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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: