnish
(without cost) to any Owner who may so request, a signed or
certified copy of a report by an independent accountant covering
the next preceding fiscal year showing the following information
relating to the System:
(a) Income and Expense Statement;
(b) Balance Sheet;
(c) Accountant's comment regarding the manner in which the
City has complied with the requirements of this Ordinance, and his
recommendation for any changes or improvements in the operation of
the System;
(d) List of insurance policies in force at the end of the
fiscal year, showing as to each policy, the risk covered, the name
of the insurer, and the expiration date;
(e) The number of properties connected with the System and
the total income from the System for the year;
(f) The number of unmetered customers of the System at the
end of the year.
Section 7.4: Inspection. Any Owner of Bonds or Additional
Bonds have the right at all reasonable times to inspect the System
and all records, accounts and data of the City relating thereto.
Section 7.5: Special Covenants. The City hereby further
covenants as follows:
(a) That it has the lawful power to pledge the revenues
supporting the Bonds and has lawfully exercised that power under
the Constitution and laws of the State of Texas; that the Bonds,
the Outstanding Bonds, and the Additional Bonds, when issued, shall
be ratably secured in such manner that no bond shall have
preference over any other bond.
(b) That no free service of the System shall be allowed, and
should the City or any of its agencies or instrumentalities make
use of the services and facilities of the System, payment of the .
reasonable value thereof shall be made by the City out of funds
from sources other than the revenues and income of the System.
Section 7.6: Bonds are Special Obligations. The Bonds are
special obligations of the City payable from the pledged revenues,
and the Owners thereof shall never have the right to demand payment
out of any funds raised or to be raised by taxation.
Section 7.7: System and Revenues not Encumbered. The City
covenants that neither the properties comprising the System nor the
revenues of the System are in any way pledged or hypothecated
except as the Net Revenues of the System are pledged to the payment
of the Outstanding Bonds and the Bonds.
ARTICLE VIII
PROVISIONS CONCERNING SALE AND
APPLICATION OF PROCEEDS OF BONDS
Section 8.1: Sale; Bond Purchase Agreement. The Bonds are
hereby sold and shall be delivered to the Underwriter at a price
of $1,826,158.55 plus accrued interest to the date of delivery, in
accordance with the terms of a bond purchase agreement of even date
herewith, presented to and hereby approved by the City Council,
which price and terms are hereby found and determined to be the
most advantageous reasonably obtainable by the City. The Mayor and
other appropriate officials of the City are hereby authorized and
directed to execute such bond purchase agreement on behalf of the
City, and the Mayor and all other officers, agents and
representatives of the City are hereby authorized to do any and
all things necessary or desirable to satisfy the conditions set out
therein and to provide for the issuance and delivery of the Bonds.
Section 8.2: Tax Exemption. (a) General Tax Covenant. The
City intends that the interest on the Bonds shall be excludable
from gross income for purposes of federal income taxation pursuant
to sections 103 and 141 through 150 of the Code, and applicable
regulations. The City covenants and agrees not to take any action,
or knowingly omit to take any action within its control, that if
taken or omitted, respectively, would cause the interest on the
Bonds to be includable in gross income, as defined in section 61
of the Code, of the Owners thereof for purposes of federal income
taxation. In particular, the City covenants and agrees to comply
with each requirement of this Section 8.2; provided, however, that
the City shall not be required to comply with any particular
requirement of this Section 8.2 if the City has received an opinion
of nationally recognized bond counsel ( "Counsel's Opinion ") that
such noncompliance will not adversely affect the exclusion from
gross income for federal income tax purposes of interest on the
Bonds or if the City has received a Counsel's Opinion to the effect
that compliance with some other requirement set forth in this
Section 8.2 will satisfy the applicable requirements of the Code,
in which case compliance with such other requirement specified in
such Counsel's Opinion shall constitute compliance with the
corresponding requirement specified in this Section 8.2.
(b) Use of Proceeds. The City covenants and agrees that its
use of the Net Proceeds of the Bonds and the Refunded Bonds will
at all times satisfy the following requirements:
(i) The City will use all of the Net Proceeds of
the Bonds to (A) acquire Escrowed Securities
(as hereinafter defined) sufficient to pay the
principal of and interest on the Refunded
Bonds, and (B) to pay the costs of issuing the
Bonds, except for amounts, if any, described
in the Report as the rounding amount and the
ending cash balance in the Escrow Fund (as
hereinafter defined). The City has limited
and will limit the amount of original or
investment proceeds of the Refunded Bonds to
be used (other than use as a member of the
general public) in the trade or business of
any person other than a governmental unit to
an amount aggregating no more than ten percent
of the Net Proceeds of the Refunded Bonds
( "private -use proceeds "). For purposes of this
Section, the term "person" includes any
individual, corporation, partnership,
unincorporated association, or any other entity
capable of carrying on a trade or business; and
the term "trade or business" means, with
respect to any natural person, any activity
regularly carried on for profit and, with
respect to persons other than natural persons,
any activity other than an activity carried on
by a governmental unit. Any use of proceeds
of the Refunded Bonds or the Bonds in any
manner contrary to the guidelines set forth in
Revenue Procedures 82 -14, 1982 -1 C.B. 459, and
82 -15, 1982 -1 C.B. 460, including any revisions
or amendments thereto, shall constitute the use
of such proceeds in the trade or business of
one who is not a governmental unit;
(ii) The City has not permitted and will not permit
more than five percent of the Net Proceeds of
the Refunded Bonds to be used in the trade or
business of any person other than a
governmental unit if such use is unrelated to
the governmental purpose of such Refunded
Bonds. Further, the amount of private -use
proceeds of the Refunded Bonds in excess of
five percent of the Net Proceeds of such
Refunded Bonds ( "excess private -use proceeds ")
did not and will not exceed the proceeds of
such Refunded Bonds expended for the
governmental purpose of such Refunded Bonds to
which such excess private -use proceeds relate;
(iii) The City has not permitted and will not permit
an amount of proceeds of the Refunded Bonds
exceeding the lesser of (a) $5,000,000 or (b)
five percent of the Net Proceeds of such
Refunded Bonds to be used, directly or
indirectly, to finance loans to persons other
than governmental units.
When used in this Section 8.2, the term Net Proceeds of the Bonds
and the Refunded Bonds shall mean the proceeds from the sale of
each issue of the Bonds and the Refunded Bonds, respectively,
including investment earnings on the proceeds of such issue, less
accrued interest with respect to such issue.
(c) No Federal Guaranty. The City covenants and agrees not
to take any action, or knowingly omit to take any action within its
control, that, if taken or omitted, respectively, would cause the
Bonds to be "federally guaranteed" within the meaning of section
149(b) of the Code and applicable regulations thereunder, except
as permitted by section 149(b)(3) of the Code and such regulations.
(d) Bonds are not Hedge Bonds. The City represents that not
more than 50 percent of the proceeds of the Refunded Bonds was
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 expected that
at the time the Refunded Bonds were issued that at least 85 percent
of the spendable proceeds of such issue would be used to carry out
the governmental purposes of such issue within the three -year
period beginning on the date of issue of such bonds.
(e) No- Arbitrage Covenant. The City shall certify, through
an authorized officer, employee or agent, that based upon all facts
and estimates known or reasonably expected to be in existence on
the date the Bonds are delivered, the City will reasonably expect
that the proceeds of the Bonds will not be used in a manner that
would cause the Bonds to be "arbitrage bonds" within the meaning
of section 148(a) of the Code and applicable regulations
thereunder. Moreover, the City covenants and agrees that it will
make such use of the proceeds of the Bonds including interest or
other investment income derived from Bond proceeds, regulate
investments of proceeds of the Bonds, and take such other and
further action as may be required so that the Bonds will not be
"arbitrage bonds" within the meaning of section 148(a) of the Code
and applicable regulations thereunder.
(f) arbitrage Rebate. The City expects to qualify for an
exception to the requirements of the Code relating to rebate to
the United States, because the City will use at least 95% of the
Net Proceeds of the Bonds for local governmental activities of the
City and expects that the total of all tax - exempt obligations
(excluding "private activity" bonds) issued by or attributable to
the City during calendar year 1992 will not exceed $5,000,000. If
-24-
the City does not qualify for such exception, 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 Bonds (within the meaning of section 148(f)(6)(B)
of the Code), be rebated to the federal government. Specifically,
the City will (i) maintain records regarding the investment of the
gross proceeds of the Bonds as may be required to calculate the
amount earned on the investment of the gross proceeds of the Bonds
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, (ii) calculate at such times as are required by
applicable regulations, the amount earned from the investment of
the gross proceeds of the Bonds which is required to be rebated to
the federal government, and (iii) pay, not less often than every
fifth anniversary date of the delivery of the Bonds and within
sixty days following retirement of the Bonds, all amounts required
to be rebated to the federal government. Further, the City will
not 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 Bonds that
might result in a reduction in the amount required to be paid to
the federal government because such arrangement results in a
smaller profit or larger loss than would have resulted if the
arrangement had been at arm's length and had the yield on the issue
not been relevant to either party.
(g) Information Reporting. The City covenants and agrees to
file or cause to be filed with the Secretary of the Treasury, not
later than the 15th day of the second calendar month after the
close of the calendar quarter in which the Bonds are issued, an
information statement concerning the Bonds, all under and in
accordance with section 149(e) of the Code and applicable
regulations thereunder.
Section 8.4: Oualified Tax- Exempt Obligations. The City
hereby designates the Bonds as "qualified tax - exempt obligations"
for purposes of section 265(b) of the Code. In connection
therewith, the City represents (a) that the aggregate amount of
tax - exempt obligations issued by the City during calendar year
1992, including the Bonds, which have been designated as "qualified
tax - exempt obligations" under section 265(b)(3) of the Code does
not exceed $10,000,000, and (b) that the reasonably anticipated
amount of tax - exempt obligations which will be issued by the City
during calendar year 1992, including the Bonds, will not exceed
$10,000,000. For purposes of this Section 8.3, the term
"tax- exempt obligation" does not include "private activity bonds"
within the meaning of section 141 of the Code, other than
"qualified 501(c)(3) bonds" within the meaning of section 145 of
-25-
the Code. In addition, for purposes of this Section 8.3, the City
includes all governmental units which are aggregated with the City
under the Code.
Section 8.4: Use of Proceeds. Proceeds from the sale of the
Bonds shall, promptly upon receipt by the City, be applied as
follows:
(a) Accrued interest shall be deposited into the
Interest and Sinking Fund and invested only in direct
obligations of the United States of America.
(b) The balance of the proceeds from the sale of the
Bonds shall be applied to establish an escrow fund to
refund the Refunded Bonds, as more fully provided below,
and, to the extent not otherwise provided for, to pay all
expenses arising in connection with the issuance of the
Bonds, the establishment of such escrow fund and the
refunding of the Refunded Bonds. Any proceeds of the
Bonds remaining after making all such deposits and
payments shall be deposited into the Interest and Sinking
Fund.
ARTICLE IX
ADVANCE REFUNDING AND REDEMPTION
Section 9.1: Escrow Agreement. The discharge and defeasance
of the Refunded Bonds shall be effectuated pursuant to the terms
and provisions of an Escrow Agreement to be entered into by and
between the City and the Escrow Agent, which shall be substantially
in the form attached hereto as Exhibit A, the terms and provisions
of which are hereby approved, subject to such insertions, additions
and modifications as shall be necessary (a) to carry out the
program designed for the City by the Underwriter, which shall be
certified as to mathematical accuracy by KPMG Peat Marwick,
Certified Public Accountants, whose Report shall be attached to the
Escrow Agreement (b) to maximize the City's present value savings
and /or to minimize the City's costs of refunding, (c) to comply
with all applicable laws and regulations relating to the refunding
of the Refunded Bonds and (d) to carry out the other intents and
purposes of this Ordinance, and the Mayor or Mayor Pro Tem is
hereby authorized to execute and deliver such Escrow Agreement on
behalf of the City in multiple counterparts and the City Secretary
or an Assistant City Secretary is hereby authorized to attest
thereto and affix the City's seal.
Section 9.2: Redemption of Refunded Bonds. The City hereby
irrevocably calls the following bonds of the City for redemption
prior to maturity on the date set forth below, at a price of par
-26-
plus accrued interest to the date fixed for redemption, and
authorizes and directs notice of such redemption to be given in
accordance with the ordinance authorizing the issuance of such
bonds:
Bonds to be Redeemed Redemption Date
Waterworks and Sanitary Sewer System
Revenue Bonds, Series 1983
Maturities 1994 through 2002
October 1, 1993
Section 9.3: Purchase of United States Treasury Obligations.
To assure the purchase of the Escrowed Securities referred to in
the Escrow Agreement, the Mayor or Mayor Pro Tem, the City Manager,
and the Escrow Agent are hereby authorized to subscribe for, agree
to purchase, and purchase non - callable obligations of the United
States of America, in such amounts and maturities and bearing
interest at such rates as may be provided for in the Report, and
to execute any and all subscriptions, purchase agreements,
commitments, letters of authorization and other documents necessary
to effectuate the foregoing, and any actions heretofore taken for
such purpose are hereby ratified and approved.
Section 9.4: Related Matters. To satisfy in a timely manner
all of the City's obligations under this Ordinance, the bond
purchase agreement, and the Escrow Agreement, the Mayor or Mayor
Pro Tem, the City Manager, the City Secretary or an Assistant City
Secretary, and all other appropriate officers and agents of the
City are hereby authorized and directed to take all other actions
that are reasonably necessary to provide for the refunding of the
Refunded Bonds, including, without limitation, executing and
delivering on behalf of the City all certificates, consents,
receipts, requests, and other documents as may be reasonably
necessary to satisfy the City's obligations under the Escrow
Agreement, the bond purchase agreement, and this Ordinance and to
direct the application of funds of the City consistent with the
provisions of such Escrow Agreement and this Ordinance.
ARTICLE X
BOND INSURANCE
Section 10.1: Payments under the Policy.
A. In the event that, on the second Business Day, and again
on the Business Day, prior to the payment date on the Bonds, the
Registrar has not received sufficient moneys to pay all principal
of and interest on the Bonds due on the second following or
following, as the case may be, Business Day, the Registrar shall
immediately notify the Insurer or its designee on the same Business
Day by telephone or telegraph, confirmed in writing by registered
or certified mail, of the amount of the deficiency.
B. If the deficiency is made up in whole or in part prior
to or on the payment date, the Registrar shall so notify the
Insurer or its designee.
C. In addition, if the Registrar has notice that any Owner
has been required to disgorge payments of principal or interest on
the Bonds to a trustee in Bankruptcy or creditors or others
pursuant to a final judgment by a court of competent jurisdiction
that such payment constitutes a voidable preference to such Owner
within the meaning of any applicable bankruptcy laws, then the
Registrar shall notify the Insurer or its designee of such fact by
telephone or telegraphic notice, confirmed in writing by registered
or certified mail.
D. The Registrar is hereby irrevocably designated,
appointed, directed and authorized to act as attorney -in -fact for
Owners of the Bonds as follows:
1. If and to the extent there is a deficiency in
amounts required to pay interest on the Bonds, the
Registrar shall (a) execute and deliver to Citibank,
N.A., or its successors under the Policy (the "Insurance
Paying Agent "), in form satisfactory to the Insurance
Paying Agent, an instrument appointing the Insurer as
agent for such Owners in any legal proceeding related to
the payment of such interest and an assignment to the
Insurer of the claims for interest to which such
deficiency relates and which are paid by the Insurer, (b)
receive as designee of the respective Owners (and not as
Paying Agent) in accordance with the tenor of the Policy
payment from the Insurance Paying Agent with respect to
the claims for interest so assigned, and (c) disburse
the same to such respective Owners; and
2. If and to the extent of a deficiency in amounts
required to pay principal of the Bonds, the Registrar
shall (a) execute and deliver to the Insurance Paying
Agent in form satisfactory to the Insurance Paying Agent
an instrument appointing the Insurer as agent for such
Owner in any legal proceeding relating to the payment of
such principal and an assignment to the Insurer of any
of the Bonds surrendered to the Insurance Paying Agent
of so much of the principal amount thereof as has not
previously been paid or for which moneys are not held by
the Registrar and available for such payment (but such
assignment shall be delivered only if payment from the
Insurance Paying Agent is received), (b) receive as
designee of the respective Owners (and not as Paying
Agent) in accordance with the tenor of the Policy payment
therefor from the Insurance Paying Agent, and (c)
disburse the same to such Owners.
E. Payments with respect to claims for interest on and
principal of Bonds disbursed by the Registrar from proceeds of the
Policy shall not be considered to discharge the obligation of the
City with respect to such Bonds, and the Insurer shall become the
owner of such unpaid Bond and claims for the interest in accordance
with the tenor of the assignment made to it under the provisions
of this subsection or otherwise.
F. Irrespective of whether any such assignment is executed
and delivered, the City and the Registrar hereby agree for the
benefit of the Insurer that,
1. They recognize that to the extent the Insurer
makes payments, directly or indirectly (as by paying
through the Registrar), on account of principal of or
interest on the Bonds, the Insurer will be subrogated to
the rights of such Owners to receive the amount of such
principal and interest from the City, with interest
thereon as provided and solely from the sources stated
in this Ordinance and the Bonds; and
2. They will accordingly pay to the Insurer the
amount of such principal and interest (including
principal and interest recovered under subparagraph (ii)
of the first paragraph of the Policy, which principal and
interest shall be deemed past due and not to have been
paid), with interest thereon as provided in this
Ordinance and the Bonds, but only from the sources and
in the manner provided herein for the payment of
principal of and interest on the Bonds to Owners, and
will otherwise treat the Insurer as the owner of such
rights to the amount of such principal and interest.
-29-
G. In connection with the issuance of additional Bonds, the
City shall deliver to the Insurer a copy of the disclosure
document, if any, circulated with respect to such additional Bonds.
H. Copies of any amendments made to the documents executed
in connection with the issuance of the Bonds which are consented
to by the Insurer shall be sent to Standard & Poor's Corporation.
I. The Insurer shall receive notice of the resignation or
removal of the Registrar and the appointment of a successor
thereto.
J. The Insurer shall receive copies of all notices required
to be delivered to Owners, and, on an annual basis, copies of the
City's audited financial statements and Annual Budget.
Section 10.2: Notices: Any notice that is required to be
given to an Owner of the Bonds or to the Registrar pursuant to the
Ordinance shall also be provided to the Insurer. All notices
required to be given to the Insurer under the Ordinance shall be
in writing and shall be sent by registered or certified mail
addressed to Municipal Bond Investors Assurance Corporation, 113
King Street, Armonk, New York 10504 Attention: Surveillance.
ARTICLE XI
MISCELLANEOUS
Section 11.1: Official Statement. The City Council ratifies
and confirms its prior approval of the form and content of the
Preliminary Official Statement prepared in the initial offering and
sale of the Bonds and hereby authorizes the preparation of a final
Official Statement reflecting the terms of the bond purchase
agreement with the Underwriter and other relevant matters. The
use of such Official Statement in the reoffering of the Bonds by
the Underwriter is hereby approved and authorized. The proper
officials of the City are hereby authorized to execute and deliver
a certificate pertaining to such Official Statement as prescribed
therein, dated as of the date of payment for and delivery of the
Bonds.
Section 11.2: Paying Agent /Registrar Agreement. The form of
agreement setting forth the duties of the Registrar is hereby
approved, and the appropriate officials of the City are hereby
authorized to execute such agreement for and on behalf of the City.
Section 11.3: Further Proceedings,. The Mayor, the 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 11.4: 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.
Section 11.5: Open Meeting. It is hereby officially found
and determined that the meeting at which this Ordinance was adopted
was open to the public, and that public notice of the time, place
and purpose of said meeting was given, all as required by Article
6252 -17, Vernon's Texas Civil Statutes, as amended.
Section 11.6: No Personal Liability. No recourse shall be
had for payment of the principal of or interest on any Bonds or for
any claim based thereon, or on this Ordinance, against any official
or employee of the City or any person executing any Bonds.
Section 11.7: Parties Interested. Nothing in this Ordinance
expressed or implied is intended or shall be construed to confer
upon, or to give to, any person or entity, other than the City,
the Registrar, the Insurer, and the Owners of the Bonds, any right,
remedy or claim under or by reason of this Ordinance or any
covenant, condition or stipulation hereof, and all covenants,
stipulations, promises and agreements in this Ordinance shall be
for the sole and exclusive benefit of the City, the Registrar, the
Insurer, and the Owners of the Bonds.
Section 11.8: Repealer. All orders, resolutions and
ordinances, or parts thereof, inconsistent herewith are hereby
repealed to the extent of such inconsistency.
Section 11.9: Effective Date. This Ordinance shall become
effective immediately upon passage by this City Council and
signature of the Mayor.
PASSED AND APPROVED this 28th day of April, 1992.
Mayor
CITY OF HUNTSVILLE,
ATTEST:
/ J 0).4 ,/
City Secretary
CITY OF HUNTSVI , TEXAS
(SEAL)
APPROVED AS TO LEGALITY:
City Attorney
CITY OF HUNTSVILLE, TEXAS
EXHIBIT "A"
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Escrow Agreement ") dated for
convenience April 28, 1992, but effective on the Escrow Funding
Date described herein, is made and entered into by and between the
City of Huntsville, Texas, an incorporated city of the State of
Texas (the "City "), and First Interstate Bank of Texas, N.A.,
Houston, Texas (the "Escrow Agent ").
WHEREAS, the City has heretofore issued and there remain
outstanding the City's Waterworks and Sanitary Sewer System Revenue
Bonds, Series 1983, dated April 1, 1983 (the "Outstanding Bonds ");
and
WHEREAS, the City desires to refund in advance of maturity
a portion of such Outstanding Bonds in the aggregate principal
amount of $1,650,000 (the "Refunded Bonds "); and
WHEREAS, Article 717k, Vernon's Texas Civil Statutes, as
amended, authorizes and empowers the City to deposit the proceeds
of refunding bonds, together with other available funds or
resources, with any place of payment for the Refunded Bonds in an
amount which is sufficient to provide for the payment or redemption
of the principal of and interest on the Refunded Bonds; and
WHEREAS, the City Council of the City has adopted an ordinance
authorizing the issuance of the City's Waterworks and Sanitary
Sewer System Revenue Refunding Bonds, Series 1992, in the aggregate
principal amount of $1,860,000 (the "Refunding Bonds "), for the
purpose of providing the funds necessary to refund the Refunded
Bonds, to provide a savings in debt service; and
WHEREAS, the City Council of the City has further determined
to effectuate the advance refunding of the Refunded Bonds pursuant
to this Escrow Agreement, under which provision is made for the
safekeeping, investment, reinvestment, administration and
disposition of the proceeds of the Refunding Bonds, so as to
provide firm banking and financial arrangements for the discharge
and final payment or redemption of the Refunded Bonds;
NOW, THEREFORE, in consideration of the mutual undertakings,
promises and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to secure the full and timely payment of
the principal of and the interest on the Refunded Bonds, the City
and the Escrow Agent agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.01. Definitions. Unless otherwise expressly
provided or unless the context clearly requires otherwise, the
following terms shall have the respective meanings specified below
for all purposes of this Escrow Agreement:
"City" shall mean the City of Huntsville, Texas, and any
successor to its duties and functions.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the applicable regulations thereunder and under the
Internal Revenue Code of 1954.
"Escrow Agent" shall mean First Interstate Bank of Texas,
N.A., Houston, Texas, in its capacity as escrow agent hereunder,
and any successor or assign in such capacity.
"Escrow Agreement" shall mean this escrow agreement by and
between the City and the Escrow Agent.
"Escrow Fund" shall mean the fund created in Section 3.01 of
this Escrow Agreement to be administered by the Escrow Agent
pursuant to the provisions of this Escrow Agreement.
"Escrow Funding Date" shall mean the date on which the City
deposits with the Escrow Agent the cash and Escrowed Securities
described in Section 2.01.
"Escrowed Securities" shall mean United States Treasury
Securities, State and Local Government Series, initially purchased
with proceeds of the Refunding Bonds all as more fully described
in the Report.
"Paying Agents for the Refunded Bonds" shall mean First
National Bank, Huntsville, Texas (formerly The First National Bank
of Huntsville, Huntsville, Texas) and First Interstate Bank of
Texas, N.A., Houston, Texas (formerly Allied Bank of Texas,
Houston, Texas).
"Refunded Bond Ordinance" shall mean the City's ordinance
authorizing the issuance, sale and delivery of the Refunded Bonds.
"Refunded Bonds" shall mean the City's Waterworks and Sanitary
Sewer System Revenue Bonds, Series 1983, dated April 1, 1983, in
the aggregate principal amount of $1,650,000, maturing on October 1
in each of the years 1994 through 2002, both inclusive.
"Refunding Bonds" shall mean the City's Waterworks and
Sanitary Sewer System Revenue Refunding Bonds, Series 1992, dated
April 1, 1992, in the initial aggregate principal amount of
$1,860,000.
"Refunding Bond Ordinance" shall mean the City's Ordinance
adopted April 28, 1992, authorizing the issuance, sale and delivery
of the Refunding Bonds.
"Report" shall mean the verification report prepared by KPMG
Peat Marwick relating to the advance refunding of the Refunded
Bonds, a copy of which is attached hereto as Exhibit A, and any
subsequent report required by Section 5.02.
