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Home My WebLink AboutOrdinance No. 902 Ordinance No. 902 ORDINANCE AUTHORIZING THE ISSUANCE OF $1,000,000 CITY OF THE COLONY, TEXAS WATER AND SEWER SYSTEM REVENUE BONDS SERIES 1995 Adopted September 18, 1995 TABLE OF CONTENTS Recitals ......................................................................... 1 ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATrizRS Section 1.01. Definitions ............................................................. 1 Section 1.02. Other Definitions ....................................................... 3 Section 1.03. Findings ............................................................... 3 Section 1.04. Table of Contents, Titles and Headings ..................................... 3 Section 1.05. Interpretation .......................................................... 3 ARTICLE II SECURITY FOR THE BONDS Section 2.01. Security for the Bonds ................................................... 4 Section 2.02. Limited Obligations ..................................................... 4 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 and Initial Registration ......................................... 6 Section 3.05. Ownership ............................................................. 7 Section 3.06. Registration, Transfer and Exchange ....................................... 7 Section 3.07. Cancellation and Authentication .......................................... 8 Section 3.08. TemporaDy Bonds ....................................................... 9 Section 3.09. Replacement Bonds ..................................................... 9 ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY Section 4.01. Limitation on Redemption .............................................. 10 Section 4.02. Optional Redemption .................................................. 11 Section 4.03. Partial Redemption .................................................... 11 Section 4.04. Notice of Redemption to Owners ......................................... 11 Section 4.05. Payment Upon Redemption ............................................. 12 Section 4.06. Effect of Redemption ................................................... 12 ARTICLE V PAYING AGENT/REGISTRAR Section 5.01. Appointment of Initial Paying Agent/Registrar .............................. 12 Section 5.02. Qualifications ......................................................... 13 Section 5.03. Maintaining Paying Agent/Registrar ....................................... 13 Section 5.04. Termination ........................................................... 13 Section 5.05. Notice of Change to Owners ............................................. 13 Section 5.06. Agreement to Perform Duties and Functions ............................... 13 Section 5.07. Delivery of Records to Successor ......................................... 13 ARTICLE VI FORM OF THE BONDS Section 6.01. Form Generally ........................................................ 13 Section 6.02. Form of Bonds ........................................................ 14 Section 6.03. CUSIP Registration .................................................... 19 Section 6.04. Legal Opinion ......................................................... 19 Section 6.05. Municipal Bond Insurance ............................................... 19 ARTICLE VII SALE OF THE BONDS; CONTROL AND DELIVERY OF THE BONDS Section 7.01. Sale of Bonds; TWDB Application ........................................ 19 Section 7.02. Control and Delivery of Bonds ........................................... 20 ARTICLE VIII CREATION OF FUNDS AND ACCOUNTS; DEPOSIT OF PROCEEDS; INVESTMENTS Section 8.01. Special Funds ......................................................... 20 Section 8.02. Flow of Funds ......................................................... 21 Section 8.03. Construction Fund ..................................................... 21 Section 8.04. Security of Funds ...................................................... 22 Section 8.05. Deposit of Proceeds .................................................... 22 Section 8.06. Investments ........................................................... 22 Section 8.07. Investment Income ..................................................... 22 Section 8.08. Additional Bonds ...................................................... 22 ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Payment of the Bonds .................................................. 23 Section 9.02. Other Representations and Covenants ..................................... 23 Section 9.03. Rate Covenant ........................................................ 23 Section 9.04. Nonimpairment of Lien ................................................. 23 Section 9.05. No Sale or Encumbrance of System ....................................... 23 Section 9.06. No Competing Systems ................................................. 24 Section 9.07. No Free Service ........................................................ 24 Section 9.08. Insurance ............................................................. 24 Section 9.09. Provisions Concerning Federal Income Tax Exclusion ........................ 24 Section 9.10. Use of Proceeds ....................................................... 24 Section 9.11. No Federal Guaranty ................................................... 25 Section 9.12. Bonds are not Hedge Bonds ............................................. 25 Section 9.13. No-Arbitrage Covenant ................................................. 25 Section 9.14. Arbitrage Rebate ...................................................... 25 Section 9.15. Information Reporting .................................................. 26 Section 9.16. Continuing Obligation .................................................. 26 ARTICLE X SPECIAL PROVISIONS RELATING TO THE TEXAS WATER DEVELOPMENT BOARD Section 10.01. Application of Article X ................................................ 26 Section 10.02. Covenant to Abide with Rules ........................................... 26 Section 10.03. Tax Covenant ........................................................ 26 Section 10.04. Final Accounting ...................................................... 26 Section 10.05. Annual Audit Reports ................................................. 26 ARTICLE XI DEFAULT AND REMEDIES Section 11.01. Events of Default ..................................................... 26 Section 11.02. Remedies for Default .................................................. 27 Section 11.03. Remedies Not Exclusive ................................................ 27 ARTICLE XII DISCHARGE Section 12.01. Discharge by Payment ................................................. 27 Section 12.02. Discharge by Deposit .................................................. 28 ARTICLE XIII ESCROW AGREEMENT; ESCROW FUND Section 13.01. Authorization and Execution of Escrow Agreement ......................... 29 Section 13.02. Disbursements fromthe Escrow Fund .................................... 29 ARTICLE XIV MUNICIPAL BOND INSURANCE Section 14.01. Application .......................................................... 29 Section 14.02. Consent of AMBAC Indemnity .......................................... 29 Section 14.03. Consent of AMBAC Indemnity in Addition to Bondholder Consent ........... 29 Section 14.04. Consent of AMBAC Indemnity Upon Default ............................. 29 Section 14.05. Bonds to Remain Outstanding .......................................... 29 EXECUTION ..................................................................... 31 Ordinance No. 902 AN ORDINANCE OFTHE CITY COUNCIL OF THE CITY OF THE COLONY, TEXAS, AUTHORIZING THE ISSUANCE AND SALE OF CITY OF THE COLONY, TEXAS, WATER AND SEWER SYSTEM REVENUE BONDS, SERIIB 1995, IN THE AGGREGATE PRINCIPAL AMOUNT OF $1,000,000; PRESCRIBING THE FORM OF SAID BONDS; PROVIDING FOR THE SECURITY FOR AND PAYMENT OF SAID BONDS; AWARDING THE SALE THEREOF; AND ENACTING OTHER PROVISIONS RELATING TO THE SUBJECT WHEREAS, the City Council (the "City Council") of the City of The Colony, Texas (the "City"), by resolution adopted on July 24, 1995, directed publication of notice of the intention of the City to issue a maximum principal amount of not exceeding $1,000,000 revenue bonds of the City for the purposes hereinafter set forth; WHEREAS, such notice was published in the manner and to the extent required by law; WHEREAS, there has not been filed with the City SecretaE/or any other officer of the City a petition protesting the issuance of such revenue bonds and requesting an election on same; WHEREAS, it is affirmatively found that this City Council is authorized to proceed with the issuance and sale of such certificates of obligation as authorized by the Constitution and laws of the State of Texas, particularly Arts. 1111, et seq., as amended; and WHEREAS, it is officially found, determined, and declared that the meeting at which this Ordinance has been adopted was open to the public and public notice of the time, place and subject matter of the public business to be considered and acted upon at said meeting, including this Ordinance, was given, all as required by the applicable provisions of Chap. 551, Texas Government Code; Now Therefor, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF THE COLONY: ARTICLE I DEFINITIONS AND OTHER PRELIMINARY MATTERS Section 1.01. ~. 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 8.08. "AMBAC Indemnity" means AMBAC Indemnity Corporation, a Wisconsin domiciled stock insurance company. "Bond" means any of the Bonds. "Bonds" means the City's bonds entitled "City of The Colony, Texm, Water and Sewer System Revenue Bonds, Series 1995" authorized to be issued by Section 3.01. "Closing Date" means the date of the initial delivery of and payment for the Bonds. "Code" means the Internal Revenue Code of 1986, as amended, including applicable regulations, published rulings and court decisions relating thereto. "Construction Fund" means the construction fund established by Section 8.01(d). "Designated Payment/Transfer Office" means (i) with respect to the initial Paying Agent/Registrar named herein, its corporate trust office in Dallas, Texas, or at such other location designated by the Paying Agent/Registrar and (2) with respect to any successor Paying Agent/Registrar, the office of such successor designated and located as may be agreed upon by the City and such successor. "Escrow Agent" means Texas Commerce Bank National Association. "Escrow Agreement" means the escrow agreement, dated as of September 18, 1995, by and between the City and the Escrow Agent. "Escrow Fund" means the fund referred to in Sections 8.03(a) and 13.02 of this Ordinance and established by the Escrow Agreement to hold the proceeds of the Bonds pending disbursemem of such proceeds pursuant to the provisions of the Escrow Agreement. "Event of Default" means any Event of Default as defined in Section 11.01 of this Ordinance. "Initial Bond" means the Bond described in Section 3.04(d) and 6.02(d). "Interest and Sinking Fund" means the interest and sinking fund established by Section 8.0100). "Interest Payment Date" means the date or dates upon which interest on the Bonds is scheduled to be paid until the maturity of the Bonds, such dates being February 15 and August 15 of each year commencing February 15, 1996. "Municipal Bond Guaranty Insurance Policy" means the municipal bond insurance policy issued by AMBAC Indemnity insuring the payment when due of the principal of and interest on the Bonds as provided therein. "Ordinance" means this Ordinance. "Original Issue Date" means the initial date from which interest on the Bonds accrues and which is designated in Section 3.02(a). "Owner" means the person who is the registered owner of a Bond or Bonds, as shown in the Register. "Parity Bonds" means the City's outstanding Waterworks and Sewer System Revenue Bonds, Series 1991, the Bonds and any Additional Bonds. "Paying Agent/Registrar" means Texas Commerce Bank National Association, any successor thereto or an entity which is appointed as and assumes the duties of paying agent/registrar as provided in this Ordinance. "Paying Agent/Registrar Agreement" means the Paying Agent/Registrar Agreement between the City and the Paying Agent/Registrar relating to the Bonds. "Purchaser" means the person, firm or entity initially purchasing the Bonds from the City and which is designated in Section 7.01 of this Ordinance. "Record Date" means the last business day of the month next preceding an Interest Payment Date. "Register" means the Register specified in Section 3.06(a). "Revenue Fund" means the revenue fund established and confirmed in Section 8.01(a). "Reserve Fund" means the reserve fund established and confirmed in Section 8.01(c). "Special Payment Date" means the Special Payment Date prescribed by Section 3.03(b). "Special Record Date" means the Special Record Date prescribed by Section 3.03(b). "System" means the City's combined waterworks and sewer system. "Unclaimed Payments" means money deposited with the Paying Agent/Registrar for the payment of the principal of or interest on Bonds as the same come due and payable and remaining unclaimed by the Owners thereof for 90 days after the applicable payment or redemption date. Section 1.02. Other Definitions. The terms "City Council" and "City" shall have the meaning assigned in the preamble to this Ordinance. Section 1.03. ~. 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. Section 1.04. Table of Contents. Titles and Heading. 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 1.05. Inte~retation. (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. (c) Article and section references shall means references to articles and sections of this Ordinance unless designated otherwise. ARTICLE II SECURITY FOR THE BONDS Section 2.01. ~:llF~[gllgll~l~. The Bonds are being issued as Additional Bonds on a parity with the outstanding Parity Bonds The Bonds, together with the outstanding Parity 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 Parity Bonds are special obligations of the City, payable solely from the Net Revenues, and shall never be payable out of funds raised or to be raised by taxation. ARTICLE III AUTHORIZATION; GENERAL TERMS AND PROVISIONS REGARDING THE BONDS Section 3.01. Authorization. The City's revenue bonds to bc designated "City of The Colony, Texas, Water and Sewer System Revenue Bonds, Series 1995," are hereby authorized to bc issued and delivered in accordance with thc Constitution and laws of thc State of Texas in thc aggregate principal amount of $1,000,000 for the purpose of providing funds for the construction, acquisition and equipment of improvements, additions and extensions to the System, including expansion of the existing Stewart Creek Wastcwater Treatment Plant, and to pay ali or a portion of the costs of issuance of thc Bonds. Section 3.02. Date. Denomination. Maturities. Numbers and Interest (a) Thc Bonds shall bc dated September 1, 1995, shall be in fully reg/stcred form, without coupons, in the denomination of $5,000 or any integral multiple thereof, and shall be numbered separately from one upward or such other designation acceptable to the City and the Paying Agent/Rcg/strar. (b) The Bonds shall mature on August 15 in the years and in the principal amounts set forth in thc following schedule: Principal Interest Year Amount Rate 1996 $15,000 3.000% 1997 35,000 3.200% 1998 35,000 3.350% 1999 35,000 3.500% 2000 40,000 3.600% 2001 40,000 3.700% 2002 40,000 3.800% 2003 45,000 3.900% 2004 45,000 4.000% 2005 45,000 4.100% 2006 50,000 4.250% 2007 50,000 4.400% 2008 55,000 4.500% 2009 55,000 4.650% 2010 60,000 4.750% 2011 65,000 4.850% 2012 65,000 4.950% 2013 70,000 5.000% 2014 75,000 5.050% 2015 80,000 5.100% Interest shall accrue and be paid on each Bond, respectively, until its maturity or prior from the later of the Closing Date or the most recent Interest Payment Date to which been paid or provided for at the rates per annum for each respective maturity specified in contained in subsection (b) above. Such interest shall be payable semiannually on February 15, 1996 and on each February 15 and August 15 thereafter until maturity redemption. Interest on the Bonds shall be calculated on the basis of a 360-day year composed 30-day months. 3.03. Medium. Method and Place of Pa.vmer~t. (a) The principal of, premium, if any, the Bonds shall be paid in lawful money of the United States of America as provided Interest on the Bonds shall be payable to the Owners whose names appear in the the dose of business on the Record Date; provided, however, that in the event of interest on a scheduled Interest Payment Date, and for 30 days thereafter, a new record 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. Special Record Date and of the scheduled payment date of the past due interest (the Payment Date", which shall be at least 15 days after the Special Record Date) shall be sent at business days prior to the Special Record Date by United States mall, first class postage address of each Owner of a Bond appearing on the books of the Paying Agent/Registrar business on the last business day next preceding the date of mailing of such notice. (c) Interest on the Bonds shall be paid by check (dated as of the Interest Payment Date) and sent by the Paying Agent/Registrar to the person entitled to such payment, United States mail, first class postage prepaid, to the address of such person as it appears in the Register 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, that such person shall bear all risk and expenses of such other customary banking arrangements. (d) The principal of each Bond shall be paid to the person in whose name such Bond is registered 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 Designated Payment/Transfer Office. (e) If a date for the payment of the principal of or interest on the Bonds is a Saturday, Sunday, legal holiday, or a day on which banking institutions in the city in which the Designated Payment/Transfer Office is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday, or day on which such 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. (f) Subject to any applicable escheat, unclaimed property or similar law, including without limitation Title 6 of the Texas Property Code, Unclaimed 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 and 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 Owners of such Bonds for any further payment of such unclaimed moneys or on account of any such Bonds, subject to any applicable escheat law, unclaimed property or similar law, including without limitation Title 7 of the Texas Property Code. Section 3.04. Execution and Initial Re~stration. (a) The Bonds shall be executed on behalf of the City by the Mayor and City Secretary of the City, 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 in this Ordinance, duly authenticated by manual execution of the Paying Agent/Registrar. It shall not be required that the same authorized representative 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 the Closing Date shall have attached thereto the Comptroller's Registration Certificate substantially in the form provided in this Ordinance, 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 and that it is a valid and binding obligation of the City, and has been registered by the Comptroller. (d) On the Closing Date, one Initial Bond representing the entire principal amount of the Bonds, payable in stated installments to the Purchaser or its designee, executed by manual or facsimile signature of the Mayor and City Secretary of the City, approved by the Attorney General of Terns, and registered and manually signed by the Comptroller of Public Accounts of the State of Texas, will be delivered to the Purchaser or its designee. Upon payment for the Initial Bond, the Paying Agent/Registrar shall cancel the Initial Bond and deliver to the Purchaser one registered definitive Bond for each year of maturity of the Bonds, in the aggregate principal amount of all Bonds for such maturity, registered in the name of the Purchaser or its designee. 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 premium, if any, thereon, for the further purpose of making and receiving payment of the interest thereon (subject to the provisions herein that interest is to be paid to the person in whose name the Bond is registered on the Record Date), 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 person deemed to be the Owner of any Bond in accordance with this Section 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. Re~stration. Transfer and Exchange. (a) So long as any Bonds remain outstanding, the City shall cause the Paying Agent/Registrar to keep at the Designated Payment/Transfer Office a register (the "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) Registration of any Bond may be transferred in the Register only upon the presentation and surrender thereof at the Designated Payment/Transfer Office for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of the Bonds, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and the right of such assignee or assignees thereof to have the Bond or any portion thereof registered in the name of such assignee or assignees. No transfer of any Bond shall be effective until entered in the Register. Upon assignment and transfer of any Bond or portion thereof, a new Bond or Bonds will be issued by the Paying Agent/Registrar in conversion and exchange for such transferred and assigned Bond. To the extent possible the Paying Agent/Registrar will issue such new Bond or Bonds in not more than three business days after receipt of the Bond to be transferred in proper form and with proper instructions directing such transfer. (c) Any Bond may be converted and exchanged only upon the presentation and surrender thereof at the Designated Payment/Transfer Office, together with a written request therefor duly executed by the registered owner or assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantees of signatures satisfactory to 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. If a portion of any Bond is redeemed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in the denomination or denominations of any integral multiple of $5,000 at the request of the registered owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. To the extent possible, a new Bond or Bonds shall be delivered by the PayingAgent~egistrar to the registered owner of the Bond or Bonds in not more than three business days after receipt of the Bond to be exchanged in proper form and with proper instructions directing such exchange. (d) Each Bond issued in exchange for any Bond or portion thereof assigned, transferred or converted shall have the same principal maturity date and bear interest at the same rate as the Bond for which it is being exchanged. Each subslitute Bond shall bear a letter and/or number to distinguish it from each other Bond. The Paying Agent/Registrar shall convert and exchange the Bonds as provided herein, and each substitute 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 substitute Bond is delivered. (e) The City will pay the Paying Agent/Registrar's reasonable and customarycharge for the initial registration or any subsequent transfer, exchange or conversion of Bonds, but the Paying Agent/Registrar will 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 registration, transfer, exchange or conversion of a Bond. In addition, the City hereby covenants with the Owners of the Bonds that it will (i) pay the reasonable and standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the principal of and interest on the Bonds, when due, and (ii) pay the fees and charges of the Paying Agent/Registrar for services with respect to the transfer, registration, conversion and exchange of Bonds as provided herein. (f) 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 45 calendar 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. Section 3.07. Cancellation and Authentication. (a) 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 destroyed upon the making of proper records regarding such payment, redemption, exchange or replacement. The Paying Agent/Registrar shall periodically furnish the City with certificates of destruction of such Bonds. (b) Each substitute Bond issued pursuant to the provisions of Sections 3.06 and 3.09 of this Ordinance, in conversion of and exchange for or replacement of any Bond or Bonds issued under this Ordinance, shall have printed thereon a Paying Agent/Registrar's Authentication Certificate, in the form hereinafter set forth. An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, manually sign and date such Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so executed. No additional ordinances, orders, or resolutions need be passed or adopted by the City Council or any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Bond orportion thereof, and the Paying Agent/Registrar shall provide for the printing execution, and delivery of the substitute Bonds in the manner prescribed herein, and said Bonds shall be of customary type and composition and be printed on paper with lithographed or steel engraved borders of customary weight and strength. Pursuant to Article 717k-6, Tex. Rev. Civ. Stat.Ann., as amended, and particularly Section 6 thereof, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the above Paying Agent/Registrar's Authentication Certificate, the converted and exchanged or replaced Bonds shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Bond which was originally delivered pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. (c) Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the registered owners thereof, (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the Form of Bonds set forth in this Ordinance. Section 3.08. ~. (a) Following the delivery and registration of the Initial Bonds 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, at the Designated Payment/Transfer Office, of a mutilated Bond, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement 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 s~n sufficient to cover any tax or other governmental charge that is authorized to be imposed in connection therewith and any other expenses connected herewith. (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 mount, bearing a number not contemporaneously outstanding, provided that the Owner first: (i) furnishes to the Paying Agent/Registrar satisfactory evidence of h/s 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 and the City to save them 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 (iv) satisfies any other reasonable requirements imposed by the City and the Paying Agent/Registrar. (c) If, after the delivery of such replacement Bond, a bona fide purchaser of the original Bond in heu 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, inits discretion, instead of issuing a replacement Bond, may pay such Bond. (e) Each replacement 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 replacement Bond is delivered. ARTICLE IV REDEMPTION OF BONDS BEFORE MATURITY Section 4.01. Limitation on Redemptign. The Bonds shall be subject to redemption before scheduled maturity only as provided in this Article IV. Section 4.02. ~. (a) The City reserves the option to redeem Bonds maturing on and after August 15, 2006, in whole, or in part in inverse order of maturity, before their respective scheduled maturity dates, on August 15, 2005 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 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 of a maturity are to be redeemed, the City shall determine the amount thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot the Bonds, or portions thereof, within such maturity and in such principal amount 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. If such a Bond is to be partially redeemed, the Paying Agent/Registrar shall treat each $5,000 portion of the 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 Owrlcrs. (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 part thereof) to be redeemed, at the address shown on the Register at the close of business on the business day next preceding the date of mailing such notice. (b) The notice shall state the redemption date, the redemption pr/cc, the place at which the Bonds are to be surrendered for payment, and, if less than all the Bonds 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 such amounts as are 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 Designated Payment/Transfer Office 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 money set aside for such purpose. Section 4.06. (a) Notice of redemption having been given as providedin Section 4.04 of this Ordinance, the Bonds or portions thereof called for redemption shall become due and payable on the date f/xed for redemption and, unless the City defaults in its obligation to make provision for 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 called for redemption shall continue to bear interest at the rate stated on the Bond until due provision is made for the payment of same by the City. ARTICLE V PAYING AGENT/REGISTRAR Section 5.01. Appointment of Initial Paving Agent/Re~strar. (a) The City hereby appoints Texas Commerce Bank National Association as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the City and the Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such transfer and registrations as herein provided. It shall be the duty of the Paying Agent/Registrar to obtain from the Owners and record in the Register the address of such Owner of each Bond to which payments with respect to the Bonds shall be mailed, as provided herein. The City or its designee shall have the right to inspect the Register during regular business houm of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. (b) The City hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds. The Paying Agent/Registrar shall keep proper records of all payments made by the City and the Paying Agent/Registrar with respect to the Bonds, ard of all conversions, exchanges and replacements of such Bonds, as provided in the Ordinance. (c) The execution and delivery of a Paying Agent/Registrar Agreement, substantially in the form presented at this meeting, specifying the duties and responsibilities of the City and the Paying Agent/Registrar,/s hereby approved with such changes as may be approved by the Mayor of the City, and the Mayor and City Secretary of the City are hereby authorized to execute such agreement. Section 5.02. ~. Each Paying Agent/Registrar shall be (i) a commercial bank, trust company, or other entity duly qualified and legally authorized under applicable law, (ii) authorized under such laws to exercise trust powers, (iii) subject to supervision or examination by a federal or state governmental authority, and (iv) a single entity. Section 5.03. Maintaining Paying Agent/Registrar. (a) At all times while any Bonds are outstanding, the City will maintain a Paying Agent/Registrar that is qualified under ~ection 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. Terminatiorl. The City reserves the right to terminate the appointment of any Paying Agent/Registrar by delivering to the entity whose appointment is to be terminated a certified copy of a resolution of the City (i) giving notice of the termination of the appointment and of the Paying Agent/Registrar Agreement, stating the effective date of such termination, and (ii) appointing a successor Paying Agent/Registrar; provided, that, no such termination shall be effective until a successor Paying Agent/Registrar has accepted the duties of Paying Agent/Registrar for the Bonds. Section 5.05. Notice of Change to Owners. Promptly upon each change in the entity serving as Paying AgenffRegistrar, the City will cause notice of the change to be sent to each Owner by United States mail, first class postage prepaid, at the address in the Register, stating the effective date of the change and the name of the replacement Paying Agent/Registrar and the mailing address of its Designated Payment/Transfer Office. Section 5.06. A~eement to Perform Duties and Functions. By accepting the appointment as Paying Agent/Registrar, the Paying Agent/Registrar is deemed ~ have agreed to the provisions of this Ordinance and that it will perform the duties and functions of Paying Agent/Registrar prescribed hereby. Section 5.07. Delivery_ of Records to Successor. If a Paying Agent/Registrar is replaced, such Paying Agent/Registrar, 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..E.QXIIl_CzgZ~r~. (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 Assignment form to appear on each of the Bonds, (i) shall be substantially in the form set forth in tiffs Article, with such appropriate insertions, omissions, 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 indorsements (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 thereo£ (b) Any portion of the text of any Bonds may be set forth on the reverse side thereof, with an appropriate reference thereto on the face of the Bonds. (c) The Bonds shall be typed, printed, lithographer, 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. Section 6.02. Form of Borlds~ The form of Bonds, including the form of the Registration 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 WATER AND SEWER SYSTEM REVENUE BONDS SERIES 1995 INTEREST RATE: MATURITY DATE: DELIVERY DA'rE: CUSIP NUMBER: ,1995 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, 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 provision for such payment shall have been made, and to pay interest on the unpaid principal amount hereof 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 such principal amount shall have 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 February 15, 1996. 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 corporate trust office in Dallas, Texas (the "Designated Payment/Transfer Office"), of the Paying Agent/Registra: executing the registration certificate appearing hereon, or, with respect to a successor Paying Agent/Registrar, at the Designated Payment/Transfer Office of such successor. Interest on this Bond is payable by check dated as of the interest payment date, 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, requested by, and at the risk and expense of, the person to whom interest is to be paid. 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 business day of the month next preceding such interest payment date; provided, however, that in the event of nonpayment of interest on a scheduled interest payment date, and for 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 (the "Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each Owner of a Bond appearing on the books of the Paying Agent/Registrar at the close of business on the last business day preceding the date of mailing such notice. Reference is hereby made to the further provisions of this Bond set forth on the reverse side hereof, and such further provisions shall for all purposes have the same effect as if set forth on the face hereof. * If a date for the payment of the principal of or interest on the Bonds is a Saturday, Sunday, legal holiday, or a day on which banking institutions in the city in which the Designated Payment/Transfer Office is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not a Saturday, Sunday, legal holiday, or day on which such 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. * This Bond is one of a series of fully registered certificates of obligation specified in the title hereof issued in the aggregate principal amount of $1,000,000, dated September 1, 1995, and issued (herein referred to as the "Bonds") pursuant to a certain Ordinance of the City Council of the City (the "Ordinance") for the purpose of paying contractual obligations to be incurred in connection with the construction, acquisition and equipment of improvements, additions and extensions to the City's waterworks and sewer system and to pay the costs of issuance related to the Bonds. * The Bonds and the interest thereon, together with certain outstanding revenue bonds of the City, are payable from a pledge of the Net Revenues of the City's waterworks and sewer system, all as described and provided in the Ordinance. * 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. * The City has reserved the option to redeem the Bonds maturing on or after August 15, 2006, in whole, or in part in inverse order of maturity, in principal mount equal to $5,000 or any integral multiple thereof, before their respective scheduled maturity dates, on August 15, 2005, or on any date .thereafter, at a price equal to the principal mount of the Bonds so called for redemption plus accrued mterest to the date fixed for redemption. If less than all of the Bonds of a maturity are to be redeemed, the City shall determine the amount thereof to be redeemed and shall direct the Paying Agent/Registr~ to call by lot the Bonds, or portions thereof, within such maturity and in such principal amount, for redemption. * 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 Designated Payment/Transfer Office, with such indorsement or other evidence of transfer as is acceptable to the Paying Agent/Registrar, and, 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. * 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 or Special Record Date, as applicable) and for all other purposes, whether or not this Bond be overdue, and neither the City nor the Paying Agent/Registrar shall be affected by notice to the contrary. * 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 45 calendar 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. * IT IS HEREBY CERTIFIED AND RECITEDthat the issuance of this Bond and the series of which it is a part is duly authorized by law; that all acts, conditions and things required to be done precedent to and in the issuance of the Bonds have been properly done and performed and have happened in regular and due time, form and manner, as required by law; and that the total indebtedness of the City, including the Bonds, does not exceed any constitutional or statutory limitation. IN WITNESS WHEREOF, this Bond has been duly executed on behalf of the City, under its official seal, in accordance with law. City Secretary, City of The Colony, Texas Mayor, City of The Colony, Texas (b) [Form of Certificate of Paying Agent/Registrar] CERTIFICATE OF PAYING AGENT/REGISTRAR This is one of the Bonds referred to in the within mentioned Ordinance. The series of Bonds of which this Bond is a part was originally issued as one Initial Bond which was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. as Paying Agent/Registrar Dated: By:. Authorized Signatory (c) [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: Signature Guaranteed By: Authorized Signatory 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 and must be guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers. * Note to printer: Paragraphs preceded by an asterisk (*) are to be printed on the reverse side of the certificates. (d) '' ' . (i) The Initial Bond shall be in the form set forth in paragraph (a) of this Section, except that: A. immediately under the name of the Bond, the headings "INTEREST RATE" and "MATURITY DATE" shall both be completed with the words "As Shown Below" and "CUSIP NO. "deleted; B. in the first paragraph: the words "on the Maturity Date specified above" shall be deleted and the following will be inserted: "on the fifteenth day of August in the years, in the principal installments and bearing interest at the per annum rates set forth in the following schedule: Principal Interest Years Installments Rates (Information to be inserted from Section 3.02(b) hereof.) C. In the second paragraph of the Initial Bond, "initial" shall be inserted before "Paying Agent/Registrar" in the first sentence, "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 Texas Commerce Bank National Association."; D. the Initial Bond shall be numbered T-1. E. The third paragraph of the Bond form shall be deleted from the Initial Bond. (ii) The following Registration Certificate of Comptroller of Public Accounts shall appear on the Initial Bond: REGISTRATION CERTIFICATE OF COMPTROLLER OF PUBLIC ACCOUNTS OFFICE OF THE COMPTROLLER § OF PUBLIC ACCOUNTS § REGISTER NO. THE STATE OF TEXAS § I HEREBY CERTIFY THAT there is on file and of record in my office a certificate to the effect that the Attorney General of the State of Texas has approved this Certificate, and that this Certificate has been registered this day by me. WITNESS MY SIGNATURE AND SEAL OF OFFICE this [SEAL] Comptroller of Public Accounts of the State of Texas Section 6.03. ~5~2~g~Atlg~. 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. ~. The approving legal opinion of Vinson & Elkins L.L.P., Bond Counsel, may be 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. Municipal Bond Insurance If municipal bond guaranty insurance is obtained with respect to the Bonds, the Bonds, including the Initial Bond, may bear an appropriate legend, as provided by the insurer. ARTICLE VII SALE OF THE BONDS; CONTROL AND DELIVERY OF THE BONDS Section 7.01. Sale of Bonds: TWDB Application. (a) The Bonds are hereby officially sold and awarded to the Texas Water Development Boan:l, at a price equal to the principal amount thereof. It is hereby found and determined that the terms of this sale are the most advantageous reasonably obtainable. The Bonds shall initially be registered in the name of the Purchaser or its designee. (b) All officers of the City are authorized to take such actions and to execute such documents, certificates and receipts as they may deem necessary and appropriate in order to consummate the delivery of the Bonds. (c) The form and substance of the Application to the Texas Water Development Board (the "Board") for the Bonds and any addenda, supplement or amendment thereto (the "Application") presented to and considered at this meeting, is hereby in all respects approved and adopted by the City Council. The submission of the Application to the Board in the offering and sale of the Bonds is hereby ratified, approved and confirmed. The City Secretary is hereby authorized and directed to include and maintain a copy of the Application and any addenda, supplement or amendment thereto thus approved among the permanent records of this meeting. (d) The obligation of the Purchaser to accept delivery of the Bonds is subject to the Purchaser being furnished with the final, approving opinion of Vinson & Elkins L.L.P., Bond Counsel for the City, which opinion shall be dated as of and delivered on the Closing Date. Section 7.02. Control and Delivery_ of Bot~d~ (a) The Mayor is hereby authorized to have control of the Initial Bond and all necessary records and 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 Purchaser under and subject to the general supervision and direction of the Mayor, against receipt by the City of all amounts due to the City under the terms of sale. ARTICLE VIII CREATION OF FUNDS AND ACCOUNTS; DEPOSIT OF PROCEEDS; INVESTMENTS Section 8.01. 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 have been established and shall be maintained at a depository bank of the City so long as any of the Parity Bonds are outstanding and unpaid, to-wit: (a) "City of The Colony, Texas, Water and Sewer System Revenue Bonds Revenue Fund;' herein called the "Revenue Fund"; (b) "City of The Colony, Texas, Water and Sewer System Revenue Bonds Interest and Sinking Fund," herein called the "Interest and Sinking Fund"; (c) "City of The Colony, Texas, Water and Sewer System Revenue Bonds Reserve Fund," herein called the "Reserve Fund"; and (d) "City of The Colony, Texas, Water and Sewer System Revenue Bonds, Series 1995 Construction Fund," (herein called the "Construction Fund"). Section 8.02. (a) 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 ether Funds described in this Ordinance, in the order of priority, in the manner, and in the amounts set forth below: (b) There shall be deposited into the Interest and Sinking Fund the following: (i) such amounts, in equal monthly installments, commencing on the tenth day of the month following the month in which the Closing Date occurs, and on the tenth day of each month thereafter, as will be sufficient to pay the interest scheduled to come due on the Parity Bonds on the next Interest Payment Date, less any amounts already in 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 on the tenth day of the month following the month in which the Closing Date occurs, and on the tenth day of each month thereafter, as will be sufficient to pay the next maturing principal of the Parity Bonds. The Interest and Sinking Fund shall be used to pay the principal of and interest on the Parity Bonds as such principal matures and such interest becomes due. (c) So long as the funds on deposit in the Reserve Fund 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, which shall be an amount equal to the average annual debt serxrice of the Parity Bonds and any Additional Bonds outstanding from time to time, 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 Parity Bonds at any time there are not sufficient funds on deposit in the Interest and Sinking Fund for such purpose. Upon issuance of the Bonds, the City shall calculate the Reserve Fund Requirement that will be required after giving effect to the issuance of the Bonds. In accordance with the procedures specified in the preceding paragraph and in addition to any deposits required to be made pursuant to such paragraph, deposits shall be made to the Reserve Fund by the City to accumulate in the Reserve Fund, within sixty months from the month in which the Closing Date occurred, an amount equal to the Reserve Fund Requirement. Section 8.03. ~. (a) Subject to the provisions of Section 10.04, all funds disbursed from the Escrow Fund shall be deposited into the Construction Fund and, together with any investment earnings thereof, shall be used for the purposes specified in Section 3.01 of this Ordinance. (b) Subject to the provisions of Section 10.04, all amounts remaining in the Construction Fund after the accomplishment of the ~urposes for which the Bonds are hereby issued, including investment earnings of the Construction Fund, shall be deposited into the Interest and Sinking Fund, unless appl/cable law permits or authorizes all or any part of such funds to be used for other purposes. Section 8.04. i~eJ31Iily_.Qlf_llg~. All moneys on deposit in the funds created by this Ordinance shall be secured in the manner and to the fullest extent required by the laws of the State 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 8.05. I~Qf~LgJ2~.~. On the Closing Date, the mounts received from the sale of the Bonds shall be deposited to the credit of the Escrow Fund. Section 8.06. Investments. (a) Money in the Interest and Sinking Fund, the Reserve Fund and the Construction Fund, at the option of the City, may be invested in such securities or obligations as permitted under applicable law. (b) Any securities or obligations in which money is so invested shall be kept and held in trust for the benefit of the Owners and shall be sold and the proceeds of sale shall be timely applied to the making of all payments required to be made from the fund from which the investment was made. Section 8.07. Investment Income. Interest and income derived from investment of any fund created by this Ordinance shall be credited to such fund. Section 8.08. ~. (a) 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 Parity Bonds; (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 in which the ordinance authorizing the proposed Additional Bonds is adopted, or for the City's completed fiscal year next preceding the date of such Additional Bonds, 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 Parity 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 8.08(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 Parity Bonds including the proposed Additional Bonds, such additional amount to be accumulated in equal monthly installments during a per/od not to exceed five years and one month. ARTICLE IX PARTICULAR REPRESENTATIONS AND COVENANTS Section 9.01. Pa_vment of the Bonds. While any of the Bonds are outstanding and unpaid, there shall be made available to the Paying Agent/Registrar, out of the Interest and Sinking Fund or, if funds in the Interest and Sinking Funds are insufficient for such purpose, the Reserve Fund, money s~fficient to pay the interest on and the principal of the Bonds, as applicable, as will accrue or mature on each applicable Interest Payment Date. Section 9.02. Other Representations and Covenants. (a) The City will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in this Ordinance and in each Bond; the City will promptly pay or cause to be paid the principal of, interest on, and premium, if any, with respect to, each Bond on the dates and at the places and manner prescribed in such Bond; and the City will, at the times and in the manner prescribed by this Ordinance, deposit or cause to be deposited the amounts of money specified by this Ordinance. (b) The City is duly authorized under thc laws of the State of Texas to issue the Bonds; all action on its part for the creation and issuance of the Bonds has been duly and effectively taken; and the Bonds in the hands of the Owners thereof are and will be valid and enforceable obligations of the City in accordance with their terms. Section 9.03. Rate Covenant. The City hereby covenants that it will establish rates for water and sewer services supplied by thc 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 Parity Bonds. Section 9.04. Nonimpairment of L~en, The City 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 Parity 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 g~ven precedence to, or an equality with the Parity Bonds as a lien or charge upon the revenues of the System or any part thereof; provided that nothing in this section 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. Section 9.05. No Sale or Encumbrance of System. The City hereby covenants that it 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 Parity Bonds shall have been paid in full as to both principal and interest; provided, however, that this covenant shall not be construed to prevent 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 thc Interest and Sinking Fund in the current fiscal year, and are used for the retirement of Parity Bonds in advance of their respective maturities. Section 9.06. 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 Parity Bonds have been paid in full with respect to principal and interest. Section 9.07. 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. Section 9.08. Insurance. So long as any of the Parity 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 9.09. Provisions Concerning Federal Income Tax Exclusior~ The City intends that the interest on the Bonds shall be excludable from gross income for purposes of federal income taxation pursuant to sections 103 and 141 through 150 of the Internal Revenue Code of 1986, as amended (the "Code"), and applicable regulations. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that if taken or omitted, respectively, would cause the interest on the Bonds to be includable in gross income, as defined in section 61 of the Code, of the holders thereof for purposes of federal income taxation. In particular, the City covenants and agrees to comply with each requirement of this Article IX; provided, however, that the City shall not be required to comply with any particular requirement of this Article IX if the City has received an opinion of nationally recognized bond counsel ("Counsel's Opinion") that such noncompliance will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or if the City has received a Counsel's Opinion to the effect that compliance with some other requirement set forth in this Article IX will satisfy the applicable requirements of the Code, in which case compliance with such other requirement specified in such Counsel's Opinion shall constitute compliance with the corresponding requirement specified in this Article IX. Section 9.10. ~. The City covenants and agrees that its use of the Net Proceeds of the Bonds (as hereinafter defined) will at all times satisfy the following requirements: (a) The City will limit the amount of original or investment proceeds of the Bonds to be used (other than use as a member of the general public) in the trade or business of any person other than a governmental unit to an amount aggregating no more than ten percent of the Net Proceeds of the Bonds ("private-use proceeds"). For purposes of this Section, the term "person" includes any individual, corporation, partnership, unincorporated association, or any other entity capable of carry/ng on a trade or business; and the term "trade or business" means, with respect to any natural person, any activity regularly carried on for profit and, with respect to persons other than natural persons, any activity other than an activity carried on by a governmental unit. Any use of proceeds of the Bonds in any manner contrary to the guidelines set forth in Revenue Procedure 93-19, including any revisions or amendments thereto, shall constitute the use of such proceeds in the trade or business of one who is not a governmental unit; (b) The City will not permit more than five percent of the Net Proceeds of the Bonds to be used in the trade or business of any person other than a governmental unit if such use is unrelated to the governmental purpose of the Bonds. Further, the amount of private-use proceeds of the Bonds in excess of five percent of the Net Proceeds of the Bonds ("excess private-use proceeds") will not exceed the proceeds of the Bonds expended for the governmental purpose of the Bonds to which such excess private-use proceeds relate; and (c) The City will not permit an amount of proceeds of the Bonds exceeding the lesser of (i) $5,000,000 or (ii) five percent of the Net Proceeds of the Bonds to be used, directly or indirectly, to finance loans to persons other than governmental units. When used in this Article IX, the term Net Proceeds of the Bonds shall mean the proceeds from the sale of the Bonds, including investment earnings on such proceeds, less accrued interest. Section 9.11. 2~F~[~3~tr/tl~. The City covenants and agrees not to take any action, or knowingly omit to take any action within its control, that, if taken or omitted, respectively, would cause the Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Code and applicable regulations thereunder, except as permitted by section 149(b)(3) of the Code and such regulations. Section 9.12. Bonds are not Hedge Bonds. The City covenants and agrees that not more than 50 percent of the proceeds of the Bonds will be invested in nonpurpose investments (as defined in section 148(f)(6)(A) of the Code) having a substantially guaranteed yield for four years or more within the meaning of section 149(g)(3)(A)(ii) of the Code, and the City reasonably expects that at least 85 percent of the spendable proceeds of the Bonds will be used to carry out the governmental purposes of the Bonds within the three-year period beginning on the date the Bonds are issued. Section 9.13. ~. The City shall certify, through an authorized officer, employee or agent that based upon all facts and estimates known or reasonably expected to be in existence on the date the Bonds are delivered, the City will reasonably expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of section 148(a) of the Code and applicable regulations thereunder. Moreover, the City covenants and agrees that it will make such use of the proceeds of the Bonds including interest or other investment income derived from Bond proceeds, regulate investments of proceeds of the Bonds, and take such other and further action as may be required so that the Bonds will not be "arbitrage bonds" within the meaning of section 148(a) of the Code and applicable regulations thereunder. Section 9.14. ~2b. il!.~e_g.c.h.~. The City will take all necessary steps to comply with the requirement that certain amounts earned by the City on the investment of the "gross proceeds" of the Bonds (within the meaning of section 148(f)(6)(B) of the Code), be rebated to the federal governmert. Specifically, the City will (i) maintain records regarding the investment of the gross proceeds of the Bonds as may be required to calculate the amount earned on the investment of the gross proceeds of the Bonds separately from records of amounts on deposit in the funds and accounts of the City allocable to other bond issue of the City or moneys which do not represent gross proceeds of any bonds of the City, (ii) calculate at such times as are required by applicable regulations, the amount earned from the investment of the gross proceeds of the Bonds which is required to be rebated to the federal government, and (iH) pay, not less often than every fifth anniversary date of the delivery of the Bonds or on such other dates as may be permitted under applicable regulations, all amounts required to be rebated to the federal government. Further, the City will not indirectly pay any amount otherwise payable to the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the gross proceeds of the Bonds that might result in a reduction in the amount required to be paid to the federal government because such arrangement results in a smaller profit or a larger loss than would have resulted if the arrangement had been at arm's length and had the yield on the issue not been relevant to either party. Section 9.15. Information Reporting. The City covenants and agrees to file or cause to be fled with the Secretary of the Treasu~, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are issued, an information statement concerning the Bonds, all under and in accordance with section 149(e) of the Code and applicable regulations thereunder. Section 9.16. ~llllJl~g~. Notwithstanding any other provision of this Order, the City's obligations under the covenants and provisions of this Article IX shall survive the defeasance and discharge of the Bonds. ARTICLE X SPECIAL PROVISIONS RELATING TO THE TEXAS WATER DEVELOPMENT BOARD Section 10.01. Application of Article X. The provisions of this Article shall apply so long as the Bonds, or any of them, are owned by the Texas Water Development Board (the "Board"). Section 10.02. Covenant to Abide with Rules. The Citywill abide with all applicable laws of the State of Texas and Rules of the Board relating to the loan of funds evidenced by the Bonds and the project for which the Bonds are issued, sold and delivered. Section 10.03. Tax Covenant. The City will not take, or omit to take, any action which action or omission would adversely affect the excludability for Federal income tax purposes of interest payable on the Bonds or on any series of bonds issued by the Board or the Texas Water Resources Finance Authority. Section 10.04. i~ll~. Upon completion of the project to be financed with the proceeds of the Bonds, the City shall render a final accounting of the cost of said project and shall deliver "as-built" plans of said project to the Board; and, if the total cost of said project, as finally completed, is less than originally estimated, so that the proper share of the participation of the Board in said project is reduced, the City shall return to the Board the amount of such excess to the nearest multiple of the denomination of the Bonds, whereupon the Board shall cancel and return to the City a like amount of said Bonds held by the Texas Water Development Board. The Bonds to be cancelled and returned shall be chosen in inverse order of maturity. The remainder of such excess (an amount less then $5,000) shall be deposited into the Interest and Sinking Fund. Section 10.05. ~I~ilL~IS. The City shall provide to the Development Fund Director of the Board, without necessity of a written request therefor, a copy of the City's annual audit report immediately upon receipt thereof by the City. ARTICLE XI DEFAULT AND REMEDIES Section 11.01. ~. Each of the following occurrences or events for the purpose of this Ordinance is hereby declared to be an "Event of Default," to-wit: (i) the failure to make payment of the principal of or interest on any of the Bonds when the same becomes due and payable; or (ii) default in the performance or observance of any other covenant, agreement or obligation of the City, the failure to perform which materially, adversely affects the rights of the Owners, including but not limited to, their prospect or ability to be repaid in accordance with this Ordinance, and the continuation thereof for a period of 60 days after notice of such default is given by any Owner to the City. Section 11.02. ~'lL~[9i~!lI. (a) Upon the happening of any Event of Default, then and in every case any Owner or an authorized representative thereof, including but not limited to, a trustee or trustees therefor, may proceed against the City for the purpose of protecting and enforcing the rights of the Owners under this Ordinance, by mandamus or other suit, action or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the Owners hereunder or any combination of such remedies. (b) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all Owners of Bonds then outstanding. Section 11.03. i 1 'ye. (a) 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 fight to accelerate the debt evidenced by the Bonds shall not be available as a remedy under this Ordinance. (b) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. ARTICLE XII DISCHARGE Section 12.01. ~. When all or any portion of the Bonds have been paid in full as to principal and as to interest and premium, if any, or when all or any portion of the Bonds have become due and payable, whether at maturity or otherwise, and the City shall have provided for the payment of the whole amount due or to become due on such Bonds then outstanding, including all interest that has accrued thereon or that may accrue to the date of maturity, and any premium due or that may become due at maturity, by depositing with the PayingAgent/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 as it relates to such Bonds and execute and deliver to the City such releases or other instruments as shall be requisite to release the lien hereof. Section 12.02. l~c~g~g~z~. (a) The City may discharge its obligation to pay the principal of, premium, if any, and interest on all or any portion of the Bonds, and its obligation to pay other sums payable or to become payable under this Ordinance by the City, by complying with the following provisions: (i) the City shall deposit or cause 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 ~rom 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; (ii) the City shall establish or cause to be established a separate escrow account fund with the Paying Agent/Registrar for the deposit pursuant to subdivision (i) of this subsection (a); (iii) the City shall make provision for 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, which may be in book ent~ form, maturing and/or bearing interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payments of such Bonds; (iv) the City shall make provision for the payment to the Owners at the date of maturity, of the full amount to which the Owners would be entitled by way of principal, premium, if any, and interest to the date of such maturity or prior redemption; (v) the City shall make provision for the sending of written notice by first-class postage prepaid 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 (vi) the City shall provide 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. (b) Upon compliance with subsection (a) of this Section, the Bonds for which provision is so made shall no longer be regarded as outstanding and unpaid, and the Paying Agent/Registrar, upon receipt of a letter of instructions ~rom the City requesting the same, shall discharge and release the lien of this Ordinance with respect to such Bonds and execute and deliver to the City such releases or other instruments as shall be requisite to release the lien hereof. (c) Following the final payment of the principal of, premium, if any, and interest on the Bonds, any moneys, interest earnings, profits or capital gains over and above the amounts necessary for such purposes shall be paid to the City. ARTICLE XIII ESCROW AGREEMENT; ESCROW FUND Section 13.01. Authorization and Execution of Escrow A_nTeemenL Thc Escrow Agreement between the City and the Escrow Agent substantially in the form and content presented at this meeting specifying the duties and responsibilities of the City and the Escrow Agent, is hereby approved and the Mayor and City Secretary are hereby authorized and directed to execute the Escrow Agreement on behalf of the City. The Escrow Agent named in the Escrow Agreement is hereby appointed as the Escrow Agent pursuant to such Escrow Agreement. Section 13.02. Disbursements from the Escrow Fund (a) Except as provided in Section 10.04, moneys disbursed from the Escrow Fund established pursuant to the Escrow Agreement shall be deposited to the credit of the Construction Fund and applied only for the projects for which the Bonds are issued. (b) The security for, and the investment of, funds on deposit in the Escrow Fund shall be governed by the provisions of the Escrow Agreement. ARTICLE XIV MUNICIPAL BOND INSURANCE Section 14.01. Applicatior~. Notwithstanding any other provision of this Ordinance, the provisions of this Article shall apply so long as thc Municipal Bond Guaranty Insurance Policy is in effect and AMBAC Indemnity is not in default thereunder. Section 14.02. Consent of AMBAC Indemni~y. Any provision of this Ordinance expressly recognizing or granting rights in or to AMBAC Indemnity may not be amended in any manner which affects the rights of AMBAC Indemnity hereunder without the prior written consent of AMBAC Indemnity. Section 14.03. Consent of AMBAC Indemnity in Addition to Bondholder Conser, L Unless other,vise provided in this Section, AMBAC Indemnity's consent shall be required in addition to Owner consent, when required, for the following purposes: (i) execution and delivery of any supplemental Ordinance or any amendment, supplement, or change to or modification of this Ordinance; (ii) removal of the Paying Agent/Registrar and selection and appointment of any successor paying agent/registrar; and (iii) initiation or approval of any action not described in (i) or (ii) above which requires Owner consent. Section 14.04. Consent of AMBAC Indemnity_ Upon DeflmTt. Anything in this Ordinance to the contrary notwithstanding, upon the occurrence and continuance of an event of default as defined herein, AMBAC Indemnity shall be entitled to control and direct the enforcement of all rights and remedies granted to the Owners for the benefit of the Bondholders under this Ordinance. Section 14.05. Bonds to Remain Outstanding. Notwithstanding anything herein to the contrary, in the event that the principal and/or interest due on the Bonds shall be paid by AMBAC Indemnity pursuant to the Municipal Bond Insurance Policy, the Bonds shall remain outstanding for all purposes, not be defensed or otherwise satisfied and not be considered paid by the City, and the lien on and pledge of the Net Revenues and all covenants, agreements and other obligations of the City to the Owners shall continue to exist and shall run to the benefit of AMBAC Indemnity, and AMBAC Indemnity shall be subrogated to the fights of such Owners. FINAl 1.Y PASSED, APPROVED AND EFFECTIVE this /~o,.z Mayor, City of The Colony, Texas ATrlzST: City Secretary, City of The Colony, Texas APPROVED AS TO FORM: IZity Attorney, City of The Colony,