Loading...
HomeMy WebLinkAbout1996-2227 - Ordinance - 12/12/1996ORDINANCE NO. 2227 ORDINANCE AUTHORIZING THE ISSUANCE OF $10,110,000 CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE AND REFUNDING BONDS, SERIES 1996; EXECUTION OF AN ESCROW AGREEMENT, A BOND PURCHASE AGREEMENT, AND A PAYING AG ENTfREGISTRAR AGREEMENT; AND APPROVING ALL OTHER MATTERS RELATED TO ISSUANCE OF THE BONDS, INCLUDING IMMEDIATE EFFECTIVENESS WHEREAS, the City of College Station, Texas (the "City" or the "Issuer") has heretofore issued the following described outstanding bonds (collectively, the "Previously Issued Parity Bonds") to-wit: CITY OF COLLEGE STATION, TEXAS, UTILITY SYSTEM REVENUE REFUNDING BONDS, SERIES 1985, dated January 15, 1985, originally issued in the principal amount of $34,185,000 (the "Series 1985 Bonds"); CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE BONDS, SERIES 1990 in the principal amount of $4,800,000 (the "Series 1990 Bonds"); CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE AND REFUNDING BONDS, SERIES 1993, dated June 1, 1993, originally issued in the principal amount of' $5,850,000 (the "Series 1993 Bonds"); CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM KEVENUE BONDS, SERIES 1994, dated October I, 1994, originally issued in the principal amount of $16,500,000 (the "Series 1994 Bonds"); CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE BONDS, SERIES 1995, dated August 1, 1995, originally issued in the principal amount of $6,000,000 (the "Series 1995 Bonds"); and CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE REFUNDING BONDS, TAXABLE SERIES 1995, dated July I, 1995, originally issued in the principal amount of $7,125,000 (the "Taxable Series 1995 Bonds"); WHEREAS, all of the Previously Issued Parity Bonds are secured by a pledge of the net revenues from the operation of the City's combined waterworks system, sewer system, and electric light and power system and are on a parity with each other (and any Parity Bonds, hereinafter defined, which are hereafter authorized, issued, and delivered); WHEREAS, notice of intention to issue the bonds authorized hereby has been given by publication thereof in The Eagle, a newspaper of general circulation in the City, on November 27, 1996 and December 4, 1996; WHEREAS, the City desires to refund $2,600,000 of the Series 1990 Bonds maturing in the years 2001 through 2006, inclusive, at par; WHEREAS, Article 717k, Vemon's Texas Civil Statutes, as amended ("Article 717k"), authorizes the City to issue refunding bonds and to deposit the proceeds from the sale thereof, and any other available funds or resources, directly with a place of payment (paying agent) for the Refunded Obligations, and such deposit, if made before such payment dates, shall constitute the making of firm banking and financial arrangement for the discharge and final payment of the Refunded Bonds; WHEREAS, Article 717k further authorizes the City to enter into an escrow agreement with any paying agent for the Refunded Obligations with respect to the safekeeping, investment, reinvestment, administration, and disposition of any such deposit, upon such terms and conditions as the City and such paying agent may agree, provided that such deposits may be invested and reinvested in direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and which shall mature and bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment or prepayment of the Refunded Obligations; WHEREAS, Texas Commerce Bank National Association, as successor to First City, Texas - Houston, N.A., is the paying agent for the Refunded Obligations and the Escrow Agreement hereinafter authorized constitutes an escrow agreement of the kind authorized and permitted by Article 717k; WHEREAS, in accordance with Article 717k, all the Refunded Obligations mature or are subject to redemption prior to maturity within 20 years of the date of the refunding bonds hereinafter authorized; and THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF COLLEGE STATION, TEXAS THAT: Section I. Bonds Authorized. Pursuant to Article 717k and Article 1111 through 1118, Vernon's Texas Civil Statutes, as amended, and other applicable law, the City's bonds are hereby authorized to be issued to be designated as the "City of College Station, Texas Utility System Revenue and Refunding Bonds, Series 1996" in the aggregate principal amount of $I0,110,000 with $3,700,000 for the extensions and improvements to the City's electric light and power system; $3,200,000 for the extensions and improvements to the City's water system; and $500,000 for extensions and improvements to the City's wastewater system and the payment of contractual obligations for professional services in connection therewith (including, but not limited to, financial advisory, legal, and engineering), and with $2,710,000 for the purpose of providing money for the advance refunding of the Refunded Bonds and paying the costs of issuance of the Bonds. Section 2. Dates~ Maturities~ and Interest Rates. The Bonds shall be dated December 1, 1996, shall be in the denomination of $5,000 or any integral multiple thereof, shall be numbered I-1 for the Initial Bond and consecutively from R- 1 upward for the definitive bonds, and shall mature on the maturity date, in each of the years, and in the amounts, respectively, as set forth in the following schedule and shall bear interest at the following rates per annum: MATURITY DATE: FEBRUARY 1 INTEREST INTEREST YEAR AMOUNTS RATES YEAR AMOUNTS RATES 1998 $250,000 4.05% 2008 $ 360,000 5.05% 1999 260,000 4.15 2009 375,000 5.15 2000 270,000 4.30 2010 400,000 5.25 2001 680,000 4.40 2011 420,000 5.35 2002 685,000 4.50 2012 445,000 5.45 2003 690,000 4.60 2013 470,000 5.50 2004 700,000 4.70 2014 495,000 5.50 2005 805,000 4.80 2015 520,000 5.55 2006 810,000 4.90 *** *** *** 2007 340,000 5.05 2017 1,135,000 5.60 Such interest shall be payable on August 1, 1997 and semiannually thereafter on February 1 and August I. Said interest shall be payable to the registered owner of any such Bond in the manner provided in the FORM OF BONDS set forth in this Ordinance. Section 3. Right of Prior Redemption. The City reserves the right to redeem the Bonds maturing on or after February l, 2008, in whole or in part in principal amount of $5,000 or any integral multiple thereof, on February 1, 2007, or any date thereafter, at the par value thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot Bonds, or portions thereof, within such maturity or maturities and in such principal amounts, for redemption. The Bonds maturing in 2017 shall be subject to mandatory sinking fund redemption, in whole or in part (at a redemption price equal to the principal amount thereof and any accrued interest thereon to the date set for redemption), on February I in each of the years and in the amounts set forth below: Year Amount 2016 $550,000 2017 585,000 (final maturity) Notice of such redemption shall be given as provided in the FORM OF BOND in Section 5 hereof. If such notice of redemption is given, and if due provision for such payment is made, the Bonds, or the portions thereof which are to be so redeemed, thereby automatically shall be redeemed prior to their scheduled maturities, and shall not bear interest after the date fixed for their redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all such redemptions of principal of the Bonds or any portion thereof. By the date fixed for any such redemption due provision shall be made by the City with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds, or the portions thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such notice of redemption is given and if due provision for such payment is made, all as provided above, the Bonds, or the portions thereof which are to be so redeemed, thereby automatically shall be redeemed prior to their scheduled maturities and shall not bear interest after the date fixed for their redemption and shall not be regarded as being outstanding except for the right of the registered owner to receivethe redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. Ifa portion of any Bond shall be redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request ofthe registered owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the City all as provided in this Ordinance. Section 4. Pavine Aeent/Registrar. (a) The City shall keep or cause to be kept at the designated payment office of the Paying Agent/Registrar herein named, or such other bank, trust company, financial institution, or other entity duly qualified and legally authorized to serve and perform duties of and services of Paying Agent/Registrar, named in accordance with the provisions of (g) of this Section (the "Paying Agent/Registrar"), books or records of the registration and transfer of the Bonds (the "Registration Books"), and the City hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the City and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such transfers and registrations as herein provided. It shall be the duty of the Paying Agent/Registrar to obtain from the registered owner and record in the Registration Books the address of such registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided. The City or its designee shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. Registration of each Bond may be transferred in the Registration Books only upon presentation and surrender of such bond to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing the assignment of the bond, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and the right of such assignee or assignees to have the bond or any such portion thereof registered in the name of such assignee or assignees. Upon the assignment and transfer of any Bond or any portion thereof, a new substitute bond or bonds shall be issued in exchange therefor in the manner herein provided. (b) The entity in whose name any Bond shall be registered in the Registration Books at any time shall be treated as the absolute owner thereof for ali purposes of this Ordinance, whether or not such bond shall be overdue, and the City and the Paying Agent/Registrar shall not be affected by any notice to the contrary unless otherwise required by law; and payment of, or on account of, the principal of, premium, if any, and interest on any such bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon such bond to the extent of the sum or sums so paid. (c) The City hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to exchange or replace Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the City and the Paying Agent/Registrar with respect to the Bonds, and of all exchanges of such bonds, and all replacements of such bonds, as provided in this Ordinance. (d) Each Bond may be exchanged for fully registered bonds in the manner set forth herein. Each bond issued and delivered pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal balance or principal amount thereof, may, upon surrender of such bond at the designated payment office of the Paying Agent/Registrar, together with a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, at the option of the registered owner or such assignee or assignees, as appropriate, be exchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORM OF BONDS set forth in this Ordinance, in the denomination of $5,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated maturity date), as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid or unredeemed principal amount of any bond or bonds so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be. Ifa portion of any Bond shall be redeemed prior to its scheduled maturity as provided herein, a substitute bond or bonds having the same maturity date, bearing interest at the same rate, in the denomination or denominations of any integral multiple of $5,000 at the request of the registered owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. If any Bond or portion thereof is assigned and transferred, each bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the bond for which it is being exchanged. Each substitute bond shall bear a letter and/or number to distinguish it from each other bond. The Paying Agent/Registrar shall exchange or replace Bonds as provided herein, and each fully registered bond delivered in exchange for or replacement of any bond or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again be exchanged or replaced. It is specifically provided, however, that any bond delivered in exchange for or replacement of another bond prior to the first scheduled interest payment date on the Bonds (as stated on the face thereof) shall be dated the same date as such bond, but each substitute bond so delivered on or after such first scheduled interest payment date shall be dated as of the interest payment date preceding the date on which such substitute bond is delivered, unless such bond is delivered on an interest payment date, in which case it shall be dated as of such date of delivery; provided, however, that if at the time of delivery of any substitute bond the interest on the bond for which it is being exchanged has not been paid, then such bond shall be dated as of the date to which such interest has been paid in full. On each substitute bond issued in exchange for or replacement of any bond or bonds issued under this Ordinance there shall be printed thereon a Paying Agent/Registrar's Authentication Certificate, in the form hereinafter set forth. An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such bond, date such by dating the Authentication Certificate in the manner set forth above, and manually sign such Certificate, and no such bond shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for exchange or replacement. No additional ordinances, orders, or resolutions need be passed or adopted by the City Council or any other body or person so as to accomplish the foregoing exchange or replacement of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute bonds in the manner prescribed herein, and said bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength pursuant to Article 717k-6, V.T.C.S, and particularly Section 6 thereof, the duty of such exchange or replacement of bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and upon the execution of the aforementioned Paying Agent/Registrar's Authentication Certificate, the exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which originally were delivered pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. Neither the City nor the Paying Agent/Registrar shall be required (I) to issue, transfer, or exchange any Bond subject to redemption during a period beginning at the opening of business 15 days before the day of the first mailing ora notice of redemption of Bonds and ending at the close of business on the day of such mailing, or (2) to transfer or exchange any Bond after it is selected for redemption, in whole or in part when such redemption is scheduled to occur within 30 calendar days; provided, however, that such limitation shall not be applicable to an exchange by the owner of the uncalled principal balance of a Bond. (e) All Bonds issued in exchange or replacement of any other Bond or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such bonds to be payable only to the registered owners thereof, (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORM OF BONDS set forth in this Ordinance. (f) The City shall pay all of the Paying Agent/Registrar's reasonable and customary fees and charges for making transfers, conversions, and exchanges of the Bonds in accordance with an agreement between the City and the Paying Agent/Registrar, but the registered owner of any Bond requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. In addition, the City hereby covenants with the registered owners of the Bonds that it will pay the reasonable and standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the principal of and interest on the Bonds, when due. (g) The City covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the City will provide a competent and legally qualified bank, trust company, financial institution, or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar, to act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity. The City reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 60 days written notice to the Paying Agent/Registrar. In the event that the entity at any time acting as Paying Agent/Registrar(or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the City covenants that promptly it will appoint a competent and legally qualified national or state banking institution which shall be a corporation organized and doing business under the laws of the United States of America or of any state, authorized under such laws to exercise trust powers, subject to supervision or examination by federal or state Authority, and whose qualifications substantially are similar to the previous Paying Agent/Registrar to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Reg- istrar designated and appointed by the City. Upon any change in the Paying Agent/Registrar, the City promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by United States mail, postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. Section 5. Forms. The form of the Bonds, including the form of Paying Agent/Registrar's Certificate, the form of Assignment, the form of Statement of Insurance, the form of the Comptroller's Registration Certificate to accompany the Bonds on the initial delivery thereof, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance: FORM OF DEFINITIVE BONDS FORM OF BONDS: NO. $ United States of America State of Texas CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE AND REFUNDING BOND, SERIES 1996 MATURITY DATE INTEREST RATE ISSUE DATE CUSIP % December 1, 1996 REGISTERED OWNER: PRINCIPAL AMOUNT: $ THE CITY OF COLLEGE STATION, TEXAS (the "City") hereby promises to pay to the Registered Owner, specified above, or the registered assignee (the "registered owner") the Principal Amount, specified above, and to pay interest thereon from the Issue Date, specified above, to the Maturity Date, specified above, at the Interest Rate, specified above, with said interest being payable on August 1, 1997, and semiannually on each February I and August I thereafter. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity at the designated payment office of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, HOUSTON, TEXAS, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof as shown by the Registration Books kept by the Paying Agent/Registrar at the close of business on the Record Date by check drawn by the Paying Agent/Registrar on, and payable solely from, funds of the City required to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, postage prepaid, on each such interest payment date, to the registered owner at its address as it appears on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. The record date ("Record Date") for the interest payable on any interest payment date means the fifteenth calendar day of the month preceding a scheduled interest payment. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date", which shall be 15 calendar days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each registered owner of a Bond appearing on the books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. The City covenants with the registered owner of this Bond that no later than each principal payment date and interest payment date for this Bond it will make available to the Paying Agent/Registrar the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due, in the manner set forth in the ordinance authorizing the issuance of the bonds adopted by the City Council of the City on December 12, 1996 (the "Ordinance"). THE TERMS AND PROVISIONS of this Bond are continued on the reverse side hereof and shall for all purposes have the same effect as though fully set forth at this place. *IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, a Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. *THIS BOND is one of a series of bonds of like tenor and effect except as to denomination, number, maturity, interest rate and right of prior redemption, issued in the aggregate principal amount of 5; 10,110,000 with $3,700,000 for the extensions and improvements to the City's electric light and power system; $3,200,000 for the extensions and improvements to the City's water system; and 5;;500,000 for extensions and improvements to the City's wastewater system and the payment of contractual obligations for professional services in connection therewith (including, but not limited to, financial advisory, legal, and engineering), and with $2,710,000 for the purpose of providing money for the advance refunding of certain outstanding bonds of the City ( the "Refunded Bonds), and paying the costs of issuance of the Bonds. *THE BONDS of this series scheduled to mature on and after February 1, 2008 may be redeemed prior to their scheduled maturities, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof, at the option of the City, on February I, 2007, or on any date thereafter, for the principal amount thereof plus accrued interest to the date fixed for redemption. *THE BONDS maturing in 2017 shall be subject to mandatory sinking fund redemption, in whole or in part (at a redemption price equal to the principal amount thereof and any accrued interest thereon to the date set for redemption), on February 1 in each of the years and in the amounts set forth below: Year Amount 2016 $550,000 2017 585,000 (final maturity) *NOTICE OF REDEMPTION shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, at least 30 days prior to the date fixed for any such redemption, to the registered owner of each Bond, or portion thereof to be redeemed, at its address as it appeared on the Registration Books on the 45th day prior to such redemption date; provided, however, that the failure to send, mail, or receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond. By the date fixed for any such redemption, due provision shall be made by the City with the Paying Agent/Registrar for the payment of the required redemption price for this Bond or the portion hereof which is to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such notice of redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so redeemed,thereby automatically shall be redeemed prior to its scheduled maturity, and shall not bear interest after the date fixed for its redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all such redemptions of principal of this Bond or any portion hereof. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the City, all as provided in the Ordinance. *ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Ordinance, this Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be assigned, transferred, and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordancewith the form and procedures set forth in the Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Bond may be executed by the registered owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any portion or portions hereof from time to time by the registered owner. The City shall pay the Paying Agent/Registrar's reasonable standard or customary fees and charges for transferring, converting and exchanging any Bond or portion thereof; provided, however, that any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such transfer, conversion and exchange. In any circumstance, neither the City nor the Paying Agent/Registrar shall be required (1) to make any transfer or exchange during a period beginning at the opening of business 15 days before the day of the first mailing of a notice of redemption of bonds and ending at the close of business on the day of such mailing, or (2) to transfer or exchange any Bonds so selected for redemption when such redemption is scheduled to occur within 30 calendardays; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. *IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the City, resigns, or otherwise ceases to act as such, the City has covenanted in the Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds. *BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions of the Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Ordinance is duly recorded and available for inspection in the official minutes and records of the City, and agrees that the terms and provisions of this Bond and the Ordinance constitute a contract between each registered owner hereof and the City. *THE CITY HAS RESERVED THE RIGHT, subject to the restrictions stated, and adopted by reference, in the Ordinance, to issue additional parity revenue bonds which also may be made payable from, and secured by, a first lien on and pledge of the "Net Revenues" of the City's combined waterworks system, sewer system, and electric light and power system (as defined and described in the Ordinance) on a parity with the previously issued parity bonds including the Bonds. *THE REGISTERED OWNER HEREOF shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation, or from any source whatsoever other than the aforesaid Net Revenues. IT IS HEREBY certified and covenanted that this Bond has been duly and validly authorized, issued and delivered; that all acts, conditions and things required or proper to be performed, exist and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed and been done in accordance with law; that this Bond is a special obligation; and that the principal of and interest on this Bond together with outstanding parity revenue bonds are payable from, and secured by a first lien on and pledge of, the Net Revenues. IN TESTIMONY WHEREOF, the City Council has caused the seal of the City to be duly impressed or placed in facsimile hereon, and this Bond to be signed with the imprinted facsimile signature of the Mayor and countersigned by the facsimile signature of the City Secretary. COUNTERSIGNED: XXXXXXXXXXXXXXXXXXXXXXXXXXXXX City Secretary, City of College Station XXXXXXXXXXXXXXXXXXXXXXXXXXXXX Mayor, City of College Station (CITY SEAL) FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Ordinance described on the face ofthis Bond; and that this Bond has been issued in exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated TEXAS COMMERCE BANK NATIONAL ASSOCIATION, HOUSTON, TEXAS Paying Agent/Registrar By Authorized Representative FORM OF STATEMENT OF INSURANCE STATEMENT OF INSURANCE The MBIA Insurance Corporation (the "Insurer") has issued a policy containing the following provisions, such policy being on file at Texas Commerce Bank National Association, 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 Texas Commerce Bank National Association or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or 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 payments 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 a 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: "$10, I 10,000 City of College Station, Texas Utility System Revenue Refunding and Improvement Bonds, Series 1996". 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, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required 9 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 State Street Bank and Trust Company, 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 related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to State Street Bank and Trust Company, N.A., State Street Bank and Trust Company, 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 and such service of process shall be valid and binding. 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. FORM OF ASSIGNMENT *ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner of this Bond, or duly authorized representative or attorney thereof, hereby assigns this Bond to / / (Assignee's Social Security or Tax Payer Identification number) (Print or type Assignee's names and address including zip code) and hereby irrevocably constitutes and appoints attorney to transfer the registration of this Bond on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises. Dated Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. NOTICE: The signature above must correspond with the name of the Registered Owner as it appears upon the front of this Bond in every particular, without alteration or enlargement or any change whatsoever. The following abbreviations, when used in the assignment above or on the face of the within Bond, shall be construed as though they were written out in full according to applicable laws or regulations: 10 TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenant with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - Custodian (Cust) (Minor) under Uniform Gifts to Minor Act (State) Additional abbreviations may also be used though not in the list above. NOTE TO PRINTER: *¶s to be on reverse side of definitive bonds FORM OF INITIAL BOND The Initial Bond shall be in the form set forth above for the Definitive Bonds, except the followin~ shall replace the heading and the first three paragraphs: NO. I-1 $10,110,000 United States of America State of Texas CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE AND REFLFNDING BOND, SERIES 1996 Issue Date: DECEMBER 1, 1996 Registered Owner: SOUTHWEST SECURITIES, INC. Principal Amount: TEN MILLION, ONE HUNDRED TEN THOUSAND DOLLARS ($ l 0, l 10,000) THE CITY OF COLLEGE STATION, TEXAS (the "City"), for value received,acknowledges itself indebted to and hereby promises to pay to the order of the Registered Owner, specified above, or the registered assigns thereof (the "Registered Owner"), the Principal Amount, specified above, with principal installments payable on February I in each of the years, and bearing interest at per annum rates in accordance with the following schedule: YEARS OF PRINCIPAL INTEREST STATED MATURITIES INSTALLMENTS RATES (Information to be inserted from schedule in Section 2 hereof.) INTEREST on the unpaid Principal Amount hereof from the Issue Date, specified above, or from the most recent interest payment date to which interest has been paid or duly provided for until the Principal Amount has become due and payment thereof has been made or duly provided for shall be paid computed on the basis of a 360- day year of twelve 30-day months; such interest being payable on February I and August I of each year, commencing August 1, 1997. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The final payment of principal of this Bond shall be paid to the Registered Owner hereof upon presentation and surrender of this Bond at final maturity, at the designated payment office of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Houston, Texas, which is the "Paying Agent/Registrar" for this Bond. The payment of principal installments and interest on this Bond shall be made by the Paying Agent/Registrar to the Registered Owner hereof as shown by the Registration Books kept by the Paying 11 Agent/Registrar at the close of business on the Record Date by check drawn by the Paying Agent/Registrar on, and payable solely from, funds of the City required to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, postage prepaid, on each such payment date, to the registered owner hereof at its address as it appears on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. The record date ("Record Date") for payments hereon means the fifteenth calendar day of the month preceding a scheduled payment. In the event ora non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment thereof have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due payment (the "Special Payment Date", which shall be 15 calendar days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of the Registered Owner appearing on the books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. The City covenants with the Registered Owner that no later than each principal installment payment date and interest payment date for this Bond it will make available to the Paying Agent/Registrar the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due, in the manner set forth in the ordinance authorizing the issuance of the Bonds adopted by the City Council of the City on December 12, 1996 (the "Ordinance"). FORM OF COMPTROLLER'S CERTIFICATE (ATTACHED TO THE INITIAL BOND) OFFICE OF COMPTROLLER: REGISTER NO. STATE OF TEXAS: 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 (COMPTROLLER'S SEAL) Comptroller of Public Accounts of the State of Texas [END OF FORMS] Section 6. Definitions. As used in this Ordinance, in addition to other defined terms herein, the following terms shall have the meanings set forth below, unless the text hereof specifically indicates otherwise: "Additional Bonds" means the additional parity obligations which the City reserves the right to issue in the future, as provided in Section 12 of this Ordinance. "Bond" or "Bonds" means one or more, as the case may be, of the Bonds authorized to be issued by this Ordinance. "Bond Fund" means the fund provided for in Section 13 of the Ordinance authorizing the issuance of the Series 1985 Bonds. "City" and "Issuer" mean the City of College Station, Texas, or where appropriate the City Council thereof. 12 "City Council" means the governing body of the City. "Junior Lien Certificates" means the following certificates of obligation issued by the City bearing the dates, in the original principal amounts, and finally maturing as set forth below, to-wit: Date Principal Amount Final Maturity 6/I 5/85 $393,000 6/I 5/99 "Net Revenues" means the gross revenues of the Systems less the reasonable expenses of operation and maintenance of the Systems, 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 Parity Bonds shall be deducted in determining the "Net Revenues". "Parity Bonds" means collectively the Previously Issued Parity Bonds, the Bonds, and any Additional Bonds. "Parity Bonds Ordinances" means collectively the ordinances authorizing the Parity Bonds. "Previously Issued Parity Bonds" means the outstanding bonds named in the preamble to this Ordinance.o "Refunded Bonds" means those bonds described in the preamble to the Ordinance. "Reserve Minimum" is defined in Section 12(e) hereof. "Systems" means the City's entire existing waterworks system, sewer system, and electric light and power system, including all present and future extensions, enlargements, additions, replacements, and improvements thereto. "Systems Fund" means that fund described in Section 9 hereof. "Year" or "fiscal year" means the regular fiscal year used by the City in connection with the operation of the Systems, which may be any 12 consecutive months period established by the City Council. Section 7. Pled£e. The principal of the Parity Bonds, redemption premium, if any, and any interest payable thereon, are and shall be secured by and payable from an irrevocable first lien on and pledge of the Net Revenues, and the Net Revenues are further pledged irrevocably to the establishment and maintenance of the funds created by the Parity Bonds Ordinances. The Parity Bonds are not and will not be secured by or payable from a mortgage or deed of trust on any real, personal, or mixed properties constituting the Systems. The owners of the Parity Bonds shall never have the right to demand payment of such obligations out of any funds raised or to be raised by taxation, or from any source whatsoever other than the Net Revenues. This Ordinance shall not be construed as requiring the City to expend any funds which are derived from sources other than the operation of the Systems, but nothing herein shall be construed as preventing the City from doing so. Section 8. Rates. The City covenants and agrees with the holders of the Parity Bonds that it will: (a) fix and maintain rates and collect charges for the facilities and services afforded by the Systems which will provide revenues sufficient at all times: (I) to pay all operation, maintenance, depreciation, replacement, and betterment charges of the Systems; (2) to establish and maintain the Bond Fund; (3) to generate in each year Net Revenues equal to 1.25 times the maximum annual requirements for the payment of the principal of and interest on the Parity Bonds at the time outstanding (although amounts shall be paid into the Bond Fund only in accordancewith Section 9 hereof); and (4) to pay all indebtedness outstanding against the Systems, other than the Parity Bonds, including the Junior Lien Certificates as and when the same become due; and 13 (b) deposit as collected all revenues derived from the operation of the Systems into the Systems Fund. Section 9. Flow of Funds. There has been created and established on the books of the City, and accounted for separate and apart from all other funds of the City, a special Systems Fund. All gross revenues received from operation of the Systems are and shall be deposited into and credited to the Systems Fund immediately upon receipt. The necessary and reasonable expenses of operation and maintenance of the Systems shall first be paid from the Systems Fund. The City shall then make substantially equal monthly payments into the Bond Fund (commencing with respect to the Bonds and any Additional Bonds on the date of delivery to the initial purchaser thereof) during each year in which any of the Parity Bonds are outstanding in an aggregate amount equal to 100% of the amounts required to meet the interest and principal payments falling due on or before the next maturity date of the Parity Bonds. The City shall, at least five days prior to August 1, 1997, and each February I and August I thereafter, deposit into the Bond Fund any additional Net Revenues available in the Systems Fund which may be necessary to pay in full the interest on and principal, if any, coming due on the Parity Bonds such February 1 or August 1. In no event shall any amount in excess of the amounts stated above be placed in the Bond Fund for the payment of the interest on or principal of the Parity Bonds, and any amount so placed may be withdrawn by the City and replaced in the Systems Fund. Any funds remaining in the Systems Fund, after provision for the reasonable cost of operating and maintaining the Systems, and after paying the amounts required to be paid into the Bond Fund, may be used for any lawful purpose. Section 10. Investments. Money in any Fund established by the Parity Bonds Ordinances may, at the option of the City, be placed or invested in any investments then permitted by Texas law and the City's investment policies and permitted in the Parity Bonds Ordinances. Section 11. Funds Secured. Money in all Funds created by this Ordinance, to the extent not invested, shall be secured in the manner prescribed by law for securing funds of the City. Section 12. Additional Bonds. In addition to inferior lien obligations, the City expressly reserves the right hereafter to issue additional parity bonds and other evidences of indebtedness now or hereafter authorized by the Legislature of Texas (collectively, the "Additional Bonds"), and the Additional Bonds, when issued, may be secured by and payable from a first lien on and pledge of the Net Revenues in the same manner and to the same extent as the outstanding Parity Bonds but subject to the remaining provisions hereof, and the Previously Issued Parity Bonds, the Bonds, and the Additional Bonds may be in all respects of equal dignity. It is provided, however, that no Additional Bonds shall be issued unless: (a) As long as any of the Previously Issued Parity Bonds are outstanding and unpaid, all material conditions set forth in the Parity Bonds Ordinances are satisfied; (b) As long as any of the Previously Issued Parity Bonds are outstanding, the "net earnings" (defined below) of the Systems for the fiscal year next preceding the month in which the ordinance authorizing such Additional Bonds is adopted, were equal to each of the provisions following in items (c)(i) and (ii) below, determined independently and certified by an independent firm of certified public accountants, based upon an annual audit of the books of the Systems; (c) After all the Series 1985 Bonds are no long outstanding, (1) An independent firm of certified public accountants, based upon an annual audit of the books of the Systems, certified that the net earnings of the Systems for the previous fiscal year or for any 12 consecutive month period ending not more than 90 days prior to the date of the adoption of the ordinance authorizing such Additional Bonds or other evidence of indebtedness were equal to each of the following determined independently: 14 (i) at least 1.40 times the average annual requirements for the payment of principal and interest on the then outstanding Parity Bonds and other evidences of indebtedness payable from the revenues of the Systems and on said Additional Bonds or other evidences of indebtedness, when issued, sold, and delivered; and (ii) at least 1.25 times the maximum annual requirement for the payment of the principal of and interest on the Parity Bonds then outstanding and on such Additional Bonds, when issued, sold, and delivered; provided, however, should the certificate of the accountant certify that the net earnings of the Systems for the period covered thereby were, in either case, less than required above, and a change in the rates and charges for the services afforded by the Systems became effective at least 60 days prior to the scheduled date of adoption of the ordinance authorizing such Additional Bonds, then such Additional Bonds may nevertheless be issued if an independent engineer or engineering firm having a favorable reputation with respect to such matters certifies that, had such change in rates and charges been effective for the entire period covered by the accountant's certificate would have met the tests specified in (i) and (ii) above. The term "net earnings" as used in this Section shall mean all of the Net Revenues, exclusive of income received specifically for capital items, after deduction of the reasonable expenses of operation and maintenance of the Systems excluding expenditures which under standard accounting practice should be charged to capital expenditures or depreciation; (d) Such Additional Bonds or other evidences of indebtedness are made to mature on February I in each of the years in which they are scheduled to mature; and (e) The entire issue of such Additional Bonds is insured in a manner similar to the Previously Issued Parity Bonds by an insurance company or association of companies whose insured obligations are rated by either Moody's Investors Service or Standard & Poor's Ratings Group in the same or a higher rating category than the insured obligations of the Municipal Bond Investors Assurance Corporation (at the time such Additional Bonds are to be issued) or the City shall establish a reserve fund for such Additional Bonds by any method or combination of methods that the City deems reasonable and appropriate provided that (i) the amount of such reserve fund (or coverage of any surety bond in lieu thereof) shall at least equal the maximum annual debt service requirements of such Additional Bonds, not to exceed the maximum then permitted by applicable regulations, procedures, or published rulings of the Internal Revenue Service (the "Reserve Minimum"); (ii) if any cash reserve fund is funded by making transfers of Net Revenues in the Systems Fund, such transfers shall be made each month in an amount reasonably sufficient to reach the Reserve Minimum within a period of not more than five years after such Additional Bonds are sold and delivered; and (iii) such reserve fund shall be for the equal benefit of the owner of (x) such Additional Bonds, (y) any Parity Bonds theretofore issued which are not insured in manner similar to the Previously Issued Parity Bonds, and (z) any Additional Bonds thereafter issued which are not so insured. Section 13. General Covenants. The City further covenants, warrants, and agrees that in accordance with and to the extent required or permitted by law while the Parity Bonds are outstanding and unpaid: (a) PERFORMANCE. It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in each Parity Bonds Ordinances, and in each and every Parity Bond; it will promptly pay or cause to be paid the principal of and interest on every Parity Bond, on the dates and in the places and manner prescribed in the Parity Bonds Ordinances; and it will, at the times and in the manner prescribed, deposit, or cause to be deposited, the amounts required to be deposited into the Bond and the Reserve Fund, if any; and any holder of the Parity Bonds may require the City, its officials and employees, to carry out, respect, or enforce the covenants and obligations of the Parity Bonds Ordinances by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings in any court of competent jurisdiction against the City, its officials and employees. 15 Co) CITY'S LEGAL AUTHORITY. It is a duly created and existing home rule city of the State of Texas, and is duly authorized under the laws ofthe State of Texas to create and issue the Parity Bonds; all action on its part for the creation and issuance of said obligations has been duly and effectively taken; and said obligations in the hands of the holders and owners thereof are and will be valid and enforceable special obligations of the City in accordance with their terms. (c) TITLE. It has or will obtain lawful title to the lands, buildings, structures, and facilities constituting the Systems; it will defend the title to all the aforesaid lands, buildings, structures, and facilities, and every part thereof, for the benefit of the holders and owners of the Parity Bonds against the claims and demands of all persons whomsoever; it is lawfully qualified to pledge the Net Revenues to the payment of the Parity Bonds in the manner prescribed herein; and it has lawfully exercised such rights. (d) LIENS. It will from time to time and before the same become delinquent pay and discharge all taxes, assessments, and governmental charges, if any, which shall be lawfully imposed upon it or the Systems; it will pay all lawful claims for rents, royalties, labor, materials, and supplies which if unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner provided herein; and it will not create or suffer to be created any mechanic's, laborer's materialman's, or other lien or charge which might or could be prior to the liens hereof, or do or suffer any matter or thing whereby the liens hereof might or could be impaired; provided, however, that no such tax, assessment, or charge, and that no such claims which might be used as the basis of a mechanic's, laborer's, materialman's, or other lien or charge, shall be required to be paid so long as the validity of the same shall be contested in good faith by the City. (e) OPERATION OF SYSTEMS; NO FREE SERVICE. It shall continuously and efficiently operate the Systems and maintain the Systems in good condition, repair, and working order, all at reasonable cost. No free service of the Systems shall be allowed, and should the City or any of its agencies or instrumentalities, lessees, or concessionaires make use of the services and facilities of the Systems, payment monthly of the standard retail price of the services provided shall be made by the City or any of its agencies or instrumentalities, lessees, or concessionaires out of funds from sources other than the revenues of the Systems. (f) FURTHER ENCUMBRANCE. It shall not additionally encumber the Net Revenues in any manner, except as permitted in the Parity Bonds Ordinances in connection with Additional Bonds, unless said encumbrance is made junior and subordinate in all respects to the liens, pledges, covenants, and agreements of the Parity Bonds Ordinances; but the right of the City to issue obligations payable from a subordinate lien on the surplus Net Revenues is specifically recognized and retained. (g) SALE OR DISPOSAL OF PROPERTY. It shall not sell, convey, mortgage, encumber, lease, or in any manner transfer title to, or dedicate to other use, or otherwise dispose of the Systems, or any significant or substantial part thereof; provided, however, that when the City deems it necessary to dispose of any other property to other use, it may do so either when it has made arrangements to replace the same or provide substitutes therefor, or it is determined by resolution of the City Council that no such replacement or substitute is necessary. (la) INSURANCE. It agrees to maintain insurance on the Systems, for the benefit of the holders or owners of the Parity Bonds, of a kind and in an amount which usually would be carried by private companies engaged in a similar type of business in the same area. (i) RECORDS AND AUDITS. It shall keep proper books, records, and accounts, separate from all other books, records, and accounts, in which complete and correct entries shall be made of all transactions relating to the Systems. Upon written request made not more than 60 days following the close of the fiscal year, the City shall furnish to any holder of any Parity Bonds complete financial statements of the Systems in reasonable detail covering 16 such fiscal year, certified by the City's auditor. Any holders of 25% in principal amount of the Parity Bonds at the time outstanding shall have the right at all reasonabletimes to inspect the Systems and all records, accounts, and data of the City relating thereto. 0) GOVERNMENTAL AGENCIES. It has or will obtain and keep in full force and effect all franchises, permits, authorization, and other requirements applicable to or necessary with respect to the acquisition, construction, equipment, operation, and maintenance of the Systems, and it will comply with all of the terms and conditions of any and all franchises, permits and authorizations applicable to or necessary with respect to the Systems. (k) NO COMPETITION. It will not operate, or grant any franchise or, to the extent it legally may, permit the acquisition, construction, or operation of, any facilities which would be in competition with the Systems, and to the extent that it legally may, the City will prohibit any such competing facilities. Section 14. Amendment of Ordinance. (a) The holders of the Parity Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding Parity Bonds shall have the right from time to time to approve any amendment to this Ordinance which may be deemed necessary or desirable by the City; provided, however, that without the consent of the holders of all of the Parity Bonds at the time outstanding, nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in this Ordinance or in the Parity Bonds so as to: (1) Make any change in the maturity of the outstanding Parity Bonds; (2) Reduce the rate of interest borne by any of the outstanding Parity Bonds; (3) Reduce the amount of the principal payable on the outstanding Parity Bonds; (4) Modify the terms of payment of principal of or interest on the outstanding Parity Bonds or impose any conditions with respect to such payment; (5) Affect the rights of the holders of less than all of the Parity Bonds; or (6) Change the minimum percentage of the principal amount of Parity Bonds necessary for consent to such amendment. (b) If at any time the City shall desire to amend the Ordinance under this Section, the City shall cause notice of the proposed amendment to be published in a financial newspaper or journal published in The City of New York, New York, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Paying Agent/Registrar for inspection by all holders of Parity Bonds. Such publication is not required, however, if notice in writing is given to each holder of the Parity Bonds. (c) When at any time not less than 30 days, and within one year, from the date of the first publication of said notice or other service of written notice, the City shall receive an instrument or instruments executed by the holders of at least 51% in aggregate principal amount of all Parity Bonds, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying AgenffRegistrar, the City Council may pass the amendatory ordinance in substantially the same form. (d) Upon the passage of any amendatory ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be amended in accordancewith such amendatory ordinance, and the respective rights, duties, and obligations under this Ordinance of the City and all the holders of Parity Bonds shall thereaf'ter be determined, exercised, and enforced hereunder, subject in all respects to such amendments. (e) Any consent given by the holder of a Parity Bond pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders of the same Parity Bond during such period. Such consent may be revoked at any time after six months from the date of the first publication of such notice by the 17 holder who gave such consent, or by a successor in title, by filing notice thereof with the Paying Agent and the City, but such revocation shall not be effective if the holders of 5 !% in aggregate principal amount of the Parity Bonds as in this Section defined have, prior to the attempted revocation, consented to and approve the amendment. (f) For the purpose of this Section the fact of the holding of Parity Bonds issued in registered form without coupons and the amounts and numbers of such Parity Bonds and the date of their holding same shall be proved by the Registration Books of the Paying AgenffRegistrar. The City may conclusively assume that such ownership continues until written notice to the contrary is served upon the City. (g) The foregoing provisions of this Section notwithstanding, the City by action of the City Council may amend this Ordinance for any one or more of the following purposes: (1) To add to the covenants and agreements of the City in this Ordinance contained, other covenants and agreements thereafter to be observed, grant additional rights or remedies to bondholders, or to surrender, restrict, or limit any right or power herein reserved to or conferred upon the City; (2) To make such provisions for the purpose of curing any ambiguity, or curing, correcting, or supple- menting any defective provision contained in this Ordinance, or in regard to clarifying matters or questions arising under this Ordinance, as are necessary or desirable and not contrary to or inconsistent with this Ordinance and which shall not adversely affect the interests of the holders of the Parity Bonds; (3) To modify any of the provisions of this Ordinance in any other respect whatever, provided that (i) such modification shall be, and be expressed to be, effective only after all Parity Bonds outstanding at the date of the adoption of such modification shall cease to be outstanding, and (ii) such modification shall be specifically referred to in the text of all Additional Bonds issued after the date of the adoption of such modification. Section 15. DamnRed, Mutilated, Lost, Stolen~ or Destroyed Bonds. (a) In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made to the Paying Agent/Registrar. In every case of loss, theft, or destruction ora Bond, the applicant for a replacement bond shall furnish to the City and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the applicant shall furnish to the City and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the applicant shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the City may authorize the payment of the same (without surrender thereof expect in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the City whether or not the lost, stolen or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance. 18 (e) In accordance with Section 6 of Article 717k-6, V.T.C.S., this Section of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the City or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such bonds in the form and manner and with the effect, as provided in Section 4(d) of this Ordinance for Bonds issued in exchange for other Bonds. Section 16. Defeasance of the Bonds. (a) Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond") within the meaning of this Ordinance, except to the extent provided in subsection (c) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption), or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of'America sufficient to make such payment or (2) direct obligations of' the United States of America, or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, and which may be book entry form (herein "Government Obligations") which mature as to principal and interest in such amounts and at such time as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the City with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the revenue herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. Co) Any money so deposited with the Paying Agent/Registrar may at the written direction of'the City also be invested as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to the City, or deposited as directed in writing by the City. (c) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the City shall make proper arrangements to provide and pay for such services as required by this Ordinance. Section 17. Covenants Re~,ardin£ Tax Matters. The City covenants to take any action to maintain, or refrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in "gross income" for federal income tax purposes. In furtherance thereof, the City specifically covenants as follows: (i) To refrain from taking any action which would result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (ii) To