Loading...
HomeMy WebLinkAboutORD 1444 - ORD Authorizing Issuance of West U Refunding Bonds Series 1992 ORDINANCE NO. 1444 ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF WEST UNIVERSITY PLACE, TEXAS, 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; AND DECLARING AN EMERGENCY THE STATE OF TEXAS 3 COUNTY OF HARRIS 3 CITY OF WEST UNIVERSITY PLACE 3 WHEREAS, the City of West University Place, Texas (the "City") has heretofore issued its Public Improvement Bonds, Series 1983, Series 1986 and Series 1988 (the "outstanding Bonds"); and WHEREAS, the City desires to refund a portion of the outstanding Bonds in advance of their maturities (the "Refunded Bonds"); and WHEREAS, Article 717k, Vernon I s Texas civil Statutes, as amended, authorizes the City to issue refunding bonds payable from taxes, 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 av,ailable 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 ordinances 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 WEST UNIVERSITY PLACE: 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 detenr.ined that the transactions contemplated in this Ordinance will result in a present value savings in the debt service payable by the City, and that such benefit is sufficient consideration for the refunding of the Refunded Bonds. 2 . Definitions. Throughout this Ordinance the following terms and expressions as used herein shall have the meanings set forth below: The term "Act" shall mean Article 717k, Vernon's Texas civil statutes, as amended. The term "Bonds" shall mean the $10,160,000 City of West University Place, Texas, Refunding Bonds, Series 1992, authorized in this Ordinance, unless the context clearly indicates otherwise. The term "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, or a legal holiday. The term "City" shall mean the City of West University Place, Texas. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Escrow Agent" shall mean First City, Texas-Houston, N.A., Houston, Texas. The term "Escrow Agreement" shall mean the agreement between the City and the Escrow Agent relating to the escrow of funds to pay the Refunded Bonds. The term "Insurer" shall mean Municipal Bond Investors Assurance Corporation. The term "Interest and Sinking Fund" shall mean the interest and sinking fund for payment of the Bonds established by the city in section 19 of this Ordinance. -2- The term "Interest Payment Date", when used in connection with any Bond, shall mean February 1, 1993, and each August 1 and February 1 thereafter until maturity or earlier redemption. The term "Ordinancell as used herein and in the Bonds shall mean this ordinance authorizing the Bonds. The term "Ownerll shall mean any person who shall be the registered own~r of any outstanding Bond. The term "Paying Agentll shall mean the Registrar. The term IIRecord Datell shall mean the close of business on the fifteenth calendar day of the month next preceding each Interest Payment Date. The term "Refunded Bonds" shall mean the City's Public Improvement Bonds, Series 1983, in the aggregate principal amount of $1,925,000, maturing on February 1 in the years 1994 through 2003, both inclusive, the City's Public Improvement Bonds, Series 1986, in the aggregate principal amount of $2,840,000, maturing on February 1 in each of the years 1996 through 2006, both inclusive, and the City's Public Improvement Bonds, Series 1988, in the aggregate principal amount of $4,500,000, maturing on April 1 in each of the years 2000 through 2008, both inclusive. The term IIRegisterll shall mean the books of registration kept by the Registrar, in which are maintained the names and addresses of, and the principal amounts of the Bonds registered to, each Owner. The term "Registrar" shall mean First City, Texas-Houston, N.A., Houston, Texas, and its successors in that capacity. The term "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. The term "Underwriters" shall mean Rauscher pierce Refsnes, Inc., Coastal Securities Corporation, and Masterson Moreland Sauer Whisman, Inc. 3. Authorization. The Bonds shall be issued, pursuant to the Act, in fully registered form in the principal amount of Ten Million One Hundred Sixty Thousand Dollars ($10,160,000) for the purpose of refunding the Refunded Bonds. 4. Desianation, Date, and Interest Payment Dates. The Bonds shall be designated as "CITY OF WEST UNIVERSITY PLACE, TEXAS, -3- REFUNDING BONDS, SERIES 1992" and shall be dated August 15, 1992. The Bonds shall bear interest at the rates set forth in section 5 of this Ordinance from the later of August 15, 1992, or the most recent Interest Payment Date to which such interest has been paid or duly provided for, calculated on the basis of a 360 day year of twelve 30 day months, interest payable on February I, 1993, and semiannually thereafter on August 1 and February 1 of each year until maturity or prior redemption. . 5. Ini tial Bonds: Numbers and. Denominations. 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, subj ect to prior redemption in accordance with this Ordinance, on February 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 in~egral 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 Interest Number ~ Amount Rate R- 1 1994 $ 25,000 3.75% R- 2 1995 75,000 4.00% R- 3 1996 390,000 4.40% R-'4 1997 435,000 4.625% R- 5 1998 485,000 4.875% R- 6 1999 460,000 5.00% R- 7 2000 900,000 5.25% R- 8 2001 930,000 5.40% R- 9 2002 980,000 5.50% R-I0 2003 1,040,-000 5.60% R-ll 2004 1,100,000 5.70% R-12 2005 1,165,000 5.75% R-13 2006 1,235,000 5.75% R-14 2007 940,000 5.75% 6. Execution of Bonds: Seal. The Bonds shall be signed 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 -4- 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 s~fficient for all purposes as if such officer had remained in such office. 