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1995 06 22 CC MinutesMINUTES OF THE REGULAR SESSION OF THE CITY COUNCIL OF THE CITY OF BAYTOWN June 22, 1995 The City Council of the City of Baytown, Texas, met in regular session on June 22, 1995, at 6:30 p.m. in the Council Chamber of the Baytown City Hall with the following in attendance: Eva Benavides Stephen DonCarlos Manuel Escontrias Rolland J. Pruett David Byford Bobby Rountree Ignacio Ramirez Eileen P. Hall Absent: Pete C. Alfaro E. Frank Hinds, Jr. Council Member Council Member Council Member Council Member Mayor Pro Tempore City Manager City Attorney City Clerk Mayor Council Member The meeting was opened with a quorum present, and Council Member DonCarlos offered the invocation, after which the following business was conducted: Consider Approval of the Minutes for the Regular Meeting Held on June 8, 1995 and the Special Meeting Held on June 15, 1995. Council Member Benavides moved for approval of the minutes for the regular session held on June 8, 1995 and the Special Meeting held on June 15, 1995. Council Member Escontrias seconded the motion. The vote follows: Ayes: Council Members Benavides, Escontrias, DonCarlos, and Pruett Mayor Pro Tempore Byford Nays: None 950622 - 2 Minutes for Regular Session - June 22, 1995 Consider Rejection of Bids for Bayland Park Marina Boat Ramps and Parking And Consider Approval of Plans and Specifications for Bayland Park Marina, Combined Boat Ramps, Parking Facility, and Wetlands Creation and Authorize Advertisement for Bids Bids for the boat ramp project were higher than anticipated. After checking with companies who bid the project and with those in the business, the staff and engineers feel the reason the bids came in above the estimate was due to the small size of the job. Also, one bid contained a mistake of about $60,000. The project engineers have visited with a couple of firms who feel that a combined project will result in a more competitive bid; therefore, the administration is recommending rejection of the bids and requesting authorization to advertise for bids for combined boat ramps, parking facility, and wetlands creation. This project provides final grading and contouring of the entire marina site, as well as strategic placement of rip -rap to protect the wetlands, tidal surge, and the construction of three boat ramps /piers, 66 parking spaces, and associated lighting. An alternate bid includes planting of vegetation for creative wetlands, hydro mulching of raw graded areas and installation of eight warning signs. The Texas Parks and Wildlife Department has approved these plans and specifications, and their grant will fund $325,000 of this project. The engineering cost estimate for this project is $850,000. Council Member Escontrias moved to reject bids for Bayland Park Marina boat ramps and parking and to authorize advertisement for Bayland Park Marina combined boat ramps, parking facility, and wetlands creation. Council Member DonCarlos seconded the motion. The vote follows: Ayes: Council Members Benavides, Escontrias, DonCarlos, and Pruett Mayor Pro Tempore Byford Nays: None For bid tabulation, see Attachment "A." ia 950622 - 3 Minutes for Regular Session - June 22, 1995 Consider Approval of Plans and Specifications for Central District Diversion Project and Authorize Advertisement for Bids This project diverts sanitary sewage from the Craigmont and Garth Road lift stations to a new lift station to be built on Lynchburg Cedar Bayou near Goose Creek. Sewage is then forced via a 20 -inch line to a 42 -inch gravity system near the West District Treatment Plant. The engineering construction cost estimate for this project is $2,434,437 to be funded from revenue bonds. Approximately two million gallons will be diverted from Central District to West District by this project. Council Member Benavides moved to approve the plans and specifications and to authorize the administration to advertise for bids. Council Member Pruett seconded the motion. The vote follows: Ayes: Council Members Benavides, Escontrias, DonCarlos, and Pruett Mayor Pro Tempore Byford Nays: None Consent Agenda Council considered consent agenda items "a" through "e" as follows: a. Proposed Ordinance No. 950622 -3, authorizes Change Order No. 2 in the amount of $8,157 with Firemen Construction Company, Inc. for Sterling Municipal Library Expansion Project. Major additions involved in Change Order No. 2 include revisions of mechanical piping to remain under roof and clear existing low roof area, installation of rigid conduits to connect cable trays on the existing low roof area, provide four foot wide sidewalk to match existing sidewalk adjacent to porch, and provide condensate drain from ceiling mounted air conditioning unit to underground storm line. Deducts include deletion of cast iron overflow drains at roof drains and addition of 114 bends at column footings and credit for accessories allowance and unused hardware. The original contract amount was $1,570,000. Change Order No. 1 for $9,171 involved HVAC changes, plumbing changes, and work to comply with ADA requirements necessitated after State plan review. The revised contract amount including the change orders is $1,587,328. We recommend approval. 950622 - 4 Minutes for Regular Session - June 22, 1995 b. Proposed Ordinance No. 950622 -4, authorizes payment in the amount of $274,594.99 of C.L. Winter Lawsuit This ordinance authorizes payment of the judgement in the suit styled C.L. Winter, Inc., v. City of Baytown, which is a suit involving a construction contract between the City of Baytown and C.L. Winter, Inc. We recommend approval. C. Proposed Ordinance No. 950622 -5, awards the annual miscellaneous radio parts contract to Tessco in the amount of $11,152.69. Invitations to bid were mailed to four suppliers and we received two bids. This annual contract is for various miscellaneous radio parts other than GTE parts to be used by the radio shop. The low bidder, Hutton, was unable to provide various items in quantities required by the City. Therefore, the recommendation is to award the bid to Tessco who is able to provide items as specified. We recommend approval. d. Proposed Ordinance No. 950622 -6, awards the annual cast iron castings contract to Industrial International in the amount of $16,444. Invitations to bid were mailed to six suppliers and we received three bids. This contract is used by the Public Works Department for drainage and sewer maintenance (manhole covers, sewer clean out covers, storm sewer drain grates, etc.) Quantities remain the same this year. This contract is a 9% increase over last year. We recommend approval. e. Proposed Ordinance No. 950622 -7, awards the annual fill sand contract to Smart Materials, Inc. in the amount of $18,675. Invitations to bid were mailed to four suppliers and we received four bids. The fill sand is used primarily to fill and level construction areas where necessary, i.e. filling in water lines, leveling yards where sewer or water repairs occur, etc. Baytown Sand & Clay and Smart Materials, Inc. tied in price per cubic yard for fill sand. This past year, Baytown Sand & Clay has had service problems such as late deliveries, inability to deliver on various occasions, and poor quality of sand. A memo is enclosed in the packet from Public Works regarding Baytown Sand & Clay. We recommend approval. 950622 - 5 Minutes for Regular Session - June 22, 1995 Council Member Pruett moved for approval of the consent agenda items "a" through "e." Council Member DonCarlos seconded the motion. The vote follows: Ayes: Council Members Benavides, Escontrias, DonCarlos, and Pruett Mayor Pro Tempore Byford Nays: None ORDINANCE NO. 7332 AN ORDINANCE AUTHORIZING CHANGE ORDER NO. 2 WITH FIREMEN CONSTRUCTION COMPANY, INC., FOR THE STERLING MUNICIPAL LIBRARY EXPANSION PROJECT; AUTHORIZING PAYMENT BY THE CITY OF BAYTOWN, THE SUM OF EIGHT THOUSAND ONE HUNDRED FIFTY -SEVEN AND NO1100 DOLLARS ($8,157.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. ORDINANCE NO. 7333 AN ORDINANCE AUTHORIZING THE PAYMENT OF TWO HUNDRED THIRTY -EIGHT THOUSAND FOUR HUNDRED THIRTY - NINE AND 831100 DOLLARS ($238,439.83) TO THE INTERNAL REVENUE SERVICE AND THIRTY -SIX THOUSAND ONE HUNDRED FIFTY -FIVE AND 161100 ($36,155.16) TO C. L. WINTER, INC., AND BUTLER & BINION, L.L.P., AS THE COST FOR PAYMENT OF THE JUDGEMENT IN THE SUITE STYLED C. L. WINTER, INC. v. CITY OF BAYTOWN, CAUSE NO. 92- 13986, IN THE 234TH JUDICIAL DISTRICT COURT; MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. 950622 - 6 Minutes for Regular Session - June 22, 1995 ORDINANCE NO. 7334 AN ORDINANCE ACCEPTING THE BID OF TESSCO FOR THE ANNUAL MISCELLANEOUS RADIO PARTS CONTRACT AND AUTHORIZING PAYMENT BY THE CITY OF BAYTOWN, THE SUM OF ELEVEN THOUSAND ONE HUNDRED FIFTY -TWO AND 691100 DOLLARS ($11,152.69); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. ORDINANCE NO. 7335 AN ORDINANCE ACCEPTING THE BID OF INDUSTRIAL INTERNATIONAL FOR THE ANNUAL CAST IRON CASTINGS CONTRACT AND AUTHORIZING PAYMENT BY THE CITY OF BAYTOWN, THE SUM OF SIXTEEN THOUSAND FOUR HUNDRED FORTY -FOUR AND NO1100 DOLLARS ($16,444.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. ORDINANCE NO. 7336 AN ORDINANCE ACCEPTING THE BID OF SMART MATERIALS, INC., FOR THE ANNUAL FILL SAND CONTRACT AND AUTHORIZING PAYMENT BY THE CITY OF BAYTOWN, THE SUM OF EIGHTEEN THOUSAND SIX HUNDRED SEVENTY -FIVE AND NO /100 DOLLARS ($18,675.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. For bid tabulations, see Attachments "B" through "D." -, ( 950622 - 7 Minutes for Regular Session - June 22, 1995 City Manager's Report Town Hall Meeting Council was reminded of the Town Hall Meeting scheduled for June 26, 1995, at 7:00 p.m., Community Center, Main Auditorium, hosted by the Baytown Police Department Community Services Bureau. Brownwood Nature Center The City Manager invited Council to visit the Brownwood Nature Center site. Consider Proposed Ordinance No. 950622 -1, Authorizing Issuance of City of Baytown, Texas, General Obligation and Refunding Bonds, Series 1995; Appropriating the Proceeds for Refunding Outstanding Bonds, a Public Works Maintenance Facility, Public Buildings, and Park Purposes; Authorizing the Advance Refunding of Certain Outstanding Obligations and the Execution and Delivery of an Escrow Agreement and the Subscription for and Purchase of Certain Escrow Securities And Consider Proposed Ordinance No. 950622 -2, Authorizing Issuance of $5,200,000 City of Baytown, Texas, Waterworks and Sewer System Revenue Bonds, Series 1995; Appropriating $1,528,850 of the Proceeds of Sale Thereof for Waterworks Improvements and $3,671,150 of the Proceeds of Sale Thereof for Sewer System Improvements The City's financial advisor, Mr. Drew Masterson, explained that the first ordinance would provide for the sale of outstanding bonds from the 1991 bond issue, as well as refunding of outstanding general obligation bonds from the previous years and refunding of the MUD No. 3 bonds. Item No. 2 would authorize issuance of funds from the 1991 bond program for waterworks and sewer system improvements. The refinancing and marketing of new bonds went very well. The interest rates on the general obligation bonds range from 4.1 % in 1997 to 6.028% in 2016. On the revenue bonds, the interest rates range from 5.05% in 2003 to 6% in 2012. The City will save over $1 Million on the refinancing of MUD No. 3 bonds and City bonds. This is the reduction in debt service which was included as part of the basis for annexation of MUD No. 3. The administration recommended approval ` of both ordinances. 950622 - 8 Minutes for Regular Session - June 22, 1995 Council Member Escontrias moved for adoption of the ordinances. Council Member Benavides seconded the motion. The vote follows: Ayes: Council Members Benavides, Escontrias, DonCarlos, and Pruett Mayor Pro Tempore Byford Nays: None For full context of ordinances, see Attachments "E" and "F." Adjourn As there was no further business to be transacted, the meeting was adjourned. minutes106- 22 -95. rgr `-\ Eileen P. Hall, City Clerk PROPOSAL FOR BAYLAND PARK MARINA BOAT RAMPS � PARKING 810 TABULATION BID BID ITEM DESCRIPTION AND ANO�I,'BROTHERS ENTERPRISES MASTER CONTRACTORS INC. TOM -MAC, INC. ITEM UNIT PRICE BID WRITTEN IN r •: NO. • QUANTITIES UNIT WORDS UNIT PRICE TOTAL UNIT PRICE TOTAL UNIT PRICE TO AL 1. 2.8 Acro Clearing end Onrbbing Conetructlan Site, Complete In P1eoe 51,000.00 32,800.00 35,500:00 615,400.00 3665.00 1,86200 2. 2,450 C.Y. F�ccavatlon Inducting Roadway, Swalee, Channel and Borrow from SPoe, Inducting Fl(I and Compactor, Complete In Place 5.00 12,250.00 8.00 19,600.00 7.00 17,150.00 3. 82 LF. 12' RCP, ASTM C -78, Clsaa III, Complete- in -Plaoe 30.00 2,460.00 37.00 3,034.00 20.70 1,697.40 4. 68 LF. 15' RCP, ASTM C -78, Claaa III, Complete In Place 33.00 2,178.00 38.D0 2,508.00 25.75 1,699.50 6. 72 LF. 18' RCP, ASTM C -78, Class III, Complete 1n Place 35.00 2,520.00 40.00 2,880.00 40.25 2,898.00 8. 45 S.Y. Broken Concrete Rlp -Rap (minimum 18' deep), Fumished by Owner On- Stte, Plaoed by Contractor, Complete M Place 60.00 2,700.00 40.00 1,800.00 34.50 1552.60 .7. 3 Each Orate Inlet, Complete In Place 850.00 2,550.00 765.00 2,295.00 1,725.00 5,175.00 8. 310 S.Y. 4' ihldc Concrete Sidewalk Wllh ar Without Th�kened Edge Complete fn Waco 23.00 7,130.00 19.00 5,890.00 30.00 9,300.00 9. 90 Ton Ume Slurry (3 %) 12 Ibs/SY for Subgrade, Complete in Place 120.00 � 10,800.00 177.00 15,930.00 110.00 9,900.00 10. 287 Ton Fly Ash (8%) 40 lbs /SY for Subgrade, Complete In F1aoe 35.00 9,345.00 64.00 17,088.00 80.00 21,360.00 11. 11,825 S.Y. Mbttng and Compacting 8' Stabilized Subgrade, Complete M Place 2.00 23,650.00 0.70 8,277.50 2.88 34,058.00 12. 6,133 S.Y. 8' Retnlarced Concrete Pavement. Complete M Place 22.00 134,926.00 20.50 125,726.50 27.25 167,12425 13. 1,747 S.Y. 5' Reinforced Concrete Pavement, Complete to Place 20.50 35,813.50 19.00 33,193.00 25.81 45,090.07 / � Pegc 1 of 4 PROPOSAL FOR BAYLAND PARK MARINA BOAT RAMPS 6 PARKING BID TABULATION BIO BID ITEM DESCRIPTION ANO ANGEL BROTHERS ENTERPRISES MASTER CONTRACTORS INC. TOM•MAC, INC. ITEM UNIT PRICE BID WRITTEN IN NO. CIUANTITIES UNIT WORDS UNIT PRICE TOTAL UNIT PRICE TOTAL UNIT PRICE TOTAL 14. 3,795 S.Y. Compacted Milled Aephatt Surface as Shown on SheAt C1, Complete !n place 2.50 9,487.50 8.00 30,360.00 3.45 13,09275 15. 1,885 LF. 8' Concrete Curb, Complete In Place 2.00 3,330.00 6.00 9,990.00 3.45 5,74425 18. 18 Ton Cement Stabilized Sand other than Specltted Bedding and Baddill as Direct by the Engineer, Delivery Ticket Basle, Complete In Place 15.00 240.00 14.00 224.00 70.00 1,120.00 17. 614 S.F. White ReBedorized Thennoplastic - Type A or B paint SlrtpMg, Complete M Place 2.00 1,028.00 1.50 771.00 7.50 3,855.00 18.. 383 S.F. Yellow Reflectorized Thennoplastic Type A or B Paint for SMpMg, Complete M Place 200 728.00 1.50 544.50 7.50 2,72250 . 19. 2 Each Yellow Reflectorized Thermoplastic Type A er B Paint for Hancflcapped Parking Symbols on Pavement, Complete M Plsoe 250.00 600.00 150.00 300.00 335.00 870.00 20. 718 S.F. Red Reflectodzed Thennoplastic Type A or B Paint for Strlphtg for Flre Lanes, Complete In Place 10.50 � ,518.00 2.00 1,432.00 7.50 5,370.00 21. 4 Each Tralftc Control Signs Includng ^� Handicapped Parking as Shown on �� the Drawings, Complete to place 150.00 `600.00 250.00 1,000.00 335.00 t,340.00 22. 228 LF. 12' C900 PVC Water Une, Complete in Place 27.00 8,102.00 28.00 6,878.00 27.00 8,102.00 23. 440 LF. 8' C900 PVC Water Una, Complete M place 18.00 7,920.00 20.00 8,800.00 20.00 8,800.00 24. 12 LF. 8' C900 PVC Water UnA, Complete M Place 38.00 432.00 18.00 216.00 20.00 240.00 25. 1 Each 12 x 8 Mechanical Joint Tee, Complete In Place 300.00 300.00 170.00 170.00 290.00 290.00 28. 1 Each 12 x 8 Mechanical Joint Tee. Complete In Place 350. 350.00 180.00 180.00 300. 300.00 Poge 2 of 4 PROPOSAL FOA BAYLAND PARK MARINA BOAT RAMPS 6 PARKING BID TABULATION 810 BID ITEM DESCRIPTION AND ANGEL BROTHERS ENTERPRISES MASTER CONTRACTORS INC. TOM -MAC, INC, ITEM UNIT PRICE BID WRITTEN IN NO. QUANTITIES UNIT WORDS UNIT PRICE TOTAL UNIT PRICE TOTAL UNIT PRICE TOTAL 27. 2 Each 12' Gale Vshre with Valve Box, Mechanical Joint, Complete In Place 1,000.00 2,000.00 800.00 1,600.00 1,130.00 2,260.00 28. 2 Each 8• Data Valve with Valve Box, Mechanical Joint, Complete In Place 500.00 1,000.00 275.00 550.00 400.00 800.00 29. 1 Each 8 x 8 Mechanical Joint Toe, Complete In Place 300.00 300.00 110.00 110.00 185.00 185.00 30. 2 Each 8' Mechanical Joint 4S Bend, Complete In Place 250.00 500,00 80.00 160.00 135.00 270.00 31. � 2 Each 12' Mechanical Joint 45 deg. Bend, Complete M Place 350.00 700.00 138.00 278.00 235.00 470.00 32. 2 Each 12' Plug, Mechanical JoMt, Complete M Place 200.00 400.00 60.00 100.00 75.00 150.00 33. 2 Eech Flre Hydrant, 5' Bury, MechenkeJ Joint, Complete M Place 1,100.00 2,200.00 7115.00 1,530.00 800.00 1,600.00 34. Aq Lump Electrical for Marina Boat Ramp Area Sum lncudtng Wiring, Conduit, Switch Gear, Light Fixtures 3 Standards, Cempiele to Place 35,000.00 35,000.00 43,000.00 43,000.00 48,000.00 48,000.00 35. Atl Lump OemoAtlon and Removal of Remains Sum of Did Pter Approximately 200 FL Long, Complete In Place t2,500.00 •12,500.00 17,000.00 17,000.00 16,000.00 18,000.00 38. Atl Lump Boat Launch Ramps Mcluding Sum Concrete Panels, Fastenere, Skids, Gravel Fill, Ber Rap, Rabar, Stops, . Scour Toe and FTlter Fabric 45,000.00 45, 000.00 58, 200.00 56,200.00 8,500.00 68,500.00 37. 2,400 S.F. Concrete Approach for Ramp 60'x 40', Complete M Place 4.00 9,600.00 2.50 6,000.00 3.65 8,760.00 38. All Lump Ramp Excavatlon and Slope Sum Preparation, Complete In Place 20,000.00 20,000.00 13,000.00 13,000.00 X11,000.00 11,000.00 39. 3 Each Boat Launch Ramp Ffnger Piers, Induding Piling, Stringers, Decking, Curbs, Banda, and Fasteners 30,000.00 90;000.00 21,000.00 63,000.00 63,000.00 159,000.00 F fi Page 3 of 4 pROPOSAI FOR BAYLAND PARK MARINA BOAT RAMPS � PARKING BID TABULATION glp BID ITEM DESCRIPTION AND ANGEL BROTHERS ENTERPRISES MASTER CONTRACTORS INC. TOM -MAC, INC. UNIT PRICE TOTAL UNIT PRICE TOTAL UNIT PRICE TOTAL ITEM NO. QUANTITIES UNIT UNIT PRICE Blb WRITTEN IN WORDS 40. A!I Lump Handicapped Aocesstble Boat Sum launch Pier Induding P9Ing, Strhrgero, Handra9, Decking, Guard Reg, Curbs, Bands and Fasteners 18,000.00 18 000.00 18,000.00 18,000.00 t 1,000.00 1 1,000.00 41. 185 LF. Bulkheading and Special Backflll �I Indudtng Plitng, Whalers, Sheathing, Deadmen, Filter Fabric, Tie- Backs, and Fasteners , 350.00 ' ..64,750.00 535.00 98,975.00 453.00 83,805.00 42. AM Lump Signs as Shown on Drawings loi `� Sum Safe Boating, Construction Credit and Permanent Plaque 1,500.00 •' 1,500.00 1,200.00 1,200.00 4,000.00 4,000.00 43. All Lump Sum Concrete Slab Tor Temporary Toilets 24'x e'x 4', Complete M Place 650.00 650.00 1,000.00 1,000.00 800.00 800.00 44. 5 Each Wheel Stops a, Detailed on Drewings and Installed as shovm 30.00 150.00 60.00 250.00 25.00 125.00 �45. � All Lump Sum Brick Paver TroJI Oellnatoro as shown and detailed on the Orawlrtgs 3,500.00 3,500.00 1,000.00 1,000.00 350.00 350.00 Tote) Base Bki 5595,408.00 5838,438.50 5781,58822 Add AIL 11 Eech Rekscete Channel Day Markers from 1 Ship Channel to Marina Bash, Complete M Place 900.00 9,900.00 1,200.00 13,200.00 12,000 132,000.00 Add 3 Eech Placement of T dleuneter 25 bng �, qtL 0.60 CCA Wood Piles at Locatlons Shown, Complete [n Place 1,800.00 4,800.00 3,900.00 t 1,700.00 800.00 2,400.00 2 Add 18 Each Set 18, 2' diameter Schedule 40, 18' Alt, bng DeMaetero at 100 toot Sparing 7' PI1es, Complete to Place 250.00 4,500.00 400.00 7,200.00 533.33 9,800.00 g Between GRAND TOTAL 5614,606.00 5668,538.50 5925,58822 ! f Page 4 of 4 �a a .� LOTUS,95,3 -- -PAGE 1 -- 9504 -70T _. TITLE: ANNUAL RADlO PARTS CONTRACT BID #: 9504 -70 This is an "all or none" bid. DATE: MAY 30, 1995 2:00 P.M. CITY OF BAYTOWN B1D TABULATION HUTTON COMMUNICA. TESSCO:,...a.:�- �.:_� .��.. ��� ... NO. QTY. UNIT DESCRIPTION UNIT PRICq EXT. PRIC UNIT PRICq EXT. PRIC UNIT PRICE EXT. PRIC 1. 5 each Ada ter, NFemale /UHF Male 4.07 20.35 5.63 28.15 2. 5 each Ada ter, UHF Female /N Male 7.50 37.50 9.01 45.05 3. 6 each Ada ter, UHF /F- -UHF /F 1.88 11.28 2.63 15.78 4. 1 each Antenna, 450 Plastic Radome 26.50 26.50 29.82 29.82 5. 1 each Antenna, 800 MHZ -On Glass "N" 26.23 9.33 29.33 29.33 6. 1 each Antenna, 800 MHZ -On Glass 'T' 26.23 26.23 29.33 29.33 7. 2 each Antenna, 800 MHZ Roof To "N" 31.00 62.00 34.68 69.36 8. 2 each Antenna, 800 Plastic Radome 49.00 98.00 55.11 110.22 9. 2 each Antenna, Dual Band Cou ler 38.00 76.00 36.63 73.26 10. 2 each Antenna, UHF 114 Wave 9.25 18.50 10.56 21.12 11. 5 each Antenna, UHF 114 Wave whi 3.00 15.00 3.52 17.60 12. 2 each Antenna, UHF BNC Stubb 7.10 14.20 9.77 19.54 13. 15 each Antenna, UHF Gain ASP -1650 32.00 480.00 32.10 481.50 14. 5 each Antenna, UHF Motorola MX Lon 6.25 31.25 6.62 33.10 15. 5 each Antenna, UHF MX Stubb 6.25 31.25 6.62 33.10 16. 2 each Antenna, UHF On Glass 38.75 77.50 43.55 87.10 17. 15 each Antenna, UHF /GE MPR 2" Stub 5.00 75.00 7.04 105.60 18. 10 each Antenna, UHF /GE MPR 6" 5.00 50.00 6.62 66.20 19. 1 each Antenna, V /UHF Glass Dual Ban 0.00 0.00 93.84 93.84 20. 10 each Antenna, VHF 1/4 Wave 10.00 100.00 11.36 113.60 21. 1 each Antenna, VHF BNC Lon 8.55 8.55 9.33 9.33 22. 15 each Antenna, VHF Gain 32.00 480.00 32.10 481.50 23. 5 each Antenna, VHF MPE /PE/PY Lon 5.00 25.00 6.62 33.10 24. 5 each Antenna, VHF MPElPE /PY stubb 5.00 25.00 7.70 38.50 25. 2 each Antenna, VHF MX Lon 6.25 12.50 6.62 13.24 26. 2 each Antenna, VHF On Glass 38.75 77.50 39.00 78.00 27. 1 each Antenna, VHF On Glass 29.50 29.50 29.55 29.55 28. 2 each Antenna, VHF Plastic Radome 56.50 113.00 63.32 126.64 29. 5 each Antenna, VHF Whi 4.15 20.75 4.66 23.30 30. 10 each Antenna, VHF /UHF Whi 1.15 11.50 1.34 13.40 LOTUS,95,3 -- -PAGE 2 -- 9504 -70T .: CITY OF BAYTOWN BID TABULATION TITLE: ANNUAL RADIO PARTS CONTRACT BID #: 9504 -70 This is an "all or none" bid. DATE' MAY 30. 1995 2:00 P.M. t � c HUTTON COMMUNICA. TESSCO • • NO. QTY. UNIT DESCRIPTION UNIT PRICq EXT. PRIC UNIT PRICq EXT. PRIC UNIT PRICE EXT. PRIC 31. 5 each Batte Bolt, Side Mount 0.00 0.00 1.84 9.20 32. 2 each Batte Bolt, To Mount 0.00 0.00 1.64 3.28 33. 7 each Batte Ta ,Cable 0.00 0.00 1.75 12.25 34. 4 each Batte , GE MPDlMPA 1700 MA 97.50 390.00 98.80 395.20 35. 17 each Batte , GE MPD /M PA Short 74.10 1,259.70 75.05 1,275.85 36. 10 each Batte , GE MPE /PE /PY Ra id 25.00 250.00 28.27 282.70 37. 47 each Batte , GE MPR /MPS Lon Bo 40.35 1,896.45 49.22 2,313.34 38. 14 each Batte , GE MPX 29.20 408.80 34.35 480.90 39. 1 ack/6 Batte , Minitor Pa er 22.80 22.80 11.86 11.86 40. 3 each Batte ,Motorola HT -90 23.15 69.45 32.61 97.83 41. 2 each Batte ,Motorola HT220 25.60 51.20 29.06 58.12 42. 1 each Batte ,Motorola MX 750MAH 27.75 27.75 29.39 29.39 43. 14 each Batte ,Motorola MX Lon 31.40 439.60 39.55 553.70 44. 5 each Bracket, L Antenna 314" Hole 2.70 13.50 3.03 15.15 45. 150 foot Cable, RG -58U 0.16 24.00 0.28 42.00 46. 1 k/1000 Clam ,Cable 314" 0.00 0.00 36.69 36.69 47. 5 each Clam roundin 3.00 15.00 3.09 15.45 48. 1 k/100 Cli ,Cable 0.00 12.50 12.50 49. 5 each Connector, BNC Male RG -58 2.30 11.50 3.01 15.05 50. 5 each Connector, BNC Maile RG -59 0.99 4.95 1.49 7.45 51. 2 k/5 Connector, Mini UHF 6.25 12.50 6.72 13.44 52. 1 each Connector, N Male RG -58 2.63 2.63 7.52 7.52 53. 6 each Connector, NMale- Proflex 2.10 12.60 3.04 18.24 54. 3 each Connector, TNC Male RG -58 1.16 3.48 1.49 4.47 55. 52 each Connector, UHF Male RG -58 0.63 32.76 0.92 47.84 56. 17 each Cord, Micro honelDelta 15.50 263.50 16.80 285.60 57. 2 each Decoder, CTCSS Decoder 35.95 71.90 38.36 76.72 58. 4 each Decoder, Two -Tone Decoder 49.45 197.80 52.76 211.04 59. 1 k/100 Disconnect, Insulated Female 0.00 0.00 2.36 9.44 60. 1 each Encoder, SS -32SMP CTCSS 0.00 24.04 24.04 t � c LOTUS,95,3 -- -PAGE 3 -- 9504 -70T :- CITY OF BAYTOWN BID TABULATION TITLE: ANNUAL RADIO PARTS CONTRACT BID #: 9504 -70 This is an "a!I or none" bid. DATE: MAY 30, 1995 2:00 P.M. C � HUTTON COMMUNICA. TESSCO� NO. QTY. UNIT DESCRIPTION UNIT PRICq EXT. PRIC UNIT PRICQ EXT. PRIC UNIT PRICE EXT. PRIC 61. 1 k/100 Fuse, AGC 15A 0.00 0.00 5.64 5.64 62. 1 k/100 Fuse, AGC 1A 0.00 0.00 5.64 5.64 63. 1 k/100 Fuse, AGC 2A 0.00 0.00 5.64 5.64 64. 1 k/100 Fuse, AGC 30A 0.00 0.00 5.64 5.64 65. 1 k/100 Fuse, AGC 3A 0.00 0.00 5.64 5.64 66. 1 k/100 Fuse, AGC 5 AMP 0.00 0.00 5.64 5.64 67. 1 k/100 Fuse, AGC 7.5 A 0.00 0.00 5.64 5.64 68. 2 k/25 Fuseholder, Yellow Sna lock 0.00 0.00 14.72 29.44• 69. 1 k/100 Grommet, 114" ID 318" Hole 0.00 0.00 4.87 4.87 70. 1 k/100 Grommet, 5/8" ID 718" Hole 0.00 0.00 21.46 21.46 71. 1 k/100 Grommet, 9116" ID 314" Hole 0.00 0.00 15.46 15.46 72. 1 k/25 Hole Plu , 3/4" 20.20 20.20 31.00 31.00 73. 1 each Meter, Movement W /Cable -Bird 78.30 78.30 89.98 89.98 74. 15 each Micro hone, Multi -use 28.00 420.00 30.08 451.20 75. 7 each Mount, Floor /Bucket 3 unit 49.60 347.20 52.92 370.44 76. 6 each Mount, Floor/ Bucket 4 Unit 57.50 345.00 61.43 368.58 77. 9 each Mount, SM 212 Short Stack 32.50 292.50 34.67 312.03 78. 2 each Plu , Ci arette Li hter�re 0.00 0.00 5.54 11.08 79. 1 each Rela , 12 V Hom 3.00 3.00 3.57 3.57 80. 1 each Socket, 12 V Rela 0.00 0.00 1.29 1.29 81. 4 each Socket, Print Kote 0.00 0.00 1.85 7.40 82. 1 k/100 Slice, Blue Butt 16 -14 GA. 0.00 0.00 2.83 2.83 83. 1 k/100 Slice, Blue Sna 18 -14 GA. 8.50 8.50 7.16 7.16 84. 1 k1100 Slice, Red Butt 22 -18 GA. 7.61 7.61 7.62 7.62 85. 1 k125 Slice, Red Butt 8 GA. 10.80 10.80 13.61 13.61 86. 1 k/100 Slice, Red Sna 22 -18 GA. 12.70 12.70 10.75 10.75 87. 1 k1100 Slice, Yellow Butt 12 -10 GA. 0.00 0.00 5.09 5.09 88. 1 k1100 Ta ,Flat Fuse ATC 0.00 0.00 22.40 22.40 89. 1 k/100 Ta ,Flat Fuse AGC 0.00 0.00 24.00 24.00 90. 1 k/100 Terminal, Blue Fork 16 -14 GA. 7.42 7.42 7.42 7.42 C � LOTUS,95,3 -- -PAGE 4 -- 9504 -70T CITY OF BAYTOWN BID TABULATION TITLE: ANNUAL RADIO PARTS CONTRACT BID #: 9504 -70 This is an "all or none" bid. DATE: MAY 30. 1995 2:00 P_M_ � c � HUTTON COMMUNICA. TESSCO NO. QTY. UNIT DESCRIPTION UNIT PRIC EXT. PRIC UNIT PRICq EXT. PRIC UNIT PRICE EXT. PRIC 91. 1 k/100 Terminal, Blue Rin 16 -14 GA. 0.00 0.00 7.42 7.42 92. 1 k/100 Terminal, Blue Rin 5116" '92.0 0.00 9.34 9.34 `minimum ord r 1000/ k 93. 1 k1100 Terminal, Male S ade 22 -18 26.75 26.75 26.83 26.83 94. 1 k1100 Terminal, Red Fork 22 -18 GA *65.7 0.00 7.25 7.25 'minimum ord r 1000/ k 95. 1 k/100 Terminal, Red Rin 22 -18 GA. 7.25 7.25 7.42 7.42 96. 1 k/25 Terminal, Red Rin 8 GA X 114 14.75 14.75 14.92 14.92 97. 1 k/200 Terminal, Red Rin 8 GA X 3/8 '11.3 0.00 56.98 56.98 *incorrect/ ri ed b su lie 98. 1 k/25 Terminal, Red Rin 8 GA. 5116 *56.3 0.00 7.13 7.13 *minimum ord r 2001 k 99. 1 k/50 Terminal, Red Rin 8 GA. X #10 *41.9 0.00 4.53 4.53 'minimum ord r 200/ k 100. 1 k/50 Terminal, Yellow Rin 12 -10 '10.0 0.00 5.09 5.09 'minimum ord r 200/ k 101. 1 k/50 Terminal, Yellow Rin 12 -10GA 6.00 6.00 6.07 6.07 102. 1 k/100 Tie Mount, Adhesive Backed 38.00 38.00 37.32 37.32 103. 2 k/50 Tie Wra ,Black 15 X 5116" 15.75 31.50 15.44 30.88 104. 1 k/1000 ite Wra ,Black 4" X 1/16" 0.00 0.00 7.70 7.70 105. 2 k/1000 Tie Wra ,Black 7.5" X 3116" 0.00 0.00 19.60 39.20 106. 1 k/100 Tie Wra , Cable /MTG Hole 0.00 0.00 6.74 6.74 107. 1 footh00 Tubin , S lit Loom .350" 0.00 0.00 9.43 9.43 108. 1 foot1100 Tubin , S lit Loom 1" 0.00 0.00 21.21 21.21 109. 1 foot/100 Tubin , S lit Loom 112" 0.00 0.00 10.84 10.84 110. 1 foot/100 Tubin , S lit Loom 3/4" 0.00 0.00 16.17 16.17 111. 1 footJ4 Velcro, Fastener 3/4" Black 0.00 0.00 5.01 5.01 112. 1 S o01 /50 Wire, Black 12 GA. 0.00 0.00 42.43 42.43 113. 1 S 001150 Wire, Black 18 GA. 0.00 0.00 14.80 14.80 114. 1 S ooU10 Wre, Black 8 GA. 0.00 0.00 33.31 33.31 � c � � 7 'W'd OO:Z 9661, 0£ AVW :31VO •plq ,auou Jo Ile„ ue si slyl OL-VO96 :# 018 13VNIN00 SINVcl OIOvu ivnNNV 31111 Nouvi evi 919 NMOIAV13 d0 A110 lOL11096 -- 9 3JVd --- £'96'Sf1101 'Suoilmur wwo0 paouen V luoJj asuod 4,91 ou 4j!M a essaw 1491 •awll a e l lou pp pue !1!DBI Mau a of ! panow lsn paJ!n aJ swal pueJq jo lol a Jeo lou p!p a neoaq puo s of pal!el sale8 uo11Je0 •sJapp!q o1 pal!e aJa sp!g 'loeJluoo Jay o Aue Aq pajaAqO lou sped o!peJ Inoauellaosm jpj si loeJluoo s yl 'A1NO sliod 39 J01 IM1 00 Wed o!pe8 39 lenuuV ue seq umolAeE j0 1! 841 '13VUlN S1HVd oicivm Sf103NV1 30SIW '1vnNNV NV 110d HV3 1SMld 21HI SI IHl (08d) 3AV0 A181H1 (OUV) Ado AlalHBA83AI130 ONV1A VW 'S>jNVdS S 31 'SV 1-1V0 :N01.LV301 swap palm aJ . l ns -ol juasgid le algel!ene sJOpuan aney lou saop Jaq ns Jan Moy 'algel!ene aJe swat! Alu( pueJq uppaO 'sjunot je a Jei of anp •pau!oa s -apela-5555L un swat! Mal e SIL awann aJ japi o wnw!u!w ON jo sluawaJ!n aJ apJo wnw!ulW luo pueJq 1!0 Aq paiinb 91 sailquenb ui uuin aJ sw 1! ap!Aoid ue0 s al! snolJen ap! %oid of algeun palsan aJ se ipluenb ayl J0i swat! 6uipp!q-c,u Jol suoseaU w81! Ile 9P!AOJC ueo OOSS31 swat! Ile p!q o1 pail-- jailddnS 69'Z96 61• 1Z'99Z'6 :-lV101 ONVUE) 9L'91 91'91 OL'Z1 0L'Z1 sJoloauuo0 Jod Jo en ` eJM N0Ed L '6 L L 09,14 08'1 L 00'0 00'0 'dJ 8 L Mona) 'aj!M 091100 S L •8 L L L£'££ L£•££ 00'0 00'0 'd0 9 pa}j 'aJlM 0L/loo S L 'LL L 091p L 0914 00'0 00'0 dJ 9 L pail 'aJ!M 09/100 S L 9 L L £171 £1'Z1 00'0 00'0 dJ Z L paN 'aJ!M 09 /lO0 S L 9 L L 0lud '1X3 GOINd 11Nf1 aoiudax3 93111d 11Nf1 331Ud '1X3 1301Md 11Nn N0I1dINOS30 11Nn '115 'ON OOSS31 'VOINnWW00 Naum 'W'd OO:Z 9661, 0£ AVW :31VO •plq ,auou Jo Ile„ ue si slyl OL-VO96 :# 018 13VNIN00 SINVcl OIOvu ivnNNV 31111 Nouvi evi 919 NMOIAV13 d0 A110 lOL11096 -- 9 3JVd --- £'96'Sf1101 a �o L lotus,95,3 -- -PAGE 1 -- 9505 -72T CITY OF BAYTOWN B1D TABULATION TITLE: ANNUAL CAST IRON CASTINGS CONTRACT BID #: 9505 -72 This is an "all or none" bid. DATE: JUNE 6 1995 2:00 P.M. GOLDEN TRIANGLE INDUSTRIAL INTERNAT. O 8� R UTILITIES NO. QTY. UNIT DESCRIPTION UNIT PRICQ EXT. PRIC °UNIT PRIC � � EXT: PRIC UNIT PRIC© EXT. PRIC I. d'u stable V Ive Box '• ''•�;• °f` "' � •�• •..• �� �;;: 1. 45 each 24" x 36" x 5 -114" 25.00 1,125.00 18:50 832.50 24.00 1,080.00 II. anhole Cov rs Onl � ' 2. 30 each Heav dut o en grated covers - 80.00 2,400.00 .•�: 39.15 • • •.1,174.50 no bid 0.00 22" castin s ���' � - . 3. 25 each Light wei ht - 22" castin s 50.00 1,250.00 ' � '� : � ;:40:00 �: ��.�= 1;000.00 64.00 1,600.00 VM -17 ora roved a ual •• �•i'�'�• b�} }.� /t+�'•�..�.1t�i�`i � ^: ' � �} j: �Ui w��.ti�1.iY'.ji :f�'rt: 4. 25 each Heav wei ht - 22" castin s 65.00 1,625.00 :•:� {:47:20 � -::;'r ;:1;180.00 64.00 1,600.00 VM -18 MOD ora roved a ual •:.'_`•� x; >��: j; ?�,� :�;;.__; ��; �-���� -_ _ 5. 10 each Hea wei ht - 22" castin s 65.00 650.00 �:- . _: .47.20 '•=�� : '; 472.00 64.00 640.00 VM -18 or a roved a ual ��•��•�.-��;�.�' -��: _, <_�: +�;,j. 6. 5 each Water ti ht bolt on lid 80.00 400.00 .; °.�'� x;-0'95:00 �"�' ? ':475 :00 106.00 530.00 VM -18 MOD.WT or a roved a al ' .. �'�����'•• � •, • ••••� -�• �: + ��� :r} � ,, s r, III. anh le Cas in sand Covers ::�;�.�;;•';t <�- �:;.��' ��;=: t;�, "' 7. 10 each Li ht wei ht - 22" casting &cove 85.00 850.00 �;�. ;:;.:;70.00 ;•';• °::x''700.00 80.00 800.00 VM -17 ora roved a ual '•" ':, #;'•��� �ti. °��` •� -� °'' •• -�� a w• 8. 30 each Heav wei ht - 22" castin 8= co 100.00 3,000.00 ;,�`'�•g';"'i�;85;00• : ?a.��2550:00 93.50 2,805.00 VM -18 MOD ora roved a ual ='�-�';,;�.��i�' ' ► ••a��1° ,,.� ~,�;���•' 9. 10 each Heav wei ht - 22" casting 8� cov 196.00 1,960.00 �:;��•" ���? :181 ?00 '-��':1;810:00 183.00 1,830.00 VM 18 or a roved a ual ,.'�",,�:, �. .�.:� � �•_ �• +•:• ��,� 10. 5 each Water tight bolt -on covers 140.00 700.00 .. •:135.00 �:::; � ,:: ••675.00 137.00 685.00 22" castin and cover ,r � �:,� ;r�;��L �� �; •,� •w�l;�.J -,�; M18 MOD.WT ore ual °'. �t' `�•;h•yr�• ° . ,- �� . �� : j. ,, .. IV. Rect n ular Grate Castin s and O en overs - Re lar- covers obe��rectan ular °•18��`x�3 "and 11. 10 each Re ular -18 "x36" o en inlet rate 190.00 1,900.00 '��..: 170:00 ;.�;-�:�1,700.00. 185.29 1,852.90 cover and castings � `__ . ��s:� ^ =;,�,; . �,; •�_ Iotus,95,3 -- -PAGE 2 -- 9505 -72T CITY OF BAYTOWN BID TABULATION TITLE: ANNUAL CAST IRON CASTINGS CONTRACT BID #: 9505 -72 This is an "all or none" bid. DATE: JUNE 6 1995 2:00 P.M. GOLDEN TRIANGLE INDUSTRIAL INTERNAT. O 8 R UTILITIES NO. OTY. UNIT DESCRIPTION UNIT PRICD EXT. PRIC UNIT PRIC � EXT. PRIC UNIT PRICO EXT. PRIC V. Sew r Clea outs -- Boot -ty a sewer cle nout with li .Lids to b stain ed c eahout. 12. 25 each Trinit Valle 1684 oreual 45.00 1,125.00 31.00 - � 775.00 28.24 706.00 I VI. Exx n T e Inlet Castin s &Inlet Grate Covers 13. 10 each Inlet castin - rec. heav dut 4 -112" in de th 125.00 1,250.00 125.00 .. 1,250.00 nd bid 0.00 14. 10 each inlet o en rate cover 90.00 900.00 125.00 1,250.00 no bid 0.00 - .� ' U,1 VII. T "C" V Ican T e "C," Old S le H � uston or a roved e u I Shall be:15" x 23" x 1' . 15. 20 each 15" x 23" x 1" 45.00 900.00 '� '� "30.00 - � 600.00 36.00 720.00 GRAND TOTAL: 20,035.00 16 444.00 14,848.90 Did not bid all terns. � _ LOCATION: BEAUMONT, EXAS FRIENDSWO � D, TEXAS HOUSTON, TEXAS DELIVERY:AS REQUES D AS REQUES D. AS REQUES D LAST YEAR'S BID: INDUSTRIAL INTERNATIONAL, INC.: $14,990.00 QUANTITIES REMAINED THE SAME THIS YEAR.. not bid because 9 %increase this year over last year. Various items increased while others decreased due to competitiveness &market Fluctuation. lust overlooked bidding deadline_ Rohan Company and Municipal Pipe &Fabricating did Alamo Iron Works sales representative moved to San Antonio branch oFFce. L � a a a► .� lotus,95,3 -- -PAGE 1 -- 9505 -75T CITY OF BAYTOWN BID TABULATION TITLE: ANNUAL FILL SAND CONTRACT BID #: 9505 -75 DATE: JUNE 6. 1995 2:00 P.M. NO. QTY. UNIT DESCRIPTION BAYTOWN'SAND`8� -CLAY SMART MATERIALS�INC:' WAL'KER:SAND� INC';��'��t�° UNIT PRIC EXT. PRIC �" UNIT.PRIC ;�� EXT: PRIC UNIT PRICt� EXT. PRIC 1. 4500 ards Fill Sand 4.15 18,675.00 '' � " ;` `� t= }''�'°''4'�15 x'``18'675:00 5.95 26,775.00 ., r SUPPLY POINT: MT. BELVIEU TEXAS LIBERTY�.TE S�" �' � LA PORTE, TEXAS -,• - f ,, ' � f�., .. DELIVERY: AS REQUES D AS'REQU�S ED` . �:,.•: `, = � :. - AS REQUES D P a_ � ��loca 'ori� ' 1:;10'8 � . -� � . H iiwa' 4�t• rid: 4FM�565� NO. QTY. UNIT DESCRIPTION BEDROCKtMATERIALS'� '"w &''Needlepoint Road:. ��!�•�.t �;=?s UNIT PRIC EXT. PRIC 1. 4500 ards Fill Sand 4.25 19,125.00 SUPPLY POINT: CHANNELVIE ,TEXAS DELIVERY: AS REQUES D �; .. , LA YE R'S BI BAYfOWN SAND'�`CLAYi NO. QTY. UNIT DESCRIPTION UNIT PRIC EXT. PRIC 1. 4500 ards Fill Sand 4.15 18,675.00 Where there is a tie, consideration regarding past service must be taken into account for evaluation purposes. Service problems for Baytown Sand � Clay included late deliveries, inability to deliver on various occasions because was too muddy to get to sand at their site, and inadequate content of sand requiring rejection of a load. 06/07/95 TO: 13.49 $713 120 5322 BYT ,,' PUBLIC WRK MEMORANDUM June 7, 1995 Sandy Sparks, Purchasing a 001 r . u ►, t -- 7 ISM rrCtWED i FROM: Mike Prewitt, Superintendent Utilities Transmission SUBJECT: Bank Sand Contract On October 3, 1994, the City had to go off contract to get clean sand without clay because Baytown Sand & Clay could not provide. On March 1, 1995, the City had to go off contract because Baytown Sand & clay said it was too muddy for them to get to their sand. On May 9, 1995, the City had to go off contract because Baytown Sand & Clay said it was too wet for them to get to their sand. Also, the delivery time was very long. Baytown Sand & Clay told the City to call early so they could get scheduled. On several occasions it would take Baytown Sand & Clay as long as six (6) hours to deliver. MP /np Attachment "F" ORDINANCE NO. 7338 ORDINANCE AUTHORIZING THE ISSUANCE OF $5,200,000 CITY OF BAYTOWN, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 1995; APPROPRIATING $1,528,850 OF THE PROCEEDS OF SALE THEREOF FOR WATERWORKS IMPROVEMENTS AND $3,671,150 OF THE PROCEEDS OF SALE THEREOF FOR SEWER SYSTEM IMPROVEMENTS; AND CONTAINING OTHER PROVISIONS RELATED THERETO BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN: ARTICLE I FINDINGS AND DETERMINATIONS Section 1: Findings and Determinations. It is hereby officially found and determined that: (a) The City held an election on May 4, 1991, at which the duly qualified voters of the City authorized the issuance of $6,450,000 waterworks system revenue bonds for the purpose of improving and extending the City's waterworks system and $19,150,000 sanitary sewer system revenue bonds for the purpose of improving and extending the City's sanitary sewer system. (b) The City is authorized by Article 1111 et sect, Vernon's Texas Civil Statutes, as amended, to issue bonds payable from the net revenues such system, and is authorized by Article 1112 to issue such bonds without an election to provide money for acquisitions, extensions, construction, improvement or repair of such system. (c) The City Council, by ordinance adopted June 1, 1995, authorized the giving of notice under Article 2368a, Vernon's Texas Civil Statutes, as amended, and Chapter 252, Texas Local Government Code, as amended, of its intention to issue the bonds authorized by this Ordinance, and such notice was published as required by law. (d) The City has not received any petition for a referendum concerning the issuance of such bonds. (e) The City desires to combine the $3,200,000 revenue bonds voted at the May 4, 1991 election with the $2,000,000 revenue bonds authorized by giving notice of intention into one issue. ba ARTICLE II DEFINITIONS AND INTERPRETATIONS Section 2.1: Definitions. In this Ordinance, the following terms shall have the following meanings, unless the context clearly indicates otherwise: The term "Acts" shall mean Articles 1111 through 1118 and Article 717k-6,, Vernon's Texas Civil Statutes, as amended. The term "Additional Parity Bonds" shall mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 6.1 of this Ordinance. The term "Bonds" shall mean the City of Baytown, Texas, Waterworks and Sewer System Revenue Bonds, Series 1995, authorized by this Ordinance. The term "Business Day" shall mean any day which is not a Saturday, Sunday, a day on which banking institutions in the city where the principal corporate trust office of the Registrar is located are authorized by law or executive order to close, or a legal holiday. The term "City" shall mean the City of Baytown, Texas, and where appropriate, the City Council thereof and any successor to the City as owner of the System. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Gross Revenues" shall mean all revenues, income and receipts of every nature derived or received by the City from the operation and ownership of the System and the interest income from the investment or deposit of money in the Revenue Fund, the Interest and Sinking Fund, and the Reserve Fund. The term "Insurer" shall mean MBIA Insurance Corporation. The term "Interest Payment Date ", when used in connection with any Bond, shall mean February 1, 1996, and each August 1 and February 1 thereafter until maturity or earlier redemption. The term "Maintenance and Operation Expenses" shall mean the reasonable and necessary expenses of operation and maintenance of the System, including all salaries, labor, materials, repairs and extensions necessary to render efficient service (but only such -2- MEZZO repairs and extensions as, in the judgment of the governing body of the City, are necessary to keep the System 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), and all payments under contracts now or hereafter defined as operating expenses by the Legislature of Texas. Depreciation shall never be considered as a Maintenance and Operation Expense. The term "Net Revenues" shall mean all Gross Revenues remaining after deducting the Maintenance and Operation Expenses. The term "Ordinance" shall mean this bond ordinance and all amendments hereof and supplements hereto. The term "Outstanding Bonds" shall mean the Series 1991 Bonds, the Series 1992 Bonds, the Series 1993 Bonds, and the Series 1994 Bonds. The term "Owner" or "Registered Owner ", when used with respect to any Bond shall mean the person or entity in whose name such Bond is registered in the Register. Any reference to a particular percentage or proportion of the Owners shall mean the Owners at a particular time of the specified percentage or proportion in aggregate principal amount of all Bonds then outstanding under this Ordinance, exclusive of Bonds held by the City. The term "Parity Bonds" shall mean the Bonds, the Outstanding Bonds, and each series of Additional Parity Bonds from time to time hereafter issued, but only to the extent such Parity Bonds remain outstanding. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the fifteenth (15th) calendar day of the month next preceding each Interest Payment Date. The term "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of, and the principal amounts of the Bonds registered to, each Owner. The term "Registrar" shall mean First Interstate Bank of Texas, N.A., Houston, Texas, and its successors in that capacity. The term "Series 1991 Bonds" shall mean the City of Baytown, Texas, Waterworks and Sewer System Revenue Bonds, Series 1991. The term "Series 1992 Bonds" shall mean the City of Baytown, Texas, Waterworks and Sewer System Revenue Bonds, Series 1992. -3- la The term "Series 1993 Bonds" shall mean the City of Baytown, Texas, Waterworks and Sewer System Revenue Bonds, Series 1993. The term "Series 1994 Bonds" shall mean the City of Baytown, Texas, Waterworks and Sewer System Revenue Bonds, Series 1994. The term "Special Project" shall mean, to the extent permitted by law, any waterworks or sanitary sewer system property, improvement or facility declared by the City not to be part of the System and substantially all of the costs of acquisition, construction, and installation of which is paid from proceeds of a financing transaction other than the issuance of bonds payable from ad valorem taxes or Net Revenues of the System, and for which all maintenance and operation expenses are payable from sources other than revenues of the System, but only to the extent that and for so long as all or any part of the revenues or proceeds of which are or will be pledged to secure the payment or repayment of such costs of acquisition, construction and installation under such financing transaction. The term "System" shall mean all properties, facilities, improvements, equipment, interests, and rights constituting the waterworks and sanitary sewer system of the City, including all future extensions, replacements, betterments, additions, and improvements to the System. The System shall not include any Special Project. The term "Underwriters" shall mean Masterson Moreland Sauer Whisman, Inc., A.G. Edwards & Sons, Inc., Rauscher Pierce Refsnes, Inc., and Edward D. Jones & Co. Section 2.2: Interpretations. All terms defined herein and all pronouns used in this Ordinance shall be deemed to apply equally to singular and plural and to all genders. The titles and headings of the articles and sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof. This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to sustain the validity of the Parity Bonds and the validity of the lien on and pledge of the Net Revenues to secure the payment of the Parity Bonds. -4- ig ARTICLE III TERMS OF THE BONDS Section 3.1: Authorization and Authorized Amount. The Bonds shall be issued pursuant to the Acts in fully registered form, without coupons, in the amount of $5,200,000. The amount appropriated, and the purposes for which the Bonds are issued are $1,528,850 for improving and extending the City's waterworks system and $3,671,150 for improving and extending the City's sanitary sewer system. Section 3.2: Designation, Date, and Interest Pavment Dates. The Bonds shall be designated as "City of Baytown, Texas, Waterworks and Sewer System Revenue Bonds, Series 1995," and shall be dated July 1, 1995. The Bonds shall bear interest payable on each Interest Payment Date at the rates set out in Section 3.3 of this Ordinance from the later of July 1, 1995, or the most recent Interest Payment Date to which interest has been paid or duly provided for., calculated on the basis of a 360 day year of twelve 30 day months. Section 3.3: Initial Bonds; Numbers and Denomination. The Bonds shall be initially issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance. The Bonds shall mature, subject to prior redemption in accordance with this Ordinance, on February 1 in each of the years and in the amounts set out in such schedule. Bonds delivered on transfer of or in exchange for other Bonds shall be numbered in order of their authentication by the Registrar, shall be in the denomination of $5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Bond or Bonds in lieu of which they are delivered. Bond Principal Year of Interest Number Amount Maturity Rate R- 1 $ 160,000 2003 5.90% R- 2 320,000 2004 5.90% R- 3 340,000 2005 5.95% R- 4 365,000 2006 5.35% R- 5 390,000 2007 5.45% R- 6 420,000 2008 5.558 R- 7 450,000 2009 5.65% R- 8 480,000 2010 5.75% R- 9 515,000 2011 5.85% R -10 550,000 2012 5.90% R -11 1,210,000 2014 5.95% -5- Section 3.4: Execution of Bonds: Seal. The Bonds shall be signed on behalf of the City by the Mayor and countersigned by the City Clerk, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds. If any officer of the City whose manual or facsimile signature shall appear on the Bonds shall cease to be such officer before the authentication of such Bonds or before the delivery of such Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. Section 3.5.: Approval By Attorney General: Registration by Comptroller. The Bonds to be initially issued shall be delivered to the Attorney General of Texas for examination and approval and shall be registered by the Comptroller. The manually executed registration certificate of the Comptroller substantially in the form provided in Article IV of this Ordinance shall be affixed or attached to the Bonds to be initially issued. Section 3.6: Authentication. Except for the Bonds to be initially issued, which need not be authenticated, only such Bonds as shall bear thereon a certificate of authentication substantially in the form provided in Article IV of this Ordinance, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Bond so authenticated was delivered by the Registrar hereunder. Section 3.7. Payment of Principal and Interest. The Registrar is hereby appointed as the registrar and paying agent for the Bonds. The principal of the Bonds shall be payable, without exchange or collection changes, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register, or by such other method, acceptable to the Registrar, requested by and at the risk and expense of the Owner. ( ^. If the date for the payment of principal or interest on any Bond is not a Business Day, then the date for such payment shall be -6- la Wa the next succeeding Business Day, and payment on such date shall have the same force and effect as if made on the original date such payment was due. Section 3.8. Successor Registrars. The City covenants that at all times while any Bonds are outstanding it will provide a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to act as Registrar for the Bonds. The City reserves the right to change the Registrar for the Bonds on not less than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Bonds. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the Register or a copy thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each.Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. Section 3.9. Special Record Date. If interest on any Bond is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each Owner or record of an affected Bond as of the close of business on the day prior to the mailing of such notice. Section 3.10. Ownership; Unclaimed Principal and Interest. Subject to the further provisions of this Section, the City, the Registrar and any other person may treat the person in whose name any Bond is registered as the absolute Owner of such Bond for the purpose of making and receiving payment of the principal of or interest on such Bond, and for all other purposes, whether or not such Bond is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Bond in accordance with this Section 3.10 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Bond to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Bonds remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become -7- im due and payable shall be reported and disposed of by the Registrar in accordance with the applicable provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. Section 3.11. Registration, Transfer, and Exchancre. So long as any Bonds remain outstanding, the Registrar shall keep the Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance. Each Bond shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bond in proper form for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three (3) Business Days after such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Bond or Bonds so presented. All Bonds shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Bond or Bonds of the same maturity and interest rate and in any authorized denomination, in an aggregate amount equal to the unpaid principal amount of the Bond or Bonds presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Bonds in accordance with the provisions of this Section 3.11. Each Bond delivered in accordance with this Section 3.11 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such Bond is delivered. The City or the Registrar may require the Owner of any Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Bond. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. Section 3.12. Cancellation of Bonds. All Bonds paid or redeemed in accordance with this ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment or redemption. The Registrar shall furnish the City with appropriate certificates of destruction of such Bonds. -8- Section 3.13. Mutilated, Lost, or Stolen Bonds. Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of such Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the Registrar. If any Bond is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall authorize and the Registrar shall authenticate and deliver a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding, provided that the Owner thereof shall have: (1) furnished to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Bond; (2) furnished such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) paid all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) met any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Bond, a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the City and the Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or the Registrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Bond, authorize the Registrar to pay such Bond. MM Each replacement Bond delivered in accordance with this Section 3.13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. Section 3.14: Redemption. The City reserves the right, at its option, to redeem Bonds prior to maturity, in whole or from time to time in part, on February 1, 2005, or any date thereafter, at a price of par plus accrued interest on the amounts called for redemption to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the City shall determine the particular Bonds or portions thereof to be redeemed. The Bonds maturing in the year 2014 are also subject to mandatory redemption in the manner set out in the form of bond in Section 17. Principal amounts may be redeemed only in integral multiples of $5,000. If a Bond subject to redemption is in a denomination larger than .$5,000, a portion of such Bond may be redeemed, but only in integral multiples of $5,000. Upon surrender of any Bond for redemption in part, the Registrar, in accordance with Section 3.11 hereof, shall authenticate and deliver in exchange therefor a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. Notice of any redemption identifying the Bonds to be redeemed in whole or in part shall be given by the Registrar at least thirty days prior to the date fixed for redemption by sending written notice by first class mail, postage prepaid, to the Owner of each Bond to be redeemed in whole or in part at the address shown on the Register. Such notices shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all Bonds outstanding of a particular maturity are to be redeemed, the numbers of the Bonds or portions thereof of such maturity to be redeemed. Any notice given as provided in this Section 3.14 shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Bonds or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When Bonds have been called for redemption in whole or in part and due provision has been made to redeem the same as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Bond ., or portion thereof called for redemption shall terminate on the date fixed for redemption. -10- ARTICLE IV FORM OF BONDS AND CERTIFICATES Section 4.1: Forms. The form of the Bonds, including the form of the Registrar's Authentication Certificate, the form of Assignment, the form of bond insurance legend, and the form of Registration Certificate of the Comptroller, which shall be attached or affixed to the Bonds initially issued, shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: FORM OF BOND UNITED STATES OF AMERICA STATE OF TEXAS COUNTIES OF HARRIS AND CHAMBERS NUMBER R- REGISTERED AMOUNT REGISTERED CITY OF BAYTOWN, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BOND SERIES 1995 INTEREST RATE: MATURITY DATE: ISSUE DATE: July 1, 1995 REGISTERED OWNER: PRINCIPAL AMOUNT: •L • DOLLARS The City of Baytown, Texas, a municipal corporation duly incorporated under the laws of the State of Texas (herein the "City ") for value received, promises to pay, but solely from certain Net Revenues as hereinafter provided, to the Registered Owner identified above or registered assigns, on the Maturity Date specified above, upon presentation and surrender of this Bond at the principal corporate trust office of First Interstate Bank of Texas, N.A., Houston, Texas (the "Registrar ") , the principal amount identified above, in any coin or currency of the United States of America which on the date of payment of such principal is legal tender for the payment of debts due the United States of America, and to pay, solely from such Net Revenues, interest thereon at the rate shown above, calculated on the basis of a 360 day year of twelve 30 day months, from the later of July 1, 1995, or the most recent interest payment date to which interest has been paid or -11- duly provided for. Interest on this Bond is payable by check payable on February 1 and August 1, beginning on February 1, 1996, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the fifteenth (15th) calendar day of the month next preceding each interest payment date, or by such other method, acceptable to the Registrar, requested by and at the risk and expense of the registered owner. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT THIS PLACE. IN WITNESS WHEREOF, the City has caused its corporate seal to be impressed, printed, or lithographed hereon and has caused this Bond to be executed by the manual or facsimile signatures of the Mayor and City Clerk. (AUTHENTICATION (SEAL) CITY OF BAYTOWN, TEXAS CERTIFICATE) xxxxxxxxx Mayor COUNTERSIGNED: xxxxxxxxx City Clerk (Back Panel of Bond) THIS BOND IS ONE OF A DULY AUTHORIZED SERIES OF BONDS aggregating $5,200,000, issued for the purposes of improving and extending the City's waterworks and sanitary sewer system, under and in strict conformity with the Constitution and laws of the State of Texas, particularly Articles 1111 to 1118, both inclusive, Vernon's Texas Civil Statutes, as amended, and an ordinance adopted by the City Council of the City on June 22, 1995 (the "Ordinance ") . THIS BOND AND THE SERIES OF WHICH IT IS A PART are special obligations of the City that are payable, together with the City's outstanding waterworks and sewer system revenue bonds, from and are equally and ratably secured by a first lien on the revenues of the City's waterworks and sewer system remaining after deduction of the operation and maintenance expenses of that system (the "Net Revenues ") , as defined and provided in the Ordinance, which Net Revenues are required to be set aside and pledged to the payment of the Bonds, the outstanding bonds, and all additional bonds issued on a parity therewith, in the Interest and Sinking Fund and the Reserve Fund maintained for the payment of all such Bonds, all as more fully described and provided for in the Ordinance. This Bond and the series of which it is a part, together with the interest thereon, are payable solely from such Net Revenues and do not -12- constitute an indebtedness or general obligation of the City. The owner hereof shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation. THE CITY RESERVES THE RIGHT to redeem Bonds, in whole or from time to time in part, in integral multiples of $5,000, on February 1, 2005, or any date thereafter at par plus accrued interest on the principal amounts called for redemption to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. THE BONDS maturing in the year 2014 (the "Term Bonds ") are subject to mandatory redemption prior to maturity, on February 1, 2013, in the principal amount of $585,000, at a price of par plus accrued interest to the redemption date. The particular Term Bonds to be redeemed shall be selected by the Registrar by lot or other customary random method, on or before January 1, 2013. The principal amount of Term Bonds to be mandatorily redeemed shall be reduced by the principal amount of such Term Bonds that have been optionally redeemed on or before January 1, 2013, and which have not been made the basis for a previous reduction. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior to the date fixed for redemption by first class mail, addressed to the registered owners of each Bond to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Bonds or portions thereof have been called for redemption, and due provision has been made to redeem the same, the principal amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS BOND IS TRANSFERABLE only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. THE BONDS ARE EXCHANGEABLE at the principal corporate trust office of the Registrar for bonds in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. THE CITY HAS RESERVED THE RIGHT to issue additional parity revenue bonds, subject to the restrictions contained in the Ordinance, which may be equally and ratably payable from, and secured by a first lien on and pledge of, the Net Revenues in the -13- wa same manner and to the same extent as this Bond and the series of which it is a part. IT IS HEREBY DECLARED AND REPRESENTED that this Bond has been duly and validly issued and delivered; that all acts, conditions, and things required or proper to be performed, exist, and be done precedent to or in the issuance and delivery of this Bond have been performed, existed, and been done in accordance with law; that the Bonds do not exceed any statutory limitation; and that provision has been made for the payment of the principal of and interest on this Bond and all of the Bonds by the creation of the aforesaid lien on and pledge of the Net Revenues. FORM OF REGISTRATION CERTIFICATE COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this (SEAL) xxxxxxxxxx Comptroller of Public Accounts of the State of Texas FORM OF AUTHENTICATION CERTIFICATE AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been delivered pursuant to the Bond Ordinance described in the text of this Bond. First Interstate Bank of Texas, N.A. By Authorized Signature Date of Authentication FORM OF ASSIGNMENT ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto -14- (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said Bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. Registered Owner NOTICE: The signature above must correspond to the name of the registered owner as shown on the face of this Bond in every particular, without any alteration, enlargement or change whatsoever. Form of Statement of Insurance MBIA Insurance Corporation (the "Insurer ") has issued a policy containing the following provisions, such policy being on file at First Interstate Bank of Texas, N.A., Houston, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to First Interstate Bank of Texas, N.A., Houston, Texas, or its successor (the "Paying Agent ") of an amount equal to (i) the principal of (either at the stated maturity of by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such 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 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 -15- wa WE to herein collectively as the "Insured Amounts." "Obligations" shall mean: $5,200,000 City of Baytown, Texas Waterworks and Sewer System Revenue Bonds, Series 1995 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 any Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with 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 relating 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 Insurer at its offices located at 113 King Street, 10504 and such service of process shall be valid be made to the Armonk, New York 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. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of -16- WW coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. MBIA Insurance Corporation Section 4.2. Legal Opinion; Cusip Numbers; Bond Insurance. The approving opinion of Vinson & Elkins L.L.P., Houston, Texas, and CUSIP Numbers may be printed on the Bonds, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Bonds. The purchase of and payment of the premium for municipal bond insurance by the City, in accordance with the terms of a commitment for such insurance presented to and hereby approved by the City Council is hereby authorized. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary or desirable to obtain such insurance, and the printing on the Bonds of an appropriate legend regarding such insurance is hereby approved. ARTICLE V SECURITY AND SOURCE OF PAYMENT FOR ALL PARITY BONDS Section 5.1: Pledge and Source of Payment. The City hereby covenants and agrees that all Gross Revenues of the System shall be deposited and paid into the special funds heretofore established, and shall be applied in the manner set out herein, to provide for the payment of all Maintenance and Operation Expenses and to provide for the payment of principal, interest and any redemption premium of the Parity Bonds and all expenses of paying same. The Parity Bonds shall constitute special obligations of the City that shall be payable solely from, and shall be equally and ratably secured by a first lien on, the Net Revenues, as collected and received by the City, from the operation and ownership of the System, which Net Revenues shall, in the manner herein provided, be set aside for and pledged to the payment of the Parity Bonds in the Interest and Sinking Fund and Reserve Fund as hereinafter provided, and the Parity Bonds shall be in all respects on a parity with and of equal dignity with one another. The owners of the Parity Bonds shall never have the right to demand payment out of any funds raised or to be raised by taxation. Section 5.2: Rates and Charges. So long as any Parity Bonds remain outstanding, the City shall fix, charge and collect rates and charges for the use and services of the System which are calculated to be fully sufficient to produce Net Earnings of the System (as herein defined) in each fiscal year at least equal to 125°s of the principal and interest requirements scheduled to occur -17- in such fiscal year on all Parity Bonds then outstanding; but in no event shall Net Revenues ever be less than the amount required to maintain the Interest and Sinking Fund and the Reserve Fund as hereinafter provided, and, to the extent that funds for such purpose are not otherwise available, to pay all other outstanding obligations payable from the Net Revenues of the System as and when the same become due. For purposes of this Section, the term "Net Earnings" shall mean all Net Revenues of the System, except that in calculating Net Earnings there shall not be deducted as Maintenance and Operation Expenses any charge, disbursement or expenditure for extensions, repairs or otherwise which, under standard accounting practice, constitutes a capital expenditure. The City will not grant or permit any free service from the System except for public buildings and institutions operated by the City. Section. 5.3: Special Funds. The creation and confirmation of the following special funds in the ordinances authorizing the issuance of the Outstanding Bonds is hereby confirmed, and such funds shall be maintained and accounted for as hereinafter provided, so long as any Parity Bonds remain outstanding: (a) Waterworks and Sewer System Revenue Fund (the "Revenue Fund "); (b) Waterworks and Sewer System Revenue Bonds Interest and Sinking Fund (the "Interest and Sinking Fund "); and (c) Waterworks and Sewer System Revenue Bonds Reserve Fund (the "Reserve Fund ") . The Revenue Fund shall be maintained as a separate account on the books of the City. The Interest and Sinking Fund and the Reserve Fund shall be maintained at an official depository bank of the City separate and apart from all other funds and accounts of the City and shall constitute trust funds which shall be held in trust for the benefit of the Owners of the Parity Bonds and the proceeds of which (except for interest income, which shall be transferred to the Revenue Fund) shall be and are hereby pledged to the payment of the Parity Bonds. All of the Funds named above shall be used solely as provided herein so long as any Parity Bonds remain outstanding. Section 5.4: Flow of Funds. All Gross Revenues of the System shall be deposited as collected into the Revenue Fund. Money from time to time on deposit to the credit of the Revenue Fund shall be applied as follows in the following order of priority: -18- (a) First, to pay Maintenance and Operation Expenses. (b) Second, to make all deposits into the Interest and Sinking Fund required by this Ordinance, the ordinances authorizing the issuance of the Outstanding Bonds, and any ordinance authorizing the issuance of Additional Parity Bonds. (c) Third, to make all deposits into the Reserve Fund required by this Ordinance, the ordinances authorizing the issuance of the Outstanding Bonds, and any ordinance authorizing the issuance of Additional Parity Bonds. (d) Fourth, for any lawful purpose. Whenever the total amounts on deposit to the credit of the Interest and Sinking Fund and the Reserve Fund shall be equivalent to the sum of the aggregate principal amount of all outstanding Parity Bonds plus the aggregate amount of all interest accrued and to accrue thereon, no further payments need be made into the Interest and Sinking Fund or the Reserve Fund. Section 5.5: Interest and Sinking Fund. On or before the last Business Day of each month so long as any Parity Bonds remain outstanding, after making all required payments and provision for payment of Maintenance and Operation Expenses, there shall be transferred into the Interest and Sinking Fund from the Revenue Fund (i) such amounts, in approximately equal monthly installments, as will be sufficient to accumulate the amount required to pay the interest scheduled to become due on the Parity Bonds on the next interest payment date; and (ii) such amounts, in approximately equal monthly installments, as will be sufficient to accumulate the amount required to pay the next maturing principal of the Parity Bonds, including the principal amounts of, and any redemption premium on, any Parity Bonds payable as a result of the exercise or operation of any optional or mandatory redemption provision contained in any ordinance authorizing the issuance of Parity Bonds. Money deposited to the credit of the Interest and Sinking Fund shall be used solely for the purpose of paying principal (at maturity or prior redemption or to purchase Parity Bonds issued as -19- MW term bonds in the open market to be credited against mandatory redemption requirements) , interest and any redemption premium on the Parity Bonds, plus all bank charges and other costs and expenses relating to such payment. On or before each principal and /or interest payment date on the Parity Bonds, the City shall transfer from the Interest and Sinking Fund to the paying agents an amount equal to the principal, interest and any redemption premium payable on the Parity Bonds on such date, together with an amount equal to all bank charges and other costs and expenses relating to such payment. The paying agents shall totally destroy all paid Parity Bonds and shall provide the City with an appropriate certificate of destruction. Section 5.6: Reserve Fund. Unless the Reserve Fund is fully funded, on or before the last Business Day of each month so long as any Parity Bonds remain outstanding, after making all required payments and provision for payment of Maintenance and Operation Expenses, and after making the transfers into the Interest and Sinking Fund required in the preceding Section, there shall be transferred into the Reserve Fund from the Revenue Fund an amount at least equal to one - sixtieth (1 /60th) of the average annual principal and interest requirements on the Parity Bonds, so that the Reserve Fund shall contain, in no more than 60 months after the issuance of each such issue of Parity Bonds, money and investments in an aggregate amount at least equal to the average annual principal and interest requirements on all Parity Bonds then outstanding. After such amount has accumulated in the Reserve Fund and so long thereafter as such Fund contains such amount, no further deposits shall be required to be made into the Reserve Fund, and any excess amounts may be transferred to the Revenue Fund. But if and whenever the balance in the Reserve Fund is reduced below such amount, monthly deposits into such Fund shall be resumed and continued in amounts at least equal to one - sixtieth (1 /60th) of the average annual principal and interest requirements on the Parity Bonds until the Reserve Fund has been restored to such amount. The Reserve Fund shall be used to pay the principal of and interest on the Parity Bonds at any time when there is not sufficient money available in the Interest and Sinking Fund for such purpose and it may be used finally to pay and retire the last Parity Bonds to mature or be redeemed. Section 5.7: Deficiencies in Funds. If in any month there shall not be deposited into any Fund maintained pursuant to this Article the full amounts required herein, amounts equivalent to such deficiency shall be set apart and paid into such Fund or Funds from the first available and unallocated money in the Revenue Fund, and such payment shall be in addition to the amounts otherwise required to be paid into such Funds during the succeeding month or months. To the extent necessary, the rates and charges for the System shall be increased to make up for any such deficiencies. -20- Section 5.8: Investment of Funds; Transfer of Investment Income. (a) Money in the Revenue Fund, the Interest and Sinking Fund and the Reserve Fund may, at the option of the City, be invested in time deposits or certificates of deposit of commercial banks secured in the manner required by law for public funds and insured by the Federal Deposit Insurance Corporation to the maximum extent permitted by law, or be invested in direct obligations of, or obligations fully guaranteed by, the United States of America; provided that all such deposits and investments shall be made in such manner that the money required to be expended from any Fund will be available at the proper time or times, and provided further that in no event shall such deposits or investments of money in the Reserve Fund mature later than the final maturity date of the Parity Bonds. Any obligation in which money is so invested shall be kept and held in the official depository bank of the City at which the Fund is maintained from which the investment was made. All such investments shall be promptly sold when necessary to prevent any default in connection with the Parity Bonds. (b) All interest and income derived from such deposits and investments shall be transferred or credited as received to the Revenue Fund, and shall constitute Gross Revenues of the System. Section 5.9: Security for Uninvested Funds. So long as any Parity Bonds remain outstanding, all uninvested money on deposit in, or credited to, the Revenue Fund, the Interest and Sinking Fund and the Reserve Fund shall be secured by the pledge of security, as provided by Texas law. ARTICLE VI ADDITIONAL BONDS Section 6.1: Additional Parity Bonds. The City reserves the right to issue, for any lawful purpose (including the refunding of any previously issued Parity Bonds or any other bonds or obligations of the City issued in connection with or payable from the revenues of the System), one or more series of Additional Parity Bonds payable from and secured by a first lien on the Net Revenues of the System, on a parity with the Bonds, the Outstanding Bonds, and any previously issued Additional Parity Bonds; provided, however, that no Additional Parity Bonds may be issued unless: (a) The Additional Parity Bonds mature on, and interest is payable on, the same days of the year as the Bonds; (b) The Interest and Sinking Fund and the Reserve Fund each contains the amount of money then required to be on deposit therein; -21- (c) For either the preceding fiscal year or any consecutive 12 -month period out of the 18 month period immediately preceding the month in which the ordinance authorizing such Additional Parity Bonds is adopted (the "Base Period "), either: (1) Net Earnings of the System (as hereinbelow defined) were equal to at least 1251 of the average annual principal and interest requirements on all Parity Bonds that will be outstanding after the issuance of the series of Additional Parity Bonds then proposed to be issued, as certified by the City's Director of Finance or by an independent certified public accountant or firm of independent certified public accountants; or (2) Net Earnings of the System, as adjusted to give effect to any rate increase for the System that has been in effect for at least 60 days prior to the adoption of the ordinance authorizing the issuance of the series of Additional Parity Bonds then proposed to be issued, to the same extent as if such rate increase had been in effect for the entire Base Period, would have been at least equal to the amount required in paragraph (1) above, as certified by an independent consulting engineer or independent firm of consulting engineers; provided, however, that this requirement shall not apply to the issuance of any series of Additional Parity Bonds for refunding purposes that will have the result of reducing the average annual principal and interest requirements on Parity Bonds; and (d) Provision is made in the ordinance authorizing the Additional Parity Bonds then proposed to be issued for (1) additional payments into the Interest and Sinking Fund sufficient to provide for any increased principal and interest requirements on the Parity Bonds resulting from the issuance of the Additional Parity Bonds and (2) payments into the Reserve Fund so that such Fund will, in not later than 60 months from the date of issuance of such Additional Parity Bonds, contain a balance not less than the average annual principal and interest requirements on all Parity Bonds that will be outstanding after the issuance of such series of Additional Parity Bonds. -22- For purposes of Section 6.1(c), the term "Net Earnings of the System" shall mean all of the Net Revenues of the System, except that in calculating Net Earnings there shall not be deducted as Maintenance and Operation Expenses any charge, disbursement or expenditure for extensions, repairs or otherwise which, under standard accounting practice, constitutes a capital expenditure. Section 6.2: Subordinate Lien Bonds. The City reserves the right to issue, for any lawful purpose, bonds, notes or other obligations secured in whole or in part by liens on the Net Revenues that are junior and subordinate to the lien on Net Revenues securing payment of the Parity Bonds. Such subordinate lien obligations may be further secured by any other source of payment lawfully available for such purposes. Section 6.3: Special Project Bonds. The City reserves the right to issue revenue bonds secured by liens on and pledges of revenues and proceeds derived from Special Projects. ARTICLE VII COVENANTS AND PROVISIONS RELATING TO ALL PARITY BONDS Section 7.1: Punctual Payment of Parity Bonds. The City will punctually pay or cause to be paid the interest on and principal of all Parity Bonds according to the terms thereof and will faithfully do and perform, and at all times fully observe, any and all covenants, undertakings, stipulations and provisions contained in this Ordinance and in any ordinance authorizing the issuance of Additional Parity Bonds. Section 7.2: Maintenance of System. So long as any Parity Bonds remain outstanding, the City covenants that it will at all times maintain the System, or within the limits of its authority cause the same to be maintained, in good condition and working order and will operate the same, or cause the same to be operated, in an efficient and economical manner at a reasonable cost and in accordance with sound business principles. In operating and maintaining the System, the City will comply with all contractual provisions and agreements entered into by it and with all valid rules, regulations, directions or orders of any governmental, administrative, or judicial body promulgating same, noncompliance with which would materially and adversely affect the operation of the System. Section 7.3: Sale or Encumbrance of System. So long as any Parity Bonds remain outstanding, the City will not sell, dispose of or, except as permitted in Article VI, further encumber the System; provided, however, that this provision shall not prevent the City from disposing of any portion of the System which is being replaced -23- WCO or is deemed by the City to be obsolete, worn out, surplus or no longer needed for the proper operation of the System. Any agreement pursuant to which the City contracts with a person, corporation, municipal corporation or political subdivision to operate the System or to lease and /or operate all or part of the System shall not be considered as an encumbrance of the System. Section 7.4: Insurance. The City further covenants and agrees that it will keep the System insured with insurers of good standing against risks, accidents or casualties against which and to the extent customarily insured against by political subdivisions of the State of Texas operating similar properties, to the extent that such insurance is available. The cost of all such insurance together with any additional insurance, shall be a part of the Maintenance and Operation Expenses. All net proceeds of such insurance shall be applied to repair or replace the insured property that is damaged or destroyed, or to make other capital improvements to the System, or to redeem Parity Bonds. Section 7.5: Accounts, Records, and Audits. So long as any Parity Bonds remain outstanding, the City covenants and agrees that it will maintain a proper and complete system of records and accounts pertaining to the operation of the System in which full, true and proper entries will be made of all dealings, transactions, business and affairs which in any way affect or pertain to the System or the Gross Revenues or the Net Revenues thereof. The City shall after the close of each of its fiscal years cause an audit report of such records and accounts to be prepared by an independent certified public accountant or independent firm of certified public accountants. Each year promptly after such audit report is prepared, the City shall furnish a copy thereof without cost to the Municipal Advisory Council of Texas, the major municipal rating agencies and any owners of Parity Bonds who shall request same. All expenses incurred in preparing such audits shall be Maintenance and Operation Expenses. Section 7.6: Competition. To the extent it legally may, the City will not grant any franchise or permit for the acquisition, construction, or operation of any competing facilities which might be used as a substitute for the System and will prohibit the operation of any such competing facilities. Section 7.7: Pledge and Encumbrance of Net Revenues. The City covenants and represents that it has the lawful power to create a lien on and to pledge the Net Revenues to secure the payment of the Parity Bonds and has lawfully exercised such power under the Constitution and laws of the State of Texas. The City further covenants and represents that, other than to the payment of the Parity Bonds, the Net Revenues are not and will not be made subject to any other lien, pledge or encumbrance to secure the payment of any debt or obligation of the City, unless such lien, -24- WE pledge or encumbrance is junior and subordinate to the lien and pledge securing payment of the Parity Bonds. Section 7.8: Bondowners' Remedies. This Ordinance shall constitute a contract between the City and the Owners of the Parity Bonds from time to time outstanding and this Ordinance shall be and remain irrepealable until the Parity Bonds and the interest thereon shall be fully paid or discharged or provision therefor shall have been made as provided herein. In the event of a default in the payment of the principal of or interest on any of the Parity Bonds or a default in the performance of any duty or covenant provided by law or in this Ordinance, the Owner or Owners of any of the Parity Bonds may pursue all legal remedies afforded by the Constitution and laws of the State of Texas to compel the City to remedy such default and to prevent further default or defaults. Without in any way limiting the generality of the foregoing, it is expressly provided that any Owner of any of the Parity Bonds may at law or in equity, by suit, action, mandamus, or other proceedings, enforce and compel performance of all duties required to be performed by the City under this Ordinance, including the making and collection of reasonable and sufficient rates and charges for the use and services of the System, the deposit of the Gross Revenues into the special funds herein provided, and the application of such Gross Revenues and Net Revenues in the manner required in this Ordinance. Section 7.9: Discharge by Deposit. The City may discharge its obligation to the Owners of any or all of the Parity Bonds to pay principal, interest and redemption premium (if any) thereon in any manner then permitted by law, including by depositing with any paying agent for such Parity Bonds or with the State Treasurer of the State of Texas either: (i) cash in an amount equal to the principal amount and redemption premium, if any, of such Parity Bonds plus interest thereon to the date of maturity or redemption, or (ii) pursuant to an escrow or trust agreement, cash and /or direct obligations of the United States of America, in principal amounts and maturities and bearing interest at rates sufficient to provide for the timely payment of the principal amount and redemption premium, if any, of such Parity Bonds plus interest thereon to the date of maturity or redemption; provided, however, that if any of such Parity Bonds are to be redeemed prior to their respective dates of maturity, provision shall have been made for giving notice of redemption as provided in the ordinance authorizing such Parity Bonds. Upon such deposit, such Parity Bonds shall no longer be regarded to be outstanding or unpaid. Section 7.10: Paying Agents May Own Parity Bonds. The paying agents for the Parity Bonds, in their individual or any other capacity, may become holders or pledges of the Parity Bonds with the same rights they would have if they were not paying agents. -25- Section 7.11: No Recourse Actainst City Officials. No recourse shall be had for the payment of principal of or interest on any Parity Bonds or for any claim based thereon or on this Ordinance against any official of the City or any person executing any Parity Bonds. ARTICLE VIII PROVISIONS CONCERNING SALE AND APPLICATION OF PROCEEDS OF BONDS Section 8.1: Sale; Bond Purchase Agreement. The Bonds are hereby sold and shall be delivered to the Underwriters at a price of $5,148,641 plus accrued interest to the date of delivery, in accordance with the terms of a bond purchase agreement of even date herewith, presented to and hereby approved by the City Council, which price and terms are hereby found and determined to be the most advantageous reasonably obtainable by the City. The Mayor and other appropriate officials of the City are hereby authorized and directed to execute such bond purchase agreement on behalf of the City, and the Mayor and all other officers, agents and representatives of the City are hereby authorized to do any and all things necessary or desirable to satisfy the conditions set out therein and to provide for the issuance and delivery of the Bonds. Section 8.2: Tax Exemption. (a) General Tax Covenant. The City intends that the interest on the Bonds shall be excludable from gross income for purposes of federal income taxation pursuant to sections 103 and 141 through 150 of the Code, and applicable regulations. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Bonds to be includable in gross income, as defined in section 61 of the Code, of the owners thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section; provided, however, that the City shall not be required to comply with any particular requirement of this Section if the City has received an opinion of nationally recognized bond counsel ( "Counsel's Opinion ") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in this Section. (b) Use of Proceeds. The City covenants and agrees that its use of the Net Proceeds of the Bonds will at all times satisfy the following requirements: -26- Ma The City will limit the amount of original or investment proceeds of the Bonds to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than ten percent of the Net Proceeds of the Bonds ( "private -use proceeds "). For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Bonds in any manner contrary to the guidelines set forth in Revenue Procedure 93 -19, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (ii) The City will not permit more than five percent of the Net Proceeds of the Bonds and to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Bonds. Further, the amount of private -use proceeds of the Bonds in excess of five percent of the Net Proceeds of the Bonds ( "excess private -use proceeds ") did not and will not exceed the proceeds of the Bonds expended for the governmental purpose of the Bonds to which such excess private -use proceeds relate; (iii) The City will not permit an amount of proceeds of the Bonds exceeding the lesser of (a) $5,000,000 or (b) five percent of the Net Proceeds of the Bonds to be used, directly or indirectly, to finance loans to persons other than governmental units. When used in this Section, the term Net Proceeds of the Bonds shall mean the proceeds from the sale of the Bonds, including investment earnings on such proceeds, less accrued interest. (c) No Federal Guaranty. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Code and applicable regulations thereunder, except as permitted by section 149(b)(3) of the Code and such regulations. (d) Bonds Are Not Hedge Bonds. The City covenants and agrees that not more than 50 percent of the proceeds of the Bonds will be invested in nonpurpose investments (as defined in section -27- WW 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more within the meaning of section 149 (g) (3) (A) (ii) of the Code, and the City reasonably expects that at least 85 percent of the spendable proceeds of the Bonds will be used to carry out the governmental purposes of the Bonds within the three -year period beginning on the date the Bonds are issued. (e) No- Arbitrage Covenant. The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known or reasonably expected to be in existence on the date the Bonds are delivered, the City will reasonably expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of section 148(a) of the Code and applicable regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Bonds including interest or other investment income derived from Bond proceeds, regulate investments of proceeds of the Bonds, and take such other and further action as may be required so that the Bonds will not be "arbitrage bonds" within the meaning of section 148(a) of the Code and applicable regulations thereunder. (f) Arbitrage Rebate. The City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Bonds (within the meaning of section 148(f)(6)(B) of the Code) , be rebated to the federal government. Specifically, the City will (i) maintain records regarding the investment of the gross proceeds of the Bonds as may be required to calculate the amount earned on the investment of the gross proceeds of the Bonds separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issues of the City or moneys which do not represent gross proceeds of any bonds of the City, (ii) calculate at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Bonds which is required to be rebated to the federal government, and (iii) pay, not less often than every fifth anniversary date of the delivery of the Bonds or on such other dates as may be permitted by applicable regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Bonds that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (g) Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not -28- IM later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are issued, an information statement concerning the Bonds, all under and in accordance with section 149(e) of the Code and applicable regulations thereunder. (h) Continuing Obligation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants and provisions of this Section shall survive the defeasance and discharge of the Bonds. Section 8.3: Use of Proceeds. Proceeds from the sale of the Bonds shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest and premium shall be deposited into the Interest and Sinking Fund. (b) The remaining proceeds from the sale of the Bonds shall be used for the purposes set out in Section 3.1 and to pay costs of issuance, with any remainder being transferred to the Interest and Sinking Fund. Section 8.4: Official Statement. The City ratifies and confirms its prior approval of the form and content of the Preliminary Official Statement prepared in the initial offering and sale of the Bonds and hereby authorizes the preparation of a final Official Statement reflecting the terms of the bond purchase agreement and other relevant information. The use of such final Official Statement by the Underwriters is hereby approved and authorized. The proper officials of the City are authorized to sign such Official Statement and execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. ARTICLE IX INSURANCE POLICY Section 9.1: Payments under the Policy. A. In the event that, on the second Business Day, and again on the Business Day, prior to the payment date on the Bonds, the Registrar has not received sufficient moneys to pay all principal of and interest on the Bonds due on the second following or following, as the case may-be, Business Day, the Registrar shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. W *Z B. If the deficiency is made up in whole or in part prior to or on the payment date, the Registrar shall so notify the Insurer or its designee. C. In addition, if the Registrar has notice that any Owner has been required to disgorge payments of principal or interest on the Bonds to a trustee in Bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Owner within the meaning of any applicable bankruptcy laws, then the Registrar shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. D. The Registrar is hereby irrevocably designated, appointed, directed and authorized to act as attorney -in -fact for Owners of the Bonds as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Bonds, the Registrar shall (a) execute and deliver to 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 Owners in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Owners (and not as Paying Agent) in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respective Owners; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Bonds, the Registrar shall (a) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such Owner in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Bonds surrendered to the Insurance Paying Agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Registrar and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Owners (and not as Paying Agent) in accordance with the tenor of the Policy payment -30- therefor from the Insurance Paying Agent, and (c) disburse the same to such Owners. E. Payments with respect to claims for interest on and principal of Bonds disbursed by the Registrar from proceeds of the Policy shall not be considered to discharge the obligation of the City with respect to such Bonds, and the Insurer shall become the owner of such unpaid Bond and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the City and the Registrar hereby agree for the benefit of the Insurer that, 1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Registrar), on account of principal of or interest on the Bonds, the Insurer will be subrogated to the rights of such Owners to receive the amount of such principal and interest from the City, with interest thereon as provided and solely from the sources stated in this Ordinance and the Bonds; and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Ordinance and the Bonds, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Bonds to Owners, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Bonds, the City shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Bonds. H. Copies of any amendments made to the documents executed in connection with the issuance of the Bonds which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. I. The Insurer shall receive notice of the resignation or removal of the Registrar and the appointment of a successor thereto. J. The Insurer shall receive copies of all notices required to be delivered to Owners, and, on an annual basis, copies of the City's audited financial statements and annual budget. -31- im Section 9.2. Notices: Any notice that is required to be given to an Owner of the Bonds or to the Registrar pursuant to the Ordinance shall also be provided to the Insurer. All notices required to be given to the Insurer under the Ordinance shall be in writing and shall be sent by registered or certified mail addressed to Municipal Bond Investors Assurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Surveillance. ARTICLE X MISCELLANEOUS Section 10.1: Further Proceedings. The Mayor, the City Manager, the City Clerk, and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary and /or convenient to carry out the terms of this Ordinance. Section 10.2: Severabilitv. If any Section, paragraph, clause or provision of this Ordinance shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such Section, paragraph, clause or provision shall not affect any of the remaining provisions of this Ordinance. ^ Section 10.3: Open Meeting. It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and that public notice of the time, place and purpose of said meeting was given, all as required by the Texas Open Meetings Act. Section 10.4: Paying Agent /Registrar Agreement. The form of agreement setting forth the duties of the Registrar is hereby approved, and an appropriate official of the City is hereby authorized to execute such agreement for and on behalf of the City. Wo Section 10.5: No Personal Liabilitv. No recourse shall be had for payment of the principal of or interest on any Bonds or for any claim based thereon, or on this Ordinance, against any official or employee of the City or any person executing any Bonds. Section 10.6: Parties Interested. Nothing in this Ordinance expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the City, the Registrar, the Insurer, and the Owners of the Bonds, any right, remedy or claim under or by reason of this Ordinance or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this Ordinance shall be for the sole and exclusive benefit of the City, the Registrar, the Insurer, and the Owners of the Bonds. -32- MW Section 10.7: Repealer. All orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. Section 10.8: Effective Date. This Ordinance shall become effective immediately upon passage by this City Council and signature of the Mayor. PASSED AND APPROVED this 22nd day of June, 1995. ATTEST: 7 2 i4'� �e City Clerk ,�I ' CITY OF BAYTOWN, TEXAS (SEAL) -33- 1 Mayor CITY OF • Attachment "E" ORDINANCE NO. 7337 ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF BAYTOWN, TEXAS, GENERAL OBLIGATION AND REFUNDING BONDS, SERIES 1995; APPROPRIATING THE PROCEEDS THEREOF FOR REFUNDING OUTSTANDING BONDS, A PUBLIC WORKS MAINTENANCE FACILITY, PUBLIC BUILDINGS, AND PARK PURPOSES; AUTHORIZING THE ADVANCE REFUNDING OF CERTAIN OUTSTANDING OBLIGATIONS AND THE EXECUTION AND DELIVERY OF AN ESCROW AGREEMENT AND THE SUBSCRIPTION FOR AND PURCHASE OF CERTAIN ESCROWED SECURITIES THE STATE OF TEXAS § COUNTIES OF HARRIS AND CHAMBERS § CITY OF BAYTOWN § WHEREAS, the City of Baytown, Texas (the "City ") has heretofore issued its General Obligation Refunding Bonds, Series 1985, its Public Improvement Bonds, Series 1986, and its Public Improvement Series 1988, and has assumed the Harris County Municipal Utility District No. 3 Waterworks and Sewer System Combination Unlimited Tax and Revenue Bonds, Series 1984 (the "Outstanding Bonds "); and WHEREAS, the City desires to refund a portion of the Outstanding Bonds in advance of their maturities (the "Refunded Bonds "); and WHEREAS, Article 717k, Vernon's Texas Civil Statutes, as amended, authorizes the City to issue refunding bonds payable from taxes, without an election, for the purpose of refunding the Refunded Bonds in advance of their maturities, and to accomplish such refunding by depositing directly with any paying agent for the Refunded Bonds the proceeds of such refunding bonds, together with other available funds, in an amount sufficient to provide for the payment or redemption of the Refunded Bonds, and provides that such deposit shall constitute the making of firm banking and financial arrangements for the discharge and final payment or redemption of the Refunded Bonds; and WHEREAS, the City desires to authorize the execution of an escrow agreement and provide for the deposit of proceeds of the refunding bonds, together with other funds, to pay the Refunded Bonds; and WHEREAS, upon the issuance of the refunding bonds herein authorized and the deposit of funds referred to above, the Refunded Bonds shall no longer be regarded as being outstanding, except for the purpose of being paid pursuant to such deposit, and the pledges, liens, trusts and all other covenants, provisions, terms and conditions of the proceedings authorizing the issuance of the Refunded Bonds shall be, with respect to the Refunded Bonds, discharged, terminated and defeased; and l"I WHEREAS, the City desires to issue, in combination with such refunding bonds, as authorized by Article 717k, as amended, $4,310,000 general obligation bonds voted at an election held within the City on May 4, 1991, such bonds being the final installment of the $27,400,000 bonds voted at the election mentioned above; Now, Therefore BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN: 1. Recitals; Consideration. It is hereby found and determined that the matters and facts set out in the preamble to this Ordinance are true and correct. It is hereby found and determined that the refunding contemplated in this Ordinance will result in a present value savings in the debt service payable by the City, and that such benefit is sufficient consideration for the refunding of the Refunded Bonds. 2. Definitions. Throughout this Ordinance the following terms and expressions as used herein shall have the meanings set forth below: The term "Acts" shall mean Articles 717k and 823, Vernon's Texas Civil Statutes, as amended. The term "Bonds" shall mean the $10,480,000 City of Baytown, Texas, General Obligation and Refunding Bonds, Series 1995, authorized in this Ordinance, unless the context clearly indicates otherwise. The term "Business Day" shall mean any day which is not a Saturday, Sunday, or a day on which the Registrar is authorized by law or executive order to close, or a legal holiday. The term "City" shall mean the City of Baytown, Texas. The term "Code" shall mean the Internal Revenue Code of 1986, as amended. The term "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. The term "Escrow Agent" shall mean Texas Commerce Bank National Association, Houston, Texas. The term "Escrow Agreement" shall mean the agreement between the City and the Escrow Agent relating to the escrow of funds to pay the Refunded Bonds. -2- rAZZIN The term "Interest and Sinking Fund" shall mean the interest and sinking fund for payment of the Bonds established by the City in Section 19 of this Ordinance. The term "Interest Payment Date ", when used in connection with any Bond, shall mean February 1, 1996, and each August 1 and February 1 thereafter until maturity or earlier redemption. The term "Ordinance" as used herein and in the Bonds shall mean this ordinance authorizing the Bonds. The term "Owner" shall mean any person who shall be the registered owner of any outstanding Bond. The term "Paying Agent" shall mean the Registrar. The term "Record Date" shall mean, for any Interest Payment Date, the fifteenth (15th) day of the month next preceding each Interest Payment Date. The term "Refunded Bonds" shall mean the bonds described on Exhibit A attached hereto. The term "Register" shall mean the books of registration kept " by the Registrar, in which are maintained the names and addresses of, and the principal amounts of the Bonds registered to, each Owner. The term "Registrar" shall mean First Interstate Bank of Texas, N.A., Houston, Texas, and its successors in that capacity. The term "Report" shall mean the report of KPMG Peat Marwick LLP, Certified Public Accountants, verifying the accuracy of certain mathematical computations relating to the Bonds and the Refunded Bonds. The term "Underwriters" shall mean Masterson Moreland Sauer Whisman, Inc., A.G. Edwards & Sons, Inc., Rauscher Pierce Refsnes, Inc. and Edward D. Jones & Co. 3. Authorization. The Bonds shall be issued, pursuant to the Acts, in fully registered form in the principal amount of Six Million One Hundred Seventy Thousand Dollars ($6,170,000) for the purpose of refunding the Refunded Bonds and in the amount of Four Million Three Hundred Ten Thousand Dollars ($4,310,000) for the following purposes: $2,490,000 for the purchase of land for and construction of a public works maintenance facility; S $1,425,000 for constructing, improving, and permanently equipping public buildings; and -3- $1,425,000 for constructing, improving, and permanently equipping public buildings; and $395,000 for improving lands for park purposes, including improvements along Goose Creek stream. 4. Designation, Date, and Interest Payment Dates. The Bonds shall be designated as "CITY OF BAYTOWN, TEXAS, GENERAL OBLIGATION AND REFUNDING BONDS, SERIES 1995" and shall be dated July 1, 1995. The Bonds shall bear interest at the rates set forth in Section 5 of this Ordinance from the later of July 1, 1995, or the most recent Interest Payment Date to which such interest has been paid or duly provided for, calculated on the basis of a 360 day year of twelve 30 day months, interest payable on February 1, 1996, and semiannually thereafter on August 1 and February 1 of each year until maturity or prior redemption. 5. Initial Bonds; Numbers and Denominations. The Bonds shall be initially issued bearing the numbers, in the principal amounts, and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance. The Bonds shall mature, subject to prior redemption in accordance with this Ordinance, on February 1 in each of the years and in the amounts set out in such schedule. Bonds delivered on transfer of or in exchange for other Bonds shall be numbered in order of their authentication by the Registrar, shall be in the denomination of $5,000 or integral multiples thereof, and shall mature on the same date and bear interest at the same rate as the Bond or Bonds in lieu of which they are delivered. Bond Principal Interest Number Year Amount Rate R- 1 1997 $ 295,000 4.10% R- 2 1998 1,110,000 4.30% R- 3 1999 1,175,000 4.4516 R- 4 2000 445,000 4.55% R- 5 2001 450,000 4.7516 R- 6 2002 475,000 4.9016 R- 7 2003 490,000 5.00% R- 8 2004 415,000 5.15% R- 9 2005 435,000 5.1516 R -10 2006 465,000 5.30% R -11 2007 485,000 5.40% R -12 2008 515,000 5.5016 R -13 2009 550,000 5.60% R -14 2010 585,000 5.70% R -15 2011 625,000 5.80% R -16 2012 590,000 5.8516 R -17 2013 310,000 5.90% R -18 2016 1,065,000 5.90% -4- No 6. Execution of Bonds; Seal. The Bonds shall be signed by the Mayor and countersigned by the City Clerk, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds. If any officer of the City whose manual or facsimile signature shall appear on the Bonds shall cease to be such officer before the authentication of such Bonds or before the delivery of such Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. 7. Approval by Attorney General: Registration by Comptroller. The Bonds to be initially issued shall be delivered to the Attorney General of Texas for approval and shall be registered by the Comptroller. The manually executed registration certificate of the Comptroller substantially in the form provided in Section 17 of this Ordinance shall be attached or affixed to the Bonds to be initially issued. S. Authentication. Except for the Bonds to be initially issued, which need not be authenticated by the Registrar, only such Bonds which bear thereon a certificate of authentication, substantially in the form provided in Section 17 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Bonds so authenticated were delivered by the Registrar hereunder. 9. Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent for the Bonds. The principal of the Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable, whether at maturity or by prior redemption, at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable by check payable on the Interest Payment Date, mailed by the Registrar on or before each Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register, or by such other method, acceptable to the Registrar, requested by and at the risk and expense of the Owner. If the date for payment of the principal of or interest on any Bond is not a Business Day, then the date for such payment shall be -5- the next succeeding Business Day with the same force and effect as if made on the date such payment was originally due. 10. Successor Registrars. The City covenants that at all times while any Bonds are outstanding it will provide a commercial bank or trust company organized under the laws of the State of Texas or other entity duly qualified and legally authorized to serve as and perform the duties and services of the Paying Agent /Registrar for the Bonds. The City reserves the right to change the Registrar for the Bonds on not less than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Bonds. Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section. 11. Special Record Date. If interest on any Bond is not paid on any Interest Payment Date and continues unpaid for thirty (30) days thereafter, the Registrar shall establish a new record date for the payment of such interest, to be known as a Special Record Date. The Registrar shall establish a Special Record Date when funds to make such interest payment are received from or on behalf of the City. Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice. 12. Ownership; Unclaimed Principal and Interest. The City, the Registrar and any other person may treat the person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment of the principal of or interest on such Bond, and for all other purposes, whether or not such Bond is overdue, and neither the City nor the Registrar shall be bound by any notice or knowledge to the contrary. All payments made to the person deemed to be the Owner of any Bond in accordance with this Section 12 shall be valid and effectual and shall discharge the liability of the City and the Registrar upon such Bond to the extent of the sums paid. Amounts held by the Registrar which represent principal of and interest on the Bonds remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the applicable provisions of Texas law -6- including, to the extent applicable, Title 6 of the Texas Property Code, as amended. 13. Registration, Transfer, and Exchancre. So long as any Bonds remain outstanding, the Registrar shall keep the Register at its principal corporate trust office and, subject to such reasonable regulations as it may prescribe, the Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of this Ordinance. Each Bond shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Registrar, duly endorsed for transfer, or accompanied by an assignment duly executed by the registered Owner or his authorized representative in form satisfactory to the Registrar. Upon due presentation of any Bond for transfer, the Registrar shall authenticate and deliver in exchange therefor, within three Business Days after such presentation, a new Bond or Bonds, registered in the name of the transferee or transferees, in authorized denominations and of the same maturity and aggregate principal amount and bearing interest at the same rate as the Bond or Bonds so presented. All Bonds shall be exchangeable upon presentation and surrender thereof at the principal corporate trust office of the Registrar for a Bond or Bonds of the same maturity and interest rate and in any authorized denomination, in an aggregate amount equal to the unpaid principal amount of the Bond or Bonds presented for exchange. The Registrar shall be and is hereby authorized to authenticate and deliver exchange Bonds in accordance with the provisions of this Section 13. Each Bond delivered in accordance with this Section 13 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such Bond is delivered. The City or the Registrar may require the Owner of any Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the transfer or exchange of such Bond. Any fee or charge of the Registrar for such transfer or exchange shall be paid by the City. 14. Mutilated, Lost. or Stolen Bonds. Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate, and principal amount, bearing a number not contemporaneously outstanding. If any Bond is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall authorize and the Registrar shall authenticate and deliver a replacement Bond of like maturity, interest rate and -7- principal amount, bearing a number not contemporaneously outstanding. The City or the Registrar may require the Owner of a mutilated Bond to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith and any other expenses connected therewith, including the fees and expenses of the Registrar. The City or the Registrar may require the Owner of a lost, apparently destroyed or wrongfully taken Bond, before any replacement Bond is issued, to: (1) furnish to the City and the Registrar satisfactory evidence of the ownership of and the circumstances of the loss, destruction or theft of such Bond; (2) furnish such security or indemnity as may be required by the Registrar and the City to save them harmless; (3) pay all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Registrar and any tax or other governmental charge that may be imposed; and (4) meet any other reasonable requirements of the City and the Registrar. If, after the delivery of such replacement Bond, a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the City and the Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or the Registrar in connection therewith. If any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the City in its discretion may, instead of issuing a replacement Bond, authorize the Registrar to pay such Bond. Each replacement Bond delivered in accordance with this Section 14 shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. 15. Cancellation of Bonds. All Bonds paid in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance -8- ka herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment. The Registrar shall furnish the City with appropriate certificates of destruction of such Bonds. 16. Redemption. prior to maturity, in February 1, 2005, or a accrued interest on tr fixed for redemption. the particular Bonds o selected by the City. The City reserves the right to redeem Bonds whole or from time to time in part, on ny date thereafter at a price of par plus e Bonds called for redemption to the date If less than all of the Bonds are redeemed, portions thereof to be redeemed shall be The Bonds maturing in the year 2016 are also subject to mandatory redemption in the amounts, on the dates, and in the manner set out in the form of bond in Section 17. Principal amounts may be redeemed only in integral multiples of $5,000. If a Bond subject to redemption is in a denomination larger than $5,000, a portion of such Bond may be redeemed, but only in integral multiples of $5,000. Upon surrender of any Bond for redemption in part, the Registrar, in accordance with Section 13 hereof, shall authenticate and deliver in exchange therefor a Bond or Bonds of like maturity and interest rate in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered. Notice of any redemption identifying the Bonds to be redeemed in whole or in part shall be given by the Registrar at least thirty days prior to the date fixed for redemption by sending written notice by first class mail to the Owner of each Bond to be redeemed in whole or in part at the address shown on the Register. Such notices shall state the redemption date, the redemption price, the place at which Bonds are to be surrendered for payment and, if less than all Bonds outstanding of a particular maturity are to be redeemed, the numbers of the Bonds or portions thereof of such maturity to be redeemed. Any notice given as provided in this Section 16 shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Registrar for payment of the redemption price of the Bonds or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When Bonds have been called for redemption in whole or in part and due provision has been made to redeem same as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Owners to collect interest which would otherwise accrue after the redemption date on any Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. -9- im 17. Forms. The form of the Bonds, including the form of the Registrar's Authentication Certificate, the form of Assignment, the form of bond insurance legend, and the form of Registration Certificate of the Comptroller, which shall be attached or affixed to the Bonds initially issued, shall be, respectively, substantially as follows, with such additions, deletions and variations as may be necessary or desirable and not prohibited by this Ordinance: NUMBER R- REGISTERED INTEREST RATE: REGISTERED OWNER: PRINCIPAL AMOUNT: FORM OF BONDS United States of America State of Texas Counties of Harris and Chambers DENOMINATION REGISTERED CITY OF BAYTOWN, TEXAS GENERAL OBLIGATION AND REFUNDING BOND SERIES 1995 MATURITY DATE: ISSUE DATE: CUSIP: July 1, 1995 DOLLARS The City of Baytown, Texas (the "City ") promises to pay to the registered owner identified above, or registered assigns, on the date specified above, upon presentation and surrender of this Bond at the principal corporate trust office of First Interstate Bank of Texas, N.A., Houston, Texas (the "Registrar ") , the principal amount identified above, payable in any coin or currency of the United States of America which on the date of payment is legal tender for the payment of debts due the United States of America, and to pay interest thereon at the rate shown above, calculated on the basis of a 360 day year of twelve 30 day months, from the later of July 1, 1995, or the most recent interest payment date to which interest has been paid or duly provided for. Interest on this Bond is payable by check on February 1 and August 1, beginning on February 1, 1996, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the fifteenth (15th) day of the month next preceding each interest payment date, or by such other method, acceptable to the Registrar, requested by and at the risk and expense of the Owner. -10- REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT THIS PLACE. IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signature of the Mayor and countersigned with the manual or facsimile signature of the City Clerk, and the official seal of the City has been duly impressed, or placed in facsimile, on this Bond. (AUTHENTICATION CERTIFICATE) (SEAL) CITY OF BAYTOWN, TEXAS Mayor City Clerk (Back Panel of Bond) THIS BOND is one of a duly authorized issue of Bonds, aggregating $10,480,000 (the "Bonds "), issued for the purpose of refunding a portion of the City's outstanding bonds and for the following purposes: purchase of land for and construction of a public works maintenance facility ($2,490,000); constructing, improving, and permanently equipping public buildings ($1,425,000); and improving lands for park purposes, including improvements along Goose Creek stream ($395,000), authorized at an election held in the City on May 4, 1991 and pursuant to an ordinance adopted by the City Council on June 22, 1995 (the "Ordinance "). THE CITY RESERVES THE RIGHT to redeem Bonds, in whole or from time to time in part, in integral multiples of $5,000, on February 1, 2005, or any date thereafter at par plus accrued interest on the principal amounts called for redemption to the date fixed for redemption. Reference is made to the Ordinance for complete details concerning the manner of redeeming the Bonds. THE BONDS maturing in the year 2016 (the "Term Bonds ") are subject to mandatory redemption prior to maturity in the amounts and on the dates set out below, at a price of par plus accrued interest to the redemption date: February 1, 2014 $330,000 February 1, 2015 355,000 -11- The particular Term Bonds to be redeemed shall be selected by the Registrar by lot or other customary random method, on or before January 1 of each year in which Term Bonds are to be mandatorily redeemed. The principal amount of Term Bonds to be mandatorily redeemed in each year shall be reduced by the principal amount of such Term Bonds that have been optionally redeemed on or before January 1 of such year and which have not been made the basis for a previous reduction. NOTICE OF ANY REDEMPTION shall be given at least thirty (30) days prior to the date fixed for redemption by first class mail, addressed to the registered owners of each Bond to be redeemed in whole or in part at the address shown on the books of registration kept by the Registrar. When Bonds or portions thereof have been called for redemption, and due provision has been made to redeem the same, the amounts so redeemed shall be payable solely from the funds provided for redemption, and interest which would otherwise accrue on the amounts called for redemption shall terminate on the date fixed for redemption. THIS BOND IS TRANSFERABLE only upon presentation and surrender at the principal corporate trust office of the Registrar, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or his authorized representative, subject to the terms and conditions of the Ordinance. THE BONDS ARE EXCHANGEABLE at the principal corporate trust office of the Registrar for Bonds in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance. NEITHER THE CITY NOR THE REGISTRAR shall be required to transfer or exchange any Bond during the 15 day period next preceding any interest payment date. THIS BOND shall not be valid or obligatory for any purpose or be entitled to any benefit under the Ordinance unless this Bond is either (i) registered by the Comptroller of Public Accounts of the State of Texas by registration certificate attached or affixed hereto or (ii) authenticated by the Registrar by due execution of the authentication certificate endorsed hereon. THE REGISTERED OWNER of this Bond, by acceptance hereof, acknowledges and agrees to be bound by all the terms and conditions of the Ordinance. THE CITY has covenanted in the Ordinance that it will at all times provide a legally qualified registrar for the Bonds and will cause notice of any change of registrar to be mailed to each registered owner. -12- IT IS HEREBY certified, recited and covenanted that this Bond has been duly and validly issued and delivered; that all acts, conditions and things required or proper to be performed, to exist and to be done precedent to or in the issuance and delivery of this Bond have been performed, exist and have been done in accordance with law; and that annual ad valorem taxes, within the limits prescribed by law, sufficient to provide for the payment of the interest on and principal of this Bond, as such interest comes due and such principal matures, have been levied and ordered to be levied against all taxable property in the City, and have been pledged irrevocably for such payment. Form of Registration Certificate of Comptroller of Public Accounts COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. WITNESS MY SIGNATURE AND SEAL this xxxxxxxxxx Comptroller of Public Accounts (SEAL) of the State of Texas Form of Registrar's Authentication Certificate AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been delivered pursuant to the Bond Ordinance described in the text of this Bond. First Interstate Bank of Texas, N.A. By Authorized Signature Date of Authentication Form of Assignment ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) -13- rd-" WIMM (Please insert Social Security or Taxpayer Identification Number of Transferee) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer said Bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: Signature Guaranteed: NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. Registered Owner NOTICE: The signature above must correspond to the name of the registered owner as shown on the face of this Bond in every particular, without any alteration, enlargement or change whatsoever. Form of Statement of Insurance MBIA Insurance Corporation (the "Insurer ") has issued a policy containing the following provisions, such policy being on file at First Interstate Bank of Texas, N.A., Houston, Texas. The Insurer, in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to First Interstate Bank of Texas, N.A., Houston, Texas, or its successor (the "Paying Agent ") of an amount equal to (i) the principal of (either at the stated maturity of by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such 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 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 -14- M M to herein collectively as the "Insured Amounts." "Obligations" shall mean: $10,480,000 City of Baytown, Texas General Obligation and Refunding Bonds, Series 1995 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 any Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with 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 relating 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 Insurer at its offices located at 113 King Street, 10504 and such service of process shall be valid be made to the Armonk, New York 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. DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is unable to fulfill its contractual obligation under this policy or contract or application or certificate or evidence of -15- coverage, the policyholder or certificateholder is not protected by an insurance guaranty fund or other solvency protection arrangement. MBIA Insurance Corporation is. Legal Opinion: Cusip Numbers: Bond Insurance. The approving opinion of Vinson & Elkins L.L.P., Houston, Texas, and CUSIP Numbers may be printed on the Bonds, but errors or omissions in the printing of such opinion or such numbers shall have no effect on the validity of the Bonds. The purchase of and payment of the premium for municipal bond insurance by the City, in accordance with the terms of a commitment for such insurance presented to and hereby approved by the City Council is hereby authorized. All officials and representatives of the City are authorized and directed to execute such documents and to do any and all things necessary or desirable to obtain such insurance, and the printing on the Bonds of an appropriate legend regarding such insurance is hereby approved. 19. Interest and Sinking Fund: Tax Levy. There is hereby established a separate fund of the City to be known as the City of Baytown, Texas, General Obligation and Refunding Bonds, Series 1995 Interest and Sinking Fund (the "Interest and Sinking Fund ") , which shall be kept separate and apart from all other funds of the City. The proceeds from all taxes levied, assessed and collected for and on account of the Bonds authorized by this Ordinance shall be deposited, as collected, in the Interest and Sinking Fund. While the Bonds or any part of the principal thereof or interest thereon remain outstanding and unpaid, there is hereby levied and there shall be annually assessed and collected in due time, form and manner, and at the same time as other City taxes are assessed, levied and collected, in each year, beginning with the current year, a continuing direct annual ad valorem tax, within the limits prescribed by law, upon all taxable property in the City, sufficient to pay the current interest on the Bonds as the same becomes due and to provide and maintain a sinking fund of not less than two percent of the principal amount of the Bonds or the amount required to pay each installment of principal of the Bonds as the same matures, whichever is greater, full allowance being made for delinquencies and costs of collection, and said taxes are hereby irrevocably pledged to the payment of the interest on and principal of the Bonds and to no other purpose. 20. Further Proceedinas. After the Bonds to be initially issued have been executed, it shall be the duty of the Mayor and other appropriate officials and agents of the City to deliver the Bonds to be initially issued and all pertinent records and '-� proceedings to the Attorney General of the State of Texas, for examination and approval. After the Bonds to be initially issued -16- have been approved by the Attorney General, they shall be delivered to the Comptroller for registration. Upon registration of the Bonds to be initially issued, the Comptroller (or the Comptroller's bond clerk or an assistant bond clerk lawfully designated in writing to act for the Comptroller) shall manually sign the Comptroller's Registration Certificate prescribed herein and the seal of said Comptroller shall be impressed, or placed in facsimile, thereon. 21. Sale; Bond Purchase Agreement. The Bonds are hereby sold and shall be delivered to the Underwriters at a price of $10,316,939.70 plus accrued interest to the date of delivery, in accordance with the terms of a bond purchase agreement of even date herewith, presented to and hereby approved by the City Council, which price and terms are hereby found and determined to be the most advantageous reasonably obtainable by the City. The Mayor and other appropriate officials of the City are hereby authorized and directed to execute such bond purchase agreement on behalf of the City, and the Mayor and all other officers, agents and representatives of the City are hereby authorized to do any and all things necessary or desirable to satisfy the conditions set out therein and to provide for the issuance and delivery of the Bonds. 22. Tax Exemption. (a) General Tax Covenant. The City intends that the interest on the Bonds shall be excludable from gross income for purposes of federal income taxation pursuant to sections 103 and 141 through 150 of the Code, and applicable regulations. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Bonds to be includable in gross income, as defined in section 61 of the Code, of the Owners thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section 22; provided, however, that the City shall not be required to comply with any particular requirement of this Section 22 if the City has received an opinion of nationally recognized bond counsel ( "Counsel's Opinion ") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 22 will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in this Section 22. (b) Use of Proceeds. The City covenants and agrees that its use of the Net Proceeds of the Bonds and the Refunded Bonds will at all times satisfy the following requirements: -17- ia (i) The City will use all of the Net Proceeds of the Bonds to (A) acquire Escrowed Securities (as hereinafter defined) sufficient to pay the principal of and interest on the Refunded Bonds, (B) for the purpose of constructing various public improvements (the "New Money Portion of the Bonds "), and (C) to pay the costs of issuing the Bonds, except for amounts, if any, described in the Report as the rounding amount and the ending cash balance in the Escrow Fund (as hereinafter defined) . The City has limited and will limit the amount of original or investment proceeds of each issue of the Refunded Bonds and the New Money Portion of the Bonds to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than ten percent of the Ne-t Proceeds of each issue of the Refunded Bonds and the New Money Portion of the Bonds, respectively ( "private -use proceeds ") . For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carrying on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Refunded Bonds or the Bonds in any manner contrary to the guidelines set forth in Revenue Procedure 93- 19, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; The City has not permitted and will not permit more than five percent of the Net Proceeds of any issue of the Refunded Bonds or the New Money Portion of the Bonds to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of such Refunded Bonds or the New Money Portion of the Bonds. Further, the amount of private -use proceeds of the Refunded Bonds or the New Money Portion of the Bonds in excess of five percent of the Net -18- ria Proceeds of any issue of the Refunded Bonds or the New Money Portion of the Bonds ( "excess private -use proceeds ") did not and will not exceed the proceeds of the Refunded Bonds or the New Money Portion of the Bonds expended for the governmental purpose of the Refunded Bonds or the New Money Portion of the Bonds to which such excess private -use proceeds relate; (iii) The City has not permitted and will not permit an amount of proceeds of any issue of the Refunded Bonds or the New Money Portion of the Bonds exceeding the lesser of (a) $5,000,000 or (b) five percent of the Net Proceeds of such issue of the Refunded Bonds or the New Money Portion of the Bonds to be used, directly or indirectly, to finance loans to persons other than governmental units. When used in this Section 22, the term Net-Proceeds of the Bonds and the Refunded Bonds shall mean the proceeds from the sale of each issue of the Bonds and the Refunded Bonds, respectively, including investment earnings on the proceeds of such issue, less accrued interest with respect to such issue. (c) No Federal Guaranty. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Code and applicable regulations thereunder, except as permitted by section 149(b)(3) of the Code and such regulations. (d) Bonds are not Hedge Bonds. The City covenants and agrees that not more than 50 percent of the New Money Portion of the Bonds will be invested in nonpurpose investments (as defined in section 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more within the meaning of section 149 (g) (3) (A) (ii) of the Code, and the City reasonably expects that at least 85 percent of the spendable proceeds of the New Money Portion of the Bonds will be used to carry out the governmental purposes of the Bonds within the three -year period beginning on the date the Bonds are issued. Furthermore, the City represents that not more than 50 percent of the proceeds of each issue of the Refunded Bonds (including any issue of bonds refunded by the Refunded Bonds) was invested in nonpurpose investments (as defined in section 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more within the meaning of section 149 (g) (3) (A) (ii) of the code, and the City reasonably expected at the time each issue of the Refunded Bonds (including any issue of bonds refunded by the Refunded Bonds) was issued that at least 85 percent of the spendable proceeds of each such issue -19- would be used to carry out the governmental purposes of such issues within the corresponding three -year period beginning on the respective dates of issue of such Refunded Bonds. (e) No- Arbitrage Covenant. The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known or reasonably expected to be in existence on the date the Bonds are delivered, the City will reasonably expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of section 148(a) of the Code and applicable regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Bonds including interest or other investment income derived from Bond proceeds, regulate investments of proceeds of the Bonds, and take such other and further action as may be required so that the Bonds will not be "arbitrage bonds" within the meaning of section 148(a) of the Code and applicable regulations thereunder. (f) Arbitrage Rebate. The City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Bonds (within the meaning of section 148(f)(6)(B) of the Code) , be rebated to the federal government. Specifically, the City will (i) maintain records regarding the investment of the gross proceeds of the Bonds as may be required to calculate the amount earned on the investment of the gross proceeds of the Bonds separately from records of amounts on deposit in the funds and accounts of the City allocable to other obligations of the City or moneys which do not represent gross proceeds of any obligations of the City, (ii) calculate at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Bonds which is required to be rebated to the federal government, and (iii) pay, not less often than every fifth anniversary date of the delivery of the Bonds or on such other dates as may be permitted by applicable regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Bonds that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. (g) Information Reporting. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are issued, an information statement concerning the Bonds, all under and in -20- accordance with section 149(e) of the Code and regulations thereunder. (h) Continuing Obligation. Notwithstanding provision of this Ordinance, the City's obligation covenants and provisions of this Section 22 shall defeasance and discharge of the Bonds. applicable any other s under the survive the 23. Use of Proceeds. Proceeds from the sale of the Bonds shall, promptly upon receipt by the City, be applied as follows: (a) Accrued interest shall be deposited into the Interest and Sinking Fund and invested only in direct obligations of the United States of America. (b) $4,310,000 from the proceeds of the Bonds shall be used for the purpose of the purchase of land for and construction of a public works maintenance facility, constructing, improving, and permanently equipping public buildings, and improving lands for park purposes, including improvements along Goose Creek stream. Earnings on investments of such proceeds may, at the City's discretion, be transferred to the Interest and Sinking Fund. (c) The balance of the proceeds from the sale of the Bonds shall be applied to establish an escrow fund to refund the Refunded Bonds, as more fully provided below, and, to the extent not otherwise provided for, to pay all expenses arising in connection with the issuance of the Bonds, the establishment of such escrow fund and the refunding of the Refunded Bonds. Any proceeds of the Bonds remaining 'after making all such deposits and payments shall be deposited into the Interest and Sinking Fund. 24. Escrow Agreement. The discharge and defeasance of the Refunded Bonds shall be effectuated pursuant to the terms and provisions of an Escrow Agreement to be entered into by and between the City and the Escrow Agent, which shall be substantially in the form attached hereto as Exhibit B, the terms and provisions of which are hereby approved, subject to such insertions, additions and modifications as shall be necessary (a) to carry out the program designed for the City by the Underwriters, and which shall be certified as to mathematical accuracy by KPMG Peat Marwick LLP, Certified Public Accountants, whose Report shall be attached to the Escrow Agreement (b) to maximize the City's present value savings and /or to minimize the City's costs of refunding, (c) to comply with all applicable laws and regulations relating to the refunding of the Refunded Bonds and (d) to carry out the other intents and purposes of this Ordinance, and the Mayor or Mayor Pro Tem is hereby authorized to execute and deliver such Escrow Agreement on -21- behalf of the City in multiple counterparts and the City Clerk or an Assistant City Clerk is hereby authorized to attest thereto and affix the City's seal. 25. Redemption of Bonds. The City hereby irrevocably calls the following bonds of the City for redemption prior to maturity on the followings date, at a price of par plus accrued interest to the date fixed for redemption, and authorizes and directs notice of such redemption to be given in accordance with the proceedings authorizing the issuance of such bonds: Bonds to be Redeemed General Obligation Refunding Bonds, Series 1985 Maturities 1997 through 1999 Public Improvement Bonds, Series 1986 Maturities 1998 and 1999 Public Improvement Bonds, Series 1988 Maturities 2000 through 2003 Harris County MUD #3 Waterworks & Sewer System Combination Unlimited Tax & Revenue Bonds, Series 1984 Maturities 1998 through 2007 Redemption Date August 1, 1995 February 1, 1996 February 1, 1998 April 1, 1997 26. Purchase of United States Treasury Obligations. To assure the purchase of the Escrowed Securities referred to in the Escrow Agreement, the Mayor or Mayor Pro Tem, the City Manager, and the Escrow Agent are hereby authorized to subscribe for, agree to purchase, and purchase non - callable obligations of the United States of America, in such amounts and maturities and bearing interest at such rates as may be provided for in the Report, and to execute any and all subscriptions, purchase agreements, commitments, letters of authorization and other documents necessary to effectuate the foregoing, and any actions heretofore taken for such purpose are hereby ratified and approved. 27. Transfer from Interest and Sinking Funds. On the date of delivery of and payment for the Bonds there shall be transferred from the interest and sinking funds for the Refunded Bonds to the Escrow Agent, an amount sufficient, when added to the proceeds of the Bonds, to provide for the refunding of the Refunded Bonds, all as set out in the Report. -22- im 28. Payments under the Policy. A. In the event that, on the second Business Day, and again on the Business Day, prior to the payment date on the Bonds, the Registrar has not received sufficient moneys to pay all principal of and interest on the Bonds due on the second following or following, as the case may be, Business Day, the Registrar shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. B. If the def iciency is made up in whole or in part prior to or on the payment date, the Registrar shall so notify the Insurer or its designee. C. In addition, if the Registrar has notice that any Owner has been required to disgorge payments of principal or interest on the Bonds to a trustee in Bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Owner within the meaning of any applicable bankruptcy laws, then the Registrar shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. D. The Registrar is hereby irrevocably designated, appointed, directed and authorized to act as attorney -in -fact for Owners of the Bonds as follows: 1. If and to the extent there is a deficiency in amounts required to pay interest on the Bonds, the Registrar shall (a) execute and deliver to 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 Owners in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Owners (and not as Paying Agent) in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respective Owners; and 2. If and to the extent of a deficiency in amounts required to pay principal of the Bonds, the Registrar shall (a) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such -23- Owner in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Bonds surrendered to the Insurance Paying Agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Registrar and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Owners (and not as Paying Agent) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent, and (c) disburse the same to such Owners. E. Payments with respect to claims for interest on and principal of Bonds disbursed by the Registrar from proceeds of the Policy shall not be considered to discharge the obligation of the City with respect to such Bonds, and the Insurer shall become the owner of such unpaid Bond and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. F. Irrespective of whether any such assignment is executed and delivered, the City and the Registrar hereby agree for the benefit of the Insurer that, 1. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Registrar) , on account of principal of or interest on the Bonds, the Insurer will be subrogated to the rights of such Owners to receive the amount of such principal and interest from the City, with interest thereon as provided and solely from the sources stated in this Ordinance and the Bonds; and 2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Ordinance and the Bonds, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Bonds to Owners, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. G. In connection with the issuance of additional Bonds, the City shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Bonds. -24- H. Copies of any amendments made to the documents executed in connection with the issuance of the Bonds which are consented to by the Insurer shall be sent to Standard & Poor's Corporation. I. The Insurer shall receive notice of the resignation or removal of the Registrar and the appointment of a successor thereto. J. The Insurer shall receive copies of all notices required to be delivered to Owners, and, on an annual basis, copies of the City's audited financial statements and annual budget. 29. Notices: Any notice that is required to be given to an Owner of the Bonds or to the Registrar pursuant to the Ordinance shall also be provided to the Insurer. All notices required to be given to the Insurer under the Ordinance shall be in writing and shall be sent by registered or certified mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Surveillance. 30. Related Matters. To satisfy in a timely manner all of the City's obligations under this Ordinance, the bond purchase agreement, and the Escrow Agreement, the Mayor or Mayor Pro Tem, the City Manager, the City Clerk or an Assistant City Clerk, and all other appropriate officers and agents of the City are hereby authorized and directed to take all other actions that are reasonably necessary to provide for the refunding of the Refunded Bonds, including, without limitation, executing and delivering on behalf of the City all certificates, consents, receipts, requests, and other documents as may be reasonably necessary to satisfy the City's obligations under the Escrow Agreement, the Bond Purchase Agreement, and this Ordinance and to direct the application of funds of the City consistent with the provisions of such Escrow Agreement and this Ordinance. 31. Registrar. The form of agreement setting forth the duties of the Registrar is hereby approved, and the appropriate officials of the City are hereby authorized to execute such agreement for and on behalf of the City. 32. Official Statement. The City Council ratifies and confirms its prior approval of the form and content of the Preliminary Official Statement prepared in the initial offering and sale of the Bonds and hereby authorizes the preparation of a final Official Statement reflecting the terms of the bond purchase agreement with the Underwriters and other relevant matters. The use of such Official Statement in the reoffering of the Bonds by the Underwriters is hereby approved and authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed -25- therein, dated as of the date of payment for and delivery of the Bonds. 33. No Personal Liability. No recourse shall be had for payment of the principal of or interest on any Bonds or for any claim based thereon, or on this Ordinance, against any official or employee of the City or any person executing any Bonds. 34. Open Meeting. It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and that public notice of the time, place and purpose of said meeting was given, all as required by the Texas Open Meetings Act. 35. Effective Date. This Ordinance shall become effective immediately upon passage by this City Council and signature of the Mayor. PASSED AND APPROVED this 22nd day of June, 1995. ATTEST: City Clerk , CITY OF BAYTOWN, TEXAS (SEAL) -26- ayor CITY OF BAYTOWN, TEXAS WE ram EXHIBIT A Issue Amount Maturities City of Baytown, Texas General Obligation Refunding Bonds, Series 1985 $ 740,000 1997/1999 City of Baytown, Texas Public Improvement Bonds, Series 1986 1,050,000 1998/1999 City of Baytown, Texas Public Improvement Bonds, Series 1988 400,000 2000/2003 Harris County MUD #3 WW & SS Combination Unlimited Tax and Revenue Bonds, Series 1984 4,075,000 1998/2007 Ira EXHIBIT B ESCROW AGREEMENT THIS ESCROW AGREEMENT (the "Escrow Agreement ") dated for convenience June 22, 1995, but effective on the Escrow Funding Date described herein, is made and entered into by and between the City of Baytown, Texas, an incorporated city of the State of Texas (the "City "), and Texas Commerce Bank National Association, Houston, Texas, as escrow agent (together with any successor or assign in such capacity, the "Escrow Agent "). WHEREAS, the City has heretofore issued or assumed and there remain outstanding the bonds described in Appendix A attached hereto (the "Refunded Bonds "); and WHEREAS, the City desires to refund the Refunded Bonds in advance of maturity; and WHEREAS, Article 717k, Vernon's Texas Civil Statutes, as amended, authorizes and empowers the City to deposit the proceeds of refunding bonds payable from ad valorem taxes of the City, together with other available funds or resources, with any place of payment for the Refunded Bonds in an amount which is sufficient to provide for the payment or redemption of the principal of and interest on the Refunded Bonds; and WHEREAS, the City Council of the City has adopted an ordinance authorizing the issuance of the City's General Obligation and Refunding Bonds, Series 1995, in the aggregate principal amount of $10,480,000 (the "Refunding Bonds "), for the purpose, among others, of providing the funds necessary to refund the Refunded Bonds, to provide a savings in debt service; and WHEREAS, the City Council of the City has further determined to effectuate the advance refunding of the Refunded Bonds pursuant to this Escrow Agreement, under which provision is made for the safekeeping, investment, reinvestment, administration and disposition of the proceeds of the Refunding Bonds and other funds, so as to provide firm banking and financial arrangements for the discharge and final payment or redemption of the Refunded Bonds; NOW, THEREFORE, in consideration of the mutual undertakings, promises and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to secure the full and timely payment of the principal of and the interest on the Refunded Bonds, the City and the Escrow Agent agree as follows: wo la ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1.01. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise, the following terms shall have the respective meanings specified below for all purposes of this Escrow Agreement: "City" shall mean the City of Baytown, Texas, and any successor to its duties and functions. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the applicable regulations thereunder and under the Internal Revenue Code of 1954. "Escrow Agent" shall mean Texas Commerce Bank National Association, Houston, Texas, in its capacity as escrow agent hereunder, and any successor or assign in such capacity. "Escrow Agreement" shall mean this escrow agreement by and between the City and the Escrow Agent. "Escrow Fund" shall mean the fund created in Section 3.01 of this Escrow Agreement to be administered by the Escrow Agent pursuant.to the provisions of this Escrow Agreement. "Escrow Funding Date" shall mean the date on which the City deposits with the Escrow Agent the cash and Escrowed Securities described in Section 2.01. "Escrowed Securities" shall mean the direct non - callable obligations of or direct, non - callable, non - prepayable obligations the principal of and interest on which are unconditionally guaranteed for full and timely payment by, the United States of America, initially purchased for deposit into the Escrow Fund, all as more fully described in the Report. "Paying Agent for the Refunded Bonds" shall mean Texas Commerce Bank National Association, Houston, Texas (successor to First City National Bank, MTrust Corp., and Bank of the Southwest) . "Refunded Bond Ordinances" shall mean the ordinances and resolution authorizing the issuance, sale and delivery of the Refunded Bonds. "Refunded Bonds" shall mean the bonds described in Appendix A attached hereto. WE "Refunding Bonds" shall mean the City's General Obligation and Refunding Bonds, Series 1995, dated July 1, 1995, in the initial aggregate principal amount of $10,480,000. "Refunding Bond Ordinance" shall mean the City's Ordinance adopted June 22, 1995, authorizing the issuance, sale and delivery of the Refunding Bonds. "Report" shall mean the verification report prepared by KPMG Peat Marwick LLP, relating to the advance refunding of the Refunded Bonds, a copy of which is attached hereto as Exhibit A, and any subsequent report required by Section 5.02. Section 1.02. Interpretations. The titles and headings of the articles and sections of this Escrow Agreement have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict the terms hereof. This Escrow Agreement and all of the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the intended purpose of providing for the refunding of the Refunded Bonds in accordance with applicable law. ARTICLE II DEPOSIT OF FUNDS AND ESCROWED SECURITIES Section 2.01. Deposits with Escrow Agent; Acquisition of Escrowed Securities. On the Escrow Funding Date the City will deposit, or cause to be deposited, with the Escrow Agent the following: (a) Escrowed Securities in the principal amount of $ ; and (b) A beginning cash balance of $ ARTICLE III CREATION AND OPERATION OF ESCROW FUND Section 3.01. Escrow Fund. On the Escrow Funding Date the Escrow Agent will create on its books a special fund and irrevocable escrow to be known as the City of Baytown, Texas, General Obligation and Refunding Bonds, Series 1995, Escrow Fund into which will be deposited the cash and Escrowed Securities described in Section 2.01. The Escrowed Securities, all proceeds therefrom, and all cash balances from time to time on deposit in the Escrow Fund shall be the property of the Escrow Fund and shall be applied only in strict conformity with the terms and conditions hereof. The Escrowed Securities, all proceeds therefrom and all -3- cash balances from time to time on deposit in the Escrow Fund are hereby irrevocably pledged to the payment of the principal of and interest on the Refunded Bonds, which payment shall be made by timely transfers to the Paying Agent for the Refunded Bonds of such amounts at such times as are provided in Section 3.02 hereof. When the final transfers have been made to the Paying Agent for the Refunded Bonds for the payment of such principal of and interest on the Refunded Bonds, any balance then remaining in the Escrow Fund shall be transferred to the City, and the Escrow Agent shall thereupon be discharged from any further duties hereunder. Section 3.02. Payment of Principal of and Interest on Refunded Bonds. (a) The Escrow Agent is hereby irrevocably instructed to transfer to the Paying Agent for the Refunded Bonds from the cash balance from time to time on deposit in the Escrow Fund the amounts required to pay the principal of and interest on the Refunded Bonds as the same become due and payable, as shown in the Report. (b) Money transferred to and held by the Paying Agent for the Refunded Bonds in accordance with the provisions hereof shall be held by the Paying Agent for the Refunded Bonds as a separate fund for the account of the respective Owners of the Refunded Bonds in connection with which such money is held; provided, however, that money so held remaining unclaimed by the Owners of such Refunded Bonds for three (3) years after the dates on which payment thereon was due, shall be reported and disposed of by the Paying Agent for the Refunded Bonds in accordance with the provisions of Title 6 of the Texas Property Code. Section 3.03. Sufficiency of Escrow Fund. The City represents (based upon the Report) that the successive receipts of the principal of and interest on the Escrowed Securities will assure that the cash balance on deposit from time to time in the Escrow Fund will be at all times sufficient to provide money for transfer to the Paying Agent for the Refunded Bonds at the times and in the amounts required to pay the principal of and interest on the Refunded Bonds as such principal and interest becomes due and payable. If any deficiency results from any error in the calculations set forth in the Report, the City shall transfer tc the Escrow Agent for deposit to the Escrow Fund to be held pursuant to this Escrow Agreement an additional amount of cash or securities sufficient to provide for such deficiency. Section 3.04. Escrow Fund. The Escrow Agent at all times shall hold the Escrow Fund, the, Escrowed Securities and all other assets of the Escrow Fund wholly segregated from all other funds and securities on deposit with the Escrow Agent; it shall never allow the Escrowed Securities or any other assets of the Escrow Fund to be commingled with any other funds or securities of the Escrow Agent; and it shall hold and dispose of the assets of the -4- WR Escrow Fund only as set forth herein. The Escrowed Securities and other assets of the Escrow Fund always shall be maintained by the Escrow Agent for the benefit of the Owners of the Refunded Bonds; and a special account evidencing such fact shall be maintained at all times on the books of the Escrow Agent. The Owners of the Refunded Bonds shall be entitled to the same preferred claim and first lien upon the Escrowed Securities, the proceeds thereof and all other assets of the Escrow Fund as are enjoyed by other beneficiaries of similar accounts. The amounts received by the Escrow Agent under this Escrow Agreement shall not be considered as a banking deposit by the City, and the Escrow Agent shall have no right or title with respect thereto except as escrow agent under the terms hereof. The amounts received by the Escrow Agent hereunder shall not be subject to warrants, drafts or checks drawn by the City. Section 3.05. Security for Cash Balances. Cash balances from time to time on deposit in the Escrow Fund, to the extent not insured by the Federal Deposit Insurance Corporation or its successor, shall be continuously secured by a pledge of direct obligations of, or obligations unconditionally guaranteed by, the United States of America, having a market value at least equal to such cash balances. ARTICLE IV REDEMPTION OF CERTAIN REFUNDED BONDS PRIOR TO MATURITY Section 4.01. Optional Redemption. The City has irrevocably called the following bonds of the City for redemption prior to maturity on the dates set out below, at a price of par plus accrued interest to the date fixed for redemption, and has authorized and directed notice of such redemption to be given in accordance with the proceedings authorizing the issuance of such bonds: Bonds to be Redeemed General Obligation Refunding Bonds, Series 1985 Maturities 1997 through 1999 Public Improvement Bonds, Series 1986 Maturities 1998 and 1999 Public Improvement Bonds, Series 1988 Maturities 2000 through 2003 -5- Redemption Date August 1, 1995 February 1, 1996 February 1, 1998 Bonds to be Redeemed Redemption Date Harris County MUD #3 Waterworks & Sewer System Combination Unlimited Tax & Revenue Bonds, Series 1984 Maturities 1998 through 2007 April 1, 1997 ARTICLE V LIMITATION ON INVESTMENTS Section 5.01. General. Except as herein otherwise expressly provided, the Escrow Agent shall not have any power or duty to invest any money held hereunder; or to make substitutions of the Escrowed Securities; or to sell, transfer or otherwise dispose of the Escrowed Securities. Section 5.02. Substitution of Securities. At the written request of the City, and upon compliance with the conditions hereinafter stated, the Escrow Agent shall sell, transfer, otherwise dispose of or request the redemption of all or any portion of the Escrowed Securities and apply the proceeds therefrom to purchase Refunded Bonds or direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America and which do not permit the redemption thereof at the option of the obligor. Any such transaction may be effected by the Escrow Agent only if (1) the Escrow Agent shall have received a written opinion from a recognized firm of certified public accountants that such transaction will not cause the amount of money and securities in the Escrow Fund to be reduced below an amount which will be sufficient, when added to the interest to accrue thereon, to provide for the payment of principal of and interest on the remaining Refunded Bonds as they become due, and (2) the Escrow Agent shall have received the unqualified written legal opinion of nationally recognized bond counsel or tax counsel acceptable to the City and the Escrow Agent to the effect that (a) such transaction will not cause any of the Refunding Bonds to be an "arbitrage bond" within the meaning of the Code, and (b) that such transaction complies with the Constitution and laws of the State of Texas and with all relevant documents relating to the issuance of the Refunded Bonds and the Refunding Bonds. ARTICLE VI RECORDS AND REPORTS Section 6.01. Records. The Escrow Agent shall keep books of record and account in which complete and correct entries shall be made of all transactions relating to the receipt, disbursement, -6- allocation and application of the money and Escrowed Securities deposited to the Escrow Fund and all proceeds thereof, and such books shall be available for inspection at reasonable hours and under reasonable conditions by the City and the Owners of the Refunded Bonds. Section 6.02. Reports. For the period beginning on the Escrow Funding Date and ending on August 31, 1995, and for each twelve (12) month period thereafter while this Agreement remains in effect, the Escrow Agent shall prepare and send to the City, at the City's request, within thirty (30) days following the end of such period a written report summarizing all transactions relating to the Escrow Fund during such period, including, without limitation, credits to the Escrow Fund as a result of interest payments on or maturities of the Escrowed Securities and transfers from the Escrow Fund to the Paying Agent for the Refunded Bonds or otherwise, together with a detailed statement of all Escrowed Securities and the cash balance on deposit in the Escrow Fund as of the end of such period. Section 6.03. Notification. The Escrow Agent shall notify the City immediately if at any time during the term of this agreement it determines that the cash and Escrowed Securities in the Escrow Fund is not sufficient to provide for the transfer to the Paying Agent for the Refunded Bonds for timely payment of all interest on and principal of the Refunded Bonds. ARTICLE VII CONCERNING THE ESCROW AGENT Section 7.01. Representations of Escrow Agent. Texas Commerce Bank National Association hereby represents that it is a Paying Agent for the Refunded Bonds. The Escrow Agent has all necessary power and authority to enter into this Escrow Agreement and undertake the obligations and responsibilities imposed upon it herein, and that it will carry out all of its obligations hereunder. Section 7.02. Limitation on Liability. The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in good faith in the 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 except for its own neglect or default, nor for any loss unless the same shall have been through its negligence or want of good faith. The liability of the Escrow Agent to transfer funds to the Paying Agent for the Refunded Bonds for the payments of the -7- principal of and interest on the Refunded Bonds shall be limited to the proceeds of the Escrowed Securities and the cash balances from time to time on deposit in the Escrow Fund. Notwithstanding any provision contained herein to the contrary, the Escrow Agent shall have no liability whatsoever for the insufficiency of funds from time to time in the Escrow Fund or any failure of the obligor of the Escrowed Securities to make timely payment thereon, except for its obligation to notify the City promptly of any such occurrence. The recitals herein and in the proceedings authorizing the Refunding Bonds shall be taken as the statements of the City and shall not be considered as made by, or imposing any obligation or liability upon, the Escrow Agent. In its capacity as Escrow Agent, it is agreed that the Escrow Agent need look only to the terms and provisions of this Escrow Agreement. The Escrow Agent makes no representation as to the accuracy of the Report, the value, condition or sufficiency of the Escrow Fund, or any part thereof, or as to the title of the City thereto, or as to the security afforded thereby or hereby, and the Escrow Agent shall incur no liability or responsibility with respect to any of such matters. In the absence of bad faith, the Escrow Agent may rely '. conclusively upon the truth, completeness and accuracy of the statements, certificates, opinions, resolutions and other documents conforming to the requirements of this Escrow Agreement, and shall not be obligated to make any independent investigation with respect thereto. It is the intention of the City and the Escrow Agent that the Escrow Agent shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. Unless it is specifically provided otherwise herein, the Escrow Agent has no duty to determine or inquire into the happening or occurrence of any event or contingency or the performance or failure of performance of the City with respect to arrangements or contracts with others, with the Escrow Agent's sole duty hereunder being to safeguard the Escrow Fund and to dispose of and deliver the same in accordance with this Escrow Agreement. If, however, the Escrow Agent is called upon by the terms of this Escrow Agreement to determine the occurrence of any event or contingency, the Escrow Agent shall be obligated; in making such determination, only to exercise reasonable care and diligence, and in event of error in making such determination the Escrow Agent shall be liable only for its own misconduct or its negligence. In determining the occurrence of any such event or contingency the Escrow Agent may request from the City or any other person such reasonable -8- Wo additional evidence as the Escrow Agent in its discretion may deem necessary to determine any fact relating to the occurrence of such event or contingency, and in this connection may make inquiries of, and consult with the City, among others, at any time. The Escrow Agent shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper or document believed by it to be genuine, and to have been signed or presented by the proper party or parties. The Escrow Agent may consult with counsel, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it in good faith and in accordance therewith. To the full extent permitted by law, the City agrees to indemnify, defend and hold the Escrow Agent harmless from and against any and all loss, damage, tax liability and expense that may be incurred by the Escrow Agent arising out of or in connection with its acceptance or appointment as Escrow Agent hereunder, including attorneys fees and expenses of defending itself against any claim or liability in connection with its performance hereunder, except that the Escrow Agent shall not be indemnified for any loss, damage, tax liability, or expense resulting from its own negligence. Section 7.03. Compensation. On the Escrow Funding Date, the City will pay the Escrow Agent, as a fee for performing the services hereunder and for all expenses incurred or to be incurred by the Escrow Agent in the administration of this Escrow Agreement the sum of $ , which does not include fees for the Refunding Bonds. Texas Commerce Bank National Association will continue to act as Paying Agent for the life of the Refunded Bonds under its existing fee schedule, with the sole remedy for nonpayment being an action for amounts owing under the Paying Agency Agreement. The Escrow Agent's fee does not include the cost of publication, printing costs, or reasonable out -of- pocket expenses of the Escrow Agent. If the Escrow Agent is requested to perform any extraordinary services hereunder, the City hereby agrees to pay reasonable fees to the Escrow Agent for such extraordinary services and to reimburse the Escrow Agent for all expenses incurred by the Escrow Agent in performing such extraordinary services. It is expressly provided that the Escrow Agent shall look only to the City for the payment of such additional fees and reimbursement of such additional expenses. The Escrow Agent hereby agrees that in no event shall it ever assert any claim or lien against the Escrow Fund for any fees for its services, whether regular, additional or extraordinary, as Escrow Agent, or in any other capacity, or for reimbursement for any of its expenses. Section 7.04. Successor Escrow Agents. This agreement may be terminated by the City or the Escrow Agent on 60 days written -9- notice, but no such termination shall be effective until a successor Escrow Agent has been appointed and has accepted such appointment. Any successor Escrow Agent appointed by the City shall succeed, without further act, to all the rights, immunities, powers and trusts of the predecessor Escrow Agent hereunder. Upon the request of any such successor Escrow Agent, the City shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Escrow Agent all such immunities, rights, powers and duties. The Escrow Agent shall pay over to its successor Escrow Agent a proportional part of the Escrow Agent's fee hereunder equal to the portion of such fee attributable to duties to be performed after the date of succession. ARTICLE VIII MISCELLANEOUS Section 8.01. Notices. Any notice, authorization, request, or demand required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when mailed by registered or certified mail, postage prepaid, addressed as follows: To the Escrow Accent: Texas Commerce Bank National Association P. O. Box 4717 Houston, TX 77210 Attention: Corporate Trust Department, Tax Exempt and Agency Division Refunding Escrow To the City: City of Baytown P. O. Box 424 Baytown, TX 77522 -0424 Attention: Mayor 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. Either party hereto may change the address to which notices are to be delivered by giving to the other party not less than ten days prior notice thereof. Section 8.02. Termination of Escrow Agent's Obligations. Upon the taking by the Escrow Agent of all the actions as described herein, the Escrow Agent shall have no further obligations or responsibilities hereunder to the City, the Owners of the Refunded Bonds or to any other person or persons in connection with this Escrow Agreement. -10- we Section 8.03. Binding Agreement. This Escrow Agreement shall be binding upon the City and the Escrow Agent and their respective successors and legal representatives, and shall inure solely to the benefit of the Owners of the Refunded Bonds, the City, the Escrow Agent and their respective successors and legal representatives. Section 8.04. Severability. If 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 provision of this Escrow Agreement, but this Escrow Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Section 8.05. Governing Law. This Escrow Agreement shall be governed exclusively by the provisions hereof and by the applicable laws of the State of Texas. Section 8.06. Time of Essence. Time shall be of the essence in the performance of obligations from time to time imposed upon the Escrow Agent by this Escrow Agreement. Executed as of June 22, 1995, but effective as set forth herein. -11- ATTEST: City Clerk (SEAL) ATTEST: Title (SEAL) -12- CITY OF BAYTOWN, TEXAS By Mayor TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Escrow Agent By Title APPENDIX A Issue Amount Maturities City of Baytown, Texas General Obligation Refunding Bonds, Series 1985 $ 740,000 1997/1999 City of Baytown, Texas Public Improvement Bonds, Series 1986 1,050,000 1998/1999 City of Baytown, Texas Public Improvement Bonds, Series 1988 400,000 2000/2003 Harris County MUD #3 WW & SS Combination Unlimited Tax and Revenue Bonds, Series 1984 4,075,000 1998/2007