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HomeMy WebLinkAboutOrd 1682 - waterworks and sewer system bonds 2001A ~ "1 ORDINANCE NO: 2001-1682 AN ORDINANCE OF THE CITY OF WEST UNIVERSITY PLACE, TEXAS, AUTHORIZING THE ISSUANCE AND SALE OF $3,615,000 WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 2001A; PROVIDING THE DETAILS RELATING THERETO; AND DECLARING AN EMERGENCY BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF WEST UNIVERISTY PLACE, TEXAS: ARTICLE I FINDINGS AND DETERMINATIONS Section 1: Findings and Detenninations. The bonds hereinafter authorized wereduIy and favorably voted at an election held in the City of West University Place, Texas (the tJCityn) on the 7th day of November, 1995~ The City Council hereby finds that $3,615,000 of the revenue bonds authorized at said election should be issued for the purposes shown in the table below: Purpose Amount Authorized Prior Issues This Issue Unissued Waterworks System Sanitary Sewer System $ 5,200,000 12,800,000 $3,150,000 8,220,000 $2,050,000 1,565,000 $ -0- 3,015,000 ARTICLE II DEFINITIONS AND INTERPRET A TrONS Section 2~ 1 : Definitions. In this Ordinance, the following tenns shall have the following meanings, unless the context clearly indicates otherwise: "Act" means Chapter 1502, Texas Government Code, as amended. UAdditional Parity Bonds" mean the additional parity revenue bonds permitted to be issued by the City pursuant to Section 6.1 of this Ordinance. UBondsU mean the City of West University Place, Texas, WateIWorks and Sewer System Revenue Bonds, Series 2001A, authorized by this Ordinance. ffBusiness Day,t means any day which is not a Saturday, Sunday, or a day on which the Registrar is authorized by law or executive order to close.. "City" means the City of West University Place, Texas a home-rule city of the State of Texas, and where appropriate, the City Council thereof and any successor to the City as owner of the System. "Closing Date" means the date of the initial delivery of and payment for the Bonds~ Headen means the Internal Revenue Code of 1986, as amended. "Comptroller" means the Comptroller of Public Accounts of the State ofTexas~ "Gross Revenuesn 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 F,und, the Debt Service Fund, and the Reserve Fund~ "Initial Bond" means the Initial Bond authorized by Section 5(d)~ "Interest Payment Date", when used in connection with any Bond, means February 1,2002, and each August 1 and February 1 thereafter until maturity or earlier redemption~ UMaintenance and Operation Expensesfl 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 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 System), 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~ flMSRB" means the Municipal Securities Rulemaking Board~ "N et Revenues II mean all Gross Revenues remaining after deducting the Maintenance and Operation Expenses. IINRMSIRU means each person whom the SEe or its staffhas determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time.. "Ordinancetl means this bond ordinance and all amendments hereof and supplements hereto.. "Outstanding Bondsl1 means the City's Waterworks and Sewer System Revenue Bonds, Series 1996A, Series 1996B and Series 1998A. "Ownertl, when used with respect to any Bond means 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 mean the Owners at a particular time of the specified percentage or proportion in aggregate -2- < i principal amount of all Bonds then outstanding under this Ordinance, exclusive of Bonds held by the City. nparity Bonds" 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 within the meaning of this Ordinance~ "Record Date" means, for any Interest Payment Date, the fifteenth day of the month next preceding each Interest Payment Date. "RegisterU means 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. "RegistrarU means Bank One, National Association, and its successors in that capacity. UReserve Fund Requirement" means the average armual principal and interest requirements on the Parity Bonds, which may be determined and redetermined each year by the City but in no event less frequently than upon the issuance of each series of Parity Bonds~ UReserve Fund Surety Policy" means an insurance policy or other credit agreement as provided in Section 5.6 of this Ordinance~ URule" means SEe Rule 15c2-12, as amended from time to time. USEe II means the United States Securities and Exchange Commission.. USIDU means the Municipal Advisory Council of Texas, which has been designated by the State of Texas as, and determined by the SEe staff to be, a state information depository within the meaning of the Rule.. tlSpecial Projece' means, 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 Gross Revenues 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. nSystem" means 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 -3- · i Section 2~2: Intel1lretations.. 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. 1bis 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.. ARTICLE III TERMS OF THE BONDS Section 3 ~ 1 : Authorization and Authorized Amount The Bonds shall be issued, pursuant to the Act, in fully registered form in the principal amount of Three Million Six Hundred Fifteen Thousand Dollars ($3,615,000) for the purpose of constructing improvements to the City's waterworks and sanitary sewer system. Section 3.2: Designation, Date, and Interest Payment Dates. The Bonds shall be designated as nCity of West University Place, Texas, WatelWorks and Sewer System Revenue Bonds, Series 2001A,n and shall be dated July 1,2001.. The Bonds shall bear interest at the rates set out in Section 3.3 of this Ordinance from July 1, 2001, or the most recent Interest Payment Date to which interest has been paid or duly provided for, calculated on the basis of a 360 day year of twelve 30 day months, payable on February 1, 2002, and semiannually thereafter on August 1 and February 1 of each year until maturity or earlier redemption. Section 3..3: Initial Bonds; Numbers and Denominations. The Bonds shall be issued in the principal amounts and bearing interest at the rates set forth in the following schedule, and may be transferred and exchanged as set out in this Ordinance~ The Bonds shall mature on February 1 in each of the years and in the amounts set out in such schedule. The Initial Bond shall be numbered I- I and all other Bonds shall be numbered in sequence beginning with R-l. 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~ Principal Interest Year Amount Rate 2003 $ 60,000 6.50% 2004 70,000 6..50% 2005 70,000 6.50% 2006 75,000 6..500/0 2007 75,000 6.500/0 2008 75,000 6~50% -4- . ~ 2009 2010 2011 2012 2013 2014 2015 2016 2.017 2018 2019 2020 2021 2022 80,000 85,000 100,000 100,000 100,000 100,000 110,000 115,000 275,000 300,000 350,000 400,000 400,000 675,000 6~50% 6.50% 6.50% 4~60% 4~ 700/0 4.80% 4.80% 4.80% 4.85% 5.00% 5~OO% 5.00% 5.00% 5.00% Section 3.4: Execution of Bonds; Seal. (a) The Bonds shall be signed by the Mayor and countersigned by the City Secretary, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds. (b) 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. (c) Except as provided below, no Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Registrar's Authentication Certificate substantially in the form provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Registrar. In lieu of the executed Registrar's Authentication Certificate described above, the Initial Bond delivered at the Closing Date shall have attached hereto the Comptroller's Registration Certificate substantially in the form provided herein, manually executed by the Comptroller, or by his duly authorized agent, which certificate shall be evidence that the Initial Bond has been duly approved by the Attorney General and that it is a valid and binding obligation of the City, and has been registered by the Comptroller. (d) On the Closing Date, the Initial Bond, being a single bond representing the entire principal amount of the Bonds) payable in stated installments to the Underwriter or its designee, executed by manual or facsimile signature of the Mayor and City Secretary of the City, approved by the Attorney General, and registered and manually signed by the Comptroller, shall be delivered to the Underwriter or its designee. Upon payment for the Initial Bond, the Registrar shall cancel the Initial Bond and deliver Bonds to the Registrar~ -5- Section 3.5: Payment of Principal and Interest. The Registrar is hereby appointed as the paying agent and registrar for the Bonds~ The principal of the Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America which on the date ofpayment 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 earlier redemption, at the principal payment office of the Registrar. The interest on each Bond shall be payable on each Interest Payment Date, by check mailed by the Registrar on or before the Interest Payment Date to the Owner of record as of the Record Date, to the address of such Owner as shown on the Register. If the date for payment of the principal of or interest on any Bond is not a Business Day, then the date for such payment shall be the next succeeding Business Day with the same force and effect as if made on the date payment was originally due. Section 3.6: Successor ReJtistrars~ 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 United States or any state, authorized under such laws to exercise trust powers, and subject to supervision or examination by federal or state authority, to serve as and perform the duties and services of Registrar for the Bonds. The City reserves the right to change the Registrar on not less than 60 days written notice to the Registrar, so long as any such notice is effective not less than 60 days prior to the next succeeding principal or interest payment date on the Bonds~ Promptly upon the appointment of any successor Registrar, the previous Registrar shall deliver the Register or copies thereof to the new Registrar, and the new Registrar shall notify each Owner, by United States mail, first class postage prepaid, of such change and of the address of the new Registrar.. Each Registrar hereunder, by acting in that capacity, shall be deemed to have agreed to the provisions of this Section~ Section 3.7: 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 behalfofthe City~ Such Special Record Date shall be fifteen (15) days prior to the date fixed for payment of such past due interest, and notice of the date of payment and the Special Record Date shall be sent by United States mail, first class, postage prepaid, not later than five (5) days prior to the Special Record Date, to each affected Owner of record as of the close of business on the day prior to the mailing of such notice~ Section 3.8: 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 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. -6- Amounts held by the Registrar which represent principal of and interest on the Bonds remaining unclaimed by the Owner after the expiration of three years from the date such amounts have become due and payable shall be reported and disposed of by the Registrar in accordance with the applicable provisions of Texas law including, to the extent applicable, Title 6 of the Texas Property Code, as amended. Section 3..9: Registration, Transfer, and Exchange.. So long as any Bonds remain outstanding, the Registrar shall keep the Register at its principal payment office and, if such principal payment office is not in the State of Texas, the Registrar shall maintain a copy of the Register within the State of Texas. 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 payment 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 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 at the principal payment office of the Registrar, for a Bond or Bonds of like maturi:tY 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.. Each Bond delivered in accordance with this Section 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 3.10: Mutilated, Lost, or Stolen Bonds.. Upon the presentation and surrender to the Registrar of a mutilated Bond, the Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate, and principal amount, bearing a number not contemporaneously outstanding.. If any Bond is lost, apparently destroyed, or wrongfully taken, the City, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall authorize and the Registrar shall authenticate and deliver a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. -7- 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 hannless; (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 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 3.12: Cancellation ofBonds~ All Bonds paid in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance herewith, shall be cancelled and destroyed upon the making of proper records regarding such payment.. The Registrar shall furnish the City with appropriate certificates of destruction of such Bonds~ - Section 3.13: Optional Redemption~ The Bonds are subject to optional redemption as set forth in.the Form of Bonds in this Ordinance~ Principal amounts may be redeemed only in integral multiples of$5,OOO. 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 -8- Registrar, in accordance with Section 3.10 hereof: shall authenticate and deliver in exchange therefor a Bond or Bonds of like m.aturity 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 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. Section 3.14: Forms. The form of the Bonds, including the form of the Registrarfs Authentication Certificate, the form of Assignment, 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, including any legend regarding bond insurance if such insurance is obtained by the Underwriter: -9- (a) Form ofBdnds~ UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF HARRIS REGISTERED NUMBER REGISTERED DENOMINA TION $ CITY OF WEST UNIVERSITY PLACE, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BOND SERIES 2001A INTEREST RATE: MATURITY DATE: February 1,20_ ISSUE DATE: July 1, 2001 CUSIP: REGISTERED OWNER: PRINCIP AL AMOUNT: DOLLARS The City of West University, Texas, a municipal corporation duly incorporated under the laws of the State of Texas (herein the tlCityU) 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 payment office of Bank One, National Association (the ffRegistrar), 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, 2001, 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, 2002, mailed to the registered owner as shown on the books ofregistration kept by the Registrar as of the fifteenth day of the month next preceding each interest payment date. THIS BOND IS ONE OF A DULY AUTHORIZED SERIES OF BONDS aggregating $3,615,000, issued for the pmpose of improving the CityJs waterworks and sanitary sewer system, under and in strict conformity with the Constitution and laws of the State of Texas, particularly Chapter 1502, Texas Government Code, as amended, and pursuant to an ordinance adopted by the City Council (the nOrdinanceU), which Ordinance is of record in the City1S official minutes. -10- THE CITY RESERVES THE RIGHT to redeem the Bonds scheduled to mature on or after February 1, 2012, prior to their scheduled maturities, in whole or from time to time in part, in integral multiples of$5,000, on February 1,2011, or any date thereafter at a price of 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~ 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 thereofhave 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 othenvise 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 payment 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 payment office of the Registrar, for bonds in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the Ordinance~ THIS BOND AND THE SERIES OF WHICH IT IS A PART are special obligations of the City that, along with the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 1996A, Series 1996B and Series 1998A (the lTOutstandingBondsU), are payable from and are equally and ratably secured by a first lien on the revenues of the City's watelWorks and sewer system remaining after deduction of the operation and maintenance expenses of that system (the UNet RevenuesU), 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 Debt Service Fund and the Reserve Fund maintained for the payment of all such bonds, all as more fully described and provided for in the Ordinance. This Bond and the series of which it is a part, together with the interest thereon, are payable solely from such Net Revenues and do not constitute an indebtedness or general obligation of the City. The holder of this obligation is not entitled to demand payment of this obligation out of any money raised by taxation~ 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 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, -11- 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. IN WITNESS WHEREOF, this Bond has been signed with the manual or facsimile signature of the Mayor and countersigned with the manual or facsimile signature of the City Secretary, and the official seal of the City has been duly impressed, or placed in facsimile, on this Bond. (AUTHENTICA TION CERTIFICATE) (SEAL) CITY OF WEST UNIVERSITY PLACE, TEXAS Mayor City Secretary (b ) F arm of Re~istration 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 ofTexas~ WITNESS MY SIGNATURE AND SEAL this (SEAL) (c) 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. . Bank One, National Association By Authorized Signature Date of Authentication -12- (d) Form of Assignment. ASSIGNMENT For value received, the undersigned hereby sells, assigns, and transfers unto (Please print or type