Section 1.02. Interpretations. The titles and headings of
the articles and sections of this Escrow Agreement 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 the terms hereof. This Escrow Agreement and all of the
terms and provisions hereof shall be liberally construed to
effectuate the purposes set forth herein and to achieve the
intended purpose of providing for the refunding of the Refunded
Bonds in accordance with applicable law.
ARTICLE II
DEPOSIT OF FUNDS AND ESCROWED SECURITIES
Section 2.01. Deposits with Escrow Agent; Acquisition of
Escrowed Securities,. On the Escrow Funding Date the City will
deposit, or cause to be deposited, with the Escrow Agent the
following:
(a) Escrowed Securities in the principal amount of
$ , purchased with proceeds of the Refunding
Bonds; and
(b) A beginning cash balance of $
ARTICLE III
CREATION AND OPERATION OF ESCROW FUND
Section 3.01. Escrow Fund. On the Escrow Funding Date the
Escrow Agent will create on its books a special fund and
irrevocable escrow to be known as the City of Huntsville, Texas,
Waterworks and Sanitary Sewer System Revenue Refunding Bonds,
Series 1992 Escrow Fund, into which will be deposited the cash and
the Escrowed Securities described in Section 2.01. The Escrowed
Securities, all proceeds therefrom and all cash balances from time
-3-
to time on deposit in the Escrow Fund shall be the property of the
Escrow Fund, and shall be applied only in strict conformity with
the terms and conditions hereof. The Escrowed Securities, all
proceeds therefrom and all cash balances from time to time on
deposit in the Escrow Fund are hereby irrevocably pledged to the
payment of the principal of and interest on the Refunded Bonds,
which payment shall be made by timely transfers to the Paying
Agents for the Refunded Bonds of such amounts at such times as are
provided in Section 3.02 hereof. When the final transfers have
been made to the Paying Agents for the Refunded Bonds for the
payment of such principal of and interest on the Refunded Bonds,
any balance then remaining in the Escrow Fund shall be transferred
to the City, and the Escrow Agent shall thereupon be discharged
from any further duties hereunder.
Section 3.02. Payment of Principal of and Interest on
Refunded Bonds. (a) The Escrow Agent is hereby irrevocably
instructed to transfer to the Paying Agents for the Refunded Bonds
from the cash balance from time to time on deposit in the Escrow
Fund the amounts required to pay the principal of and interest on
the Refunded Bonds as the same become due and payable, all as
provided in the Report.
(b) Money transferred to and held by the Paying Agents for
the Refunded Bonds in accordance with the provisions hereof shall
be held by the Paying Agents for the Refunded Bonds as a separate
trust fund for the account of the respective Owners of the Refunded
Bonds in connection with which such money is held; provided,
however, that money so held remaining unclaimed by the Owners of
such Refunded Bonds for three (3) years after the dates on which
payment thereon was due, shall be reported and disposed of in
accordance with the provisions of Texas law including, to the
extent applicable, Title 6 of the Texas Property Code, as amended.
Section 3.03. Sufficiency of Escrow Fund. The City
represents (based solely upon the Report) that the successive
receipts of the principal of and interest on the Escrowed
Securities will assure that the cash balance on deposit from time
to time in the Escrow Fund will be at all times sufficient to
provide money for transfer to the Paying Agents for the Refunded
Bonds at the times and in the amounts required to pay the interest
on the Refunded Bonds as such interest comes due and to pay the
principal of the Refunded Bonds as the Refunded Bonds mature or are
redeemed. If any deficiency results from any error in the
calculations set forth in the Report, the City shall transfer to
the Escrow Agent for deposit to the Escrow Fund an additional
amount of cash or securities sufficient to provide for such
deficiency.
Section 3.04. Escrow Fund. The Escrow Agent at all times
shall hold the Escrow Fund, the Escrowed Securities and all other
assets of the Escrow Fund wholly segregated from all other funds
and securities on deposit with the Escrow Agent; it shall never
allow the Escrowed Securities or any other assets of the Escrow
Fund to be commingled with any other funds or securities of the
Escrow Agent; and it shall hold and dispose of the assets of the
Escrow Fund only as set forth herein. The Escrowed Securities and
other assets of the Escrow Fund always shall be maintained by the
Escrow Agent for the benefit of the Owners of the Refunded Bonds;
and a special account therefor evidencing such fact shall be
maintained at all times on the books of the Escrow Agent. The
Owners of the Refunded Bonds shall be entitled to the same
preferred claim and first lien upon the Escrowed Securities, the
proceeds thereof and all other assets of the Escrow Fund as are
enjoyed by other beneficiaries of similar accounts. The amounts
received by the Escrow Agent under this Escrow Agreement shall not
be considered as a banking deposit by the City, and the Escrow
Agent shall have no right or title with respect thereto except as
escrow agent under the terms hereof. The amounts received by the
Escrow Agent hereunder shall not be subject to warrants, drafts or
checks drawn by the City.
Section 3.05. Security for Cash Balances. Cash balances from
time to time on deposit in the Escrow Fund, to the extent not
insured by the Federal Deposit Insurance Corporation or its
successor, shall be continuously secured by a pledge of direct
obligations of, or obligations unconditionally guaranteed by, the
United States of America, having a market value at least equal to
such cash balances.
