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HomeMy WebLinkAboutOrdinances (O-89-733)-08/15/1989 !JaddJ 7-/4-11 L/'~?II1t, ~ ORDINANCE NO. 0-89-733 AN ORDINANCE authorizing the issuance of "CITY OF COLLEYVILLE, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 1989"; pledging the Net Revenues of the City's combined waterworks and sanitary sewer system to the payment of the principal of and interest on such Bonds providing the terms and features of such Bonds; resolving other matters incident and relating to the issuance, payment, security, sale and delivery of said Bonds, including the approval and distribution of an Official Statement pertaining thereto; and providing an effective date. WHEREAS, the City Council of the City of Colleyville, Texas (the "Ci ty") has determined that revenue bonds, payable from and secured by a lien on and pledge of the Net Revenues (hereinafter defined) of the City's combined waterworks and sanitary sewer system (the "System"), in the aggregate principal amount of $750,000 should be issued for the purpose of making improvements and extensions to the System; and WHEREAS, notice of intention to issue such revenue bonds (stating the date, time and place this Council proposed to pass the ordinance authorizing the issuance of the revenue bonds, the purposes for which the bonds are to be issued, the maximum amount of bonds proposed to be issued, the maximum rate of interest the proposed bonds would bear and the maximum maturi ty date of such bonds) has been duly published in the offici a 1 newspaper of the Ci ty , namely, the Fort Worth Star Telegram, a newspaper published and having general circulation, in the City of Colleyville, Texas on July 11, 1989 and July 18, 1989, the date of the first publication of such notice being at least fourteen (14) days prior to the date stated therein for the passage of this ordinance; and WHEREAS, no valid petition bearing the valid signatures of ten per cent (10%) or more of the qualified electors of the City has been filed with the City Secretary, any member of this Councilor any other officer of the City requesting a referendum election be held on the issuance of the proposed revenue bonds; and WHEREAS, this Council hereby finds and determines that such revenue bonds can be issued on a pari ty with and be equally and ratably secured in the same manner as the outstanding revenue bonds of the City payable from and secured by a first lien on and pledge of the Net Revenues of the System (hereinafter called and defined as the "Previously Issued ",-, Bonds") in that (i) the City is not now in default as to any covenant, condition or obligation prescribed in the ordinances authorizing the issuance of the Previously Issued Bonds, (i i) each of the speci a 1 Funds created for the payment and security of the Previously Issued Bonds contains the amount now required to be on deposit therein, (iii) the City can secure from a Certified Public Accountant a report showing that the Net Earnings (hereinafter defined) of the System in the completed Fiscal Year next preceding the adoption of this ordinance are equal to at least one and twenty hundredths (1. 20) times the average annual principal and interest requirements for all the revenue bonds to be secured by a first lien on and pledge of the Net Revenues of the System which will be Outstanding after the issuance of the revenue bonds herein authorized, (iv) the revenue bonds herein authorized shall mature on January 1 and, (v) this ordinance provides for additional deposits to be made to (a) the Interest and Sinking Fund (hereinafter defined) established for the payment of the Previous ly I ssued Bonds in amounts adequate to -pay the principal and interest requirements of the bonds herein authorized to be issued and (b) the Reserve Fund (hereinafter defined) created for the benefit of the Previously Issued Bonds so that the total amount to be accumulated therein will be equal to not less than the average annual principal and interest requirements for all the Outstanding Previously Issued Bonds and the revenue bonds herein authorized and any additional amount required to be deposited therein will be accumulated within ten (10) calendar years of the date of the revenue bonds herein authorized; and WHEREAS, this Council further finds and determines that all of the revenue bonds described in the aforementioned notice of intention should be issued and sold at this time; now, therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF COLLEYVILLE: SECTION 1: Authorization Designation Principal Amount - Purpose. Revenue bonds of the Ci ty sha 11 be and are hereby authorized to be issued in the aggregate principal amount of $750,000, to be designated and bear the title of "CITY OF COLLEYVILLE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 1989" (hereinafter referred to as the "Bonds"), pursuant to and in accordance with the laws of the State of Texas, particularly Article 1111 et seq and the City's Charter, for the purpose of making improvements and extensions to the City's combined Waterworks and Sanitary Sewer System (the "System"). SZ72C -2- SECTION 2: Fully Registered Obligations - Authorized Denominations - Stated Maturities - Interest Rates - Date. The Bonds are issuable in fully registered form only; shall be dated August 1, 1989 (the "Bond Date") and shall be in denominations of $5,000 or any integral multiple (within a Stated Maturity) thereof and the Bonds shall become due and payable on January 1 in each of the years and in the principal amounts (the "Stated Maturities") and bear interest, computed on the basis of a 360-day year of twelve 30-day months, on the unpaid principal amounts from the Bond Date at per annum rates, in accordance with the following schedule: Year of Stated ~aturity Principal Amount Interest Rate(s) 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $15,000 20,000 20,000 20,000 20,000 25,000 25,000 30,000 30,000 35,000 35,000 40,000 40,000 45,000 50,000 50,000 55,000 60,000 65,000 70,000 Z/O \ ?: /0 \ 7. /D \ - 7./0 \ 7.10 \ 7.11.> " 7./0 \ 7.10 \ 7,10 \ 7.10 " 7.20 \ Z 2-r" \ 7..30 \ 7..gs- \ 7..vD \ 7. J/O \ 'It'S \ J "iI~ \ 7...J" () , " 7.S0 " ..... .. ~ SECTION 3: Terms' of Payment Paying Agent/Registrar. The principal of, premium, if any, and the interest on the Bonds, due and payable by reason of Stated Maturity, redemption, or otherwise, shall be payable only to the registered owners or holders of the Bonds (hereinafter called the "Holders") appearing on the registration and transfer books maintained by the Paying Agent/Registrar (hereinafter defined) and the payment thereof shall be in any coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts, and shall be without exchange or collection charges to the Holders. The Bonds sha 11 bear interest at the per annum rates shown above in Section 2, and interest thereon shall be payable semiannua 11y on Janua ry 1 and July 1 of each year, conunencing January 1, 1990, while any of the Bonds remain Outstanding. 5l72C -3- The selection and appointment of NCNB Texas National Bank, Fort Worth, Texas, to serve as Paying Agent/Registrar for the Bonds is hereby approved and confirmed. The City covenants to maintain and provide a Paying Agent/Registrar at all times until the Bonds are paid and discharged, and any successor Paying Agent/Registrar shall be a bank, trust company, financial institution or other entity qualified and authorized to serve in such capaci ty and perform the duties and services of Paying Agent/Registrar. Upon any change in the Paying Agent/Registrar for the Bonds, the City agrees to promptly cause a written notice thereof to be sent to each Holder by United States Mail, first class postage prepaid, which notice shall also give the address of the new Paying Agent/Registrar. The Bonds shall be payable at their Stated Maturities or upon their earlier redemption only upon the presentation and surrender to the principal office of the Paying Agent/ Registrar. Interest on the Bonds shall be paid to the Holders whose names appear in the Security Register at the close of business on the Record Date (the 15th day of the month next preceding each interest payment date) and shall be paid by the Paying Agent/Registrar (i) by check sent United States Mail, first class postage prepaid, to the address of the Holder recorded in the Security Register or (ii) by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the Holder. If the date for the payment of the Bonds shall be a Saturday, Sunday, a legal holiday, or a day when banking institutions 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. In the event of a non-payment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/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 scheduled payment date of the past due interest (which shall be fifteen (15) days after the Special Record Date) shall be sent a t leas t five (5) bus iness days pr ior to the Specia I Record Date by United States Mail, first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. SECTION 4: Redemption. (a) Optional Redemption. The Bonds having Stated Maturities on and after January I, 2001, shall be subject to redemption prior to maturity, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated 5272C -4- .~ Maturity by lot by the Paying Agent/ Registrar), on January 1, 2000 or on any date thereafter at the redemption price of par, together with accrued interest to the redemption date. (b) Exercise of Redemption Option. At least forty-five (45) days prior to a date set for the redemption of Bonds (unless a shorter notification period shall be satisfactory to the Paying Agent/Registrar), the City shall notify the Paying Agent/Registrar of its decision to exercise the right to redeem Bonds, of each Stated Maturity to be redeemed, and the date set for the redemption thereof. The decision of the City to exercise the right to redeem Bonds shall be entered in the minutes of the governing body of the City. (c) Selection of Bonds for Redemption. If less than all Outstanding of a Bonds Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall treat such Bonds as representing the number of Bonds Outstanding which is obtained by dividing the principal amount by $5,000 and shall select the Bonds to be redeemed within such Stated Maturity, by lot. (d) Notice of Redemption. Not less than thirty (30) days prior to a redemption date for the Bonds, a notice of redemption shall be sent by United States Mail, first class postage prepaid, in the name of the City and at the City's expense, to each Holder of a Bond to be redeemed in whole or in part at the address of the Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing such notice, and any notice of redemption so mailed shall be conclusively presumed to have been duly given irrespective of whether received by the Holder. All notices of redemption shall (i) specify the date of redemption for the Bonds, (ii) identify the Bonds to be redeemed and, in the case of a portion of the principal amount to be redeemed, the principal amount thereof to be redeemed, (iii) the redemption price, (iv) state that the Bonds, or the portion of the principal amount thereof to be redeemed, shall become due and payable on the redemption date specified, and the interest thereon, or on the portion of the principal amount thereof to be redeemed, shall cease to accrue from and after the redemption date, and (v) specify that payment of the redemption price for the Bonds, or the principal amount thereof to be redeemed, shall be made at the principal corporate office of the Paying Agent/Registrar only upon presentation and surrender thereof by the Holder. If a Bond is subject by its terms to prior redemption and has been called for redemption and notice of redemption thereof has been duly given as SZ7ZC -5- hereinabove provided, such Bond (or the principal amount thereof to be redeemed) so ca lIed for redempt ion sha 11 become due and payable, and if moneys sufficient for the payment of such Bonds (or of the principal amount thereof to be redeemed) at the then applicable redemption price are held for the purpose of such payment by the Paying Agent/Registrar, then on the redemption date designated in such notice, interest on said Bond (or the principal amount thereof to be redeemed) called for redemption shall cease to accrue and such Bonds shall not be deemed to be Outstanding hereunder. SECTION 5: Registration - Transfer - Exchange of Bonds _ Predecessor Bonds. The City shall cause to be kept at the principal office of the Paying Agent/Registrar a Security Register for the registration and transfer or exchange of the Bonds, as provided herein, and subject to reasonable regulations as may be prescribed by the Paying Agent/Registrar. The Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and address of each Holder of the Bonds issued under and pursuant to the provisions of this Ordinance. Any Bond may, in accordance with its terms and the terms hereof, be transferred or exchanged for Bonds of other authorized denominations upon the Security Register by the Holder, in person or by his duly authorized agent, upon surrender of such Bond to the Paying Agent/Registrar for cancellation, accompanied by a written instrument of transfer or request for exchange duly executed by the Holder or by his duly authorized agent, in form satisfactory to the Paying Agent/Registrar. Upon surrender for transfer of any Bond at the principal office of the Paying Agent/Registrar, the City shall execute and the Paying Agent/Registrar shall register and deliver, in the name of the designated transferee or transferees, one or more new Bonds of authorized denomination and having the same Stated Maturity and of a like aggregate principal amount as the Bond or Bonds surrendered for transfer. At the option of the Holder, Bonds may be exchanged for other Bonds of authorized denominations and having the same Stated Maturity, bearing the same rate of interest and of like aggregate principal amount as the Bonds surrendered for exchange upon surrender of the Bonds to be exchanged at the principal office of the Paying Agent/Registrar. Whenever any Bonds are so surrendered for exchange, the City shall execute, and the Paying Agent/Registrar shall register and deliver, the Bonds to the Holder requesting the exchange. All Bonds issued upon any transfer or exchange of Bonds shall be delivered at the principal office of the Paying S272C -6- Agent/Registrar, or sent by registered mail to the Holder at his request, risk, and expense and upon the delivery thereof, the same shall be the valid obligations of the City, evidencing the same debt, and entitled to the same benefits under this Ordinance, as the Bonds surrendered upon such transfer or exchange. All transfers or exchanges of Bonds pursuant to this Section shall be made without expense or service charge to the Holder, except as otherwise herein provided, and except that the Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange of any tax or other governmental charges required to be paid with respect to such transfer or exchange. Bonds cancelled by reason of an exchange or transfer pursuant to the provisions hereof are hereby defined to be "Predecessor Bonds", evidencing all or a portion, as the case may be, of the same debt evidenced by the new Bond -or Bonds registered and delivered in the exchange or transfer therefor. Additionally, the term "Predecessor Bonds" shall include any Bond registered and delivered pursuant to Section 28 hereof in lieu of a mutilated, lost, destroyed, or stolen Bond which shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond. Neither the City nor the Paying Agent/Registrar shall be required to transfer or exchange any Bond called for redemption, in whole or in part, within 45 days of the date fixed for redemption of such Bond; provided, however, such limitation on transferability shall not be applicable to an exchange by the Holder of the unredeemed balance of a Bond called for redemption in part. SECTION 6: Execution - Registration. The Bonds shall be executed on behalf of the City by its Mayor under its seal reproduced or impressed thereon and attested by its Secretary. The signature of ei ther of said officers on the Bonds may be manual or facsimile. Bonds bearing the manual or facsimile signatures of individuals who were at the time of the Bond Date the proper officials or officers of the City shall bind the City, notwithstanding that such individuals or either of them shall cease to hold such offices prior to the delivery of the Bonds to the initial purchaser(s), all as authorized and provided in the Bond Procedures Act of 1981, Texas Revised Civil Statutes Annotated, Article 717k-6, as amended. No Bond sha 11 be enti t led to any right or benefit under this Ordinance, or be valid or obligatory for any purpose, unless there appears on such Bond either a certificate 5l7lC -7- of registration substantially in the form provided in Section BC, executed by the Comptroller of Public Accounts of the State of Texas or his duly authorized agent by manual signature, or a certificate of registration substantially in the form provided in Section BD, executed by the Paying Agent/Registrar by manual signature. Either of these certificates upon any Bond shall be conclusive evidence, and the only evidence required, that such Bond has been duly certified or registered and delivered. SECTION 7: Initial Bond(s). The Bonds herein authorized shall be issued initially either (i) as a single fully registered Bond in the total principal amount of $750,000 with principal installments to become due and payable as provided in Section 2 hereof and numbered T-I, or (ii) as twenty (20) fully registered Bonds for each year of Stated Maturity in the applicable principal amounts and denominations and to be numbered consecutively from T-l and upward (hereinafter called the "Initial Bond(s)") and, in either case, the Initial Bond(s) shall be registered in the name of the initial purchaser(s) or the designee thereof. The Initial Bond(s) shall be the Bonds submitted to the Office of the Attorney General of the State of Texas for approval, certified and registered by the Office of the Comptroller of Public Accounts of the State of Texas and delivered to the initial purchaser(s). Any time after the delivery of the Initial Bond(s) , the Paying Agent/Registrar, pursuant to wri tten instructions from the initial purchaser(s), or the designee thereof, shall cancel the Initial Bond(s) delivered hereunder and exchange therefor definitive Bonds of authorized denominations, Stated Maturities, principal amounts and bearing applicable interest rates for transfer and delivery to the Holders named at the addresses identified therefor; all pursuant to and in accordance with such written instructions from the initial purchaser(s), or the designee thereof, and such other information and documentation as the Paying Agent/Registrar may reasonably require. SECTION 8: FORMS. A. Forms Generally. The Bonds, and the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Registration Certificate of the Paying Agent/Registrar, and the form of Assignment to be printed on each of the Bonds, shall be substantially in the forms set forth in this Section with such appropriate insertions, omissions, substitutions, and other variations as are permitted or required by this Ordinance and may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform S272C -8- Securities Identification Procedures of the American Bankers Association) and such legends and endorsements (including insurance legends, if the Bonds or any maturities thereof are sold with insurance and any reproduction of an opinion of counsel) thereon as may, consistently herewith, be established by the City or determined by the officers executing such Bonds as evidenced by their execution thereof. Any portion of the text of any Bonds may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Bond. The definitive Bonds shall be printed, lithographed, or engraved, produced by any combination of these methods, or produced in any other similar manner, all as determined by the officers executing such Bonds as evidenced by their execution thereof, but the Initial Bond(s) submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise reproduced. B. Form of Definitive Bond. REGISTERED REGISTERED NO . ...... $ ........ United States of America State of Texas County of Tarrant CITY OF COLLEYVILLE, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BOND, SERIES 1989 Bond Date: August 1, 1989 Interest Rate: Stated Maturity: CUSIP NO: ............. ................ ......... REGISTERED OWNER: PRINCIPAL AMOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. DOLLARS The Ci ty of Co lleyvi lIe, Texas (hereinafter referred to as the lOCi ty'.), a body corporate and municipal corporation in the County of Tarrant, State of Texas, for value received, hereby promises to pay to the registered owner specified above, or the registered assigns thereof, on the Stated Maturity date specified above, the principal amount specified above (or so much thereof as shall not have been paid upon prior redemption) and to pay interest on the unpaid principal amount hereof (computed on the basis of a 360-day year of twelve 30-day months) from the Bond Date specified above at the per annum rate specified above; such interest being payable semiannually on January 1 and July 1 of each year, commencing January 1, 1990. SZ7ZC -9- Principal and premium, if any, of this Bond is payable at its Stated Maturity or redemption to the registered owner hereof (the "Holder"), upon presentation and surrender, at the principal office of the Paying Agent/Registrar executing the registration certificate appearing hereon or a successor thereof. Interest shall be payable to the Holder of this Bond (or one or more Predecessor Bonds, as defined in the Ordinance hereinafter referenced) whose name appears on the Security Register maintained by the Paying Agent/Registrar at the close of business on the Record Date, which is the fifteenth day of the month next preceding each interest payment date and such interest shall be paid by the Paying Agent/Registrar by check sent on or prior to the appropriate date of payment by United States Mail, first class postage prepaid, to the Holder at the address appearing in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by the Holder at the Holder's risk and expense. All payments of principal, premium, if any, and interest on this Bond shall be without exchange or collection charges to the Holder and in any coin or currency of the Uni ted States of America which at the time of payment is legal tender for the payment of public and private debts. This Bond is one of the series specified in its title issued in the aggregate principal amount of $150,000 (herein referred to as the "Bonds") pursuant to an ordinance adopted by the governing body of the City (herein referred to as the "Ordinance"), for the purpose of making improvements and extensions to the City's combined Waterworks and Sanitary Sewer System, under and in strict conformity with the Constitution and laws of the State of Texas, particularly Texas Revised Civil Statutes Annotated Articles 1111 et seq, as amended, and Texas Revised Civil Statutes Annotated Article 2368a, as amended. The Bonds maturing on and after January 1, 2001, may be redeemed prior to their Stated Maturities, at the option of the City, in whole or in part in principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity at random and by lot by the Paying Agent/Registrar) on January 1, 2000, or on any date thereafter, at the redemption price of par, together with accrued interest to the date of redemption, and upon thirty (30) days prior written notice being given by United States Mail, first class postage prepaid, to Ho Iders of the Bonds to be redeemed, and subj ect to the terms and provisions relating thereto contained in the Ordinance. If this Bond is of a denomination in excess of $5,000, portions of the principal sum hereof in installments of $5,000 or any integral multiple thereof may be redeemed, and if less than all of the principal sum hereof is to be redeemed, there sha 11 be issued, wi thou t cha rge therefor, to the Holder, Sl7lC -10- upon the surrender of this Bond to the Paying Agent/ Registrar at its principal office, a new Bond or Bonds of like Stated Maturity and interest rate in any authorized denominations provided in the Ordinance for the then unredeemed balance of the principal sum hereof. If this Bond (or any portion of the principal sum hereof) shall have been duly called for redemption and notice of such redemption is duly given, then upon such redemption date this Bond (or the portion of the principal sum hereof to be redeemed) shall become due and payable, and, if moneys for the payment of the redemption price and the interest accrued on the principa 1 amount to be redeemed to the date of redemption are held for the purpose of such payment by the Paying Agent/ Registrar, interest shall cease to accrue and be payable hereon from and after the redemption date on the principal amount hereof to be redeemed. If this Bond is called for redemption, in whole or in part, the City or the Paying Agent/Registrar shall not be required to issue, transfer, or exchange this Bond, within forty-five (45) days of the date fixed for redemption; provided, however, such limitation of transfer sha 11 not be app 1 icable to an exchange by the Ho lder of the unredeemed balance hereof in the event of its partial redemption. The Bonds are special obligations of the City and, together with the outstanding and unpaid Previously Issued Bonds (identified and defined in the Ordinance), are payable solely from and equally and ratably secured by a first lien on and pledge of the Net Revenues (as defined in the Ordinance) of City's combined Waterworks and Sanitary Sewer System (the "System") . The Bonds do not consti tute a legal or equi table pledge, charge, lien or encumbrance upon any property of the Ci ty or the System, except with respect to the Net Revenues thereof. The holder hereof shall never have the right to demand payment of this Obligation out of any funds raised or to be raised by taxation. Subject to satiSfying the terms and conditions prescribed therefor, the Ci ty has reserved the right to issue additional revenue obligations payable from and equally and ratably secured by a parity lien on and pledge of the Net Revenues of the System, in the same manner and to the same extent as the Bonds. Reference is hereby made to the Ordinance, copies of which are on file in the principal office of the Paying Agent/Registrar, and to all of the provisions of which the Holder by his acceptance hereof hereby assents, for definitions of terms; the description and nature of the revenues pledged S272C -11- for the payment of the Bonds i the terms and condi tions under which the City may issue Additional Parity Obligations, the terms and condi tions relating to the transfer or exchange of this Bond; the conditions upon which the Ordinance may be amended or supplemented with or without the consent of the Holder; the rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and provisions upon which this Bond may be discharged at or prior to its Stated Maturity or redemption, and deemed to be no longer Outstanding thereunder; and for the other terms and provisions thereof. Capi talized terms used herein have the same meanings assigned to them in the Ordinance. This Bond, subject to certain limitations contained in the Ordinance, may be transferred on the Security Register only upon its presentation and surrender at the principal office of the Paying Agent/Registrar with the Assignment hereon duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Paying Agent/Registrar duly executed by the registered owner hereof, or his duly authorized agent. When a transfer on the Security Register occurs, one or more new fully registered Bonds of the same Stated Maturity, of author i zed denomina t ions, bea ring the same rate of interes t, and of the same aggregate principal amount will be issued to the designated transferee or transferees. The City and the Paying Agent/Registrar, and any agent of either, may treat the Holder whose name appears on the Security Register (i) on the Record Date as the owner hereof for purposes of receiving payment of interest hereon, (ii) on the date of surrender of this Bond as the owner hereof for purposes of receiving payment of principal hereof at its Stated Maturity or its redemption, in whole or in part, and (iii) on any other date as the owner for all other purposes, and neither the Ci ty nor the Paying Agent/Registrar, or any such agent of either, shall be affected by notice to the contrary. In the event of a non-payment of interest on a scheduled payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received f rom the Ci ty. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date" which shall be fifteen (IS) days after the Special Record Date) shall be sent at least five (S) business days prior to the Special Record Date by United States Mail, first class postage prepaid, to the address of each Holder appearing on the Security Register at the close of business on the last business day next preceding the date of mailing of such notice. S212C -12- It is hereby certified, recited, represented and covenanted that the City is a duly organized and legally existing municipal corporation under and pursuant to the Constitution and laws of the State of Texas; that the issuance of the Bonds is duly authorized by law; that all acts, condi tions and things required to exist and be done precedent to and in the issuance of the Bonds to render the same lawful and valid obligations of the City have been properly done, have happened and have been performed in regular and due time, form and manner as required by the Constitution and laws of the State of Texas, and the Ordinance; that the Bonds do not exceed any constitutional or statutory limitatioti; and that due provision has been made for the payment of the principal of and interest on the Bonds by a pledge of the Net Revenues of the System as aforestated. In case any provision in this Bond or any application thereof shall be invalid, illegal, or unenforceable, the va 1 idi ty, lega I i ty, and enforceabi Ii ty of the remaining provisions and applications shall not in any way be affected or impaired thereby. The terms and provisions of this Bond and the Ordinance shall be construed in accordance with and shall be governed by the laws of the State of Texas. IN WITNESS WHEREOF, the Ci ty Counci I of the Ci ty has caused this Bond to be duly executed under the official seal of the City as of the Bond Date. CITY OF COLLEYVILLE, TEXAS Mayor ATTEST: City Secretary (CITY SEAL) SZ1ZC -13- C. llForm of Registration Certificate of Comptroller of Public Accounts to Appear on Initial Bondes) Only. REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS ~ ~ ~ ~ REGISTER NO. ............ THE STATE OF TEXAS 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 duly registered by the Comptroller of Public Accounts of the State of Texas. WITNESS my signature and seal of office this .......................... . ..................... ........... (SEAL) Comptroller of Public Accounts of the State of Texas 11 Note to Printer: Not to appear on definitive Bonds D. Form of Certificate of Paying Agent/Registrar to appear on Definitive Bonds Only. REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR This Bond has been duly issued under the provisions o'f the within-mentioned Ordinance; the Bond or Bonds of the above entitled and designated series originally delivered having been approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts, as shown by the records of the Paying Agent/Registrar. NCNB Texas National Bank, Fort Worth, Texas as Paying Agent/Registrar Registration Date: By Authorized Signature 5272C -14- E. Form of Assignment. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto (Print or typewrite name, address, and zip code of transferee:) .......... ........................ ................. .............. ............... ........ .......... ................. .............. ........... ... .... ............... (Social Security or other identifying number: ................. . . . . . . . . . . . . . . . .) the wi thin Bond and all rights thereunder, and hereby irrevocably constitutes and appoints ............... ......... ...... ...................... ... ........................ attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises. DATED: ........ ....... .......... ............... ................ ..... ..... ..... ..... ...... ... NOTICE: The signature on this assignment must correspond with the name of the registered owner as it appears on the face of the within Bond in every particular. Signature guaranteed: F. The Initial Bond(s) shall be in the form set forth in paragraph 8 of this Section, except that the form of a single fully registered Initial Bond shall be modified as follows: (i) immediately under the name of the Bond(s) the headings "Interest Rate " and "Stated Maturity " shall both be omitted; (ii) paragraph one shall read as follows: Registered Owner: Principal Amount: The City of Colleyville, Texas, a body corporate and municipal corporation in the County of Tarrant, State of Texas, for value received, hereby promises to pay to the registered owner named above, or the registered assigns thereof, solely from the revenues hereinafter identified, the Principal Amount hereinabove stated on January 1 in each of the years and in principal installments and bearing interest at the per annum rates in accordance with the following schedule: 5272C -15- YEAR OF MATURITY PRINCIPAL INSTALLMENTS INTEREST RATE (Information to be inserted from schedule in Section 2 hereof). (or so much thereof as sha 11 not have been paid upon prior redemption) and to pay interest on the unpaid principal amounts hereof (computed on the basis of a 360-day year of twelve 3D-day months) from the Bond Date specified above, at the per annum rate specified above; such interest being payable semiannually on January 1 and July 1 of each year, commencing January 1, 1990. Principal installments of this Bond are payable in the year of maturity or on a prepayment date to the registered owner hereof (the "Holder"), upon its presentation and surrender, at the principal office of NCNB Texas National Bank, Fort Worth, Texas (the "Paying Agent/Registrar"). Interest shall be payable to the Holder of this Bond whose name appears on the Security Register maintained by the Paying Agent/Registrar at the close of business on the Record Date, which is the fifteenth day of the month next preceding each interest payment date and such interest shall be paid by the Paying Agent/Registrar by check sent on or prior to the appropriate date of payment by United States Mail, first class postage prepaid, to the Holder at the address appearing in the Security Register or by such other method, acceptable to the Paying Agent/Registrar, requested by, and at the risk and expense of, the registered owner hereof. All payments of principal of and interest on this Bond shall be without exchange or collection charges to the owner hereof and in any coin or currency of the Uni ted States of America which at the time of payment is legal tender for the payment of public and private debts. SECTION 9: Definitions. For all purposes of this Ordinance and in particular for clarity with respect to the issuance of the Bonds herein authorized and the pledge and appropriation of revenues to the payment of the Bonds, the fallowing words and terms, whenever the same appear herein without qualifying language, are defined to mean as follows: "Additional Parity Obligations. - Bonds, notes, warrants, certificates of obligation or other evidences of indebtedness which the City reserves the right to issue or enter into, as the case may be, in the future under the terms and conditions provided in Section 17 of this Ordinance and which are equally and ratably secured by a first 1 ien on and pledge of the Net Revenues of the System. S272C -16- S272C "Bonds" - The "City of Colleyville, Texas Waterworks and Sewer System Revenue Bonds, Series 1989", dated August I, 1989, authorized by this Ordinance. "City" - The City of Colleyville, located in the County of Tarrant, Texas. "Fiscal Year" - The twelve month operational periOd of the System ending each year on September 30th; provided, however, at such time as the Series 1975 and Series 1975-A Previously Issued Bonds have been fully paid as to both principal and interest, the City may change the Fisca 1 Year to another period of not less than twelve calendar months by the passage of an ordinance, but in no event may the Fiscal Year be changed more than one time in any three calendar year period. "Government Obligations" - Direct obligations of the Uni ted States of America, including obligations the principal of and interest on which are uncondi t iona lly gua ranteed by the Uni ted St a tes of Amer ica, and Uni ted States Treasury obligations such as its State and Local Government Series in book-entry form. "Gross Revenues" - All income, receipts and revenues of every nature derived or received from the operation and ownership (excluding refundable meter deposits, restricted gifts and grants in aid of construction) of the System. "Holder" or "Holders" The registered owner, whose name appears in the Securi ty Register, for any Bond. "Maintenance and Operating Expenses" - All current expenses of operating and maintaining the System as authorized by the provisions of Texas Revised Civil Statutes Annotated Article 1113, as amended, inCluding but not limited to, all salaries, labor, materials, 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 maintain the operations and render adequa te service to the Ci ty and the inhabi tants -17- S272C thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair obligations payable from Net Revenues shall be deducted in determining Net Revenues. Depreciation charges shall not be considered Maintenance and Operating Expenses. Maintenance and Operating Expenses shall include payments under contracts for the purChase of water supply, treatment of sewage or other materials, goods or services for the System to the extent authorized by law and the provisions of such contract. "Net Revenues" - Gross Revenues of the System, wi th respect to any period, after deducting the System's Maintenance and Operating Expenses during such period. "Obligations Similarly Secured" - COllectively, the Bonds, the PreviOUSly Issued Bonds and any Additional Parity Obligations, which shall be parity obligations being equally and ratably secured by and payable from a lien on and pledge of the Net Revenues of the System. "Outstanding" - When used in this Ordinance wi th respect to any Bonds means, as of the date of determinat ion, a 11 Bonds theretofore issued and delivered under this Ordinance, except: 1. those Bonds theretofore cancelled by the Paying Agent/Registrar or delivered to the Paying Agent/Registrar for cancellation; 2. those Bonds for which payment has been duly provided by the Ci ty in accordance with the provisions of Section 29 of this Ordinance by the irrevocable deposit with the Paying Agent/Registrar, or an authorized escrow agent, of money or Government Obligations, or both, in the amount necessary to fully pay the principal of, premi urn, if any, and interest thereon to maturity or redemption, as the case may be, provided that, if such Bonds are to be redeemed, notice of redemption thereof shall have been duly given pursuant to this Ordinance or -18- S272C irrevocably provided to be given to the satisfaction of the Paying Agent/Registrar, or waived; and 3. those Bonds that have been mutilated, destroyed, lost, or stolen and replacement Bonds have been registered and delivered in lieu thereof as provided in Section 28 of this Ordinance. "Previously Issued Bonds" - shall Outstanding and unpaid revenue bonds payable from and equally and ratably first lien on and pledge of the Net the System, identified as follows: mean the of the Ci ty secured by a Revenues of 1. City of Colleyville, Texas, Waterworks and Sewer System Revenue Bonds, Series 1975, dated January 1, 1975, and originally issued in the principal amount of $2,000,000; 2. City of Colleyville, Waterworks and Sewer System Bonds, Series 1975-A, dated 1975, and originally issued principal amount of $250,000; Texas Revenue July 1, in the 3. City of Colleyville, Texas Waterworks and Sewer System Revenue Bonds, Series 1981, dated April 1, 1981, and originally issued in the principal amount of $1,400,000; and 4. City of Colleyville, Texas Waterworks and Sewer System Revenue Bonds, Series 1987, dated March 1, 1987 and originally issued in the principal amount of $1,500,000. "Required Reserve Amount" - The amount to be deposited and maintained in the Fund under the provisions of Section 14 Ordinance. required Reserve of this -19- "System" - The waterworks and sewer system of the Ci ty, together wi th any addi tions and extensions thereto and improvements and replacements thereof hereafter constructed or acquired. SECTION 10: Pledge. The Ci ty hereby covenants and agrees that all of the Net Revenues of the System, with the exception of those in excess of the amounts required to establish and maintain the special Funds created for the payment and security of the Obligations Similarly Secured, are hereby irrevocably pledged, equally and ratably, to the payment of the Previously Issued Bonds, the Bonds, and Additional Par i ty ObI igat ions, if issued, and the interest thereon, as hereinafter provided. It is hereby ordained that the Obligations Similarly Secured, and the interest thereon, shall constitute a first lien on the Net Revenues of the System and be valid and binding without any physical delivery thereof or further act by the City. SECTION 11: Rates and Charges. For the benefi t of the Holders of the Bonds and in addition to all provisions and covenants in the laws of the State of Texas and in this Ordi nance, the Ci ty hereby express ly stipulates and ag rees, while any of the Bonds are Outstanding, to establish and maintain rates and charges for facilities and services afforded by the System that are reasonably expected, on the basis of available information and experience and with due allowance for contingencies, to produce Gross Revenues in each Fiscal Year sufficient: 1. To pay Maintenance Expenses, depreciation Charges and betterment costs, and and and Operating replacement 2. To produce Net Revenues sufficient to pay the principal of and interest on the Obligations Similarly Secured and the amounts required to be deposited in any reserve or contingency fund created for the payment and security of the Obligations Similarly Secured, and any other obligations or evidences of indebtedness issued or incurred that are payable only from and secured solely by a lien on and pledge of the Net Revenues of the System. 3. Any other legally incurred indebtedness payable from the revenues of the System and/or secured by a lien on the System. S27ZC -20- ------- SECTION 12: Waterworks and Sewer System Fund. The City hereby covenants, agrees and reaffirms its covenants to the Holders of the Previously Issued Bonds that the Gross Revenues of the System shall be deposited, as collected and received, into a separate account (previously created, established and to be maintained with a depository bank of the City) known as the Waterworks and Sewer System Fund (herein called the "System Fund") and that the Gross Revenues of the System shall be kept separate and apart from all other funds of the Ci ty. All Gross Revenues deposi ted into the System Fund shall be pledged and appropriated to the extent required for the following uses and in the order of priority shown: FIRST: To the payment of all necessary and reasonable Maintenance and Operating Expenses as defined herein or required by statute to be a first charge on and claim against the Gross Revenues of the System. SECOND: To the payment of the amounts required to be deposited into the Interest and Sinking Fund (hereinafter defined) created and established for the payment of the principal of and interest on each of the Obligations Similarly Secured as the same become due and payable. THIRD: To the payment of the amounts required to be deposited into the Reserve Fund (hereinafter defined) to establish and maintain the Required Reserve Amount in accordance wi th the provi s ions of this Ordinance or any other ordinance relating to the issuance of Obligations Similarly Secured. Any Net Revenues satisfying the foregoing sufficient provision for appropriated and used for hereafter permitted by law. remaining in the System Fund after payments, or making adequate and the payment thereof, may be any other City purpose now or SECTION 13: Interest and Sinking Fund. For purposes of providing funds to pay the principal of and interest on the Obligations Similarly Secured as the same become due and payable, the City agrees to maintain on the books and records of the City, a separate and special account or fund known as the "Waterworks and Sewer System Interest and Sinking Fund" (the "Interest and Sinking Fund") and moneys deposited to the credit of such account shall be kept in a special fund maintained at the depository of the City. The City covenants that there shall be deposited to the credit of the Interest and Sinking Fund prior to each principal and interest payment date S272C -21- from the available Net Revenues an amount equal to one hundred per centum (100%) of the amount required to fully pay the interest on and the principal of the Bonds then falling due and payable, such deposits to pay maturing principal and accrued interest on the Bonds to be made in substantially equal monthly installments on or before the fifteenth day of each month, beginning on 'or before the fifteenth day of the month next following the delivery of the Bonds to the initial purchaser(s). The required monthly deposits to the Interest and Sinking Fund for the payment of principal of and interest on the Bonds sha 11 continue to be made as hereinabove provided until such time as (i) the total amount on deposit in the Interest and Sinking Fund and Reserve Fund is equal to the amount required to fully pay and discharge all Outstanding Obligations Similarly Secured (principal and interest) or, (ii) the Bonds are no longer Outstanding. Accrued interest and premium, if any, received from the initial purchaser(s) of the Bonds, shall be taken into cons iderat ion and reduce the amount of the monthly deposi ts hereinabove required to be deposited into the Interest and Sinking Fund from the Net Revenues of the System. Additionally, any proceeds of the Bonds not required to complete the improvements and extensions to be made to the System shall be deposited into the Interest and Sinking Fund and may be taken into consideration and reduce the amount of monthly deposits required to be deposited into the Interest and Sinking Fund from the Net Revenues of the System. SECTION 14: Reserve Fund. For purposes of accumulating and maintaining funds as a reserve for the payment of the Obligations Similarly Secured, the City agrees, covenants and reaffirms its covenants to the Holders of the Previously Issued Bonds to maintain a special fund or account known as the "Waterworks and Sewer System Reserve Fund- (the "Reserve Fund"), which Fund shall be kept and maintained at an official depository of City funds. All funds deposited to the credit of the Reserve Fund (excluding earnings and income derived or received from deposits or investments which may be transferred to the System Fund referenced in Section 12 of this Ordinance during such periods as there is on deposit in the Reserve Fund the Required Reserve Amount) shall be used solely for the payment of the principal of and interest on the Obligations Simi larly Secured, when and to the extent other funds available for such purposes are insufficient. In accordance wi th the provi s ions of the ordinances authorizing the issuance of the Previously Issued Bonds, the amount currently on deposit in the Reserve Fund is $ (the "Current Reserve"). By reason of the issuance of the S272C -22- Bonds, the total amount required to be accumulated and maintained in the Reserve Fund shall be and is hereby increased to the sum of $~~ 69~ (the "Required Reserve Amount"), which amount equals at least the average annual principal and interest requi rements for the Bonds and the Previously Issued Bonds now Outstanding. Beginning on or before the fifteenth day of the month next following the delivery of the Bonds and on or before the fifteenth day of each following month until the Required Reserve Amount has been accumulated in the Reserve Fund, the Ci ty covenants and agrees to deposi t to the Reserve Fund an amount equal to l/60th of the difference between the Required Reserve Amount and the Current Reserve. When and so long as the cash and investments in the Reserve Fund tota 1 not less than the Requi red Reserve Amount, no deposi ts need be made to the credi t of the Reserve Fundi but, if and when the Reserve Fund at any time contains less than the Required Reserve Amount (other than as the result of the issuance of Addi tional Pa ri ty ObI igations as provided in the preceding paragraph), the City covenants and agrees to cure the deficiency in the Required Reserve Amount by resuming monthly deposits to said Fund in an amount equal to 1/60th of the Required Reserve Amount from the Net Revenues of the System on or before the fifteenth day of each month until the Required Reserve Amount has been fully restored. The City further covenants and agrees that, subject only to the payments to be made to the Interest and Sinking Fund, the Net Revenues shall be applied and appropriated and used to establish and maintain the Required Reserve Amount and to cure any deficiency in such amounts as requi red by the terms of this Ordinance and any other ordinance pertaining to the issuance of Additional Parity Obligations. Money in the Reserve Fund, at the option of the City, may be invested or reinvested from time to time in direct obligations or Obligations the principal and interest of which are guaranteed by the Uni ted States of America or invested in direct obligations of or participation certificates guaranteed by the Federa 1 Intermediate Credi t Banks, Federa I Land Banks, Federal National Mortgage Association, Federal Home Loan Banks, Banks for Cooperatives, and in certificates of deposit of any bank or trust company the deposits of which are fully secured by a pledge of securities of any of the kinds hereinabove specified, such obligations or securities to mature in not more than ten (10) years from the date of such investment. Any obligations in which money is so invested shall be kept in escrow in the City's depository bank and shall be promptly sold and the proceeds of sale applied to the making of payments required to be made from the Reserve Fund whenever such payments are necessary to be made. The deposits to the Reserve Fund shall be subordinate to those required to be made into the Interest and Sinking Fund. -23- SZ7ZC SECTION 15: Deficiencies - Excess Net Revenues. A. I f on any occasion there sha 11 not be sufficient Net Revenues of the System to make the required deposits into the Interest and Sinking Fund and the Reserve Fund, then such deficiency shall be cured as soon as possible from the next available unallocated Net Revenues of the System, or from any other sources avai lable for such purpose, and such payments shall be in addition to the amounts required to be paid into said Funds during such month or months. Interest required issuance Revenues purpose. B. Subject to making the required deposits to the and Sinking Fund and the Reserve Fund when and as by this Ordinance, or any ordinance authorizing the of Additional Parity Obligations, the excess Net of the System may be used by the City for any lawful SECTION 16: Payment of Bonds. While any of the Bonds are Outstanding, the Director of Finance shall cause to be transferred to the Paying Agent/Registrar, from funds on deposit in the Interest and Sinking Fund, and, if necessary, in the Reserve Fund, amounts sufficient to fully pay and discharge promptly each installment of interest on and principal of the Bonds as such installment accrues or maturesi such transfer of funds must be made in such manner as will cause immediately avai lable funds to be deposi ted wi th the Paying Agent/Registrar for the Bonds at the close of the business day next preceding the date a debt service payment is due on the Bonds. SECTION 17: Issuance of Additional Parity Obligations. Subject to the provisions hereinafter appearing as to the conditions precedent which must be satisfied, the City reserves the right to issue, from time to time as needed, Additional Parity Obligations for any lawful purpose. The Additional Parity Obligations, when issued, shall be payable from and secured by a first I ien on and pledge of the Net Revenues of the System in the same manner and to the same extent as the Bonds and the Previously Issued Bonds. Such Additional Parity Obligations may be issued in such form and manner as now or hereafter authorized by the laws of the State of Texas for the issuance of evidences of indebtedness or other instruments, and should new methods or financing techniques be developed that differ from those now available and in normal use, the City reserves the right to employ the same in its financing arrangements provided only that the fOllowing conditions precedent for the authorization and issuance of any Additional Parity Obligations are satisfied, to wit: S212C -24- A. The City is not then in default as to any covenant, condition or obligation prescribed by the ordinances authorizing the Obligations Similarly Secured. B. Each of the Funds created and established for the payment and security of Obligations Similarly Secured contains the amount of money then required to be on deposit therein. C. The Net Earnings (hereinafter defined) of the System for (i) the completed Fiscal Year next preceding the adoption of an ordinance authorizing the issuance of the proposed Additional Parity Obligations, or (ii) the twelve (12) months next preceding the adoption of such ordinance are equal to at least 1.20 times the average annual principal and interest requirements of all bonds to be secured by a first lien on and pledge of the Net Revenues of the System after giving effect to the issuance of the proposed Additional Parity Obligations, as such Net Earnings are shown by a report by a Certified Public Accountant or a Licensed Public Accountant. The term "Net Earnings" as used in this Section shall mean the Gross Revenues after deducting Maintenance and Operating Expenses, but not deducting depreciation or expenditures which, under standard accounting practice, should be Charged to capital expenditures. D. The Additional Parity Obligations are made to mature on January 1 of each of the years in which they are scheduled to mature. E. The ordinance authorizing issuance of the Additional Parity Obligations provides for the accumulation in the Interest and Sinking Fund of amounts sufficient to pay the principal and interest on such Additional Parity Obligations as the same mature. F. The ordinance authorizing the issuance of Additional Parity Obligations provides that the amount to be accumulated and maintained in the Reserve Fund (including the amount required to be deposited therein by the provisions of this Ordinance) will be equal to not less than the average annual principal and interest requirements for all Obligations Similarly Secured which will be Outstanding after giving effect to the issuance of the proposed Additional Parity Obligations (such average annual requirement to be calculated on a Fiscal Year basis as of the date of the proposed Additional Parity Obligations). Any additional Reserve Fund Amount shall be required (by such authorizing ordinance) to be accumulated therein within sixty (60) calendar months from the date of issuance of the proposed Additional Parity Obligations. SZ1ZC -25- SECTION 18: Refunding Bonds. The Ci ty reserves the right to issue refunding bonds to refund all or any part of the Outstanding Obligations Similarly Secured, pursuant to any law then available, upon such terms and conditions as the City Council of the City may deem to be in the best interest of the City and its inhabitants, and if less than all such Outstanding Obligations Similarly Secured are refunded, the conditions precedent prescribed, for the issuance of Additional Parity Obligations, set forth in Section 17 of this Ordinance shall be satisfied and the Accountant I s certificate or opinion required in subparagraph (C) shall give effect to the principal and interest requirements of the proposed refunding bonds (but shall not give effect to the Obligations Similarly Secured being refunded following their cancellation or provision being made for their payment). SECTION 19: Obligations of Inferior Lien and Pledge. The City hereby reserves the right to issue, at any time, obligations payable from and secured by a lien on and pledge of the Net Revenues of the System, junior and subordinate in rank and digni ty to the lien on and pledge of such Net Revenues securing the payment of the Obligations Similarly Secured, as may be authorized by the laws of the State of Texas. SECTION 20: Security of Funds. All moneys on deposit in the funds for which this Ordinance makes provision (except any portion thereof as may be at any time properly invested) shall be secured in the manner and to the fullest extent required by the laws of Texas for the security of public funds, and moneys on deposit in such funds shall be used only for the purposes permitted by this Ordinance. SECTION 21: Maintenance of System - Insurance. The City covenants, agrees and reaffirms its covenants to the Holders of the Previous ly Issued Bonds that whi Ie the Bonds remain Outstanding, it will maintain and operate the System with all possible efficiency and maintain casualty and other insurance on the properties of the System and its operations of a kind and in such amounts customari ly carried by municipal corporations in the State of Texas engaged in a similar type of business. SECTION 22: Records and Accounts Annual Audit. The Ci ty covenants, agrees and reaff i rms its covenants to the Holders of the Previously Issued Bonds that so long as any of the Bonds remain Outstanding, it will keep and maintain separate and complete records and accounts pertaining to the operations of the System in which complete and correct entries shall be made of all transactions relating thereto, as provided by Texas Revised Civil Statutes Annotated Article 1113, as ~ :.27lC -26- amended, or other applicable law. The Holder or Holders of the Bonds of any duly authorized agent or agents of such Holders sha 11 have the right to inspect the Sys tern and all p ropert ies comprising the same. The City further agrees that fallowing the close of each Fiscal Year, it will cause an audit of such books and accounts to be made by an independent firm of Certified Public Accountants. This audi t wi 11 address, at a minimum, the requi rements set forth in the ordinances authorizing the issuance of the Previously Issued Bonds. Copies of each annual audit shall be furnished to the Executive Di rector of the Municipa I Advisory Counci 1 of Texas at his office in Austin, Texas, and, upon written request, to the initial purchaser of the Bonds and any subsequent Holder thereof. SECTION 23: Remedies in Event of Default. In addition to all the rights and remedies provided by the laws of the State of Texas, the City covenants and agrees particularly that in the event the City (a) defaults in the payments to be made to the Interest and Sinking Fund or the Reserve Fund, or (b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in this Ordinance, the Holder or Holders of any of the Bonds shall be enti t led to a wri t of mandamus issued by a court of proper jurisdiction compelling and requiring the governing bOdy of the City and other officers of the City to observe and perform any covenant, condition or obligation prescribed in this Ordinance. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence therein, and every such right or power may be exercised from time to time and as often as may be deemed expedient. The specific remedies herein provided shall be cumulative of all other existing remedies and the specification of such remedies shall not be deemed to be exclusive. SECTION 24: Special Covenants. hereby further covenants as follows: That the City A. It has the lawful power to pledge the Net Revenues supporting this issue of Bonds and has lawfully exercised said powers under the Constitution and laws of the State of Texas, including said power existing under Texas Revised Civil Statutes Annotated Articles 1111 et seq, as amended, and Texas Revised Civil Statutes Annotated Article 2368a, as amended. B. The Obligations Similarly Secured shall be equally and ratably secured by a lien on and a pledge of the Net Revenues of the System in a manner that one bond shall have no preference over any other bond. S272C -27- C. Other than for the payment of the Outstanding Obligations Similarly Secured, the outstanding "City of Colleyville, Texas Combination Tax and Junior Lien Revenue Certificates of Obligation, Series 1982", dated December I, 1982, in the original principal amount of $400,000, the Bonds, and the "City of Colleyville, Texas, Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 1989" (authorized for issuance concurrently with the Bonds), the Net Revenues of the System have not in any manner been pledged to the payment of any debt or obligation of the City or of the System. D. As long as any Obligations Similarly Secured, or any interest thereon, remain Outstanding, the City will not sell, lease or encumber the System or any substantial part thereof, provided that this covenant shall not be construed to prohibi t the sa Ie of such machinery, or other propert ies or equipment which has become obsolete or otherwise unsui ted to the efficient operation of the System; also, with the exception of Addi tional Pari ty Obligations issued in accordance wi th the terms and condi t ions of thi s Ordinance, it wi 11 not encumber the Net Revenues unless such encumbrance is made junior and subordinate to all of the provisions of this Ordinance. E. No free service of the System shall be allowed, and should the City or any of its agents or instrumentalities make use of the services and facilities of the System, payment of the reasonable va lue thereof sha 11 be made by the Ci ty out of funds from sources other than the revenues and income of the System. F. To the extent further covenants and agrees Obligations Similarly Secured, Outstanding, no franchise shall or operation of any competing systems other than those owned of any such systems by anyone prohibited. that it legally may, the City that, so long as any of the or any interest thereon, are be granted for the installation waterworks and sani tary sewer by the City, and the operation other than the Ci ty is hereby SECTION 25: Special Obligations. The Bonds are limited, special obligations of the City payable solely from and secured by a lien on and pledge of the Net Revenues of the System, and the Holders thereof shall never have the right to demand payment of the principal or interest on the Bonds from any funds raised or to be raised through taxation by the City. SECTION 26: Notices to Holders; Waiver. Wherever this Ordinance provides for notice to Holders of any event, such notice shall be SUffiCiently given (unless otherwise herein expressly provided) if in writing and mailed, first class pos tage prepa id, to the address of each Ho lder as it appears in the Security Register. SZ7ZC -28- In any case where notice to Holders is given by mail, neither the failure to mail such notice to any particular Holders, nor any defect in any notice so mailed, shall affect the sufficiency of such notice with respect to any other Holders. Where this Ordinance provides for notice in any manner, such notice may be waived in writing by the Holder entitled to receive such notice, either before or after the event wi th respect to which such notice is given, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. SECTION 27: Cancellation. All Bonds surrendered for payment, transfer, exchange, or replacement, if surrendered to the Paying Agent/Registrar, shall be promptly cancelled by it and, if surrendered to the City, shall be delivered to the Paying Agent/Registrar and, if not already cancelled,' shall be promptly cancelled by the Paying Agent/Registrar. The City may at any time deliver to the Paying Agent/Registrar for cancellation any Bonds previously certified or registered and delivered which the City may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the Paying Agent/Registrar. All cancelled Bonds held by the Paying Agent/Registrar shall be destroyed as directed by the City. SECTION 28: Mutilated, Destroyed, Lost, and Stolen Bonds. In case any Bond shall be mutilated, or destroyed, lost or stolen, the Paying Agent/Registrar may execute and deliver a replacement Bond of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substi tution for such muti lated Bond, or in lieu of and in substitution for such destroyed, lost or stolen Bond, only upon the approval of the City and after (i) the f i 1 ing by the Holder thereof wi th the Paying Agent/Registrar of evidence satisfactory to the Paying Agent/Registrar of the destruction, loss or theft of such Bond, and of the authenticity of the ownership thereof and (ii) the furnishing to the Paying Agent/Registrar of indemnification in an amount satisfactory to hold the City and the Paying Agent/Registrar harmless. All expenses and charges associated wi th such indemni ty and wi th the preparation, execut ion and delivery of a replacement Bond shall be borne by the Holder of the Bond mutilated, or destroyed, lost or stolen. Every replacement Bond issued pursuant to this Section shall be a valid and binding obligation, and shall be entitled to all the benefits of this Ordinance equally and ratably with all other Outstanding Bonds; notwithstanding the enforceability of payment by anyone of the destroyed, lost, or stolen Bonds. S272C -29- The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement and payment of mutilated, destroyed, lost or stolen Bonds. SECTION 29: Satisfaction of Obligation of City. If the City shall payor cause to be paid, or ther~ shall otherwise be paid to the Holders, the principal of and interest on the Bonds, at the times and in the manner stipulated in this Ordinance, then the pledge of any taxes, or Net Revenues of the System or other money, securities, and funds pledged under this Ordinance and all covenants, agreements, and other obligations of the City to the Holders shall thereupon cease, terminate, and become void and be discharged and satisfied, and the Paying Agent/Registrar shall pay over or deliver all money held by it under this Ordinance to the City. Bonds or any principal amount(s) thereof shall be deemed to have been paid within the meaning and with the effect expressed above in this Section when (i) money sufficient to pay in full such Bonds or the principal amount(s) thereof at maturity or to the redemption date therefor, together with all interest due thereon, shall have been irrevocably deposited with and held in trust by the Paying Agent/Registrar, or an authorized escrow agent, or (ii) Government Obligations shall have been irrevocably deposited in trust with the Paying Agent/ Registrar, or an authorized escrow agent which Government Obligations have been certified by an independent accounting firm to mature as to principal and interest in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money, together wi th any moneys deposited therewith, if any, to pay when due the principal of and interest on such Bonds, or the principal amount(s) thereof, on and prior to the Stated Maturi ty thereof or (if notice of redemption has been duly given or waived or if irrevocable arrangements therefor acceptable to the Paying Agent/Registrar have been made) the redemption date thereof. The Ci ty covenants that no deposit of moneys or Government Obligations will be made under this Section and no use made of any such deposit which would cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended, or regulations adopted pursuant thereto. Any moneys so deposited with the Paying Agent/ Registrar, or an authorized escrow agent, and all income from Government Obligations held in trust by the Paying Agent/Registrar or an authorized escrow agent, pursuant to this Section which is not required for the payment of the Bonds, or any principal amount(s) thereof, or interest accruing thereon, 5212C -30- with respect to which such moneys have been so deposited shall be remitted to the City or deposited as directed by the City. Furthermore, any money held by the Paying Agent/Registrar for the payment of the principal of and interest on the Bonds and remaining unclaimed for a period of four (4) years after the Stated Maturity, or applicable redemption date, of the Bonds such moneys were deposited and are held in trust to pay shall, upon the request of the City, be remitted to the City against a wri tten receipt therefor. Notwi thstanding the above and foregoing, any remittance of funds from the Paying Agent/Registrar to the City shall be subject to any applicable unclaimed property laws of the State of Texas. SECTION 30: Ordinance a Contract Amendments Outstanding Bonds. The City aCknowledges that the covenants and obligations of the City herein contained are a material inducement to the purchase of the Bonds. This Ordinance shall constitute a contract with the Holders from time to time, binding on the City and its successors and assigns, 'and shall not be amended or repea led by the Ci ty so long as any Bond remains Outstanding except as permitted in this Section. The City may, without the consent of or notice to any Holders, from time to time and at any time, amend this Ordinance in any manner not detrimental to the interests of the Holders, including the curing of any ambiguity, inconsistency, or formal defect or omission herein. In addition, the City may, with the written consent of Holders holding a majority in aggregate principa 1 amount of the Bonds then Outstanding affected thereby, amend, add to, or rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders of Outstanding Bonds, no such amendment, addition, or rescission shall (1) extend the time or times of payment of the principal of and interest on the Bonds, reduce the principal amount thereof or the rate of interest thereon, or in any other way modify the terms of payment of the principal of or interest on the Bonds, (2) give any preference to any Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds requi red for consent to any such amendment, addi tion, or rescission. SECTION 31: Covenants to Maintain Tax-Exempt Status. (a) Definitions. When used in this Section 31, the following terms have the following meanings: "Code" means the Internal Revenue Code of 1986, as amended by all legislation, if any, enacted on or before the Issue Date. "Computation Date" has the meaning stated in Treas. Reg. ~ 1.148-8T(b)(1). 5272C -31- "Gross ProceedsR has the meaning stated in Treas. Reg. S 1.148-8T(d). "Investment" has the meaning stated in Treas. Reg. S 1.148-8T(e). "Issue Date" means the date on which the Bonds are first authenticated and delivered to the initial purchasers against payment therefor. "Nonpurpose Investment" means any Investment in which Gross Proceeds of the Bonds are invested and which is not acquired to carry out the governmental purpose of the Bonds. "Yield of" (1) any Investment shall be computed in accordance with Treas. Reg. Sl.148-2T, and (2) the Bonds has the meaning stated in Treas. Reg. S 1.148-3T. (b) Not to Cause Interest to Become Taxable. The City shall not use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction, or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner which, if made or omitted, respectively, would cause the interest on any Bond to become includable in the gross income, as defined in sect ion 61 of the Code, of the owner thereof for federal income tax purposes. Without 1 imi t ing the genera 1 i ty of the foregoing, unless and until the City shall have received a written opinion of counsel nationally recognized in the field of municipal bond law to the effect that failure to comply with such covenant will not adversely affect the exclusion of interest on any Bond from gross income for federal income tax purposes pursuant to Section 103 of the Code, the City shall comply with each of the specific covenants in this Section. (c) No Private Use or Private Payments. Except as permitted by section 141 of the Code and the regulations and rulings thereunder, the City, at all times prior to the last Stated Maturity of Bonds, (1) shall exclusively own, operate, and possess all property acquired, constructed or improved di rect ly or indi rectly with Gross Proceeds of the Bonds and sha 11 not use or permi t the use of such -32- S272C Gross Proceeds or any property acquired, constructed, or improved with such Gross Proceeds in any activity carried on by any person or entity other than a state or local government, unless such use is solely as a member of the general public, or (2) shall not directly or indirectly impose or accept any charge or other payment for use of Gross Proceeds of the Bonds or for any property acquired, const ructed or improved indi rect ly wi th such Gross Proceeds, other than taxes of general application wi thin the Ci ty or interest earned on investments acquired with such Gross Proceeds pending application for their intended purposes. (d) No Pr i vate Loan. Except to the extent permi tted by section 141 of the Code and the regulations and rulings thereunder, the City shall not use Gross Proceeds of the Bonds to make or finance loans to any person or entity other than a state or local government. For purposes of the foregoing covenant, such Gross Proceeds are considered to be "loaned" to a person or entity if (1) property acquired, constructed, or improved wi th such Gross Proceeds is sold or leased to such person or entity in a transaction which creates a debt for federal income tax purposes, (2) capacity in or service from such property is commi tted to such person or enti ty under a take-or-pay, output, or similar contract or arrangement, or (3) indi rect benefi ts, or burdens and benefi ts of ownership, of such Gross Proceeds or any property acquired, constructed, or improved with such Gross Proceeds are otherwise transferred in a transaction which is the economic equivalent of a loan. (e) Not to Invest at Higher Yield. Except to the extent permi tted by section 148 of the Code and the regulations and rulings thereunder, the Ci ty shall not, at any time prior to the final Stated Maturity of the Bonds, directly or indirectly invest Gross Proceeds of the Bonds in any Investment (or use such Gross Proceeds to replace money so invested), if as a result of such investment the Yield of all Investments allocated to such Gross Proceeds whether then held or previously disposed of, exceeds the Yield of the Bonds. (f) Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the Code and the regulations and rulings thereunder, the City shall not take or omit to take any action which would cause the Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code and the regulations and rulings thereunder. S272C -33- "--=:::::::- (g) Information Report. The City shall timely file with the Secretary of the Treasury the information required by sect ion 149 (e) of the Code wi th respect to the Bonds on such form and in such place as such Secretary may prescribe. (h) No Rebate Required. The City warrants and represents that it satisfies the requirements of paragraph (2) and (3) of section 148(f) of the Code with respect to the Bonds without making the payments for the Uni ted States described in such section. Specifically, the City warrants and represents that (1) the City is a governmental unit with general taxing powers; (2) at least 95\ of the Gross Proceeds of the Bonds will be used for the local governmental activities of the City; (3) the aggregate face amount of all tax-exempt obligations issued or expected to be issued by the City (and all subordinate entities thereof) in the calendar year in which the Bonds are issued is not reasonably expected to exceed $5,000,000. SECTION 32: Qualified Tax Exempt Obligations. In accordance wi th the provisions of paragraph (3) of subsection (b) of Section 265 of the Code, the City hereby designates the Bonds to be "qualified tax exempt obligations" in that the Bonds are not "private activity bonds" as defined in the Code and the reasonably anticipated amount of "qualified tax exempt obligations" to be issued by the City (including all subordinate entities of the City) for the calendar year 1989 will not exceed $10,000,000. SECTION 33: Sale ~ Bon~Use~f B~pro=s. The sale of the Bonds to _~~_/'~G...... . ~ (herein referred to as the "Purchaser" and having all the rights, benefits, and obligations of a Halder) at the price of par and accrued interest to date of delivery, pl"~ .,. pr,-i tlRl. 8F less a discount of $ ~ d....::57':J~, is hereby confirmed. Delivery of the Bonds shall e made to the Purchaser as soon as pract1cable after the adoption of this Ordinance, upon payment therefor in accordance with the terms of sale. Proceeds from the sale of the Bonds shall be applied as follows: A. Accrued interest and premium, if any, received from the Purchaser shall be deposited into the Interest and Sinking Fund. -34- S272C B. The balance of the proceeds derived from the sale of the Bonds (after paying costs of issuance) shall be deposited into the special construction account or accounts created for the projects to be constructed with the proceeds of the Bonds. SECTION 34: Cant ro 1 and Cus tody of Bonds. The Mayo r of the Ci ty sha 11 be and is hereby authorized to take and have charge of all necessary orders and records pending investigation by the Attorney General of the State of Texas, and shall take and have charge and control of the Bonds pending their approval by the Attorney General, the registration thereof by the Comptroller of Public Accounts and the delivery of the Bonds to the Purchaser. Furthermore, the Mayor, City Secretary, City Manager, City Attorney, and Director of Finance, anyone or more of said officials, are hereby authorized and directed to furnish and execute such documents and certifications relating to the City and the issuance of the Bonds, including certifications as to facts, estimates, circumstances and reasonable expectations pertaining to the use, expenditure and investment of the proceeds of the Bonds, as may be necessary for the approval of the Attorney General, the registration by the Comptroller of Public Accounts and the delivery of the Bonds to the Purchasers, and, together wi th the Ci ty' s financial advisor, bond counsel and the Paying Agent/Registrar, make the necessary arrangements for the delivery of the Initial Bond(s) to the Purchasers and the initial exchange thereof for definitive Bonds. SECTION 35: Printed Opinion. That the initial purchaser's obligation to accept delivery of the Bonds is subj ect to its being furnished a final opinion of Fulbright & Jaworski, Attorneys at Law, approving such Bonds as to thei r validity, said opinion to be dated and delivered as of the date of delivery and payment for such Bonds. Printing of a true and correct copy of said opinion on the reverse side of each of said Bonds, with appropriate certificate pertaining thereto executed by facsimile signature of the City Secretary of the City is hereby approved and authorized. SECTION 36: Effect of herein are for convenience construction hereof. Headings. only and The shall Section headings not affect the SECTION 37: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is intended or shall be construed to confer upon any person other than the City and the Holders, any right, remedy, or claim, legal or equitable, under or by reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being intended to be and being for the sole and exclusive benefit of the City and the Holders. S272C -35- SECTION 38: Inconsistent Provisions. All ordinances and resolutions, or parts thereof, which are in conflict or inconsistent wi th any provision of this Ordinance are hereby repealed to the extent of such conflict and the provisions of this Ordinance shall be and remain controlling as to the matters ordained herein. SECTION 39: Governing Law. This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas and the United States of America. SECTION 40: Severability. If any provision of this Ordinance or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Ordinance and the application of such provision to other Persons and circumstances shall nevertheless be valid, and this governing body hereby declares that this Ordinance would have been enacted without such invalid provision. SECTION 41: Amendments to Ordinance Upon Discharge of Previously Issued Bonds. That, at such time as the Previously Issued Bonds identified in Section 9 have been paid or are no longer Outs tandi ng, the fo llowing Sections of thi s Ordinance shall be amended and modified to read as follows: (a) Section 9 shall be amended and modified to read as follows: "SECTION 9: Definitions. For all purposes of this Ordinance and in particular for clarity with respect to the issuance of the Bonds herein authorized and the pledge and appropriation of revenues to the payment of the Bonds, the fo llowing definitions are provided: "Additional Parity Obligations" - Bonds, notes, warrants, certificates of obligation or other evidences of indebtedness which the City reserves the right to issue or enter into, as the case may be, in the future under the terms and condi tions provided in Section 18 of this Ordinance and which are equally and ratably secured by a first lien on and pledge of the Net Revenues of the System. "Average Annual Debt Service" - That average amount which, at the time of computation, will be requi red to pay the Debt Service of obligations when due and derived by dividing the total of such Debt Service by the number of S272C -36- S272C years then remaining before final maturity. Capitalized interest payments provided from proceeds of Obligations Similarly Secured shall be excluded in making the aforementioned computation. "Bonds" - The "City of Colleyville, Texas Waterworks and Sewer System Revenue Bonds, Series 1989", dated August 1, 1989, authorized by this Ordinance. "City" - The City of Colleyville, located in the County of Tarrant, Texas. "Debt Service" - As of any particular date of computation, with respect to any obligations and with respect to any period, the aggregate of the amounts to be paid or set aside by the City as of such date or in such period for the' payment of the principal of, premium, if any, and interest (to the extent not capitalized) on such obligations; assuming, in the case of Obligations Similarly Secured without a fixed numer ica 1 rate, that such obI iga t ions bear, or would have borne, interest at the highest rate reached, or that would have applied to such obligations (using the index or method for computing interest applicable to such obligations) during the twenty-four (24) month period next preceding the date of computation; and fu rther assumi ng in the case of obI igat ions required to be redeemed or prepaid as to principal prior to maturi ty, the principal amounts thereof will be redeemed prior to maturity in accordance with the mandatory redemption provisions applicable thereto. "Fiscal Year" - The twelve month financial accounting period for the System ending September 30th of each year; provided, however, the Ci ty, by ordinance, may change the Fiscal Year to another period of not less than twelve calendar months. "Government Obligations" - Direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, and United States Treasury obligations such as its State and Local Government Series in book-entry form. -37- S212C "G ross Revenues" - All income and revenues of every nature derived or received from the operation and ownership (excluding refundable meter deposits, gifts and grants in aid of construction, impact fees charged developers and special assessments against landowners) of the System, including earnings and income derived from the investment or deposit of moneys in any special funds or accounts created and established for the payment and security of the Obligations Similarly Secured and other obligations payable solely from and secured only by a lien on and pledge of the Net Revenues. "Maintenance and Operating Expenses" - All current expenses of operating and maintaining the System, inCluding all salaries, labor, materials, 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 maintain the operations and render adequate service to the Ci ty and the inhabi tants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair obligations payable from Net Revenues sha II be deducted in determining "Net Revenues". Depreciation charges shall not be considered Operating and Maintenance Expenses. Operating and Maintenance Expenses shall include payments under contracts for the purchase of water supply, treatment of sewage or other materials, gOOds or services for the System to the extent authorized by law and the provisions of such contract. "Net Earnings" - The meaning assigned to such term in Section 18 hereof. "Net Revenues" - Gross Revenues of the System, wi th respect to any periOd, after deducting the System's Maintenance and Operating Expenses during such period. "Outstanding" - When used in this Ordinance wi th respect to Bonds or Obligations Simi larly Secured means, as of the date of determination, all Bonds or Obligations Similarly Secured theretofore issued and delivered under their respective authorizing ordinances, except: -38- S272C (I) those Similarly Secured cancellation by agent therefor; Bonds or Obligations cancelled or received for the appropriate paying (2) those Bonds or Obligations Similarly Secured paid or deemed to be duly paid by the Ci ty in accordance wi th the provisions of the ordinances governing thei r issuance and appl icable laws by the irrevocable deposit with the Paying Agent/Registrar, or an authorized escrow agent, of money or Government Obligations, or both, in the amount necessary to fully pay the principal of, premium, if any, and interest thereon to maturity or redemption, as the case may be; provided that, if such obligations are to be redeemed, notice of redemption thereof shall have been duly given in accordance with the terms prescribed therefor or irrevocably provided to be given, or waived; and (3) those Bonds or Obligations Similarly Secured that have been mutilated, destroyed, lost, or stolen and replacement Bonds have been registered and delivered in 1 ieu thereof in accordance wi th applicable terms and provisions. "Requi red Reserve" - The amount required to be accumulated and maintained in the Reserve Fund under the provisions of Section 14. "System" - All properties, facilities and plants currently owned, operated and maintained by the City for the supply, treatment, transmission and distribution of potable water and the collection, treatment and disposal of water-carried wastes, together with all future extens ions, improvements, replacements and additions thereto; provided, however, that notwithstanding the foregoing, and to the extent now or hereafter authorized or permitted by law, the term "System" shall not mean to include facilities of any kind which are declared not to be a part of the System and which are acquired or constructed by or on behalf of the City with the proceeds from the issuance of .Special Facilities Bonds", which are hereby defined as -39- S272C being special revenue obligations of the City which are not Bonds but which are payable from and secured by other liens on and pledges of any revenues, sources or payments, not pledged to the payment of the Obligations Similarly Secured including, but not limited to, special contract revenues or payments received from any other legal entity in connection with such facilities." (b) Section 11 shall be amended and modified to read as follows: "SECTION II: Rates and Charges. That, for the benefit of the Holders of the Bonds and in addition to all provisions and covenants in the laws of the State of Texas and in this Ordinance, the City hereby expressly stipulates and agrees, while any of the Bonds are Outstanding, to establish and maintain rates and charges for facilities and services afforded by the System that are reasonably expected, on the basis of avai lable information and experience and wi th due a llowance for cont ingencies, to produce Gross Revenues in each Fiscal Year sufficient: (I) To pay Maintenance and Operating Expenses, depreciation charges and replacement and betterment costs, (2) To produce Net Revenues sufficient to pay the current Debt Service on the Obligations Simi larly Secured then Outstanding and the amounts required to be deposited in any reserve or contingency fund created for the payment and securi ty of the Obligations Similarly Secured, or other evidences of indebtedness issued or incurred that are payable only from and secured solely by a lien on and pledge of the Net Revenues of the System, and (3) To produce Net Revenues equal to at least 1.20 times the annual Debt Service for the Obligations Similarly Secured then Outstanding. (4) To pay all payable from the Net secured by a lien on the revenues of the System. other indebtedness Revenues and/o r properties or the -40- (c) follows: Section 12 shall be amended and modified to read as "SECTION 12: Water and Sewer System Fund. The City hereby covenants and agrees that Gross Revenues of the System (excluding earnings and income derived from investments held in the Interest and Sinking Fund and Reserve Fund) shall be deposited as collected to the credit of a fund maintained at an official depository of City funds and known on the books and records of the City as the "Water and Sewer System Fund" (herein called the "System Fund"), and such revenues of the System shall be kept separate and apart from all other funds of the City. All revenues deposited in the System Fund shall be pledged and appropriated to the extent required for the fOllowing uses and in the order of priority shown: (1) To the payment of all necessary and reasonable Maintenance and Operating Expenses' as defined herein or required by statute to be a first charge on and claim against the Gross Revenues thereof. (2) To the payment of the amounts requi red to be deposited in the Interest and Sinking Fund established and maintained for the payment of Debt Service on the Obligations Similarly Secured as the same becomes due and payable. (3) To the payment of the amounts requi red to be deposi ted in the Reserve Fund to accumulate and maintain therein the Required Reserve in accordance with the provisions of this Ordinance or any other ordinance relating to issuance of Obligations Similarly Secured. Any Net Revenues remaining in the System Fund after satisfying the foregoing payments, or making adequate and sufficient provision for the payment thereof, may be appropriated and used for any other City purpose now or hereafter permitted by law." (d) follows: Section 13 shall be amended and modified to read as "SECTION 13: Interest and Sinking Fund. For purposes of providing funds to pay current Debt Service on Obligations Similarly Secured when and as the same shall become due and payable, a separate and special account shall be established and maintained S272C -41- .L....._. ,___~ on the books and records of the Ci ty known as the "City of Colleyville Revenue Bond Interest and Sinking Fund" (the "Interest and Sinking Fund") and all funds deposited to the credit of such Fund shall be kept and maintained in a special banking account or fund maintained at an official depository of the Ci ty. In addi tion to the deposi ts to the Interest and Sinking Fund for the payment of the Previously Issued Bonds, the City covenants that there shall be deposited into the Interest and Sinking Fund prior to each principal and interest payment date from the Net Revenues an amount equa I to one hundred per centum (100%) of the amount required to fully pay the interest on and the principal of the Bonds then falling due and payable by reason of maturity or redemption, and such deposits to pay principal and accrued interest on the Bonds shall be made in substantially equal monthly installments on or before the 15th day of each month, beginning on or before the 15th day of the month next following the delivery of the Bonds to the ini t i a 1 purchaser. If the Net Revenues in any month are then insufficient to make the requi red payments into the Interest and Sinking Fund, then the amount of any deficiency in the payment shall be added to the amount otherwise requi red to be paid into the Interest and Sinking Fund in the next month. "The requi red monthly deposi ts to the Interest and Sinking Fund for the payment of principal of and interest on the Bonds shall continue to be made as hereinabove provided until (i) the total amount on deposit in the Interest and Sinking Fund and Reserve Fund is equal to the amount required to fully pay and discharge all Obligations Similarly Secured then Outstanding (principal and interest) or (ii) the Bonds are no longer Outstanding. "Accrued interest and premium, if any, received from the purchaser(s) of the Bonds, as well as earnings derived from the investment of moneys in the Interest and Sinking Fund, shall be deposited to the credi t of the Interest and Sinking Fund and taken into consideration and reduce the amount of the monthly deposits hereinabove required to be deposited in the Interest and Sinking Fund from the Net Revenues of the System." (e) follows: Section 14 shall be amended and modified to read as -42- S272C S272C "SECTION 14: Reserve Fund. For purposes of accumulating and maintaining funds as a reserve for the payment of the Obligations Similarly Secured, the City agrees and covenants to create and maintain on the books and records of the Ci ty a separate and special fund or account known as the "Revenue Bond Reserve Fund" (the "Reserve Fund"), and all funds depos i ted to the credi t of such Fund sha II be kept and maintained in a special banking account or fund maintained at an official depository of the City. All funds deposited therein (excluding earnings and income derived or received from deposits or investments which may be transferred to the System Fund referred to in Section 12 hereof during such periods as there is on deposit in the Reserve Fund the Required Reserve) shall be used solely for the payment of the principal of and interest on the Obligations Similarly Secured when (whether at maturity, upon a mandatory redemption date or 'any interest payment date) other funds available for such purposes are insufficient, and, in addition, may be used to the extent not required to maintain the "Required Reserve", to pay, or provide for the payment of, the final principal amount of a series of Obligations Simi larly Secured so that such series of Obligations Similarly Secured is no longer deemed to be "Outstanding" as such term is defined herein. "The City hereby reaffirms that it will accumulate and, when accumulated, continUOUSly maintain in the Reserve Fund an amount equal to the lesser of (i) the Average Annual Debt Service (calculated on a Fiscal Year basis) for all Obligations Similarly Secured then Outstanding, as determined on the date each series of Additional Parity Obligations are delivered or incurred, as the case may be, or (ii) the maximum amount in a reasonably required reserve fund that can be invested without restriction as to yield pursuant to Subsection (d) of Section 148 of the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder -- the "Required Reserve". By reason of the issuance of the Bonds, the Required Reserve shall be an amount equal to the Average Annual Debt Service (calculated on a Fiscal Year basis) for all Obligations Similarly Secured that are Outstanding at the time the provisions hereof become operative and effective, and the City shall continue to make monthly deposits in the -43- S272C Reserve Fund, if then required, on or before the 15th day of each month in substantially equal amounts so that the Required Reserve shall have been accumulated in the Reserve Fund within 60 months from the date of issuance of the Bonds. "When and so long as the cash and investments in the Reserve Fund tota 1 not less than the Required Reserve, no depos i ts need be made to the credi t of the Reserve Fund; but, if and when the Reserve Fund at any time contains less than the Required Reserve, the City covenants and agrees to cure the deficiency in the Required Reserve by resuming monthly deposits to sa id Fund f rom the Net Revenues of the System; such monthly depos its to be in amounts equa 1 to not less than 1/60th of the then total Required Reserve to be maintained in said Fund and to be made on or before the 15th day of each month until the total Required Reserve then to be maintained in said Fund has been fully restored. The City further covenants and ag rees tha t, subj ect only to the payments to be made to the Interest and Sinking Fund, the Net Revenues shall be applied and appropriated and used to establish and maintain the Required Reserve and to cure any deficiency in such amounts as required by the terms of this Ordinance and any other ordinance pertaining to the issuance of Additional Parity Obligations. '.During such time as the Reserve Fund contains the total Required Reserve, the City may, at its option, withdraw all surplus in the Reserve Fund in excess of the Required Reserve and deposit such surplus in the System Fund." (f) Section 15 shall be added and shall read as follows: '.SECTION 15: Investments. Money deposited to the credi t of any Fund referenced in this Ordinance may, at the option of the City, be invested in funds and obligations authorized and identified in the Public Funds Investment Act of 1987, as enacted or hereafter amended; provided, however, the investment of moneys in the Interest and Sinking Fund and Reserve Fund sha II be rest ricted to Government Obligations and time deposits or certificates of deposit secured (to the extent not insured by the Federal Deposit Insurance Corporation) by Government Obligations; provided that all such deposits and investments shall be made in such a manner that the -44- money required to be expended from any Fund will be ava i lable at the proper time or times. Such investments (except State and Local Government Series investments held in book entry form, which shall at all times be valued at cost) shall be valued in terms of current market value within 45 days of the close of each Fiscal Year and, with respect to investments held for the account of the Reserve Fund, within 30 days of the date of passage of each ordinance authorizing the issuance of Additional Parity Obligations. All interest and income derived from deposits and investments in the Interest and Sinking Fund immediately shall be credited to, and any losses debited to, the Interest and Sinking Fund. All interest and interest income derived from deposits in and investments of the Reserve Fund shall, subject to the limitations provided in Section 14 hereof, be credited to and deposited in the System Fund. All such investments shall be sold promptly when necessary to prevent any default in connection with the Bonds." (g) amended, follows: Sections 17, 18 and 19 shall be consolidated, merged, modified and renumbered as Section 18 to read as "SECTION 18: Issuance of Additional Parity Obli- gations-Refunding Bonds-Obligations Secured by Inferior Lien. (a) Subject to the provisions hereinafter appearing as to conditions precedent which must be satisfied, the City reserves the right to issue, from time to time as needed, Additional Parity Obligations for any lawful purpose. Such Additional Parity Obligations may be issued in such form and manner as now or hereafter authorized by the laws of the State of Texas for the issuance of evidences of indebtedness or other instruments, and should new methods or financing techniques be developed that differ from those now available and in normal use, the City reserves the right to employ the same in its financing arrangements provided only that the fo llowing condi t ions precedent for the authorization and issuance of the same are satisfied, to wit: (1) The Director of Finance of the City (or other officer of the City then having the primary responsibility for the financial affairs of the City) shall have executed a certificate stating (a) that, to the best of his knowledge and belief, the S272C -45- S272C City is not then in default as to any covenant, obligation or agreement contained in any ordinance or other proceeding relating to any obligations of the City payable f rom and secured by a I ien on and p ledge of the Net Revenues of the Sys tern that would materially affect the security or payment of such obligations and (b) either (i) payments into all special funds or accounts created and established for the payment and security of all outstanding obligations payable from and secured by a lien on and pledge of the Net Revenues of the System have been made and that the amounts on deposit in such special funds or accounts are the amounts then required to be on deposit therein or (ii) the application of the proceeds of sale of such obligations then being issued will' cure any such deficiency. (2) The Additional Parity Obligations sha 11 be scheduled to mature or be payable as to principal on January 1 or July 1 (or both) in each year the same are to be outstanding or during the term thereof. (3) The City has secured a certificate or opinion of an independent Certified Public Accountant to the effect that, according to the books and records of the City, the Net Earnings, for the preceding Fiscal Year or for 12 consecutive months out of the 15 months immediately preceding the month the ordinance authorizing the issuance of the Additional Parity Obligations is adopted, are at least equal to 1.25 times the Average Annual Debt Service for all Obligations Similarly Secured then Outstanding after giving effect to the issuance of the Additional Pari ty Obligations then being issued. In making a determination of the Net Earnings, the Accountant may take into consideration a change in the rates and charges for services and facilities afforded by the System that became effective at least sixty (60) days prior to the last day of the periOd for which Net Earnings are determined and, for purposes of satiSfying -46- the above Net Earnings test, make a pro forma determination of the Net Earnings of the System for the period of time covered by his certification or opinion based on such change in rates and charges being in effect for the entire period covered by the Accountant's certificate or opinion. "As used In this Section, the term "Net Earnings" shall mean the Gross Revenues of the System after deducting the Maintenance and Operating Expenses of the System, but not depreciation charges or expendi tures which, under generally accepted accounting principles, should be charged to capital expenditures. (b) The Ci ty reserves the right to issue refunding bonds to refund all or any part of the Obligations Similarly Secured (pursuant to any, law then available) upon such terms and conditions as the Ci ty Counc i I of the Ci ty may deem to be in the best interest of the City and its inhabitants, and if less than all such Obligations Similarly Secured then outstanding are refunded, the conditions precedent prescribed (for the issuance of Additional Parity Obligations) set forth in subparagraph (a)(3) of this Section shall be satisfied and the Accountant's certificate or opinion required in subparagraph (a)(3) shall give effect to the Debt Service of the proposed refunding bonds (and shall not give effect to the Debt Service of the Obligations Simi larly Secured being refunded following their cancellation or provision being made for their payment). (c) The City hereby reserves the right to issue obligations payable from and secured by a lien on and pledge of the Net Revenues of the System, junior and subordinate in rank and dignity to the lien and pledge securing the paYffient of the Obligations Simi larly Secured, as may be authorized by the laws of the State of Texas." (h) Section 21 shall be amended and modified to read as follows: "SECTION 21: Maintenance and Operation Insurance. The City shall maintain the System in good condition and operate the same in an efficient manner and at reasonable cost. In regard to the operations and properties of the System, the City -47- S272C also agrees to carry and maintain liability and property damage insurance of the kind and in the amounts carried by municipal corporations in Texas owning and operating similar facilities and providing like services; provided, however, the Ci ty in lieu of and/or in combination wi th carrying such insurance may self-insure against such perils and risks by establishing self-insurance reserves. Annua lly each year not later than the end of each Fiscal Year, the City shall prepare or cause to be prepared by a person competent and knowledgable in such matters a written evaluation of the adequacy of such self-insurance and/or insurance coverage and of any recommended changes in regard to the City's insurance/self-insurance policies, practices and procedures." (i) follows: Section 22 is hereby amended and modified to read as "SECTION 22: Records - Accounts - Accounting Reports. The Ci ty hereby covenants and ag rees that whi Ie any of the Bonds are Outstanding, it wi II keep and maintain separate and complete records and accounts pertaining to the operations of the System in which complete and correct entries shall be made of all transactions relating thereto, as provided by Article 1113, V.A.T.C.S. or other applicable law. The Holders of any Bonds or any duly authorized agent or agents of such Holders shall have the right at all reasonable times to inspect such records, accounts and data relating thereto, and to inspect the System and all properties comprising same. The City further agrees that fOllowing the close of each Fiscal Year, it will cause an audit of such books and accounts to be made by an independent firm of Certified Public Accountants. Each such audi t, in addi t ion to whatever other matters may be thought proper by the accountant, shall particularly include the following: (I) A statement of the income and expenses of the System for such Fiscal Year. (2) A balance sheet for the System as of the end of such Fiscal Year. (3) regarding carried Ordinance The Accountant's the manner in which the out the requirements and any other comments Ci ty has of this ordinance S272C -48- authorizing the issuance of Additional Parity Obligations and his recommendations for any changes or improvements in the operations, records and accounts of the System. "Expenses incurred in making an annual audit of the operations of the System are to be regarded as Operating and Maintenance Expenses. Copies of each annual audit shall be furnished to the Executive Director of the Municipal Advisory Council of Texas at his office in Austin, Texas, and, upon request, to the initial purchasers of the Bonds and subsequent Holders of any of said Bonds. The audits herein required shall be made within 120 days following the close of each Fiscal Year insofar as is possible." (j) Subparagraph 0 of Section 24 shall be am~nded and modified to read as follows: "D. While the Bonds remain Outstanding, the City will not sell or otherwise dispose of the System or, except as authorized below, any substantial portion of the System or its compontent parts; provided, however, to the extent and in the manner authorized by law, the City may sell or dispose of any property, facilities and equipment not necessary or essential to the operations of the System or which is obsolete, damaged or surplus and the proceeds of sale of such property, facilities and equipment, if any, shall be deposited to the credit of the System Fund." SECTION 42: CUSIP Numbers. CUSIP numbers may be printed or typed on the definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP numbers on the definitive Bonds shall be of no significance or effect as regards the legality thereof and neither the City nor attorneys approving the Bonds as to legali ty are to be held responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds. SECTION 43: Official Statement. The City 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 approves the form and content of any addenda, supplement, or amendment thereto. The use of such Official Statement in the reoffering of the Bonds by the Purchaser is hereby approved and authorized. The proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to such Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. -49- Sl72C D-tf- /33 given, all as required by Texas Revised Civil Statutes Annotated Article 6252-17, as amended. SECTION 45: Effecti ve Date. This Ordinance shall be in force and effect from and after its third reading at a regularly scheduled meeting of the City Counci I, and it is so ordained. FIRST READING on July 18, 1989. SECOND READING on August 1, 1989. THIRD AND FINAL READING, PASSED AND ADOPTED on August 15, 1989. CITY OF COLLEYVILLE, TEXAS t2~~d'~.6~ ayor (City Seal) AT::. AS T~ -:;/ . ~ City Attorney - / -52- S272C