7. Approval bv Attornev General; Reqistration bv Comptroller. The Bonds to be initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller. The manually executed registration certificate of the Comptroller substantially in the form provided in section 17 of this Ordinance shall be attached or affixed to the Bonds to be initially issued. 8. Authentication. Except for the Bonds to be initially issued, which need not be authenticated by the Registrar, only such Bonds which bear thereon a certificate of authentication, substantially in the form provided in section 17 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 Bonds so authenticated were delivered by the Registrar hereunder. 9. Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent and reglstrar for the Bonds. The prin9ipal of the Bonds shall be ~ayable, 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, whether at maturity or by prior redemption, 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. 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. 10. Successor Registrars. The City covenants that at all times while any Bonds are outstanding it will provide a national or state banking corporation organized and doing business under the laws of the United States or any State, with trust powers and subject to supervision or examination by Federal or State authority to act as Registrar 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 -5- 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. 11. 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. 12. 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 12 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. 13. Reqistration, Transfer, and Exchanqe. 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. -6- 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 13. Each Bond delivered in accordance with this section 13 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 r~quire 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. 14. 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 -7- 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 d~livered 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 14 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. 15. 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. 16. optional Redemption. The City reserves the right to redeem Bonds prior to maturity, in whole or from time to time in -8- part, on February 1, 2002, or any date thereafter at a price of par plus accrued interest on the Bonds called for redemption to the date fixed for redemption. If less than all of the Bonds are redeemed, the particular Bonds or portions thereof to be redeemed shall be selected by the city. Principal amounts may be redeemed only in integral multiples of $5,000. If a Bond subject to redemption is in a denomination larger than $5,000, a portion of such Bond may be redeemed, but only in integral multiples of $5,000. Upon surrender of any Bond for redemption in part, the Registrar, in accordance with section 13 hereof, shall authenticate and deliver in exchange therefor a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. Notice of any redemption identifying the Bonds to be redeemed in whole or in part shall be given by the Registrar at least thirty days prior to the date fixed for redemption by sending written notice by first class mail to the Owner of each Bond to be redeemed in whole or in part at the address shown on the Register. Such notices shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all Bonds outstanding of a particular maturity are to be redeemed, the numbers of the Bonds or portions thereof of such maturity to be redeemed. Any notice given as provided in this Section 16 shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Bonds or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When Bonds have been called for redemption in whole or in part and due provision has been made to redeem same as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. 17. 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: -9- FORM OF BONDS united States of America State of Texas NUMBER R- REGISTERED DENOMINATION $ REGISTERED CITY OF WEST UNIVERSITY PLACE, TEXAS REFUNDING BOND SERIES 1992 INTEREST RATE: MATURITY DATE: ISSUE DATE: August 15, 1992 CUSIP: REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS The City of West university Place, Texas (the "City") promises to pay 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 City, Texas-Houston, 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 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 August 15, i992, 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 February 1 and August 1, beginning on February 1, 1993, mailed to the registered owner of record as of the fifteenth calendar day of the month next preceding each interest payment date. 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 -10- official seal of the city has been duly impressed, or placed in facsimile, on this Bond. (AUTHENTICATION CERTIFICATE) ( SEAL) CITY OF WEST UNIVERSITY PLACE, TEXAS Mayor City Secretary (Back Panel of Bond) THIS BOND is one of a duly authorized issue of Bonds, aggregating $10,160,000 (the "Bonds.'), issued for the purpose of refunding a portion of the City.s outstanding bonds, pursuant to an ordinance adopted by the City Council on August 24, 1992 (the ilOrdinanceil). THE CITY RESERVES THE RIGHT to redeem Bonds maturing on and after February 1, 2003, in whole or from time to time in part, in integral multiples of $5,000, on FelJruary 1, 2002, or any date thereafter at par and accrued interest on the principal amounts called for redemption to the date fixed for redemption. Reference is made tb the Ordinance for complete details concerning the manner of redeeming the Bonds. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior to the date fixed for redemption by first class mail, addressed to the registered owners of each Bond to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Bonds or portions thereof have been called for redemption, and due provision has been made to redeem the same, the amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. 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 office of the Registrar for Bonds in the principal or any integral multiple thereof, subject to conditions of the Ordinance. corporate trust amount of $5,000 the terms and -11- 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. IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Bond have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes, within the limits prescribed by law, sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due and such principal matures, have bean levied and ordered to be levied against all taxable property in the City, and have been pledged irrevocably for such payment. Form of Registration Certificate of Comnrroll pr of Pl1hl i (" 2l.(",(",r"IllTl'h:: 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 xxxxxxxxxx Comptroller of Public Accounts of the State of Texas ( SEAL) -12- Form of Reqistrar's 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 City, Texas-Houston, N.A. By Authorized Signature Date of Authentication Form of Assianment 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: 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. NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. Form of Statement 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 city, Texas-Houston, N .A. , Houston, Texas. -13- 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 City, Texas-Houston, 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 defaul t 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 consti tutes an avoidable preference to such owner wi thin 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: $10,160,000 City of West University Place, Texas, Refunding Bonds, Series 1992. Upoo 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, 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 -14- 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 18. Leqal Opinion ~ 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 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 is hereby authorized. All officials and representations 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. 19. Interest and Sinkinq Fund~ Tax Levy. There is hereby established a separate fund of the City to be known as the City of West University Place, Texas, Refunding Bonds, Series 1992 Interest and Sinking Fund (the "Interest and Sinking Fund"), which shall be kept separate and apart from all other funds of the City. The proceeds from all taxes levied, assessed and collected for and on account of the Bonds authorized by this Ordinance shall be deposited, as collected, in the Interest and sinking Fund. While the Bonds or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there -15- shall be annually assessed and collected in due time, form and manner, and at the same time as other City taxes are assessed, levied and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax, within the limits prescribed by law, upon all taxable property in the City, sufficient to pay the current interest on the Bonds as the same becomes due and to provide and maintain a sinking fund of not less than two percent of the principal amount of the Bonds or the amount required to pay each installment of principal of the Bonds as the same matures, whichever is greater, full allowance being made for delinquencies and costs of collection, and said taxes are hereby irrevocably pledged to the payment of the interest on and principal of the Bonds and to no other purpose. The City's tax rate for the year 1992 has not yet been determined, and it is hereby covenanted and certified that such rate, when determined, will take into account the debt service on the Bonds. 20. Further Proceedinqs. After the Bonds to be initially issued shall have been executed, it shall be the duty of the Mayor and other appropriate officials and agents of the City to deliver the Bonds to be initially issued and all pertinent records and proceedings to the Attorney General of the state of Texas, for examination and approval. After the Bonds to be initially issued shall have been approved by the Attorney General, they shall be delivered to the Comptroller for registration. Upon registration of the Bpnds to be initially issued, the Comptroller (or the Comptroller's bond clerk or an assistant bond clerk lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein and the seal of said Comptroller shall be impressed, or placed in facsimile, thereon. 21. Sale; Bond Purchase Agreement. The Bonds are hereby sold and shall be delivered to the Underwriters at a price of $9,931,996.15 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. 22. Tax Exemption. (a) General Tax Covenant. The City intends that the interest on the Bonds shall be excludable from -16- 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 22; provided, howev&r, that the City shall not be required to comply with any particular requirement of this section 22 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 22 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 22. (b) 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 her~inafter 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 principal of and interest on the Refunded Bonds has heretofore been paid, and the principal of and interest on the Bonds will be- paid, solely out of ad valorem tax collections, together with investment interest earnings thereon, and there are no other funds generated by the property financed or refinanced by the Refunded Bonds that would have been or could be used for purposes of paying such debt service. The City will limit to an amount not exceeding ten percent of the Net Proceeds of the Bonds, the amount of principal of, or interest on, such Bonds the payment of which is (under the terms of such Bonds or any underlying arrangement) directly or indirectly (A) secured by an interest in property, or payments in respect of property, used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit ("private business use"), or (B) to be derived from payments (whether or not to the District) in respect of -17- property, or borrowed money, used or to be used for a private business use. 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 property financed or refinanced by the Refunded 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 consti tute the use of such property in the trade or business of one who is not a governmental unit; (ii) The City will limit to an amount not exceeding five percent of the Net Proceeds 0f the Bonds, the amount of principal of, or interest on, such Bonds which is (i) secured by any interest in property or payments in respect of property used in any private business use or (ii) to be derived from payments in respect of property or borrowed money, used or to be used for a private business use, to the extent such use is unrelated to the governmental purpose of the Bonds; and (iii) The City has not permitted and will not permit an amount of proceeds of any issue of the Refunded Bonds exceeding the lesser of (a) $5,000,000 or (b) five percent of the Net Proceeds of such issue of Refunded Bonds to be used, directly or indirectly, to finance loans to persons other than governmental unit. When used in this Section 22, 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 Hedqe Bonds. The city represents that not more than 50 percent of the proceeds of any issue of the Refunded -18- 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 wi thin the meaning of section 149(g) (3) (A) (ii) of the Code, and the City reasonably expected at the time the Refunded Bonds were issued that at least 85 percent of the spendable proceeds of each issue of the Refunded Bonds would be used to carry out the governmental purposes of such Refunded Bonds within the corresponding three-year period beginning on the respective dates of such Refunded Bonds. (e) No-Arbitraqe 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) Arbitraqe Rebate. 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 or on such other dates as may be permitted by applicable regulations, 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 -19- 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 RenortinQ_ 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. 23. Use of Procppn~ 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 in direct obligations of the United States of America. (b) The balance of the proceeds from the sale of the Bonds shall be applied, together with other lawfully available funds of the City, 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 and constitute a reserve in such fund. 24. 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 First City, Texas-Houston, N.A., Houston, Texas, as 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 ci ty by the Underwriters, and 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 Tern 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 -20- Secretary is hereby authorized to attest thereto and affix the City's seal. 25. Redemption of Refunded Bonds. The City hereby irrevocably calls the following bonds of the City for redemption prior to maturity on the dates set forth below, at a price of par plus accrued interest to the dates fixed for redemption, and authorizes and directs notice of such redemption to be given in accordance with the ordinances authorizing the 'issuance of such bonds: Bonds to be Redeemed Redemption Date Public Improvement Bonds, Series 1983 Maturities 1994 through 2003 February 1, 1993 Public Improvement Bonds, Series 1986 Maturities 1996 through 2006 February 1, 1995 Public Improvement Bonds, Series 1988 Maturities 2000 through 2008 April 1, 1999 26. 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 Director of Finance and Administrative Services, 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. 27. Payments under the Bond Insurance 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. -21- 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 rece:>ived), (b) receive as designee of the respective Owners (and not as Paying Agent) in accordance with the tenor of the Policy payment -22- 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 fo~ 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 ~he 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. 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. removal thereto. The Insurer shall receive notice of the resignation or of the Registrar and the appointment of a successor -23- 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. 28. 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. 29. 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 Director of Finance and Administration, 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. 30. . Transfer from Interest ~nrl Sinkinq ~lnrl~ On the date of delivery of and payment for the Bonds there shall be transferred from the interest and sinking funds for the Refunded Bonds to the Escrow Agent, an amount sufficient, when added to the proceeds of the Bonds, to provide for the refunding of the Refunded Bonds, all as set out in the Report. 31- duties of officials agreement Reaistrar. The form of' agreement setting forth the the Registrar is hereby approved, and the appropriate of the City are hereby authorized to execute such for and on behalf of the city. 32. 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 Underwriters and other relevant matters. The use of such Official statement in the reOffering of the Bonds by the Underwriters 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 -24- therein, dated as of the date of paYMent for and delivery of the Bonds. 33. 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. 34. Open Meetinq. 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. 35. Emerqency. The urgent need to effect a reduction in debt service for the City constitutes an emergency and public necessity requiring that this Ordinance be finally passed on first reading and shall take effect immediately, and it is so ordained. PASSED AND APPROVED THIS 24th day of August, 1992. jj.j;u/f--~~/ ayor CITY OF WEST UNIVERSITY PLACE, TEXAS ATTEST: ~t~~ CITY OF WEST UNIVERS TY PrACE , TEXAS ( SEAL) :\~AA: City Attorney CITY OF WEST UNIVERSITY PLACE, TEXAS -25- EXHIBIT A ESCROW AGREEMENT THIS ESCROW AGREEMENT (the "Escrow Agreement") dated for convenience August 24, 1992, but effective on the Escrow Funding Date described herein, is made and entered into by and between the City of West University Place, Texas, an incorporated city of the State of Texas (the "City"), and First City, Texas-Houston; N.A., Houston Texas (the "Escrow Agentll) . WHEREAS, the City has heretofore issued and there remain outstanding the City's Public Improvement Bonds, Series 1983, dated February 1, 1983, the City's Public Improvement Bonds, Series 1986, dated August 1, 1986, and the City's Permanent Improvement Bonds, Series 1988, dated October 1, 1988 (the "outstanding Bondsll); and WHEREAS, the City desires to refund in advance of maturity a portion of such Outstanding Bonds in the aggregate principal amount of $9,265,000 (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 payable from ad valorem taxes of the city, 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 Refunding Bonds, Series 1992, in the aggregate principal amount of $10,160,000 (the "Refunding Bonds"), for the purpose, among others, of providing the funds necessary to refund the Refundsd 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 in order 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 West University Place, 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 City, Texas-Houston, 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 the direct non-callable obligations of or direct, non-callable, non-prepayable obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America, payable to the City for deposit into the Escrow Fund and initially purchased with proceeds of the Refunding Bonds and other funds, all as more fully described in the Report. "paying Agent for the Refunded Bonds" shall mean First City, Texas-Houston, N.A., Houston, Texas (formerly First city National Bank of Houston, Houston, Texas). IIRefunded Bond Ordinances" shall mean the city's ordinances authorizing the issuance, sale and delivery of the Refunded Bonds. -2- "Refunded Bonds" shall mean th8 City's Public Improvement Bonds, Series 1983, in the aggregate principal amount of $1,925,000, maturing on February 1 in the years 1994 thrugh 2003, both inclusive, the City's Public Improvement Bonds, Series 1986, in the aggregate principal amount of $2,840,000, maturing on February 1 in each of the years 1996 through 2006, both inclusive, and the City's Public Improvement Bonds, Series 1988, in the aggregate principal amount of $4,500,000, maturing on April 1 in each of the years 2000 through 2008, both inclusive. "Refunding Bonds" shall mean the City's Refunding Bonds, Series 1992, dated August 15, 1992, in the initial aggregate principal amount of $10,160,000. "Refunding Bond Ordinance" shall mean the City's Ordinance adopted August 24, 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. Inter~retations. 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. De~osi ts with Escrow AQ'Fmt ~ Ar.ml;!=:; 1-; on of Escrowed Securities. On the Escrow Funding Date the District 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 other funds; and (b) A beginning cash balance of $ -3- 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 West University Place, Texas, Refunding Bonds, Series 1992 Escrow Fund, into which will be deposited the cash -and Escrowed Securities described in section 2.01. The Escrowed Securities, all proceeds therefrom and all cash balances from time 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 Agent 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 Agent 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 instruct~d to transfer to the Paying Agent 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 Agent for the Refunded Bonds in accordance with the provisions hereof shall be held by the Paying Agent 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 Agent for the Refunded -4- 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 to be held pursuant to this Escrow Agreement an additional amount of cash or securities sufficient to provide for such'deficiency. section 3.04. Security of 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; it shall hold and dispose of the assets of the Escrow Fund only as set forth herein, and the Escrow Agent shall at all times provide at its expense a surety bond or insurance policy covering theft or defalcation sufficient to protect the City and the Owners of the Refunded Bonds. 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. ootional Redemotion. The city has irrevocably exercised its option to call the following bonds of the City for -5- redemption prior to maturity on the dates set forth below, at a price of par plus accrued interest to the dates fixed for redemption, and authorized and directed notice of such redemption to be given in accordance with the ordinances authorizing the issuance of such bonds: Bonds to be Redeemed Redemption Date Public Improvement Bonds, Series 1983 Maturities 1994 through 2003 February 1, 1993 Public Improvement Bonds, Series 1986 Maturities 1996 through 2006 February 1, 1995 'Public Improvement Bonds, Series 1988 Maturities 2000 through 2008 April 1, 1999 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. Reinvestment. Amounts on deposit in the Escrow Fund shall be invested and reinvested at the times, in the amounts, and maturing and bearing interest, all as set out in the Report. Section 5.03. 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, non-callable obligations of, or direct, non-callable, non-prepayable obligations the principal of and interest on which are unconditionally guaranteed for full and timely payment 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 independent 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 -6- 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 counselor tax 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 RF.POR~~ 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. Reoorts. For the period beginning on the Escrow Funding Date and ending on February 1, 1993, 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 Agent 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. -7- "(g) lilt is additionall.v a defense to prosecution under Subsection (b) or (d) that the actor had taken reasonable precautions under the attendant circumstances to ensure that a child would not have the ability to obtain access to the fireann or an air rifle without supervision. Such precautions could include. but need not be limited to. the storage of the fireann or air rifle in a place where. at the time the access was obtained. an unsupervised child would not reasonably have been expected to have been able to gain access. Such precautions could also include: (i) storage of the fireann or air rifle in a locked safe. locked rack. locked hard case. locked soft case. locked drawer, locked cabinet or other locked container. or (ii) installation of a lock on the fireann or air rifle to prevent its normal function and discharge. "(h) The provisions of this Section shall not apply to the discharge of a weapon by City police officers or other law enforcement officers while perfonning their duties. "(i) To the extent that any conduct in violation of this Section also constitutes a violation of state law. then the conduct shall be punishable under the applicable state law. The City may petition the court hearing charges involving the violation of applicable state law and request that any fireann(s) fonning the basis of the violation be permanently seized and thereafter destroyed. Section 2. That Section 15-3 (relating to fireanns) of the Code of Ordinances of the City of West University Place. Texas is hereby amended to read in its entirety as follows: Sec. 15-3. Discharge of fireanns. It shall be unlawful for any person to discharge a fireann within the City. This section does not apply to city police officers or other law enforcement officers while perfonning their duties. It is a defense to prosecution under this section that the discharge was justified as provided in Chapter 9 of the Texas Penal Code. Section 3. All ordinances and parts of ordinances in conflict herewith are hereby repealed to the extent of the conflict only. ~ If any word. phrase, clause, sentence, paragraph, sec~ther part of this ordinance or the application thereof to any person or circumstance, shall ever be held invalid or -e .. .... -. unconstitutional by any court of competent jurisdiction, the remainder of this ordinance and the application of such word, phrase, clause, sentence, paragraph, section or other part of this ordinance to any other persons or circumstance shall not be affected thereby. Section 5. The City Council officially finds, determines and declares that a sufficient written notice of the date, hour, place, and subject of each meeting at which this ordinance was discussed, considered or acted upon was given in the manner required by the Open Meetings Law, TEX. REV. CIV. STAT. ANN. art. 6252-17 as amended, and that each such meeting has been open to the public as required by law at all times during such discussion, consideration and action. The City Council ratifies, approves, and confirms such notices and the contents and posting thereof. Section 6. This ordinance shall take effect on the tenth day following its publication, as prescribed by the City Charter. PASSED AND APPROVED ON FIRST READING, this . 1992. day of Voting Aye: Voting Nay: Absent: PASSED AND APPROVED ON SECOND READING, this , 1992 , day of Voting Aye: Voting Nay: Absent: Signed: ATTEST: APPROVED AS TO FORM: Kaylynn Holloway City Secretary James L. Dougherty, Jr. City Attorney (SEAL)