ARTICLE IV
REDEMPTION OF CERTAIN
REFUNDED BONDS PRIOR TO MATURITY
Section 4.01. Optional Redemption. The City has irrevocably
exercised its option to call the following bonds of the City for
redemption prior to maturity on the date set forth below, at a
price of par plus accrued interest to the date fixed for
redemption, and authorized and directed notice of such redemption
to be given in accordance with the ordinance authorizing the
issuance of such bonds:
Bonds to be Redeemed Redemption Date
Waterworks and Sanitary Sewer System
Revenue Bonds, Series 1983
Maturities 1994 through 2002
October 1, 1993
ARTICLE V
LIMITATION ON INVESTMENTS
Section 5.01. General. Except as herein otherwise expressly
provided, the Escrow Agent shall not have any power or duty to
invest any money held hereunder; or to make substitutions of the
Escrowed Securities; or to sell, transfer or otherwise dispose of
the Escrowed Securities.
Section 5.02. Substitution of Securities. At the written
request of the City, and upon compliance with the conditions
hereinafter stated, the Escrow Agent shall sell, transfer,
otherwise dispose of or request the redemption of all or any
portion of the Escrowed Securities and apply the proceeds therefrom
to purchase Refunded Bonds or direct obligations of, or obligations
the principal of and interest on which are unconditionally
guaranteed by, the United States of America and which do not
permit the redemption thereof at the option of the obligor. Any
such transaction may be effected by the Escrow Agent only if (1)
the Escrow Agent shall have received a written opinion from a
nationally recognized firm of certified public accountants
acceptable to the City and the Escrow Agent that such transaction
will not cause the amount of money and securities in the Escrow
Fund to be reduced below an amount which will be sufficient, when
added to the interest to accrue thereon, to provide for the payment
of principal and interest on the remaining Refunded Bonds as they
become due, and (2) the Escrow Agent shall have received the
unqualified written legal opinion of nationally recognized bond
counsel acceptable to the City and the Escrow Agent to the effect
that (i) such transaction will not cause any of the Refunding Bonds
to be an "arbitrage bond" within the meaning of the Code, and (ii)
that such transaction complies with the Constitution and laws of
the State of Texas and with all relevant documents relating to the
issuance of the Refunded Bonds and the Refunding Bonds.
ARTICLE VI
RECORDS AND REPORTS
Section 6.01. Records. The Escrow Agent shall keep books of
record and account in which complete and correct entries shall be
made of all transactions relating to the receipts, disbursements,
allocations and application of the money and Escrowed Securities
deposited to the Escrow Fund and all proceeds thereof, and such
books shall be available for inspection at reasonable hours and
under reasonable conditions by the City and the Owners of the
Refunded Bonds.
Section 6,02. Reports. For the period beginning on the
Escrow Funding Date and ending on October 1, 1992, and for each
twelve (12) month period thereafter while this Agreement remains
in effect, the Escrow Agent shall prepare and send to the City, at
the City's request, within thirty (30) days following the end of
such period a written report summarizing all transactions relating
to the Escrow Fund during such period, including, without
limitation, credits to the Escrow Fund as a result of interest
payments on or maturities of the Escrowed Securities and transfers
from the Escrow Fund to the Paying Agents for the Refunded Bonds
or otherwise, together with a detailed statement of all Escrowed
Securities and the cash balance on deposit in the Escrow Fund as
of the end of such period.
Section 6.03. Notification. The Escrow Agent shall notify
the City immediately if at any time during the term of this
agreement it determines that there is insufficient cash and
Escrowed Securities in the Escrow Fund to provide for the transfer
to the Paying Agents for the Refunded Bonds for timely payment of
all interest on and principal of the Refunded Bonds.
ARTICLE VII
CONCERNING THE ESCROW AGENT
Section 7.01. Representations. The Escrow Agent hereby
represents that it has all necessary power and authority to enter
into this Escrow Agreement and undertake the obligations and
responsibilities imposed upon it herein, and that it will carry out
all of its obligations hereunder.
Section 7,02. Limitation on Liability. The Escrow Agent
shall not be liable for any action taken or neglected to be taken
in good faith in the exercise of reasonable care and believed to
be within the discretion or power conferred by this Escrow
Agreement, nor shall it be responsible for the consequences of any
error of judgment; and it shall not be answerable except for its
own neglect or default, nor for any loss unless the same shall have
been through its negligence or want of good faith.
The liability of the Escrow Agent to transfer funds to the
Paying Agents for the Refunded Bonds for the payments of the
principal of and interest on the Refunded Bonds shall be limited
to the proceeds of the Escrowed Securities and the cash balances
from time to time on deposit in the Escrow Fund. Notwithstanding
any provision contained herein to the contrary, the Escrow Agent
shall have no liability whatsoever for the insufficiency of funds
from time to time in the Escrow Fund or any failure of the obligor
of the Escrowed Securities to make timely payment thereon, except
for the obligation to notify the City promptly of any such
occurrence.
The recitals herein and in the proceedings authorizing the
Refunding Bonds shall be taken as the statements of the City and
shall not be considered as made by, or imposing any obligation or
liability upon, the Escrow Agent. In its capacity as Escrow Agent,
it is agreed that the Escrow Agent need look only to the terms and
provisions of this Escrow Agreement.