take any action to assure that no more than 10% of the proceeds of the Bonds or the projects financed therewith are used for any "private business use," as defined in section 14 l(b)(6) of the Code or, if more than 10% of the proceeds or the projects financed therewith are so used, that amounts, whether or not received by the City with respect to such private business use, do not under the terms of this Resolution or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10% of the debt service on the Bonds, in contravention of section 14 l(b)(2) of the Code; (iii) To take any action to assure that in the event that the "private business use" described in paragraph (ii) hereof exceeds 5% of the proceeds of the Bonds or the projects financed therewith, then the amount in excess of 5% is used for a "private business use" which is "related" and not "disproportionate," within the meaning of' section 14 l(b)(3) of the Code, to the governmental use; 19 (iv) To take any action to assure that no amount which is greater than the lesser of $5,000,000 or 5% of the proceeds of the Bonds is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (v) To refrain from taking any action which would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (vi) Except to the extent permitted by section 148 of the Code and the regulations and rulings thereunder, to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the term of the Bonds. (vii) To otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage)and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); (viii) Except to the extent otherwise provided in section 148(0 of the Code and the regulations and rulings thereunder, to pay to the United States of America at least once during each five year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90% of the "Excess Earnings," within the meaning of section 148(0 of the Code, and to pay to the United States of America, not later than 60 days after the Bonds have been paid in full, 100% of the amount then required to be paid as a result of Excess Earnings under section 148(0 of the Code; and (ix) To maintain such records as will enable the City to fulfill its responsibilities under this subsection and section 148 of the Code and to retain such records for at least six years following the final payment of principal and interest on the Bonds. For the purposes of the foregoing, in the case of a refunding bond, the term proceeds includes transferred proceeds and, for purposes of paragraphs (ii) and (iii), proceeds of the refunded bonds. The covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of Treasury pursuant thereto. In the event that regulations or rulings are herea~er promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the City will not be required to comply with any covenant contained herein to the extent that such modification or expansion, in the opinion of nationally-recognized bond counsel, will not adversely affect the exclusion from gross income of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the City agrees to comply with the additional requirements to the extent necessary, in the opinion of nationaily-recognizedbond counsel, to preserve the exclusion from gross income of interest on the Bonds under section 103 of the Code. Proper officers of the City charged with the responsibility of issuing the Bonds are hereby authorized and directed to execute any documents, certificates, or reports required by the Code and to make such elections, on behalf of the City, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. Notwithstanding any other provision in this Resolution, to the extent necessary to preserve the exclusion from gross income of interest on the Bonds under section 103 of the Code the covenants contained in this subsection shall survive the later of the defeasance or discharge of the Bonds. Section 18. Municipal Bond Insurance. The City has obtained a financial guaranty insurance policy (the "Policy") from MBIA Insurance Corporation (the "Insurer") insuring the payment of principal and interest on the Bonds when due. The President of the Board is authorized to execute the commitment to issue a financial guaranty 2O insurance policy, and the Board and the officers and employees of the City are directed to do any and all things necessary to obtain the bond insurance policy and, in accordance with such policy, the City shall abide with the following provisions: (a) If the Paying Agent/Registrar has notice that any Bondholder 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 an avoidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent/Registrar shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. (b) The Paying Agent/Registrar is hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for the Bondholders as follows: (i) If and to the extent there is a deficiency in amounts required to pay interest on the Bonds, the Paying Agent/Registrar shall (a) execute and deliver to State Street Bank and Trust Company, 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 Bondholders 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 Bondholders (and not as Paying Agent/Registrar) in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to claims for interest so assigned, and (c) disburse the same to such respective Bondholders; and (ii) If and to the extent of a deficiency in amounts required to pay principal of the Bonds, the Paying Agent/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 Bondholder 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 or so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent/Registrar and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), Co) receive as designee of the respective Bondholders (and not as Paying Agent/Registrar) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent, and (c) disburse the same to such Bondholders. (c) Payments with respect to claims for interest on and principal of Bonds disbursed by the Paying Agent/Registrar fi'om proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Bonds, and the Insurer shall be come the owner of such unpaid Bonds and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. (d) Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent/Registrar hereby agree for the benefit of the Insurer that, (i) They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent/Registrar), on account of principal of or interest on the Bonds, the Insurer will be subrogated to the rights of such Bondholders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Order and the Bonds; and (ii) 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 Order 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 Bondholders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. 21 (e) In connection with the issuance of Additional Bonds, the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such Additional Bonds. (f) 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 Ratings Group. (g) The Insurer shall receive notice of the resignation or removal of the Paying Agent/Registrar and the appointment of a successor thereto. (h) The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis, copies of the Issuer's audited financial statements. Notices: Any notice that is required to be given to a holder of the Bonds or to the Paying Agent/Registrar pursuant to this Order shall also be provided to the Insurer. All notices required to be given to the Insurer under this Order shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504. Attention: Surveillance. Section 19. Sale of Bonds. The Bonds are hereby sold and shall be delivered to underwriters represented by Southwest Securities, Inc. (the "Underwriters") pursuant to the Bond Purchase Agreement attached hereto as Exhibit D and the Mayor is hereby authorized to execute and deliver such Bond Purchase Agreement. The officers of the Issuer are hereby authorized and directed to execute and deliver such certificates, instructions, or other instruments as are required or necessary to comply with the conditions of the Bond Purchase Agreement and accomplish the purposes of this Ordinance. (b) Approval of Official Statement. The City hereby approves the form and content of the Official Statement relating to the Bonds and any addenda, supplement, or amendment thereto, and approves the distribution of such Official Statement in the reoffering of the Bonds by the Underwriters in final form, with such changes therein or additions thereto as the officer executing the same may deem advisable, such determination to be conclusively evidenced by his execution thereof. The form and content of and the distribution and use of the Preliminary Official Statement dated December 5, 1996, prior to the date hereof is hereby ratified and confirmed. The Council finds and determines that the Preliminary Official Statement is "deemed final" as that term is defined in 17 C.F.R. Section 240.15c2-12. (c) Legal Opinion. The Underwriters' obligation to accept delivery of the Bonds is subject to their being furnished an opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., Attorneys, such opinion to be dated and delivered as of the date of delivery and payment for the Bonds. (d) Registration and Delivery. Upon the registration of the Initial Bond, the Comptroller of Public Accounts of the State of Texas is authorized and instruct to deliver the Initial Bond pursuant to the instruction of the Mayor for delivery to the Underwriters. Section 20. Escrow A£reement. The Escrow Agreement attached hereto as Exhibit "A" is hereby approved and the Mayor is hereby authorized and directed to execute and deliver, and the City Secretary is hereby authorized and directed to attest the Escrow Agreement. Section 21. Use of Proceeds. The proceeds from the sale of the Bonds shall be as follows: (i) accrued interest on the Bonds shall be deposited to the credit of the Bond Fund; (ii) $2,685,757.41 of the proceeds shall be deposited to credit of the "Escrow Fund", established in accordance with the provisions of the Escrow Agreement, which proceeds, together with other funds on deposit therein and received from the investment thereof, shall be used to retire the Refunded Bonds; and (iii) the balance of the proceeds shall be deposited to a construction fund held at the City's depository bank and used for the purposes herein described. 22 Section 22. Matters Related to Refunding. (a) In order that the City shall satisfy in a timely manner all of its obligations under this Ordinance, the Mayor 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, notices, and other documents as may be reasonably necessary to satisfy the City's obligations under this Ordinance and to direct the transfer and application of funds of the City consistent with the provisions of this Ordinance. (b) The City hereby irrevocably calls the Refunded Bonds for redemption prior to maturity on the dates set forth in, and authorizes and directs notice of such redemption to be given as provided in, the form attached hereto as Exhibit "C". (c) The Issuer hereby appropriates $80,000 from money set aside for payment of the Refunded Bonds as a portion of the beginning cash balance in the Escrow Account. (d) To assure the purchase of the Escrowed Securities referred to in the Escrow Agreement, the Mayor 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 referred to in the Escrow Agreement, 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. (e) The Council finds that the City will realize a present value savings of $148,371.30 as a result of refunding the Refunded Bonds. Section 23. Pavine Aeent/Re~istrar ARreement. The Paying Agent/Registrar Agreement, between the City and Texas Commerce Bank National Association, Houston, Texas attached hereto as Exhibit "B" is hereby approved, and the Mayor is authorized to execute and the City Secretary is authorized to attest same. Section 24. Book-Entry Only System. It is intended that the Bonds initially be registered so as to participate in a securities depository system (the "DTC System") with The Depository Trust Company, New York, New York, or any successor entity thereto ("DTC"), as set forth herein. The definitive Bonds shall be issued in the form of a separate single definitive Bond for each maturity. Upon issuance, the ownership of each such Bond shall be registered in the name of Cede & Co., as the nominee of DTC, and all of the outstanding Bonds shall be registered in the name of Cede & Co., as the nominee of DTC. The City and the Paying Agent/Registrar are authorized to execute, deliver, and take the actions set forth in such letters to or agreements with DTC as shall be necessary to effectuate the DTC System, including a "Letter of Representation" (the "Representation Letter"). With respect to the Bonds registered in the name of Cede & Co., as nominee of DTC, the City and the Paying Agent/Registrar shall have no responsibility or obligation to any broker-dealer, bank, or other financial institution for which DTC holds the Bonds from time to time as securities depository (a "Depository Participant") or to any person on behalf of whom such a Depository Participant holds an interest in the Bonds (an "Indirect Participant"). Without limiting the immediately preceding sentence, the City and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co., or any Depository Participant with respect to any ownership interest in the Bonds, or (ii) the delivery to any Depository Participant or any Indirect Participant or any other Person, other than a registered owner of a Bond, of any amount with respect to principal of, premium, if any, or interest on the Bonds. While in the DTC System, no person other than Cede & Co., or any successor thereto, as nominee for DTC, shall receive a Bond evidencing the obligation of the City to make payments of principal, premium, if any, and interest pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Ordinance with respect to interest checks or drafts being mailed to the holder, the word "Cede & Co." in this Ordinance shall refer to such new nominee of DTC. 23 In the event that (a) the City determines that DTC is incapable of discharging its responsibilities described herein and in the Representation Letter, (b) the Representation Letter shall be terminated for any reason, or (c) DTC or the City determines that it is in the best interest of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the City shall notify the Paying Agent/Registrar, DTC, and Depository Participants of the availability within a reasonable period of time through DTC of certificated certificates, and the Bonds shall no longer be restricted to being registered in the name of Cede & Co., as nominee of DTC. At that time, the City may determine that the Bonds shall be registered in the name of and deposited with a successor depository operating a securities depository system, as may be acceptable to the City, or such depository's agent or designee, and if the City and the Paying Agent/Registrar do not select such alternate securities depository system then the Bonds may be registered in whatever names the registered owners of Bonds transferring or exchanging the Bonds shall designate, in accordance with the provisions hereof. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Representation Letter. Section 25. Continuing Disclosure Undertakine. (a) Definitions. The following terms used in this Section shall have the meanings set forth below: "MSRB" means the Municipal Securities Rulemaking Board. "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Rule" means the rule set out at 17 C.F.R. §240.15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "SID" means any person designated by the State of Texas or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. (b) Annual Reports. The Issuer shall provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year ending in or after 1996, financial information and operating data with respect to the Issuer and the System of the general type included in the final Official Statement authorized by Section 18 of this Order, being the information described in Exhibit "E" hereto. Any financial statements to be so provided shall be (1) prepared in accordance with the accounting principles described in Exhibit "E" hereto and (2) audited, if the Issuer commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, the Issuer shall provide unaudited statements by the required date and provide audited financial statements for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such statements becomes available. If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to thc next date by which the Issuer otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. 24 (c) Material Event Notices. The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material to a decision to purchase or sell the Bonds: (i) principal and interest payment delinquencies; (ii) non-payment related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (vii) modifications to rights of holders of the Bonds; (viii) Bond calls; (ix) defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds; and (xi) rating changes. The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the Issuer to provide financial information or operating data in accordancewith this Section by the time required by this Section. (d) Limitations, Disclaimers, and Amendments. The Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer in any event will give notice of any deposit made in accordance with Section 35 that causes Bonds no longer to be outstanding and any call of Bonds made in connection therewith. The provisions of this Section are for the sole benefit of the Owners and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The Issuer does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under this Order for purposes of any provisions of this Order other than this Section. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer under federal and state securities laws. The provisions of this Section may be amended, supplemented, or repealed by the Issuer from time to time to adapt to changed circumstances that arise from a change in legal requirements, or a change in the identity, nature, status, or type of operations of the Issuer, but only if (1) the provisions of this Section, as so supplemented or amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (a) the Owners of 5 !% in aggregate principal amount of the Outstanding Bonds consent to such amendment, supplement, or repeal or (b) a person that is unaffiliated with the Issuer (such as Bond Counsel determines that such amendment, supplement, or repeal will not materially impair the interest of the registered owners and beneficial owners of the Bonds. The Issuer may also amend or repeal the provisions of this 25 Section if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter fi.om lawfully purchasing or selling Bonds in the primary offering of the Bonds. Section 26. Further Procedures. The Mayor, the City Secretary, the Executive Director, Fiscal and Human Resources,, the Issuer's Financial Advisor, and all other officers, employees, attorneys, and agents of the Issuer, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the seal and on behalf of the Issuer, all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance, the Bonds, the Escrow Agreement, and the Official Statement. Prior to the initial delivery of the Bonds, the Mayor and Bond Counsel to the Issuer are hereby authorized and directed to approve any technical changes or corrections to this Ordinance or to any of the instruments authorized by this Ordinance necessary in order to (i) correct any ambiguity or mistake or properly or more completely document the transactions contemplated and approved by this Ordinance, (ii) obtain a rating from any of the national bond rating agencies, or (iii) obtain the approval of the Bonds by the Texas Attorney General's office. Section 27. Miscellaneous Provisions. (a) Titles Not Restrictive. The titles assigned to thc various sections of this Ordinance arc for convenience only and shall not be considered restrictive ofthe subject matter of any section or of any pan of this Ordinance. (b) Preamble Adopted. The preamble to this Ordinance is hereby adopted as a part of the this Ordinance. (c) Inconsistent Provisions. All orders and resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed and declared to be inapplicable, and the provisions of this Ordinance shall be and remain controlling as to the matters prescribed herein. (d) Severability. If any word, phrase, clause, paragraph, sentence, part, portion, or provision ofthis Ordinance or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Ordinance shall nevertheless be valid and the City hereby declares that this Ordinance would have been enacted without such invalid word, phrase, clause, paragraph, sentence, part, portion, or provisions. (e) Governing Law. This Ordinance shall be construed and enforced in accordancewith the laws of the State of Texas. (f) Open Meetine. The City officially finds and determines that the meeting at which this Ordinance is adopted was open to the public; and that public notice of the time, place, and purpose of such meeting was given, all as required by Chapter 551, Texas Government Code, as amended. (g) Immediate Effect. Notwithstanding any charter provision or other applicable laws, this Ordinance shall immediately effective upon its adoption by the City Council. PASSED AND APPROVED this December 12, 1996. /s/ Connie Hooks City Secretary, City of College Station, Texas /s/ Lynn McIIhaneg Mayor, City of College Station, Texas (CITY SEAL) 26 EXHIBIT A Escrow Agreement THIS ESCROW AGREEMENT, dated as of December 1, 1996 (herein, together with any amendments or supplements hereto, called the "Escrow Agreement") is entered into by and between the CITY OF COLLEGE STATION, TEXAS (herein called the "Issuer") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as escrow agent (herein, together with any successor in such capacity, called the "Escrow Agent"). The addresses of the Issuer and the Escrow Agent are shown on Exhibit "A" attached hereto and made a part hereof. WITNESSETH: WHEREAS, the Issuer heretofore has issued or assumed and there presently remain outstanding the obligations described in Exhibit "B" attached hereto (the "Refunded Bonds"); and WHEREAS, the Refunded Bonds are scheduled to bear interest and be payable at such times and in such amounts as are set forth in Exhibit "C" attached hereto and made a part hereof; and WHEREAS, when finn banking arrangements have been made for the payment of all principal and interest of the Refunded Bonds when due, then the Refunded Bonds shall no longer be regarded as outstanding except for the purpose of receiving payment from the funds provided for such purpose; and WHEREAS, Article 717k, Vemon's Texas Civil Statutes, as amended ("Article 717k") authorizes the Issuer to issue refunding bonds and to deposit the proceeds from the sale thereof, and any other available funds or resources, directly with any place of payment (paying agent) for any of the Refunded Bonds, and such deposit, if made before such payment dates and in sufficient amounts, shall constitute the making of firm banking and financial arrangements for the discharge and final payment of the Refunded Bonds; and WHEREAS, Article 717k further authorizes the Issuer to enter into an escrow agreement with any such paying agent for any of the Refunded Bonds with respect to the safekeeping, investment, administration, and disposition of any such deposit, upon such terms and conditions as the Issuer and such paying agent may agree, provided that such deposits may be invested only in Eligible Securities which shall mature and/or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment of principal of and interest on the Refunded Bonds when due; and WHEREAS, the Escrow Agent is the successor paying agent for certain of the Refunded Bonds and this Escrow Agreement constitutes an escrow agreement of the kind authorized and required by Article 717k; and WHEREAS, the "City of College Station, Texas Utility System Revenue and Refunding Bonds, Series ! 996" (the "Refunding Bonds") have been duly authorized to be issued, sold, and delivered partially for the purpose of obtaining the funds required to provide for the payment of the principal of and interest on the Refunded Bonds when due; and WHEREAS, the Issuer desires that, concurrently with the delivery of the Refunding Bonds to the purchasers thereof, certain proceeds of the Refunding Bonds, together with certain other available funds of the Issuer, shall be applied to purchase certain direct obligations of the United States of America or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America (hereinafter defined as the "Escrowed Securities") for deposit to the credit of the Escrow Fund created pursuant to the terms of this Escrow Agreement and to establish a beginning cash balance (if needed) in such Escrow Fund; and WHEREAS, the Escrowed Securities shall mature and the interest thereon shall be payable at such times and in such amounts so as to provide money which, together with cash balances from time to time on deposit in the A-I Escrow Fund, will be sufficient to pay interest on the Refunded Bonds as it accrues and becomes payable and the principal of the Refunded Bonds as it becomes due and payable; and WHEREAS, to facilitate the receipt and transfer of proceeds of the Escrowed Securities, particularly those in book entry form, the Issuer desires to establish the Escrow Fund at the designated corporate trust office of the Escrow Agent in Houston, Texas; NOW, THEREFORE, in consideration of the mutual undertakings, promises, and agreements herein contained, the sufficiency of which hereby is acknowledged, and to secure the full and timely payment of principal of and the interest on the Refunded Bonds, the Issuer and the Escrow Agent mutually undertake, promise, and agree for themselves and their respective representatives and successors, as follows: ARTICLE I. DEFINITIONS AND INTERPRETATION Section 1.01. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the meanings assigned to them below when they are used in this Escrow Agreement: "Eligible Securities" means direct, non-prepayable full faith and credit obligations of the United States of America, which are non-callable prior to the respective scheduled payment of principal and interest on the Refunded Bonds when due and may be United States Treasury Obligations such as the State and Local Government Series and may be in book-entry form. Investments in mutual funds or unit investment trusts are prohibited. "Escrow Fund" means the fund created by this Escrow Agreement to be administered by the Escrow Agent pursuant to the provisions of this Escrow Agreement. "Escrowed Securities" means the cash and direct noncallable United States Treasury obligations described in Exhibit "D" attachedto this Escrow Agreement. Investments in mutual funds or unit investment trusts are prohibited. Section 1.02. Other Definitions. The terms "Escrow Agreement," "Issuer," "Escrow Agent," "Refunded Bonds," and "Refunding Bonds," when they are used in this Escrow Agreement, shall have the meanings assigned to them in the preamble to this Escrow Agreement. Section 1.03. Interpretations. The titles and headings of the articles and sections of this Escrow Agreement have been inserted for convenience and 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 Concurrently with the sale and delivery of the Refunding Bonds the Issuer shall deposit, or cause to be deposited, with the Escrow Agent, for deposit in the Escrow Fund, the money and Escrowed Securities described herein, and the Escrow Agent shall, upon the receipt thereof, acknowledge such receipt to the Issuer in writing. ARTICLE III. CREATION AND OPERATION OF ESCROW FUND Section 3.01. Escrow Fund. The Escrow Agent has created on its books a special trust fund and irrevocable escrow to be known as the "City of College, Station, Texas Utility System Revenue and Refunding Bonds, Series 1996 Escrow Fund" (the "Escrow Fund"). The Escrow Agent hereby agrees that upon receipt thereof it will deposit to the credit of the Escrow Fund the funds and the Escrowed Securities described in Article II and Exhibit "D". Such deposit, all proceeds therefrom, and all cash balances from time to time on deposit therein (a) shall be the property of the Escrow Fund, (b) shall be applied only in strict conformity with the terms and conditions A-2 of this Escrow Agreement, and (c) 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 of such amounts at such times as are provided for in Section 3.02 hereof. When the final transfers have been made 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 Issuer, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section 3.02. Payment of Principal and Interest; Money Transmitted to Issuer. The Escrow Agent is hereby irrevocably instructed to transfer, from the cash balances from time to time on deposit in the Escrow Fund, the amounts required to pay the principal of and interest on the Refunded Bonds to their scheduled payment or redemption date in the amounts and at the times shown in Exhibit "C" attached hereto. Immediately following payment of the final amounts required by this Escrow Agreement, the remaining money, if any, in the Escrow Fund shall be transmitted by the Escrow Agent to the Issuer by the fastest available method pursuant to delivery instructions provided to the Escrow Agent by the Issuer. Section 3.03. Sufficiency of Escrow Fund. The Issuer represents that the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balance on deposit from time to time in the Escrow Fund will be at all times sufficient to provide money for the Escrow Agent as paying agent at the times and in the amounts required to pay the principal of and interest on the Refunded Bonds on the redemption date all as more fully set forth in Exhibit "E" attached hereto. If, for any reason, at any time, the cash balances on deposit or scheduled to be on deposit in the Escrow Fund shall be insufficient to transfer the amounts required by each place of payment (paying agent) for the Refunded Bonds to make the payments set forth in Section 3.02 hereof, the Issuer shall timely deposit in the Escrow Fund, from any funds that are lawfully available therefor, additional funds in the amounts required to make such payments. Notice of any such insufficiency shall be given promptly as hereinat~er provided, but the Escrow Agent shall not in any manner be responsible for any insufficiency of funds in the Escrow Fund or the Issuer's failure to make additional deposits thereto. Section 3.04. Trust Fund. The Escrow Agent shall hold at all times the Escrow Fund, including the Escrowed Securities and all other assets of the Escrow Fund, wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund shall always be maintained by the Escrow Agent as trust funds for the benefit of the owners of the Refunded Bonds, and a special account thereof shall at all times be maintained on the books of the Escrow Agent. The Issuer intends that 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 to which they are entitled as owners of the Refunded Bonds. The amounts received by the Escrow Agent under this Escrow Agreement shall not be considered as a banking deposit by the Issuer, and the Escrow Agent shall have no right to title with respect thereto except as a constructive trustee and Escrow Agent under the terms of this Escrow Agreement. The amounts received by the Escrow Agent under this Escrow Agreement shall not be subject to warrants, drafts, or checks drawn by the Issuer or, except to the extent expressly herein provided, by any paying agent. Section 3.05.. Security for Cash Balances. Cash balances from time to time on deposit in the Escrow Fund shall, to the extent not insured by the Federal Deposit Insurance Corporation or its successor, be continuously secured by a pledge of direct obligations of, or obligations unconditionally guaranteed by, the United States of America, having a market value at least equal to such cash balances. Investments in .mutual funds or unit investment trusts are prohibited. ARTICLE IV. LIMITATION ON INVESTMENTS Section 4.01. Investments. (a) Initial Investments. Except for the initial investment of proceeds of the Refunding Bonds in the Escrowed Securities, the verification report covering the Bonds, dated , 199_, A-3 of Deloitte & Touche LLP, Houston, Texas (the "Report"), and the opinion of nationally recognized municipal bond counsel, which are hereby specifically permitted, neither the Escrow Agent, the Issuer, nor any other entity shall have any right, power, or duty to invest or reinvest any money held hereunder, or to make substitutions of the Escrowed Securities, or to sell, transfer, or otherwise dispose of the Escrowed Securities, except as set forth in this Section. (b) Initial Substitution for Escrowed Securities. Concurrently with the sale and delivery of the Refunding Bonds, the Issuer, at its option, may substitute cash or non-interest bearing direct obligations of the United States Treasury (i.e., Treasury obligations that mature and are payable in a stated amount on the maturity date thereof, and for which there are no payments other than the payment made on the maturity date) for non-interest bearing Escrowed Securities, if any, listed in Exhibit "D" attached hereto, but only if such cash and/or substituted non-interest bearing direct obligations of the United States Treasury - (I) are in an amount, and/or mature in an amount, that, together with any cash substituted for such obligations, is equal to or greater than the amount payable on the maturity date of the obligations listed in Exhibit "D" for which such obligation is substituted, and (2) mature on or before the maturity date of the obligation listed in Exhibit "D" for which such obligation is substituted. (c) Other Substitutions. The Escrow Agent shall redeem all or any part of the Escrowed Securities and reinvest the proceeds thereof, together with all or any part of any cash held in the Escrow Fund, in Eligible Securities, provided that the Issuer delivers to the Escrow Agent the following: (1) an opinion by an independent certified public accountant that after such reinvestment the principal amount of substituted securities, together with the interest thereon and any other available cash in the Escrow Fund, will be sufficient to pay (excluding reinvestment earnings), as the same become due in accordance with Exhibit "C" attached hereto, the principal of and interest on the Refunded Bonds which have not previously been paid, and (2) an unqualified opinion of nationally recognized municipal bond counsel to the effect that (i) such investment will not make the interest on the Refunding Bonds or the Refunded Bonds subject to federal income taxation, and (ii) such reinvestment complies with the laws of the State of Texas and with all relevant documents relating to the issuance of the Refunding Bonds and the Refunded Bonds. Section 4.02. Reinvestments. Ail reinvestments shall be in Eligible Securities and shall mature in an amount at least equal to the purchase price on or before the applicable debt service payment date for the Refunded Bonds. Section 4.03. Allocation of Certain Escrowed Securities. The maturing principal of and interest on the Escrowed Securities may be applied to the payment of any Refunded Bonds and no allocation or segregation of the receipts of principal or interest from such Escrowed Securities is required. ARTICLE V. APPLICATION OF CASH BALANCES Except as provided in Sections 3.01, 3.02, and 4.01 hereof, no withdrawals, transfers, or reinvestment shall be made of cash balances in the Escrow Fund. ARTICLE VI. RECORDS AND REPORTS Section 6.01. Records. The Escrow Agent will keep books of record and account in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocations, and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such books shall A-4 be available for inspection at reasonable hours and under reasonable conditions by the Issuer and the owners of the Refunded Bonds. Section 6.02. Reports. While this Escrow Agreement remains in effect, the Escrow Agent annually shall prepare and send to the Issuer a written report summarizing all transactions relating to the Escrow Fund during the preceding year, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities, transfers from the Escrow Fund for payments on the Refunded Bonds, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. ARTICLE VlI. CONCERNING THE PAYING AGENTS AND ESCROW AGENT Section 7.01. Representations. The Escrow Agent hereby represents that it has all necessary power and authority to enter into this 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 liability of the Escrow Agent to transfer funds for the payment of the principal of and interest on the Refunded Bonds and purchase of Eligible Securities 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 not have any liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund or any failure of the obligors of the Escrowed Securities to make timely payment thereon, except for the obligation to notify the Issuer promptly of any such occurrence. The recitals herein and in the proceedings authorizing the Refunding Bonds shall be taken as the statements of the Issuer and shall not be considered as made by, or imposing any obligation or liability upon, the Escrow Agent. The Escrow Agent is not a party to the proceedings authorizing the Refunding Bonds or the Refunded Bonds and is not responsible for nor bound by any of the provisions thereof(except as a place of payment and paying agent and/or a paying agent/registrar therefor). In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms and provisions of this Escrow Agreement. The Escrow Agent makes no representations as to the value, condition, or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the Issuer thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall not incur any liability or responsibility in respect to any of such matters. It is the intention of the parties hereto that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in any exercise of reasonable care and believed by it to be within the discretion or power conferred upon it by this Escrow Agreement, nor shall the Escrow Agent be responsible for the consequences of any error of judgment; and the Escrow Agent shall not be answerable for any loss unless the same shall have been through its negligence or willful misconduct. Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the Issuer with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund, and to dispose of and deliver the same in accordance with this 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 A-5 only for its own willful misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the Issuer or any other person such reasonable additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and in this connection may make inquiries of, and consult with, among others, the Issuer at any time. Section 7.03. Compensation. Upon delivery of the Refunding Bonds, the Issuer shall pay to the Escrow Agent $ as a fee for (a) 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 (b) its services in its capacity as the paying agent for the Refunded Bonds, the sufficiency of which is hereby acknowledged by the Escrow Agent. This sum does not include the cost of publication, printing costs, reasonable out-of-pocket costs of the Escrow Agent, or reasonable attorney's fees incurred pursuant to Section 8.10. In the event that the Escrow Agent is requested to perform any extraordinary services hereunder, the Issuer hereby agrees to pay reasonable fees to the Escrow Agent for such extraordinary services. 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 or extraordinary, as Escrow Agent under this Escrow Agreement, or in any other capacity, or for reimbursement for any of its expenses. Section 7.04. Successor Escrow Agents. If at any time the Escrow Agent or its legal successor or successors should become unable, through operation of law or otherwise, to act as escrow agent hereunder, or if its property and affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall forthwith exist in the office of Escrow Agent hereunder. If no successor Escrow Agent shall have been appointed by the Issuer within 60 days, a successor may be appointed by the owners of a majority in principal amount of the Refunded Bonds then outstanding by an instrument or instruments in writing filed with the Issuer, signed by such owners or by their duly authorized attorneys-in-fact. If, in a proper case, no appointment of a successor Escrow Agent shall be made pursuant to the foregoing provisions of this section within three months after a vacancy shall have occurred, the owner of any Refunded Obligation may apply to any court of competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent. Any successor Escrow Agent shall be a corporation or association organized and doing business under the laws of the United States or the State of Texas, authorized under such laws to exercise corporate trust powers, having its principal office and place of business in the State of Texas, having a combined capital and surplus of at least $50,000,000 and subject to the supervision or examination by federal or state authority. Any successor Escrow Agent shall execute, acknowledge, and deliver to the Issuer and the Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall execute and deliver an instrument transferring to such successor Escrow Agent, subject to the terms of this Escrow Agreement, all the rights, powers, and trusts of the Escrow Agent hereunder. Upon the request of any such successor Escrow Agent, the Issuer shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such rights, powers, and duties. ARTICLE VIII. MISCELLANEOUS Section 8.01. Notice. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid addressed to the Issuer or the Escrow Agent at the address shown on Exhibit "A" attached hereto. The United States Post Office registered or certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date and fact of delivery. Any party hereto may change the address to which notices are to be delivered by giving to the other parties not less than ten days prior notice thereof. Section 8.02. Termination of Responsibilities. Upon the taking of all the actions required herein of the Escrow Agent, the Escrow Agent shall have no further obligations or responsibilities hereunder to the Issuer, the owners of A-6 the Refunded Bonds, or to any other person or persons in connection with this Escrow Agreement. Notwithstanding any change in this Escrow Agreement permitted by Section 8.07, no changes to this Escrow Agreement may be made which alters the firm banking and financial arrangement for the payment of the Refunded Bonds. Section 8.03. Binding Escrow Agreement. This Escrow Agreement shall be binding upon the Issuer 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 Issuer, 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. Texas Law Governs. This Escrow Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Texas. Section $.06. Time of the Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Escrow Agreement. Section 8.07. Changes in Escrow Agreement Generally Prohibited. This Escrow Agreement is made for the benefit of the Issuer and the holders or owners from time to time of the Refunded Bonds, and it shall not be repealed, revoked, altered, or amended without the written consent of all such holders or owners and the written consent of the Escrow Agent; provided, however, that the Issuer and the Escrow Agent may, without the consent of, or notice to, such holders or owners and as shall not be inconsistent with the terms and provisions of this Escrow Agreement amend this Escrow Agreement to cure any ambiguity or formal defect or omission in this Escrow Agreement. Notwithstanding the foregoing, this Escrow Agreement may not be amended without the written confirmation from any rating agency which has a then current rating of the Refunded Bonds that the rating(s) will not be reduced or withdrawn as a result of such action. Section 8.08. Counterparts. This Escrow Agreement may be executed in any number of counterparts, each of which shall be deemed an original for all purposes, and all counterparts shall together constitute one and the same instrument. Section 8.09. Covenants. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Escrow Agreement, in any and every Refunded Bond as executed, authenticated, and delivered, and in ali proceedings pertaining thereto as the Refunded Bonds shall have been modified as provided in this Escrow Agreement. The Issuer covenants that it is duly authorized to execute and deliver this Escrow Agreement, that all actions on its part for the payment of the Refunded Bonds as provided herein and the execution and delivery of this Escrow Agreement have been duly and effectively taken, and that the Refunded Bonds in the hands of the holders and owners thereof are and will be valid and enforceable obligations of the Issuer according to the import thereof as provided in this Escrow Agreement. Section 8.10. Interpretation of Escrow Agreement. In the event of any disagreement or controversy hereunder or if conflicting demands or notices are made upon the Escrow Agent growing out of or relating to this Escrow Agreement or in the event that the Escrow Agent in good faith is in doubt as to actions to be taken under the Escrow Agreement, the Issuer expressly agrees and consents that the Escrow Agent shall have the right at its election to: (a) withhold and cease all further proceedings in, and performance of, this Escrow Agreement, with respect to the issue in question and of ali instructions received hereunder and thereunder, respectively, in regard to such issue; and Al'/ (b) file a suit in interpleader and obtain an order from a court of appropriate jurisdiction requiring all persons involved to interplead and litigate in such court their several claims and rights among themselves. In the event the Escrow Agent becomes involved in litigation in connection with this Escrow Agreement, the Issuer agrees to indemnify and save the Escrow Agent harmless, to the extent permitted by law, from all loss, costs, damages, expenses, and attorney's fees suffered or incurred by the Escrow Agent as a result thereof and not the result of the negligence or willful misconduct of the Escrow Agent. The Escrow Agent may consult with legal counsel in the event of any dispute or question as to the construction of any of the provisions of this Escrow Agreement, or its duties hereunder or thereunder, respectively, and it shall, in the absence of negligence or willful misconduct on the part of the Escrow Agent, incur no liability and shall be fully protected in acting in accordance with the opinion and instructions of such counsel. Notwithstanding anything to the contrary in this Section 8.10, payments of principal and interest on the Refunded Bonds when due will continue as scheduled. (Remainder of this page intentionally left blank) A-8 Section 8.11. Liability; Reliance. The Escrow Agent shall not be responsible or liable to any person in any manner whatever for the sufficiency, correctness, genuineness, effectiveness, or validity of this Escrow Agreement with respect to the Issuer or for the identity or authority of any person making or executing this Escrow Agreement for or on behalf of the Issuer. The Escrow Agent is authorized by the Issuer to rely upon the representations of the Issuer with respect to this Escrow Agreement, and as to the Issuer's right and power to execute and deliver this Escrow Agreement, and the Escrow Agent shall not be liable in any manner as a result of such reliance. EXECUTED as of the date first written above. CITY OF COLLEGE STATION, TEXAS ATTEST: By Mayor City Secretary (SEAL) TEXAS COMMERCE BANK NATIONAL ASSOCIATION ATTEST: By Name: Title: Name: Title: (SEAL) EXECUTION PAGE OF ESCROW AGREEMENT EXHIBIT "A" ADDRESSES OF THE ISSUER AND ESCROW AGENT ISSUER City of College Station, Texas c/o Director of Fiscal and Human Resources 1101 Texas Avenue College Station, TX 77840 ESCROW AGENT Texas Commerce Bank National Association 600 Travis, Suite 1150 Houston, TX 77002 "EXHIBIT "B" DESCRIPTION OF THE REFUNDED BONDS City of College Station, Texas Utility System Revenue Bonds, Series 1990, dated November l, 1990, maturities of February 15, 2001 through February 15, 2006, presently outstanding in the principal amount of $2,600,000. EXHIBIT "C" DEBT SERVICE REQUIREMENTS OF THE REFUNDED BONDS II. EXHIBIT "D" ESCROW DEPOSIT I. CASH $ GOVERNMENTAL OBLIGATIONS EXHIBIT "E" ESCROW FUND CASH FLOW EXHIBIT B Paying Agent/Registrar Agreement THIS PAYING AGENT/REGISTRAR AGREEMENT entered into as of December 1, 1996 (the "Agreement"), by and between the CITY OF COLLEGE STATION, TEXAS (the "Issuer"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, Houston, Texas, a banking association duly organized and existing under the laws of the United States of America (the "Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of College Station, Texas Utility System Revenue and Refunding Bonds, Series 1996" (the "Securities"), such Securities to be issued in fully registered form only as to the payment of principal and interest thereon; WHEREAS, the Securities are scheduled to be delivered to the initial purchaser thereof as provided in the "Ordinance" (hereinafter defined); WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on the Securities and with respect to the registration, transfer, and exchange thereof by the registered owners thereof; WHEREAS, the Bank has agreedto serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE I. APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities. As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof, all in accordance with this Agreement and the Ordinance. The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the Ordinance. The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof(including the reasonable compensation and the expenses and disbursements of its agents and counsel). B-1 ARTICLE II. DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Bank Office" means the designated principal corporate trust office of the Bank as indicated on the signature page hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Fiscal Year" means the fiscal year of the Issuer, ending September 30. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Ordinance" means a written request or order signed in the name of the Issuer by the Mayor of the Issuer, the Director of Finance of the Issuer, the City Administrator, or the City Secretary of the Issuer, any one or more of said officials, delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "Ordinance" mean the ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the City Secretary or any other officer of the Issuer and delivered to the Bank. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Ordinance). "Redemption Date" when used with respect to any Security to be redeemed means the date fixed for such redemption pursuant to the terms of the Ordinance. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice-Chairman of the Board of Directors, the Chairman or Vice-chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfer of the Securities. "Stated Maturity" means the date specified in the Ordinance the principal of a Security is scheduled to be due and payable. Section 2.02. Other Definitions. The terms "Bank," Issuer," and "Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. B-2 ARTICLE III. PAYING AGENT Section 3.01. Duties of Payim~ Aeent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the Bank Office. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and preparing and sending checks by United States Mail, first class postage prepaid, on each payment date, to the Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the address appearing on the Security Register or by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Ordinance. ARTICLE IV. REGISTRAR Section 4.01. Security Register - Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Office books and records (herein sometimes referred to as the "Security Register") for recording the names and addresses of the Holders of the Securities, the transfer, exchange, and replacement of the Securities, and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges, and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer, or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three business days after the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02. Certificates. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Security Re~ister. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer, and exchange of the Securities in accordancewith the Bank's general practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. B-3 The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04. List of Seeuri .ty Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. Unless required by law, the Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt ora court order and prior to the release or disclosure of the contents of the Security Register, the Bank will notify the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.05. Return of Cancelled Certificates. All Securities surrendered for payment, redemption, transfer, exchange, or replacement, if surrendered to the Bank, shall be promptly cancelled by it and, if surrendered to the Issuer, shall be delivered to the Bank and, if not already cancelled, shall be promptly cancelled by the Bank. The Issuer may at any time deliver to the Bank for cancellation any Securities previously authenticated and delivered which the Issuer may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Bank. All cancelled Securities held by the Bank shall be destroyed, and evidence of such destruction furnished to the Issuer at such reasonable intervals as it determines subject to applicable rules and regulations of the Securities and Exchange Commission. Section 4.06. Mutilated~ Destroyed~ Lost~ or Stolen Securities. The Issuer hereby instructs the Bank, subject to the applicable provisions of the Ordinance, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an over issuance. In case any Security shall be mutilated, or destroyed, lost, or stolen, the Bank, in its discretion, may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only at~er (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss, or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution, and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost, or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish thc Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. Section 4.08. Redemption of Securities. Securities which are redeemable before their stated maturity shall be redeemable in accordance with Section 3 of the Ordinance and terms in accordance with this Article IV. Section 4.09. Notice of Redemption. Notice of redemption shall be given by the Bank in the name at the expense of the Issuer not less than 30 or more than 45 days prior to the date of redemption, to each Registered Owner of Securities to be redeemed and otherwise required by the Ordinance. All notices of redemption shall include the CUSIP number and statement as to: B-4 (a) the date of redemption; (b) the price of the Securities expressed as a percentage of par amount of the Securities; (c) the principal amount of Securities to be redeemed, and, if less than all outstanding Securities are to be redeemed, the identification (and, in case of partial redemption, the principal amounts) of the Securities to be redeemed; (d) that on the date of redemption the principal of each of the Securities to be redeemed will become due and payable and that the interest thereon shall cease to accrue from and after said date; and (e) that the Securities to be redeemed are to be surrendered for payment of the price stated in the notice of redemption at the designated principal corporate trust office of the Bank, and the address of such office. The Bank shall, at the expense of the Issuer, provide notice to designated securities depositories and information services based upon the then current guidelines of the Securities and Exchange Commission relating to redemptions and refundings of municipal bonds, including the Securities. The Bank, at the expense of the Issuer, shall also provide notice to any other addressees as the Issuer shall designate in writing. ARTICLE V. THE BANK Section 5.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents~ Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (f) The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. B-5 Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Money Held by Bank. (a) Money held by the Bank hereunder shall be held for the benefit of the Registered Owners of the Securities. (b) The Bank shall be under no obligation to pay interest on any money received by it hereunder. (c) Except to the extent provided otherwise in the Ordinance, any money deposited with the Bank for the payment of the principal on, redemption premium, if any, or interest on any security and remaining unclaimed for three years after the dates such amounts have become due and payable shall be reported and disposed of by the Bank in accordance with the provisions of Title 6 of the Texas Property Code, as amended, to the extent that such provisions are applicable to such amounts. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demands, or controversy over its person as well as funds on deposit, in either the District Court of Harris County, Texas, or the United States Federal District Court for the Southern District of Texas, waive personal service of any process, and agree that service of process by certified or registered mail, return receipt requested, to the address set forth in Section 6.03 hereof shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction, at the expense of the Issuer, to determine the rights of any persons claiming any interest herein. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where either the Bank Office or the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction to determine the rights of any Person claiming any interest herein. Section 5.08. Depository Trust Company Services, It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements," effective August 1, 1987, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE VI. MISCELLANEOUS PROVISIONS B-6 Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02. Assil~nment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on the signature page of this Agreement. Section 6.04. Effect of Headines. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severabilit¥. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire Agreement. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Ordinance, the Ordinance shall govern. Section 6.09. Counterparts. This Agreement may be executedin any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon 60 days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and (b) notice has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay, or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. (Remainder of this page intentionally left blank) B-7 Section 6.11. Governin~ Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Attest: TEXAS COMMERCE BANK NATIONAL ASSOCIATION Houston, Texas By By Title Title Address: (BANK SEAL) 600 Travis Street, Suite 1150 Houston, TX 77002 Attest: CITY OF COLLEGE STATION, TEXAS By City Secretary (ISSUER SEAL) By Address: Mayor 1101 Texas Avenue College Station, Texas 77840 EXECUTION PAGE FOR PAYING AGENT/REGISTRAR AGREEMENT SCHEDULE A Paying Agent/Registrar Fee Schedule (To be furnished by the Bank) EXHIBIT C Notice of Prior Redemption NOTICE OF REDEMPTION To the Holders of THE FOLLOWING NAMED SERIES OF CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE BONDS, SERIES 1990 DATED NOVEMBER 1, 1990 NOTICE IS HEREBY GIVEN that the City of College Station, a political subdivision of the State of Texas (the "Issuer"), has called for redemption ON FEBRUARY 15, 2001 AT 100% OF PAR PLUS ACCRUED INTEREST the following described outstanding General Obligation Bonds (the "Bonds") of the Issuer as follows: MATURITY DATE February I PRESENT CUSIP NUMBER PRINCIPAL AMOUNT 2001 $ 400,000 2002 400,000 2003 400,000 2004 400,000 2005 500,000 2006 500~000 TOTAL $21600~000 NOTICE IS FURTHER GIVEN that due and proper arrangements have been made for providing Texas Commerce Bank National Association, Dallas, Texas, as successor to First City, Texas - Houston, N.A., Houston, Texas, the Paying Agent for the Bonds called for redemption, with funds sufficient to pay the redemption price of the Bonds equal to the principal amount of the Bonds and the interest thereon to the redemption date. In the event the Bonds, or any of them are not presented for redemption by the date fixed for their redemption, they shall not thereafter bear interest. If due provision for the payment of the redemption price is made, then the Bonds automa- tically shall be deemed to have been redeemed prior to their scheduled maturity, and they shall not bear interest after the redemption date, and they shall not be regarded as being outstanding except for the right of the owner thereof to receive the redemption price from the Paying Agent. THIS NOTICE is issued and given pursuant to the redemption provisions in the proceedings authorizing the issuance of the Bonds and in accordance with the recitals and provisions of each of the Bonds. NOTICE IS FURTHER GIVEN THAT the Bonds will be payable at and should be submitted either in person or by certified or registered mail to the following address: By Hand Bond Payment Unit 1201 Main, 18th Floor Dallas, Texas 75202 By Mail Bond Payment Unit P.O. Box 2320 Dallas. Texas 75221-2320 EXECUTED UNDER MY HAND and seal of office this December 12, 1996. /s/ Lynn MclIhaney Mayor, City of College Station, Texas C-I In compliance with current federal tax law and broker reporting requirements, the Paying Agent is required to withhold 31% of the principal amount of your proceeds unless it is provided with your Social Security Number or federal employer identification number properly certified. Any questions regarding this notice may be addressed to (214) 672-5125. TEXAS COMMERCE BANK NATIONAL ASSOCIATION, AS PAYING AGENT EXHIBIT D Bond Purchase Agreement $10,110,000 CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE AND REFUNDING BONDS, SERIES 1996 December 12, 1996 BOND PURCHASE AGREEMENT City of College Station 1101 Texas Avenue College Station, Texas 77840 Ladies and Gentlemen: The undersigned, Southwest Securities, Inc. (the "Representative"), acting on behalf of itself and the other underwriters listed in Schedule I hereto (the Representative and such other underwriters being collectively referred to as the "Underwriters" herein), offers to enter into this Bond Purchase Agreement with the City of College Station, Texas (the "Issuer"), for the purchase by the Underwriters of the $10,110,000 City of College Station, Texas Utility System Revenue and Refunding Bonds, Series 1996 (the "Bonds"). Representative hereby informs the Issuer that it is authorized, on behalf of itself and the Underwriters, to enter into this Bond Purchase Agreement and that it is authorized to execute the Bond Purchase Agreement and to take any other actions which may be required hereby on behalf of the other Underwriters. This offer is made subject to written acceptance by the Issuer on or before 9:00 P.M., Houston, Texas time on the date hereof. Upon such acceptance, the Bond Purchase Agreement shall be in full force and effect in accordance with its te~ms and shall be binding upon the Issuer'and the Underwriters. Terms used herein, unless otherwise defined, have the meanings ascribed thereto in the Official Statement of the Issuer dated December 12, 1996 (the "Official Statement") relating to the sale of the Bonds. Section 1. Sale of Bonds. Upon the terms and conditions and based upon the representations hereinafter set forth, the Underwriters hereby agree to purchase from the Issuer all (but not less than all) of the $10,110,000 principal amounts of the Bonds, which Bonds have the terms and features (including those with respect to redemption) set forth in the Official Statement. The Bonds shall be issued under the authority of the Constitution and laws of the State of Texas, particularly Article 717k and Article G~09\68902.3 -1- 111 through 1118, Vernon's Texas Civil Statutes, as amended. The purchase price for the Bonds will be $9,991,611.65 (which reflects the par amount of the Bonds, less an original issue discount of $49,741.45 and less an underwriting discount of $68,646.90). The purchase price for all of the Bonds will also include accrued interest on the Bonds, calculated on the basis of a 360-day year of twelve 30-day months from December 1, 1996, to the date of Closing. "Closing" shall have the meaning set forth in Section 5 below. The Underwriters agree to make a bona fide public offering of the Bonds at the initial offering price or prices set forth in the Official Statement described below. The Underwriters reserve the right to change such initial offering price or prices as the Underwriters shall deem necessary in connection with the marketing of the Bonds in order to offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the initial offering price or prices set forth in the Official Statement, plus accrued interest. The Underwriters also reserve the right (i) to over-allot or effect transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market, and (ii) to discontinue such stabilizing, if com- menced, at any time. Section 2. Good Faith Check. Delivered to the Issuer herewith is a corporate check (the "Good Faith Check") drawn on the Representative's account at a New York Clearing House Bank payable to the order of the Issuer in the amount of $98,000, as security for the performance by the Underwriters of their obligation to accept and pay for the Bonds at the Closing in accordance with the provisions of the Bond Purchase Agreement. The Good Faith Check shall be held, uncashed by the Issuer until one of the following events occurs: (a) In the event the Issuer does not accept this offer, such Good Faith Check shall be immediately returned to the Underwriters. No interest shall be deemed earned by or payable to the Underwriters upon said security deposit. Concurrently with the delivery of and payment for the Bonds at the Closing, the Good Faith Check shall be returned to the Representative. (b) Upon the Issuer's failure to deliver the Bonds at the Closing, or if the Issuer shall be unable to satisfy the conditions precedent required by the Underwriters and contained in this Bond Purchase Agreement or if such Underwriters' obligations shall be terminated for any reason permitted by this Bond Purchase Agreement, the Good Faith Check shall be immediately returned to the Representative and such return shall constitute a full release and discharge of all claims and rights hereunder of the Underwriters against the Issuer. ~W09\68902.3 2 (c) In the event the Underwriters fail (other than for a reason permitted under this Bond Purchase Agreement) to accept and pay for the Bonds at the Closing, the Issuer shall notify the Underwriters by written notice delivered to the Underwriters at the address shown below and shall be entitled to cash or to negotiate the Good Faith Check, and the proceeds thereof shall be retained by the Issuer as and for full liquidated damages for such failure and for any and all defaults on the part of the Underwriters and such proceeds shall constitute a full release and discharge of all claims and damages for such failure and for any and all such defaults. Section 3. Official Statement. The Issuer shall execute and deliver the Bonds to the Underwriters and shall deliver or cause to be delivered to the Underwriters herewith two (2) copies of the Official Statement of the Issuer, dated December 12, 1996 substan- tially in the form of the Preliminary Official Statement dated December 5, 1996 (the "Preliminary Official Statement") with only such changes therein as shall have been accepted expressly by the Underwriters, which acceptance will not be unreasonably withheld, signed on behalf of the Issuer by a duly authorized officer of the Issuer, and shall cause copies of the Official Statement, in sufficient quantity for the Underwriters to comply with the rules of the Municipal Securities Rulemaking Board ("MSRB") and Section 15c2-12(b) (4) of Rule 15c2-12 (the "Rule"), promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act") by the United States Securities and Exchange Commission (the "SEC"), to be available to the Underwriters within seven (7) business days of the execution of this Bond Purchase Agreement (delivery of such copies of the Official Statement within such seven (7) business day period constituting the Issuer's representation that such Official Statement is complete as of the date of its delivery). The Issuer consents to and ratifies the use, prior to the date hereof, of copies of the Preliminary Official Statement and the documents re$~rred to therein by the Underwriters. In addition, the Issuer authorizes the distribution o£ copies of the Official Statement in cohnection with the public offering and sale of the Bonds by the Underwriters. The Representative has received written assurances from all "obligated persons", as such term is defined in Section (b) (5) (c) of the Rule for each such obligated person to file annually with all "Nationally Recognized Municipal Securities Information Repositories" ("NRMSIR") and any state information repository ("SID") which has been or may be established in this State, annual financial and/or operating information about each such obligated person in form and substance of similar content and scope as is being made available about each such obligated person in the Official Statement with respect to the Bonds. G"W09\68902 . 3 -3- In addition, the Representative has reasonably assured itself that there are presently in place, in writing, procedures to timely notify (i) any SID established within this State and (ii) each ATRMSR or the MSRB, of the occurrence of any one of the eleven denominated events contained in the Rule, as such events may materially affect the issuer or each obligated person. Section 4. Issuer Representations and Agreements. The Issuer represents to and agrees with the Underwriters that: (a) both at the time of acceptance hereof by the Issuer and at all times during the period from the date hereof to and including the date which is twenty-five (25) days following the end of the underwriting period for the Bonds, as determined in accordance with Section 7 hereof, the statements and information contained in the Official Statement (other than information relating to The Depository Trust Company and information contained in Appendix A, as to which the Issuer makes no representation) are and will be true, correct and complete in all material respects and the Official Statement, to the knowledge of the Issuer, does not as of the date of acceptance hereof and will not at all times during the period from the date hereof to and including the date which is twenty-five (25) days following the end of the underwriting period for the Bonds, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements and information therein, in light of the circumstances under which they were made, not misleading in any material respect; (b) prior to the execution of this Bond Purchase Agreement, the Issuer delivered to the Underwriters copies of the Preliminary Official Statement which the Issuer deemed final as of its date for purposes of the Rule; (c) if the Official Statement is supplemented or amended pursuant to Section 7 hereof, at the time of each supplement or amendment thereto and at all times during the period from the date of such supplement or amendment to and including twenty-five (25) days following the end of the underwriting period for the Bonds, the Official Statement as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements cohtained therein, in the light of the circumstances under which they were made, not misleading; (d) the Issuer is and will be at the date of the Closing duly organized and existing as an agency of the State of Texas; (e) the execution and delivery of this Bond Purchase Agreement, the Bonds, the resolutions (the "Resolutions") of the Issuer authorizing the issuance of the Bonds, and compliance with the provisions of all of them, under the circumstances contem- plated hereby and thereby, do not as of the date of acceptance hereof, and will not at the date of Closing, in any material respect conflict with or constitute on the part of the Issuer, a breach or any default under any agreement or other instrument to which the Issuer is a party or any existing law, administrative regulation, court order or consent decree to which the Issuer is subject; (f) when delivered to and paid for by the Underwriters at the Closing in accordance with the provisions of this Bond Purchase GW09\68902.3 -4- Agreement, the Bonds will be duly authorized, validly issued and binding outstanding obligations of the Issuer secured in the manner provided in the Resolutions and described in the Official Statement and entitled to the benefits of the Resolutions, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights generally and subject, as to enforceability, to the general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); (g) the Issuer has contracted in writing to file, on an annual basis with each NRMSIR as well as with any SID established in the State of Texas, copies of the annual audited financial reports or financial information of the Issuer in the form annexed to the Official Statement as Appendix B; and (h) the Issuer has duly delegated to its Mayor, or in the absence of the Mayor, its City Manager, authority to act on behalf of the Issuer with respect to (i) the execution and delivery of this Bond Purchase Agreement, (ii) the distribution of the Preliminary Official Statement and the execution, delivery and distribution of the Official Statement and (iii) the performance by the Issuer of the obligations contained in this Bond Purchase Agreement and the Resolutions. Section 5. Closing. At 10:00 A.M, Houston, Texas time, on January 15, 1997, or at such other time or on such earlier or later date as the Underwriters and the Issuer may mutually agree upon (the "Closing"), the Issuer will deliver or cause to be delivered to the Underwriters, at the office of Texas Commerce Bank National Association, Houston, Texas, or at such other place as the Underwriters and Issuer may mutually agree upon, the Bonds (the "Initial Bonds"), in printed or typewritten form duly executed, together with the other documents hereinafter mentioned. The Underwriters will accept delivery of the Initial Bonds and pay the purchase price of such Initial Bonds plus accrued interest from December 1, 1996 to the date of the Closing, by check or checks payable to the order of the Issuer in Federal Funds or by wire transfer of funds as directed by the Issuer in the amount provided above. Upon surrender of the Initial Bonds for exchange, de~finitive Bonds shall be issued in the form of one typewritten or p~inted bond certificate for each maturity, registered, in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company, New York, New York ("DTC"), in the aggregate principal amount of $10,110,000. Delivery of the definitive Bonds as aforesaid shall be made at the place in New York, New York, designated by DTC. The definitive Bonds shall be filed with The Depository Trust Company (at which location they may be inspected by the Representative) at least 24 hours before the Closing. The definitive Bonds shall bear proper CUSIP numbers (provided, however, that neither the printing of wrong CUSIP number on any Bond nor the failure to print a CUSIP number thereon shall constitute cause to refuse to accept delivery of any Bond). GW09\68902.3 5 Section 6. Conditions Precedent. The Representative has entered into this Bond Purchase Agreement in reliance upon the accuracy of the Issuer's representations and agreements set forth herein and the performance by the Issuer of its obligations hereunder, both as of the date hereof and as of the date of the Closing. The Issuer's obligation to deliver the Bonds to the Underwriters will be subject to the receipt by the Issuer of the purchase price for the Bonds and the delivery of the opinions and documents described in Paragraph 6 of this Bond Purchase Agreement. The Underwriters' obligation hereunder to purchase and pay for the Bonds shall be subject to the performance by the Issuer of its obligations hereunder in all material respects at or prior to the Closing and the accuracy in all material respects of the Issuer's representations and warranties contained herein and shall also be subject to the following conditions, any one or more of which may be waived by the Underwriters: (a) That at the time of the Closing, this Bond Purchase Agreement, the Official Statement, and the Resolutions shall be in full force and effect and shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Underwriters and the Issuer; and the Issuer shall have duly adopted and there shall be in full force and effect such other resolutions as, in the opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., as Bond counsel, shall be necessary in connection with the transactions contemplated hereby. (b) That the Underwriters shall have the right to cancel its obligations to purchase the Bonds, by notifying the Issuer of its election to do so, if between the date hereof and Closing (i) legislation shall have been introduced in or enacted by the Congress of the United States, or shall have been favorably reported out of committee, or a decision shall have been rendered by a court of the United States or a ruling shall have been made or proposed by the Treasury Department of the United States or the Internal Revenue Service, with respect to federal taxation upon interest received on obligations of the general character of the Bonds, or (ii) there shall exist an event which, in the Underwriters' reasonable judgment, materially adversely affects the market for the Bonds, or which, in the Underwriters' reasonable judgment, either (A) makes untrue or incorrect in any material respect, as of such time, any statement or information contained in the Official Statement or adversely affects the exemption of the interest on the Bonds from federal or state taxes or (B) is not reflected in the Official Statement but should be reflected therein in order to make the statements and information contained therein not misleading in any material respect, or (iii) there shall have occurred any outbreak of hostilities or other local, national or ~W09\68902 . 3 - 6 - international calamity or crisis on the financial markets of the United States being such as, in the Underwriters' reasonable judgment, would make it impracticable for the Underwriters to market the Bonds or enforce contracts for the sale of the Bonds, or (iv) there shall be in force a general suspension of trading on the New York Stock Exchange or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in full force on the New York Stock Exchange, whether by virtue of a determination by that Stock Exchange or by order of the SEC or any other governmental authority having jurisdiction, or (v) a general banking moratorium shall have been declared by either Federal, State of Texas, or State of New York authorities and be in force, or (vi) a stop order, ruling, regulation, proposed regulation or statement by or on behalf of the SEC shall be issued or made to the effect that the issuance, offering, sale or distribution of obligations of the general character of the Bonds is in violation of any provisions of the Securities Act of 1933 or of the Trust Indenture Act of 1939, or (vii) in the Congress of the United States legislation shall be enacted or a bill shall be favorably reported out of committee of either the House of Representatives or the Senate, or a decision by a court of the United States shall be rendered, or a ruling, regulation, proposed regulation or statement by or on behalf of the SEC or any other agency of the government having jurisdiction of the subject matter shall be made, to the effect that securities of the Issuer, or of any similar public body, are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended, or the Trust Indenture Act of 1939, as amended. (c) That the Issuer shall not have failed to pay principal of or interest on, when due, any of its outstanding obligations for borrowed money; (d) That, at the Closing, the Underwriters shall receive a copy of the transcript of proceedings relating to the authorization and issuance of the Bonds, including each of the following documents: (1) Official Statement and Resolutions. The Official Statement of the Issuer and the Resolutions of the Issuer, with such amendments, modifications or supplements thereto as may have been agreed to by the Underwriters; (2) Bond Counsel's Opinion. The opinion of the Issuer's Bond Counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P. ("Bond Counsel"), in substantially the forms set forth in Appendix C to the Official Statement; GW09\68902.3 -7- (3) Bond Counsel's SuDplemental ODinion. The supplemental opinions of Bond Counsel, dated the date of Closing, addressed to the Issuer, to the effect that the offer and sale of the Bonds are not required to be registered under the Securities Act of 1933, as amended, the Resolutions are not required to be qualified under the Trust Indenture Act of 1939, as amended, and further that the Issuer's Bond Counsel has reviewed the information appearing in the Official Statement under the captions "PLAN OF FINANCING," "THE BONDS" (other than the section "Book-Entry Only System"), "TAX MATTERS', and "CONTINUING DISCLOSURE OF INFORMATION,', and the subcaptions "Legal Opinions" and "Legal Investments and Eligibility to Secure Public Funds in Texas" solely to determine whether such information relating to the Bonds and the Ordinance contained under such captions is a fair and accurate summary of the information purported to be shown therein; however, such opinion shall not address or opine as to any statistical and financial information contained therein; and further such opinion also shall contain a provision to the effect that the opinion referred to in subparagraph (2) above may be relied upon by the Underwriters to the same extent as if such opinion was addressed to them. (4) No-Litiqation Certificate. A certificate dated the date of Closing from the City Attorney of the Issuer stating to the effect that, based on such inquiry and investigation as (s)he has deemed sufficient, no litigation is pending (or, to his or her knowledge, threatened) against the Issuer in any court (i) to restrain or enjoin the sale or delivery of the Bonds, or (ii) in any manner questioning the authority of the State of Texas or the Issuer to issue, or the issuance, validity or payment of principal of or interest on, the Bonds, or (iii) questioning the constitutionality of any statute, or the validity of any proceedings, authorizing the issuance of the Bonds, or (iv) affecting the provision made for the payment or security of the Bonds, or (v) contesting in any way the completeness, accuracy or fairness of the Preliminary Official Statement or the Official Statement, or (vi) contesting the titles of any members of the City Council of the Issuer to their respective offices, or (vii) which might in any material respect adversely affect the transaction contemplated herein; ~W09\68902 . 3 - 8- (5) Issuer's Closinq Certificate. A certificate dated the date of Closing from the Issuer, executed by the Mayor of the Issuer, acting in her official capacity, stating that to the best of her knowledge and belief: (a) the descriptions and statements of the Bonds and the Resolutions contained in the Official Statement and any addenda, supplement or amendment thereto, on the date of such Official Statement, on the date of sale of the Bonds to the Underwriters and on the date of delivery, were and are true and correct in all material respects; (b) insofar as the Issuer and its affairs, including its financial affairs, are concerned, such Official Statement did not and does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions, statements and activities, including financial data, of or pertaining to entities other than the Issuer contained in such Official Statement are concerned, such statements and data have been obtained from sources which the Issuer believes to be reliable and the Issuer has no reason to believe that they are untrue in any material respect; (d) there has been no material adverse change in the condition of the Issuer (financial or otherwise) since the date of the Official Statement; (e) the Resolutions and this Bond Purchase Agreement have not been amended, modified, supplemented or repealed, except as contemplated hereby or as may have been agreed to by the Underwriters, and are in full force and effect, and the representations and warranties of the Issuer contained in the Bond Purchase Agreement are true and correct in all material respects o~ and as of the date of Closing and if made on such date; and the Issuer has complied with all the agreements and satisfied all the conditions on its part to be complied with or satisfied at or prior to the date hereof pursuant to this Bond Purchase Agreement and the Resolutions; (6) Attorney General's Opinions. The unqualified approving opinion of the Attorney General of the State of Texas in respect of the Bonds; GW09\68902.3 - 9 - (7) Comptroller's Registration Certificates. The registration certificates of the Comptroller of Public Accounts of the State of Texas (the "Comptroller") in respect of the Bonds; (8) Rating Letters. Evidence of the rating of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, of "Aaa," and "AAA" respectively, on the Bonds, in a form acceptable to the Underwriters; (9) Continuing Disclosure Obligation. Evidence of a continuing disclosure agreement of Issuer, for the benefit of the holders of the Bonds, and agreement to comply with all provisions of Section (b) (5) (i) of the Rule, as may be amended from time to time; (10) Certification of Compliance. A certificate of the Mayor of the Issuer, dated the date of Closing, to the effect that the Issuer is in full compliance with each and every undertaking previously entered into by it pursuant to the Rule; and (11) Additional Certificates, Instruments and Opinions. Such additional certificates, instruments or opinions as Bond Counsel or Counsel to the Underwriters determine are necessary; and (e) That the Issuer shall perform or have performed in all material respects at or prior to the Closing all of the Issuer's obligations required under or specified in this Bond Purchase Agreement to be performed at or prior to the Closing. AI~ certificates, instruments, opinions and documents referred to above shall be in form and substance satisfactory to Bond Counsel, and Counsel to the Underwriters. Section 7. Amendments and Supplements to the Official Statement. The "end of the underwriting period" for the Bonds for all purposes of the Rule is the date of the Closing. In the event the Underwriters request an extension of the underwriting period, the Issuer in its sole discretion may agree to or deny such request, which discretion shall not be exercised in an arbitrary or capricious manner. The "end of the underwriting period" for the Bonds as used in this Bond Purchase Agreement shall mean the date of Closing or such later date as to which the Issuer has consented in accordance with the preceding sentence. During the period from the date hereof to and including a date which is twenty-five (25) days following the end of the underwriting period for the Bonds (as G~W09\68902.3 -10- determined in accordance with this Section 7 hereof) the Issuer will (a) not adopt any amendment of or supplement to the Official Statement to which, after having been furnished with a copy, the Underwriters shall reasonably object in writing unless the Issuer has obtained the opinion of Bond Counsel, stating that such amendment or supplement is necessary in order to make the Official Statement not misleading in the light of the circumstances existing at the time that it is delivered to a purchaser of the Bonds and (b) if any event relating to or affecting the Issuer or the Bonds shall occur as a result of which it is necessary, in the opinion of Bond Counsel, to amend or to supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time it is delivered to a purchaser of the Bonds, the Issuer shall forthwith prepare and furnish to the Underwriters (at the expense of the Issuer) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to the Issuer and the Underwriters) which will amend or supplement the Official Statement so that such Official Statement, as amended or supplemented, will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser of the Bonds, not misleading. For the purpose of this Section 7, the Issuer will furnish such information with respect to itself as the Underwriters may from time to time reasonably request. Section 8. Payment of ExDenses. The Underwriters shall have no obligation to pay and the Issuer shall pay, from the proceeds of the sale of the Bonds or other available funds, upon or promptly after the Closing: (a) the cost of the preparation and printing of the Bonds, if any; (b) the costs of obtaining credit ratings; (c) the fees and disbursements of Bond Counsel, the Financial Advisor to the Issuer and of any other counsel or consultants retained by the Issuer; (d) the costs of preparing, printing and mailing the Preliminary Official Statement and the Official Statement; (e) the fees and expenses of the Paying Agent/Registrar; (f) the out-of-pocket expenses, including the cost of travel, of any officials of the Issuer; and (g) any other expenses mutually agreed to by the Issuer and the Underwriters to be reasonably considered expenses of the Issuer which are incident to the transactions contemplated hereby. The Underwriters will pay or cause to be paid all fees and expenses of their counsel, advertising costs incurred by them in connection with the public offering and sale of the Bonds, the expenses incurred by them in connection with qualification of the Bonds for sale and the determination of their eligibility for investment under the "Blue Sky" and securities laws and legal investment laws of the several states, the cost of obtaining federal funds, the charge of the CUSIP Service Bureau for the assignment of CUSIP numbers for the Bonds, any securities G"WO9\68902.3 -11- depository for the Bonds, the MSRB and the Public Sacurities Association. Section 9. Delivery of Names and Addresses of Holders of the Bonds. At the Closing, contemporaneously with the receipt of the Bonds by the Underwriters, the Underwriters will, if so requested, deliver to the Issuer a receipt therefor, in form satisfactory to Bond Counsel, signed by the Underwriters. Section 10. ReDroduction of Bond Counsel's ODinion on the Bonds. The opinions of Bond Counsel as described in Section 6 above may be reproduced on the Bonds. Section 11. Issuer's Cooperation. The Issuer covenants with the Underwriters that it will cooperate with the Underwriters in qualifying the Bonds for offer and sale, and as legal investments, under the securities "Blue Sky" laws of such jurisdictions as the Underwriters may request (except for any jurisdiction in which such qualification would require the Issuer to consent to service of process or to qualify to do business therein). Section 12. Notices. Any notice or other communication to be given to the Issuer under this Bond Purchase Agreement may be given by delivering the same, in writing, to the City of College Station, 1101 Texas Avenue, College Station, Texas 77840, Attention: City Manager; any such notice or other communication to be given to the Underwriters may be given by delivering the same, in writing, to Southwest Securities, Inc., 4040 Broadway, San Antonio, Texas 78209 to the attention of Mr. Jorge Rodriguez. The approval of the Underwriters when required hereunder or the determination of its satisfaction as to any document referred to herein shall be evidenced in writing signed by Southwest Securities, Inc. and delivered to the Issuer. Section 13. Benefit. This Bond Purchase Agreement is made so%ely for the benefit of the Issuer and the Underwriters (including the successors or ~ssigns thereof) and no other person, partnership, association or corporation shall acquire or have any right hereunder or by virtue hereof. All representations and agreements by the Issuer in this Bond Purchase Agreement shall remain operative and in full force and effect except as otherwise provided herein, regardless of any investigation made by or on behalf of the Underwriters and shall survive the delivery of a payment of the Bonds. Section 14. Governinq Law. THIS BOND PURCHASE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF TEXAS. GW09\6 S 902.3 -12 - Section 15. Counterparts. This Bond Purchase Agreement may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. Section 16. No Personal Liability. None of the members of the City Council of the Issuer nor any officer, agent or employee of the Issuer shall be charged personally by the Underwriters with any liability, or be held liable to the Underwriters under any term or provision of this Bond Purchase Agreement, or because of its execution or attempted execution, or because of any breach, or attempted or alleged breach, of this Bond Purchase Agreement. Section 17. Business Days. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided for in this Bond Purchase Agreement, shall not be a Business Day, such payment may, unless otherwise provided in this Bond Purchase Agreement, be made or such act be performed or right expressed on the next succeeding Business Day with the same force and effect as if done on the nominal date provided for in this Bond Purchase Agreement. Section 18. Entire Agreement. This Bond Purchase Agreement constitutes the entire agreement, understanding, representations, warranties and obligations of the parties hereto with respect to the transactions contemplated hereby, and shall become effective upon the acceptance of this offer by the execution and the counter- execution hereof as provided, and shall be valid and enforceable as of the time of such acceptance. GW09\68902.3 -13 - Accepted: CITY OF COLLEGE STATION SOUTHWEST SECURITIES, INC. as Representatives of the Underwriters By: ~~' Name: Title: Lyn~ R. McIlhaney / Mayor GW09\68902.2 - 14 - SCHEDULE I: LIST OF PARTICIPATING UNDERWRITERS REPRESENTATIVE: Southwest Securities, Inc. ORIGINAL PARTICIPATION 50% OTHERS: Rauscher Pierce Refsnes, Inc. Coastal Securities, Inc. 25% 25% GW09\68902.3 -15 - EXHIBIT E Description of Annual Financial Information The following information is referred to in Section 25 of this Ordinance Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such Section are set forth in the Official Statement under Tables 1 through 16 and in Appendices C and D thereto. Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements attachedto the Official Statement as Appendices C and D, as such principles may be changed from time to time to comply with state law or regulation.