HomeMy WebLinkAbout028656 ORD - 06/22/2010FINAL
ORDINANCE NO. 028656
AUTHORIZING THE ISSUANCE OF "CITY OF CORPUS CHRISTI,
TEXAS UTILITY SYSTEM REVENUE IMPROVEMENT BONDS,
TAXABLE SERIES 2010 (DIRECT SUBSIDY - BUILD AMERICA
BONDS)" IN A MAXIMUM AMOUNT NOT TO EXCEED $75,000,000;
MAKING PROVISIONS FOR THE PAYMENT AND SECURITY
THEREOF ON A PARITY WITH CERTAIN CURRENTLY
OUTSTANDING OBLIGATIONS; STIPULATING THE TERMS AND
CONDITIONS FOR THE ISSUANCE OF ADDITIONAL REVENUE
BONDS ON A PARITY THEREWITH; PRESCRIBING THE FORM,
TERMS, CONDITIONS, AND RESOLVING OTHER MATTERS
INCIDENT AND RELATED TO THE ISSUANCE, SALE, AND
DELIVERY OF THE BONDS; INCLUDING THE APPROVAL AND
DISTRIBUTION OF AN OFFICIAL STATEMENT PERTAINING
THERETO; AUTHORIZING THE EXECUTION OF A PAYING
AGENTIREGISTRAR AGREEMENT AND A PURCHASE CONTRACT;
COMPLYING WITH THE REQUIREMENTS IMPOSED BY THE
LETTER OF REPRESENTATIONS PREVIOUSLY EXECUTED WITH
THE DEPOSITORY TRUST COMPANY; DELEGATING THE
AUTHORITY TO THE MAYOR AND CERTAIN MEMBERS OF THE
CITY STAFF TO EXECUTE CERTAIN DOCUMENTS RELATING TO
THE SALE OF THE BONDS; AND PROVIDING AN EFFECTIVE DATE
WHEREAS, the City of Corpus Christi, Texas (the "City" or the "Issuer"), a "home -rule"
city operating under a home -rule charter adopted pursuant to Section 5 of Article XI of the Texas
Constitution, with a population according to the latest federal decennial census of in excess of
50,000, has heretofore issued its "City of Corpus Christi, Texas Utility System Revenue
Refunding Bonds, Series 1990" (the "Series 1990 Bonds"); its "City of Corpus Christi, Texas
Utility System Revenue Bonds, Series 1994" (the "Series 1994 Bonds"); its "City of Corpus
Christi, Texas Utility System Revenue Bonds, Series 1994-A" (the "Series 1994-A Bonds"); its
"City of Corpus Christi, Texas Utility System Revenue Bonds, Series 1995" (the "Series 1995
Bonds"); its "City of Corpus Christi, Texas Utility System Revenue Bonds, Series 1995-A" (the
"Series 1995-A Bonds"); its "City of Corpus Christi, Texas Utility System Revenue Refunding
and Improvement Bonds, Series 1999" (the "Series 1999 Bonds"); its "City of Corpus Christi,
Texas Utility System Revenue Refunding and Improvement Bonds, Series 1999-A" (the "Series
1999-A Bonds"); its "City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 2000" (the "Series 2000 Bonds"); its "City of Corpus Christi, Texas Utility System
Revenue Refunding Bonds, Series 2000-A" (the "Series 2000-A Bonds"), its "City of Corpus
Christi, Texas Utility System Revenue Refunding and Improvement Bonds, Series 2002" (the
"Series 2002 Bonds"); its "City of Corpus Christi, Texas Utility System Revenue Refunding
Bonds, Series 2003" (the "Series 2003 Bonds"); its "City of Corpus Christi, Texas Utility System
Revenue Refunding and Improvement Bonds, Series 2004" (the "Series 2004 Bonds"); its "City
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of Corpus Christi, Texas Utility System Revenue Refunding Bonds, Series 2005" (the "Series
2005 Bonds"); its "City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 2005A" (the "Series 2005A Bonds"); its "City of Corpus Christi, Texas Utility System
Revenue Refunding and Improvement Bonds, Series 2006" (the "Series 2006 Bonds"); its "City
of Corpus Christi, Texas Utility System Revenue Improvement Bonds, Series 2009" (the "Series
2009 Bonds"); and it's "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2010" (the "Series 2010 Bonds"); and
WHEREAS, the Series 1990 Bonds, the Series 1994 Bonds, the Series 1994-A Bonds,
the Series 1995 Bonds, the Series 1995-A Bonds, and the Series 2000 Bonds are no longer
Outstanding (as hereinafter defined); and
WHEREAS, the Series 1999 Bonds, the Series 1999-A Bonds, the Series 2000-A Bonds,
the Series 2002 Bonds, the Series 2003 Bonds, the Series 2004 Bonds, the Series 2005 Bonds,
the Series 2005A Bonds, the Series 2006 Bonds, the Series 2009 Bonds, and the Series 2010
Bonds are sometimes collectively referred to herein as the "Previously Issued Priority Bonds";
and
WHEREAS, the City has established an interim financing program pursuant to which the
City has authorized the issuance of commercial paper notes designated "City of Corpus Christi,
Texas Utility System Commercial Paper Notes, Series B", to be issued from time to time in an
aggregate principal amount not to exceed $75,000,000 at any one time Outstanding (the "Series
13 Commercial Paper Notes"), under which there currently exists no Outstanding obligations; and
WHEREAS, the City Council will herein irrevocably elect to treat the Bonds as "build
America bonds" within the definition of section 54AA of the Code (hereinafter defined) and as
authorized by section 1531 of the Code, and designate the Bonds as "qualified bonds" under
section 54AA(g) of the Code, and hereby finds and determines that the Tax Credit (as defined in
the Paying Agent/Registrar Agreement) is not considered a revenue of the System and is,
therefore, not part of the Gross Revenues of the System, nor would the Tax Credit be treated as
Gross Revenues of the System, but shall be treated as a reduction in interest expense, and the
City Council hereby delegates to any Authorized Representative (defined herein) the authority to
take any and all actions, on behalf of the City as its authorized representative with respect to the
Tax Credit as set forth in this Ordinance, the Paying Agent/Registrar Agreement, and the BAB
Agreement (defined in Section 31 of this Ordinance); and
WHEREAS, the City deems it appropriate and in its best interest to issue the hereinafter
authorized revenue bonds for the primary purpose of acquiring, purchasing, constructing,
improving, repairing, extending, equipping, and renovating the City's combined waterworks
system, including storm sewer and drainage (which is a part of a larger utility system that also
includes the City's wastewater disposal system and its gas system and is hereinafter described
and defined more thoroughly as the "System"); and
WHEREAS, in the ordinance authorizing the issuance of the Series 1990 Bonds (the
"Base Ordinance"), the City reserved the right to issue revenue bonds on a parity with the Series
1990 Bonds; and
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WHEREAS, the revenue bonds hereinafter authorized are to be issued and delivered
pursuant to the laws of the State of Texas, including specifically Chapter 1502, Texas
Government Code, as amended (the "Act"), and the terms of the Base Ordinance and this
Ordinance (as hereinafter defined), for the purposes set forth in this Ordinance; now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI,
TEXAS:
SECTION 1: Bonds Authorized. In order to provide funds for the purposes of
(i) acquiring, purchasing, constructing, improving, repairing, extending, equipping, and
renovating the System as described in the preamble hereof and (ii) paying the costs of issuance
relating thereto, the City Council (the "Governing Body") of the City, acting pursuant to the laws
of the State of Texas, particularly the Act, has determined that there shall be issued and there is
hereby ordered to be issued a series of revenue bonds to be designated "City of Corpus Christi,
Texas Utility System Revenue Improvement Bonds, Taxable Series 2010 (Direct Subsidy - Build
America Bonds)", in the principal sum of SIXTY MILLION SIX HUNDRED TWENTY-FIVE
THOUSAND AND NO/100 DOLLARS ($60,625,000) (the "Bonds").
As authorized by Chapter 1371, as amended, Texas Government Code, the Mayor of the
City, the City Manager of the City, and the Interim Assistant City Manager for Administrative
Services (each of the foregoing, individually, an "Authorized Representative") are hereby
authorized, appointed, and designated as the officers of the City authorized to individually act on
behalf of the City in selling and delivering the Bonds authorized herein and carrying out the
procedures specified in this Ordinance, including approval of the aggregate principal amount of
each maturity of the Bonds, the redemption provisions therefor, and the rate of interest to be
borne on the principal amount of each such maturity. Each Authorized Representative, acting for
and on behalf of the City, is authorized to execute the Approval Certificate attached hereto as
Schedule I. The Bonds shall be issued in the principal amount, when combined with the
principal amount of the Series 2010A Bonds (defined herein), not to exceed $75,000,000, the
maximum maturity of the Bonds will be July 15, 2045; and the net effective per annum interest
rate shall not exceed a rate greater than 7.0% per annum calculated in a manner consistent with
the provisions of Chapter 1204, as amended, Texas Government Code. Lastly, each Authorized
Representative is authorized to select the bond insurer and/or debt service reserve fund surety
provider, if any, with respect to the Bonds. If the Authorized Representative chooses to purchase
a debt service reserve surety policy or similar credit facility relating to the Bonds, then the
Authorized Representative shall be permitted to execute an insurance or similar reimbursement
agreement in substantially the form attached hereto as Exhibit A (which form is hereby
approved) in connection with such purchase. The execution of the Approval Certificate shall
evidence the sale date of the Bonds by the City to the Purchasers (defined herein) in accordance
with the provisions of Chapter 1371. It is further provided, however, that notwithstanding the
foregoing provisions, the Bonds shall not be delivered unless prior to their initial delivery, the
Bonds have been rated by a nationally recognized rating agency for municipal securities in one
of the four highest rating categories for long term obligations, as required by Chapter 1371.
Upon execution of the Approval Certificate, Bond Counsel is authorized to complete this
Ordinance to reflect such final terms.
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SECTION 2: Dated Date, Denomination, and Stated Maturities., Redemption Option.
The Bonds shall be issued as fully registered obligations, without coupons, totaling $60,625,000
in aggregate principal amount and be dated July 1, 2010.
A. Denominations, and Stated Maturities. The Bonds shall be issued in denominations
of Five Thousand Dollars ($5,000) or any integral multiple (within a stated maturity) thereof
(each, an "Authorized Denomination"), shall be lettered "R" and numbered consecutively from
One (1) upward. The Bonds herein authorized to be issued shall bear interest on the unpaid
principal amounts from the Closing Date or from the most recent interest payment date to which
interest has been duly paid or provided and principal shall become due and payable on July 15 in
each of the years and in amounts in accordance with the following schedule. Said interest shall
be payable to the registered owner of any such Bond in the manner provided and on the dates
stated in the FORM OF BOND attached to this Ordinance as Exhibit B.
Stated Maturities
2025
2030
2040
B. Redemption Provisions.
Principal Amounts (5)
12,730,000
****
12,940,000
****
34,955,000
Interest Rates (%)
5.430
****
6.093
****
6.243
(1) Optional Redemption. The Bonds shall be subject to redemption prior to
Stated Maturity, at the option of the City, on any date from the Closing Date through
July 14, 2020, as a whole or in part, in principal amounts of $5,000 or any integral
multiple thereof, at the Make -Whole Redemption Price or, upon the occurrence of an
Extraordinary Event, at the Extraordinary Redemption Price. In addition, the City
reserves the right to redeem the Bonds stated to mature on and after July 15, 2021, in
whole or in part, on July 15, 2020, or on any date thereafter, in such order of stated
maturity as the City shall determine and by lot or other customary method within a stated
maturity at the redemption price of par plus accrued interest to the date of redemption.
(2) Mandatory Redemption. The Bonds stated to mature on July 15, 2025,
July 15, 2030, and July 15, 2040 are referred to as the "Term Bonds". The Term Bonds
are subject to mandatory sinking fund redemption prior to their stated maturity from
money required to be deposited in the Debt Service Fund (but not the Reserve Fund) for
such purpose and shall be redeemed in part, at random and by lot, at the principal amount
thereof plus accrued interest to the date of redemption in the following principal amounts
on July 15 in each of the years as set forth below:
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Term Bonds Stated to Term Bonds Stated to
Mature on July 15, 2025 Mature on July 15, 2030
Principal Principal
Year Amount ($) Year Amount ($)
2020 1,945,000 2026 2,390,000
2021 2,010,000 2027 2,485,000
2022 2,080,000 2028 2,585,000
2023 2,155,000 2029 2,685,000
2024 2,230,000 2030 2,795,000*
2025 2,310,000*
Term Bonds Stated to
Mature on July 15, 2040
Principal
Year Amount ($)
2031 2,905,000
2032 3,020,000
2033 3,145,000
2034 3,270,000
2035 3,405,000
2036 3,545,000
2037 3,685,000
2038 3,835,000
2039 3,990,000
2040 4,155,000*
*Payable at Stated Maturity.
The principal amount of a Term Bond required to be redeemed pursuant to the
operation of such mandatory redemption provisions shall be reduced, at the option of the
Issuer, by the principal amount of any Term Bonds of such Stated Maturity which, at
least 50 days prior to the mandatory redemption date (1) shall have been defeased or
acquired by the Issuer and delivered to the Paying Agent/Registrar for cancellation,
{2) shall have been purchased and canceled by the Paying Agent/Registrar at the request
of the Issuer with money in the Debt Service Fund (but not the Reserve Fund), or
(3) shall have been redeemed pursuant to the optional redemption provisions set forth in
the Order and not theretofore credited against a mandatory redemption requirement.
{3) Notice of Redemption. At least thirty (30) days prior to the date any such
Bonds are to be redeemed, a notice of redemption, authorized by appropriate resolution
passed by the Governing Body, shall be given in the manner set forth below. A written
notice of such redemption shall be given to the registered owner of each Bond or a
portion thereof being called for redemption by depositing such notice in the United States
mail, first class postage prepaid, addressed to each such registered owner at his address
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shown on the Registration Books (as hereinafter defined) kept by the Paying
Agent/Registrar. By the date fixed for any such redemption, due provision shall be made
by the City with the Paying Agent/Registrar for the payment of the required redemption
price for the Bonds or the portions thereof which are to be so redeemed, plus accrued
interest thereon to the date fixed for redemption. If such written notice of redemption is
given, and if due provision for such payment is made, all as provided above, the Bonds,
or the portions thereof which are to be so redeemed, thereby automatically shall be
redeemed prior to their scheduled maturities, shall not bear interest after the date fixed for
their redemption, and shall not be regarded as being Outstanding except for the right of
the registered owner to receive the redemption price plus accrued interest to the date
fixed for redemption from the Paying Agent/Registrar out of the funds provided for such
payment. The Paying Agent/Registrar shall record in the Registration Books all such
redemptions of principal of the Bonds or any portion thereof. If a portion of any Bonds
shall be redeemed, a substitute Bond or Bonds having the same stated maturity date,
bearing interest at the same interest rate, in any denomination or denominations in any
integral multiple of $5,000, at the written request of the registered owner, and in an
aggregate principal amount equal to the unredeemed portion thereof, will be issued to the
registered owner upon the surrender thereof for cancellation, at the expense of the City,
all as provided in this Ordinance.