The Escrow Agent makes no representation as to the value,
condition or sufficiency of the Escrow Fund, or any part thereof,
or as to the title of the City thereto, or as to the security
afforded thereby or hereby, and the Escrow Agent shall incur no
liability or responsibility with respect to any of such matters.
It is the intention of the City and the Escrow Agent that the
Escrow Agent shall never be required to use or advance its own
funds or otherwise incur personal financial liability in the
performance of any of its duties or the exercise of any of its
rights and powers hereunder.
Unless it is specifically provided otherwise herein, the
Escrow Agent has no duty to determine or inquire into the happening
or occurrence of any event or contingency or the performance or
failure of performance of the City with respect to arrangements or
contracts with others, with the Escrow Agent's sole duty hereunder
being to safeguard the Escrow Fund and to dispose of and deliver
the same in accordance with this Escrow Agreement. If, however,
the Escrow Agent is called upon by the terms of this Escrow
Agreement to determine the occurrence of any event or contingency,
the Escrow Agent shall be obligated, in making such determination,
only to exercise reasonable care and diligence, and in event of
error in making such determination the Escrow Agent shall be liable
only for its own misconduct or its negligence. In determining the
occurrence of any such event or contingency the Escrow Agent may
request from the City or any other person such reasonable
additional evidence as the Escrow Agent in its discretion may deem
necessary to determine any fact relating to the occurrence of such
event or contingency, and in this connection may make inquiries of,
and consult with the City, among others, at any time.
Section 7.03. Compensation. (a) On the Escrow Funding Date
the City will pay the Escrow Agent, as a fee for performing the
services hereunder and for all expenses incurred or to be incurred
by the Escrow Agent in the administration of this Escrow Agreement,
and for its services in its capacity as the Paying Agents for the
Refunded Bonds, the sum of $ . If the Escrow Agent is
requested to perform any extraordinary services hereunder, the City
hereby agrees to pay reasonable fees to the Escrow Agent for such
extraordinary services and to reimburse the Escrow Agent for all
expenses incurred by the Escrow Agent in performing such
extraordinary services. It is expressly provided that the Escrow
Agent shall look only to the City for the payment of such
additional fees and reimbursement of such additional expenses. The
Escrow Agent hereby agrees that in no event shall it ever assert
any claim or lien against the Escrow Fund for any fees for its
services, whether regular, additional or extraordinary, as Escrow
Agent, or in any other capacity, or for reimbursement for any of
its expenses.
Section 7.04. Successor Escrow Agents. Either the City or
the Escrow Agent may terminate this Escrow Agreement on 60 days
written notice, but no such termination shall be effective until
a successor has been appointed and has accepted such appointment.
Any successor Escrow Agent appointed by the City shall succeed,
without further act, to all the rights, immunities, powers and
trusts of the predecessor Escrow Agent hereunder. Upon the request
of any such successor Escrow Agent, the City shall execute any and
all instruments in writing for more fully and certainly vesting in
and confirming to such successor Escrow Agent all such immunities,
rights, powers and duties. The Escrow Agent shall pay over to its
successor Escrow Agent a proportional part of the Escrow Agent's
fee hereunder equal to the portion of such fee attributable to
duties to be performed after the date of succession.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notices. Any notice, authorization, request,
or demand required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when mailed by
registered or certified mail, postage prepaid addressed as follows:
To the Escrow Agent:
First Interstate Bank of Texas, N.A.
P. 0. Box 4441
Houston, TX 77210 -4441
Attention: Corporate Trust
To the City:
City of Huntsville
Attention: Mayor
1212 Avenue M
Huntsville, TX 77340
The United States Post Office registered or certified mail
receipt showing delivery of the aforesaid shall be conclusive
evidence of the date and fact of delivery. Any party hereto may
change the address to which notices are to be delivered by giving
to the other parties not less than ten days prior notice thereof.
Section 8.02. Termination of Escrow Agent's Obligations.
Upon the taking by the Escrow Agent of all the actions as described
herein, the Escrow Agent shall have no further obligations or
responsibilities hereunder to the City, the Owners of the Refunded
Bonds or to any other person or persons in connection with this
Escrow Agreement.
Section 8.03. Binding Agreement. This Escrow Agreement shall
be binding upon the City, and the Escrow Agent and their respective
successors and legal representatives, and shall inure solely to the
benefit of the Owners of the Refunded Bonds, the City, the Escrow
Agent and their respective successors and legal representatives.
Section 8.04. Severability. In case any one or more of the
provisions contained in this Escrow Agreement shall for any reason
be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
any other provisions of this Escrow Agreement, but this Escrow
Agreement shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein.
Section 8.05. Governing Law. This Escrow Agreement shall be
governed exclusively by the provisions hereof and by the applicable
laws of the State of Texas.
Section 8.06. Time of Essence. Time shall be of the essence
in the performance of obligations from time to time imposed upon
the Escrow Agent by this Escrow Agreement.
Executed as of April 28, 1992, but effective as set forth
herein.
dr..
ATTEST:
City Secretary
(SEAL)
ATTEST:
By:
Title:
(SEAL)
CITY OF HUNTSVILLE, TEXAS
FIRST INTERSTATE BANK OF
TEXAS, N.A., as Escrow Agent
By:
Title: