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HomeMy WebLinkAboutO-1994-1972 .. . . ORDINANCE NO. -9..4--.1972 ORDINANCE AUTHORIZING THE ISSUANCE OF CITY OF LA PORTE. TEXAS. WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 1994. AND ALL OTHER MATIERS RELATED THERETO WHEREAS, the City of La Pone (the "City" or the "Issuer") has heretofore issued its City of La Porte, Texas. Waterworks and Sewer System Revenue Bonds, Series 1985 (the "Series 1985 Bonds"); and WHEREAS, in the ordinance authorizing the issuance of the Series 1985 Bonds the City reserved the right to issue revenue bonds on a parity therewith. and pursuant to such right has heretofore issued its City of La Porte. Texas, Waterworks and Sewer System Revenue Bonds, Series 1990 (together with the Series 1985 Bonds, the "Previously Issued Parity Bonds"); and WHEREAS. the City intends to advance refund certain of the Previously Issued Parity Bonds named below (the "Refunded Obligations") and to call the Refunded Ob~atioris prior to their maturities: DESCRIPTION AMOUNT REFUNDED MATURITIES CALL DATE City of La Pone, Texas. Water Works and Sewer System Revenue Bonds. Series 1990, dated September 15, 1990 $ 900,000 2004-2011 3-15-01 City of La Porte, Texas. Water Works and Sewer System Revenue Refunding Bonds, Series 1991, dated April 15, 1991 $1,260,000 2002-2005 3-15-99 WHEREAS. all the Refunded Obligations mature or are subject to redemption prior to maturity within 20 years of the date of the bonds hereinafter authorized; and WHEREAS, the Bonds are to be issued and delivered pursuant to the Charter of the City and Article 717k and Articles 1111 through 1118. inclusive. V.A.T.C.S., as amended.. for the purposes set forth above. THEREFORE, BE IT ORDAINED BY THE CITY COUNClL OF THE CITY OF LA PORTE, TEXAS, THAT; SECTION 1. BONDS AUTHORIZED. The City's bonds designated as the "City of La Pone, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 1994" (the "Bonds") are hereby authorized to be issued in the aggregate principal amount of $2.490,000 for the purpose of providing funds to refund the Refunded Obligations and pay costs of issuance. SECTION 2. DATES AND MATIJRITIES. The Bonds shall be dated April 1. 1994. shall be in the denomination of 55.000 or any integral multiple thereof. shall be numbered consecutively from R-t upward, and shall mature on the maturity date. in each of the years. and in the amounts, respectively, as set forth in the following schedule: , . . . MATURITY DATE: MARCH 15 YEARS 1995 1996 1997 1998 1999 2000 AMOUNTS $ 65.000 105.000 80.000 85.000 90,000 95,000 YEARS 2001 2002 2003 2004 2005 2006 AMOUNTS S 1 00.000 405,000 405,000 460,000 445,000 155,000 SECTION 3. RIGHT OF PRIOR REDEMPTION. The City reserves the right [0 redeem the Bonds maturing on or after March 15, 2003, in whole or in pan in principal amounts of $5,000 or any integral multiple thereof, on March 15,2002, or on any date selected by the City thereafter, at the redemption prices. on the dates, and in the manner described in the FORM OF BOND set forth in this Ordinance SECTION 4. INTEREST. The Bonds scheduled to mature during the years, respectively, set forth below shall bear interest at the following rates per annum: maturities 1995, % maturities 2001, % maturities 1996. % maturities 2002, % maturities 1997, % maturities 2003. % maturities 1998, % maturities 2004, % maturities 1999, % maturities 2005, % maturities 2000, % maturities 2006, % payable September 15, 1994, and semiannually thereafter on March 15 and September 15 of each year. Said interest shall be payable to the registered owner of any such Bond in the manner provided in the FORM OF BOND set forth in this Ordinance. SECTION 5. CHARACTERISTICS OF THE BONDS. (a) Re~istration, Transfer. and Exchan~e: Authentication. The Issuer shall keep or cause to be kept at the principal corporate trust office of Commerce Bank National Association, Houston, Texas (the "Paying Agenf/Registrar") books or records for the registration of the transfer and exchange of the Bonds (the "Registration Books"), and the Issuer hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers and exchanges under such reasonable regulations as the Issuer and Paying Agent/Registrar may pre- scribe: and the Paying Agent/Registrar shall make such registrations. transfers, and exchanges as herein provided. The Mayor and the City Secretary are authorized to enter into a Paying Agenf/Registrar Agreement substantially in the tonn of Exhibit A. attached hereto. The Paying Agenf/Registrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided: but it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the address to which payments shall be mailed. and such interest payments shall not be mailed unless such notice has been given. To the extent possible and under reasonable circumstances, all transfers of Bonds shall be made within three business days after request and presentation thereof. The Issuer shall have the right to inspect the Registration Books during regular business hours of the Paying Agenf/Registrar. but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not pennit their inspection by any other entity. The Paying AgentlRegistrar's standard or customary fees and charges for making such registration. transfer, exchange and delivery of a substitute Bond or Bonds shall be paid as provided in the FORM OF BOND set forth in this Ordinance. Registration of assignments, transfers, and exchanges of Bonds shall be made in the manner provided and with the effect stated 2 e e in the FORM OF BOND set fonh in this Ordinance. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond. Except as provided in (c) below, an authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond. date and manually sign the Paying Agent/Registrar's Authentication Certificate. and no such Bond shall be deemed to be issued or outstanding unless such Cenificate is so executed. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered for transfer and exchange. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing transfer and exchange of any Bond or ponion thereof, and the Paying Agent! Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Vernon's AM. Tex. Civ. S1. Art. 717k-6, and particularly Section 6 thereof, the duty of transfer and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Regisuar, and, upon the execution of said certificate, the transferred and exchanged Bond shall be valid. incontestable. and enforceable in the same manner and with the same effect as the Bonds which initially were issued and delivered pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. (b) Payment of Bonds and Interest. The Issuer hereby funher appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds. all as provided in this Ordinance. The Paying Agent! Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent/Registrar with respect to the Bonds. (c) In General. The Bonds (i) shall be issued in fully registered fonn, without interest coupons, with the principal of and interest on such Bonds to be payable only to the registered owners thereof. (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed. sealed, executed. and authenticated. (vii) shall have the principal of and interest on the Bonds be payable, and (viii) shall be administered and the Paying Agent/Registrar and the Issuer shall have cenain duties and responsibilities with respect to the Bonds. all as provided. and in the manner and to the effect as required or indicated. in the FORM OF BOND set fonh in this Ordinance. The Bonds initially issued and delivered pursuant to this Ordinance numbered R-I through R-12 (collectively, the "Initial Bonds") shall be delivered to the initial purchaser and are not required to be. and shall not be, authenti- cated by the Paying Agent/Registrar, but on each substitute Bond issued in exchange for the Initial Bonds or any Bond or Bonds issued under this Ordinance the Paying Agent/Regisuar shall execute the PAYING AGENTIREGISTRAR'S AUTHENTIC A nON CERTIFICATE, in the fonn set fonh in the FORM OF BOND. (d) Substitute Paving Agent/Regisuar. The Issuer covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank. trust company, fmancial institution, or other agency to act as and perfonn the services of Paying Agent/Regisuar for the Bonds under this Ordinance. and that the Paying AgentlRegistrar will be one entity. The Issuer reserves the right to. and may. at its option. change the Paying Agent/Registrar upon not less than 120 days written notice to the Paying AgentlRegistrar. to be effective not later than 60 days prior to the next principal or interest payment date after such notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger. acquisition. or other method) should resign or otherwise cease to act as such. the Issuer covenants that promptly it will appoint a competent and legally qualified bank. trust company. financial institution. or other agency to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying AgentlRegistrar. the previous Paying Agent/Regisuar promptly shall transfer and deliver the Registration Books (or a copy thereot), along with all other peninent books and records relating to the Bonds, to the new Paying Agent/Regis- trar designated and appointed by the Issuer. Upon any change in the Paying Agent/Registrar. the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agenl/Registrar to each registered owner of the Bonds, by United States mail. fIrst-class postage prepaid. which notice also shall give the address of the new Paying Agent! Registrar. By accepting the position and perfonning as such. each Paying Agent/Registrar shall 3 e e be deemed to have agreed to the provisions of this Ordinance. and a certified copy of this Ordinance shall be delivered to each Paying Agenl/Regisuar. SECTION 6. FORMS. The fonn of. all Bonds. including the fonn of Paying Agent!Registrar's Certificate. the Fonn of Assignment. the fonn of Statement of Insurance, if any, and the fonn of the Compttoller's Registration Certificate to accompany the Bonds on the initial delivery thereof, shall be, respectively, substantially as follows. with such appropriate variations, omissions. or insertions as are pennitted or required by this Ordinance: FORM OF BOND: NO. R-_ $ United States of America State of Texas CITY OF LA PORTE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE REFUNDING BOND, SERIES 1994 INTEREST RATE % MA TIJRlTY DATE ISSUE DATE April I. 1994 CUSIP NO. REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS ON THE MATIJRITY DATE, specified above, THE CITY OF LA PORTE. TEXAS, a home rule city and municipal corporation of the State of Texas (the "City"), hereby promises to pay to the Registered Owner, specified above, or the registered assignee hereof (hereinafter called the "registered owner") the Principal Amount. specified above, and to pay interest thereon calculated on the basis of a 360 day year of twelve 30 day months, from the Issue Date, specified above, to the date of its scheduled maturity or the date of its redemption prior to scheduled maturity. at the Interest Rate per annum. specified above, with said interest being payable on September 15, 1994. and semiannually on each March 15 and September 15 thereafter. THE TERMS AND PROVISIONS of this Bond are continued on the reverse side hereof and shall for all purposes have the same effect as though fully set forth at this place. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America. without exchange or collection charges. The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to maturity, at the principal corporate trust office of Commerce Bank Naitonal Association, Houston, Texas. which is the "Paying Agenl/Regisuar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent!Registtar to the registered owner hereof as shown by the Registration Books kept by the Paying Agenl/Registrar at the close of business on the Record Date (hereinafter described) by check drawn by the Paying Agent/ Registrar on, and payable solely from, funds of the City required to be on deposit with the Paying Agent/Regisuar for such purpose as hereinafter provided: and such check shall be sent by the Paying Agenl/Regisuar by United States mail. postage prepaid, on each such interest payment date. to the registered owner hereof at its address as it appears on the Registration Books kept by the Paying Agenl/Regisuar. as hereinafter described. The . record date ("Record Date") for the interest payable on any interest payment date means the last calendar day of the month next preceding such interest payment date: In the event of a non- payment of interest on a scheduled payment date, and for 30 calendar days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agenl/Registrar. if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the 4 e e scheduled payment date of the past due interest (which shall be IS days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail. first class, postage prepaid. to the address of each registered owner of a Bond appearing on the books of the Paying Agenl/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. The City covenants with the registered owner of this Bond that no later than each principal payment date and interest payment date for this Bond it will make available to the Paying Agent/Registrar the amounts required to provide for the payment. in immedialely available funds by wire transfer or other means acceptable to the Paying AgentlRegistrar, of all principal of and interest on the Bonds. when due. in the manner set forth in the ordinance authorizing the issuance of this Bond adopted by the City Council of the City on _' 1994 (the "Ordinance"). IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, a Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agenl/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking instimtions are authorized to close: and payment on such date shall have the same force and effect as if made on the original date payment was due. TInS BOND is one of a series of bonds of like tenor and effect. except as to denomination, number. maturity, interest rate, and right of prior redemption, issued in the aggregate principal amount of $2,490,000 for the purpose of providing funds to refund the Refunded Obligations named in the Ordinance and to pay costs of issuance. THE BONDS of this Series scheduled to mature on and after March 15.2003 may be redeemed prior to their scheduled maturities, in whole. or in part in principal amounts of $5,000 or any integral multiple thereof, at the option of the City, on March 15.2002, or on any date selected by the City thereafter. at the redemption price of the par value plus accrued interest to the date fIXed for redemption. If less than all of the Bonds are to be redeemed by the City, the City shall determine the maturity or maturities and the amounts therewith to be redeemed and shall direct the Paying Agent/Registrar to call by lot Bonds. or portions thereof, within such maturity or maturities and in such principal amounts. for redemption. AT LEAST 30 days prior to the date for any such redemption, a notice of such redemption shall be sent by the Paying Agenl/Registrar by United States mail, first class, postage prepaid. to the registered owner of each Bond. or portion thereof to be redeemed. at its address as it appeared on the Registration Books on the 45th day prior to such redemption date and to major securities depositories, national bond rating agencies. and bond infonnation services: provided. however. that the failure to send, mail, or receive such notice, or any defect therein or in the sending or mailing thereof. shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond. By the date fixed for any such redemption, due provision shall be made by the Issuer with the Paying Agenl/Registrar for the payment of the required redemption price for this Bond or the portion hereof which is to be so redeemed, plus accrued interest thereon to the date fIXed for redemption. If such notice of redemption is given, and if due provision for such payment is made, all as provided above. this Bond. or the portion thereof which is to be so redeemed, thereby automatically shall be redeemed prior to its scheduled maturity, and shall not bear interest after the date fIXed for its redemption. and shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest to the date fIXed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all such redemptions of principal of this Bond or any portion hereof. If a ponion of any Bond shall be redeemed. a substitute Bond or Bonds having the same maturity date. bearing interest at the same rate. in any denomination or denominations in any integral multiple of $5.000, at the written request of the registered owner. and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation. at the expense of the Issuer, all as provided in the Ordinance. 5 e e ALL BONDS OF TIllS SERIES are issuable solely as fully registered bonds, without interest coupons, in the denomination of any integral multiple of 55,000. As provided in the Ordinance, this Bond, or any unredeemed portion hereof. may, at the request of the registered owner or the assignee or assignees hereof, be assigned, transferred, and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the fonn and procedures set fonh in the Ordinance. Among other requirements for such assignment and lransier, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment. in fonn and with guarantee of signatures satisfactory to the Paying AgenrJRegistrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. The fonn of Assignment printed or endorsed on this Bond may be executed by the registered owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/R.egistrar may be used to evidence the assignment of this Bond or any portion or portions hereof from time to time by the registered owner. The City shall pay the Paying Agent!Registrar's reasonable standard or customary fees and charges for lransferring, converting, and exchanging any Bond or portion thereof; provided, however, that any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such lransfer, conversion, and exchange. In any circumstance, neither the City nor the Paying Agent/Registrar shall be required (1) to make any lransfer or exchange during a period beginning at the opening of business 15 calendar days before the day of the fIrst mailing of a notice of redemption of bonds and ending at the close of business on the day of such mailing or (2) to lransfer or exchange any Bonds so selected for redemption when such redemption is scheduled to occur within 30 calendar days; provided, however. that such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the City, resigns, or otherwise ceases to act as such, the City has covenanted in the Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds. BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the tenns and provisions of the Ordinance. agrees to be bound by such tenns and provisions, acknowledges that the Ordinance is duly recorded and available for inspection in the offIcial minutes and records of the City, and agrees that the terms and provisions of this Bond and the Ordinance constitute a contract between each registered owner hereof and the City. THE CITY has reserved the right, subject to the restrictions stated in the Ordinance. to issue additional parity revenue bonds which also may be made payable from. and secured by a fIrst lien on and pledge of, the "Pledged Revenues" (as defIned in the Ordinance). THE REGISTERED OWNER HEREOF shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation, or from any source whatsoever other than the Pledged Revenues. IT IS HEREB Y certifIed and covenanted that this Bond has been duly and validly authorized. issued. and delivered; that all acts, conditions. and things required or proper to be perfonned. exist. and be done precedent to or in the authorization. issuance. and delivery of this Bond have been performed, existed. and been done in accordance with law: that this Bond is a special obligation: and that the principal of. redemption premium, if any, and interest on this Bond are payable from. and secured by a first lien on and pledge of, the Pledged Revenues, which include the Net Revenues of the City's combined Waterworks and Sewer System. 6 e e IN TESTIMONY WHEREOF, the City Council has caused the seal of the City to be duly impressed or placed in facsimile hereon, and this Bond to be signed with the imprinted facsimile signature of the Mayor and countersigned by the facsimile signature of ' the City Secretary. COUNTERSIGNED: xxxxxxxx City Secretary, City of La Porte, Texas xxxxxxxx Mayor, City of La Porte. Texas (SEAL) [FORM OF PAYING AGENTIREGlSTRAR'S AUTHENTICATION CERTIFICATE] PAYING AGENT;REGlSTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Ordinance described in this Bond; and that this Bond has been issued in exchange for or replacement of a bond. bonds, or a portion of a bond or bonds of an issue which originally was approved by the Anorney General of the Slate of Texas and registered by the Comptroller of Public Accounts of the State of Texas. !lall:d If> l- );~MMERCE BANK NATIONAL ASSOCIATION, 17 / Houston. Texas, / Paying Agent/Registrar By Authorized Representative [FORM OF STATEMENT OF INSURANCE] STATEMENT OF INSURANCE [TO COME] 7 e e [FORM OF ASSIGNMENT] ASSIGNMEL'IT FOR VALUE RECEIVED, the undersigned registered owner of this bond or duly authorized representative or attorney thereof, hereby assigns this bond to / (Assignee's Social Security or Taxpayer Identification Number) 1 (print or typewrite Assignee's name and address, including zip code) and hereby irrevocably constitutes and appoints attorney to transfer the registration of this bond on the Bond Registration Books with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: The signature of the Registered Owner must be gua- ranteed by a member of the New York Stock Exchange or a commercial bank or trust company. Registered Owner NOTICE: This signature must correspond with the name of the Registered Owner appearing on the face of this bond in every particular way without alter- ation or enlargement or any change whatsoever The following abbreviations, when used in the assignment above or on the face of the within Bond, shall be construed as though they were wrinen out in full according to applicable laws or regulations: TEN COM - TEN ENT - IT TEN- as tenants in common as tenants by the entireties as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - Custodian (Cust) (Minor) under Unifonn Gifts to Minors Act (State) Additional abbreviations may also be used though not in the list above. 8 e e [FORM OF REGISlRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS]'" "'To be printed or attached to Initial Bonds only COMPTROLLER'S REGISlRA TION CERTJFICA TE: REGISTER NO. I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General of the Stale of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the Stale of Texas. Witness my signature and seal this COMPTROLLER'S SEAL Comptroller of Public Accounts of the State of Texas SECTION 7. DEFINITIONS. As used in this Ordinance, the following tenns shall have the meanings set forth below, unless the text hereof specifically indicates otherwise: (a) The tenn "Additional Bonds" shall mean the additional parity obligations which the City reserves the right to issue in the future, as provided in Section 15 of this Ordinance. (b) The tenns "Bond" or "Bonds" shall mean one or more, as the case may be, of the Bonds authorized to be issued by this Ordinance. (c) The tenns "City" and "Issuer" shall mean the City of La Porte, Texas, or where appropriate the City Council thereof. (d) The tenn "City Council" shall mean the governing body of the City. (e) The tenn "Interest and Sinking Fund" means the fund provided for in Section 11 hereof. (0 The tenn "Net Revenues" means all gross revenues of the System after deducting the necessary and reasonable expenses of operation and maintenance of the System, including all salaries, labor, material, repairs, and extensions necessary to render efficient service; provided. however. that only such repairs and extensions. as in the judgment of the City Council. reasonably and fairly exercised, are necessary to keep the System in operation and render adequate service to the City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the Parity Bonds shall be deducted in detennining the "Net Revenues". Depreciation and payments into and out of the Interest and Sinking Fund and the Reserve Fund shall never be considered as expenses of operation and maintenance. (g) The tenn "Parity Bonds" shall mean collectively the Previously Issued Parity Bonds, the Bonds, and any Additional Bonds. (h) The tenn "Parity Bonds Ordinances" shall mean collectively the ordinances authorizing the Previously Issued Parity Bonds. the Bonds. and any Additional Bonds. (i) The tenn "Previously Issued Parity Bonds" shall mean the outstanding "City of La Porte, Texas, Waterworks and Sewer System Revenue Bonds, Series 1985" the "City of La Porte, Texas, Waterworks 9 e e and Sewer System Revenue Bonds. Series 1990, and the "City of La Pone, Texas. Waterworks and Sewer System Revenue Refunding Bonds, Series 1991. (j) The tenn "Reserve Fund" shall mean that fund described in Section 12 hereof. (k) The tenn "System" shall mean the City's entire existing waterworks and sanity sewer system. together with all future extensions. enlargements. additions, replacements. and improvements thereto. (1) The "System Fund" shall mean that fund described in Section 10 hereof. (m) The tenn "Year" or "fiscal year" shall mean the regular fiscal year used by the City in cOMection with the operation of the System, which may be any 12 consecutive months period established by the City. SECTION 8. PLEDGE. The Parity Bonds. redemption premium. if any, and any interest payable thereon. are and shall be secured by and payable from a fITSt lien on and pledge of the Net Revenues, and the Net Revenues are funher pledged irrevocably to the establishment and maintenance of the Funds created by the Parity Bonds Ordinances. The Parity Bonds are not and will not be secured by or payable from a mortgage or deed of trust on any real, personal, or mixed properties constituting the System. The Registered Owner of the Parity Bonds shall never have the right to demand payment of such obligations out of any funds raised or to be raised by taxation, or from any source whatsoever other than the Net Revenues. This Ordinance shall not be construed as requiring the City to expend any funds which are derived from sources other than the operation of the System, but nothing herein shall be construed as preventing the City from doing so. SECTION 9. RATES. The City covenants and agrees with the holders of the Parity Bonds that it will: (a) fIX and maintain rates and collect charges for the facilities and services afforded by the System which will provide revenues sufficient at all times: (1) To pay all operation, maintenance, depreciation, replacement, and bettennent charges of the System; (2) To establish and maintain the Interest and Sinking Fund; (3) To generate in each year Net Revenues equal to one and twenty-five hundredths (1.25) times the maximum annual requirement for the payment of the principal of and interest on the Parity Bonds at the time outstanding (although amounts shall be paid into the Interest and Sinking Fund and the Reserve Fund only in accordance with Sections 10 and 12 hereof); and (4) To pay all indebtedness outstanding against the System, other than the Parity Bonds, as and when the same become due: and (b) deposit as collected all revenues derived from the operation of the System into the System Fund. SECTION 10. SYSTEM FUND. There has been created and established on the books of the City. and accounted for separate and apart from all other funds of the City. a special fund entitled the "City of La Porte. Texas, Waterworks and Sewer System Fund" (the "System Fund"). All gross revenues are and shall be credited to the System Fund immediately upon receipt. The necessary and reasonable expenses of operation and maintenance of the System shall first be paid from the System Fund upon approval of the City Council and, from 10 e e the Net Revenues available in the System Fund, the City shall then make substantially equal monthly payments into the Interest and Sinking Fund (commencing with respect to the Bonds and any Additional Bonds on the date of delivery to the initial purchaser thereot) during each year in which any of the Parity Bonds are outstanding in an aggregate amount equal to 100% of the amounts required to meet the interest and principal payments falling due on or before the next maturity date of the Parity Bonds. The City shall. at least five days prior to September 15, 1994, and each March 15 and September 15 thereafter. deposit into the Interest and Sinking Fund any additional Net Revenues available in the System Fund which may be necessary to pay in full the interest on and principal, if any, coming due on such M3l'Ch 15 or September 15. In no event shall any amount in excess of the amoums stated above be placed in the Interest and Sinking Fund for the payment of the interest on or principal of the Parity Bonds. and any amount so placed may be withdrawn by the City and replaced in the System Fund. Any funds remaining in the System Fund, after provision for the necessary and reasonable cost of operating and maintaining the System, and after paying the aforesaid amounts required to be paid into the Interest and Sinking Fund and the Reserve Fund. may be used by the City for any lawful purpose. SECTION 11. INTEREST AND SINKING FUND. For the sole purpose of paying the principal of and interest on the Parity Bonds. as the same come due, there has been created and established on the books of the City a separate fund entitled the "City of La Porte, Texas, Waterworks and Sewer System Bonds Interest and Sinking Fund" (the "Interest and Sinking Fund"). SECTION 12. RESERVE FUND. There has been created and established on the books of the City at the City's depository bank a separate fund entitled the "City of La Porte, Texas, Waterworks and Sewer System Bonds Reserve Fund" (the "Reserve Fund"). The Reserve Fund shall be used to pay the principal of and interest on any Parity Bonds when and to the extent the amounts in the Interest and Sinking Fund available for such payment are insufficient for such purpose, and may be used for the purpose of finally retiring the last of any Parity Bonds. Beginning on May 15, 1994 and ending April 30, 1999, the City shall, from the Net Revenues in the System Fund, deposit into the Reserve Fund an amount of money in equal monthly amounts (the "Monthly Reserve Deposit") to achieve the Reserve Requirement (hereinafter described). Notwithstanding any provision hereof to the conttary, no deposits shall be made into the Reserve Fund at a time when there is a deficiency in the amount on deposit in the Interest and Sinking Fund nor shall any deposits be made into the Reserve Fund at any time it contains an amount equal to or greater than the Reserve Requirement If and whenever the balance in the Reserve Fund is reduced below the Reserve Requirement.. or if the City should fail timely to make any Monthly Reserve Deposit in full. then and in either such event, the City shall, from the first available and unallocated Net Revenues of the following month or months, cause amounts equal in the aggregate to any such deficiency to be set apart and ttansferred into the Reserve Fund and such transfers shall be in addition to the amounts otherwise required to be deposited into such Fund during such month or months. Surplus funds in the Reserve Fund resulting from any reduction of the Reserve Requirement or otherwise shall be promptly transferred from the Reserve Fund into the Interest and Sinking Fund, and payments into the Interest and Sinking Fund from the System Fund shall be reduced accordingly. As used herein "Reserve Requirement" shall be the lesser of (1) 10% of the face amount of the Parity Bonds, (2) 100% of the maximum annual debt service for the Parity Bonds, or (3) 125% of average annual debt service for the Parity Bonds. SECTION 13. INVESTMENTS. Money in any Fund established by the Parity Bonds Ordinances may, at the option of the City, be placed or invested in "Pennitted Investments" as defined and used herein to mean, to the extent pennitted by Texas law: (1) direct obligations of (including obligations issued or held in book entry fonn on the books ot) the Deparanent of Treasury of the United States of America; (2) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America. including: Export - Import Bank 11 e e Fanners Home Administration U.S. Maritime Administration Small Business Administration Government National.Mongage Association (GNMA) U.S. Department of Housing and Urban Development (PHA's) Federal Housing Administration; (3) bonds, notes, or other evidences of indebtedness rated "AAA" by Standard & Poor's Rating Group (S&P") and "ABa" by Moody's Investors Service ("Moodys") issued by the Federal National Mongage Associntion or the Federal Home Loan Mongage Corporation with remaining maturities not exceeding three years; or (4) U.S. dollar denominated deposit accounts, federal funds, and banker's acceptances with domestic commercial banks which have a rating on their shon tenn cenificates of deposit on the date of purchase of "A-I" or "A-I+" by S&P and "P-I" by Moody's and maturing no more than 360 days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank); Any obligation in which money from the Interest and Sinking Fund or the Reserve Fund are so invested shall be kept and held in the depository bank of the City in escrow and in trust for the benefit of the owners of the Parity Bonds, and shall be promptly sold and the proceeds of sale applied to the making of any payments required to be made from the Interest and Sinking Fund or Reserve Fund, as the case may be. Except as described in Section 20, all such investments shall at all times be a pan of the Fund from which the money used to acquire said investments shall have come and all earnings on such investments shall be credited to, and losses thereon charged against, such Fund. Notwithstanding any provision hereof to the contrary, any investment of money in the Interest and Sinking Fund shall be made so as to mattJre or be subject to redemption at the option l,f the owner or holder thereof on or prior to the date or dates on which money therefrom will be required. SECTION 14. RJNDS SECURED. Money in all Funds created by this Ordinance, to the extent not invested. shall be secured in the manner prescribed by law for securing funds of the City. SECTION 15. ADDITIONAL BONDS. In addition to inferior lien bonds authorized by Article lll1a. Vernon's Texas Civil Statutes, as amended, the City expressly reserves the right hereafter to issue additiomlI parity bonds and other evidences of indebtedness now or hereafter authorized by the Legislature of Texas \~'Ol1ectively, the "Additional Bonds"), and the Additional Bonds. when issued, may be secured by and payable from a first lien on and pledge of the Net Revenues in the same manner and to the same extent as the outstanding Parity Bonds but subject to the remaining provisions hereof, and the Previously Issued Parity Bonds, the Bomls. and the Additional Bonds may be in all respects of equal dignity. It is provided. however, that no Additional Bonds shall be issued unless: (a) The Interest and Sinking Fund, the Reserve Fund, and any similar fund or funds created by the ordinance authorizing any Parity Bonds at the time outstanding shall each contain the amount then required to be on deposit therein, and a cenificate of such effect shall be executed and delivered by the Mayor and City SecretaJ"l' . (b) As long as any of the Series 1985 Bonds are outstanding, the "net earnings" (defined below) .'i the System for the fiscal year next preceding the month in which the ordinance authorizing such Additional Bonds is adopted. were equal to each of the provisions following in items (c) (i) and (ii) below, detenn\l~ independently and cenified by an independent fmn of certified public accountants. based upon an annual :lUJit of the books of the System. (c) After the Series 1985 Bonds are no longer outstanding, an independent finn of cenified 12 e e (e) Operation of Svstem: No Free Service. It shall continuously and efficiently operate the System and maintain the System in good condition, repair, and working order, all at reasonable cost. No free service of the System shall be allowed, and should the City or any of its agencies or instrumentalities, lessees. or concessionaires make use of the services and facilities of the System, payment monthly of the standard retail price of the services provided shall be made by the City or any of its agencies or instrumentalities, lessees, or concessionaires out of funds from sources other than the revenues of the System. unless made from surplus Net Revenues. (t) Further Encumbrance. Other than for the payment of the Parity Bonds, the rents, revenues, and income of the System have not in any manner been pledged to the payment of any debt or obligations of the City or of the System: and it shall not additionally sell or encumber the Net Revenues in any manner, except as pennitted in the Parity Bonds Ordinances in connection with Additional Bonds, unless said encumbrance is made junior and subordinate in all respects to the liens, pledges, covenants, and agreements of the Parity Bonds Ordinances: but the right of the City to issue revenue bonds payable from a subordinate lien on the surplus Net Revenues is specifically recognized and retained. (g) Sale or DisPOsal of Property. It shall not sell, convey, mortgage, encumber. lease, or in any manner transfer title to, or dedicate to other use, or otherwise dispose of the System. or any significant or substantial part thereof; provided, however. that whenever the City deems it necessary to dispose of any other property, machinery, fixtures, or equipment, or dedicate such property to other use, it may do so either when it has made arrangements to replace the same or provide substitutes therefor, or it is detennined by resolution of the City Council that no such replacement or substitute is necessary. (h) Insurance. It agrees to maintain insurance on the System, for the benefit of the registered owner or owners of the Parity Bonds of a kind and in an amount which usually would be carried by private companies engaged in a similar type of business in the same area. (i) Records and Audits. It shall keep proper books and records and accounts, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to the System. Upon written request made not more than 60 days following the close of the fiscal year, the City shall furnish to any holder of any Parity Bonds, complete financial statements of the System in reasonable detail covering such fiscal year, certified by the City's Auditor. Any holders of 25% in principal amount of the Parity Bonds at the time outstanding shall have the right at all reasonable times to inspect the System and all records, accounts, and data of the City relating thereto. CD Governmental A~encies. It has or will obtain and keep in full force and effect all franchises, pennits, authorization, and other requirements applicable to or necessary with respect to the acquisition, construction, equipment. operation, and maintenance of the System, and it will comply with all of the tenns and conditions of any and all franchises. pennits and authorizations applicable to or necessary with respect to the System. (k) No Competition. To the extent it legally may. it will not operate, grant any franchise. or penn it the acquisition. construction, or operation of, any facilities which would be in competition with the System, and to the extent that it legally may, the City will prohibit any such competing facilities. SECTION 17. AMENDMENT OF ORDINANCE. (a) The holders of the Parity Bonds aggregating in principal amount 51 % of the aggregate principal amount of then outstanding Parity Bonds shall have the' right from time to time to approve any amendment to this Ordinance which may be deemed necessary or desirable by the City: provided, however. that without the consent of the holders of all of the Parity Bonds at the time outstanding, nothing herein contained shall pennit or be construed to pennit the amendment of the tenns and conditions in this Ordinance or in the Parity Bonds so as to: (I) Make any change in the maturity of the outstanding Parity Bonds: 15 e e public accountants. based upon an audit of the books of the System. certifies that the net earnings of the System for the previous fiscal year. or for any 12 consecutive month period ending not more than 90 days prior to the date of the adoption of the ordinance authorizing the Additional Bonds. were equal to each of the following detennined independently: (i) at least 1.50 times the average annual requirements for the payment of the principal of and interest on the Parity Bonds then outstanding and on such Additional Bonds. when issued. sold, and delivered; and (ii) at least 1.25 times the maximum annual requirement for the payment of the principal of and. interest on the Parity Bonds then outstanding and on such Additional Bonds, when issued. sold, and delivered; provided. however, should the certificate of the accountant cenify that the net earnings of the System for the period covered thereby were. in either case. less than required above. and a change in the rates and charges for the services afforded by the System became effective at least 60 days prior to the scheduled dale of adoption of the ordinance authorizing such Additional Bonds. then such Additional Bonds may nevertheless be issued if an independent engineer or engineering fnm having a favorable reputation with respect to such malters certifies that, had such change in rates and charges been effective for the entire period covered by the accountant's certificate, the net earnings for the System for the fiscal year covered by the accountant's certificate would have met the tests specified in (i) and (ii) above. The tenn "net earnings" as used in this Section shall mean all of the Net Revenues of the System. exclusive of income received specifically for capital items. and operation and maintenance expenses shall exclude expenditures which under standard accounting practice should be charged to capital expenditures or depreciations. (c) Such Additional Bonds are made to mature on March 15th in each of the years in which they are scheduled to mature. (d) The City shall establish a reserve fund for such Additional Bonds by providing a cash reserve fund therefor. a surety bond in lieu thereof, or a combination of such cash reserve fund and surety bond, all as the City Council deems reasonable and appropriate provided that (i) the amount of any such cash reserve fund or the coverage of any surety bond in lieu thereof or the amount of such cash reserve fund and the coverage of such surety bond when added together shall at least equal the maximum annual debt service requirements of such Additional Bonds, not to exceed the maximum permitted by applicable regulations, procedures, or published rulings of the Internal Revenue Service (the "Reserve Minimum"); (ii) if any cash reserve fund is funded by making ttansfers of Net Revenues in the System Fund, such transfers shall be made each month in an amount reasonably sufficient to reach the Reserve Minimum (or the portion thereof which is to be provided by such cash reserve fund) within a period of not more than five years after such Additional Bonds are sold and delivered: (ill) any such cash reserve fund may be combined with the Reserve Fund herein provided for the Bonds and with the cash reserve fund provided for any Additional Bonds then outstanding in order ratably to secure all Parity Bonds then outstanding and the Additional Bonds then being issued: (iv) any such surety bond provided in lieu of a cash reserve fund shall be issued by an insurance company or association of companies whose insured obligations are rated by Moody's Investors Service and by Standard & Poor's Rating Group in their highest rating categories; and (v) any such surety bond may be written (or amended) to provide coverage not only for such Additional Bonds but also pro rata for the Parity Bonds then outstanding, provided. any existing cash reserve fund 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 City'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 conslIUed in order to achieve that objective without malerially prejudicing the rights and interests of the owners of any Parity Bonds at the time outstanding. 13 e e SECTION 16. GENERAL COVENANTS. The City further covenants. warrants, and agrees that in accordance with and to the extent required or pennitted by law while the Parity Bonds are outstanding and unpaid: (a) Perfonnance. It will faithfully perfonn at all times any and a11 covenants, undertakings, stipulations, and provisions contained in each Parity Bonds Ordinance. and in each and every Parity Bond; it will promptly payor cause to be paid the principal of and interest on every Parity Bond, on the dates and in the places and manner prescribed in the Parity Bonds Ordinances: and it will. at the times and in the manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the Interest and Sinking Fund and the Reserve Fund; and any holder of the Parity Bonds may require the City, its officials and employees to carry out, respect. or enforce the covenants and obligations of the Parity Bonds Ordinances by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings in any court of competent jurisdiction against the City, its officials and employees. (b) City's Le~al Authority. It is a duly created and existing home rule city of the State of Texas, and is duly authorized under the laws of the State of Texas to create and issue the Parity Bonds; it has the lawful power to pledge the revenues supporting the Bonds and has lawfu11y exercised said power under the Constitution and laws of the State of Texas. including said power existing under Articles 1111 to 1118, both inclusive, Revised Civil Statutes of the State of Texas. as amended; the Bonds issued hereunder shall be ratably secured by said pledge of income, in such manner that one Bond shall have no preference over any other Bond; all action on its pan for the creation and issuance of said obligations has been duly and effectively taken; and said obligations in the hands of the holders and owners thereof are and will be valid and enforceable special obligations of the City in accordance with their tenns. (c) Title. It has or will obtain lawful title to the lands. buildings, structures, and facilities consti- tuting the System; it will defend the title to all the aforesaid lands, buildings, structures. and facilities, and every pan thereof, for the benefit of the holders and owners of the Parity Bonds, against the claims and demands of all persons whomsoever; it is lawfully qualified to pledge the Net Revenues to the payment of the Parity Bonds in the manner prescribed herein; and it has lawfully' exercised such rights. (d) Liens. It will from time to time and before the same become delinquent pay and discharge all taxes, assessments and governmental charges, if any, which shall be lawfully imposed upon it or the System; it will pay all lawful claims for rents. royalties. labor, materials, and supplies which if unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fu11y preserved in the manner provided herein: and it will not create or suffer to be created any mechanic's, laborer's, materialman's or other lien or charge which might or could be prior to the liens hereof. or do or suffer any matter or thing whereby the liens hereof might or could be impaired: provided, however, that no such tax, assessment, or charge, and that no such claims which might be used as the basis of a mechanic's. laborer's, materialman's, or other lien or charge, shall be required to be paid so long as the validity of the same shall be contested in good faith by the City. 14 e e (2) Reduce the rate of interest borne by any of the outstanding Parity Bonds: (3) Reduce the amount of the principal payable on the outstanding Parity Bonds: (4) Modify the tenns of payment of principal of or interest on the outstanding Parity Bonds or impose any conditions with respect to such payment: (5) Affect the rights of the holders of less than all of the Parity Bonds then outstanding; (6) Change the minimum percentage of the principal amount of Parity Bonds necessary for consent to such amendment. (b) If at any time the City shall desire to amend the Ordinance under this Section. the City shall cause notice of the proposed amendment to be published in a financial newspaper or journal published in The City of New York, New York, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Paying AgentlRegistIar for inspection by all holders of Parity Bonds. Such publication is not required, however, if notice in writing is given to each holder of the Previously Issued Parity Bonds. Bonds, and Additional Bonds. (c) Whenever at any time not less than 30 days, and within one year, from the date of the first publication of said notice or other service of written notice the City shall receive an instrument or instruments executed by the holders of at least 51 % in aggregate principal amount of all Parity Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the fonn of the copy thereof on me with the Paying AgentlRegistrar, the City Council may pass the amendatory ordinance in substantially the same fonn. (d) Upon the passage of any amendatory ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be amended in accordance with such amendatory ordinance, and the respective rights, duties and obligations under this Ordinance of the City and all the holders of then outstanding Parity Bonds shall thereafter be detennined, exercised and enforced hereunder, subject in all respects to such amendments. (e) Any consent given by the holder of a Parity Bond pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders of the same Parity Bond during such period. Such consent may be revoked at any time after six months from the date of the first publication of such notice by the holder who gave such consent, or by a successor in title. by filing notice thereof with the Paying Agent and the City, but such revocation shall not be effective if the holders of 51 % in aggregate principal amount of the then outstanding Parity Bonds as in this Section defined have. prior to the attempted revocation, consented to and approve the amendment. (t) For the purpose of this Section the fact of the holding of Parity Bonds issued in registered fonn without coupons and the amounts and numbers of such Parity Bonds and the date of their holding same shall be proved by the Registration Books of the Paying Agent/Registrar. For purposes of this Section, the holder of a Parity Bond shall be the owner thereof as shown on such Registration Books. The City may conclusively assume that such ownership continues until written notice to the contrary is served upon the City. (g) The foregoing provisions of this Section notwithstanding, the City by action of the City Council may amend this Ordinance for anyone or more of the following purposes: (1) To add to the covenants and agreements of the City in this Ordinance contained. 16 e e other covenants and agreements thereafter to be observed. grant additional rights or remedies to bondholders, or to surrender, restrict. or limit any right or power herein reserved to or conferred upon the City; (2) To make such provisions for the purpose of curing any ambiguity, or curing, correcting, or supplementing any defective provision contained in this Ordinance. or in regard to clarifying matters or questions arising under this Ordinance, as are necessary or desirable and not contrary to or inconsistent with this Ordinance and which shall not adversely affect the interests of the holders of the Parity Bonds; (3) To modify any of the provisions of this Ordinance in any other respect whatever. provided that (i) such modification shall be. and be expressed to be. effective only after all Parity Bonds outstanding at the date of the adoption of such modification shall cease to be outstanding, and (ii) such modification shall be specifically referred to in the text of all Additional Bonds issued after the date of the adoption of such modification. SECTION 18. DAMAGED, MUTll..ATED. LOST, SOTLEN. OR DESlROYED BONDS. (a) In the event any outstanding Bond is damaged, mutilated. lost stolen, or destroyed, the Paying Agenl/Registrar shall cause to be printed, executed. and delivered, a new bond of the same principal amount. maturity, and interest rate, as the damaged, mutilated, lost, stolen. or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for replacement of damaged. mutilated, lost. stolen, or destroyed Bonds shall be made to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond. the applicant for a replacement bond shall furnish to the City and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft. or destruction of a Bond, the applicant shall furnish to. the City and to the Paying Agent/Registrar evidence to their satisfaction of the loss, thefr.. or destruction of such Bond. as the case may be. In every case of damage or mutilation of a Bond. the applicant shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond. the City may authorize the payment of the same (without surrender thereof expect in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond. provided security or indemnity is furnished as above provided in this Section. (d) Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the owner of such Bond with all legal, printing. and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond. is lost stolen. or destroyed shall constitute a contractual obligation of the City whether or not the lost. stolen or destroyed Bond shall be found at any time. or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and all other Bonds duly issued under this Ordinance. (e) In accordance with Section 6 of Article 717k-6. V.A.T.C.S., this Section of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the City or any other body or person. and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agenl/Registrar. and the Paying Agenl/Registrar shall authenticate and deliver such bonds in the fonn and manner and with the effect. as provided in Section 4(d) of this Ordinance for Bonds issued in exchange for other Bonds. SECTION 19. DEFEASANCE OF THE BONDS. (a) Any Bond and the interest thereon shall 17 e e be deemed to be paid, retired. and no longer outstanding (a "Defeased Bond") within the meaning of this Ordinance. except to the extent provided in subsection (d) of this Section. when payment of the principal of such Bond. plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemption. or otherwise) either (i) shall have been made or caused to be made in accordance with the tenns thereof (including the giving of any required notice of redemption), or Oi) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying AgentlRegistrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) direct obligations of the United Stales of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. which may be United States Treasury obligations such as its State and Local Government Series. and which may be book entry fonn (herein "Government Obligations") which mature as to principal and interest in such amounts and at such time as will insure the availability, without reinvestment, of sufficient money to provide for such payment. and when proper arrangements have been made by the City with the Paying AgentlRegistrar for the payment of its services until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from. or entitled to the benefits of, the revenue herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any money so deposited with the Paying AgentlRegistrar may at the written direction of the City also be invested as hereinbefore set fonh. and all income from such Government Obligations received by the Paying AgentlRegistrar which is not required for the payment of the Bonds and interest thereon. with respect to which such money has been so deposited, shall be turned over to the City, or deposited as directed in writing by the City. (c) Until all Defeased Bonds shall have become due and payable, the Paying AgentlRegistrar shall perfonn the services of Paying AgentlRegistrar for such Defeased Bonds the same as if they had not been defeased. and the City shall make proper arrangements to provide and pay for such services as required by this Ordinance. (d) In the event that the principal and/or interest due on the Bonds shall be paid by AMBAC Indemnity pursuant to the municipal bond guaranty insurance policy issed by AMBAC Indemnity insuring the payment when due of the principal of and interest on the Bonds as provided therein (the "Municipal Bond Guaranty Insurance Policy"), the Bonds shall remain outstanding for all purposes, not be defeased or otherwise satisfied, and not be considered paid by the City, and the assignment and pledge of the proceeds of pledged revenues and all covenants. agreements, and other obligations of the City to the registered owners shall continue to exist and shall run to the benefit of AMBAC Indemnity, and AMBAC Indemnity shall be subrogated to the rights of such registered owners. SECTION 20. TAX COVENANTS. The City covenants to take any action to assure. or refrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the City covenants as follows: (a) to take any action to assure that no more than 10% of the proceeds of the Bonds (less amounts deposited to a reserve fund. if any) are used for any "private business use", as defined in section 141(b)(6) of the Code or. if more than 10% of the proceeds are so used, that amounts. whelher or not received by lhe City, with respect to such private business use, do not, under the tenns of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10% of the debt service on the Bonds. in contra- vention of section 141(b)(2) of the Code: (b) to take any action to assure that in the event that the "private business use" 18 e e described in subsection (a) hereof exceeds 5% of the proceeds of the Bonds (less amounts deposited into a reserve fund. if any) then the amount in excess of 5% is used for a "private business use" which is "related" and not "disproportionate". within the meaning of section 141(b)(3) of the Code. to the governmental use; (c) to take any action to assure that no amount which is greater than the lesser of SS.OOO.OOO, or 5% of the proceeds of the Bonds (less amounts deposited into a reserve fund. if any) is directly or indirectly used to finance loans to persons. other than state or local governmental units. in contravention of section 141(c) of the Code; (d) to refrain from taking any action which would otherwise result in the Bonds being treated as "private activity bonds" within the meaning of section 141(a) of the Code; (e) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (f) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) of the Code) which produces a materially higher yield over the tenn of the Bonds, other than investment property acquired with -- (I) proceeds of the Bonds invested for a reasonable temporary period of three years or less until such proceeds are needed for the purpose for which the bonds are issued, (2) amounts invested in a bona fide debt service fund, within the meaning of section 1.l03-13(b)(l2) of the Treasury Regulations. and (3) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed 10% of the proceeds of the Bonds; (g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds. as may be necessary, so that the Bonds do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and. to the extent applicable, section 149(d) of the Code (relating to advance refundings); (h) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90% of the "Excess Earnings". within the meaning of section 148(f) of the Code and to pay to the United States of America. not later than 60 days after the Bonds have been paid in full, 100% of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code; and (i) to maintain such records as will enable the City to fulml its responsibilities under this section and section 148 of the Code and to retain such records for at least six years following the final payment of principal and interest on the Bonds. It is the understanding of the City that the covenants contained herein are intended to assure compliance with the Code and any regulations or mlings promulgated by the U.S. Depanment of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify. or expand provisions of the Code, as applicable to the Bonds, the City will not be required to comply with any covenant contained herein to the extent that such modification or expansion, in the opinion of nationally-recognized bond counsel, will not 19 e e adversely affect the exemption from federal income taxation of inlerest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgmed which impose additional requirements which are applicable to the Bonds, the City agrees to comply with the additional requirements to the exlent necessary, in the opinion of nationally-recognized bond counsel. to preserve the exemption from federal income taxation of inlerest on the Bonds under section 103 of the Code. SECTION 21. DESIGNATION AS QUALIFIED TAX-EXEMPT BONDS. The City hereby designales the Bonds as "qualified tax-exempt bonds" as defined in section 265(b)(3) of the Internal Revenue Code of 1986. as amended (the "Code"). In furtherance of such designation. the City represents. covenants. and warrants the following: (a) during the calendar year in which the Bonds are issued, the City (including any subordinate entities) has not designated nor will designate bonds, which when aggregaled with the Bonds. will result in more than $10,000.000 of "qualified tax-exempt bonds" being issued; (b) the City reasonably anticipaIes thai the amount of tax-exempt obligations issued during the calendar year in which the Bonds are issued by the City (or any subordinate entities) will not exceed $10,000.000: and (c) the City will take such action or refrain from such action as necessary in order that the Bonds will not be considered "private activity bonds" within the meaning of section 41 of the Code. SECTION 22. SALE OF BONDS. The Bonds are hereby sold and shall be delivered to Masterson Moreland Sauer Whisman, Inc. and Rauscher Pierce Refsnes, Inc. (the "Underwriters"), pursuant to the lenns and provisions of the Purchase Contract attached hereto as Exhibit B and the Mayor is hereby authorized to execute and deliver such Purchase Contract. The Bonds shall initially be registered in the name of Masterson Moreland Sauer Whisman. Inc. The officers of the Issuer are hereby authorized and directed to execute and deliver such certificates. instructions. or other instruments as are required or necessary to accomplish the purposes of this Ordinance. SECTION 23. PROCEEDS OF SALE. The proceeds of the Bonds shall be placed into the Interest and Sinking Fund and the Escrow Fund of the Issuer as follows: (a) Interest and Sinkin~ Fund. An amount equal to the accrued inlerest on the Bonds from the date of the Bonds to the date of delivery to the Initial Purchaser shall be deposiled in the Interest and Sinking Fund. (b) Escrow Fund. The proceeds of the Bonds remaining afler the above described deposit into the Interest and Sinking Fund shall be placed in the Escrow Fund (afler created) to be used by the Issuer for the purposes described in the Escrow Agreement hereafter authorized. SECTION 24. APPROVAL OF OFFICIAL STATEMENT. The Issuer hereby approves the fonn and content of the Official Statement relating to the Bonds. and any addenda. supplement. or amendment thereto and approves the distribution of such Official Statement in the reoffering of the Bonds by the Initial Purchasers in final fonn, with such changes therein or additions thereto as the officer executing the same may deem advisable. such detennination to be conclusively evidenced by his execution thereof. It is further officially found detennined and declared that the statements and representations contained in said Official Statement are true and correct in all material respects to the best knowledge and belief of the Council. SECTION 25. CONSIDERATIONS OF REFUNDING. The Council hereby fmds that by refunding the Refunded Obligations the Issuer will (i) lower the annual debt service requirements with respect to its revenue supponed obligations and (ii) restructure its debt service in a manner which will allow the issuance of additional bond issues without a utility rate increase or with a smaller increase than would otherwise be required, SECTION 26. NOTICE OF REDEMPTION TO PAYING AGENT AND REGISTERED OWNERS AND PUBLICATION. The principal of and accrued interest on the Refunded Obligations shall be 20 e e paid on their respective redemption date, with proceeds of the Bonds. and the Refunded Obligations are hereby called for redemption on said date. Commerce Bank National Association. Houston. Texas. Houston, Texas. is hereby directed to make appropriate arrangements so that the principal of and accrued interest on such Refunded Obligations may be redeemed at said bank on such redemption dates. Unless notice is waived by the owners thereof. a copy of the Notice of Prior Redemption. substantially in the fonn attached hereto as Exhibit D. shall be delivered to the paying agent bank for the Refunded Obligations and a copy of such Notice of Prior Redemption shall be mailed to the registered owner thereof. or otherwise given as provided in the appropriate order, resolution. or ordinance authorizing the Refunded Obligations. SECTION 27. ESCROW AGREEMENT. The discharge of the Refunded Obligations shall be effectuated pursuant to the tenns and provisions of the Escrow Agreement, the tenns and provisions of which are hereby approved, subject to such insertions. additions, and modifications as shall be necessary (a) to carry out the program designed for the City by Masterson Moreland Sauer Whisman, Inc. and which shall be certified as to mathematical accuracy by Deloitte & Touche, Certified Public Accountants. whose verification report (the "Report") shall be delivered with the Escrow Agreement, (b) to maximize the City's present value savings and/or minimize the City costs of refunding. (c) to comply with all applicable laws and regulations relating to the refunding of the Refunded Obligations, and (d) to carry out the other intents and purposes of this Ordinance. and the Mayor is hereby authorized to execute and deliver the Escrow Agreement attached hereto as Exhibit C on behalf of the City in multiple counterparts and the City Secretary is hereby authorized to attest thereto and affix the City's seal. SECTION 28. SOURCE OF CITY FUNDS USED IN REFUNDING. The amount of 567,115.83 available funds of the City are hereby appropriated and shall be deposited to the Escrow Fund, which together with certin proceeds of the Bonds shall be used to refund the Refunded Obligations. SECTION 28. PURCHASE OF UNITED STATES TREASURY OBLIGATIONS. To assure the purchase of the Escrowed Securities referred to in the Escrow Agreement, the Mayor, the City's Chief Financial Officer. and the Escrow Agent are hereby authorized to subscribe for, agree to purchase. and purchase non-callable obligations of the United States of America. in such amounts and maturities and bearing interest at such rates as may be provided for in the Report. and to execute any and all subscriptions. purchase agreements, commitments, letters of authorization, and other documents necessary to effectuate the foregoing, and any actions heretofore taken for such purpose are hereby ratified and approved. SECTION 29. MATfERS RELATED TO REFUNDING. In order that the Issuer shall satisfy in a timely manner all of its obligations under this Ordinance, the Mayor and all other appropriate officers and agents of the Issuer are hereby authorized and directed to take all other actions that are reasonably necessary to provide for the refunding of the Refunded Obligations. includihg without limitation, executing and delivering on behalf of the Issuer all certificates. consents. receipts. requests, notices. and other documents as may be reasonably necessary to satisfy the Issuer's obligations under this Ordinance and to direct the ttansfer and application of funds of the Issuer consistent with the provisions of this Ordinance. SECTION 30. APPROVAL AND REGISTRATION OF BONDS. The Mayor of the City is hereby authorized to have control of the Bonds and all necessary records and proceedings pertaining to the Bonds pending their delivery and their investigation. examination. and approval by the Attorney General of the State of Texas. and their registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Bonds, said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate. The Bonds thus registered shall remain in the custody of the Mayor (or his designee) until delivered to the purchaser thereof. SECTION 31. FURTHER PROCEDURES. The Mayor. the City Secretary, and all other officers. employees. and agents of the City. and each of them, shall be and they are hereby expressly authorized. empowered. and directed form time to time and at any time to do and perform all such acts and things and to execute. acknowledge, and deliver in the name and under the corporate seal and on behalf of the City all such instruments, whether or not herein mentioned. as may be necessary or desirable in order to carry out the terms 21 e e and provisions of this Ordinance. The Official Statement. dated _. 1994, and orher documenrs used in connection wirh rhe sale of rhe Bonds are hereby approved and rhe Mayor of rhe City is hereby directed and aurhorized to execute on behalf of the City, and rhe City Secretary is hereby authorized to attest. rhe Official Statement and orher sale documents. SECTION 32. SEVERABILITY. The provisions of rhis Ordinance are severable; and in case anyone or more of rhe provisions of rhis Ordinance or rhe application rhereof to any person or circumstance should be held to be invalid. unconstitutional, or ineffective as to any person or circumstance, rhe remainder of this Ordinance nevenheless shall be valid. and rhe application of any such invalid provision to persons or circumstances orher rhan rhose as to which it is held invalid shall not be affected thereby. SECTION 33. [Insurance to Come] SECTION 34. [Insurance to Come] SECTION 35. IMMEDIATE EFFECT. This Ordinance shall take effect immediately upon its adoption. PASSED AND APPROVED rhis Yf)AR-~ 11, 1994. ~;g~k~ 22 e e EXillBIT A PAYING AGENTIREGISTRAR AGREEMENT e EXillBIT B PURCHASE CONTRACT B-1 e . . . EXHIBIT C ESCROW AGREEMENT THE ESCROW AGREEMENT IS OMIlTED AT TIllS POINT AS IT APPEARS IN EXECUTED FORM ELSEWHERE IN TIllS TRANSCRIPT. C-l . EXIllBIT 0 NOTICE OF PRIOR REDEMPTION [To Come] 0-1 .