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HomeMy WebLinkAboutOrd 1533 - waterworks and sewer revenue bonds, 1996B ORDINANCE NO. 1533 ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF $1,520,000 CITY OF WEST UNIVERSITY PLACE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 1996B BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF WEST UNIVERSITY PLACE: ARTICLE I FINDINGS AND DETERMINATIONS Section l' Findln~"I :md netermln~tl0n"l The bonds hereinafter authorized were duly and favorably voted at an election held in the City of West University Place, Texas (the "City") on the 7th day of November, 1995. The City Council of the City does hereby determine that bonds in the amount of $1,520,000 should be issued as the first installment of the $5,200,000 revenue bonds voted for waterworks improvements at the election mentioned above, leaving the remaining $3,680,000 of such bonds to be issued, sold, and delivered at a later date. ARTICLE II DEFlNITIONSAND INTERPRETATIONS. Section 2.1: Definitions. In this Ordinance, the following terms shall have the following meanings, unless the context clearly indicates otherwise: "Act" shall mean Articles 1111 through 1118, Vernon's Texas Civil Statutes, as amended. "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. "Bonds" shall mean the City, of West University Place, Texas, Waterworks and Sewer System Revenue Bonds, Series 1996B, authorized by this Ordinance. The Bonds and the Series 1996A Bonds, which are being issued concUrrently with the Bonds, are the first two series of Parity Bonds (as defmed herein) issued by the City. \ "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. "City" shall mean the City of West University Place, Texas, and where appropriate, the City Council thereof and any successor to the City as owner of the System. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Comptroller" shall mean the Comptroller of Public Accounts of the State of Texas. "Construction Fund"shall mean the construction fund established by the City pursuant to Section 8.3 of this Ordinance. "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 Debt Service Fund, and the Reserve Fund. "Interest Payment Date", when used in connection with any Bond, shall mean February 1, 1997, and each August 1 and February 1 thereafter until maturity or earlier redemption. "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, 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. "Net Revenues" shall mean all Gross Revenues remaining after deducting the Maintenance and Operation Expenses. "Ordinance"shall mean this bond-ordinance and all amendments hereof and supplements hereto. "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.. "Parity Bonds" shall mean the Bonds, the Series 1996A Bonds, and each series of Additi6hal 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" shall mean, for any Interest Payment Date; the fifteenth day of the month next preceding each Interest Payment Date. "Register" shall mean the books of registration kept by the Registrar in which are maintained the names and addresses of, and the principal amounts of the Bonds registered to, each Owner. . "Registrar" shall mean Bank One, Texas, N.A., Houston, Texas, and its successors in that capacity . "Reserve Fund Requirement" shall mean the average annual principal and interest requirements on the Parity Bonds, which may be ~etermined and redetermined each year by the City but in no event less frequently than upon the issuance of each series of Parity Bonds. -2- ~----- . ...._-~._-- "Series 1996A Bonds" means the $4,970,000 City of West University Place, Texas, Watenvorks and Sewer System Revenue Bonds, Series 1996A, issued concurrently with the Bonds and sold to the Texas Water Development Board. "Special Project" means, to the extent permitted by law, any watenvorks 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. "System" means all properties, facilities, improvements, equipment, interests, and rights constituting the watenvorks 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. Section 2.2: Intefllretations. All terms defmed 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 consid~red 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. 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 One Million Five Hundred Twenty Thousand Dollars ($1,520,000) for the purpose of improving ana extending the City's watenvorks system. Section 3.2: Designation. Date. and Interest Payment Dates. The Bonds shall be designated as "City of West University Place, Texas, Watenvorks and Sewer System Revenue Bonds, Seri~s 1996B," and shall be dated September 15, 1996. The Bonds shall bear interest at the rates set out in Section 3.3 of this Ordinance from the later of September 15, 1996, 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, 1997, and semiannually thereafter on August 1 and February 1 of each year until maturity or earlier redemption. -3- Section 3.3: Initial Bonds: Numbers and Dynomination. 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 Maturitv Rate R- I $ 50,000 1998 7.00% R- 2 50,000 1999 7.00% R- 3 50,000 2000 7.00% R- 4 50,000 2001 7.00% R- 5 50,000 2002 7.00% R- 6 60,000 2003 7.00% R- 7 60,000 2004 7.00% R- 8 70,000 2005 7.00% R- 9 75,000 2006 6.50% R-I0 75,000 2007 5.00% R-11 80,000 2008 5.20% R-12 80,000 2009 5.25% R-13 90,000 2010 5.35% R-14 90,000 2011 5.45% R-15 100,000 2012 5.50% R-16 110,000 2013 5.50% R-17 125,000 2014 5.50% R-18 125,000 2015 5.50% R-19 130,000 2016 5.50% Section 3.4: Execution of Bonds: Seal. The Bonds shall be signed on behalf of the City by the Mayor and countersigned by the City Secretary, by their manual, lithographed, or facsimile signatures, and the official seal of the City shall be impressed or'placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and. in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds. If any officer of the City whose manual or facsimile signature shall appear on the Bonds shall cease to be such officer before the authentication of such Bonds or before the delivery of such Bonds, such manual or facsimile signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in such office. Section 3.5.: Av.proval By Attorney General: Re~istration 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 -4- Comptroller substantially in the form provided in Article 4 of this Ordinance shall be affixed or attached to the Bonds to be initially issued. Section 1'" A nthp.ntl~Rtl{)n Except for the Bonds to be initially issued, which need not be authenticated, only such Bonds as shall bear thereon a certificate of authentication substantially in the form provided in Section 4.1 of this Ordinance, manually executed by an authorized representative of the Registrar, shall be entitled to the benefits of this Ordinance or shall be valid or obligatory for any purpose. Such duly executed certificate of authentication shall be conclusive evidence that the Bond so authenticated was delivered by the Registrar hereunder. Section 3.7 Payment ofPrinc1pal ann Tntp.Tp.d 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 charges, in any coin or currency of the United States of America which, on the date of payment, is legal tender for the payment of debts due the United States of America, upon their presentation and surrender as they respectively become due and payable at the principal corporate trust office of the Registrar. The interest on each Bond shall be payable 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. 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 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 Re~isttars. 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 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 deliverthe Register or a copy thereofto the ne;w Registrar, and the new Registrar shall notify each Owner, by . United States mail, first class post:age 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. -5- -l!f Section 3.10. Ownership' I Tnc1aimed 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 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 Exchan2"e. So long as any Bonds remain outstanding, the Registrar shall keep the Register at its principal corporate trust office. 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, 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 sh811 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 transferor 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 -6- FI .------------- records regarding such payment or redemption. The Registrar shall furnish the City with appropriate certificates of destruction of such Bonds. 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 execute 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. 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: Redemotion. The City reserves the right to redeem Bonds prior to maturity, in whole or from time to time in part, in inverse order of maturity, on February 1, 2006, or any date -7- thereafter at a price of par, plus accrued interest on the Bonds called for redemption to the date fixed for redemption. If less than all of the Bonds are redeemed, the particular Bonds or portions thereof to be redeemed shall be selected by the City. Principal amounts may be redeemed 'only in integral multiples of $5,000. If a Bond subject to redemption is in a denomination larger than $5,000, a portion of such Bond may be redeemed, but only in integral multiples of $5,000. Upon surrender of any Bond for redemption in part, the Registrar, in accordance with Section 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 shallterminate on the date fixed for redemption. 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, and the form of the Comptroller's Registration Certificate for the bonds to be initially issued, shall be 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 obtainable by the purchaser: -8- r- r~--.~---~i~l--r~ --rill -,If I T FORM OF BOND UNITED STATES OF AMERICA STATE OF TEXAS COUNTY OF HARRIS REGISTERED NUMBER R- REGISTERED DENOMINATION $ CITY OF WEST UNIVERSITY PLACE, TEXAS. WATERWORKS AND SEWER SYSTEM REVENUE BOND SERIES 1996B INTEREST RATE: MATURITY DATE: ISSUE DATE: September 15, 1996 CUSIP: REGISTERED OWNER: PRINCIP AL AMOUNT: DOLLARS The City of West University Place, 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 Bank One, 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 latef of September 15, 1996, or the most reeent 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, 1997, mailed to the registered owner as shown on the books of registration kept by the Registrar as of the fifteenth day of the month next preceding each mterest payment date. . REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE HEREOF, WHICH PROVISIONS SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT TIllS PLACE. -9- ~:=:-=-~==_~~~~~:___----'-l.::J -~-- 1lIT'':l _ _. . ~illT- - -- '[ j '7} 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 Secretary. (AUTHENTICATION CERTIFICATE) (SEAL) CITY OF WEST UNIVERSITY PLACE, TEXAS xxxxxxxxx Mayor COUNTERSIGNED: xxxxxxxxx City Secretary (Back Panel of Bond) THIS BOND IS ONE OFA DOL Y AUTHORIZED SERIES OF BONDS aggregating $1,520,000 (the "Bonds"), issued for the purpose of improving and extending the City's waterworks system, under and in strict conformity with the Constitution and laws of the State of Texas, particularly Articles 1111 through 1118, Vernon's Texas Civil Statutes, as amended, by authority of an election held for and within the City on November 7, 1995, and pursuant to an ordinance adopted by the City Council on August 26, 1996 (the "Ordinance"), which Ordinance is of record in the City's official minutes. Concurrently with the issuance of the Bonds, the City has also issued $4,970,000 Waterworks and Sewer System Revenue Bonds, Series 1996A for the purpose of improving and extending the City's sanitary sewer system (the "Series 1996A Bonds"). THE CITY RESERVES THE RIGHT to redeem Bonds, in whole or from time to time in part, in inverse order of maturity, in integral multiples of $5,000, on February 1,2006, 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. 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 fqr 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. -10- r=r==-''''''' . -.. I -1 r~~~~~"'1--.--------cTT-~-- -----------~----------,- -. r"-.[f'-------------- THE BONDS ARE EXCHANGEABLE at the principal corporate trust office of the Registrar for bonds in the principal amount of $5,000 or any integral multiple thereof, subject to the terms and conditions of the. Ordinance. THIS BOND AND THE SERIES OF WInCH IT IS A PART are special obligations of the City, and together with the Series 1996A Bonds, are payable from and 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 defmed and provided in the Ordinance, which Net Revenues are required to be set aside and pledged to the payment of the Bonds, the Series 1996A 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 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 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 the Bonds and the Series 1996A Bonds. IT IS HEREBY DECLARED AND REPRESENTED that this Bond has been duly and validly issued and delivered; that all ac~s, 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 ofthe 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 yyyyyyyyyy (SEAL) Comptroller of Public Accounts of the State of Texas -11- 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, TexaS, N.A. By Authorized Signature Date of Authentication FORM OE A~~TGNMF.NT ASSIGNMENT F or 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 9r'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 inthe premises. DATED: Signature Guaranteed: Registered Owner NOTICE: The signature above must correspon4 to the name of the registered owner as shown on the face of this Bond in every particular, 'without any alteration, enlargement or change whatsoever. NOTICE: Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. Section 4.2: Le2:al Ooinion: Cusio 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. If bond insurance is obtained by the purchaser, the Bonds may bear an appropriate legend as prvided by the insurer. -12- ~~~~,o"~~~~~=.,=~___~ .:-:JlTC1 1 , JiU-- - I- .c, , ARTICLE V SECURITY AND SOURCE OF PAYMENTFORALLPMUTYBONDS Section 5.1: Pled2e 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 for Parity Bonds 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 of paying, 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 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 Chames. 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 ofthe 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 5.3: SDecial Funds. The following special Funds are hereby created and established, 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 Debt Service Fund (the "Debt Service 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 Debt Service Fund and the Reserve Fund shall be maintained at an official depository bank of the City -13- ----~.ri~~--'--~'-'~---'"-O.i'"'l----r"-"--,-' "'mn :Tur .'.1 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 in this Ordinance so long as any Parity Bonds remain outstanding. Section 5.4: Flmy 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: (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 Series 1996A 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 Series 1996A Bonds, and any ordinance authorizing the issuance of Additional Parity Bonds. (d) Fourth. to pay any amounts due to any bond insurer of Parity Bonds not paid pursuant to s~psections (b )or (c) above. (e) Fifth, for any lawful purpose, including transfers to the General Fund as permitted by law. Whenever the total 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 5.5: 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 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 -14- Parity Bonds payable as a result of the exercise or operation of any optional or mandatory redemption provision contained in this Ordinance or 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, plus all bank charges and other costs and expenses relating to such payment. The paying agent shall totally destroy all paid Parity Bonds and shall provide the City with appropriate certificates of destruction. Section 5.6: Reserve Fun& 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, in approximately equal monthly installments, amounts sufficient to accumulate the Reserve Fund Requirement within sixty (60) months. Each increase in the Reserve Fund Requirement . resulting from the issuance of Additional Parity Bonds shall be accumulated within sixty (60) months of the issuance of such bonds by making transfers from the Revenue Fund into the Reserve Fund in approximately equal monthly installments of amounts sufficient for such purpose. After the Reserve Fund Requirement has accumulated in the Reserve FUnd and so long thereafter as such Fund contains the Reserve Fund Requirem~nt, 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 the Reserve Fund Requirement, monthly deposits into such Fund shall be resumed and continued in amounts at least equal to one-twelfth (l/12th) of the deficiency in the ReserveFund Requirement until the Reserve Fund again equals the Reserve Fund Requirement. 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 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. Section 5.8: 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 -15- L------...-~---.E=--.~-C_C=_==__=_._~~~ ~'.":::~lI::L::Jl..__._ --~:--- 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. ARTICLE VI ADDTTTONAL ROND~ ~ection n l' Aooltionl'll Pl'Ir11y Rono"l 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 Series 1996A Bonds, and any previously issued Parity Bonds; provided, hQwever, 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 certif1~d public accountant or fIrm of independent certifIed public acc01.~ntants; or . (d) If the City cannot meet the test described in (c) above, but a change in the rates and charges applicable to the System beco~es 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 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 -16- T,...~IC"C~~~~~~.':"'- L -:. c~~o'c_----:;':n:r::L__ . ~l:.._,TTiilln--- -.-'ru,u. 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 6.3: Special Protect 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 Pavment of Pari tv 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 7.2: Maintenance ofSvstem. 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 govermi1ental, 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 Svstem. 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 City to be obsolete, worn but, 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 sim.il~ 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 ParltyBonds. 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 -17- '''-r~CT~~~~~'.' 'r] ~ - ;mi -I . ....;Ji[J ..- ---------..---, -m- -ir - 'r 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, and any Owner 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: Pled2:e 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, 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 Bp'nds from time to time outstanding 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. . 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 the Gross Revenues and the Net Revenues in the manner required in this. Ordinance. Section 7.9: Discharl1e bv Deoosit. Except as provided in Section 8.2(h), the City may discharge its obligation to the Owners of any or all of the Parity Bon?s to pay principal, interest an~ redemptiOIl. 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 -18- 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 as outstanding or unpaid. Section 7.1 0: Pavin~ A~ents Mav Own Paritv 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 7.11: No Recourse A~ainst Citv 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. The Bonds are hereby sold and shall be delivered to RAUSCHER PIERCE REFSNES, INC. at a price of par, plus accrued interest, plus a cash premium of $-0-, subject to the approval of the Attorney General of Texas and Vinson & Elkins L.L.P., bond counsel. The Mayor and other appropriate officers, agents and representatives of the. City are hereby authorized to do any and all things neqessary or desirable to provide for the issuance and delivery of the Bonds. It is hereby found and deClared that the Bonds were sold at public sale and th.at the bid of the Underwriter was the best bid received by the City. Section 8.2: Tax Exemotion. (a) General Tax Covenant. The City intends that the interest on the Bonds shall be excludable from gross income for purposes of federal income taxation pursuant to sections 103 and 141 through 150 of the Code, and applicable regulations. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Bonds to be includable in gross income, as defined in section 61 of the Code, of the owners thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Section 8.2; provided, however, that the City shall not be required to comply with any particular requirement of this Section 8.2 if the City has received an opiIilon of nationally recognized bond counsel ("Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Section 8.2 will satisfy the applicable requirements of the Code, in which case compliance with sucp. other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in this Section 8.2. (b) Use of Proceeds. The City covenants and agrees that its use of the Net Proceeds of the Bonds will at all times satisfy the following requirements: -19- ~--~-E~ _ ___~~~~':';"-=~~ 1 ~~~~.-:J. ; --;-::-li]i:J"------------------------- ,- --,':.,~"-""-1rr.,.--,-------- (i) 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 govenimental purpose of the Bonds to which such excess private-use proceeds relate; (iii) The City will not permi~ an amount of proceeds of the Bonds exceeding the lesser of (a) $5,000,000 or QJj 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 8.2, 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 Guarantv. 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 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 ~t 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-Arbitralle Covenant. The City shall certify, through an authorized officer, employee or agent, that based upon all facts and estimates known orreasonably 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 -20- , f--._- F~rc~-'.-_..~c.:-:c:~~':r~ --:-L~:.~~.~C~~-~=~=_ _ .. _ -c:~--_._-_u -- --------m---r-,----,,-",.'-'T-m 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) Arbitra~e Rebate. The City ""ill 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 arrange~ent had been at arm's length and had the yield on the issue not been relevant to either party. (g) Information Reoortillll. The City covenants and agrees to file or cause to be filed with the Secretary of the Treasury, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are issued, an information statement concerning the Bonds, all under and in accordance with section 149( e) of the Code and applicable regulations thereunder. (h) Continuinll Oblillation. Notwithstanding any other provision of this Ordinance, the City's obligations under the covenants an~ provisions of this Section shall survive the defeasance and discharge of the Bonds. \ Section 8.3: Construction Fund. There is hereby created and.established a special fund of the City,to be known as the "City of West University Place, Texas, Waterworks and Sewer System Revenue Bonds, Series 1996B Construction Fund", which shall be established at an official depository of the City and kept separate and apart from other funds of the City. The proceeds of the Bonds, as received, shall be deposited in the Construction Fund. Money on deposit in the Construction Fund shall be used only for the purposes set forth in Section 3.1 of this Ordinance and to pay costs of issuance. Money on deposit in the Construction Fund, may, at the option of the City, be invested as permitted by Texas law; provided that all such deposits and investments shall be made in such manner that the money required to be expended from the Construction Fund will be available at the proper time or times. All interest and income derived from such deposits and investments -21- r-- -------r; -.. . .T"----r-- I,ll ~IlT shall be used for the purposes set forth in Section 3.1 of this Ordinance and to pa.y the costs of issuing the Bonds. ARTICLE IX CONTINUING DISCLOSURE Section 9.1' (;ontinllin~ Disc10"lllTp. TTnc1p.rtl'lkin~ (a) Annul'll Report"l The City shall provide annually to each NRMSIR and the SID, within six months after the end of each fiscal year ending in or after 1996, financial information and operating data with respect to the City of the general type included in the fmal Official Statement authorized by Section 10.1 of this Ordinance (i) under the headings "THE TAX BONDS," "TAX DATA," "SELECTED FINANCIAL DATA," "THE REVENUE BONDS," "THE SYSTEM" and in APPENDIX B. The information to be provided shall include the complete 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 audited, if 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 fmancial statements when 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 otherwise would be required to provide financial information and operating data pursuant to this Section. The fmancial information and operating datato 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 SID 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 Jollowing events with respect to ~e 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 difficulties; D. Unscheduled draws Qn credit enhancements reflecting fmancial difficulties; 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; G. Modifications to rights of holders of the Bonds; H. Bond calls; -22- . I. Defeasances; 1. Release, substitution, or sale of property securing repayment of the Bonds; and K; Rating changes. 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 9.1(a) of this Ordinance by the time required by such Section. (c) Limitations. Disclaimers. and Amendment<;. 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 "obligated person" with respect to the Bonds within the meaning of the Ru1e, 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, fmancial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial resu1ts, 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 concern4Ig 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 ORIN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN TIllS 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 the identity, nature, status or type of operations of the City, if (i) the agreement, as amended, wou1d 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 -23- --r:=1:',,:~=:==-_-===~~-'"'-'-~~~o",,"c'~~"'r=:-'=.~'''--=-''"--~----~.,_.mr.:::J. _ ~._",-L:-:ij'Ir:r---." :'rrr- 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. The City may also amend or repeal the agreement if the SEC amends or repeals the applicable provisions of SEC Rule 15c2-12 or a court of fmal jurisdiction determines that such provisions are invalid, and the City many amend the agreeinent in its discretion in any other circumstance or manner, but in either case only to the extent that its right to do so would not prevent the Underwriter from purchasing the Bonds in the offering described herein in compliance with the Rule. If the City amends its agreement, the City will include in its next annual update an explanation in n~ative form of the reasons for the amendment and its impact on the type of operating data or financial information being provided. ARTICLE X MTSr.F.T.T.A NPOTTS Sectlon 10 l' Officll'11 Stfltement 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 of a final Official Statement reflecting the terms of the Underwriter's bid and other relevant information. 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 regarding the accuracy and completeness of such Official State~ent, dated as of the date of payment for and delivery of the Bonds. . Sectlon 10')' Further Proceening"l The Mayor, the City Manager, the City Secretary, the Finance Director, 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 10.3: Severability. Ifany 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 4' Open Meetini 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 10.5: Payiui A~ent/Reiistrar Aweement 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 10.6: No Personal Liability. No recourse shall be had for payment of the principal of or interest on any Bonds or for any claim based thereon, or on this Ordinance, against any official or employee of the City or any person executing any Bonds. -24- ~ T..,.,'~~~-~~"~;-'~'~-'----C-_._T..U_-,_.. ~-~'m':!I!I':l --'!'IT . .:1 "IT Section 10.7: Parties Interested Nothing in this Ordinance expressed or implied is intended or shall be construed to confer upon, or to give to, any person or entity, other than the City, the Registrar, and the Owners of the Borlds, any right, remedy or claim under or by reason of this Ordinance or any covenant, condition ot stipulation hereof, and all covenants, stipulations, promises and agreements in this Ordinance shb.ll be for the sole and exclusive benefit of the City, the Registrar, and the Owners of the Bond~. I Section 10.8: Reoealer. All orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the e !ent of such inconsistency. ., -25- ,- -'--~-'.rc~i_.n._d.'_..C.'C~i~'~-'I'-l ~-----r~~~_n__'_~_--'''''1lT1 -rrH n - n - , ~-- ii!ii PASSED AND APPROVED this 26th day of August, 1996. ATTEST: d,jo,~ Mayor City of West University Place, Texas ~~~--7 City of West University Place, Texas (SEAL) REVIEWED: ~~. 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. bV'aa ~ Finance Director , City of West University Place, Texas -26- '--~r~i-----C----i-.-'-.t , r- 1IiJ, fIiT--- -. ---~~----'.rl!iiT