name, address, and zip code of Transferee) (Please insert Social Security or Taxpayer Identification Number of Transferee) the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints - attorney to transfer said Bond on the books kept for registration thereof, with full power of substitution in the premises~ DATED: Signature Guaranteed: Registered Owner NOTICE: The signature above must correspond to the name of the registered owner as shown on the face of this Bond in every particular, without any alteration, enlargement or change whatsoever. NOTICE: Signature must be guaranteed by a member firm of the New Yark Stock Exchange or a commercial bank or trust company. (e) The Initial Bond shall be in the form set forth in paragraphs (a), (b) and (d) of this Section, except for the following alterations: (i) immediately under the name of the Bond, the headings "INTEREST RATE" and "MATURITY DATEn shall both be completed with the words "As Shown Below" and the word nCUSIP" deleted; (ii) in the first paragraph of the Bond, the words "on the maturity date specified abovett and lJat the rate shown abovell shall be deleted and the following shall be inserted at the end of the first sentence u~.~, with such principal to be paid in installments on February 1 in each of the years and in the principal amounts identified in the following schedule and with such installments bearing interest at the per annwn rates set forth in the following schedule: [Information to be inserted from schedule in Section 3.3] -13- (iii) the Initial Bond shall be numbered I-I. Section 3.15: Legal Opinion; Cusip Numbers; Bond Insurance~ The approving opinion of Vinson & Elkins L~L.P1t, 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. If bond insurance is obtained by the Underwriter, the Bonds may bear an appropriate legend as provided by the insurer. ARTICLE IV SECURITY AND SOURCE OF PAYMENT FOR ALL PARITY BONDS Section 4.1 : Pled~e 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 established and maintained for Parity Bonds, as provided in this Ordinance, 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 afpaying, securing and insuring the 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 Debt Service Fund and Reserve Fund as hereinafter provided, and the Parity Bonds shall be in a]} 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 4.2: 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 fully sufficient to produce Net Revenues in each fiscal year at least equal to 110% of the principal and interest requirements scheduled to occur in such fiscal year on all Parity Bonds then outstanding plus an amount equal to the sum of all deposits required to be made to the Reserve Fund in such fiscal year; but in no event shall Net Revenues ever be less than the amount required to maintain the Debt Service 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.. The City will not grant or permit any free service from the System except for public buildings and institutions operated by the City. Section 4.3: Special Funds. The following special Funds created pursuant to the ordinance authorizing the Outstanding Bonds are hereby confirmed, and such Funds shall be maintained and accounted for as hereinafter provided, so long as any Parity Bonds remain outstanding: -14- (a) Waterworks and Sewer System Revenue Fund (the ttRevenue Fund"); (b) Waterworks and Sewer System Revenue Bonds Debt Service Fund (the "Debt Service Fund"); and (c) Waterworks and Sewer System Revenue Bonds Reserve Fund (the "Reserve FundTt)~ The Revenue Fund shall be maintained as a separate account on the books of the City~ The Debt Service 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 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 in this Ordinance so long as any Parity Bonds remain outstanding~ Section 4..4: Flow of Funds. All Gross Revenues of the System (except for interest and earnings on investments in the Reserve Fund and the Debt Service Fund) shall be deposited as collected into the Revenue Fund~ Money from time to time on deposit in the Revenue Fund shall be applied as follows in the following order of priority: (a) First, to pay Maintenance and Operation Expenses.. (b) Second, to make all deposits into the Debt Service Fund required by this Ordinance, the ordinance 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 Ordinance authorizing the issuance of the Outstanding Bonds, and any ordinance authorizing the issuance of Additional Parity Bonds.. (d) Fourth, for any lawful purpose, including transfers to the General Fund as permitted by law.. Whenever the total combined amounts on deposit to the credit of the Debt Service 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 Debt Service Fund or the Reserve Fund. Section 4.5: Debt Service 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 Debt Service Fund from the Revenue Fund: (i) such amounts, in approximately equal monthly installments, as will be sufficient to accumulate the amount required to pay -15- 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 Debt Service Fund shall be used solely for the purpose of paying principal (at maturity or prior redemption or to purchase Parity Bonds issued as term bonds in . the open market to be credited against mandatory redemption requirements), interest and any redemption premium on the Parity Bonds or reimbursing credit providers for amounts advanced for such purpose, plus all bank charges and other costs and expenses relating to such payment The paying agent shall destroy all paid Parity Bonds and shall provide the City with appropriate certificates of destruction. Section 4.6: 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 Debt Service 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 armual 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 Debt Service Fund for such purpose and it may be used finally to pay and retire the last Parity Bonds to mature or be redeemed.. The following provisions shall apply upon final payment or defeasance of the Outstanding BQnds or the adoption of the necessary amendments to the ordinances authorizing the issuance of the Outstanding Bonds which permit the use of a Reserve Fund Surety Policy to satisfy the Reserve Fund Requirement The City expressly reserves the right at any time to satisfy all or any part of the Reserve Fund Requirement by obtaining for the benefit of the Reserve Fund a Reserve Fund Surety Policy (as -16- defined below)~ In the event the City elects to substitute at any time a Reserve Fund Surety Policy for any funded amounts in the Reserve Fund, it may apply any bond proceeds thereby released, including investment earnings on bond proceeds, to any purposes for which the bonds were issued and any other funds thereby released to any purposes for which such funds may lawfully be used, including the payment of debt service on the Parity Bonds~ A Reserve Fund Surety Policy shall be an insurance policy or other instrument issued pursuant to a credit agreement (as such tenn is defined by Section 1371.001, Government Code) in a principal amount equal to the portion of the Reserve Fund Requirement to be satisfied and issued by a financial institution or insurance company with a rating for its long term unsecured debt or claims paying ability in the highest letter category by two major municipal securities evaluation sources. A Reserve Fund Surety Policy shall be for the pro rata benefit of all Parity Bonds. The premium for any such policy shall be paid from bond proceeds or other funds of the City lawfully available for such purpose. Any Reserve Fund Surety Policy shall be authorized by resolution or ordinance and submitted to the Attorney General for examination and approval~ At any time that there are insufficient funds available in the Debt Service Fund to make any required payment of interest on or principal of the Bonds, or to reimburse the credit providers for amounts advanced for such purpose, there shall be transferred from the Reserve Fund to the Debt Service Fund such amounts as may be necessary for such purpose~ In the event the Reserve Fund contains one or more Reserve Fund Surety Policy or Policies, the City shall not draw on Reserve Fund Surety Policy unless no other cash or investments are otherwise available in the Reserve Fund~ Ifmore than one Reserve Fund Surety Policy is held in the Reserve Fund, the City shall draw on such policies on a proportionate basis~ \Vhenever amounts have been drawn on one or more Reserve Fund Surety Policies, amounts subsequently transferred to the Reserve Fund shall be used to reimburse the provider (or if more than one, to the providers on a proportionate basis) of such Reserve Fund Surety Policies in accordance with the terms thereof, for the amounts advanced, interest thereon and any associated fees. The issuer(s) of such Reserve Fund Surety Policy or Policies shall be secured with respect to such reimbursement obligations by a lien on the Net Revenues, subject and subordinate to the lien securing the Bonds and the required deposits to the Debt Service Fund~ and shall further be secured by a lien on amounts from time to time on deposit in and required to be deposited to the Reserve Fund. The City hereby authorizes the Mayor or the City)s Finance Director to enter into a Reserve Fund Surety Policy for the Parity Bonds, such policy being effective through the final maturity of any Parity Bonds, under the tenns of a credit agreement (as such term is defined by Section 1371.001 , Government Code) in an amount sufficient to satisfy the Reserve Fund Requirement upon issuance of the Bonds, taking into account any existing fund balance or Reserve Fund Surety Policy and to execute any instruments in connection with that transaction. Section 4.7: 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 -17- necessary, the rates and charges for the System shall be increased to make up for any such deficiencies. Section 4..8: Investment of Funds; Transfer of Investment Income~ (a) Money in the Revenue Fund, the Debt Service Fund and the Reserve Fund may, at the option of the City, be invested as permitted by law; 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 Fund from which the investment was made. All such investments shall be promptly sold when necessary to prevent any default in cormection with the Parity Bonds~ (b) All interest and income derived from such deposits and investments shall be credited as received to the Fund from which the investment was made. ARTICLE V ADDITIONAL BONDS Section 5~ 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; and (b) The Debt. Service Fund and the Reserve Fund each contains the amount of money then required to be on deposit therein; and (c) For either the preceding fiscal year or a 12 consecutive calendar month period ending no more than 90 days prior to adoption of the ordinance authorizing such Additional Parity Bonds, Net Revenues were equal to at least 125% 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 Finance Director or by an independent certified public accountant or firm of independent certified public accountants; or -18- (d) If the City cannot meet the test described in ( c) above, but a change in the rates and charges applicable to the System becomes effective at least sixty (60) days prior to the adoption of the ordinance authorizing Additional Parity Bonds and the City's Finance Director certifies that, had such change in rates and charges been effective for the preceding fiscal year or 12 consecutive calendar month period ending no more than 90 days prior to adoption of said ordinance, the Net Revenues for such period would have met the test described in (c) above. Section 5.2: 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 the 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 purpose. Section 5.3: Special Proiect 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 VI COVENANTS AND PROVISIONS RELATING TO ALL PARITY BONDS Section 6..1 : Punctual Payment of Parity Bonds.. The City will punctually payor 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 6.2: Maintenance ofSystem~ 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 marmer 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 6.3: 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 or is deemed by the Cit)1 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 -19- 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 6..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 systems, 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 6~5: 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 finn 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 Owner of Parity Bonds who shall request same~ All expenses incurred in preparing such audits shall be Maintenance and Operation Expenses. Section 6.6: 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 6..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 ofTexas~ 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, pledge or encumbrance is junior and subordinate to the lien and pledge securing payment of the Parity Bonds~ Section 6~8: Bondowners1 Remedies. This Ordinance shall constitute a contract between the City and the Owners of the Parity Bonds from time to time outstanding (including any bond insurers of Parity Bonds) and shall remain in effect until the Parity Bonds and the interest thereon shall be fully paid or discharged or provision therefor shall have been made as provided herein (including payments of any amounts due to bond insurers of Parity Bonds)~ 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 -20- 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 perfozmance of all duties required to be perfonned 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 the Gross Revenues and the Net Revenues in the manner required in this Ordinance~ Section 6..9: Discharge by Deposit. Except as provided in Section 8~2(b )(i), 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 amolUlt 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 securities of any type authorized by law for refunding escrow account, 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 ofredemption as provided in the ordinance authorizing such Parity Bonds. Upon such deposit, such Parity Bonds shall no longer be regarded as outstanding or unpaid. Section 6.10: Amendment of Ordinance Without Consent. The City may, without the consent of or notice to any of the Owners of the Bonds, amend this Ordinance for anyone or more of the following purposes: (a) To cure any ambiguity, defect, omission or inconsistent provision in this Ordinance or in the Bonds; or to comply with any applicable provision of law or regulation of federal agencies; provided, however, that such action shall not adversely affect the interests of the Owners of the Bonds; (b) To change the terms or provisions of this Ordinance to the extent necessary to prevent the interest on the Bonds from being includable within the gross income of the Owners thereof for federal income tax purposes; (c) To grant to or confer upon the Owners of the Bonds any additional rights, remedies, powers or authority that may lawfully be granted to or conferred upon the Owners of the Bonds; (d) To add to the covenants and agreements of the City contained in this Ordinance other covenants and agreements of, or conditions or restrictions upon, the City or to surrender or eliminate any right or power reserved to or conferred upon the City in this Ordinance; -21- (e) To subject to the lien and pledge of this Ordinance additional Net Revenues which may includJe revenues, properties or other collateral; or (f) To cure or correct any technical defect in connection with the terms, conditions or procedures relating to the Bonds; provided, however, that such action shall not adversely affect the interests of the owners of the Bonds~ Section 6.11: Amendments of Ordinance Requiring Consent The City may at any time adopt one or more ordinances amending, modifying, adding to or eliminating any of the provisions of this Ordinance but, if such amendment is not of the character described in Section 6.10 hereof, only with the consent of the Owner or Owners of not less than a majority in aggregate unpaid principal amount of the Bonds then Outstanding and affected by such amendment, modification, addition, or elimination; provided, however, that nothing in this Section shall permit (a) an extension . of the maturity of the principal of or interest on any Bond issued hereunder, or (b) a reduction in the principal amount of any Bond or the rate of interest on any Bond, or ( c) a privilege or priority of any Bond or Bonds over any other Parity Bond or Bonds, or (d) a reduction in the aggregate principal amount of the Bonds required for consent to such amendment, unless the Owner or Owners of 100% in aggregate principal amount of the Bonds shall consent to any of said changes. Section 6..12: Paving Agents May Own Parity Bonds.. The paying agents for the Parity Bonds, in their individual or any other capacity, may become holders or pledgees of the Parity Bonds with the same rights they would have if they were not paying agents. Section 6. I 3: No Recourse Against 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 VII PROVISIONS CONCERNING SALE AND APPLICATION OF PROCEEDS OF BONDS Section 7..1: Sale. The sale and delivery of the Bonds to First Union Securities, Inc" (the nUnderwriterU) at a price of par, plus a cash premium of$-O-, plus accrued interest thereon to date of delivery, is hereby authorized, approved, ratified and confirmed, subject to the approving opinion as to the legality of the Bonds of the Attorney General of the State of Texas, and of Vinson & Elkins L.L.P.., Houston, Texas, bond counseL It is hereby found and declared that the Bonds were sold at public sale and that the bid of the Underwriter was the best bid received by the City. -22- Section 7.2: Federal Income Tax Exclusion: (a) General. The City intends that the interest on the Bonds shall be excludable from gross income for federal income tax purposes pursuant to sections 103 and 141 through 150 of the Internal Revenue Code of 1986) as amended (the "Cadell), and the applicable Income Tax Regulations (the "RegulationsU). 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, for federal income tax purposes~ 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 CUCounsel1s OpinionU) 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 Counselts Opinion to the effect that compliance with some other requirement set forth in this Section will satisfy the applicable requirements of the Code and the Regulations, in which case compliance with such other requirement specified in such CounsePs Opinion shall constitute compliance with the corresponding requirement specified in this Section. (b) No Private Use or Payment and No Private Loan Financing. 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, that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "private activity bondsu within the meaning of section 141 of the Code and the Regulations promulgated 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 the use of property financed, directly or indirectly, with such proceeds, and take such other and further action as may be required so that the Bonds will not be "private activity bonds" within the meaning of section 141 of the Code and the Regulations promulgated thereunder. (c) No Federal Guarantee. The City covenants and agrees that it has not and will not to take any action, and has not knowingly omitted and will not 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 the applicable Regulations thereunder, except as permitted by section 149(b)(3) of the Code and such Regulations. (d) No Hedge Bonds. The City covenants and agrees that it has not and will not to take any action, and has not knowingly omitted and will not knowingly omit to take any action, within its control, that, if taken or omitted, respectively, would cause the Bonds to be nhedge bondsu within the meaning of section 149(g) of the Code and the applicable Regulations thereunder.. (e) No Arbitrage. 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 -23- . ~ ; section 148( a) of the Code and the applicable Regulations promulgated 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 lJarbitrage bonds" within the meaning of section 148(a) of the Code and the applicable Regulations promulgated thereunder. (t) Arbitrage Rebate. lfthe City does not qualify for an exception to the requirements of section 148(f) of the Code relating to the required rebate to the United States, 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 proceedslT of the Bonds (within the meaning ofsection 148(t)(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 issue 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 under 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 govenunent because such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at annts length and had the yield on the issue not been relevant to either party. (g) Information Reporting.. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are issued, an information statement concerning the Bonds, all under and in accordance with section 149(e) of the Code and the applicable Regulations promulgated thereunder. (h) Continuin~ 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 7.3: Qualified Tax-Exempt Obli~ations.. The City hereby designates the Bonds as IIqualified tax-exempt obligations" for purposes of section 265(b) of the Code.. In connection therewith, the City represents (a) that the aggregate amount of tax-exempt obligations issued by the City during calendar year 2001, including the Bonds, which have been designated as IIqualified tax-exempt obligationsu under section 265(b)(3) of the Code does not exceed $10,000,000, and (b) that the reasonably anticipated amount of tax-exempt obligations which will be issued by the City during calendar year 2001, including the Bonds, will not exceed $10,OOO,OOO~ For purposes of this Section, the term Iltax-exempt obligationU does not include Ilprivate activity bonds" within the -24- r l meaning of section 141 of the Code, other than .'qualified 501 (c)(3) bonds" within the meaning of section 145 of the Code~ In,addition, for purposes of this Section, the City includes all governmental units which are aggregated with the City under the Code. ARTI CLE VIII CONTINUING DISCLOSURE Section 8,,1: Continuing Disclosure Undertaking" (a) Armual Reports. The City shall provide annually to each NRMSIR and the SID, within six months after the end of each fiscal year, financial information and operating data with respect to the City of the general type included in the Official Statement under the headings, "OFFICIAL STATEMENT SUMMARY," "CITY REVENUE DEBT," uTHE SYSTEM," uINVESTMENT AUTHORITY AND INVESTMENT -OBJECTIVES OF THE CITY - Current Investments, n and in Appendix "B". The information to be provided shall include the financial statements of the City prepared in accordance with the accounting principles the City may be required to employ from time to time pursuant to State law or regulation and shall be audited, if the City Commissions an audit and the audit is completed within the period during which they must be provided.. If the audit of such financial statements is not complete within such period, then the City shall provide unaudited financial statements for the applicable fiscal year to each NRMSIR and the SID within such six month period, and audited financial statements when and if the audit report on such statements becomes available~ If the City changes its fiscal year, it will notify each NRMSIR and the SID of the change (and of the date of the new fiscal year end) prior to the next date by which the City othenvise would be required to provide financial information and operating data pursuant to this Section.. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and the SIn or filed with the SEC.. (b) Material Event Notices.. The City shall notify the SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: A" Principal and interest payment delinquencies; B. Non-payment related defaults; c. Unscheduled draws on debt service reserves reflecting financial diffi cuI ti es; D~ Unscheduled draws on credit enhancements reflecting financial diffi. cuI ti es; E.. Substitution of credit or liquidity providers, or their failure to perform; F. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; -25- ~ ' G~ H. I. J. Modifications to rights of holders of the Bonds; Bond calls; Defeasances; Release, substitution, or sale of property securing repayment of the Bonds; and Rating changes~ K. The City shall notify the SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with Section 8..1(a) of this Ordinance by the time required by such Section. (c) Limitations, Disclaimers, and Amendments. The City shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the City -remains an Uobligated personl, with respect to the Bonds within the meaning of the Rule, except that the City in any event will give notice of any deposit made in accordance with Texas law that causes Bonds no longer to be outstanding. The provisions of this Section are for the sole benefit of the holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person~ The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other infoffilation that may be relevant or material to a complete presentation of the Cityfs financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC PERFORMANCE. No default by the City in observing or performing its obligations under this Section shall comprise a breach of or default under this Ordinance for purposes of any other provision of this Ordinance~ Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws.. The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances that arise from a change in legal requirements, change in law, or change in -26- * } the identity, nature, status or type of operations oftbe City, if(i) the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the original primary offering in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and (ii) either (a) the holders of a majority in aggregate principal amount of the outstanding Bonds consent to such amendment, or (b) any person unaffiliated with the City (such as nationally recognized bond counsel), determines that the amendment will not materially impair the interests of the holders and beneficial owners of the Bonds~ If any such amendment is made, the City will include in its next annual update an explanation in narrative form of the reasons for the amendment and its impact on the type of operating data or financial information being provided~ Section 8~2: Official Statement.. The City Council ratifies and confirms its prior approval of the form and content of the Official Statement prepared in the initial offering and sale of the -Bonds and hereby authorizes the preparation ofa final Official Statement reflecting the terms of the Underwriter's bid and other relevant infonnation~ The use of such Official Statement in the reoffering of the Bonds by the Underwriter is hereby approved and authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds~ Section 8..3: Further Proceedin,gs.. The Mayor, the City Manager, the City Secretary, and other appropriate officials of the City are hereby authorized and directed to do any and all things necessary and/or convenient to carry out the terms of this Ordinance~ Section 8.4: Severabili~. 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 8.5: Open Meeting~ It is hereby officially found and determined that the meeting at which this Ordinance was adopted was open to the public, and that public notice of the time, place and purpose of said meeting was given, all as required by the Texas Open Meetings Act.. Section 8.6: PayingARentIRegistrar 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. Section 8..7: 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~ -27- Section 8.8: 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 and the Owners of the Bonds, any right, remedy or claim under or by reason of this Ordinance or any covenant, condition or stipulation hereo~ and all covenants, stipulations, pronllses and agreements in this Ordinance shall be for the sole and exclusive benefit of the City, the Registrar and the Owners of the Bonds~ Section 8.9: Repealer.. All orders, resolutions and ordinances, or parts thereof: inconsistent herewith are hereby repealed to the extent of such inconsistency~ Section 8.10: Effective Date. This Ordinance shall take effect upon its passage. Section 8.11: Emergency. The public importance of this measure and the requirements of the law create an emergency and an urgent public necessity requiring that this Ordinance be passed and take effect as an emergency measure, and a state of emergency is hereby declared, and this Ordinance is accordingly passed as an emergency measure and shall take effect and be in force immediately from and after its passage and signature~ -28- PASSED AND J:\PPROVED this 11th day of June, 2001~ ~'~ ~J:~~~~ M~r City of West University Place, Texas ATTEST: ~~ City of West University Place, Texas (SEAL) REVIEWED: J City Attorney City of West University Place, Texas I certify that the above and foregoing ordinance complies with a budget appropriation (Account No. ), and that there is or will be enough unencumbered money in that account to meet the obligation when it is due~ "tDp ~ Finance Director City of West University Place, Texas -29-