HomeMy WebLinkAbout023132 ORD - 11/18/1997ORDINANCE NO. 023132
final 11/18/97
AN ORDINANCE approving and authorizing the issuance of short term obligations
in an aggregate principal amount not to exceed $50,000,000 to provide interim
financing to pay Project Costs for Eligible Projects and to refund obligations issued
in connection with an Eligible Project; authorizing such short term obligations to be
issued, sold and delivered in various forms, including commercial paper notes, fixed
rate notes and variable rate notes, a revolving credit note and term notes, and
prescribing the terms, features and characteristics of such instruments; approving and
authorizing certain authorized officers and employees to act on behalf of the City in
the selling and delivery of such short term obligations, within the limitations and
procedures specified herein; making certain covenants and agreements in connection
therewith; resolving other matters incident and related to the issuance, sale, security
and delivery of such short term obligations, including the approval of an Issuing and
Paying Agent Agreement, a Credit Agreement and a Dealer Agreement; approving
the use of an Offering Memorandum in connection with the sale from time to time of
such short term obligations; and providing an effective date.
THE STATE OF TEXAS
COUNTY OF NUECES
CITY OF CORPUS CHRISTI
WHEREAS, the City of Corpus Christi, Texas (the "City" or the "Issuer") is a "Home -Rule
City", acting as such under the Constitution and laws of the State of Texas, and has a population in
excess of 90,000; and
WHEREAS, the City Council of the City hereby determines to issue its short term obligations
pursuant to the provisions of Article 717q, V.A.T.C.S. (the "Act"), to provide interim financing for
additions, improvements and extensions to the City's combined waterworks system, wastewater
disposal system and gas system (the "System"); and
WHEREAS, the City has heretofore issued, and there are currently outstanding, five separate
series of revenue bonds (hereinafter defined as the "Outstanding Priority Bonds") payable from and
secured by a first lien on and pledge of "Pledged Revenues", which include the net revenues of the
System; and
WHEREAS, in addition to the Outstanding Priority Bonds, the City has heretofore entered
into a contract (hereinafter defined as the "Federal Contract") by and among the United States of
America, the City and the Nueces River Authority, with respect to the Nueces River Reclamation
Project, more commonly referred to as the Choke Canyon Reservoir Project, pursuant to which the
City has pledged the revenues of its waterworks system in support of the payment obligations of the
City under the Federal Contract, subordinate to the operating and maintenance expenses of the
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System and the debt service, reserve, and other requirements in respect to the Outstanding Priority
Bonds and bonds issued on a parity therewith; and
WHEREAS, the ordinances authorizing the issuance of the Outstanding Priority Bonds
reserve to the City the right to issue bonds, notes, or other obligations (such bonds, notes, or other
obligations are hereinafter defined as "Subordinated Obligations"), with such bonds, notes, or other
obligations payable from and secured by a lien on and pledge of the Pledged Revenues, which include
the net revenues of the System, subordinate to the lien on and pledge of the Pledged Revenues
securing the Outstanding Priority Bonds and the payment obligations of the City under the Federal
Contract; and
WHEREAS, such short term obligations proposed to be issued pursuant to this Ordinance
constitute bond anticipation notes which the City intends to fund through the issuance of Priority
Bonds; and
WHEREAS, arrangements relating to such interim financing have been settled and the City
Council hereby finds and determines that the issuance of short term obligations, including commercial
paper notes, variable rate notes, fixed rate notes, a revolving note, and term notes subject to the
terms, conditions and limitations hereinafter prescribed, should be approved and authorized at this
time;
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context shall indicate a contrary meaning or intent, the
terms below defined, for all purposes of this ordinance or any ordinance amendatory or supplemental
hereto, shall be construed, are used and are intended to have the following meanings, to -wit;
"Advance" shall mean a loan made under and subject to the conditions set forth in the
Agreement.
"Agreement" or "Credit Agreement" shall mean the Letter of Credit and Reimbursement
Agreement approved and authorized to be entered into by Section 2.17 hereof, as from time to time
amended or supplemented, pursuant to which the Letter of Credit shall be issued, or other credit
facility provided in lieu thereof (including any Substitute Letter of Credit) in accordance with the
provisions of Section 4.05 hereof.
"Authorized Representative" shall mean one or more of the following officers or employees
of the City, acting in concert or individually, to -wit: the Mayor, the City Manager, the Director of
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Finance, or such other officer or employee of the City designated in writing by the City Manager to
act as an Authorized Representative.
"Bank" shall mean Westdeutsche Landesbank Girozentrale, or any subsequent or succeeding
party to the Agreement.
"Bank Note" shall mean a promissory note or notes issued pursuant to the provisions of this
Ordinance and the Agreement (including specifically the Term Note as defined in the Agreement) in
evidence of Advances made by the Bank under the Agreement, having the terms and characteristics
contained therein and issued in accordance with the terms thereof.
"Bond Counsel" shall mean McCall, Parkhurst & Horton L.L.P., or any other firm of
nationally recognized Bond Counsel selected by the City.
"Bonds" shall mean Priority Bonds and Subordinated Obligations.
"Business Day" shall mean any day (a) when banks are not authorized to be closed in the City
and (b) when banks or the New York Stock Exchange are not authorized to be closed in New York,
New York.
"City" or "Issuer" shall mean the City of Corpus Christi, Texas.
"City Council" shall mean the governing body of the City.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commercial Paper Note" shall mean a note issued pursuant to the provisions of this
Ordinance, having the terms and characteristics specified in Section 2.03 hereof and in the form
described in Section 2.07(a) hereof.
"Credit Facility" shall mean a policy of municipal bond insurance, a surety bond or a letter
or line of credit issued in support of any Bonds, including, without limitation, the Agreement, all in
accordance with the terms of the Priority Bond Ordinance or any ordinance authorizing the issuance
of Subordinated Obligations, including this Ordinance.
"Dealer" shall mean the entities so designated in Section 3.04 hereof
"Dealer Agreement" shall mean the Dealer Agreement approved and authorized to be entered
into by Section 3.04 hereof, as from time to time amended or supplemented.
"Designated Office" shall mean the corporate trust office of the Issuing and Paying Agent
where Project Notes must be presented and delivered for receipt of payment of the principal amount
thereof.
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"DTC" shall mean The Depository Trust Company or any substitute securities depository
appointed pursuant to this Ordinance, or any nominee thereof.
"DTC Participant" shall mean a member of, or the participant in, DTC that will act on behalf
of a Holder.
"Eligible Investments" shall mean any or all of the authorized investments described in the
Public Funds Investment Act of 1987, Chapter 2256, Texas Government Code, in which the City may
purchase, sell and invest its funds and funds under its control; and provided further, that Eligible
Investments shall specifically include, with respect to the investment of proceeds of any Project
Notes, guaranteed investment contracts fully collateralized by 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.
"Eligible Project" shall mean the acquisition or construction of improvements, additions,
betterments or extensions for or to the System, including capital assets and facilities incident and
related to the operation, maintenance and administration thereof, all as provided in the Act, and/or
pursuant to Articles 1111 through 1118, V.A.T.C.S.
"Federal Contract" shall mean Contract No. 6-07-01-X0675, by and among the United States
of America, the City and the Nueces River Authority, dated June 30, 1976, together with any
amendments thereto.
"Fiscal Year" shall mean the fiscal year used by the City in connection with the operation of
the System.
"Fixed Rate Note" shall mean a note issued pursuant to the provisions of this Ordinance,
having the terms and characteristics contained in Section 2.05 hereof and issued in substantially the
form described in Section 2.070) hereof.
"Gross Revenues" and "Gross Revenues of the System" shall mean all revenues, income, and
receipts derived or received by the City from the operation and ownership of the System, including
the interest income from the investment or deposit of money in any Fund maintained pursuant to the
Priority Bond Ordinance or maintained by the City in connection with the System, other than those
amounts subject to payment to the United States of America as rebate pursuant to section 148 of the
Code.
"Holder" or "Noteholder" shall mean any person, firm, association, or corporation who is in
possession of any Note drawn, issued or endorsed to such person, firm, association or corporation
or to the order of such person, firm, association or corporation or to bearer or in blank.
"Issuing and Paying Agent", "Paying Agent/Registrar" or "Registrar" shall mean the agent
appointed pursuant to Section 2.02 hereof, or any successor to such agent.
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"Issuing and Paying Agent Agreement" shall mean the agreement approved and authorized
to be entered into by Section 3.03 hereof, as from time to time amended or supplemented.
"Letter of Credit" shall mean the irrevocable direct pay letter of credit issued with respect to
the Commercial Paper Notes and delivered in accordance with Section 2.17 hereof and any Substitute
Letter of Credit, as the same may be extended from time to time.
"Master Note" shall mean the "Master Note" as defined in Section 2.02 hereof.
"Maximum Interest Rate" shall mean the maximum net effective interest rate permitted by law
to be paid on obligations issued or incurred by the City in the exercise of its borrowing powers
(currently prescribed by Article 717k-2, V.A.T.C.S., as amended, or any successor provision).
"Maximum Maturity Date" shall mean twenty years following the date of passage of this
ordinance.
"Net Revenues of the System" and "Net Revenues" shall mean all Gross Revenues less
Operating Expenses.
"Note" or "Notes" shall mean the evidences of indebtedness authorized to be issued and at
any time outstanding pursuant to this Ordinance and shall include Commercial Paper Notes (including
the Master Note), Fixed Rate Notes, Variable Rate Notes or Bank Notes, as appropriate.
"Operating Expenses" shall mean the expenses of operation and maintenance of the System,
including all salaries, labor, materials, repairs, and extensions necessary to render efficient service,
provided, however, that only such repairs and extensions, as in the judgment of the City, reasonably
and fairly exercised by the passage of appropriate ordinances, are necessary to render adequate
service, or such as might be necessary to meet some physical accident or condition which would
otherwise impair the Bonds. Operating Expenses shall include the purchase of water, sewer and gas
services as received from other entities and the expenses related thereto, and, to the extent permitted
by law, Operating Expenses may include payments made on or in respect of a Credit Facility.
Depreciation and payments from the System Fund to other funds established in this Ordinance shall
never be considered as expenses of operation and maintenance.
"Outstanding Priority Bonds" shall mean the outstanding and unpaid bonds of the City issued
pursuant to the terms of the Priority Bond Ordinance, currently being the Series 1990 Bonds, the
Series 1994 Bonds, the Series 1994-A Bonds, the Series 1995 Bonds and the Series 1995-A Bonds.
"Pledged Revenues" shall mean (1) the Net Revenues, plus (2) any additional revenues,
income, receipts, or other resources, including, without limitation, any grants, donations, or income
received or to be received from the United States Government, or any other public or private source,
whether pursuant to an agreement or otherwise, which hereafter are pledged to the payment of the
Bonds.
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"Prior Lien Obligations" shall mean collectively the Priority Bonds and the Federal Contract.
"Priority Bond Ordinance" shall mean collectively the ordinances authorizing the Outstanding
Priority Bonds.
"Priority Bonds" shall mean collectively the Outstanding Priority Bonds and any bonds, notes,
or similar obligations (other than the Notes or the Agreement (including any Bank Note), but
including a Credit Facility the payment of which is secured by Pledged Revenues) issued on a parity
therewith in accordance with the terms of the Priority Bond Ordinance.
"Project Costs" shall mean all costs and expenses incurred in relation to Eligible Projects,
including without limitation design, planning, engineering and legal costs, acquisition costs of land,
interests in land, right-of-way and easements, construction costs, costs of machinery, equipment, and
other capital assets incident and related to the operation, maintenance, and administration of an
Eligible Project, financing costs, including interest during construction and thereafter, underwriter's
discount and/or fees for legal, financial, and other professional services, and reimbursement for such
Project Costs attributable to Eligible Projects incurred prior to the issuance of any Project Notes.
hereof.
hereof.
"Project Note" shall mean, as appropriate, a Note or all the Notes other than any Bank Note.
"Series A Note Bank Repayment Fund" shall mean the account so designated in Section 2.11
"Series A Note Construction Account" shall mean the account so designated in Section 2.14
"Series A Note Payment Fund" shall mean the fund so designated in Section 2.11 hereof.
"Series 1990 Bonds" shall mean the City of Corpus Christi, Texas Utility System Revenue
Refunding Bonds, Series 1990, or any bonds issued to refund same.
"Series 1994 Bonds", "Series 1994-A Bonds", "Series 1995 Bonds" and "Series 1995-A
Bonds" shall mean, respectively, the City of Corpus Christi, Texas Utility System Revenue Bonds,
Series 1994, Series 1994-A, Series 1995 and Series 1995-A Bonds, or any bonds issued to refund the
same.
"Stated Termination Date" shall have the meaning given said term in the Agreement.
"Subordinated Obligations" shall mean any bonds, notes, or other obligations issued pursuant
to law payable in whole or in part from the Pledged Revenues and subordinate to the Prior Lien
Obligations, including, without limitation, Project Notes and the Bank Note.
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"Substitute Letter of Credit" shall mean an irrevocable letter of credit issued with respect to
the Project Notes in accordance with Section 4.05 hereof by a bank, a national banking association,
a corporation subject to registration with the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act of 1956 or any successor provisions of law, a Federal branch
pursuant to the International Banking Act of 1978 or any successor provisions of law, or a domestic
branch or agency of a foreign bank, which replaces the then existing Letter of Credit.
"System" shall mean and include the City's existing combined waterworks system, wastewater
disposal system and gas system, together with all future extensions, improvements, enlargements, and
additions thereto, including, to the extent permitted by law, storm sewer and drainage, and all
replacements thereof; provided that, notwithstanding the foregoing, and to the extent now or
hereafter authorized or permitted by law, the term System shall not include any waterworks,
wastewater or gas facilities which are declared by the City not to be a part of the System and which
are hereafter acquired or constructed by the City with the proceeds from the issuance of "Special
Facilities Bonds", which are hereby defined as being special revenue obligations of the City which are
not secured by or payable from the Pledged Revenues, but which are secured by and payable solely
from special contract revenues or payments received from the System, any other legal entity, or any
combination thereof, in connection with such facilities; and such revenues or payments shall not be
considered as or constitute Gross Revenues of the System, unless and to the extent otherwise
provided in the ordinance of ordinances authorizing the issuance of such "Special Facilities Bonds".
"Variable Rate Note" shall mean a note issued pursuant to the provisions of this ordinance,
having the terms and characteristics specified in Section 2.04 hereof and in substantially the form
described in Section 2.07(c) hereof the interest rate on which is adjusted from time to time.
Section 1.02. Construction of Terms Utilized in this Ordinance. If appropriate in the context
of this Ordinance, words of the singular number shall be considered to include the plural, words of
the plural number shall be considered to include the singular, and words of the masculine, feminine
or neuter gender shall be considered to include the other genders. Certain terms not defined herein
shall have the meaning given said terms in the Credit Agreement.
ARTICLE H
AUTHORIZATION OF NOTES
Section 2.01. General Authorization. Pursuant to authority conferred by and in accordance
with the provisions of the Constitution and laws of the State of Texas, particularly the Act, Project
Notes shall be and are hereby authorized to be issued in an aggregate principal amount not to exceed
FIFTY MILLION DOLLARS ($50,000,000) at any one time outstanding for the purpose of
financing Project Costs of Eligible Projects and to refinance, renew or refund Notes, Prior Lien
Obligations, and Subordinated Obligations, including interest thereon, all in accordance with and
subject to the terms, conditions, and limitations contained herein; and a Bank Note shall be and is
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hereby authorized to be issued in the initial aggregate principal amount of FIFTY FIVE MILLION
FIVE HUNDRED FORTY SEVEN THOUSAND NINE HUNDRED FORTY SEVEN
DOLLARS ($55,547,947.00) at any one time outstanding for the purpose of evidencing Advances
to retire Project Notes; all in accordance with and subject to the terms, conditions and limitations
contained herein and, with respect to the Bank Note, the Agreement. For purposes of this Section
2.01, any portion of outstanding Notes to be paid from money on deposit in the Series A Note
Payment Fund and from the available proceeds of Notes or Bonds on the day of calculation shall not
be considered outstanding. The authority to issue Project Notes from time to time under the
provisions of this Ordinance shall exist until the Maximum Maturity Date, regardless of whether prior
to the Maximum Maturity Date there are at any time no Project Notes outstanding. Until such time
as the "Commitment" under the Agreement is increased as provided in Section 2.17 hereof, Project
Notes shall not be issued to exceed at any one time outstanding $50,000,000 in principal amount.
Section 2.02. Terms Applicable to Notes - General. Subject to the limitations contained
herein, Project Notes herein authorized shall be dated as of their date of issuance or prior thereto, but
within 30 days of the date of issuance (the "Note Date"), as determined by an Authorized
Representative; shall bear no interest or bear interest at such rate or rates (either fixed, variable or
floating) per annum computed on the basis of either actual days elapsed or twelve 30 -day months
whichever is applicable, and on a 365 -day or 366 -day year, or a 360 -day year, whichever is applicable
(but in no event in any case to exceed the Maximum Interest Rate in effect on the date of issuance
thereof) as may be determined by an Authorized Representative and all Project Notes authorized
herein shall mature on or prior to the Maximum Maturity Date.
Subject to the Maximum Interest Rate limitation, Project Notes authorized to be issued
hereunder without a fixed numerical rate of interest for the term thereof shall bear interest in
accordance with any clearly stated formula or method of calculation as determined by an Authorized
Representative and such formula or method of calculation shall be set forth in the Project Note.
Project Notes issued hereunder may contain terms and provisions for the redemption or
prepayment thereof prior to maturity, subject to any applicable limitations contained herein, as shall
be determined by an Authorized Representative.
Subject to applicable terms, limitations and procedures contained herein, Project Notes may
be sold in such manner at public or private sale and at par or at such discount (within the interest rate
and yield restrictions provided herein) as an Authorized Representative shall approve at the time of
the sale thereof.
The Project Notes shall be issued in registered form, without coupons, provided, however,
Project Notes maturing not more than one year from the Note Date may be registered to bearer. The
principal of, premium, if any, and interest on the Project Notes shall be payable in lawful money of
the United States of America, without exchange or collection charges to the Holder of the Project
Note; the principal thereof to be payable upon presentation and surrender of the Project Note at the
Designated Office of the Issuing and Paying Agent and interest thereon to be payable to the registered
owner thereof (when registered other than to bearer) either (i) by check sent by United States Mail,
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first class postage prepaid, to the address of the registered owner appearing on the Registration
Books of the City maintained by the Registrar or (ii) by such other method, acceptable to the Issuing
and Paying Agent, requested by the Holder, but interest on a Project Note registered to bearer shall
be payable only upon presentation of the Project Note at the Designated Office of the Issuing and
Paying Agent.
The selection and appointment of The Chase Manhattan Bank, to serve as Issuing and Paying
Agent, Paying Agent/Registrar and Registrar for the Project Notes is hereby confirmed and the City
covenants and agrees to keep and maintain with the Registrar at its Designated Office books and
records (the "Registration Books") for the registration, payment, transfer and exchange of the Project
Notes, all as provided herein and such reasonable rules and regulations as the Registrar may prescribe.
The City covenants to maintain and provide a Registrar at all times while the Project Notes are
outstanding, which shall be a national or state banking association or corporation or trust company
organized and doing business under the laws of the United States of America or of any state and
authorized under such laws to exercise trust powers. Should a change in the Paying Agent/Registrar
for the Project Notes occur, the City agrees to promptly cause a written notice thereof to be (i) sent
to each registered owner of the Project Notes then outstanding by United States Mail, first class
postage prepaid and (ii) published in a financial newspaper or journal of general circulation in The
City of New York, New York, once during each calendar week for at least two calendar weeks;
provided, however, the publication of such notice shall not be required if notice is sent to each Holder
of the Project Notes. Such notice shall give the address of the successor Paying Agent/Registrar.
A successor Paying Agent/Registrar may be appointed by the City without the consent of the Holders.
A copy of the Registration Books and any change thereto shall be provided to the City by the
Paying Agent/Registrar, by means of telecommunications equipment or such other means as may be
mutually agreeable thereto, within two Business Days of the opening of such Registration Books or
any change therein, as the case may be.
The City and the Paying Agent/Registrar may treat the bearer (in the case of Project Notes
so registered) or the registered payee thereof as the absolute owner of any Project Note for the
purpose of receiving payment thereof and for all purposes, and the City and the Paying
Agent/Registrar shall not be affected by any notice or knowledge to the contrary.
If an Authorized Representative determines that it is possible and desirable to provide for a
book -entry only system of Commercial Paper Note registration with DTC, such Authorized
Representative, acting for and on behalf of the City, is hereby authorized to approve, execute, and
deliver a Letter of Representations to DTC and to enter into such other agreements and execute such
instruments as are necessary to implement such book -entry only system, such approval to be
conclusively evidenced by the execution thereof by said Authorized Representative. Under the initial
book -entry only system with DTC, (i) no physical Commercial Paper Note certificates will be
delivered to DTC and (ii) the City will execute and deliver to the Issuing and Paying Agent, as
custodian for DTC, a master note relating to the Commercial Paper Notes (the "Master Note") in
substantially the form set forth in Exhibit D. Except as provided herein, the ownership of the
Commercial Paper Notes shall be registered in the name of Cede & Co., as nominee of DTC, which
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will serve as the initial securities depository for the Commercial Paper Notes. Ownership of beneficial
interests in the Commercial Paper Notes shall be shown by book -entry on the system maintained and
operated by DTC and DTC Participants, and transfers of ownership of beneficial interests shall be
made only by DTC and the DTC Participants by book -entry, and the City and the Issuing and Paying
Agent shall have no responsibility therefor DTC will be required to maintain records of the positions
of the DTC participants in the Commercial Paper Notes, and the DTC Participants and persons acting
through the DTC participants will be required to maintain records of the purchasers of beneficial
interests in the Commercial Paper Notes. Except as provided in clause (i) of this paragraph, the
Conunercial Paper Notes shall not be transferable or exchangeable, except for transfer to another
securities depository or to another nominee of a securities depository.
With respect to Commercial Paper Notes registered in the name of DTC or its nominee,
neither the City nor the Issuing and Paying Agent shall have any responsibility or obligation to any
DTC Participant or to any person on whose behalf a DTC Participant holds an interest in the
Commercial Paper Notes. Without limiting the immediately preceding sentence, neither the City nor
the Issuing and Paying Agent shall have any responsibility or obligation with respect to (i) the
accuracy of the records of DTC or any DTC Participant with respect to any ownership interest in the
Commercial Paper Notes, (ii) the delivery to any DTC Participant or any other person, other than a
registered owner of the Commercial Paper Notes, as shown on the Registration Books, of any notice
with respect to the Commercial Paper Notes, including any notice of redemption, and (iii) the
payment to any DTC Participant or any other person, other than a registered owner of the
Commercial Paper Notes, as shown in the Registration Books, of any amount with respect to
principal of and premium, if any, or interest on the Commercial Paper Notes.
Whenever, during the term of the Commercial Paper Notes, the beneficial ownership thereof
is determined by a book entry at DTC, the requirements in this Ordinance of holding, registering,
delivering, exchanging, or transferring the Commercial Paper Notes shall be deemed modified to
require the appropriate person or entity to meet the requirements of DTC as to holding, registering,
delivering, exchanging, or transferring the book -entry to produce the same effect.
Either the City or DTC may determine to discontinuing the book -entry only system and in
such case, unless a new book -entry only system is put in place, physical certificates in the form set
forth in Section 2.07(a) shall be provided to the Beneficial Holders.
If at any time, DTC ceases to hold the Commercial Paper Notes, all references herein to DTC
shall be of no further force or effect.
Whenever the beneficial ownership of the Commercial Paper Notes is determined by a book -
entry at DTC, delivery of Commercial Paper Notes for payment at maturity shall be made pursuant
to DTC's payment procedures as are in effect from time to time and the DTC Participants shall
transmit payment to beneficial owners whose Commercial Paper Notes have matured. The City and
each Issuing and Paying Agent, the Bank, and the Dealer are not responsible for transfer of payment
to the DTC Participants or beneficial owners.
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Section 2.03. Commercial Paper Notes. Under and pursuant to the authority granted hereby
and subject to the limitations contained herein, Commercial Paper Notes to be designated "City of
Corpus Christi, Texas Utility System Commercial Paper Notes, Series A" are hereby authorized
to be issued and sold and delivered from time to time in such principal amounts as determined by an
Authorized Representative in denominations of $100,000 or in integral multiples of $1,000 in excess
thereof, numbered in ascending consecutive numerical order in the order of their issuance and to
mature and become due and payable on such dates as an Authorized Representative shall determine
at the time of sale; provided, however, that no Commercial Paper Note shall (i) mature after the
Maximum Maturity Date, (ii) have a term in excess of two hundred seventy (270) calendar days or
(iii) mature no later than fifteen (15) calendar days prior to the Stated Termination Date. Anything
to the contrary herein notwithstanding, the Master Note shall not mature later than the Maximum
Maturity Date.
Interest, if any, on Commercial Paper Notes shall be payable at maturity with principal.
Section 2.04. Variable Rate Notes. Under and pursuant to authority granted hereby and
subject to the limitations contained herein, Variable Rate Notes to be designated "City of Corpus
Christi, Texas Utility System Variable Rate Notes, Series A", are hereby authorized to be issued
and sold and delivered from time to time in such principal amounts as determined by an Authorized
Representative, such Variable Rate Notes to be in denominations of no less than $5,000 or any
integral multiple thereof, to be numbered in ascending consecutive numerical order in the order of
their issuance and to mature and become due and payable on such dates as an Authorized
Representative shall determine at the time of sale; provided, however, that no Variable Rate Note
shall mature after the Maximum Maturity Date. Variable Rate Notes may be made to be payable on
demand and may include such provisions for the redemption thereof on any date prior to maturity
under such terms and conditions and at such redemption price or prices as shall be determined by an
Authorized Representative; provided, however, any premium associated with a redemption prior to
maturity of a Variable Rate Note shall not exceed three percent (3%) of the principal amount thereof.
Variable Rate Notes are hereby authorized to be issued bearing interest at a variable or
floating rate not to exceed the Maximum Interest Rate and interest thereon shall be payable at
maturity and at such intervals prior to maturity all as determined by an Authorized Representative.
Section 2.05. Fixed Rate Notes. Under and pursuant to authority granted hereby and subject
to the limitations contained herein, Fixed Rate Notes to be designated "City of Corpus Christi,
Texas Utility System Fixed Rate Notes, Series A" are hereby authorized to be issued and sold and
delivered from time to time in such principal amounts as determined by an Authorized Representative,
such Fixed Rate Notes to be in denominations of $5,000 or any integral multiple thereof, to be
numbered in ascending consecutive numerical order in the order of their issuance and to mature and
become due and payable on such dates as an Authorized Representative shall determine at the time
of sale; provided, however, that no Fixed Rate Note shall mature after the Maximum Maturity Date.
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Fixed Rate Notes shall bear interest at a fixed rate of interest per annum, such interest to be
payable at maturity and at such intervals prior to maturity as determined by an Authorized
Representative. Fixed Rate Notes may include such provisions for the redemption thereof on any
date prior to maturity under such terms and conditions and at such redemption price or prices as shall
be determined by an Authorized Representative; provided, however, any premium associated with
a redemption prior to maturity of a Fixed Rate Note shall not exceed three percent (3%) of the
principal amount thereof.
Section 2.06. Bank Note. Under and pursuant to authority granted hereby and subject to the
limitations contained herein and in the Agreement, a Bank Note to be designated "City of Corpus
Christi, Texas Utility System Credit Agreement Bank Note" (with such other designation as may
be determined by the Bank and approved by an Authorized Representative, so as to distinguish
among Term Notes, if any) are hereby authorized and approved in accordance with the terms of this
ordinance, the Agreement and the forms thereof set forth in the Agreement.
Section 2.07. Forms of Project Notes. The Project Notes and the Certificate of
Authentication to appear on each of the Project Notes shall be substantially in the forms set forth in
this section with such appropriate insertions, omissions, substitutions and other variations as are
permitted or required by this ordinance and may have such letters, numbers or other marks of
identification (including identifying numbers and letters of the Committee on Uniform Securities
Identification Procedures of the American Banks Association) and such legends and endorsements
thereon as may, consistently herewith, be approved by an Authorized Representative. Any portion
of the text of any Project Notes may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Project Notes.
The Notes shall be printed, lithographed, or engraved or produced in any other similar
manner, or typewritten, all as determined and approved by an Authorized Representative.
(a) Form of Commercial Paper Note:
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF CORPUS CHRISTI, TEXAS
UTILITY SYSTEM
COMMERCIAL PAPER NOTE,
SERIES A
No.: Note Date:
Principal Amount: Maturity Date:
Interest to Maturity: Number of Days:
Due at Maturity: Interest Rate (%):
Owner:
12
The City of Corpus Christi (the "City"), in Nueces County, State of Texas, FOR VALUE
RECEIVED, hereby promises to pay, solely from the sources hereinafter identified and as hereinafter
stated, to the order of the party specified above on the maturity date specified above, the principal
sum specified above and to pay interest, if any, on said principal amount at said maturity date, from
the above specified note date to said maturity date at the per annum interest rate shown above
(computed on the basis of actual days elapsed and a 365 -day or 366 -day year, as may be applicable);
both principal and interest on this Note being payable in lawful money of the United States of
America at the designated corporate trust office of the Issuing and Paying Agent executing the
"Certificate of Authentication" endorsed hereon and appearing below, or its successor. No interest
will accrue on the principal amount hereof after said maturity date.
This Note is one of an issue of commercial paper notes (the "Commercial Paper Notes")
which, together with other forms of short term obligations, including the below referenced Bank Note
(such other short term obligations, excluding the Bank Note, and the Commercial Paper Notes being
hereinafter collectively referred to as the "Notes"), has been duly authorized and issued in accordance
with the provisions of an ordinance (the "Ordinance") passed by the City Council of the City for the
purpose of financing Project Costs of Eligible Projects (as defined in the Ordinance) for the City's
Combined Utility System (the "System"); to refund obligations issued in connection with an Eligible
Project; and to refinance, renew or refund Notes, Prior Lien Obligations, and Subordinated
Obligations, including interest thereon, in accordance with the provisions of the Ordinance; all in
accordance and in strict conformity with the provisions of Article 717q, V.A.T.C.S., as amended (the
"Act").
This Commercial Paper Note, together with the other Notes, is payable from and equally
secured by a lien on and pledge of (i) the proceeds from (a) the sale of other Notes issued for such
purpose and (b) the sale of a series or issue of Bonds (as defined in the Ordinance) to be issued by
the City for such purpose, (ii) advances under and pursuant to the Credit Agreement (as defined in
the Ordinance) between the City and the Bank (as defined in the Ordinance) pursuant to which the
Bank has agreed to provide credit to the City under the terms and conditions set forth therein, which
advances are to be evidenced, as provided in the Credit Agreement, by a Bank Note (as defined in
the Credit Agreement), and (iii) amounts in certain funds established pursuant to the Ordinance.
This Commercial Paper Note, together with the other Notes, is payable solely from the
sources hereinabove identified securing the payment thereof, and the Commercial Paper Notes do not
constitute a legal or equitable pledge, charge, lien or encumbrance upon any other property of the
City or the System. The holder hereof shall never have the right to demand payment of this obligation
from any sources or properties of the City except as identified above.
It is hereby certified and recited that all acts, conditions and things required by law and the
ordinance to exist, to have happened and to have been performed precedent to and in the issuance
of this Commercial Paper Note, do exist, have happened and have been performed in regular and in
due time, form and manner as required by law and that the issuance of this Commercial Paper Note,
together with all other Notes, is not in excess of the principal amount of Notes permitted to be issued
under the ordinance.
13
This Commercial Paper Note has all the qualities and incidents of a negotiable instrument
under the laws of the State of Texas.
This Commercial Paper Note shall not be entitled to any benefit under the Ordinance or be
valid or become obligatory for any purpose until this Commercial Paper Note shall have been
authenticated by the execution by the Issuing and Paying Agent of the Certificate of Authentication
hereon.
IN TESTIMONY WHEREOF, the City Council has authorized and caused this Commercial
Paper Note to be executed on its behalf by the manual or facsimile signature of the Mayor and
countersigned by the manual or facsimile signatures of the City Secretary and its official seal to be
impressed or a facsimile thereof to be printed hereon.
COUNTERSIGNED:
City Secretary, Mayor,
City of Corpus Christi, Texas City of Corpus Christi, Texas
(SEAL)
ISSUING AND PAYING AGENT'S
CERTIFICATE OF AUTHENTICATION
This Commercial Paper Note is one of the Commercial Paper Notes delivered pursuant to the
within mentioned ordinance.
By:
as Issuing and Paying Agent
Authorized Signatory
If Commercial Paper Notes are issued in book -entry only form pursuant to Section 2.02, they
shall be issued in the form of a Master Note in substantially the form attached hereto as Exhibit D,
to which there shall be attached the form of Commercial Paper Note as prescribed above, and it is
hereby declared that the provisions of the Commercial Paper Note as prescribed above are
incorporated into and shall be a part of the Master Note. It is further provided that this Ordinance
and the form of Commercial Paper Note prescribed above shall constitute the "underlining records"
referred to in the Master Note. Notwithstanding the provisions of Section 2.08, the Master Note
shall be executed on behalf of the City by the manual signature of the Mayor or the Mayor Pro -Tem.
14
b) Form of Fixed Rate Note:
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF CORPUS CHRISTI, TEXAS
UTILITY SYSTEM
FIXED RATE NOTE, SERIES A
Note Interest Note Maturity Principal
Number Rate Date Date Amount
The City of Corpus Christi ("City"), in Nueces County, State of Texas, FOR VALUE
RECEIVED, hereby promises to pay, solely from the sources hereinafter identified and as hereinafter
stated, to the order of on the Maturity Date specified above, the principal sum specified above and
to pay interest, if any, on said principal amount at said Maturity Date, from the above specified Note
Date to said Maturity Date at the per annum Interest Rate shown above (computed on the basis of
twelve 30 -day months and a 360 -day year). The principal of, premium, if any, and interest on this
Note are payable in lawful money of the United States of America; the principal hereof and premium,
if any, being payable upon presentation and surrender of this Note at the designated corporate trust
office of the Paying Agent/Registrar executing the Certificate of Authentication appearing hereon,
or its successor, and the interest hereon to be payable either (i) by check sent by United States Mail,
first class postage prepaid, to the address of the registered owner hereof appearing on the registration
and transfer books (the "Registration Books") maintained by the Paying Agent/Registrar or (ii) by
such other method, acceptable to the Paying Agent/Registrar, requested by the registered owner
hereof, and if registered to bearer, upon presentation of this Note at the designated corporate trust
office of the Paying Agent/Registrar.
This Note is one of an issue of notes (the "Fixed Rate Notes") which, together with other
forms of short term obligations, including the below referenced Revolving Credit Note and one or
more Term Notes (such other short term obligations, excluding the Revolving Credit Note and Term
Notes, and the Fixed Rate Notes being hereinafter collectively referred to as the "Notes"), has been
duly authorized and issued in accordance with the provisions of an ordinance (the "Ordinance")
passed by the City Council of the City for the purpose of financing Project Costs of Eligible Projects
(as defined in the Ordinance) for the City's Combined Utility System (the "System"); to refund
obligations issued in connection with an Eligible Project; and to refinance, renew or refund Notes,
Prior Lien Obligations, and Subordinated Obligations, including interest thereon, in accordance with
the provisions of the Ordinance; all in accordance and in strict conformity with the provisions of
Article 717q, V.A.T.C.S., as amended (the "Act").
This Fixed Rate Note, together with the other Notes, is payable from and equally secured by
a lien on and pledge of (i) the proceeds from (a) the sale of other Notes issued for such purpose and
(b) the sale of a series or issue of Bonds (as defined in the Ordinance) to be issued by City for such
purpose, (ii) advances under and pursuant to the Credit Agreement (as defined in the Ordinance)
between the City and the Bank (as defined in the Ordinance) pursuant to which the Bank has agreed
to provide credit to the City under the terms and conditions set forth therein, which advances are to
15
be evidenced, as provided in the Credit Agreement, by a Bank Note (as defined in the Credit
Agreement) and (iii) amounts in certain funds established pursuant to the Ordinance.
This Fixed Rate Note, together with the other Notes, is payable solely from the sources
hereinabove identified securing the payment thereof and the Fixed Rate Notes do not constitute a
legal or equitable pledge, charge, lien or encumbrance upon any other property of City or the System.
The holder hereof shall never have the right to demand payment of this obligation from any sources
or properties of City except as identified above.
[Insert - Redemption Provisions, if any]
This Fixed Rate Note may be transferred only upon the Registration Books maintained by the
Registrar under the Ordinance upon surrender thereof at the designated corporate trust office of the
Registrar with an assignment duly executed by the registered owner or his duly authorized attorney,
but only in the manner, subject to the limitations and upon payment of the charges provided in the
ordinance, and upon surrender and cancellation of this Fixed Rate Note. Upon any such transfer,
there shall be executed in the name of the transferee, and the Registrar shall deliver, a new registered
note or notes in the same aggregate principal amount and maturity and interest rate of the authorized
denominations as the surrendered Fixed Rate Note.
It is hereby certified and recited that all acts, conditions and things required by law and the
Ordinance to exist, to have happened and to have been performed precedent to and in the issuance
of this Fixed Rate Note, do exist, have happened and have been performed in regular and in due time,
form and manner as required by law and that the issuance of this Fixed Rate Note, together with all
other Notes, is not in excess of the principal amount of Notes permitted to be issued under the
Ordinance.
This Note is and has all the qualities and incidents of a negotiable instrument under the laws
of the State of Texas.
This Fixed Rate Note shall not be entitled to any benefit under the Ordinance or be valid or
become obligatory for any purpose until this Fixed Rate Note shall have been authenticated by the
execution by the Paying Agent/Registrar of the Certificate of Authentication hereon.
IN TESTIMONY WHEREOF, the City Council has authorized and caused this Fixed Rate
Note to be executed on its behalf by the manual or facsimile signature of the Mayor and
countersigned by the manual or facsimile signatures of the City Secretary and its official seal to be
impressed or a facsimile thereof to be printed hereon.
COUNTERSIGNED:
City Secretary, Mayor,
City of Corpus Christi, Texas City of Corpus Christi, Texas
(SEAL)
16
PAYING AGENT/REGISTRAR'S
CERTIFICATE OF AUTHENTICATION
This Fixed Rate Note is one of the Fixed Rate Notes delivered pursuant to the within mentioned
ordinance.
By:
as Paying Agent/Registrar
Registered This Date: Authorized Signatory
(c) Form of Variable Rate Note:
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF CORPUS CHRISTI, TEXAS
UTILITY SYSTEM
VARIABLE RATE NOTE, SERIES A
Note Interest Note Maturity Principal
Number Rate Date Date Amount
The City of Corpus Christi ("City"), in Nueces County, State of Texas, FOR VALUE
RECEIVED, hereby promises to pay, solely from the sources hereinafter identified and as hereinafter
stated, to the order of
on the Maturity Date specified above [or on demand (after business days from the receipt of a written
demand for payment as provided below)] the principal sum specified above and to pay interest, if any,
on said principal amount from the above specified Note Date to said Maturity Date or the date of
payment pursuant to a demand for payment at the rate per annum (computed on the basis of actual
days elapsed and a 365 -day or 366 -day year as applicable) equal to (insert formula or method of
calculation for determining variable or floating rate of interest], such interest being payable
on the day of . Principal of,
premium, if any, and interest on this Note are payable in lawful money of the United States of
America; the principal hereof and premium, if any, being payable upon presentation and surrender of
this Note at the designated corporate trust office of the Paying Agent/Registrar executing the
Certificate of Authentication appearing hereon, or its successor, and the interest hereon to be payable
either (i) by check sent by United States Mail, first class postage prepaid, to the address of the
17
registered owner hereof appearing on the registration and transfer books (the "Registration Books")
maintained by the Paying Agent/Registrar or (ii) by such other method, acceptable to the Paying
Agent/Registrar, requested by the registered owner hereof, and, if registered to bearer, upon
presentation of the Note at the designated corporate trust office of the Paying Agent/Registrar.
This Note is one of an issue of variable rate notes (the "Variable Rate Notes") which, together
with other forms of short term obligations, including the below referenced Revolving Credit Note and
one or more Term Notes (such other short term obligations, excluding the Revolving Credit Note and
Term Note, and the Variable Rate Notes being hereinafter collectively referred to as the "Notes"),
has been duly authorized and issued in accordance with the provisions of an ordinance (the
"Ordinance") passed by the City Council of the City for the purpose of financing Project Costs of
Eligible Projects (as defined in the Ordinance) for the City's Combined Utility System (the "System");
to refund obligations issued in connection with an Eligible Project; and to refinance, renew or refund
Notes, Prior Lien Obligations, and Subordinated Obligations, including interest thereon, in
accordance with the provisions of the Ordinance; all in accordance and in strict conformity with the
provisions of Article 717q, V.A.T.C.S., as amended (the "Act").
This Variable Rate Note, together with the other Notes, is payable from and equally secured
by a lien on and pledge of (i) the proceeds from (a) the sale of other Notes issued for such purpose
and (b) the sale of a series or issue of Bonds (as defined in the Ordinance) to be issued by the City
for such purpose, (ii) advances under and pursuant to the Credit Agreement (as defined in the
Ordinance) between the City and the Bank (as defined in the Ordinance) pursuant to which the Bank
has agreed to provide credit to the City under the terms and conditions set forth therein, which
advances are to be evidenced, as provided in the Credit Agreement, by a Bank Note (as defined in
the Credit Agreement), and (iii) amounts in certain funds established pursuant to the Ordinance.
This Variable Rate Note, together with the other Notes, is payable solely from the sources
hereinabove identified securing the payment thereof and the Variable Rate Notes do not constitute
a legal or equitable pledge, charge, lien or encumbrance upon any other property of City or the
System. The holder hereof shall never have the right to demand payment of this obligation from any
sources or properties of City except as identified above.
[Optional Paragraph if Note payable on Demand - Demand for payment of this Variable Rate
Note shall be made in writing to the City at City Hall, 1201 Leopard Street, Corpus Christi, Texas
78403. (Insert statement of dates or periods on which or in which demand for payment may be
made). Such demand shall be irrevocable. Upon a demand for payment of this Variable Rate Note
being made in accordance with the provisions hereinabove recited, this Note shall become due and
payable on the business day next following the receipt of the written demand for payment.]
This Variable Rate Note may be transferred only upon the Registration Books of the Registrar
under the Ordinance upon surrender thereof at the designated corporate trust office of the Paying
Agent/Registrar with an assignment duly executed by the registered owner or his duly authorized
attorney, but only in the manner, subject to the limitations and upon payment of the charges provided
in the Ordinance, and upon surrender and cancellation of this Variable Rate Note. Upon any such
transfer, there shall be executed in the name of the transferee, and the Registrar shall deliver, a new
18
registered note or notes in the same aggregate principal amount, maturity date and interest rate and
in the authorized denominations as the surrendered Variable Rate Note.
[Insert - Redemption Provisions, if any]
It is hereby certified and recited that all acts, conditions and things required by law and the
Ordinance to exist, to have happened and to have been performed precedent to and in the issuance
of this Variable Rate Note, do exist, have happened and have been performed in regular and in due
time, form and manner as required by law and that the issuance of this Variable Rate Note, together
with all other Notes, is not in excess of the principal amount of Notes permitted to be issued under
the Ordinance.
This Note is and has all the qualities and incidents of a negotiable instrument under the laws
of the State of Texas.
This Variable Rate Note shall not be entitled to any benefit under the Ordinance or be valid
or become obligatory for any purpose until this Variable Rate Note shall have been authenticated by
the execution by the Paying Agent/Registrar of the Certificate of Authentication hereon.
IN TESTIMONY WHEREOF, the City Council has authorized and caused this Variable Rate
Note to be executed on its behalf by the manual or facsimile signature of the Mayor and
countersigned by the manual or facsimile signatures of the City Secretary and its official seal to be
impressed or a facsimile thereof to be printed hereon.
COUNTERSIGNED:
City Secretary, Mayor,
City of Corpus Christi, Texas City of Corpus Christi, Texas
(SEAL)
19
PAYING AGENT/REGISTRAR'S
CERTIFICATE OF AUTHENTICATION
This Variable Rate Note is one of the Variable Rate Notes delivered pursuant to the within
mentioned Ordinance.
Registered This Date: By:
as Paying Agent/Registrar
Authorized Signatory
Section 2.08. Execution - Authentication. The Notes (other than the Master Note) shall be
executed on behalf of the City by the Mayor and attested by the City Secretary under its seal
reproduced or impressed thereon, all as provided in Section 2.07 hereof. The signature of said
officers on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures
of individuals who are or were the proper officers of the City on the date of passage of this Ordinance
shall be deemed to be duly executed on behalf of the City, notwithstanding that such individuals or
either of them shall cease to hold such offices at the time of the initial sale and delivery of Notes
authorized to be issued hereunder and with respect to Notes delivered in subsequent sales, exchanges
and transfers, all as authorized and provided in the Bond Procedures Act of 1981, as amended
(Article 717k-6, V. A. T. C. S. ).
No Project Note shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Project Note a certificate of authentication
substantially in the forms provided in Section 2.07 hereof, executed by the Paying Agent/Registrar
by manual signature, and such certificate upon any Project Note shall be conclusive evidence, and the
only evidence, that such Project Note has been duly certified or registered and delivered.
Section 2.09. Notes Mutilated, Lost, Destroyed or Stolen. If any Note shall become
mutilated, the City, at the expense of the Holder of said Note, shall execute and deliver a new Note
of like tenor and number in exchange and substitution for the Note so mutilated, but only upon
surrender to the City of the Note so mutilated. If any Note shall be lost, destroyed or stolen, evidence
of such loss, destruction or theft may be submitted to the City and, if such evidence be satisfactory
to it and indemnity satisfactory to it shall be given, the City, at the expense of the owner, shall execute
and deliver a new Note of like tenor in lieu of and in substitution for the Note so lost, destroyed or
stolen. Neither the City nor the Paying Agent/Registrar shall be required to treat both the original
Note and any duplicate Note as being outstanding for the purpose of determining the principal
amount of Notes which may be issued hereunder, but both the original and the duplicate Note shall
be treated as one and the same.
20
Section 2.10. Negotiability, Registration and Exchangeability. The obligations issued
hereunder shall be, and shall have all of the qualities and incidents of, a negotiable instrument under
the laws of the State of Texas, and each successive holder, in accepting any of the obligations, shall
be conclusively deemed to have agreed that such obligations shall be and have all of the qualities and
incidents of a negotiable instrument under the laws of the State of Texas.
The Registration Books relating to the registration, payment and transfer or exchange of the
Project Notes shall at all times be kept and maintained by the City at the Designated Office of the
Registrar, and the Registrar shall obtain, record and maintain in the Registration Books the name and
address of each registered owner of the Project Notes, except for Project Notes registered to bearer,
issued under and pursuant to the provisions of this Ordinance, and the Registrar further shall provide
such information to the City as described in Section 2.02 hereof. Any Project Note may, in
accordance with its terms and the terms hereof; be transferred or exchanged for Project Notes of like
tenor and character and of other authorized denominations upon the Registration Books by the
Holder in person or by his duly authorized agent, upon surrender of such Project Note to the
Registrar for cancellation, accompanied by a written instrument of transfer or request for exchange
duly executed by the Holder or by his duly authorized agent, in form satisfactory to the Registrar.
Upon surrender for transfer of any Project Note at the Designated Office of the Registrar, the
Registrar shall register and deliver, in the name of the designated transferee or transferees (or to
bearer, as appropriate), one or more new Project Notes executed on behalf of, and furnished by, the
City of like tenor and character and of authorized denominations and having the same maturity,
bearing interest at the same rate and of a like aggregate principal amount as the Project Note or
Project Notes surrendered for transfer.
Furthermore, Project Notes may be exchanged for other Project Notes of like tenor and
character and of authorized denominations and having the same maturity, bearing the same rate of
interest and of like aggregate principal amount as the Project Notes surrendered for exchange, upon
surrender of the Project Notes to be exchanged at the Designated Office of the Registrar. Whenever
any Project Notes are so surrendered for exchange, the Registrar shall register and deliver new
Project Notes of Ince tenor and character as the Project Notes exchanged, executed on behalf of, and
furnished by, the City to the Holder requesting the exchange.
The City and the Registrar may charge the Noteholder a sum sufficient to reimburse them for
any expenses incurred in making any exchange or transfer after the first such exchange or transfer.
The Registrar or the City may also require payment from the Holder of a sum sufficient to cover any
tax, fee or other governmental charge that may be imposed in relation thereto. Such charges and
expenses shall be paid before any such new Project Note shall be delivered.
The City and the Paying Agent/Registrar shall not be required (a) to issue, transfer or
exchange any Project Note during a period beginning at the opening of business on the 15th day next
preceding either any interest payment date of such Project Note or any date of possible selection of
such Project Note or parts thereof to be redeemed and ending at the close of business on the interest
21
payment date or day on which the applicable notice of redemption is given, or (b) to transfer or
exchange any Project Note selected, called or being called for redemption in whole or in part.
New Project Notes delivered upon any transfer or exchange shall be valid special obligations
of the City, evidencing the same debt as the Project Notes surrendered, shall be secured by this
ordinance and shall be entitled to all of the security and benefits hereof to the same extent as the
Project Notes surrendered.
The City reserves the right to change the above registration and transferability provisions of
the Project Notes at any time on or prior to the delivery thereof in order to comply with applicable
laws and regulations of the United States in effect at the time of issuance thereof.
Section 2.11. Series A Note Payment Fund: Series A Note Bank Repayment Fund. There
are hereby created and established with the Issuing and Paying Agent two separate and special funds
to be designated as the "City of Corpus Christi, Texas Utility System Series A Note Payment
Fund" (the "Series A Note Payment Fund") and the "City of Corpus Christi, Texas Utility
System Series A Note Bank Repayment Fund" (the "Series A Note Bank Repayment Fund").
Moneys drawn under the Letter of Credit, or any other proceeds of Advances made under a
Credit Agreement, shall be deposited into the Series A Note Payment Fund and used to pay the
principal of, premium, if any, and interest on the Project Notes at the respective interest payment,
maturity or redemption dates of each issue of such Notes as provided herein. The Issuing and Paying
Agent is hereby authorized to make a drawing under the Letter of Credit as soon as practicable after
the opening of business, but in no event later than 10:00 a.m., New York City time, on the maturity
date of a Project Note in an amount equal to the principal of and interest on the Project Notes
maturing on such day; provided, that if the Letter of Credit so provides, the Issuing and Paying Agent
may make such drawing on or prior to 5:00 p.m., New York City time, on the Business Day next
preceding the maturity date of a Project Note. The proceeds of such drawing shall be deposited in
the Series A Note Payment Fund.
Moneys on deposit in the Series A Note Bank Repayment Fund shall be used first to repay
any Advances and term loans made pursuant to the Agreement (evidenced by a Bank Note) and
second to pay principal of, premium, if any, and interest on Project Notes at the respective interest
payment, maturity or redemption dates of each issue of such Notes as provided herein repay any
Advances and term loans made pursuant to the Agreement (evidenced by any Bank Note). In
addition to the proceeds from the sale of Project Notes deposited in the Series A Note Bank
Repayment Fund, the City shall also cause to be deposited in the Series A Note Bank Repayment
Fund such moneys as may be required, together with such proceeds, to reimburse the Bank for
outstanding Advances. Amounts remaining in the Series A Note Bank Repayment Fund not then
necessary for the purposes set forth above may be transferred to the Series A Note Construction
Account (created pursuant to Section 2.14 hereof) upon request of an Authorized Representative.
22
Pending the expenditure of moneys in the Series A Note Bank Repayment Fund for authorized
purposes, moneys deposited therein may be invested at the direction of the Director of Finance or the
designee thereof in Eligible Investments. Any income received from such investments shall be
deposited, as received, into the System Fund, as established in the Priority Bond Ordinance, and shall
not, for purposes of this Ordinance, be considered an amount held in the Series A Bank Repayment
Account. Moneys held in the Series A Note Payment Fund shall remain uninvested pending their
expenditure.
Section 2.12. Pledge; Payments. The Notes are special obligations of the City payable from
and secured solely by the funds pledged therefor pursuant to this Ordinance. The City agrees to make
payments into the Series A Note Bank Repayment Fund and cause payments to be made into the
Series A Note Payment Fund at such times and in such amounts as are necessary to provide for the
full payment of the principal of, premium, if any, and the interest on the Notes when due.
To provide security for the payment of the principal of and interest on the Notes and any other
amounts due under the Agreement as the same shall become due and payable, there is hereby granted
a lien on and pledge of, subject only to the provisions of this Ordinance permitting the application
thereof for purposes and on the terms and conditions set forth herein, (i) the proceeds from (a) the
sale of the Bonds issued for such purpose and (b) the sale of Project Notes issued pursuant to this
Ordinance for such purpose, (ii) Advances, (iii) the amounts held in the Series A Note Payment Fund
until the amounts deposited therein are used for authorized purposes, provided, however, amounts
in the Series A Note Payment Fund attributable to and derived from Advances shall be used only to
pay, prior to any application to the payment of the Bank Note, the principal of and interest on the
Project Notes in full, and (iv) the amounts remaining on deposit in the Series A Note Construction
Account after the payment of all Project Costs, and it is hereby resolved and declared the principal
of and interest on the Notes and any other amounts due under the Agreement shall be and are hereby
equally and ratably secured by and payable from a lien on and pledge of the sources hereinabove
identified in clauses (i), (ii), (iii) and (iv) subject and subordinate only to the exceptions noted therein.
Additionally, to provide security for the payment of the principal of and interest on the Bank Note
and other amounts due under the Agreement as the same shall become due and payable, there is
hereby granted a lien on and pledge of, subject only to the provisions of this Ordinance permitting the
application thereof for purposes and on the terms and conditions set forth herein, such lien on and
pledge of Pledged Revenues to the Bank Notes and other amounts due under the Agreement,
however, being subordinate only to the lien and pledge of the Pledged Revenues securing (i) the
payment of the Priority Bonds and the debt service and reserve funds relating thereto and (ii) the
payment obligations of the City under the Federal Contract. Unless a Bank Note is paid from the
proceeds of Project Notes or Bonds issued for such purposes, or amounts available in the Series A
Note Payment Fund or the Series A Note Construction Fund, all as described above, such payments
are to be made from Pledged Revenues on deposit in the Series A Note Bank Repayment Fund.
Section 2.13. Application of Prior Covenants. The covenants and agreements (to the extent
the same are not inconsistent herewith) contained in the Priority Bond Ordinance are hereby
incorporated herein and shall be deemed to be for the benefit and protection of the Bank Notes and
the Holder thereof in like manner as applicable to the Priority Bonds, provided, however, in the event
23
of any conflict between the terms, covenants and agreements contained herein and the terms,
covenants and agreements contained in the Priority Bond Ordinance, the provisions of the Priority
Bond Ordinance shall control over the provisions hereof. Specifically, consistent with the provisions
of the Priority Bond Ordinance, if any property or facilities is sold or exchanged and such property
or facilities constituted property or facilities comprising all or a part of a system within the System,
the acquisition, improvement or extension of such system having not been financed by the City in any
manner with the proceeds of Bonds, or with the proceeds of obligations which were refunded in
whole or in part with the proceeds of Bonds, then the City may utilize the proceeds of such sale or
exchange for any lawful purpose.
Section 2.14. Series A Note Construction Account. There is hereby created and established
a separate account hereby designated as the "City of Corpus Christi, Texas Utility System Series
A Note Construction Account" (the "Series A Note Construction Account"). The Series A Note
Construction Account shall be held at a depository of the City. Moneys deposited in the Series A
Note Construction Account shall remain therein until from time to time expended to pay for Project
Costs, and to refund obligations issued in connection with Eligible Projects and shall not be used for
any other purposes whatsoever, except as otherwise provided below, and pending such expenditure,
moneys in said Account may be invested at the direction of the Director of Finance or the designee
thereof in Eligible Investments. Any income received from such investments (except as otherwise
required to be rebated to the United States of America in accordance with the provisions of Section
4.08 hereof) shall be deposited, as received, into the System Fund as established in the Priority Bond
Ordinance, and shall not, for purposes of this Ordinance, be considered an amount held in the Series
A Note Construction Account.
Any amounts on deposit in the Series A Note Construction Account designated by an
Authorized Representative as eligible to pay interest during construction and thereafter may be
transferred from time to time at the direction of an Authorized Representative to the credit of either
the Series A Note Payment Fund or the Series A Note Bank Repayment Fund for use in accordance
with the terms of Section 2.11 hereof. Any amounts remaining in the Series A Note Construction
Account after the payment of all Project Costs shall be paid at the direction of an Authorized
Representative into either the Series A Note Payment Fund or the Series A Note Bank Repayment
Fund and used for the payment of such maturities of the Project Notes coming due at such times as
may be selected by an Authorized Representative or for the payment of the Bank Notes, as the case
may be. In the event no Project Notes are outstanding and there are no outstanding Advances, any
amounts in the Series A Note Construction Account not anticipated to be needed to pay Project
Costs shall be transferred to the Debt Service Fund established by the Priority Bond Ordinance.
Section 2.15. Cancellation. All Project Notes which at maturity are surrendered to the Paying
Agent/Registrar for the collection of the principal and interest thereof or are surrendered for transfer
or exchange pursuant to the provisions hereof shall, upon payment or issuance of new Project Notes,
be cancelled by the Paying Agent/Registrar, and the Paying Agent/Registrar forthwith shall transmit
to the City a certificate identifying such Project Notes and that such Project Notes have been duly
cancelled and destroyed.
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Section 2.16. Fiscal and Other Agents. In furtherance of the purposes of this Ordinance, the
City may from time to time appoint and provide for the payment of such additional fiscal, paying or
other agents or trustees as it may deem necessary or appropriate in connection with the Notes.
Section 2.17. Credit Agreement. The Agreement, substantially in the form attached hereto
as Exhibit A, is hereby approved, and shall be entered into with the Bank. The form of the Bank Note
substantially in the form contained in the Agreement is hereby approved with the interest rate to be
determined as set forth therein. The Mayor is hereby authorized to execute and deliver any Bank
Note, and the City Secretary is authorized to attest and to place the City seal on the Agreement and
the Bank Note.
Section 2.18. Funds Secured. That moneys in all such Funds, to the extent not invested as
permitted hereunder, shall be secured in the manner prescribed by law for securing funds of the City.
ARTICLE III
ISSUE AND SALE OF NOTES
Section 3.01. Issuance and Sale of Notes. (a) The Commercial Paper Notes shall be
completed and delivered by the Issuing and Paying Agent in accordance with telephonic, computer
or written instructions of the Director of Finance or the designee thereof and in the manner specified
below and in the Issuing and Paying Agent Agreement. To the extent such instructions are not
written, they shall be confirmed in writing by the Director of Finance or the designee thereof within
24 hours. Said instructions shall specify such principal amounts, dates of issue, maturities, rates of
discount or interest, or the formula or method of calculating interest and the basis upon which it is
to be computed, and other terms and conditions which are hereby authorized and permitted to be
fixed by the Director of Finance or the designee thereof at the time of sale of the Commercial Paper
Notes. Such instructions shall include the purchase price of the Commercial Paper Notes, and a
request that the Issuing and Paying Agent authenticate such Commercial Paper Notes by counter
signature of its authorized officer or employee and deliver them to the named purchaser or purchasers
thereof upon receipt of payment in accordance with the custom then prevailing in the New York
financial market in regard to such Commercial Paper Notes. The rules of the New York
Clearinghouse shall apply thereto. Such instructions shall also contain provisions representing that
all action on the part of the City necessary for the valid issuance of the Commercial Paper Notes then
to be issued has been taken, that all provisions of Texas and federal law necessary for the valid
issuance of such Commercial Paper Notes with provision for interest exemption from federal income
taxation have been complied with, if applicable, and that such Commercial Paper Notes in the hands
of the Holders thereof will be valid and enforceable obligations of the City according to their terms,
subject to the exercise of judicial discretion in accordance with general principles of equity and
bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights
heretofore or hereafter enacted to the extent constitutionally applicable and that, if applicable, based
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upon the advice of Bond Counsel, the stated interest on the Commercial Paper Notes is exempt from
federal income taxation. Such instructions shall also certify that:
(i) no Event of Default under Section 5.01 hereof has occurred and is continuing
as of the date of such Certificate;
(ii) the City is in compliance with the covenants set forth in Article IV hereof as
of the date of such instructions;
(iii) the City has been advised by Bond Counsel that the projects to be financed
with the proceeds of the Commercial Paper Notes will constitute Eligible Projects, the
obligations to be refunded were issued in connection with Eligible Projects and, further, that
the proposed expenditure of the proceeds of such Commercial Paper Notes for such projects
and refunding will not cause the City to be in violation of its covenants set forth in Section
4.08 hereof and
(iv) the sum of the interest payable on such Commercial Paper Note will not
exceed a yield (calculated on the principal amount of the Commercial Paper Note on the basis
of a 365 -day or 366 -day, as may be applicable, year and actual number of days elapsed) to
the maturity date of such Commercial Paper Note in excess of the Maximum Interest Rate in
effect on the date of issuance of such Commercial Paper Note.
(b) The Bank Note shall be or has been delivered to the Bank and indebtedness may be
incurred thereunder in accordance with the terms of the Agreement.
(c) Variable Rate Notes and Fixed Rate Notes shall be issued and sold at public or private
sale in the same manner provided for the issuance and sale of Commercial Paper Notes in subsection
(a) of this Section 3.01.
Section 3.02. Proceeds of Sale of Project Notes. The proceeds of the sale of any Project
Notes (net of all expenses and costs of sale and issuance) shall be applied for any or all of the
following purposes as directed by an Authorized Representative:
(i) Proceeds to be used for the payment and redemption of outstanding Project
Notes at or before maturity and the repayment of any borrowing (evidenced by any Bank
Note) or other amounts due under the Agreement shall be retained in the Series A Note Bank
Repayment Fund, and expended therefor; and
(ii) Proceeds not retained in the Series A Note Bank Repayment Fund as provided
in subparagraph (i) above shall be transferred and deposited to the Series A Note
Construction Account and used and applied in accordance with the provisions of Section 2.14
hereof.
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Section 3.03. Issuing and Paying Agent Agreement. The Issuing and Paying Agent
Agreement by and among the City, the Bank and the Issuing and Paying Agent, relating to the
Commercial Paper Notes, in substantially the form attached to this Ordinance as Exhibit B, is hereby
approved, and any Authorized Representative is hereby authorized and directed to execute the same
for and on behalf of the City and the City Secretary is authorized to attest and place the City seal on
such instrument. Any Authorized Representative is hereby authorized to enter into any supplemental
agreements with the Issuing and Paying Agent or with any successor Issuing and Paying Agent in
order to implement the functions of the Issuing and Paying Agent or Registrar with respect to the
Project Notes including, without limitation, authorizing the Issuing and Paying Agent to effect draws
upon the Letter of Credit in the manner provided in the Issuing and Paying Agent Agreement.
Section 3.04. Dealer Agreement. The Dealer Agreement to be entered into with Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Estrada Hinojosa & Company, Incorporated
(together, the "Dealer") pertaining to the sale, from time to time, of Commercial Paper Notes or the
purchase of Commercial Paper Notes from the City, all for a fee to be set forth in said Dealer
Agreement, in substantially the form attached to this Ordinance as Exhibit C, is hereby approved, and
any Authorized Representative is hereby authorized and directed to execute the same for and on
behalf of the City and the City Secretary is authorized to attest and place the City seal on such
instrument.
ARTICLE IV
COVENANTS OF THE CITY
Section 4.01. Limitation on Issuance. Unless this Ordinance is amended and modified by the
City Council and in accordance with the provisions of Section 6.01 hereof, the City covenants that
there will not be issued and outstanding at any time under this ordinance more than $50,000,000 in
principal amount of Project Notes. For purposes of this Section 4.01 any portion of outstanding
Project Notes to be paid on a particular day from moneys on deposit in the Series A Note Payment
Fund and available proceeds of Notes or Bonds shall not be considered outstanding on such day.
Additionally, the City covenants and agrees that the total principal amount of all Project Notes
outstanding at any one time and the total amount of interest accrued or to accrue thereon shall not
exceed the "Commitment" (as defined in the Agreement).
Section 4.02. Rates and Charges. The City hereby agrees and reaffirms its covenants to the
holders of the Priority Bonds and covenants to the Holder of the Bank Note that it will at all times
maintain rates and charges for the services furnished, provided, and supplied by the System which
shall comply with the provisions of the Priority Bond Ordinance, be reasonable and nondiscriminatory
and produce income and revenues sufficient to pay:
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(a) all maintenance and operating expenses, depreciation, replacement and betterment
expenses and other costs as may be required by law (including specifically Article 1113, V.A.T.C.S.);
(b) the interest on and principal of all Priority Bonds, as and when the same shall become
due, and to maintain the Funds and Accounts created and established for the payment and security
of the Priority Bonds;
(c) the payment obligations of the City under the Federal Contract, as and when the same
shall become due;
(d) to the extent the same are reasonably anticipated to be paid with Pledged Revenues,
the interest on and principal of the Bank Notes and other amounts due the Bank under the
Agreement, as and when the same shall become due; and
(e) any legal debt or obligation of the System as and when the same shall become due.
Section 4.03. System Fund. Pursuant to Section 2.13 hereof, the City hereby reaffirms its
covenant to the holders of the Priority Bonds, and hereby covenants with respect to the Holder of the
Bank Notes, that all Gross Revenues shall be deposited as received in the "City of Corpus Christi,
Texas System Fund" (hereinafter referred to as "System Fund"), which is required by the Priority
Bond Ordinance, which shall be kept separate and apart from all other funds of the City. Revenues
received for the System Fund shall be deposited from time to time as received in such bank or banks
as may be selected by the City in accordance with applicable laws relating to the selection of City
depositories.
Section 4.04. Priority of Deposits and Payments From System Fund. The City shall make the
deposits and payments from the Pledged Revenues in the System Fund when and as required by the
Priority Bond Ordinance and such deposits shall be made in the order and with the priorities set forth
in the Priority Bond Ordinance. After satisfying the requirements of the Priority Bond Ordinance and
any ordinance with respect to payment of principal, premium, if any, and interest on the Priority
Bonds and the respective debt service and reserve fund requirements therefor, and the payments due
under the Federal Contract, there shall be deposited by the City to the Series A Note Bank
Repayment Fund the amounts required by Sections 2.11 and 2.12 hereof for the payment of the
Bank Notes.
Section 4.05. Maintenance of Available Credit Facilities Requirement. (a) The City agrees
and covenants that at all times up to and including the Maximum Maturity Date, unless the Project
Notes are no longer outstanding it will maintain credit or liquidity facilities with banks in amounts
such that, assuming that all then outstanding Project Notes were to become due and payable
immediately, the amount available for borrowing under such facilities would be sufficient at that time
to pay principal and interest of all Project Notes. No Project Note shall be issued which if, after giving
effect to the issuance thereof and, if applicable, the immediate application of the proceeds thereof to
retire other Project Notes secured by the credit or liquidity facility, the aggregate principal amount
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of all Project Notes secured by or payable from the credit or liquidity facility would exceed the
amount of the commitment thereunder. The availability for borrowing of such amounts under such
facilities may be subject to reasonable conditions precedent, including but not limited to, bankruptcy
of the City. In furtherance of the foregoing covenant, the City agrees that it will not issue any Project
Notes or make any borrowing which will result in a violation of such covenant, will not amend the
Agreement in a manner which will cause a violation of such covenant and, if and to the extent
necessary to maintain compliance with such covenant, will arrange for new credit or liquidity facilities
prior to, or contemporaneously with, the expiration of the Agreement.
(b) The City shall not deliver or cause to be delivered to the Issuing and Paying Agent a
Substitute Letter of Credit or consent to the assignment by the Bank of its obligations under the
Letter of Credit or the Agreement unless simultaneously therewith there is also delivered to the
Issuing and Paying Agent (i) written evidence from each of Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group, a division of McGraw Hill Corporation, which then rates the
Project Notes to the effect that termination of the then existing Letter of Credit and substitution of
the Substitute Letter of Credit therefor or the assignment of the Bank's obligations under the Letter
of Credit or the Agreement will not result in the reduction or withdrawal of the ratings of the then
Outstanding Project Notes assigned thereto by such rating service and (ii) an opinion of counsel to
the Bank issuing the Substitute Letter of Credit in all respects substantially similar to the opinion
required by the Agreement initially executed and delivered by counsel to the Bank in connection with
the initial issuance by the City of Project Notes. The City shall, simultaneously with the delivery of
any Substitute Letter of Credit to the Issuing and Paying Agent, mail by first-class mail, postage
prepaid, a notice of such substitution to all Holders existing as of the effective date of such
substitution.
Section 4.06. Bonds. The City hereby acknowledges that the Project Notes are being issued
as bond anticipation notes, and therefore the City in good faith shall endeavor to sell a sufficient
principal amount of the Bonds in order to have funds available, together with other moneys available
therefor, to pay the Notes and the interest thereon, or any renewals thereof, as the same shall become
due, and other amounts due under the Agreement.
Section 4.07. Punctual Payment. The City will punctually pay or cause to be paid the
principal of and interest, if any, on the Notes (but only from the sources pledged herein), in
conformity with the Notes, this Ordinance and the Agreement.
Section 4.08. Project Notes to Remain Tax Exempt. The City covenants to take any action
to assure, or refrain from any action which would adversely affect, the treatment of the Project Notes
as obligations described in section 103 of the Code, the interest on which is not includable in the
"gross income" of the holder for purposes of federal income taxation if such Project Notes are
designated by the City as "tax exempt". In furtherance thereof, the City covenants as follows;
(a) to take any action to assure that no more than 10 percent of the proceeds of
the Project Notes or the projects financed therewith (less amounts deposited to a reserve
fund, if any) are used for any "private business use", as defined in section 141(b)(6) of the
29
Code or, if more than 10 percent of the proceeds are so used, that amounts, whether or not
received by the City, with respect to such private business use, do not, under the terms of this
ordinance or any underlying arrangement, directly or indirectly, secure or provide for the
payment of more than 10 percent of the debt service on the Project Notes, in contravention
of section 141(b)(2) of the Code;
(b) to take any action to assure that in the event that the "private business use"
described in subsection (a) hereof exceeds 5 percent of the proceeds of the Project Notes or
the projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" which is "related" and not
"disproportionate", within the meaning of section 141(b) (3) of the Code, to the governmental
use;
(c) to take any action to assure that no amount which is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Project Notes (less amounts deposited into
a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than
state or local governmental units, in contravention of section 141(c) of the Code;
(d) to refrain from taking any action which would otherwise result in the Project
Notes being treated as "private activity bonds" within the meaning of section 141(b) of the
Code;
(e) to refrain from taking any action that would result in the Project Notes being
"federally guaranteed" within the meaning of section 149(b) of the Code;
(0 to refrain from using any portion of the proceeds of the Project Notes, directly
or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire
"investment property" (as defined in section 148(b)(2) of the Code) which produces a
materially higher yield over the term of the Project Notes, other than investment property
acquired with --
(1) proceeds of the Project Notes invested for a reasonable temporary
period of 3 years or less until such proceeds are needed for the purpose for which the
obligations are issued,
(2) amounts invested in a bona fide debt service fund, within the meaning
of section 1.148-1(b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement
fund to the extent such amounts do not exceed 10 percent of the proceeds of the
Project Notes;
(g) to otherwise restrict the use of the proceeds of the Project Notes or amounts
treated as proceeds of the Project Notes, as may be necessary, so that the Project Notes do
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not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage)
and, to the extent applicable, section 149(d) of the Code (relating to advance refundings); and
(h) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Project Notes) an amount that is at least equal
to 90 percent of the "Excess Earnings", within the meaning of section 148(0 of the Code, and
to pay to the United States of America, not later than 60 days after the Project Notes have
been paid in full, 100 percent of the amount then required to be paid as a result of Excess
Earnings under section 148(0 of the Code.
The City represents and covenants that it will not expend, or permit to be expended, the
proceeds of any Project Notes in any manner inconsistent with its reasonable expectations as certified
in a federal tax certificate to be executed from time to time with respect to the Project Notes;
provided, however, that the City may expend Project Note proceeds in any manner if the City first
obtains an unqualified opinion of Bond Counsel that such expenditure will not impair the exemption
from federal income taxation of interest paid on the Project Notes. The City represents that it has
not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that
it is an issuer whose arbitrage certifications may not be relied upon.
The City understands that the term "proceeds" includes "disposition proceeds" as defined in
the Regulations and, in the case of a refunding bond, transferred proceeds (if any) and proceeds of
the refunded bonds expended prior to the date of the issuance of the Project Notes. It is the
understanding of the City that the covenants contained herein are intended to assure compliance with
the Code and any regulations or rulings promulgated by the U.S. Department of the Treasury
pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify,
or expand provisions of the Code, as applicable to the Project Notes, the City will not be required to
comply with any covenant contained herein to the extent that such failure to comply, in the opinion
of Bond Counsel, will not adversely affect the exemption from federal income taxation of interest on
the Project Notes under section 103 of the Code. In the event that regulations or rulings are hereafter
promulgated which impose additional requirements which are applicable to the Project Notes, the
City agrees to comply with the additional requirements to the extent necessary, in the opinion of Bond
Counsel, to preserve the exemption from federal income taxation of interest on the Project Notes
under section 103 of the Code. In furtherance of such intention, the City hereby authorizes and
directs the Mayor, the City Manager and the Director of Finance to execute any documents,
certificates or reports required by the Code, and to make such elections on behalf of the City which
may be permitted by the Code as are consistent with the purpose for the issuance of the Project
Notes.
In order to facilitate compliance with the above clause (h), a "Rebate Fund" is hereby
established by the City for the sole benefit of the United States of America, and such Fund shall not
be subject to the claim of any other person, including without limitation the bondholders. The Rebate
Fund is established for the additional purpose of compliance with section 148 of the Code.
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Section 4.09. Allocation of. and Limitation on, Expenditures for Eligible Projects. That the
City covenants to account for on its books and records the expenditure of proceeds from the sale of
the Project Notes and any investment earnings thereon to be used for Eligible Projects by allocating
proceeds to expenditures within 18 months of the later of the date that (a) the expenditure on a
Eligible Project is made or (b) each Eligible Project is completed. The foregoing notwithstanding,
the City shall not expend such proceeds or investment earnings more than 60 days after the later of
(a) the fifth anniversary of the date of delivery of the Project Notes or (b) the date the Project Notes
are retired, unless the City obtains an opinion of Bond Counsel substantially to the effect that such
expenditure will not adversely affect the tax-exempt status of the Project Notes. For purposes of this
Section, the City shall not be obligated to comply with this covenant if it obtains an opinion of Bond
Counsel to the effect that such failure to comply will not adversely affect the excludability for federal
income tax purposes from gross income of the interest.
Section 4.10. Disposition of Eligible Projects. That the City covenants that the property
constituting an Eligible Project will not be sold or otherwise disposed in a transaction resulting in the
receipt by the City of cash or other compensation, unless the City obtains an opinion of Bond Counsel
substantially to the effect that such sale or other disposition will not adversely affect the tax-exempt
status of the Project Notes. For purposes of this Section, the portion of the property comprising
personal property and disposed of in the ordinary course of business shall not be treated as a
transaction resulting in the receipt of cash or other compensation. For purposes of this Section, the
City shall not be obligated to comply with this covenant if it obtains an opinion of Bond Counsel to
the effect that such failure to comply will not adversely affect the excludability for federal income tax
purposes from gross income of the interest.
Section 4.11. Taxable Obligations. That the provisions of Section 4.08 of this Ordinance
notwithstanding, the City reserves the ability to issue Project Notes in a manner such that such
obligations are not obligations described in section 103(a) of the Code or are obligations which
constitute "private activity bonds" within the meaning of section 141(b) of the Code. If Project Notes
are so issued, the Authorized Representative is authorized to designate such Project Notes in such
a manner as to distinguish such Project Notes from those Project Notes that are issued as obligations
described in section 103(a) of the Code.
Section 4.12. Supplemental Ordinances. Other than as permitted herein with respect to the
issuance of additional obligations of the City secured by the Net Revenues of the System, the City
will not adopt any supplemental ordinances with respect to the Pledged Revenues of the System,
pursuant to the Priority Bond Ordinance or otherwise, without the consent of the Bank.
Section 4.13. Opinion of Bond Counsel. The City shall cause the legal opinion of Bond
Counsel as to the validity of the Notes and as to the exemption of interest on the Project Notes from
federal income taxation to be furnished to any Noteholder without cost. In addition, a copy of said
opinion may be printed on each of the Project Notes. In addition, in connection with the annual
updating of the Offering Memorandum (as provided in accordance with Section 6.08 hereof) as
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required by the Dealer Agreement, there shall be provided an annual updated opinion of Bond
Counsel, at the cost of the City or the Dealer as agreed to in the Dealer Agreement.
Section 4.14. Compliance With Priority Bond Ordinance and Other Documents. The City
will comply with the terms and provisions of the Priority Bond Ordinance, the Federal Contract, and
any other ordinance or contract to which the City is a party, the non-compliance with which would
materially adversely affect the ability of the City to make payments on the Notes when due.
Section 4.15. Reservation of Right to Issue Priority Bonds and Obligations of Inferior Lien.
In accordance with Section 4.12 hereof the City hereby expressly reserves the right to hereafter issue
Priority Bonds in accordance with the provisions of the Priority Bond Ordinance, payable from and
secured by a lien on and pledge of the Pledged Revenues of the System prior in right and claim to the
lien and pledge securing the payment of the Bank Notes. In accordance with Section 4.12 hereof,
the City also retains the right to issue bonds, notes, or other evidences of indebtedness or to incur
contractual obligations secured by a lien on and pledge of the Pledged Revenues of the System junior
and subordinate to the lien and pledge securing the Bank Notes.
Section 4.16. Ongoing Continuing Disclosure Covenant. To the extent required by the
provisions of Rule 15c2-12, promulgated by the U.S. Securities and Exchange Commission, the City
agrees to enter into an agreement to file financial information and operating data with respect to the
Project Notes with such entities as are designated pursuant to the terms of said Rule 15c2-12 as
nationally recognized municipal securities information repositories and the state information
depository in Texas. The City currently anticipates issuing Project Notes in the form of Commercial
Paper Notes, and under the provisions of said Rule 15c2-12, as they exist on the date this Ordinance
is adopted, the City is exempted from complying with the undertaking described in the first sentence
of this Section 4.16 if the Project Notes are issued in the form of Commercial Paper Notes.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES OF NOTEHOLDERS
Section 5.01. Events of Default. If one or more of the following events shall occur:
(a) if default shall be made in the due and punctual payment of any installment of
principal of any Project Note when and as the same shall become due and payable, whether
at maturity as therein expressed, by declaration or otherwise;
(b) if the City shall fail to make due and punctual payment of any installment of
interest on any Project Note when and as such interest installment shall become due and
payable and such failure shall continue for 5 Business Days;
(c) if the principal of any Bank Note (and interest accrued thereon) shall become
due and payable prior to the maturity thereof under such Bank Note and the Agreement;
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(d) if default shall be made by the City in the performance or observance of any
other of the covenants, agreements or conditions on its part in this ordinance or in the Project
Notes contained, and such default shall continue for a period of sixty (60) days after written
notice thereof; provided, however, if such default cannot be cured within the sixty (60) day
period but corrective action to cure such default is commenced and diligently pursued until
the default is corrected no such Event of Default shall be deemed to have occurred;
(e) if there shall occur the dissolution (without a successor being named to assume
the rights and obligations) or liquidation of the City or the filing by the City of a voluntary
petition in bankruptcy, or adjudication of the City as a bankrupt, or assignment by the City
for the benefit of its creditors, or the entry by the City into an agreement of composition with
its creditors, or the approval by a court of competent jurisdiction with its creditors, or the
approval by a court of competent jurisdiction of a petition applicable to the City in any
proceeding for its reorganization instituted under the provisions of the Bankruptcy Code, as
amended, or under any similar act in any jurisdiction which may now be in effect or hereafter
enacted; or
(f) if an order or decree shall be entered, with the consent or acquiescence of the
City, appointing a receiver or receivers of the System, or any part thereof, or of the rents,
fees, charges or other revenues therefrom, or if such order or decree, having been entered
without the consent or acquiescence of the City shall not be vacated or discharged or stayed
within 90 days after the entry thereof;
then such event as described above shall constitute an "Event of Default" under this Ordinance.
Section 5.02. Suits at Law or in Equity and Mandamus. In case one or more Events of
Default shall occur, then and in every such case the Holder of any Note at the time outstanding shall
be entitled to proceed to protect and enforce such Holder's rights by such appropriate judicial
proceeding as such Holder shall deem most effectual to protect and enforce any such right, either by
suit in equity or by action at law, whether for the specific performance of any covenant or agreement
contained in this Ordinance, or in aid of the exercise of any power granted in this Ordinance, or to
enforce any other legal or equitable right vested in the Holders of Notes by this Ordinance or the
Notes or by law. The provisions of this Ordinance shall be a contract with each and every Holder of
Notes and the duties of the City shall be enforceable by any Noteholder by mandamus or other
appropriate suit, action or proceeding in any court of competent jurisdiction.
Section 5.03. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the
Holders of Notes is intended to be exclusive of any other remedy, and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing, at law or in equity or by statute or otherwise, and may be exercised at any time or from time
to time, and as often as may be necessary, by the Holder of any one or more of the Notes.
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ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments or Modifications Without Consent of Holders of Notes. This
Ordinance and the rights and obligations of the City and of the Holders of Notes may be modified or
amended at any time by a supplemental ordinance, without notice to or the consent of any
Noteholders, but only to the extent permitted by law, and, subject to the rights of the holders of the
Notes, only for any one or more of the following purposes --
(1) to add to the covenants and agreements of the City in this Ordinance
contained, other covenants and agreements thereafter to be observed, or to surrender any
right or power herein reserved to or conferred upon the City;
(2) to cure any ambiguity or inconsistency, or to cure or correct any defective
provision contained in this Ordinance, upon receipt by the City of an approving opinion of
Bond Counsel selected by the City, that the same is needed for such purpose, and will more
clearly express the intent of this Ordinance; or
(3) to supplement the security for the Notes, replace or provide additional credit
facilities, make such changes, modifications or amendments as may be necessary or desirable
in order to obtain or maintain the granting of a rating on the Bonds by a nationally recognized
municipal bond rating agency, or change the form of the Notes or make such other changes
in the provisions hereof as the City may deem necessary or desirable and which shall not
materially adversely affect the interests of the Holders of the Notes;
provided, however, that nothing herein contained shall permit or be construed to permit the
amendment of the terms and conditions of this ordinance or of the Project Notes so as to:
(1)
(2)
(3)
Notes
Make any change in the maturity of any of the outstanding Project Notes;
Reduce the rate of interest borne by any of the outstanding Project Notes;
Reduce the amount of the principal payable on any of the outstanding Project
(4) Modify the terms of payment of principal of or interest on the outstanding
Project Notes, or impose any conditions with respect to such payment;
(5)
Notes; or
Affect the rights of the Holders of less than all of the outstanding Project
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(6) Reduce or restrict the pledge made pursuant to Section 2.12 hereof for
payment of the Project Notes;
and provided, further, that no change, modification or amendment shall be made in this Ordinance
or become valid and effective (i) without the approval of such change, modification or amendment
by the Attorney General of the State of Texas, to the extent required by the Act and (ii) without the
consent of the Bank.
Section 6.02. Additional Actions. (a) The Mayor, the City Secretary, the Authorized
Representatives and the other officers of the City are hereby authorized and directed, jointly and
severally, to do any and all things and to execute and deliver any and all documents which they may
deem necessary or advisable in order to consummate the issuance, sale and delivery of the Notes and
otherwise to effectuate the purposes of this Ordinance, the Agreement, the Dealer Agreement, the
Offering Memorandum and the Issuing and Paying Agent Agreement. Specifically, by the adoption
of this Ordinance, the City Council hereby authorizes the payment of the fees and expenses incurred
and to be paid by the City in connection with the issuance, sale and delivery of the Notes and the
execution and delivery of the Agreement, the Dealer Agreement and the Issuing and Paying Agent
Agreement.
(b) In order for the City Council to be kept informed of the general activities and future needs
of the System, the City Manager or the designee thereof shall report periodically to the City Council,
but no less frequently than once each calendar quarter, and provide the City Council with a summary
of recent events relating to the System and actions taken by the City with respect to such events.
Such report shall include information relating to (i) the financial condition of the System including
the most recent balance sheet and income statement available (or similar financial information
prepared by City staff for review by the City Council) and, once each year, a summary of the annual
audit prepared for or with respect to the System, (ii) major construction projects in progress or
expected to begin during the next six months, (iii) additional major capital projects with respect to
the System the City Manager expects the City to undertake in the future, (iv) expectations of the City
Manager relating to the need of the City Council to authorize the issuance of additional indebtedness
payable from revenues of the System or raising utility rates during the next twelve months, and (v)
such other matters as the City Council, acting through the Mayor, may request in writing.
Section 6.03. Ordinance to Constitute a Contract Equal Security. In consideration of the
acceptance of the Notes, the issuance of which is authorized hereunder, by those who shall hold the
same from time to time, this Ordinance shall be deemed to be and shall constitute a contract between
the City and the Holders from time to time of the Notes and the pledge made in this ordinance by the
City and the covenants and agreements set forth in this Ordinance to be performed by the City shall
be for the equal and proportionate benefit, security and protection of all Holders of the Notes,
without preference, priority or distinction as to security or otherwise of any of the Notes authorized
hereunder over any of the others by reason of time of issuance, sale or maturity thereof or otherwise
for any cause whatsoever, except as expressly provided in or permitted by this Ordinance or, with
respect to the Bank Notes, the Agreement.
36
Section 6.04. Severability of Invalid Provisions. If any one or more of the covenants,
agreements or provisions herein contained shall be held contrary to any express provisions of law or
contrary to the policy of express law, though not expressly prohibited, or against public policy, or
shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall
be null and void and shall be deemed separable from the remaining covenants, agreements or
provisions and shall in no way affect the validity of any of the other provisions hereof or of the Notes
issued hereunder.
Section 6.05. Payment and Performance on Business Days. Whenever under the terms of
this Ordinance or the Project Notes, the performance date of any provision hereof or thereof,
including the payment of principal of or interest on the Project Notes, shall occur on a day other than
a Business Day, then the performance thereof, including the payment of principal of and interest on
the Project Notes, need not be made on such day but may be performed or paid, as the case may be,
on the next succeeding Business Day with the same force and effect as if made on the date of
performance or payment.
Section 6.06. Defeasance. If, when all or any portion of the Project Notes shall have become
due and payable in accordance with their terms or otherwise as provided in this Ordinance, the entire
principal and interest so due and payable upon said Project Notes shall be paid, or if at or prior to the
date said Project Notes have become due and payable, sufficient moneys or direct obligations of, or
obligations guaranteed by, the United States of America the principal of and interest on which will
provide sufficient moneys for such payment, shall be held in trust by the Issuing and Paying Agent
and provision shall also be made for paying all other sums payable hereunder by the City with respect
to said Project Notes, the pledge herein created with respect to said Project Notes shall thereupon
cease, terminate and become discharged and said Project Notes shall no longer be deemed
outstanding for purposes of this Ordinance and all the provisions of this Ordinance relating to the
Project Notes, including all covenants, agreements, liens and pledges made herein for the benefit
thereof, shall be deemed duly discharged, satisfied and released.
Section 6.07. Limitation of Benefits with respect to the Ordinance. With the exemption of
the rights or benefits herein expressly conferred, nothing expressed or contained herein or implied
from the provisions of this Ordinance or the Notes is intended or should be construted to confer upon
or give to any person other than the City, the Holders of the Notes, the Issuing and Paying Agent and
the parties to the Dealer Agreement and the Agreement, any legal or equitable right, remedy or claim
under or by reason of or in respect to this Ordinance or any covenant, condition, stipulation, promise,
agreement or provision herein contained. This Ordinance and all of the covenants, conditions,
stipulations, promises, agreements and provisions hereof are intended to be and shall be for and inure
to the sole and exclusive benefit of the City, the Holders of the Notes, the Issuing and Paying
Agent/Registrar and the parties to the Dealer Agreement and the Agreement as herein and therein
provided.
Section 6.08. Use of Offering Memorandum. The use by the Dealer of the Offering
Memorandum, prepared by the Dealer in connection with the sale of Commercial Paper Notes, and
37
the distribution of the Offering Memorandum by the Dealer, is approved subject to the approval
thereof by an Authorized Representative.
Section 6.09. Approval of Attorney General. No Notes herein authorized to be issued shall
be sold or delivered by an Authorized Representative until the Attorney General of the State of Texas
shall have approved this Ordinance, the Agreement and other agreements and proceedings as may be
required in connection therewith, all as is required by the Act.
Section 6.10. Notice to Rating Agencies. The City agrees to provide written notice to each
of Moody's Investors Service, Inc. and Standard & Poor's Ratings Group, a division of McGraw Hill
Corporation, which then rates the Project Notes, of any expiration, termination or extension of the
Letter of Credit, or any amendment or supplement made to either the Credit Agreement or this
Ordinance.
Section 6.11. Preamble. The preamble to this Ordinance shall be considered an integral part
of this Ordinance, and is herein incorporated as part of the body of this Ordinance for all purposes.
Section 6.12. Immediate Effect. That on request of the Mayor to find and declare an
emergency due to the immediate need for the efficient and effective administration of City affairs by
authorizing the issuance of the above-mentioned Project Notes, such finding of an emergency is
hereby specifically made and declared, requiring suspension of the Charter rule as to consideration
and voting upon ordinances or resolutions at two regular meetings so that this Ordinance be
passed and take effect upon first reading.
ADOPTED this 11th day of November, 1997.
ATTEST:
0 •I/
City Secretary • (SEAL)
APPROVED AS TO FORM:
38
us Christi, Te as
1 Day of %77ClliLk, ti 19
TO THE MEMBERS OF THE CITY COUNCIL
Corpus Christi, Texas
For the reasons set forth in the emergency clause of the foregoing ordinance an emergency exists
requiring suspension of the Charter rule as to consideration and voting upon ordinances at two
regular meetings: I/we, therefore, request that you suspend said Charter rule and pass this ordinance
finally on the date it is introduced, or at the present meeting of the City Council.
Respectfully, Respectfully,
MAYOR ��G��7
THE CITY OF CORPUS C STl
Council Members
The above ordinance was passed by the following vote:
Loyd Neal
Jaime Capelo, Jr.
Melody Cooper
Alex L. Garcia, Jr.
Arnold Gonzales
Betty Jean Longoria
John Longoria
Edward A. Martin
Dr. David A. McNichols
(Lkfc
U
it c
01(
023132
CERTIFICATE FOR ORDINANCE
THE STATE OF TEXAS
COUNTY OF NUECES
CITY OF CORPUS CHRISTI
On this the 18th day of November, 1997, the City of Corpus Christi, Texas convened in
Regular Meeting, with the following members of said Council present, to -wit:
S. Loyd Neal Mayor
Alex L. Garcia, Jr. Mayor Pro -Tem
Jaime L. Capelo, Jr., Councilmembers
Betty Jean Longoria,
John Longoria,
Dr. David McNichols,
Melody Cooper,
Edward A. Martin,
Arnold Gonzales, Ph.D.
Bill Hennings, City Manager
James Bray, City Attorney
Jorge G. Cruz-Aedo, Director of Finance
Armando Chapa City Secretary
with the following absent: None, constituting a quorum, at which time the following among other
business was transacted:
City Manager Bill Hennings presented for the consideration of the Council an ordinance
authorizing the establishment of the Utility System short-term obligations program. The
ordinance was read by the City Secretary. The motion to suspend the Charter rules as to
consideration and voting on ordinances at two regular meetings and to pass the ordinance was
carried by the following vote:
AYES: All members of the City Council shown present above voted
"Aye."
NAYS: None.
The Mayor announced that the ordinance had been passed. The ordinance is as follows: