03-10-10 Regular Meeting of the La Porte Area Water Authority

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Parity Bonds estimated to be issued, if any, for all Capital Acquisitions, Capital Improvements and Capital Additions then in progress or then being initiated during the period from the date the first series of obligations for the Capital Additions is to be delivered through the fifth Year subsequent to the date the Capital Addition is estimated to become commercially operative. The Board covenants that it will adopt on or before the closing date for the proposed Additional Bonds and enforce any periodic rate increases described in the report of the Engineer of Record; provided, however, that if such rate increases are not actually needed for any Year, the Board may by subsequent resolution delay such increase until it becomes actually necessary to comply with its covenants in this Section. D. Capital Additions - Subsequent Issues. Once the initial Parity Bonds have been delivered for a Capital Addition pursuant to paragraph C, the Authority may issue Additional Bonds to finance the remaining costs of such Capital Addition in such amounts as may be necessary to complete the acquisition and construction thereof and make the same commercially operative without satisfaction of any condition precedent under paragraph B or C, but subject to satisfaction of the following conditions precedent: (1) The Board makes a forecast (the "Forecast") of the operations of the System demonstrating the System's ability to pay all obligations payable from Pledged Revenues to be outstanding after the issuance of the Parity Bonds then being issued for the period (the "Forecast Period") of each ensuing Year through the fifth Year subsequent to the latest estimated date such Capital Addition is expected to be commercially operative; and (2) The Engineer of Record reviews the Forecast and executes a certificate to the effect that the Forecast is reasonable, and that based thereon (and such other factors deemed to be relevant), the Pledged Revenues will be adequate for the Forecast Period to pay all the obligations payable from the Pledged Revenues to be outstanding after the issuance of the Parity Bonds then being issued. E. Refunding Bonds. The Authority may issued refunding bonds to refund all or any part of the outstanding Parity Bonds (pursuant to any law then available), upon such terms and conditions as the Board may deem to be in the best interest of the Authority and its inhabitants, and if less than all such outstanding Parity Bonds are refunded, the conditions precedent for the issuance of Additional Bonds in paragraphs A and B shall be satisfied and the Accountant's certificate or opinion required by paragraph B shall give effect to the issuance of the proposed refunding bonds and shall not give effect to the obligations being refunded following their cancellation or provision being made for their payment. No Accountant's certificate otherwise required by paragraph B will be required for refunding bonds if, after giving effect to such proposed refunding, there is no increase in debt service for any Year in which there will be debt service on Parity Bonds outstanding both before and after such refunding and any such refunding bond does not have a lien on Pledged Revenues superior to the obligation which it refunds. F. Determination of Average Annual Principal and Interest Requirements. With respect to Additional Bonds anticipated and estimated to be issued or incurred, the Average 30 HOU:3003369.1