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HomeMy WebLinkAboutOrdinance No. 694 BOND ORDINANCE $1,330,000 CITY OF THE COLONY~ TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BONDS SERIES 1991 Dated: March 1, 1991 Adopted: March 18, 1991 TABLE OF CONTENTS Page Recitals 1 ARTICLE I Definitions, Findings and Interpretation Section 1.01. Definitions 1 Section 1.02. Findings 3 Section 1.03. Table of Contents, Titles and Headings 3 Section 1.04. Interpretation 3 ARTICLE II Security for the Bonds Section 2.01. Security for the Bonds 3 Section 2.02. Limited Obligations 3 ARTICLE III Authorization; General Terms and Provisions Regarding the Bonds Section 3.01. Authorization 4 Section 3.02. Date, Denomination, Maturities, Numbers and Interest 4 Section 3.03. Medium, Method and Place of Payment 5 Section 3.04. Execution & Registration of Bonds 6 Section 3.05. Ownership 7 Section 3.06. Registration, Transfer and Exchange 7 Section 3.07. Cancellation 8 Section 3.08. Temporary Bonds 8 Section 3.09. Replacement Bonds 9 Section 3.10. Approval of Sale 10 Section 3.11. Procedures for Delivery 11 ARTICLE IV Redemption of Bonds Before Maturity Section 4.01 Limitation on Redemption 11 Section 4.02 Optional Redemption 11 Section 4.03 Partial Redemption 12 Section 4.04 Notice of Redemption to Owners 12 Section 4.05 Payment Upon Redemption 13 Section 4.06 Effect of Redemption 13 (i) ARTICLE ¥ Paying Agent/Registrar Section 5.01. Appointment of Initial Paying Agent/Registrar 14 Section 5.02. Qualifications 14 Section 5.03. Maintaining Paying Agent/Registrar 14 Section 5.04. Termination 14 Section 5.05. Notice of Change to Owners 14 Section 5.06. Agreement to Perform Duties and Functions 15 Section 5.07. Delivery of Records to Successor 15 ARTICLE VI Form of the Bonds Section 6.01. Form Generally 15 Section 6.02. Form of the Bonds 16 Section 6.03. CUSIP Registration 21 Section 6.04. Legal Opinion 21 Section 6.05. Statement of Insurance 22 ARTICLE VII Funds; Flow of Funds Section 7.01. Special Funds 22 Section 7.02. Revenue Fund 22 Section 7.03. Control and Delivery of Bonds 23 Section 7.04. Deposit of Proceeds 24 ARTICLE XIII Particular Representations and Covenants Section 8.01. Covenants 24 Section 8.02. Tax Covenants 26 Section 8,03. Special Covenants Regarding Water Development Board 27 ARTICLE IX Defaults and Remedies Section 9.01. Remedies in Event of Default 28 Section 9.02. Remedies Not Exclusive 28 ARTICLE X Discharge Section 10.01. Discharge by Payment 29 Section 10.02. Discharge by Deposit 29 EXECUTION 31 (ii) AN ORDINANCE PROVIDING FOR THE ISSUANCE OF CITY OF THE COLONY, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 1991, IN THE AGGREGATE PRINCIPAL AMOUNT OF $1,330,000; ENACTING OTHER PROVISIONS RELATING THERETO WHEREAS, the City Council of the City of The Colony (the "City") has found and determined and does hereby find and determine that improvements and extensions to the City's combined waterworks and sewer system (the "System") should be made and; WHEREAS, pursuant to a resolution adopted by this governing body on February 25, 1991, notice of intention to issue waterworks and sewer system revenue bonds of this City, in an amount not to exceed $1,330,000, for the purpose of improving and extending the System, was published in a newspaper of general circulation in the City on March 1, 1991 and March 8, 1991, the date of the first publication being at least fourteen (14) days before the date designated for passage of this Ordinance; and WHEREAS, no petition calling for a referendum election with respect to the revenue bonds described herein or this Ordinance has been presented to the City Secretary; and WHEREAS, the revenue bonds hereinafter authorized are to be issued and delivered pursuant to Vernon's Texas Revised Civil Statutes Annotated, Articles 1111 through 1118, as amended; and WHEREAS, the meeting at which this Ordinance is considered is open to the public as required by law, and the public notice of the time, place and purpose of said meeting was given as required by Vernon's Texas Revised Civil Statutes Annotated, Article 6252-17, as amended; THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF THE COLONY: ARTICLE I DEFINITIONS, FINDINGS AND INTERPRETATION Section 1.01. Definitions. Unless otherwise expressly provided or unless the context clearly requires otherwise, in this Ordinance, the following terms shall have the meanings specified below: "Additional Bonds" means additional parity bonds authorized to be issued pursuant to Section 8.01 hereof. "Bond" means any of the Bonds. "Bond Date" means the date designated as the initial date of the Bonds by Section 3.02(a) of this Ordinance. "Bonds" means the City's bonds authorized to be issued by Section 3.01 of this Ordinance entitled "City of The Colony, Texas, Waterworks and Sewer System Revenue Bonds, Series 1991," in the aggregate principal amount of $1,330,000. "Code" means the Internal Revenue Code of 1986, as amended, including applicable regulations, published rulings and court decisions. "Dated Date" means the dated date of the Bonds designated in Section 3.02(a) hereof. "Delivery Date" means the date that a delivery of Bonds is made in accordance with Section 3.11 hereof. "Escrow Agent" means Ameritrust Texas National Association, Austin, Texas. "Initial Bond" means the Initial Bond as authorized by Section 3.04(d) of this Ordinance. "Interest Payment Date" means the date or dates upon which interest on the Bonds is scheduled to be paid until their respective dates of maturity or prior redemption, such dates being February 15 and August 15 of each year, commencing August 15, 1991. "Owner" means the person who is the registered owner of a Bond or Bonds, as shown in the Register. "Paying Agent/Registrar" means initially Ameritrust Texas National Association, Austin, Texas, or any successor thereto as provided in this Ordinance. "Purchaser" means the initial purchaser of the Bonds identified in Section 3.10 hereof. "Record Date" means the last calendar day of the month next preceding an Interest Payment Date. "Register" means the Register specified in Section 3.06(a) of this Ordinance. "System" means the City's combined waterworks and sewer system. -2- 1109B Section 1.02. Findings. (a) The declarations, determinations and findings declared, made and found in the preamble to this Ordinance are hereby adopted, restated and made a part of the operative provisions hereof. (b) The Bonds authorized to be issued by this Ordinance are and shall be secured by and payable from a first and superior lien on and pledge of the Net Revenues of the System. Section 1.03. Table of Contents, Titles and Headings. The table of contents, titles and headings of the Articles and Sections of this Ordinance have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof and shall never be considered or given any effect in construing this Ordinance or any provision hereof or in ascertaining intent, if any question of intent should arise. Section 1.04. Interpretation. (a) Unless the context requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, and words of the singular number shall be construed to include correlative words of the plural number and vice versa. (b) This Ordinance and all the terms and provisions hereof shall be liberally construed to effectuate the purposes set forth herein to sustain the validity of this Ordinance. ARTICLE II SECURITY FOR THE BONDS Section 2.01. Security for the Bonds. The Bonds and any Additional Bonds are and shall be equally and ratably secured by and payable from a first lien on and pledge of the Net Revenues of the System. Section 2.02. Limited Obligations. The Bonds, together with any Additional Bonds, are special obligations of the City, payable solely from the Net Revenues, and do not constitute a prohibited indebtedness of the City; neither the Bonds nor any Additional Bonds shall ever be payable out of funds raised or to be raised by taxation. -3- ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE BONDS Section 3.01. Authorization. The City's revenue bonds to be designated the "City of The Colony, Texas, Waterworks and Sewer System Revenue Bonds, Series 1991," are hereby authorized to be issued and delivered in accordance with the Constitution and laws of the State of Texas, including particularly Vernon's Texas Revised Civil Statutes Annotated, Articles 1111 through 1118, as amended. The Bonds shall be issued in the aggregate principal amount of $1,330,000 for the purpose of improving and extending the City's combined waterworks and sewer system, and to pay the costs of issuance of the Bonds. Section 3.02. Date, Denomination, Maturities, Numbers and Interest. (a) The Bonds shall have a Dated Date of March 1, 1991, shall be in fully registered form, without coupons, in the denomination of $5,000 or any integral multiple thereof. Definitive Bonds in an amount equal to $225,000 principal amount shall be designated as Lot A and shall be numbered from one upward. Definitive Bonds in an amount equal to $1,105,000 principal amount shall be designated as Lot B and shall be numbered separately from one upward. The Initial Bond shall be numbered T-1. (b) The Bonds shall mature on August 15 in the years and in the principal amounts within each lot, and shall bear interest at the per annum rate of 5.50% as set forth in the following schedule: Principal Total ~ear Lot A Lot B Amount 1992 $ 5,000 $35 000 $ 40,000 1993 5,000 35 000 40,000 1994 5,000 35 000 40,000 1995 5,000 40 000 45,000 1996 10,000 35 000 45,000 1997 10,000 40 000 50,000 1998 10,000 45 000 55,000 1999 10,000 45 000 55,000 2000 10,000 502000 60,000 2001 10,000 50,000 60,000 2002 10,000 55,000 65,000 2003 10,000 60,000 70,000 2004 10,000 65,000 75,000 --4-- 1109B 2005 15,000 60 000 75,000 2006 15,000 65 000 80,000 2007 15,000 70 000 85,000 2008 15,000 75 000 90,000 2009 15,000 80 000 95,000 2010 15,000 85 000 100,000 2011 25,000 80 000 105,000 (C) Interest shall accrue and be paid on each Bond respectively until its maturity or prior redemption, from the later of the Delivery Date with respect to such principal amount of Bonds or the most recent Interest Payment Date to which interest has been paid or provided for at the rate per annum for each respective maturity specified in the schedule contained in subsection (b) above. Such interest shall be payable semiannually on February 15 and August 15 of each year, commencing August 15, 1991, computed on the basis of a 360-day year of twelve 30-day months. Section 3.03. Medium, Method and Place of Payment. (a) The principal of and interest on the Bonds shall be paid in lawful money of the United States of America, as provided in this Section. (b) Interest on the Bonds shall be payable to the Owners thereof as shown in the Register at the close of business on the Record Date. (c) Interest shall be paid by check, dated as of the Interest Payment Date, and sent, first class United States mail, postage prepaid, by the Paying Agent/Registrar to each Owner at the address of each as such appears in the Register or by such other customary banking arrangement acceptable to the Paying Agent/Registrar and the Owner; provided, however, the Owner shall bear all risk and expense of such other banking arrangement. (d) The principal of each .Bond shall be paid to the Owner of such Bond on the due date thereof, whether at the maturity date or the date of prior redemption thereof, upon presentation and surrender of such Bond at the principal corporate trust office of the Paying Agent/Registrar. (e) If the date for the payment of the principal of or interest on the Bonds shall be a Saturday, Sunday, legal holiday, or day on which banking institutions in the city where the Paying Agent/Registrar is located are required or authorized by law or executive order to close, the date for such payment shall be the next succeeding day that is not a Saturday, Sunday, legal holiday, or day on which banking -5- institutions are required or authorized to close, and payment on such date shall for all purposes be deemed to have been made on the due date thereof as specified in Section 3.02 of this Ordinance. (f) Unclaimed payments of amounts due hereunder shall be segregated in a special account and held in trust, uninvested by the Paying Agent/Registrar, for the account of the Owner of the Bonds to which such unclaimed payments pertain. Subject to any escheat, abandoned property or similar law, any such payments remaining unclaimed by the Owners entitled thereto for two years after the applicable payment or redemption date shall be applied to the next payment or payments on the Bonds thereafter coming due and, to the extent any such money remains after the retirement of all outstanding Bonds, shall be paid to the City to be used for any lawful purpose. Thereafter, neither the City, the Paying Agent/Registrar nor any other person shall be liable or responsible to any holders of such Bonds for any further payment of such unclaimed moneys or on account of any such Bonds, subject to any applicable escheat law or similar law. Section 3.04. Execution and Registration of Bonds. (a) The Bonds shall be executed on behalf of the City by the Mayor and City Secretary, by their manual or facsimile signatures, and the official seal of the City shall be impressed or placed in facsimile thereon. Such facsimile signatures on the Bonds shall have the same effect as if each of the Bonds had been signed manually and in person by each of said officers, and such facsimile seal on the Bonds shall have the same effect as if the official seal of the City had been manually impressed upon each of the Bonds. (b) In the event that any officer of the City whose manual or facsimile signature appears on the Bonds ceases to be such officer before the authentication of such Bonds or before the delivery thereof, such manual or facsimile signature nevertheless shall be valid and sufficient for all purposes as if such officer had remained in such office. (c) Except as provided below, no Bond shall be valid or obligatory for any purpose or be entitled to any security or benefit of this Ordinance unless and until there appears thereon the Certificate of Paying Agent/Registrar substantially in the form provided herein, duly authenticated by manual execution by an officer or duly authorized signatory of the Paying Agent/Registrar. It shall not be required that the same officer or authorized signatory of the Paying Agent/Registrar sign the Certificate of Paying Agent/Registrar on all of the Bonds. In lieu of the executed Certificate of Paying Agent/Registrar described above, the Initial Bond delivered on --6-- the first Delivery Date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided herein, manually executed by the Comptroller of Public Accounts of the State of Texas, or by his duly authorized agent, which certificate shall be evidence that the Initial Bond has been duly approved by the Attorney General of the State of Texas, is a valid and binding obligation of the City, and has been registered by the Comptroller of Public Accounts of the State of Texas. (d) After the Initial Bond has been approved by the Attorney General and registered by the Comptroller of Public Accounts, the Paying Agent/Registrar shall register the Bonds in the name of the Purchaser or its designee and shall cancel the Initial Bond and deliver the Bonds in accordance with Section 3.11 hereof. Section 3.05. Ownership. (a) The City, the Paying Agent/Registrar and any other person may treat the person in whose name any Bond is registered as the absolute owner of such Bond for the purpose of making and receiving payment of the principal thereof and redemption premium, if any, thereon, for the further purpose of making and receiving payment of the interest thereon, and for all other purposes, whether or not such Bond is overdue, and neither the City nor the Paying Agent/Registrar shall be bound by any notice or knowledge to the contrary. (b) All payments made to the Owner of any Bond shall be valid and effectual and shall discharge the liability of the City and the Paying Agent/Registrar upon such Bond to the extent of the sums paid. Section 3.06. Registration, Transfer and Exchange. (a) So long as any Bond remains outstanding, the City shall cause the Paying Agent/Registrar to keep at its principal corporate trust office a register in which, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Bonds in accordance with this Ordinance. (b) A Bond shall be transferable only upon the presentation and surrender thereof at the principal corporate trust office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar. No transfer of any Bond shall be effective until entered in the Register. (c) The Bonds shall be exchangeable upon the presentation and surrender thereof at the principal corporate --7-- 11098 trust office of the Paying Agent/Registrar for a Bond or Bonds of the same maturity and interest rate and in any authorized denomination and in an aggregate principal amount equal to the unpaid principal amount of the Bond presented for exchange. The Paying Agent/Registrar is hereby authorized to authenticate and deliver Bonds exchanged for other Bonds in accordance with this Section. (d) Each exchange Bond delivered in accordance with this Section shall constitute an original contractual obligation of the City and shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such exchange Bond is delivered. (e) No service charge shall be made to the Owner for the initial registration, subsequent transfer, or exchange for a different denomination of any of the Bonds. The Paying Agent/Registrar, however, may require the Owner to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection with the registra- tion, transfer or exchange of a Bond. (f) Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer, or exchange any Bond or portion thereof called for redemption prior to maturity within 30 days prior to the date fixed for redemption; provided, however, such limitation shall not be applicable to an exchange by the Owner of the uncalled principal balance of a Bond. Section 3.07. Cancellation. All Bonds paid or redeemed before scheduled maturity in accordance with this Ordinance, and all Bonds in lieu of which exchange Bonds or replacement Bonds are authenticated and delivered in accordance with this Ordinance, shall be cancelled, and proper records shall be made regarding such payment, redemption, exchange, or replacement. Section 3.08. Temporary Bonds. (a) Following the delivery and registration of the Initial Bond and pending the preparation of definitive Bonds, the proper officers of the City may execute and, upon the City's request, the Paying Agent/Registrar shall authenticate and deliver, one or more temporary Bonds that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Bonds in lieu of which they are delivered, without coupons, and with such appropriate insertions, omissions, substitutions and other variations as the officers of the City executing such temporary Bonds may determine, as evidenced by their signing of such temporary Bonds. (b) Until exchanged for Bonds in definitive form, such Bonds in temporary form shall be entitled to the benefit and security of this Ordinance. (c) The City, without unreasonable delay, shall prepare, execute and deliver to the Paying Agent/Registrar the Bonds in definitive form; thereupon, upon the presentation and surrender of the Bond or Bonds in temporary form to the Paying Agent/Registrar, the Paying Agent/Registrar shall cancel the Bonds in temporary form and authenticate and deliver in exchange therefor a Bond or Bonds of the same maturity and series, in definitive form, in the authorized denomination, and in the same aggregate principal amount, as the Bond or Bonds in temporary form surrendered. Such exchange shall be made without the making of any charge therefor to any Owner. Section 3.09. Replacement Bonds. (a) Upon the presentation and surrender to the Paying Agent/Registrar of a mutilated Bond, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replace- ment Bond of like tenor and principal amount, bearing a number not contemporaneously outstanding. The City or the Paying Agent/Registrar may require the Owner of such Bond to pay a sum sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection therewith and any other expenses connected therewith. (b) In the event that any Bond is lost, apparently destroyed or wrongfully taken, the Paying Agent/Registrar, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall authenticate and deliver a replacement Bond of like tenor and principal amount, bearing a number not contemporaneously outstanding, provided that the Owner first complies with the following requirements: (i) furnishes to the Paying Agent/Registrar satisfactory evidence of his or her ownership of and the circumstances of the loss, destruction or theft of such Bond; (ii) furnishes such security or indemnity as may be required by the Paying Agent/Registrar to save it and the City harmless; (iii) pays all expenses and charges in connection therewith, including, but not limited to, printing costs, legal fees, fees of the Paying Agent/Registrar and any tax or other governmental charge that is authorized to be imposed; and -9- (iv) satisfies any other reasonable requirements imposed by the City and the Paying Agent/Registrar. (c) After the delivery of such replacement Bond, if a bona fide purchaser of the original Bond in lieu of which such replacement Bond was issued presents for payment such original Bond, the City and the Paying Agent/Registrar shall be entitled to recover such replacement Bond from the person to whom it was delivered or any person taking therefrom, except a bona fide purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the City or the Paying Agent/Registrar in connection therewith. (d) In the event that any such mutilated, lost, apparently destroyed or wrongfully taken Bond has become or is about to become due and payable, the Paying Agent/Registrar, in its discretion, instead of issuing a replacement Bond, may pay such Bond if it has become due and payable or may pay such Bond when it becomes due and payable. (e) Each replacement Bond delivered in accordance with this Section shall constitute an original additional contractual obligation of the City and shall be entitled to the benefits and security of this Ordinance to the same extent as the Bond or Bonds in lieu of which such replacement Bond is delivered. Section 3.10. Approval of Sale. (a) The Bonds are hereby sold and shall be delivered to the Texas Water Development Board in installments pursuant to the rules of such Board, for a price of par. The Purchaser will purchase Bonds designated as Lot A in ascending order of maturity until $225,000 principal amount of the Bonds have been delivered. The Purchaser will purchase the remaining principal amount of the Bonds designated as Lot B in ascending order of maturity. (b) As required as part of the Texas Water Development Board's Commitment to purchase the Bonds, the City covenants and agrees to provide sufficient funds either through the issuance of additional bonds of the System or from otherwise unencumbered funds of the System for the timely completion of the project for which Bonds are being issued and sold. (c) All officers of the City are authorized to execute such documents, certificates and receipts, and to make such elections with respect to the tax-exempt status of the Bonds, as they may deem appropriate in order to consummate the delivery of the Bonds. (d) The obligation of the Purchaser to accept delivery of the Bonds is subject to the Purchaser being furnished with -10- the final, approving opinion of Hutchison Boyle Brooks & Fisher, A Professional Corporation, Bond Counsel for the City, which opinion shall be dated and delivered on the first Delivery Date. Section 3.11. Procedures for Delivery of the Bonds. (a) After the Initial Bond has been approved by the Attorney General and registered by the Comptroller of Public Accounts of the State of Texas, the City shall cause the Initial Bond to be deposited with the Paying Agent/Registrar, which shall cancel the Initial Certificate and register the Bonds in the name of the Purchaser in accordance with Section 3.04 hereof. (b) On the initial Delivery Date, and on each Delivery Date thereafter, upon receipt of a written instruction from the City and upon receipt from the Purchaser of a sum equal to the principal amount of the Bonds being delivered, the Escrow Agent shall deliver an installment of Bonds, subject to the requirements of Section 3.01(a) hereof, to the Purchaser. The Escrow Agent shall hold and deliver the remaining Bonds held in escrow pending the delivery thereof. The Mayor is hereby authorized and directed to execute an agreement with the Escrow Agent specifying the duties and responsibilities of the City and the Escrow Agent. (c) On the applicable Delivery Date for each of the Bonds, the Paying Agent/Registrar shall insert such date of delivery on each delivered Bond under the column designated "Delivery Date." (d) On each Delivery Date, the City shall receive an amount of proceeds equal to the par value of the Bonds being delivered and the City shall deposit such proceeds as may be directed by the Mayor. ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY Section 4.01. Limitation on Redemption. The Bonds shall be subject to redemption before their scheduled maturity only as provided in this Article IV and as provided in Section 8.03(c) hereof. Section 4.02. Optional Redemption. (a) The City reserves the right and option to redeem Bonds maturing on and after August 15, 2002, in whole or in -11- 1109B part before their respective scheduled maturity dates, on August 15, 2001, or on any date thereafter, such redemption date or dates to be fixed by the City, at a price equal to the principal amount of the Bonds so called for redemption plus accrued interest to the date fixed for redemption. (b) The City, at least 45 days before the redemption date, unless a shorter period shall be satisfactory to the Paying Agent/Registrar, shall notify the Paying Agent/Registrar of such redemption date and of the principal amount of Bonds to be redeemed. Section 4.03. Partial Redemption. (a) If less than all of the Bonds are to be redeemed, the Bonds shall be redeemed in inverse order of maturity and by lot within a maturity if less than all Bonds within a maturity are to be redeemed. The City shall direct the Paying Agent/Registrar to call such Bonds, or portion thereof, for redemption. (b) A portion of a single Bond of a denomination greater than $5,000 may be redeemed, but only in a principal amount equal to $5,000 or any integral multiple thereof. The Paying Agent/Registrar shall treat each $5,000 portion of such Bond as though it were a single bond for purposes of selection for redemption. (c) Upon surrender of any Bond for redemption in part, the Paying Agent/Registrar, in accordance with Section 3.06 of this Ordinance, shall authenticate and deliver an exchange Bond or Bonds in an aggregate principal amount equal to the unredeemed portion of the Bond so surrendered, such exchange being without charge. (d) The Paying Agent/Registrar shall promptly notify the City in writing of the principal amount to be redeemed of any Bond as to which only a portion thereof is to be redeemed. Section 4.04. Notice of Redemption to Owners. (a) The Paying Agent/Registrar shall give notice of any redemption of Bonds by sending notice by first class United States mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the Owner of each Bond or portion thereof to be redeemed, at the address shown in the Register. (b) The notice shall state the redemption date, the redemption price, the place at which the Bonds are to be surrendered for payment, and, if less than all the Bonds --12-- 1109B outstanding are to be redeemed, an identification of the Bonds or portions thereof to be redeemed. (c) Any notice given as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives such notice. Section 4.05. Payment Upon Redemption. (a) Before or on each redemption date, the City shall deposit with the Paying Agent/Registrar money sufficient to pay all amounts due on the redemption date and the Paying Agent/ Registrar shall make provision for the payment of the Bonds to be redeemed on such date by setting aside and holding in trust an amount from the Interest and Sinking Fund or otherwise received by the Paying Agent/Registrar from the City and shall use such funds solely for the purpose of paying the principal of, redemption premium, if any, and accrued interest on the Bonds being redeemed. (b) Upon presentation and surrender of any Bond called for redemption at the principal corporate trust office of the Paying Agent/Registrar on or after the date fixed for redemption, the Paying Agent/Registrar shall pay the principal of, redemption premium, if any, and accrued interest on such Bond to the date of redemption from the moneys set aside for such purpose. Section 4.06. Effect of Redemption. (a) Notice of redemption having been given as provided in Section 4.04 of this Ordinance, the Bonds or portions thereof called for redemption shall become due and payable on the date fixed for redemption; thereafter, unless the City defaults in the payment of the principal thereof, redemption premium, if any, or accrued interest thereon, such Bonds or portions thereof shall cease to bear interest from and after the date fixed for redemption, whether or not such Bonds are presented and surrendered for payment on such date. (b) If the City shall fail to make provision for payment of all sums due on a redemption date, then any Bond or portion thereof shall continue to bear interest at the rate stated on the Bond until due provision is made for the payment of same. --13-- 1109B ARTICLE V PAYING AGENT/REGISTRAR Section 5.01. Appointment of Initial Paying Agent/ Reqistrar. (a) Ameritrust Texas National Association, Austin, Texas, is hereby appointed as the initial Paying Agent/Registrar for the Bonds. (b) The Mayor is hereby authorized and directed to execute an agreement with the Paying Agent/Registrar specifying the duties and responsibilities of the City and the Paying Agent/Registrar. The signature of the Mayor shall be attested by the City Secretary. Section 5.02. Qualifications. Each Paying Agent/Registrar shall be a commercial bank, a trust company organized under the laws of the State of Texas, or other entity duly qualified and legally authorized to serve as and perform the duties and services of paying agent and registrar for the Bonds. Section 5.03. Maintaininq Payinq Agent/Registrar. (a) At all times while any Bonds are outstanding, the City will maintain a Paying Agent/Registrar that is qualified under Section 5.02 of this Ordinance. (b) If the Paying Agent/Registrar resigns or otherwise ceases to serve as such, the City will promptly appoint a replacement. Section 5.04. Termination. The City, upon not less than 60 days notice, reserves the right to terminate the appointment of any Paying Agent/ Registrar by delivering to the entity whose appointment is to be terminated written notice of such termination. Section 5.05. Notice of Chanqe to Owners. Promptly upon each change in the entity serving as Paying Agent/Registrar, the City will cause notice of the change to be sent to each Owner by first class United States mail, postage prepaid, at the address in the Register, stating the effective date of the change and the name and mailing address of the replacement Paying Agent/Registrar. -14- Section 5.06. Agreement to Perform Duties and Functions. By accepting the appointment as Paying Agent/Registrar, and executing the Paying Agent/Registrar Agreement, the Paying Agent/Registrar is deemed to have agreed to the provisions of this Ordinance and that it will perform the duties and functions of Paying Agent/Registrar prescribed thereby. Section 5.07. Delivery of Records to Successor. If a Paying Agent/Registrar is replaced, such Paying Agent, promptly upon the appointment of the successor, will deliver the Register (or a copy thereof) and all other pertinent books and records relating to the Bonds to the successor Paying Agent/Registrar. ARTICLE VI FORM OF THE BONDS Section 6.01. Form Generally. (a) The Bonds, including the Registration Certificate of the Comptroller of Public Accounts of the State of Texas, the Certificate of the Paying Agent/Registrar, and the Ass ignment to appear on each of the Bonds, ( i ) shall be substantially in the form set forth in this Article with such appropriate insertions, omiss ions, substitutions, and other variations as are permitted or required by this Ordinance, and ( ii ) may have such letters, numbers, or other marks of identification (including identifying numbers and letters of the Committee on Uniform Securities Identification Procedures of the American Bankers Association) and such legends and endorsements ( including any reproduction of an opinion of counsel) thereon as, consistently herewith, may be determined by the City or by the officers executing such Bonds, as evidenced by their execution thereof. (b) Any portion of the text of any Bonds may be set forth on the reverse side thereo f, with an appropriate reference thereto on the face of the Bonds. ( c ) The definitive Bonds shall be typewritten, printed, lithographed, or engraved, and may be 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. (d) The Initial Bond submitted to the Attorney General of the State of Texas may be typewritten and photocopied or otherwise reproduced. Section 6.02. Form of the Bonds. The form of the Bond, including the form of the Registra- tion Certificate of the Comptroller of Public Accounts of the State of Texas, the form of Certificate of the Paying Agent/ Registrar and the form of Assignment appearing on the Bonds shall be substantially as follows: (a) Form of Bond. REGISTERED REGISTERED NO. $ United States of America State of Texas COUNTY OF DENTON CITY OF THE COLONY, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BOND SERIES 1991 Interest Maturity Bond Delivery Cusip Rate Date Date Lot Date Number 5.50% March 15, 1991 The City of The Colony (the "City"), in the County of Denton, State of Texas, for value received, hereby promises to pay to or registered assigns, but solely from the sources and in the manner hereinafter provided, on the Maturity Date specified above, the sum of DOLLARS unless this Bond shall have been sooner called for redemption and the payment of the principal hereof shall have been paid or provided for, and to pay interest on such principal amount from the later of the Delivery Date specified above or the most recent interest payment date to which interest has been paid or provided for until payment of such principal amount has been paid or provided for, at the per annum rate of interest specified above, computed on the basis of a 360-day year of twelve 30-day months, such interest to be paid semiannually on February 15 and August 15 of each year, commencing August 15, 1991. The principal of this Bond shall be payable without exchange or collection charges in lawful money of the United States of America upon presentation and surrender of this Bond at the principal corporate trust office of the Paying Agent/ Registrar executing the registration certificate appearing hereon. Interest on this Bond is payable by check dated as of the interest payment date, and will be mailed by the Paying Agent/Registrar to the registered owner at the address shown on the registration books kept by the Paying Agent/Registrar, or by such other customary banking arrangements acceptable to the Paying Agent/Registrar and the person to whom interest is to be paid; provided, however, such person shall bear all risk and expense of such other banking arrangement. For the purpose of the payment of interest on this Bond, the registered owner shall be the person in whose name this Bond is registered at the close of business on the "Record Date," which shall be the last calendar day of the month next preceding such interest payment date. If the date for the payment of the principal of or interest on this Bond shall be a Saturday, Sunday, legal holiday or day on which banking institutions in the city where the Paying Agent/Registrar is located are required or authorized by law or executive order to close, the date for such payment shall be the next succeeding day that is not a Saturday, Sunday, legal holiday or day on which banking institutions are required or authorized to close and payment on such date shall for all purposes be deemed to have been made on the original date payment was due. This Bond is one of a series of fully registered bonds specified in the title hereof issued in the aggregate principal amount of $1,330,000 (herein referred to as the "Bonds"), issued pursuant to the authority provided by Vernon's Texas Revised Civil Statutes Annotated, Articles 1111 through 1118, as amended, and a certain ordinance of the City (the "Ordinance"), for the purpose of improving and extending the City's combined waterworks and sewer system. The Bonds are secured by and payable solely from a first lien on and pledge of the net revenues of the City's combined waterworks and sewer system, as provided or incorporated by reference in the Ordinance. The Bonds constitute special obligations of the City payable solely from the sources and in the manner set forth herein and in the Ordinance and not from any other revenues, funds or assets of the City. The City has reserved the right, subject to the restrictions stated or incorporated by reference in the Ordinance, to issue additional parity revenue bonds that may be secured in the same manner and on a parity with the Bonds and the previously issued parity revenue bonds. -17- The City has reserved the option to redeem the Bonds maturing on or after August 15, 2002, before their respective scheduled maturities in whole or in part on August 15, 2001, or on any date thereafter, at a price equal to the principal amount of the Bonds so called for redemption plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed, the Bonds shall be redeemed in inverse order of maturity and by lot within a maturity if less than all of the Bonds of a maturity are to be redeemed. Notice of such redemption or redemptions shall be given by first class mail, postage prepaid, not less than 30 days before the date fixed for redemption, to the registered owner of each of the Bonds to be redeemed in whole or in part. Notice having been so given, the Bonds or portions thereof designated for redemption shall become due and payable on the redemption date specified in such notice; from and after such date, notwithstanding that any of the Bonds or portions thereof so called for redemption shall not have been surrendered for payment, interest on such Bonds or portions thereof shall cease to accrue. As provided in the Ordinance and subject to certain limitations therein set forth, this Bond is transferable upon surrender of this Bond for transfer at the principal corporate trust office of the Paying Agent/Registrar with such endorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar; thereupon, one or more new fully registered Bonds of the same stated maturity, of authorized denominations, bearing the same rate of interest, and for the same aggregate principal amount will be issued to the designated transferee or transferees. Neither the City nor the Paying Agent/Registrar shall be required to issue, transfer or exchange any Bond called for redemption where such redemption is scheduled to occur within 30 calender days of the transfer or exchange date; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. The City, the Paying Agent/Registrar, and any other person may treat the person in whose name this Bond is registered as the owner hereof for the purpose of receiving payment as herein provided (except interest shall be paid to the person in whose name this Bond is registered on the Record Date) and for all other purposes, whether or not this Bond be overdue, and neither the City nor the Paying Agent/Registrar, nor any such agent shall be affected by notice to the contrary. IT IS HEREBY CERTIFIED AND RECITED that this Bond has been duly and validly issued and delivered; that all acts, conditions, and things required or proper to be performed, -18- exist, and be done precedent to or in the issuance and delivery of this Bond have been performed, existed, and been done in accordance with law. The registered owners hereof shall never have the right to demand payment of this Bond out of any funds raised or to be raised by taxation. IN WITNESS WHEREOF, the City has caused this Bond to be executed in its name by the manual or facsimile signature of the Mayor of the City and countersigned by the manual or facsimile signature of the City Secretary, and the official seal of the City has been duly impressed or placed in facsimile on this Bond. City Secretary Mayor, City of The Colony, Texas City of The Colony, Texas [SEAL] (b) Form of Comptroller's Registration Certificate. The following Comptroller's Registration Certificate may be deleted from the definitive Bonds if such certificate on the Initial Bond is fully executed. OFFICE OF THE COMPTROLLER OF PUBLIC ACCOUNTS ~ REGISTER NO. OF THE STATE OF TEXAS I hereby certify that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this Bond has been examined by him as required by law, that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas, and that it is a valid and binding special obligation of the City of The Colony, Texas, payable from the revenues pledged to its payment by and in the ordinance authorizing same; and that said bond has this day been registered by me. Witness my hand and seal of office at Austin, Texas, [SEAL] Comptroller of Public Accounts of the State of Texas -19- (C) Form of Certificate of Paying Agent/Reqistrar. The following Certificate of Paying Agent/Registrar may be deleted from the Initial Bond if the Comptroller's Registration Certificate appears thereon. CERTIFICATE OF PAYING AGENT/REGISTRAR The records of the Paying Agent/Registrar show that the Initial Bond of this series of bonds was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas, and that this is one of the Bonds referred to in the within-mentioned Ordinance. as Paying Agent/Registrar Dated: By: Authorized Signatory (d) 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 within Bond and all rights hereunder and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration hereof, with full power of substitution in the premises. Dated: NOTICE: The signature on this Assignment must correspond with Signature Guaranteed By: the name of the registered owner as it appears on the face of the within Bond in every particular and must be guaranteed by an officer of a federal or state bank or a member of the National Associa- tion of Securities Dealers. Authorized Signatory -20- (e) Initial Bond Insertions. The Initial Bond shall be in the form set forth in paragraphs (a) through (d) of this Section, except for the following alterations: (i) immediately under the name of the Bond, the heading"Maturity Date" shall both be completed with the words "As shown below". The heading "Delivery Date" and "Lot" shall be initially left blank and completed in accordance with Section 3.11 hereof; (ii) in the first paragraph of the Bond, the words "on the Maturity Date specified above" shall be deleted and the following will be inserted: "on August 15 in each of the years in the principal installments set forth in the following schedule: Principal Year Lot A Lot B Installments" (Information to be inserted from schedule in Section 3.02 of this Ordinance) (iii) in the second paragraph of the Bonds, the words "executing the registration certificate appearing hereon" shall be deleted and an additional sentence shall be added to the paragraph as follows: "The initial Paying Agent/Registrar is Ameritrust Texas National Association, Austin, Texas."; and (iv) the Initial Bond shall be numbered T-1. Section 6.03. CUSIP Registration. The City may secure identification numbers through the CUSIP Service Bureau Division of Standard & Poor's Corporation, New York, New York, and may authorize the printing of such numbers on the face of the Bonds. It is expressly provided, however, that the presence or absence of CUSIP numbers on the Bonds shall be of no significance or effect as regards the legality thereof and neither the City nor the attorneys approving said Bonds as to legality are to be held responsible for CUSIP numbers incorrectly printed on the Bonds. Section 6.04. Legal Opinion. The approving legal opinion of Hutchison Boyle Brooks & Fisher, A Professional Corporation, Bond Counsel, may be -21- printed on the back of each Bond over the certification of the City Secretary of the City, which may be executed in facsimile. Section 6.05. Statement of Insurance. A statement relating to a municipal bond insurance policy to be issued for the Bonds may be printed on or attached to each Bond in the event that such a policy is purchased by the initial Purchaser of the Bonds. ARTICLE VII FUNDS; FLOW OF FUNDS Section 7.01. Special Funds. The City covenants and agrees that all revenues derived from the operation of the System shall be kept separate from other funds of the City. To that end, the following special funds shall be established and maintained at a depository bank of the City so long as any of the Bonds or any Additional Bonds are outstanding and unpaid, to-wit: (a) "City of The Colony, Texas, Water and Sewer Revenue Bonds Revenue Fund," herein called the "Revenue Fund"; (b) "City of The Colony, Texas, Water and Sewer Revenue Bonds Interest and Sinking Fund," herein called the "Interest and Sinking Fund"; (c) "City of The Colony, Texas, Water and Sewer Revenue Bonds Reserve Fund," herein called the "Reserve Fund"; and (d) "City of The Colony, Texas, Water and Sewer Revenue Bonds, Series 1991 Construction Fund," (herein called the "Construction Fund"). Section 7.02. Revenue Fund. All Gross Revenues shall be deposited from day to day as collected into the Revenue Fund. Moneys on deposit in the Revenue Fund shall first be used to pay all Operation and Maintenance Expenses. The revenues of the System not actually required to pay Operation and Maintenance Expenses (the "Net Revenues") shall be transferred from the Revenue Fund to the other Funds in this Ordinance, in the order of priority, in the manner, and in the amounts set forth below: -22- (a) Interest and Sinking Fund. There shall be deposited into the Interest and Sinking Fund the following: (i) such amounts, in equal monthly installments, commencing May 10, 1991, and on the tenth day of each month thereafter, as will be sufficient to pay the interest scheduled to come due on the Bonds on the next Interest Payment Date, less any amounts already on deposit therein for such purpose derived from the proceeds of the Bonds or from any other lawfully available source; and (ii) such amounts, in equal monthly installments, commencing May 10, 1991, and on the tenth day of each month thereafter, as will be sufficient to pay the next maturing principal of the Bonds. The Interest and Sinking Fund shall be used to pay the principal of and interest on the Bonds and any Additional Bonds as such principal matures and such interest becomes due. (b) Reserve Fund. So long as the funds on deposit in the Reserve Fund created for the benefit of the Bonds and all Additional Bonds are equal to the Reserve Fund Requirement, no deposits need to be made to the credit of the Reserve Fund; but should the Reserve Fund at any time contain less than the Reserve Fund Requirement, then, subject and subordinate to making the required deposits to the credit of the Interest and Sinking Fund, the City shall transfer from the first available Net Revenues in the Revenue Fund and deposit to the credit of the Reserve Fund, such amounts as are required to restore the amount on deposit therein to the Reserve Fund Requirement. The money on deposit in the Reserve Fund may be used to pay the principal of and interest on the Bonds and any Additional Bonds at any time there are not sufficient funds on deposit in the Interest and Sinking Fund for such purpose. By reason of the issuance of the Bonds, the Reserve Fund Requirement, which shall be an amount equal to the average annual debt service of the Bonds and any Additional Bonds outstanding from time to time, is hereby determined to be $ In accordance with the procedures specified in the preceding paragraph, the City hereby directs that the deposits, if any, being made to the Reserve Fund be increased to accumulate in the Reserve Fund within five years and one month from the date of the Bonds an amount equal to the Reserve Fund Requirement. Section 7.03. Control and Delivery of Bonds. (a) The Mayor of the City is hereby authorized to have control of the Initial Bond and all necessary records and -23- proceedings pertaining thereto pending investigation, examination and approval of the Attorney General of the State of Texas, registration by the Comptroller of Public Accounts of the State of Texas, and registration with, and initial exchange or transfer by, the Paying Agent/Registrar. (b) After registration by the Comptroller of Public Accounts, delivery of the Bonds shall be made to the initial Purchaser thereof in accordance with Section 3.11 hereof. Section 7.04. Deposit of Proceeds. (a) On each Delivery Date, the proceeds from the delivery of such installment of Bonds shall be deposited to the Construction Fund, such moneys to be dedicated and used solely for the purposes for which the Bonds are being issued as herein provided. Interest and income derived from the investment of the moneys deposited in the Construction Fund shall be credited to such Fund until the construction of the projects for which the Bonds are issued is completed; thereafter, to the extent such interest and income are present, such interest and income shall be deposited to the Interest and Sinking Fund. (b) Upon completion of the public improvements financed with the proceeds of the Bonds, any amount (exclusive of that amount retained for the payment of costs of such improvements not then due and payable) remaining in the Construction Fund shall be applied in accordance with Section 8.03(c) hereof. ARTICLE VIII PARTICULAR REPRESENTATIONS AND COVENANTS Section 8.01. General Covenants. (a) Additional Bonds. The City may issue "Additional Bonds" if the following conditions are met: (i) the City is not then in default as to any covenant, condition or obligation prescribed by an ordinance authorizing the issuance of any bonds payable from and secured by a first lien on and pledge of the Net Revenues; (ii) the Additional Bonds are made to mature on August 15 in each of the years in which they are scheduled to mature; (iii) the Net Revenues of the System for any consecutive period of 12 months of the 15 months next preceding the month of the date of the Additional Bonds then to be issued, or for the City's completed fiscal year next preceding the date of such Additional Bonds, -24- are equal to at least (A) 1.10 times the maximum annual principal and interest requirements and (B) 1.25 times the average annual principal and interest requirements of all bonds to be outstanding after the issuance of the Additional Bonds, as such Net Revenues are shown by a report by a certified public accountant or a licensed public accountant; provided, that, the calculation of Net Revenues for the purpose of this Section 8.01(a)(iii) may be made on the basis of new rates and charges as then proposed and adopted by the City and in effect not later than the issuance date of the Additional Bonds; and (iv) the amount to be accumulated and maintained in the Reserve Fund shall be increased to an amount not less than the average annual requirements for the payment of principal of and interest on the Bonds and any Additional Bonds, such additional amount to be accumulated in equal monthly installments during a period not to exceed five years and one month. (b) Rate Covenant. The Board hereby covenants that it will establish rates for water and sewer services supplied by the System which shall produce or yield revenues sufficient to pay maintenance and operating expenses of the System, maintain the funds established hereunder and an additional amount equal to 110% of the aggregate amount required to be paid in such year for principal and interest on all outstanding Bonds, and any Additional Bonds. (c) Nonimpairment of Lien. The City and the Board hereby covenants to take no action or omit to take any action, or suffer to be done or omitted to be done, any matter or thing whatsoever whereby the lien of the Bonds and any Additional Bonds on the revenues of the System might or could be lost or impaired, and that the City will pay or cause to be paid, or will make adequate provision for the satisfaction and discharge of all lawful claims and demands for labor, materials, supplies, or other objects which, if unpaid, might by law be given precedence to, or an equality with the Bonds and any Additional Bonds as a lien or charge upon the revenues of the System or any part thereof; provided that nothing in this subsection (c) shall be construed to require the City to pay, discharge or make provision for any such lien, charge, claim or demand so long as the validity thereof shall be by it in good faith contested. (d) No Sale or Encumbrance of System. The City hereby covenants, respectively, that they will not in any manner dispose of the System or any substantial part thereof, including any and all extensions and additions that may be made thereto, until the Bonds and any Additional Bonds shall have been paid in full as to both principal and interest; provided, however, that this covenant shall not be construed to prevent -25- the disposal by the City of property, which, in the City's Judgment, has become inexpedient to use in connection with the System, when other property of equal value is substituted therefor or when the proceeds of such disposition of such property are placed in the Interest and Sinking Fund, in addition to all other amounts required to be placed in the Interest and Sinking Fund in the current fiscal year, and are used for the retirement of Bonds and any Additional Bonds in advance of their respective maturities. (e) No Competing Systems. The City hereby covenants that it will not grant a franchise for the operation of any competing water or sewer system in the City until all Bonds and any Additional Bonds have been paid in full with respect to principal and interest. (f) No Free Service. The City hereby covenants that it will not permit free water or services to be supplied to the City or to any other user, and the City hereby agrees that it will pay from its general fund the reasonable value of all water and services obtained from the System by the City and all departments and agencies thereof. (g) So long as any of the Bonds or any Additional Bonds are outstanding, the City agrees to maintain, for the benefit of the holder or holders of such bonds, insurance on the System of a kind and in an amount that usually would be carried by private companies engaged in a similar type of business. Section 8.02. Tax Covenants. (a) The City hereby represents that the proceeds of the Bonds are needed at this time to finance the costs of the permanent improvements for which the Bonds are issued and to pay the costs of issuing the Bonds; that it is not reasonably expected that the proceeds of the Bonds or money deposited in the Interest and Sinking Fund will be used or invested in a manner that would cause the Bonds to be or become "arbitrage bonds," within the meaning of Section 148 of the Code; and that, except for the Interest and Sinking Fund, no other funds or accounts have been established or pledged to the payment of the Bonds. (b) The City hereby represents and covenants that not more than ten percent (10%) of the proceeds of the Bonds will be used, directly or indirectly, in the trade or business carried on by any person other than a governmental unit and that the City will not permit the proceeds of the Bonds or the facilities financed therewith to be used in any manner so as to cause the Bonds to be or become "private activity bonds" within the meaning of the Code. -26- (c) The City will not take any action or fail to take any action with respect to the investment of the proceeds of the Bonds or any other funds of the City, including amounts received from the investment of any of the foregoing, that, based upon the facts, estimates, and circumstances known on the date of issuance of the Bonds, would result in constituting the Bonds "arbitrage bonds," within the meaning of such Section 148(f) of the Code, and the City will nottake any deliberate action motivated by arbitrage that would have such result. (d) Proper officers of the City charged with the responsibility of issuing the Bonds are hereby directed to make, execute and deliver certifications as to facts, estimates and circumstances in existence as of the date of issuance of the Bonds and stating whether there are any facts, estimates or circumstances that would materially change the City's current expectations. (e) If required, the City will comply with the provisions of Section 148(f) of the Code, and the regulations promulgated thereunder relating to paying certain excess earnings of investments of proceeds of the Bonds to the United States of America. (f) The City covenants that it will not take or permit any action or activity or omit to take any action which would cause the interest on Bonds to be includable in the gross income of the recipients thereof for Federal income tax purposes pursuant to Section 103(a) of the Code. (g) The City represents and covenants that it will not cause or permit the Bonds to be treated as "federally guaranteed" obligations within the meaning of Section 149(b) of the Code. (h) The covenants and representations made or required by this Section are for the benefit of the Bondholders and may be relied upon by the Bondholders and bond counsel for the City. Section 8.03. Special Covenants Regardinq Water Development Board. (a) Promptly upon completion of the Project, the City will furnish to the Texas Water Development Board a full and complete set of "as built" plans relating to the Project. (b) In the development and completion of the Project, the City hereby covenants that it will faithfully abide by and observe all applicable statutory requirements of the State of Texas; the applicable rules and regulations of the Texas Water Development Board and the rules and regulations of the Public Service Board of the City. -27- (c) After completion of the Project and the payment of or accrual for payment of cash sufficient to pay all costs and expenses associated therewith, the City shall pay to the Texas Water Development Board any surplus remaining in the Construction Fund to the nearest $5,000 through the redemption of Bonds in inverse order of maturity. (d) The City shall provide to the Texas Water Development Board at the close of each fiscal year, an audited financial statement for the System and promptly after completion of the Project, the City shall furnish to the Texas Water Development Board a final accounting of the total costs of the Project, prepared in accordance with generally accepted accounting principles. ARTICLE IX DEFAULT AND REMEDIES Section 9.01. 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 payments to be made to the Reserve Fund as required by the Ordinance, or (b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in the Ordinance, the holder or holders of any of the Bonds shall be entitled to a writ of mandamus issued by a court of proper jurisdiction, compelling and requiring the City and its officers to observe and perform any covenant, condition or obligation prescribed in the Ordinance. No delay or omission to exercise and 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 and power may be exercised from time to time and as often as may be deemed expedient. Section 9.02. Remedies Not Exclusive. No remedy herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or under the Bonds or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Ordinance, the right to accelerate the debt evidenced by the Bonds shall not be available as a remedy under this Ordinance. The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. -28- ARTICLE X DISCHARGE Section 10.01. Discharqe by Payment. When all Bonds have been paid in full as to principal and as to interest and premium, if any, or when all Bonds have become due and payable, whether at maturity or by prior redemption or otherwise, and the City shall have provided for the payment of the whole amount due or to become due on all Bonds then outstanding, including all interest that has accrued thereon or that may accrue to the date of maturity or prior redemption, and any premium due or that may become due at maturity or prior redemption, by depositing with the Paying Agent/Registrar, for payment of the principal of such outstanding Bonds and the interest accrued thereon and any premium due thereon, the entire amount due or to become due thereon, and the City shall also have paid or caused to be paid all sums payable under this Ordinance by the City, including the compensation due or to become due the Paying Agent/Registrar, then the Paying Agent/ Registrar, upon receipt of a letter of instructions from the City requesting the same, shall discharge and release the lien of this Ordinance and execute and deliver to the City such releases or other instruments as shall be requisite to release the lien hereof. Section 10.02. Discharqe by Deposit. (a) The City may discharge its obligation to pay the principal of, premium, if any, and interest on the Bonds and its obligation to pay all other sums payable or to become payable under this Ordinance by the City, including the compensation due or to become due the Paying Agent/Registrar, by: (i) depositing or causing to be deposited with the Paying Agent/Registrar an amount of money that, together with the interest earned on or capital gains or profits to be realized from the investment of such money, will be sufficient to pay the principal of, premium, if any, and accrued interest on such Bonds to maturity or to the date fixed for prior redemption of such Bonds, and to pay such other amounts as may be reasonably estimated by the Paying Agent/Registrar to become payable under this Ordinance, including the compensation due or to become due the Paying Agent/Registrar; and (ii) providing the Paying Agent/Registrar with an opinion of nationally recognized bond counsel acceptable to the Paying Agent/Registrar to the effect that the deposit specified in subdivision (i) of this subsection (a) will not cause the interest on the Bonds to become subject to federal income taxation. -29- 1109~ (b) Subject to subsection (c) of this Section, upon compliance with subsection (a) of this Section, the Bonds shall no longer be regarded as outstanding and unpaid, and the Paying Agent/Registrar, upon receipt of a letter of instructions from the City requesting the same, shall discharge and release the lien of this Ordinance and execute and deliver to the City such releases or other instruments as shall be requisite to release the lien hereof. (c) Before the discharge and release of the lien of this Ordinance pursuant to this Section, provision shall have been made by the City with the Paying Agent/Registrar for: (i) the establishment of a separate escrow account fund with the Paying Agent/Registrar for the deposit pursuant to subsection (a)(i) of this Section; (ii) the payment to the Bondholders at the date of maturity or at the date fixed for prior redemption, as applicable, of the full amount to which the Bondholders would be entitled by way of principal, premium, if any, and interest to the date of such maturity or prior redemption; (iii) the investment of such moneys by the Paying Agent/Registrar in 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 which may be in book-entry form, maturing and/or bearing interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment and/or redemption of such Bonds in securities or obligations maturing in sufficient time, in the judgment of the Paying Agent/Registrar, to make available the moneys required for such purposes; (iv) the sending of written notice by registered or certified United States mail to the Owner of each Bond then outstanding within 30 days following the date of such deposit that such moneys are so available for such payment; and (v) the payment to the City, periodically or following final payment of the principal of, premium, if any, and interest on the Bonds, of any moneys, interest earnings, profits or capital gains over and above the amounts necessary for such purposes. -30- FINALLY PASSED, APPROVED AND EFFECTIVE this 18th day of March, 1991. ATTEST: Mayor, City o~ Texas City Secretary City of The Colony, Texas [ SEAL ] APPROVED AS TO FORM: City Attorney City of The Colony, Texas -31-