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

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Annual Principal and Interest Requirements therefor shall be those reasonably estimated and computed by the officer of the Authority then having the primary responsibility for the financial affairs of the Authority. In the preparation of the report required by paragraph C(l) above, the Engineer of Record may rely on other experts or professionals, including those in the employment of the Authority, provided such reports disclose the extent of such reliance and conclude that it is reasonably to so rely. In connection with the issuance of Additional Bonds for Capital Additions, the certificate of the Authority's officer and the Engineer of Record, together with the appropriate report for the initial issue and the Forecast for a subsequent issue, shall be conclusive evidence and the only evidence required to show compliance with the provisions and requirements of this Section. G. Combined Issues. Parity Bonds for Capital Additions may be combined in a single issue with Parity Bonds for Capital Acquisitions or Capital Improvements, or for any lawful purpose, provided the conditions precedent set fort in paragraphs B through E are complied with as the same relate to the appropriate purpose. H. Reserve Fund. The Authority shall increase the Reserve Fund for such Additional Bonds by (a) providing cash from the proceeds of the sale of the Additional Bonds or any other lawfully available source, (b) a surety bond in lieu thereof, (c) a combination of cash and a surety bond, or (d) making equal monthly installment payments to the Reserve Fund over the 24-month period following the issuance of such Additional Bonds, all as the Authority deems reasonable and appropriate; provided, however, that (I) the sum of the amount of any such cash, surety bond and monthly installment payments shall be not less than the Reserve Requirement; (II) any such surety bond provided in lieu of cash shall be issued by an insurance company or association of companies whose insured obligations are rated by a nationally recognized rating agency in its highest rating category; and (III) any such surety bond may be written or amended to provide coverage no only for such Additional Bonds, but also pro rata for the Parity Bonds then outstanding, provided any cash or surety fund in lieu thereof which secures any such outstanding Parity Bonds is extended ratably to secure the Additional Bonds then being issued. It is the Authority's intention hereby to provide maximum flexibility with respect to the Reserve Fund to be provided for any Additional Bonds which may be issued hereafter and the foregoing provisions shall be liberally construed in order to achieve that objective without materially prejudicing the rights and interests of the owners of any Parity Bonds at the time outstanding. I. Subordinate Obligations. The Authority may, at any time and from time to time, for any lawful purpose, issue obligations the principal of and redemption premium, if any, and interest on which are payable from and secured by a pledge of and lien on the Pledged Revenues junior and subordinate to the lien and pledge created hereby for the security of the Parity Bonds, the payments required to be made hereunder into the Interest and Sinking Fund and the Reserve Fund; provided, however, that any such pledge and lien securing such subordinate obligations shall be, and shall be expressed to be, subordinate in all respects to the pledge of and lien on the Pledged Revenues as security for the Parity Bonds. 31 HOU 3003369. J