SECTION 3: Interest. The Bonds shall bear interest on the unpaid principal amount
thereof at the per annum rates shown above in Section 2, computed on the basis of a 360 -day
year of twelve 30 -day months, and interest thereon shall be payable semiannually on January 15
and July 15 of each year (each an "Interest Payment Date"), commencing January 15, 2011,
while the Bonds are Outstanding. Interest on each Bond issued and delivered to a Holder shall
accrue from the latest Interest Payment Date that interest on such Bond (or the Bond which it
substitutes) has been paid that precedes the registration date appearing on such Bond in the
"Registration Certificate of Paying Agent/Registrar" (Section C of Exhibit B hereto), unless the
registration date appearing thereon is an Interest Payment Date for which interest is being paid,
in which case interest on such Bond shall accrue from the registration date appearing thereon and
provided further that with respect to the initial payment of interest on a Bond, such interest shall
accrue from the Dated Date.
SECTION 4: Characteristics of the Bonds.
A. Registration, Transfer, Conversion and Exchange; Authentication; Initial Bond. The
City shall keep or cause to be kept at the designated trust office in Austin, Texas (the
"Designated Trust Office") of Wells Fargo Bank, National Association (the "Paying
Agent/Registrar") books or records for the registration of the transfer, conversion and exchange
of the Bonds (the "Registration Books"), and the City hereby appoints the Paying
Agent/Registrar as its registrar and transfer agent to keep such books or records and make such
registrations of transfers, conversions and exchanges under such reasonable regulations as the
City and the Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make
such registrations, transfers, conversions and exchanges as herein provided. The execution of a
"Paying Agent/Registrar Agreement", in substantially the form attached to this Ordinance as
Exhibit C, is hereby authorized. The Direct Subsidy Account (as established and defined in the
Paying Agent/Registrar Agreement) and the deposit, investment, accounting, and transfer of the
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Tax Credit shall be administered by the Paying Agent/Registrar as set forth in the Paying
Agent/Registrar Agreement. The Paying Agent/Registrar shall obtain and record in the
Registration Books the address of the registered owner of each Bond to which payments with
respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each
registered owner to notify the Paying Agent/Registrar in writing of the address to which
payments shall be mailed, and such interest payments shall not be mailed unless such notice has
been given. The City shall have the right to inspect the Registration Books during regular
business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall
keep the Registration Books confidential and, unless otherwise required by law, shall not permit
their inspection by any other entity. The City shall pay the Paying Agent/Registrar's standard or
customary fees and charges for making such registration, transfer, conversion, exchange and
delivery of a substitute Bond or Bonds. Registration of assignments, transfers, conversions and
exchanges of Bonds shall be made in the manner provided and with the effect stated in the
FORM OF BOND. Each substitute Bond shall bear a letter and/or number to distinguish it from
each other Bond. Each Bond may be exchanged for fully registered bonds in the manner set
forth herein. Each Bond issued and delivered pursuant to this Ordinance, to the extent of the
unredeemed principal amount thereof, may, upon surrender thereof at the Designated Trust
Office of the Paying Agent/Registrar, together with a written request therefor duly executed by
the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys
or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, at the
option of the registered owner or such assignee or assignees, as appropriate, be exchanged for
fully registered bonds, without interest coupons, in the form prescribed in the FORM OF BOND,
in any Authorized Denomination (subject to the requirement hereinafter stated that each
substitute bond shall have a single stated maturity date), as requested in writing by such
registered owner or such assignee or assignees, in an aggregate principal amount equal to the
unredeemed principal amount of any Bond or Bonds so surrendered, and payable to the
appropriate registered owner, assignee, or assignees, as the case may be. If a portion of any
Bond shall be redeemed prior to its scheduled maturity as provided herein, a substitute bond or
bonds having the same maturity date, bearing interest at the same rate, in any Authorized
Denomination at the request of the registered owner, and in an aggregate principal amount equal
to the unredeemed portion thereof, will be issued to the registered owner upon surrender of such
partially redeemed Bond for cancellation. If any Bond or portion thereof is assigned and
transferred, each Bond issued in exchange therefor shall have the same principal maturity date
and bear interest at the same rate as the Bond for which it is being exchanged. Each substitute
Bond shall bear a letter and/or number to distinguish it from each other Bond.
The Paying Agent/Registrar shall exchange or replace Bonds as provided herein, and
each fully registered substitute Bond or Bonds delivered in exchange for or replacement of any
Bond or portion thereof as permitted or required by any provision of this Ordinance shall
constitute one of the Bonds for all purposes of this Ordinance, and may again be exchanged or
replaced. It is specifically provided, however, that any Bond delivered in exchange for or
replacement of another Bond prior to the first scheduled Interest Payment Date on the Bonds
shall be dated the same date as such Bond, but each substitute Bond so delivered on or after such
first scheduled Interest Payment Date shall be dated as of the Interest Payment Date preceding
the date on which such substitute Bond is delivered, unless such substitute Bond is delivered on
an Interest Payment Date, in which case it shall be dated as of such date of delivery; provided
further, however, that if at the time of delivery of any substitute Bond the interest on the Bond
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for which it is being exchanged has not been paid, then such substitute Bond shall be dated as of
the date to which such interest has been paid in full.
On each substitute Bond issued in exchange for or replacement of any Bond or Bonds
issued under this Ordinance there shall be printed thereon a Paying Agent/Registrar's
Authentication Certificate, in the form set forth in the FORM OF BOND (the "Authentication
Certificate"). An authorized representative of the Paying Agent/Registrar shall, before the
delivery of any such Bond, date and manually sign the Authentication Certificate, and no such
Bond shall be deemed to be issued or Outstanding unless the Authentication Certificate is so ex-
ecuted. The Paying Agent/Registrar promptly shall cancel all paid Bonds and Bonds surrendered
for conversion and exchange. No additional ordinances, orders, or resolutions need be passed or
adopted by the Governing Body or any other body or person so as to accomplish the foregoing
conversion and exchange of any Bond or portion thereof, and the Paying Agent/Registrar shall
provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed
herein. Pursuant to Chapter 1206, as amended, Texas Government Code, the duty of conversion
and exchange of Bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and,
upon the execution of the Authentication Certificate, the converted and exchanged Bond shall be
valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds
which initially were issued and delivered pursuant to this Ordinance, approved by the Attorney
General (as hereinafter defined), and registered by the Comptroller of Public Accounts (as
hereinafter defined).
The Bonds shall be issued initially either (i) as a fully registered Bond in the total
aggregate principal amount of $60,625,000 with principal installments to become due and
payable as provided in Subsection 2.A, and numbered T-1, or (ii) as one (1) fully registered
Bond for each year of stated maturity in the applicable principal amount, interest rate, and
denomination and to be numbered consecutively from T-1 and upward (the "Initial Bonds") and,
in either case, the Initial Bonds shall be registered in the name of the Purchaser or its designee.
The Initial Bonds shall be the Bonds submitted to the Attorney General for approval and certified
and registered by the Comptroller of Public Accounts. At any time after the delivery of the
Initial Bonds to the Purchaser, the Paying Agent/Registrar, upon written instructions from the
Purchaser, or its designee, shall cancel the Initial Bonds and exchange therefor definitive Bonds
of authorized denominations, stated maturities, principal amounts, and bearing applicable interest
rates for transfer and delivery to the registered owners named and at the addresses identified
therefor, all in accordance with and pursuant to such written instructions from the Purchaser, or
its designee, and such other information and documentation as the Paying Agent/Registrar may
reasonably require.
B. Payment of Bonds and Interest. The City hereby further appoints the Paying
Agent/Registrar to act as the paying agent for paying the principal of, premium, if any, and
interest on the Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep
proper records of all payments made by the City and the Paying Agent/Registrar with respect to
the Bonds.
C. In General, The Bonds (i) shall be issued in fully registered form, without interest
coupons, with the principal of and interest on such Bonds to be payable only to the registered
owners thereof, (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred
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and assigned, (iv) may be converted and exchanged for other Bonds, (v) shall have the
characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal of and
interest on which shall be payable, and (viii) shall be administered and the Paying
Agent/Registrar and the City shall have certain duties and responsibilities with respect to the
Bonds, all as provided, and in the manner and to the effect as required or indicated, in the FORM
OF BOND. The Initial Bonds are not required to be, and shall not be, authenticated by the
Paying Agent/Registrar, but on each substitute Bond issued in conversion of and exchange for
any Bond or Bonds issued under this Ordinance the Paying Agent/Registrar shall execute the
Authentication Certificate.
D. Substitute Paying Agent/Registrar. The City covenants to maintain and provide a
Paying Agent/Registrar at all times until the Bonds are paid, and any successor Paying
Agent/Registrar shall be a bank, trust company, financial institution, or other entity duly
qualified and legally authorized to serve as and perform the duties and services of Paying
Agent/Registrar. Upon any change (which shall be at the sole discretion of the City) in the
Paying Agent/Registrar for the Bonds, the City agrees to promptly cause a written notice thereof
to be sent to each registered owner of the Bonds by United States mail, first class postage
prepaid, which notice shall also give the address of the new Paying Agent/Registrar. In addition,
the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books
(or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the
new Paying Agent/Registrar designated and appointed by the City. By accepting the position and
performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the
provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each
Paying Agent/Registrar.
E. Book Entry Only System. The Bonds issued in exchange for the Initial Bonds shall
be initially issued in the form of a separate single fully registered Bond for each Stated Maturity
of the Bonds. Upon initial issuance, the ownership of each such Bond shall be registered in the
name of Cede & Co., as nominee of The Depository Trust Company, New York, New York
("DTC"), and except as provided in Subsection F hereof, all of the Outstanding Bonds shall be
registered in the name of Cede & Co., as nominee of DTC. With respect to Bonds registered in
the name of Cede & Co., as nominee of DTC, the Issuer and the Paying Agent/Registrar shall
have no responsibility or obligation to any securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations on whose behalf DTC was created ("DTC
Participant") to hold securities to facilitate the clearance and settlement of securities transactions
among DTC Participants or to any person on behalf of whom such a DTC Participant holds an
interest in the Bonds. Without limiting the immediately preceding sentence, the Issuer and the
Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy
of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership
interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than a
registered owner of Bonds, as shown on the Registration Books, of any notice with respect to the
Bonds, or (iii) the payment to any DTC Participant or any other person, other than a registered
owner of Bonds, as shown in the Registration Books of any amount with respect to principal of
or interest on the Bonds. Notwithstanding any other provision of this Ordinance to the contrary,
the Issuer and the Paying Agent/Registrar shall be entitled to treat and consider the person in
whose name each Bond is registered in the Registration Books as the absolute owner of such
Bond for the purpose of payment of principal, premium, if any, and interest with respect to such
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Bond, for the purpose of registering transfers with respect to such Bond, and for all other
purposes whatsoever. The Paying Agent/Registrar shall pay all principal of, premium, if any, and
interest on the Bonds only to or upon the order of the registered owners, as shown in the
Registration Books as provided in this Ordinance, or their respective attorneys duly authorized in
writing, and all such payments shall be valid and effective to fully satisfy and discharge the
Issuer's obligations with respect to payment of principal of, premium, if any, and interest on the
Bonds to the extent of the sum or sums so paid. No person other than a registered owner, as
shown in the Registration Books, shall receive a Bond evidencing the obligation of the Issuer to
make payments of principal, premium, if any, and . interest pursuant to this Ordinance. Upon
delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has
determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in
this Ordinance with respect to interest checks being mailed to the registered owner at the close of
business on the Record Date (as defined in the FORM OF BOND), the words "Cede & Co." in
this Ordinance shall refer to such new nominee of DTC.
F. Successor Securities Depository. In the event that the Issuer determines that DTC is
incapable of discharging its responsibilities described herein and in the representation letter of
the Issuer to DTC in the form attached hereto as Exhibit C and made a part hereof for all
purposes (the "Representation Letter") or that it is in the best interest of the beneficial owners of
the Bonds that they be able to obtain certificated Bonds, the Issuer shall (i) appoint a successor
securities depository, qualified to act as such under Section 17(a) of the Securities and Exchange
Act of 1934, as amended, notify DTC and DTC Participants of the appointment of such
successor securities depository and transfer one or more separate Bonds to such successor
securities depository or (ii) notify DTC and DTC Participants of the availability through DTC of
Bonds and transfer one or more separate Bonds to DTC Participants having Bonds credited to
their DTC accounts. In such event, the Bonds shall no longer be restricted to being registered in
the Registration Books in the name of Cede & Co., as nominee of DTC, but may be registered in
the name of the successor securities depository, or its nominee, or in whatever name or names
registered owners transferring or exchanging Bonds shall designate, in accordance with the
provisions of this Ordinance.
G. DTC Letter of Representations. Notwithstanding . any other provision of this
Ordinance to the contrary, so long as any Bond is registered in the name of Cede & Co., as
nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such
Bond and all notices with respect to such Bond shall be made and given, respectively, in the
manner provided in the Representation Letter.
SECTION 5: Form of Bonds. The form of all Bonds, including the form of the
Authentication Certificate, the form of Assignment, and the form of the Comptroller's
Registration Certificate (to be attached only to the Initial Bonds) shall be, respectively,
substantially in the form attached hereto as Exhibit B, with such appropriate variations,
omissions, or insertions as are permitted or required by this Ordinance.
SECTION 6: Definitions. For all purposes of this Ordinance, except as otherwise
expressly provided or unless the context otherwise require, the terms defined in this Section have
the meanings assigned to them in this Section, and certain terms used in Section 30 of this
Ordinance have the meanings assigned to them in such Section.
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A. The term "Account" shall mean any account created, established and maintained
under the terms of any ordinance authorizing the issuance of Priority Bonds.
B. The term "Accountant" shall mean a nationally recognized independent certified
public accountant, or an independent firm of certified public accountants.
C. The term "Additional Priority Bonds" shall mean the additional revenue bonds which
the City reserves the right to issue in the future on a parity with the Previously Issued Priority
Bonds and the Bonds, as provided in the Base Ordinance and this Ordinance.
D. The term "Amortization Installment" shall mean the amount of money which is
required to be deposited into the Mandatory Redemption Account for retirement of Term Bonds
(whether at maturity or by mandatory redemption and including redemption premium, if any).
E. The term "Attorney General" shall mean the Office of the Attorney General of the
State of Texas.
F. The term "Authorized Denomination" shall have the meaning given such term in
Section 2 of this Ordinance.
G. The term "Average Annual Principal and Interest Requirements" shall mean that
amount equal to the average annual principal and interest requirements (including Amortization
Installments) of all Priority Bonds Outstanding. With respect to Additional Priority Bonds that
bear interest at a rate which is not established at the time of issuance at a single numerical rate
for each maturity of such series, Average Annual Principal and Interest Requirements shall be
calculated by (i) assuming that the interest rate for every 12 -month period on such bonds is equal
to 9.20% or (ii) using the highest numerical rate borne over the preceding 24 month period by
such bonds, whichever is greater; provided, however, that if such bonds have not borne interest
at a variable rate for such 24 month period, such rate shall be assumed to be 9.20% until such
time as bonds have been Outstanding for a 24 month period. In making such determinations, it
shall be assumed that the principal of such bonds is amortized such that annual debt service is
substantially level over the remaining stated life of such bonds.
H. The term "Base Ordinance" shall mean the ordinance authorizing the issuance of the
Series 1990 Bonds.
I. The term `Bonds" shall have the meaning given such term in Section 1 of this
Ordinance.
J. The term "Capital Additions" shall mean a reservoir or other water storage facilities,
a wastewater treatment plant or an interest therein, a gas distribution system or an interest therein
and associated transmission facilities with respect to each and any combination thereof, which
shall become a part of the System.
K. The term "Capital Improvements" shall mean any capital extensions, improvements
and betterments to the System other than Capital Additions.
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L. The term "Capitalized. Interest Account" shall mean the Account by that name which
may be created within the Debt Service Fund.
M. The terms "City" and "Issuer" shall have the meaning given such terms in the
preamble of this Ordinance.
N. The term "Closing Date" shall mean the date of physical delivery of the Initial Bonds
in exchange for the payment in full by the Purchaser.
O. The term "Comptroller of Public Accounts" shall mean the Office of the Comptroller
of Public Accounts of the State of Texas.
P. The term "Credit Facility" shall mean a policy of municipal bond insurance, a debt
service reserve fund policy or surety bond or a letter or line of credit issued by a Credit Facility
Provider in support of any Priority Bonds or Subordinated Obligations.
Q. The term "Credit Facility Provider" shall mean (i) with respect to any Credit Facility
consisting of a policy of municipal bond insurance or a surety bond, an issuer of policies of
insurance insuring the timely payment of debt service on governmental obligations such as the
Priority Bonds, provided that a Rating Agency having an outstanding rating on the Priority
Bonds would rate the Priority Bonds fully insured by a standard policy issued by the issuer in its
highest generic rating category for such obligations; and (ii) with respect to any Credit Facility
consisting of a letter or line of credit, any financial institution, provided that a Rating Agency
having an outstanding rating on the Priority Bonds would rate the Priority Bonds in its two
highest generic rating categories for such obligations if the letter or line of credit proposed to be
issued by such financial institution secured the timely payment of the entire principal amount of
the series of Priority Bonds and the interest thereon.
R. The term "Debt Service Fund" shall have the meaning given such term in Section 9 of
this Ordinance.
S. The term "DTC" shall have the meaning given such term in Section 4 to this
Ordinance.
T. The term "Eligible Investments" shall mean those investments in which the City is
authorized by law, including, but not limited to, the Public Funds Investment Act of 1987
(Chapter 2256, as amended, Texas Government Code), to purchase, sell and invest its funds and
funds under its control, and with respect to the investment of proceeds of any Priority Bonds,
guaranteed investment contracts fully collateralized by Government Obligations.
U. The term "Engineer of Record" shall mean the independent engineer or firm at the
time employed by the City to perform and carry out the duties imposed on such engineer or firm
by this Ordinance and having a favorable reputation nationally for skill and experience in the
engineering of water, sanitary sewer and/or gas systems of comparable size and character as
those forming parts of the System.
V. The term "Extraordinary Event" shall mean the occurrence of a change to Sections
54AA or 6431 of the Code (as such Sections were added by Section 1531 of the Stimulus Act,
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pertaining to build America bonds) or any other law, administrative proceeding or regulation,
pursuant to which the Tax Credit (as defined in the Paying Agent/Registrar Agreement) is
reduced or eliminated.
W. The term "Extraordinary Redemption Price" shall mean an amount equal to the
greater of: (1) the issue price of the Bonds set forth in this Ordinance (but not less than 100% of
the principal amount of the Bonds to be redeemed) or (2) the sum of the present value of the
remaining scheduled payments of principal and interest to the maturity date of the Bonds to be
redeemed, not including any portion of those payments of interest accrued and unpaid as of the
date on which the Bonds are to be redeemed, discounted to the date on which the Bonds are to be
redeemed on a semi-annual basis, assuming a 360 -day year consisting of twelve 30 -day months,
at the Treasury Rate, plus one hundred (100) basis points, plus, in each case, accrued and unpaid
interest on the Bonds to be redeemed to the redemption date.
X. The term "Fund" shall mean any fund created, established and maintained under the
terms of any ordinance authorizing the issuance of Priority Bonds,
Y. The term "Government Obligations" shall mean (i) with respect to any Previously
Issued Priority Bonds except the Series 2009 Bonds and the Series 2010 Bonds, direct
obligations of the United States of America, including obligations the principal of and interest on
which are unconditionally guaranteed by the United States of America and (ii) with respect to the
Series 2009 Bonds, the Series 2010 Bonds, the Bonds, the Series 2010A Bonds, and any
Additional Priority Bonds hereafter issued by the City, (1) direct noncallable obligations of the
United States, including obligations that are unconditionally guaranteed by, the United States of
America, or (2) noncallable obligations of an agency or instrumentality of the United States,
including obligations that are unconditionally guaranteed or insured by the agency or
instrumentality and that, on the date the governing body of the issuer adopts or approves the
proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a
nationally recognized investment rating firm not less than "AAA" or its equivalent, or
(3) noncallable obligations of a state or an agency or a county, municipality, or other political
subdivision of a state that have been refunded and that, on the date the governing body of the
issuer adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated
as to investment quality by a nationally recognized investment rating firm not less than "AAA"
or its equivalent; provided, however, that in the event the term "Government Obligations" shall
be used in such a manner other than with respect to the defeasance of Priority Bonds pursuant to
Section 17 of this Ordinance, its meaning shall be consistent with that specified in clause (i)
above until such time as there are no longer Outstanding any Previously Issued Priority Bonds
(except the Series 2009 Bonds and the Series 2010 Bonds), which are excluded from the
definition of Previously Issued Priority Bonds for purposes of this clause) and, thereafter, it shall
have the meaning ascribed thereto in clause (ii).
Z. The term "Gross Revenues" 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 created or confirmed by this
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
Internal Revenue Code of 1986, as amended.
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AA. The term "Make -Whole Redemption Price" means an amount equal to the greater
of (i) the issue price of the Bonds set forth in this Ordinance (but not less than 100% of the
principal amount of the Bonds to be redeemed) or (ii) the sum of the present value of the
remaining scheduled payments of principal and interest on the Bonds to be redeemed to the
maturity date of such Bonds, not including any portion of those payments of interest accrued and
unpaid as of the date on which the Bonds are to be redeemed, discounted to the date on which the
Bonds are to be redeemed on a semi-annual basis, assuming a 360 -day year containing twelve
30 -day months, at the Treasury Rate plus fifty (50) basis points, plus accrued interest on the
Bonds to be redeemed to the redemption date.
BB. The term "Mandatory Redemption Account" shall mean the Account by that
name within the Debt Service Fund and established, if at all, by an ordinance authorizing the
issuance of Priority Bonds.
CC. The terms "Net Revenues of the System" and "Net Revenues" shall mean all
Gross Revenues less Operating Expenses.
DD. The term "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 any Priority 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 obtaining and maintaining any 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.
EE.The term "Outstanding" shall mean, as of the date of determination, all Priority
Bonds theretofore issued and delivered except:
(1) those Priority Bonds theretofore canceled by the respective paying agents
for such Priority Bonds or delivered to such paying agents for cancellation;
(2) those Priority Bonds for which payment has been duly provided by the
City by the irrevocable deposit with the respective paying agents for such Priority Bonds
of money in the amount necessary to fully pay principal of, premium, if any, and interest
thereon to maturity or redemption, if any, as the case may be, provided that, if such
Priority Bonds are to be redeemed, notice of redemption thereof shall have been duly
given pursuant to the ordinance authorizing the issuance of such Priority Bonds,
irrevocably provided to be given to the satisfaction of such paying agents, or waived;
(3) those Priority Bonds that have been mutilated, destroyed, lost, or stolen
and for which replacement bonds have been registered and delivered in lieu thereof; and
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(4) those Priority Bonds for which the payment of principal thereof, premium,
if any, and interest thereon to Stated Maturity or redemption has been duly provided for
by the City by the deposit in trust of money or Government Obligations, or both.
FF. The term "Paying Agent/Registrar" shall mean the financial institution specified in
Section 4.A of this Ordinance, or its herein -permitted successors and assigns.
GG. The term "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 Priority
Bonds.
HH. The term "Previously Issued Priority Bonds" shall have the meaning given said
term in the preamble to this Ordinance.
II. The term "Priority Bonds" shall mean the Previously Issued Priority Bonds, the
Bonds, the Series 2010A Bonds, and any Additional Priority Bonds,
D. The term "Prudent Utility Practice" shall mean any of the practices, methods and acts,
in the exercise of reasonable judgment, in the light of the facts, including but not limited to the
practices, methods and acts engaged in or approved by a significant portion of the public utility
industry prior thereto, known at the time the decision was made, would have been expected to
accomplish the desired result at the lowest reasonable cost consistent with reliability, safety and
expedition. It is recognized that Prudent Utility Practice is not intended to be limited to the
optimum practice, method or act at the exclusion of all others, but rather is a spectrum of
possible practices, methods or acts which could have been expected to accomplish the desired
result at the lowest reasonable cost consistent with reliability, safety and expedition. In the case
of any facility included in the System which is owned in common with one or more other
entities, the term "Prudent Utility Practice", as applied to such facility, shall have the meaning
set forth in the agreement governing the operation of such facility.
KK, The term "Purchaser" shall have the meaning given such term in Section 25 of
this Ordinance.
LL.The term "Rating Agency" shall mean any nationally recognized securities rating
agency which has assigned a rating to the Priority Bonds.
MM. The term "Required Amount" shall have the meaning given such term in Section
10 of this Ordinance.
NN. The term "Reserve Fund" shall have the meaning given such term in Section 10 of
this Ordinance.
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OO. The term "Reserve Fund Obligations" shall mean cash, Eligible Investments, any
Credit Facility, or any combination of the foregoing.
PP. The term "Series 1990 Bonds" shall mean the $64,660,000 City of Corpus Christi,
Texas Utility System Revenue Refunding Bonds, Series 1990, authorized by the ordinance
adopted by the City on November 15, 1990; the term "Series 1999 Bonds" shall mean the
$47,740,000 City of Corpus Christi, Texas Utility System Revenue Refunding and Improvement
Bonds Series 1999, authorized by the ordinance adopted by the City on May 11, 1999; the term
"Series 1999-A Bonds" shall mean the $15,750,000 City of Corpus Christi, Texas Utility System
Revenue Refunding and Improvement Bonds, Series 1999-A, authorized by the ordinance
adopted by the City on April 20, 1999; the term "Series 2000-A Bonds" shall mean the
$42,520,000 City of Corpus Christi, Texas Utility System Revenue Refunding Bonds, Series
2000-A, authorized by the ordinance adopted by the City on September 19, 2000; the term
"Series 2002 Bonds" shall mean the $92,330,000 City of Corpus Christi, Texas Utility System
Revenue Refunding and Improvement Bonds, Series 2002, authorized by the ordinance adopted
by the City on August 20, 2002; the term "Series 2003 Bonds" shall mean the $28,870,000 City
of Corpus Christi, Texas Utility System Revenue Refunding Bonds, Series 2003, authorized by
the ordinance adopted by the City on March 25, 2003; the term "Series 2004 Bonds" shall mean
the $50,000,000 City of Corpus Christi, Texas Utility System Revenue Refunding and
Improvement Bonds, Series 2004, authorized by the ordinance adopted by the City on July 13,
2004; the term "Series 2005 Bonds" shall mean the $70,390,000 City of Corpus Christi, Texas
Utility System Revenue Refunding Bonds, Series 2005, authorized by the ordinance adopted by
the City on December 21, 2004; the term "Series 2005A Bonds" shall mean the $68,325,000 City
of Corpus Christi, Texas Utility System Revenue Refunding Bonds, Series 2005A, authorized by
the ordinance adopted by the City on August 30, 2005; the term "Series 2006 Bonds" shall mean
the $84,415,000 City of Corpus Christi, Texas Utility System Revenue Refunding and
Improvement Bonds, Series 2006, authorized by the ordinance adopted by the City on September
26, 2006; the term "Series 2009 Bonds" shall mean the $96,490,000 City of Corpus Christ,
Texas Utility System Revenue Improvement Bonds, Series 2009, authorized by the ordinance
adopted by the City on February 24, 2009, the term "Series 2010 Bonds" shall mean the
$8,000,000 City of Corpus Christi, Texas Utility System Revenue Improvement Bonds, Series
2010, authorized by the ordinance adopted by the City on March 9, 2010, and the term "Series
2010A Bonds" shall mean the $14,375,000 City of Corpus Christi, Texas Utility System
Revenue Improvement Bonds, Series 2010A, authorized by the ordinance adopted by the City
concurrently with its adoption of this Ordinance on June 22, 2010.
QQ. The term "Subordinated Obligations" shall mean any bonds, notes, or other
obligations issued pursuant to law payable in whole or in part from the Pledged Revenues but
subordinate to the Priority Bonds, which includes the Series B Commercial Paper Notes.
RR. The term "System" shall mean and include, for so long as the Previously Issued
Priority Bonds (except for the Series 2010 Bonds, which are excluded from such definition for
this purpose) remain Outstanding or until consents from the Holders thereof permitting an
amendment to the applicable authorizing ordinances providing for an earlier date of effectiveness
are secured, 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 within the
90083261.5
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waterworks system, and all replacements thereof; thereafter, the term "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 (and to be added at the sole discretion of the City),
storm sewer and drainage within the waterworks system, solid waste disposal system, additional
utility (including electricity), telecommunications, technology, and any other similar enterprise
services, and all replacements, additions, and improvements to any of the foregoing, within or
without the City limits; 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 City or 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 or ordinances authorizing the
issuance of such "Special Facilities Bonds".
SS. The term "System Fund" shall have the meaning given such term in Section 8 of this
Ordinance.
TT, The term "Term Bonds" shall have the meaning given such term in Section 2 of this
Ordinance.
UU. The term "Treasury Rate" shall mean, with respect to any redemption date for a
particular Bond, the yield to maturity as of such redemption date of United States Treasury
securities with a constant maturity (as compiled and published in the most recent Federal
Reserve Statistical Release H.15 (519) that has become publicly available at least two business
days prior to the redemption date (excluding inflation indexed securities) (or, if such Statistical
Release is no longer published, any publicly available source of similar market data) most nearly
equal to the period from the redemption date to the maturity date of the Bond to be redeemed;
provided, however, that if the period from the redemption date to such maturity date is less than
one year, the weekly average yield on actually traded United States Treasury securities adjusted
to a constant maturity of one year will be used.
VV. The term "Value of Investment Securities" and words of like import shall mean
the amortized value thereof; provided, however, that all United States of America, United States
Treasury Obligations --State and Local Government Series shall be valued at par and those
obligations which are redeemable at the option of the holder shall be valued at the price at which
such obligations are then redeemable. The computations made under this paragraph shall include
accrued interest on the investment securities paid as a part of the purchase price thereof and not
collected. For the purposes of this definition, "amortized value", when used with respect to a
security purchased at par, means the purchase price of such security.
WW. The term "Year" shall mean the regular fiscal year used by the City in connection
with the operation of the System, which may be any twelve consecutive months period
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established by the City, currently being the period of time beginning on August 1 and ending on
July 31.
SECTION 7: Pledge,
A. Pledged Revenues. The Priority Bonds are and shall be secured by and payable from
a first lien on and pledge of the Pledged Revenues including such revenues within the System
Fund and the Funds hereinafter created in this Ordinance; and the Pledged Revenues are further
pledged to the establishment and maintenance of the Debt Service Fund and the Reserve Fund as
hereinafter provided. The Priority Bonds are and will be secured by and payable only from the
Pledged Revenues, and are not secured by or payable from a mortgage or deed of trust on any
properties, whether real, personal, or mixed, constituting the System.
B. Security Interest. Chapter 1208, as amended, Texas Government Code, applies to the
issuance of the Bonds and the pledge of the Pledged Revenues granted by the City under
Subsection A of this Section, and such pledge is therefore valid, effective, and perfected. If
Texas law is amended at any time while the Bonds are Outstanding and unpaid such that the
pledge of the Pledged Revenues granted by the City is to be subject to the filing requirements of
Chapter 9, as amended, Texas Business & Commerce Code, then in order to preserve to the
registered owners of the Bonds the perfection of the security interest in said pledge, the City
agrees to take such measures as it determines are reasonable and necessary under Texas law to
comply with the applicable provisions of Chapter 9, as amended, Texas Business & Commerce
Code and enable a filing to perfect the security interest in said pledge to occur.
SECTION 8: System Fund. There has heretofore been created and established and there
shall be maintained on the books of the City, and accounted for separate and apart from all other
funds of the City, a special fund entitled the "City of Corpus Christi Utility System Fund" (the
"System Fund"). All Gross Revenues shall be credited to the System Fund immediately upon
receipt. All Operating Expenses shall be paid from such Gross Revenues credited to the System
Fund as a first charge against same.
SECTION 9: Debt Service Fund.
A. Debt Service Fund Established. For the sole purpose of paying the principal amount
of, premium, if any, Amortization Installments, if any, and interest on all Priority Bonds, there
has heretofore been created and established and there shall be maintained on the books of the
City a separate fund entitled the "City of Corpus Christi Utility System Revenue Bonds Debt
Service Fund" (the "Debt Service Fund"). Money in the Debt Service Fund shall be deposited
and maintained in an official depository bank of the City.
B. Capitalized Interest Account. Within the Debt Service Fund there may hereafter be
established a Capitalized Interest Account. The proceeds of Priority Bonds representing
capitalized interest may be deposited into the Capitalized Interest Account. On or before the day
next preceding any interest payment date of Priority Bonds or other obligations for which any
interest has been capitalized, the City shall use the money in the Capitalized Interest Account to
pay such interest on such Priority Bonds or other obligations to the extent of the amounts therein
representing such capitalized interest.
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C. Mandatory Redemption Account. Within the Debt Service Fund there has heretofore
been established the Mandatory Redemption Account. Amortization Installments shall be
deposited to the credit of the Mandatory Redemption Account and be used to retire the principal
amount of Term Bonds in the manner described in any ordinance, including this Ordinance,
authorizing the issuance of Term Bonds.
D. Surplus Proceeds. Effective at such time as the Previously Issued Priority Bonds are
no longer Outstanding, the City may transfer excess amounts held in the Debt Service Fund to
any fund or funds established for the payment of or security for the Priority Bonds (including any
escrow established for the final payment of any such obligations pursuant to Chapter 1207, as
amended, Texas Government Code) or use such excess amount for any lawful purpose now or
hereafter provided by law; provided, however, to the extent that such excess amount represents
bond proceeds, then such amount must remain in the Debt Service Fund.
SECTION 10: Reserve Fund.
A. Reserve Fund Established. There has heretofore been created and established and
there shall be maintained on the books of the City a separate fund entitled the "City of Corpus
Christi Utility System Revenue Bonds Reserve Fund" (the "Reserve Fund"), There shall be
deposited into the Reserve Fund any Reserve Fund Obligations so designated by the City.
Reserve Fund Obligations in the Reserve Fund shall be deposited and maintained in an official
depository bank of the City. Reserve Fund Obligations in the Reserve Fund shall be used solely
for the purpose of retiring the last of any Priority Bonds as they become due or paying principal
of and interest on any Priority Bonds when and to the extent the amounts in the Debt Service
Fund are insufficient for such purpose. The Reserve Fund shall be maintained in an amount
equal to the Average Annual Principal and Interest Requirements of the Outstanding Priority
Bonds after giving consideration as an offset to debt service the receipt or anticipated receipt of a
Tax Credit or similar payment relating to a series of Priority Bonds irrevocably designated as
refundable tax credit bonds (the "Required Amount"). The City may, at its option, withdraw and
transfer to the System Fund, all surplus in the Reserve Fund over the Required Amount. Upon
the issuance of the Bonds and the Series 2010A Bonds, the Required Amount shall be
$26,705,996, representing an increase of $3,732,479 attributable to the issuance of the Bonds and
$1,907,918 attributable to the issuance of the Series 2010A Bonds. As permitted by Section
1813, the City will satisfy this increase in the Required Amount attributable to the issuance of the
Bonds by depositing not less than $62,208 to the Reserve Fund not later than the 10th day of
each month for 60 consecutive months, commencing September 10, 2010.
B. Credit Facility. The City may replace or substitute a Credit Facility for cash or
Eligible Investments on deposit in the Reserve Fund or in substitution for or replacement of any
existing Credit Facility. Upon such replacement or substitution, cash or Eligible Investments on
deposit in the Reserve Fund which, taken together with the face amount of any existing Credit
Facilities, are in excess of the Required Amount may be withdrawn by the City, at its option, and
transferred to the System Fund; provided, however, that the face amount of any Credit Facility
may be reduced at the option of the City in lieu of such transfer; provided further, however, that
such transfers to the System Fund shall be spent only in accordance with applicable law
including (but not limited to) restrictions on the expenditure of such funds to the extent that the
same were originally derived from proceeds of bonds or other evidences of indebtedness.
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C. Withdrawals. If the City is required to make a withdrawal from the Reserve Fund for
any of the purposes described in this Section, the City shall promptly notify any applicable
Credit Facility Provider of the necessity for a withdrawal from the Reserve Fund for any such
purposes, and shall make such withdrawal FIRST from available money or Eligible Investments
then on deposit in the Reserve Fund, and NEXT from a drawing under any Credit Facility to the
extent of such deficiency.
D. Deficiencies. In the event of a deficiency in the Reserve Fund, or in the event that on
the date of termination or expiration of any Credit Facility there is not on deposit in the Reserve
Fund sufficient Reserve Fund Obligations, all in an aggregate amount at least equal to the
Required Amount, then the City shall satisfy the Required Amount by depositing Reserve Fund
Obligations into the Reserve Fund in monthly installments of not less than 1/60 of the Required
Amount made on or before the 10th day of each month following such termination or expiration.
E. Redemption; Defeasance. In the event of the redemption or defeasance of any
Priority Bonds, any Reserve Fund Obligations on deposit in the Reserve Fund in excess of the
Required Amount may be withdrawn and transferred, at the option of the City, to the System
Fund, as a result of (i) the redemption of any Priority Bonds, or (ii) funds for the payment of any
Priority Bonds having been deposited irrevocably with the paying agent or place of payment
therefor in the manner described in any ordinance authorizing the issuance of Priority Bonds, the
result of such deposit being that such Priority Bonds no longer are deemed to be Outstanding
under the terms of any such ordinance.
F. Reimbursement of Credit Facility Provider. In the event there is a draw upon a Credit
Facility, the City shall reimburse the Credit Facility Provider for such draw, in accordance with
the terms of any agreement pursuant to which the Credit Facility is issued, from Pledged
Revenues; provided, however, such reimbursement from Pledged Revenues shall be subordinate
and junior in right of payment to the payment of principal of and premium, if any, and interest on
the Priority Bonds.
G. Additional Priority Bonds. Upon the issuance of Additional Priority Bonds the
money in the Reserve Fund shall be increased to the newly -established Required Amount in
accordance with the provisions of Section 18 of this Ordinance.
SECTION 11: Subordinated Obligations Funds and Accounts. The City hereafter may
create, establish and maintain on the books of the City separate funds and accounts from which
money can be withdrawn to pay the principal of and interest on Subordinated Obligations which
hereafter may be issued.
SECTION 12: Investments. Money in any Fund established pursuant to this Ordinance
may, at the option of the City, be placed or invested in Eligible Investments. Money in the
Reserve Fund shall not be invested in securities with an average aggregate weighted maturity of
greater than seven years. If money in a Fund herein established are permitted to be invested, the
value of any such Fund shall be established by adding the money therein to the Value of
Investment Securities. The value of each such Fund shall be established annually during the last
month of each Year, and in addition thereto• and with respect to the Reserve Fund, value shall be
established within thirty days prior to the issuance of Priority Bonds and at the time or times
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withdrawals are made therefrom. Such investments shall be sold promptly when necessary to
prevent any default in connection with the Priority Bonds. Earnings derived from the investment
of money on deposit in the various Funds and Accounts created hereunder shall be credited to the
Fund or Account from which money used to acquire such investment shall have come.
SECTION 13: Funds Secured. Money in the System Fund and all Funds created by this
Ordinance, to the extent not invested, shall be secured in the manner prescribed by law for
securing funds of the City.
SECTION 14: Flow of Funds. All money in the System Fund not required for paying
Operating Expenses during each month shall be applied by the City, on or before the 10th day of
the following month, commencing during the months and in the order of priority with respect to
the Funds and Accounts that such applications are hereinafter set forth in this Section.
A. Debt Service Fund. To the credit of the Debt Service Fund, in the following order of
priority, to -wit:
(1) such amounts, deposited in approximately equal monthly installments,
commencing during the month in which the Priority Bonds are delivered, or the month
thereafter if delivery is made after the 10th day thereof, as will be sufficient, together
with other amounts, if any, in the Debt Service Fund available for such purpose
(including specifically money on deposit in the Capitalized Interest Account, if any, and
the Direct Subsidy Account (defined in the Paying Agent/Registrar Agreement) dedicated
thereto), to pay the interest scheduled to come due on Priority Bonds on the next
succeeding interest payment date;
(2) such amounts, deposited in approximately equal monthly installments,
commencing during the month which shall be the later to occur of (i) the twelfth month
before the first maturity date of Priority Bonds or (ii) the month in which Priority Bonds
are delivered, or the month thereafter if delivery is made after the 10th day thereof, as
will be sufficient, together with other amounts, if any, in the Debt Service Fund available
for such purpose, to pay the principal scheduled to mature on Priority Bonds on the next
succeeding principal payment date; and
(3) Amortization Installments, in such amounts and on such dates as set forth
in any ordinance authorizing a series of Priority Bonds which contain Term Bonds within
such series, to pay scheduled principal amounts of Priority Bonds which constitute Term
Bonds to be redeemed in accordance with the terms of said ordinance.
B. Reserve Fund. To the credit of the Reserve Fund, such amounts, deposited in
approximately equal monthly installments, commencing during the month in which the Priority
Bonds are delivered, or the month thereafter if delivery is made after the 10th day thereof, equal
to not less than 1/60 of the Required Amount, until such time as such amounts together with
other amounts, if any, in the Reserve Fund, equal the Required Amount. When and so long as
the Reserve Fund Obligations in the Reserve Fund are not less than the Required Amount, no
deposits need be made to the credit of the Reserve Fund. When and if the Reserve Fund at any
time contains less than the Required Amount due to any cause or condition other than the
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issuance of Additional Priority Bonds then, subject and subordinate to making the required
deposits to the credit of the Debt Service Fund, commencing with the month during which such
deficiency occurs, such deficiency shall be made up from the next available Pledged Revenues or
from any other sources available for such purpose. Reimbursements to a Credit Facility Provider
made in accordance with the terms of Subsection 10.F of this Ordinance shall constitute the
making up of a deficiency to the extent that such reimbursements result in the reinstatement, in
whole or in part, as the case may be, of the amount of the Credit Facility. If the Reserve Fund
contains less than the Required Amount due to the issuance of Additional Priority Bonds,
deposits shall be made to the Reserve Fund commencing during the month and in the amounts
required by Subsection 18 of this Ordinance, unless a Credit Facility is deposited in the Reserve
Fund in an amount necessary to cause the sum of money and the value of Investment Securities
and any other Credit Facilities in the Reserve Fund to equal the Required Amount.
C. Surplus. The balance of any money remaining in the System Fund following such
transfers may be used by the City for payment of other obligations of the System, including, but
not limited to, Subordinated Obligations, and for any other lawful purpose; provided, however,
that transfers made for purposes other than for payment of obligations of the System shall be
made only at the end of the Year.
SECTION 15: Deficiencies. If on any occasion there shall not be sufficient Pledged
Revenues to make the deposits and other applications of money required by Section 14 with
respect to the various Funds as provided therein, any such deficiencies shall be made up (in the
order that each such Fund is provided for in Section 14) as soon as possible from the next
available Pledged Revenues, or from any other sources available for such purpose. The
foregoing notwithstanding, however, if any deficiency in the Reserve Fund occurs as a result of
withdrawals therefrom or decreases in the market value of Eligible Investments on deposit
therein, such deficiency will be made up from the next available Pledged Revenues within
twelve months from the date of such deficiency is determined, with such deposits to the Reserve
Fund to be made in not more than twelve substantially equal monthly payments.
SECTION 16: Payment of Bonds. On or before the first scheduled Interest Payment
Date, and on or before each interest payment date and principal payment date thereafter while
any of the Priority Bonds are Outstanding and unpaid, the City shall make available to the paying
agent therefor, out of the Debt Service Fund (and the other Funds, if necessary, in the order of
priority set forth herein) money sufficient to pay such interest on and such principal amount of
the Priority Bonds, as shall become due and mature on such dates, respectively, at maturity or by
redemption prior to maturity. The Paying Agent/Registrar, or the bond registrar for each series
of Priority Bonds shall destroy all paid Priority Bonds, as applicable, and furnish the City with an
appropriate certificate of cancellation or destruction.
SECTION 17: Final Deposits; Government Obligations.
A. Defeasance. Any Priority Bond shall be deemed to be paid, retired and no longer
Outstanding within the meaning of this Ordinance when payment of the principal amount of,
redemption premium, if any, on such Priority Bond, plus interest thereon to the due date thereof
(whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall
have been made in accordance with the terms thereof or (ii) shall have been provided for by
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irrevocably depositing with, or making available to, a paying agent (or escrow agent) therefor, in
trust and irrevocably set aside exclusively for such payment, in accordance with the terms and
conditions of an agreement between the City and said paying agent (or escrow agent), (1) money
sufficient to make such payment or (2) Government Obligations, certified by an independent
public accounting firm of national reputation, to mature as to principal and interest in such
amounts and at such times as will insure the availability, without reinvestment, of sufficient
money to make such payment, and all necessary and proper fees, compensation, and expenses of
such paying agent pertaining to the Priority Bonds with respect to which such deposit is made
shall have been paid or the payment thereof provided for (and irrevocable instructions shall have
been given by the City to the paying agent of such bonds to give notice of such redemption in the
manner required by the ordinance or ordinances authorizing the issuance of such bonds) to the
satisfaction of such paying agent. Such paying agent shall give notice to each registered owner
of any Priority Bond that such deposit as described above has been made, in the same manner as
described in Section 2.B of this Ordinance. In addition, in connection with a defeasance, such
paying agent shall give notice of redemption, if necessary, to the registered owners of any
Priority Bonds in the manner described in such Priority Bonds and as directed in the redemption
instructions delivered by the City to such paying agent. At such time as a Priority Bond shall be
deemed to be paid hereunder, as aforesaid, it shall no longer be secured by or entitled to the
benefit of this Ordinance or a lien on and pledge of the Pledged Revenues, and shall be entitled
to payment solely from such money or Government Obligations. If for any reason, at any time,
the cash balances on deposit or scheduled to be on deposit with the Paying Agent/Registrar or
authorized escrow agent for the purpose or purposes described above shall be insufficient to
accomplish the purpose or purposes for which such deposit was made, then the City shall timely
deposit with the Paying Agent/Registrar or authorized escrow agent (as applicable), from
lawfully available funds of the City, additional funds in the amount of such insufficiency;
provided, however, that this continuing obligation of the City shall not affect the termination,
discharge, and satisfaction of the lien on and pledge of the Pledged Revenues and all other
covenants, agreements, and obligations of the City to the Holders occurring upon the deposit of
money and/or Government Obligations, in the amounts specified in the preceding paragraph,
with the Paying Agent/Registrar or authorized escrow agent to accomplish the economic
defeasance of the subject Bonds.
Notwithstanding any other provision of this Ordinance to the contrary, it is hereby
provided that any deterrriination not to redeem defeased Bonds that is made in conjunction with
the payment arrangements specified in subsection (i) or (ii) above shall not be irrevocable,
provided that: (1) in the proceedings providing for such defeasance, the City expressly reserves
the right to call the defeased Bonds for redemption; (2) gives notice of the reservation of that
right to the owners of the defeased Bonds immediately following the defeasance; (3) directs that
notice of the reservation be included in any redemption notices that it authorizes; and (4) at the
time of the redemption, satisfies the conditions of (i) or (ii) above with respect to such defeased
debt as though it was being defeased at the time of the exercise of the option to redeem the
defeased Bonds, after taking the redemption into account in determining the sufficiency of the
provisions made for the payment of the defeased Bonds.
B. Government Obligations. Any money so deposited with a paying agent (or escrow
agent) may, at the direction of the City, also be invested in Government Obligations, maturing in
the amounts and times as hereinbefore set forth, and all income from all Government Obligations
90083261.5
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in the hands of the paying agent (or escrow agent) pursuant to this Section which is not required
for the payment of the principal of such Priority Bonds, the redemption premium, if any,
therefor, and interest thereon, with respect to which such money has been so deposited, shall be
remitted to the City for deposit into the System Fund.
C. Payment of Priority Bonds. Except as provided in Subsection B of this Section, all
money or Government Obligations set aside and held in trust pursuant to the provisions of this
Section for the payment of the principal of such Priority Bonds, the redemption premium, if any,
therefor, and interest thereon, shall be applied solely to and used solely for the payment of such
Priority Bonds, such redemption premium, if any, and interest thereon.
SECTION 18: Issuance of Additional Priority Bonds.
A. Reservation of Right to Issue Additional Priority Bonds. Subject to the provisions
hereinafter appearing as conditions precedent which must first be satisfied, the City reserves the
right to issue, from time to time as needed, Additional Priority Bonds for any lawful purpose
relating to the System. Such Additional Priority Bonds may be issued in such form and manner
as now or hereafter authorized by the laws of the State of Texas for the issuance of evidences of
indebtedness or other instruments, and should new methods or financing techniques be
developed that differ from those now available and in normal use, the City reserves the right to
employ the same in its financing arrangements provided only that the same conditions precedent
herein required for the authorization and issuance of Additional Priority Bonds are satisfied.
B. Debt Service Fund and Reserve Fund; Funding Reserve Fund. The Debt Service
Fund and the Reserve Fund confirmed by this Ordinance shall secure and be used to pay all
Additional Priority Bonds hereafter issued. Upon the issuance and delivery of Additional Priority
Bonds, the additional amount required to be deposited in the Reserve Fund shall be so
accumulated by the deposit in the Reserve Fund of all or any part of said required additional
amount in cash immediately after the delivery of such Additional Priority Bonds, or, at the
option of the City, (i) by the deposit of said required additional amount (or any balance of said
required additional amount not deposited in cash as permitted above) in approximately equal
monthly installments, made on or before the 10th day of each month following the delivery of
such Additional Priority Bonds, of not less than 1/60th of said required additional amount (or
1160th of the balance of said required additional amount not deposited in cash as permitted
above) or (ii) by the deposit of a Credit Facility which, in whole or in combination with deposits
described in clause (i) above, is sufficient to satisfy the required additional amount to be on
deposit in the Reserve Fund.
C. Calculations. All calculations of Average Annual Principal and Interest
Requirements made pursuant to this Section shall be made as of and from the date of the
Additional Priority Bonds then proposed to be issued.
SECTION 19: Further Requirements for. Additional .Priority Bonds.
A. Conditions Precedent for Issuance of Additional Priority Bonds - General. As a
condition precedent to the issuance of any Additional Priority Bonds, the City Manager (or other
officer of the City then having the responsibility for the financial affairs of the City) shall have
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executed a certificate stating (i) that the City is not then in default as to any covenant, obligation
or agreement contained in any ordinance or other proceeding relating to any obligations of the
City payable from and secured by a lien on and pledge of the Pledged Revenues and (ii) that the
amounts on deposit in all Funds or Accounts created and established for the payment and
security. of all Outstanding obligations payable from and secured by a lien on and pledge of the
Pledged Revenues are the amounts then required to be deposited therein. Such certificate shall
be dated on or before the date of delivery of such Additional Priority Bonds, but such certificate
shall not be dated prior to the date an ordinance is passed authorizing the issuance of such
Additional Priority Bonds.
B. Conditions Precedent for Issuance of Additional Priority Bonds - Capital
Improvements and for any other Lawful Purpose except for Capital Additions or for Refunding.
The City covenants and agrees that Additional Priority Bonds will not be issued for the purpose
of financing Capital Improvements, or for any other lawful purpose (except for Capital Additions
or for refunding, which are to be issued in accordance with the provisions of Subsection C, D
or E of this Section) unless and until the conditions precedent in Subsection A above have been
satisfied and, in addition thereto, the City has secured a certificate or opinion of the Accountant
to the effect that, according to the books and records of the City, the Net Earnings (as hereinafter
defined) for the preceding Year or for 12 consecutive months out of the 15 months immediately
preceding the month the ordinance authorizing the Additional Priority Bonds is adopted are at
least equal to 1.25 times the Average Annual Principal and Interest Requirements for all
Outstanding Priority Bonds after giving effect to the Additional Priority Bonds then proposed.
The foregoing notwithstanding, the City covenants and agrees that Additional Priority Bonds
may not be issued for the purpose of financing Capital Improvements when other Outstanding
Priority Bonds which have been issued for the purpose of financing Capital Additions and for
which capitalized interest for such other Priority Bonds has been provided for at least the twelve
months subsequent to the date of issuance of the Additional Priority Bonds then proposed to be
issued, unless the conditions precedent in Subsection A above have been satisfied and, in
addition thereto, the City has either (1) complied with the relevant conditions in this Subsection
as set forth above, or (2) if the relevant conditions of this Subsection B as set forth above cannot
be satisfied, the City has satisfied the conditions precedent in Subsection C(i) and (ii) of this
Section (but, for purposes of such clauses, the term Capital Improvements shall be substituted for
the term Capital Additions where the term Capital Additions appears therein to the extent
necessary to give recognition to the fact that Capital Improvements, rather than Capital
Additions, are then to be financed) and has secured a certificate or opinion of the Accountant to
the effect that, according to the books and records of the City, the Net Earnings for the preceding
Year or for 12 consecutive months out of the 15 months immediately preceding the month the
ordinance authorizing the Additional Priority Bonds is adopted are at least equal to 1.25 times
the Average Annual Principal and Interest Requirements for all Outstanding Priority Bonds
(other than any Priority Bonds issued for Capital Additions for which capitalized interest has
been provided for at least the twelve months subsequent to the date of issuance of the Additional
Priority Bonds proposed to be issued) after giving effect to the Priority Bonds then proposed.
C. Conditions Precedent for Issuance of Additional Priority Bonds - Capital Additions:
Initial Issue. The City covenants and agrees that Additional Priority Bonds will not be issued for
the . purpose of financing Capital Additions, unless the same conditions precedent specified in
Subsection A above have been satisfied and, in addition thereto, either the relevant conditions
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precedent specified in Subsection B above are satisfied or, in the alternative, the City shall have
obtained: (i) from the Engineer of Record a comprehensive Engineering Report for each Capital
Addition to be financed, which report shall (A) contain (1) detailed estimates of the cost of
acquiring and constructing the Capital Addition, (2) the estimated date the acquisition and
construction of the Capital Addition will be completed and commercially operative, and (3) a
detailed analysis of the impact of the Capital Addition on the financial operations of the system
for which the Capital Addition is to be integrated and to the System as a whole during the
construction thereof and for at least five Years after the date the Capital Addition becomes
commercially operative, and (B) conclude that (1) the Capital Addition is necessary and will
substantially increase the capacity, or is needed to replace existing facilities, to meet current and
projected demands for the service or product to be provided thereby, and (2) the estimated cost
of providing the service or product from the Capital Addition will be reasonable in comparison
with projected costs for furnishing such service or product from other reasonably available
sources; and (ii) a certificate of the Engineer of Record to the effect that, based on the
Engineering Report prepared for each Capital Addition, the projected Net Earnings for each of
the five Years subsequent to the date the Capital Addition becomes commercially operative (as
estimated in the Engineering Report) will be equal to at least 1.25 times the Average Annual
Principal and Interest Requirements for Priority Bonds then Outstanding or incurred and all
Priority Bonds estimated to be issued, if any, for all Capital Improvements and for all Capital
Additions then in progress or then being initiated, during the period from the date the first series
of obligations for the Capital Additions is to be delivered through the fifth Year subsequent to
the date the Capital Addition is estimated to become commercially operative.
D. Completion Issues. Once a Capital Addition has been initiated by meeting the
conditions precedent specified in Subsection C(i) and (ii) above and the initial Priority Bonds
issued therefor are delivered, the City reserves the right to issue Additional Priority Bonds to
finance the remaining costs of such Capital Addition in such amounts as may be necessary to
complete the acquisition and construction thereof and make the same commercially operative
without satisfaction of any condition precedent under Subsection C(i) and (ii) or Subsection B of
this Section but subject to satisfaction of the following conditions precedent: (i) the City makes
a forecast (the "Forecast") of the operations of the System demonstrating the System's ability to
pay all obligations, payable from the Pledged Revenues of the System to be Outstanding after the
issuance of the Additional Priority Bonds then being issued for the period (the "Forecast Period")
of each ensuing Year through the fifth Year subsequent to the latest estimated date such Capital
Addition is expected to be commercially operative; and (ii) the Engineer of Record reviews such
Forecast and executes a certificate to the effect that (A) such Forecast is reasonable, and based
thereon (and such other factors deemed to be relevant), the Pledged Revenues of the System will
be adequate to pay all the obligations, payable from the Pledged Revenues of the System to be
Outstanding after the issuance of the Additional Priority Bonds then being issued for the Forecast
Period and (B) the proceeds from the sale of such Additional Priority Bonds are estimated to be
sufficient to complete such acquisition and construction.
E. Refunding Issues. The City reserves the right to issue refunding bonds to refund all
or any part of the Outstanding Priority Bonds (pursuant to any law then available), upon such
terms and conditions as the governing body of the City may deem to be in the best interest of the
City and its inhabitants, and if less than all such Outstanding Priority Bonds are refunded, the
conditions precedent prescribed in Subsection A and B of this Section shall be satisfied and the
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Accountant's certificate or opinion required by Subsection B shall give effect to the issuance of
the proposed refunding bonds (and shall not give effect to the Priority Bonds being refunded
following their cancellation or provision being made for their payment). In addition, the City
reserves the right to refund all or any part of any other obligations of the System, upon such
terms and conditions as the Governing Body of the City may deem to be in the best interest of
the City and its inhabitants, provided that the conditions prescribed in Subsection A and B of this
Section shall be satisfied. No Accountant's certificate otherwise required by Subsection B will be
required for refunding bonds, after giving effect to such proposed refunding, if there is no
increase in debt service for any Year in which there will be debt service on Priority Bonds
Outstanding both before and after such refunding,
F. Computations; Reports. With reference to Priority Bonds anticipated and estimated
to be issued or incurred, the Average Annual Principal and Interest Requirements therefor shall
be those reasonably estimated and computed by the City's Director of Financial Services (or
other officer of the City then having the primary responsibility for the financial affairs of the
City) after giving effect to the receipt or anticipated receipt of a Tax Credit or similar payment
relating to a series of Priority Bonds irrevocably designated as refundable tax credit bonds,
which payment shall be treated as one offset to regularly -scheduled debt service of the series of
Priority Bonds to which it relates. In the preparation of the Engineering Report required in
Subsection C(i) above, the Engineer of Record may rely on other experts or professionals,
including those in the employment of the City, provided such Engineering Report discloses the
extent of such reliance and concludes it is reasonable so to rely. In connection with the issuance
of Priority Bonds for Capital Additions, the certificate of the City's Director of Financial
Services and Engineer of Record, together with the Engineering Report for the initial issue and
the Forecast for a subsequent issue, shall be conclusive evidence and the only evidence required
to show compliance with the provisions and requirements and this clause of this Section.
G. Combination Issues. Priority Bonds for Capital Additions may be combined in a
single issue with Priority Bonds for Capital Improvements or for any lawful purpose provided
the conditions precedent set forth in Subsection B through E are complied with as the same
relate to the appropriate purpose.
H. Subordinated Obligations. The City may, at any time and from time to time, for any
lawful purpose, issue Subordinated Obligations, the principal of and redemption premium, if any,
and interest on which is payable from and secured by a pledge of and lien on the Pledged
Revenues junior and subordinate to the lien and pledge created hereby for the security of the
Priority Bonds and the payments required to be made hereunder into the Debt Service Fund and
the Reserve Fund; provided, however, that any such pledge and lien securing the Subordinated
Obligations shall be, and shall be expressed to be, subordinate in all respects to the pledge of and
lien on the Pledged Revenues as security for the Priority Bonds; and provided further that any
default with respect to the issuance of Subordinated Obligations will not be deemed a default
with respect to the Priority Bonds.
I. Definition of Net Earnings. As used in this Section, the term "Net Earnings" shall
mean the Gross Revenues of the System after deducting the Operating Expenses of the System,
but not expenditures which, under standard accounting practice, should be charged to capital
expenditures,
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J. Determination of Net Earnings. In making a determination of Net Earnings for any of
the purposes described in this Section, the Accountant may take into consideration a change in
the rates and charges for services and facilities afforded by the System that became effective at
least 60 days prior to the last day of the period for which Net Earnings are determined and, for
purposes of satisfying any of the Net Earnings test described above, make a pro forma
determination of the Net Earnings of the System for the period of time covered by the
Accountant's certification or opinion based on such change in rates and charges being in effect
for the entire period covered by the Accountant's certificate or opinion.
SECTION 20: General Covenants. The City further covenants and agrees that in
accordance with and to the extent required or permitted by law:
A. Performance. It will faithfully perform at all times any and all covenants,
undertakings, stipulations, and provisions contained in this Ordinance, and each ordinance
authorizing the issuance of Additional Priority Bonds; it will promptly pay or cause to be paid
the principal amount of and interest on every Priority Bond, on the dates and in the places and
manner prescribed in such ordinances and such Priority Bonds; and it will, at the time and in the
manner prescribed, deposit or cause to be deposited the amounts required to be deposited into the
System Fund and the Funds herein created; and any registered owner of any Priority Bond may
require the City, its officials and employees to carry out, respect or enforce the covenants and
obligations of this Ordinance, or any ordinance authorizing the issuance of Priority Bonds, by all
legal and equitable means, including specifically, but without limitation, the use and filing of
mandamus proceedings, in any court of competent jurisdiction, against the City, its officials and
employees.
B. City's Legal Authority. It is a duly created and existing home rule city of the State of
Texas, and is duly authorized under the laws of the State of Texas to issue the Bonds; that all
action on its part for the issuance of the Bonds has been duly and effectively taken, and that the
Bonds in the hands of the owners thereof are and will be valid and enforceable special
obligations of the City in accordance with their terms.
C. Acquisition and Construction; Operation and Maintenance, (1) It shall use its best
efforts in accordance with Prudent Utility Practice to acquire and construct, or cause to be
acquired and constructed, any Capital Additions or Capital Improvements, in accordance with
the plans and specifications therefor, as modified from time to time, with due diligence and in a
sound and economical manner; and (2) it shall at all times use its best efforts to operate or cause
to be operated the System properly and in an efficient manner, consistent with Prudent Utility
Practice, and shall use its best efforts to maintain, preserve, reconstruct and keep the same or
cause the same to be so maintained, preserved, reconstructed and kept, with the appurtenances
and every part and parcel thereof, in good repair, working order and condition, and shall from
time to time make, or use its best efforts to cause to be made, all necessary and proper repairs,
replacement and renewals so that at all times the operation of the System may be properly and
advantageously conducted.
D. Title. It has or will obtain lawful title, whether such title is in fee or lesser interest, to
the lands, buildings, structures and facilities constituting the System, that it warrants that it will
defend the title to all the aforesaid lands, buildings, structures and facilities, and every part
90083261.5
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thereof, for the benefit of the owners of the Priority Bonds, against the claims and demands of all
persons whomsoever, that it is lawfully qualified to pledge the Pledged Revenues to the payment
of the Priority Bonds in the manner prescribed herein, and has lawfully exercised such rights.
E. Liens. It will from time to time and before the same become delinquent pay and
discharge all taxes, assessments and governmental charges, if any, which shall be lawfully
imposed upon it, or the System; it will pay all lawful claims for rents, royalties, labor, materials
and supplies which if unpaid might by law become a lien or charge thereon, the lien of which
would be prior to or interfere with the liens hereof, so that the priority of the liens granted
hereunder shall be fully preserved in the manner provided herein, and it will not create or suffer
to be created any mechanic's, laborer's, materialman's or other lien or charge which might or
could be prior to the liens hereof, or do or suffer any matter or thing whereby the liens hereof
might or could be impaired; provided however, that no such tax, assessment or charge, and that
no such claims which might be used as the basis of a mechanic's, laborer's, materialman's or
other lien or charge, shall be required to be paid so long as the validity of the same shall be
contested in good faith by the City.
F. No Free Service. No free service or service otherwise than in accordance with the
established rate schedule shall be furnished, directly or indirectly, by the System to any person,
firm, corporation or other entity, other than the City. No part of the salary of any official or
employee of the City or his replacement shall be paid from Pledged Revenues unless and only to
the extent the duties and performances of such official or employee or his replacement appertain
directly to the System. To the extent the City receives the services of the System, such services
shall be accounted for according to the established rate schedule.
G. Further Encumbrance. It will not additionally encumber the Pledged Revenues in any
manner, except as permitted in this Ordinance in connection with Priority Bonds, unless said
encumbrance is made junior and subordinate in all respects to the liens, pledges, covenants and
agreements of this Ordinance; but the right of the City to issue Subordinated Obligations payable
in whole or in part from a subordinate lien on the Pledged Revenues is specifically recognized
and retained.
H. Sale, Lease or Disposal of Property. No part of the System shall be sold, leased,
mortgaged, demolished, removed or otherwise disposed of, except as follows:
(1) To the extent permitted by law, the City may sell or exchange at any time
and from time to time any property or facilities constituting part of the System only if (A)
it shall determine such property or facilities are not useful in the operation of the System,
or (13) the proceeds of such sale are $250,000 or less, or it shall have received a certificate
executed by the Engineer of Record and the City Manager stating, in their opinion, that
the fair market value of the property or facilities exchanged is $250,000 or less, or (C) if
such proceeds or fair market value exceeds $250,000 it shall have received a certificate
executed by the Engineer of Record and the City Manager stating (i) that system within
the System of which the property or facilities comprises a part thereof and (ii) in their
opinion, that the sale or exchange of such property or facilities will not impair the ability
of the City to comply during the current or any future Year with the provisions of
Subsection K of this Section. The proceeds of any such sale or exchange not used to
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acquire other property necessary or desirable for the safe or efficient operation of the
System shall forthwith, at the option of the City (i) be used to redeem or purchase Priority
Bonds, or (ii) otherwise be used to provide for the payment of Priority Bonds, The
foregoing notwithstanding, if such property or facilities sold or exchanged 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 Priority Bonds, or with the proceeds of
obligations which were refunded in whole or in part with the proceeds of Priority Bonds,
then the City may utilize the proceeds of such sale or exchange for any lawful purpose;
and
(2) To the extent permitted by law, the City may lease or make contracts or
grant licenses for the operation of, or make arrangements for the use of, or grant
easements or other rights with respect to, any part of the System, provided that any such
lease, contract, license, arrangement, easement or right (A) does not impede the operation
by the City of the System and (B) does not in any manner impair or adversely affect the
rights or security of the owners of the Priority Bonds under this Ordinance; and provided,
further, that if the depreciated cost of the property to be covered by any such lease,
contract, license, arrangement, easement or other right is in excess of $500,000, the City
shall have received a certificate executed by the Engineer of Record and the City
Manager that the action of the City with respect thereto does not result in a breach of the
conditions under this clause (2). Any payments received by the City under or in
connection with any such lease, contract, license, arrangement, easement or right in
respect of the System or any part thereof shall constitute Gross Revenues.
I. Books, Records and Accounts. It shall keep proper books, records and accounts
separate and apart from all other records and accounts, in which complete and correct entries
shall be made of all transactions relating to the System and the City shall cause said books and
accounts to be audited annually as of the close of each Year by the Accountant.
J. Insurance.
(I) Except as otherwise permitted in clause (2) below, it shall cause to be
insured such parts of the System as would usually be insured by corporations operating
like properties, with a responsible insurance company or companies, against risks,
accidents or casualties against which and to the extent insurance is usually carried by
corporations operating like properties, including, to the extent reasonably obtainable, fire
and extended coverage insurance, insurance against damage by floods, and use and
occupancy insurance. Public liability and property damage insurance shall also be
carried unless the City Attorney gives a written opinion to the effect that the City is not
liable for claims which would be protected by such insurance. At any time while any
contractor engaged in construction work shall be fully responsible therefor, the City shall
not be required to carry insurance on the work being constructed if the contractor is
required to carry appropriate insurance. All such policies shall be open to the inspection
of the bondholders and their representatives at all reasonable times.
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(2) In lieu of obtaining policies for insurance as provided above, the City may
self -insure against risks, accidents, claims or casualties described in clause (1) above.
(3) The annual audit hereinafter required shall contain a section commenting
on whether or not the City has complied with the requirements of this Section with
respect to the maintenance of insurance, and listing the areas of insurance for which the
City is self-insuring, all policies carried, and whether or not all insurance premiums upon
the insurance policies to which reference is hereinbefore made have been paid.
K. Rate Covenant. It will fix, establish, maintain and collect such rates, charges and fees
for the use and availability of the System at all times as are necessary to produce Gross Revenues
and other Pledged Revenues equal to the greater of amounts determined in accordance with
clauses (1) or (2) below, to -wit, amounts sufficient (1) (A) to pay all current Operating Expenses
of the System, and (B) to produce Net Revenues for each Year at least equal to 1.25 times the
Average Annual Principal and Interest Requirements of all then Outstanding Priority Bonds; or
(2) to pay the sum of (A) all current Operating Expenses, (B) the Average Annual Principal and
Interest Requirements on the then Outstanding Priority Bonds, (C) deposits to the Reserve Fund
required for the Priority Bonds, and (D) amounts required to pay all other obligations of the
System reasonably anticipated to be paid from Gross Revenues during the current Year. The
calculation of Average Annual Principal and Interest Requirements on all Outstanding Priority
Bonds shall be net of (1) capitalized interest for such Priority Bonds only if the money in a
Capitalized Interest Account received from proceeds of such Priority Bonds held in cash or are
invested in Government Obligations, (2) amounts in the Debt Subsidy Account, and (3) the
receipt or anticipated receipt of a Tax Credit or similar payment relating to a series of Priority
Bonds irrevocably designated as refundable tax credit bonds, which payment shall be treated as
one offset to regularly -scheduled debt service of the series of Priority Bonds to which it relates.
The foregoing notwithstanding, such rates, charges and fees shall be fixed, established,
maintained and collected at a level sufficient to enable the City to pay debt service on Priority
Bonds during the current Year.
L. Audits. After the close of each Year while any Priority Bonds are Outstanding, an
audit will be made of the books and accounts relating to the System and the Pledged Revenues
by the Accountant. As soon as practicable after the close of each such Year, and when said audit
has been completed and made available to the City, a copy of such audit for the preceding year
shall be mailed to any holder of the then Outstanding Priority Bonds who shall so request in
writing. Such annual audit reports shall be open to the inspection of the registered owners of the
Priority Bonds and their agents and representatives at all reasonable times.
M. Governmental Agencies. It will comply with all of the terms and conditions of any
and all franchises, permits and authorizations applicable to or necessary with respect to the
System, and which have been obtained from any governmental agency; and the City has or will
obtain and keep in full force and effect all franchises, permits, authorization and other
requirements applicable to or necessary with respect to the acquisition, construction, equipment,
operation and maintenance of the System.
N. No Competition. To the extent it legally may, it will not grant any franchise or permit
for the acquisition, construction or operation of any competing facilities which might be used as
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a substitute for the System's facilities, and, to the extent that it legally may, the City will prohibit
any such competing facilities.
O. Rights of Inspection. The Engineer of Record or any registered owner of $100,000 in
aggregate principal amount of the Priority Bonds then Outstanding shall have the right at all
reasonable times to inspect the System and all records, accounts and data of the City relating
thereto, and upon request the City shall furnish to the Engineer of Record or such registered
owner, as the case may be, such financial statements, reports and other information relating to
the City and the System as the Engineer of Record or such registered owner may from time to
time reasonably request.
SECTION 21: Taxable Obligations.
A. The interest on the Bonds is not excludable from the gross income of the holders
thereof for federal income tax purposes.
B. The City hereby irrevocably elects to apply (i) section 54AA of the Code to each of
the Bonds as a "build America bond" and (ii) subsection 54AA(g) of the Code to each of the
Bonds as a "qualified bond."
C. The City hereby directs and authorizes any Authorized Representative, for and on
behalf of the City, and to the extent not otherwise provided for in Section 4 hereof, to (i) make
such elections permitted or required pursuant to the provisions of the Code, or Regulations as
they deem necessary or appropriate in connection with the Bonds, (ii) to enter into such
agreements, provide such certificates and take such other action as counsel to the City may
require to enable such counsel to provide such federal income tax opinions to the City as they
deem necessary or proper, (iii) to authorize and direct to whom and which account any credit or
subsidy payable by the United States with respect to the Bonds under section 6431 of the Code,
or any successor, similar or related provision, (iv) apply for credits under section 6431 of the
Code payable to the City or to the party or parties determined by the City, (v) apply for credits
under section 6431 of the Code payable to the City or to the party or parties determined by the
City, and (vi) to take any related act or action as they deem necessary or advisable. Such
elections shall be deemed to be made on the Closing Date.
SECTION 22: Taxable and Tax -Exempt Obligations. The City reserves the ability to
issue Additional Priority Bonds in a manner such that such obligations are or 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 of the Code.
SECTION 23: Amendment of Ordinance.
A. Approval by Registered Owners. The registered owners of a majority in aggregate
principal amount of the Priority Bonds then Outstanding shall have the right from time to time to
approve any amendment to this Ordinance which may be deemed necessary or desirable by the
City; provided, however, that without the consent of the registered owners of all of the Priority
Bonds at the time Outstanding, nothing herein contained shall permit or be construed to permit
the amendment of the terms and conditions in this Ordinance or in the Priority Bonds so as to:
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(1) make any change in the maturity of any of the Outstanding Priority Bonds;
(2) reduce the rate of interest borne by any of the Outstanding Priority Bonds;
(3) reduce the amount of the principal payable on the Outstanding Priority
Bonds;
(4) modify the terms of payment of principal of, premium, if any, or interest
on the Outstanding Priority Bonds or impose any conditions with respect to such
payment;
(5) affect the rights of the registered owners of less than all of the Priority
Bonds then Outstanding;
(6) amend this Subsection A of this Section; or
(7) change the minimum percentage of the principal amount of Priority Bonds
necessary for consent to any amendment;
unless such amendment or amendments be approved by the registered owners of all of the
Priority Bonds then Outstanding.
B. Notice. if at any time the City shall desire to amend the Ordinance under this
Section, the City shall cause notice of the proposed amendment to be published in a financial
newspaper or journal published in The City of New York, New York, and a newspaper of
general circulation in the City, once during each calendar week for at least two successive
calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and
shall state that a copy thereof is on file at the principal office of the Paying Agent/Registrar for
inspection by all holders of Priority Bonds. Such publication is not required, however, if notice
in writing is given to each registered owner of Priority Bonds.
C. Consent Obtained. Whenever at any time not less than 30 days, and within one year,
from the date of the first publication of said notice or other service of written notice, the City
shall receive an instrument or instruments executed by the registered owners of at least a
majority in aggregate principal amount of the Priority Bonds then Outstanding, which instrument
or instruments shall refer to the proposed amendment described in said notice and which
specifically consent to and approve such amendment in substantially the form of the copy thereof
on file with the Paying Agent/Registrar, the Governing Body may pass the amendatory ordinance
in substantially the same form.
D. Amendatory Ordinance. Upon the passage of any amendatory ordinance pursuant to
the provisions of this Section, this Ordinance shall be deemed to be amended in accordance with
such amendatory ordinance, and the respective rights, duties and obligations under this
Ordinance of the City and all the registered owners of then Outstanding Priority Bonds and all
future Priority Bonds shall thereafter be determined, exercised and enforced hereunder, subject in
all respects to such amendments.
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E. Consent Irrevocable for Six Months. Any consent given by the registered owner of a
Priority Bond pursuant to the provisions of this Section shall be irrevocable for a period of six
months from the date of the first publication of the notice provided for in this Section, and shall
be conclusive and binding upon all future registered owners of the same Priority Bond during
such period. Such consent may be revoked at any time after six months from the date of the first
publication of such notice by the registered owner who gave such consent, or by a successor in
title, by filing notice thereof with the Paying Agent/Registrar and the City, but such revocation
shall not be effective if the registered owners of at least a majority in aggregate principal amount
of the then Outstanding Priority Bonds as in this Section defined have, prior to the attempted
revocation, consented to and approved the amendment.
E Amendments without Consent. The foregoing provisions of this Section
notwithstanding, the City, by action of the Governing Body may amend this Ordinance 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, grant additional
rights or remedies to the registered owners of the Priority Bonds or to surrender, restrict
or limit any right or power herein reserved to or conferred upon the City;
(2) to make such provisions for the purpose of curing any ambiguity, or
curing, correcting or supplementing any defective provision contained in this Ordinance,
or in regard to clarifying matters or questions arising under this Ordinance, as are
necessary or desirable and not contrary to or inconsistent with this Ordinance and which
shall not adversely affect the interests of the registered owners of the Priority Bonds then
Outstanding;
(3) to modify any of the provisions of this Ordinance in any other respect
whatever, provided that (i) such modification shall be, and be expressed to be, effective
only after all Bonds and each series of Additional Priority Bonds Outstanding at the date
of the adoption of such modification shall cease to be Outstanding, and (ii) such
modification shall be specifically referred to in the text of all Priority Bonds issued after
the date of the adoption of such modification;
(4) to make such changes, modifications or amendments as may be necessary
or desirable in order to allow the owners of the Priority Bonds to thereafter avail
themselves of a book -entry system for payments, transfers and other matters relating to
the Priority Bonds, which changes, modifications or amendments are not contrary to or
inconsistent with other provisions of this Ordinance and which shall not adversely affect
the interests of the owners of the Priority Bonds;
(5) to make such changes, modifications or amendments as are permitted by
Section 30 of this Ordinance;
(6) to 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 Priority Bonds
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by a Rating Agency or to obtain or maintain a Credit Facility, or to obtain the approval of
the Bonds from the Attorney General of the State of Texas;
(7) to make such changes, modifications or amendments as may be necessary
or desirable, which shall not adversely affect the interests of the owners of the Priority
Bonds, in order, to the extent permitted by law, to facilitate the economic and practical
utilization of interest rate swap agreements, foreign currency exchange agreements, or
similar type of agreements with respect to the Priority Bonds; and
(8) as necessary to insure that the Bonds continue to qualify as "build
America bonds" as such terms are described in Section 21 hereof, pursuant to the
provisions of this Ordinance and the BAB Agreement.
Notice of any such amendment may be published by the City in the manner described in
Subsection 13 of this Section; provided, however, that the publication of such notice shall not
constitute a condition precedent to the adoption of such amendatory ordinance and the failure to
publish such notice shall not adversely affect the implementation of such amendment as adopted
pursuant to such amendatory ordinance.
SECTION 24: Damaged, Mutilated, Lost, Stolen, or Destroyed Bonds.
A. Substitute Bonds. In the event any Outstanding Bond is damaged, mutilated, lost,
stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and
delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged,
mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner
hereinafter provided.
B. Application for Replacement. Application for replacement of damaged, mutilated,
lost, stolen, or destroyed Bonds shall be made to the Paying Agent/Registrar. In every case of
loss, theft, or destruction of a Bond, the applicant for a replacement bond shall furnish to the City
and to the Paying Agent/Registrar such security or indemnity as may be required by them to save
each of them harmless from any loss or damage with respect thereto. Also, in every case of loss,
theft, or destruction of a Bond, the applicant shall furnish to the City and to the Paying
Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as
the case may be. In every case of damage or mutilation of a Bond, the applicant shall surrender
to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated.
C. Payment upon Maturity. Notwithstanding the foregoing provisions of this Section, in
the event any such Bond shall have matured, and no default has occurred which is then
continuing in the payment of the principal of, redemption premium, if any, or interest on the
Bond, the City may authorize the payment of the same (without surrender thereof except in the
case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security
or indemnity is furnished as above provided in this Section.
D. Cost of Replacement Bonds. Prior to the issuance of any replacement Bond, the
Paying Agent/Registrar shall charge the owner of such Bond with all legal, printing, and other
expenses in connection therewith. Every replacement Bond issued pursuant to the provisions of
this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a
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contractual obligation of the City whether or not the lost, stolen, or destroyed Bond shall be
found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this
Ordinance equally and proportionately with any and all other Bonds duly issued under this
Ordinance.
E. Authority for Replacement Bonds. In accordance with Chapter 1206, as amended,
Texas Government Code, this Section of this Ordinance shall constitute authority for the
issuance of any such replacement Bond without necessity of further action by the Governing
Body or any other body or person, and the duty of the replacement of such bonds is hereby
authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall
authenticate and deliver such bonds in the form and manner and with the effect, as provided in
Subsection 4.A of this Ordinance for Bonds issued in exchange for other Bonds.
SECTION 25: Sale of Bonds- Official Statement Approval — Approval of Purchase
Contract. The Bonds authorized by this Ordinance are hereby sold by the City to the The Frost
National Bank, San Antonio, Texas, as the authorized representative of a group of underwriters
(the "Purchasers", and having all the rights, benefits, and obligations of a Holder) in accordance
with the provisions of a Purchase Contract dated July 23, 2010 (the "Purchase Contract")
attached hereto as Exhibit D and incorporated herein by reference as a part of this Ordinance for
all purposes. The Initial Bonds shall be registered in the name of The Frost National Bank. Any
Authorized Representative is hereby authorized and directed to execute the Purchase Contract for
and on behalf of the City and as the act and deed of the City Council, and in regard to the
approval and execution of the Purchase Contract, the City Council hereby finds, determines and
declares that the representations, warranties, and agreements of the City contained in the
Purchase Contract are true and correct in all material respects and shall be honored by the City.
Delivery of the Bonds to the Purchasers shall occur as soon as practicable after the adoption of
this Ordinance, upon payment therefor in accordance with the terms of the Purchase Contract.
Furthermore, the Issuer hereby ratifies, confirms, and approves in all respects (i) the
Issuer's prior determination that the Preliminary Official Statement was, as of its date, "deemed
final" in accordance with the Rule (hereinafter defined) and (ii) the use and distribution of the
Preliminary Official Statement by the Purchasers in connection with the public offering and sale
of the Bonds. The final Official Statement, being a modification and amendment of the
Preliminary Official Statement to reflect the terms of sale (together with such changes approved
by an Authorized Representative), shall be and is hereby in all respects approved and the
Purchasers are hereby authorized to use and distribute the final Official Statement, dated July 23,
2010, in the reoffering, sale and delivery of the Bonds to the public. The Mayor and/or City
Secretary are further authorized and directed to manually execute and deliver for and on behalf
of the Issuer copies of the Official Statement in final form as may be required by the Purchasers,
and such final Official Statement in the form and content manually executed by said officials
shall be deemed to be approved by the City Council and constitute the Official Statement
authorized for distribution and use by the Purchasers.
The proceeds derived from the sale of the Bonds (after paying costs of issuance) shall be
deposited into the special construction account or accounts created for the projects to be
constructed with the proceeds of the Bonds. This special construction account shall be
established and maintained at the Depository and shall be invested in accordance with the
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provisions of Section 12 of this Ordinance. Interest earned on the proceeds of the Bonds pending
completion of construction of the projects financed with such proceeds shall be accounted for,
maintained, deposited, and expended as permitted by the provisions of Chapter 1201, as
amended, Texas Government Code, or as required by any other applicable law. Proceeds of
Bonds, including interest earnings thereon, shall be retained in this special construction account
until spent in their entirety on authorized purposes for which the Bonds were issued in
accordance with the BAB Agreement.
SECTION 26: Approval and Registration of Bonds, The City Manager of the City is
hereby authorized to have control of the Bonds and all necessary records and proceedings
pertaining to the Bonds pending their delivery and their investigation, examination and approval
by the Attorney General, and their registration by the Comptroller of Public Accounts. Upon
registration of the Bonds, the Comptroller of Public Accounts (or a deputy designated in writing
to act therefor) shall manually sign the Comptroller's Registration Certificate accompanying the
Bonds, and the seal of said Comptroller shall be impressed, or placed in facsimile, on each such
certificate.
SECTION 27: Default And Remedies.
A. Events of Default. Each of the following occurrences or events for the purpose of this
Ordinance is hereby declared to be an "Event of Default":
(1) the failure to make payment of the principal of, premium, if any, or
interest on any of the Bonds when the same becomes due and payable; or
(2) default in the performance or observance of any other covenant,
agreement or obligation of the City, the failure to perform which materially, adversely
affects the rights of the registered owners of the Bonds, including, but not limited to, their
prospect or ability to be repaid in accordance with this Ordinance, and the continuation
thereof for a period of 60 days after notice of such default is given by any registered
owner to the City.
B. Remedies for Default.
(1) Upon the happening of any Event of Default, then and in every case, any
registered owner or an authorized representative thereof, including, but not limited to, a
trustee or trustees therefor, may proceed against the City, or any official, officer or
employee of the City in their official capacity, for the purpose of protecting and enforcing
the rights of the registered owners under this Ordinance, by mandamus or other suit,
action or special proceeding in equity or at law, in any court of competent jurisdiction,
for any relief permitted by law, including the specific performance of any covenant or
agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or
in violation of any right of the registered owners hereunder or any combination of such
remedies.
(2) It is provided that all such proceedings shall be instituted and maintained
for the equal benefit of all registered owners of Bonds then Outstanding.
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C. Remedies Not Exclusive.
(1) No remedy herein conferred or reserved is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or under the Bonds or
now or hereafter existing at law or in equity; provided, however, that notwithstanding any
other provision of this Ordinance, the right to accelerate the debt evidenced by the Bonds
shall not be available as a remedy under this Ordinance.
(2) The exercise of any remedy herein conferred or reserved shall not be
deemed a waiver of any other available remedy.
(3) By accepting the delivery of a Bond authorized under this Ordinance, such
registered owner agrees that the certifications required to effectuate any covenants or
representations contained in this Ordinance do not and shall never constitute or give rise
to a personal or pecuniary liability or charge against the officers, employees or trustees of
the City or the Governing Body,
(4) None of the members of the Governing Body, nor any other official or
officer, agent, or employee of the City, shall be charged personally by the registered
owners with any liability, or be held personally liable to the registered owners under any
term or provision of this Ordinance, or because of any Event of Default or alleged Event
of Default under this Ordinance.
SECTION 28: Further Proceedings. The Mayor, the City Manager, any Assistant City
Manager, the City Secretary, and the Director of Financial Services, and all other officers,
employees and agents of the City, and each of them, shall be and they are hereby expressly
authorized, empowered and directed from time to time and at any time to do and perform all such
acts and things and to execute, acknowledge and deliver in the name and under the corporate seal
and on behalf of the City all such instruments, whether herein mentioned, as may be necessary or
desirable in order to carry out the terms and provisions of this Ordinance and the Bonds,
including, but not limited to, conforming documents to receive the approval of the Attorney
General and to receive a rating from any Rating Agency, the printing of a statement relating to
the insuring of the Bonds by a municipal bond insurance company, and the Representation
Letter.
SECTION 29: Bond Insurance and Debt Service Reserve Fund Insurance Policies. An
Authorized Representative is authorized, in connection with effecting the sale of the Bonds, to
obtain from a municipal bond insurance company so designated in the Approval Certificate a
municipal bond insurance policy (as hereinafter defined and described as the "Policy") and a
debt service reserve fund (or surety) policy (the "Surety Policy") in support of the Bonds. To
that end, should an Authorized Representative exercise such authority and commit the City to
obtain either a Policy or a Surety Policy, or both, for so long as either or both policies are in
effect, the requirements of the provider(s) relating to the issuance of said policies are
incorporated by reference into this Ordinance and made a part hereof for all purposes (and this
Ordinance may be modified so that such provisions shall be included herein), notwithstanding
any other provision of this Ordinance to the contrary. For purposes of this Ordinance, the
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Required Amount shall include the debt service on the Bonds as well as the Outstanding
Previously Issued Priority Bonds. An Authorized Representative shall have the authority to
execute any documents to effect the issuance of said policies by the provider(s) thereof,
including, without limitation, any agreement to be delivered in connection with either or both of
the Policy and/or the Surety Policy in substantially the form previously approved by the City
Council in connection with Previously Issued Priority Bonds, or with respect to a Policy relating
to the Bonds, an agreement in substantially the form attached hereto as Exhibit A.
SECTION 30: Continuing Disclosure Undertaking.
A. Definitions.
As used in this Section, the following terms have the meanings ascribed to such terms
below:
"EMMA" means the MSRB's Electronic Municipal Market Access system, accessible by
the general public, without charge, on the internet through the uniform resource locator (URL)
http://www. emma.msrb.org.
"MSRB" means the Municipal Securities Rulemaking City.
"Rule" means SEC Rule 15c2 12, as amended from time to time.
"SEC" means the United States Securities and Exchange Commission.
B. Annual Reports.
The City shall file annually with the MSRB, within six months after the end of each fiscal
year ending in or after 2010, financial information and operating data with respect to the City of
the general type included in the final Official Statement authorized by Section 25 of this
Ordinance being the information described in Exhibit D hereto and if not provided as part of
such financial information and operating data, audited financial statements of the City, when and
if available. Any financial statements so to be provided shall be (i) prepared in accordance with
the accounting principles described in Exhibit D hereto, or such other accounting principles as
the City may be required to employ from time to time pursuant to state law or regulation, and (ii)
audited, if the City commissions an audit of such statements and the audit is completed within
the period during which they must be provided. If the audit of such financial statements is not
complete within such period, then the City shall provide unaudited financial statements within
such period and audited for the applicable fiscal year to the MSRB, when and if the audit report
on such statements becomes available. Under current Texas law, including, but not limited to,
Chapter 103, as amended, Texas Local Government Code, the City must have its records and
accounts audited annually and shall have an annual financial statement prepared based on the
audit. The annual financial statement, including the auditor's opinion on the statement, shall be
filed in the office of the City Secretary within 180 days after the last day of the City's fiscal year.
Additionally, upon the filing of this financial statement and the annual audit, these documents are
subject to the Texas Open Records Act, as amended, Texas Government Code, Chapter 552.
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If the City changes its fiscal year, it will file notice of such change (and of the date of the
new fiscal year end) with the MSRB prior to the next date by which the City otherwise would be
required to provide financial information and operating data pursuant to this Section.
C. Material Event Notices.
The City shall file with the MSRB, in a timely manner, notice of any of the following
events with respect to the Bonds, if such event is material within the meaning of the federal
securities laws:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults;
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions or events affecting the treatment of the interest
payable on the Bonds;
(7) Modifications to rights of holders of the Bonds;
(8) Bond calls;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds;
and
(11) Rating changes.
The City shall file with the MSRB, in a timely manner, notice of any failure by the City
to provide financial information or operating data in accordance with this Section by the time
required by this Section.
D. Limitations, Disclaimers, and Amendments.
The City shall be obligated to observe and perform the covenants specified in this Section
with respect to the City and the Bonds while, but only while, the City remains an "obligated
person" with respect to the Bonds within the meaning of the Rule, except that the City in any
event will provide the notice required by subsection C hereof of any Bond calls and defeasance
that cause the City to be no longer such an "obligated person".
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The provisions of this Section are for the sole benefit of the Holders and beneficial
owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or
any legal or equitable right, remedy, or claim hereunder to any other person. The City
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the financial results, condition, or prospects of the City or hereby undertake to
update any information provided in accordance with this Section or otherwise, except as
expressly provided herein. The City does not make any representation or warranty concerning
such information or its usefulness to a decision to invest in or sell Bonds at any future date.
UNDER NO CIRCUMSTANCES SHALL THE CITY BE LIABLE TO THE HOLDER
OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR
TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY
THE CITY, WHETHER NEGLIGENT OR WITH OR WITHOUT FAULT ON ITS PART, OF
ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY
OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY
SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR SPECIFIC
PERFORMANCE.
No default by the City in observing or performing its obligations under this Section shall
constitute a breach of or default under this Ordinance for purposes of any other provision of this
Ordinance.
Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the
duties of the City under federal and state securities Iaws.
The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances resulting from a change in legal requirements, a change in law, or a
change in the identity, nature, status, or type of operations of the City, but only if (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or
sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account
any amendments or interpretations of the Rule to the date of such amendment, as well as such
changed circumstances, and (2) either (a) the Holders of a majority in aggregate principal
amount (or any greater amount required by any other provision of this Ordinance that authorizes
such an amendment) of the Outstanding Bonds consent to such amendment or (b) a person that is
unaffiliated with the City (such as nationally recognized bond counsel) determines that such
amendment will not materially impair the interests of the Holders and beneficial owners of the
Bonds. The City may also repeal or amend the provisions of this Section if the SEC amends or
repeals the applicable provisions of the Rule or any court of final jurisdiction enters judgment
that such provisions of the Rule are invalid, and the City also may amend the provisions of this
Section in its discretion in any other manner or circumstance, but in either case only if and to the
extent that the provisions of this sentence would not have prevented an underwriter from
lawfully purchasing or selling Bonds in the primary offering of the Bonds, giving effect to (a)
such provisions as so amended and (b) any amendments or interpretations of the Rule. If the
City so amends the provisions of this Section, it shall include with any amended financial
information or operating data next provided in accordance with subsection B of this Section an
90083261.5
-41-
explanation, in narrative form, of the reasons for the amendment and of the impact of any change
in the type of financial information or operating data so provided.
E. Information Format: Incorporation by Reference.
The City information required under this Section shall be filed with the MSRB through
EMMA in such format and accompanied by such identifying information as may be specified
from time to time thereby. Under the current rules of the MSRB, continuing disclosure
documents submitted to EMMA must be in word -searchable portable document format (PDF)
files that permit the document to be saved, viewed, printed, and retransmitted by electronic
means and the series of bonds to which such continuing disclosure documents relate must be
identified by CUSIP number or numbers.
Financial information and operating data to be provided pursuant to this Section may be
set forth in full in one or more documents or may be included by specific reference to any
document (including an official statement or other offering document) available to the public
through EMMA or filed with the United States Securities and Exchange Commission,
SECTION 31: Tax Covenant and Representation Agreement. The City hereby authorizes
any Authorized Representative to review, approve, and execute the Tax Covenant and
Representation Agreement (the "BAB Agreement") in the form prepared by Bond Counsel for
the purposes of complying with the applicable provisions of the Code, as necessary to maintain
the validity of the elections made in Section 21.B hereof.
SECTION 32: Miscellaneous Provisions.
A. 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.
B. Immediate Effect. This Ordinance shall be effective immediately from and after its
passage in accordance with the provisions of Section 1201.028, as amended, Texas Government
Code.
C. Open Meeting. It is hereby officially found and determined that the meeting at which
this Ordinance was passed was open to the public, and public notice of the time, place and
purpose of said meeting was given, all as required by Chapter 551, as amended, Texas
Government Code.
D. Rules of Construction. The words "herein", "hereof' and "hereunder" and other
words of similar import refer to this Ordinance as a whole and not to any particular Section or
other subdivision. Except where the context otherwise requires, terms defined in this Ordinance
to impart the singular number shall be considered to include the plural number and vice versa.
References to any named person means that party and its successors and assigns. References to
any constitutional, statutory or regulatory provision means such provision as it exists on the date
this Ordinance is adopted by the City and any future amendments thereto or successor provisions
thereof. Any reference to the payment of principal in this Ordinance shall be deemed to include
the payment of any mandatory sinking fund redemption payments as may be described herein.
References to any officer of the City (e.g., City Manager) means the person currently serving in
90083261,5 -42-
such capacity on a temporary, interim or permanent basis. Any reference to FORM OF BOND
shall refer to the form attached to this Ordinance as Exhibit A.
E. Inconsistent Provisions. All orders and resolutions, or parts thereof, which are in
conflict or inconsistent with any provision of this Ordinance are hereby repealed and declared to
be inapplicable, and the provisions of this Ordinance shall be and remain controlling as to the
matters prescribed herein.
90083261.5
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-43
SIGNED AND SEALED THIS 22°a DAY OF JUNE, 2010,
CITY OF CORPUS CHRISTI, TEXAS
Mayor
ATTEST:
City Secretary
(SEAL)
APPROVED THIS 22nd DAY OF JUNE, 2010:
Carlos Valdez, City Attorney
SCHEDULE 1— Approval Certificate
EXHIBIT A — Form of Reimbursement Agreement
EXHIBIT B - Form of Bond
EXHIBIT C - Form of Paying Agent/Registrar Agreement
EXHIBIT D -- Form of Purchase Contract
EXHIBIT E - DTC Letter of Representations
EXHIBIT F - Description of Annual Financial Information
90083261.5
S-1
a."-d/I--xiee
Corpus Christi, Texas
C54 Day of
, 2010
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,
Council Members
Respectfully,
Joe Aame, Mayor
City of Corpus Christi
The above ordinance was passed by the following vote:
Joe Adame
Chris N. Adler
Brent Chesney
Larry Elizondo, Sr.
Kevin Kieschnick
Priscilla G. Leaf
John E. Marez
Nelda Martinez
Mark Scott
Av t
Abse -
628656
THE STATE OF TEXAS )(
COUNTY OF NUECES )(
I, the undersigned, City Secretary of the City of Corpus Christi, Texas, do hereby certify that the
above and foregoing is a true, full and correct copy of an Ordinance passed by the City Council
of the City of Corpus Christi, Texas (and of the minutes pertaining thereto) on the 22nd day of
June, 2010, authorizing the issuance of the City's Combination Tax and Limited Pledge Revenue
Certificates of Obligation, Series 2010 (Convention Center), which ordinance is duly of record in
the minutes of said City Council, and said meeting was open to the public, and public notice of
the time, place and purpose of said meeting was given, all as required by Texas Government
Code, Chapter 551.
EXECUTED UNDER MY HAND AND SEAL of said City, this the 22nd day of June, 2010.
90083261.5
City Secretary
(CITY SEAL)
S-2
SCHEDULE 1
APPROVAL CERTIFICATE
SEE TAB NO. _
90083261.5 Schedule I-1
90083261.5
EXHIBIT A
REIMBURSEMENT AGREEMENT
N/A
A-1
EXHIBIT B
A, FORM OF DEFINITIVE BOND.
REGISTERED
NO.
REGISTERED PRINCIPAL
AMOUNT
United States of America
State of Texas
Counties of Nueces, Aransas, Kleberg, and San Patricio
CITY OF CORPUS CHRISTI, TEXAS UTILITY SYSTEM
REVENUE IMPROVEMENT BOND TAXABLE SERIES 2010
(DIRECT SUBSIDY - BUILD AMERICA BONDS)
Bond Date: Interest Rate: Stated Maturity:
July 1, 2010
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CUSIP No.:
The City of Corpus Christi, Texas (the "City"), a body corporate and a municipal
corporation in the Counties of Nueces, Aransas, Kleberg, and San Patricio, State of Texas, for
value received, acknowledges itself indebted to and hereby promises to pay to the order of the
Registered Owner specified above, or the registered assigns thereof, on the Stated Maturity date
specified above, the Principal Amount specified above (or so much thereof as shall not have been
paid upon prior redemption) and to pay interest on the unpaid Principal Amount hereof from the
Closing Date (anticipated to occur on or about August 17, 2010) or from the most recent interest
payment date to which interest has been paid or duly provided for until such Principal Amount
has become due and payment thereof has been made or duly provided for, to the earlier of
redemption or Stated Maturity, at the per annum rate of interest specified above computed on the
basis of a 360 -day year of twelve 30 -day months; such interest being payable on January 15 and
July 15 of each year commencing January 15, 2011.
The principal of and interest on this Bond are payable in lawful money of the United
States of America, without exchange or collection charges. The principal of this Bond shall be
paid to the registered owner hereof upon presentation and surrender of this Bond at maturity or
upon the date fixed for its redemption prior to maturity, at the designated trust office in Austin,
Texas (the "Designated Trust Office") of Wells Fargo Bank, National Association, which is the
"Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by
the Paying Agent/Registrar to the registered owner hereof on each interest payment date by
check or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on,
and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance
of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such
purpose as hereinafter provided; and such check or draft shall be sent by the Paying
90083261.5
B-1
Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment
date, to the registered owner hereof, at its address as it appeared on the last business day of the
month next preceding each such date (the "Record Date") on the Registration Books kept by the
Paying Agent/Registrar, as hereinafter described. Any accrued interest due at maturity or upon
the redemption of this Bond prior to maturity as provided herein shall be paid to the registered
owner upon presentation and surrender of this Bond for redemption and payment at the
Designated Trust Office of the Paying Agent/Registrar. The Issuer covenants with the registered
owner of this Bond that on or before each principal payment date, interest payment date, and
accrued interest payment date for this Bond it will make available to the Paying Agent/Registrar,
from the "Debt Service Fund" created by the Bond Ordinance, the amounts required to provide
for the payment, in immediately available funds, of all principal of and interest on the Bonds,
when due. While the Bonds are held by the Purchaser, payment of principal of, premium, if any,
and interest on the Bonds shall be made by federal funds wire transfer, at no cost to the
Purchaser, to an account at a financial institution located in the United States designated by the
Purchaser.
If the date for the payment of the principal of or interest on this Bond shall be a Saturday,
Sunday, a legal holiday, or a day on which banking institutions in the City where the Designated
Trust Office of the Paying Agent/Registrar is located are authorized by law or executive order to
close, or the United States Postal Service is not open for business, then the date for such payment
shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on
which banking institutions are authorized to close, or the United States Postal Service is not open
for business; and payment on such date shall have the same force and effect as if made on the
original date payment was due.
This Bond is one of a series of bonds of like tenor and effect except as to number,
principal amount, interest rate, maturity, and right of prior redemption, dated as of the Bond Date
specified above, aggregating $60,625,000 (herein sometimes called the "Bonds"), issued for the
purposes of (i) acquiring, purchasing, constructing, improving, repairing, extending, equipping,
and renovating the City's combined waterworks system, wastewater disposal system and gas
system (collectively, the "System") and (ii) to pay the costs of issuing the Bonds.
On any date from the Closing Date through July 14, 2020, the Outstanding Bonds may be
redeemed prior to Stated Maturity, at the option of the City, as a whole or in part, in principal
amounts of $5,000 or any integral multiple thereof, at the Make -Whole Redemption Price or,
upon the occurrence of an Extraordinary Event, the Extraordinary Redemption Price. In
addition, the Outstanding Bonds maturing on and after July 15, 2021 may be redeemed prior to
their scheduled maturities, at the option of the Issuer, in whole or in part, on July 15, 2020, or on
any date thereafter, at the redemption price of par plus accrued interest thereon to the date fixed
for redemption. The Bonds or portions thereof redeemed within a maturity shall be selected by
lot or other customary random method selected by the Paying Agent/Registrar (provided that a
portion of a Bond may be redeemed only in an integral multiple of $5,000); provided, further,
that during any period in which ownership of the Bonds is determined only by a book entry at a
securities depository for the Bonds, if fewer than all of the Bonds of the same maturity and
bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and
bearing such interest rate shall be selected in accordance with the arrangements between the City
and the securities depository.
90083261.5
B-2
As specified in the Order, the Bonds stated to mature on July 15, 2025, July 15, 2030, and
July 15, 2040 are referred to as the "Term Bonds". The Term Bonds are subject to mandatory
sinking fund redemption prior to their stated maturity from money required to be deposited in the
Debt Service Fund (but not the Reserve Fund) for such purpose and shall be redeemed in part, on
a pro rata basis in accordance with the arrangements between the Issuer and the securities
depository, at the principal amount thereof plus accrued interest to the date of redemption in the
following principal amounts on July 15 in each of the years as set forth below:
Term Bonds Stated to Term Bonds Stated to
Mature on July 15, 2025 Mature on July 15, 2030
Principal Principal
Year Amount ($) Year Amount ($)
2020 1,945,000 2026 2,390,000
2021 2,010,000 2027 2,485,000
2022 2,080,000 2028 2,585,000
2023 2,155,000 2029 2,685,000
2024 2,230,000 2030 2,795,000*
2025 2,310,000*
Term Bonds Stated to
Mature on July 15, 2040
Principal
Year Amount ($)
2031 2,905,000
2032 3,020,000
2033 3,145,000
2034 3,270,000
2035 3,405,000
2036 3,545,000
2037 3,685,000
2038 3,835,000
2039 3,990,000
2040 4,155,000*
*Payable at Stated Maturity.
The principal amount of a Term Bond required to be redeemed pursuant to the operation
of such mandatory redemption provisions shall be reduced, at the option of the Issuer, by the
principal amount of any Term Bonds of such Stated Maturity which, at least 50 days prior to the
mandatory redemption date (1) shall have been defeased or acquired by the Issuer and delivered
to the Paying Agent/Registrar for cancellation, (2) shall have been purchased and canceled by the
Paying Agent/Registrar at the request of the Issuer with money in the Debt Service Fund (but not
the Reserve Fund), or (3) shall have been redeemed pursuant to the optional redemption
90053261.5
B-3
provisions set forth in the Order and not theretofore credited against a mandatory redemption
requirement.
At least thirty (30) days prior to the date any such Bonds are to be redeemed, a notice of
redemption, authorized by appropriate resolution passed by the Governing Body, shall be given
in the manner set forth below. A written notice of such redemption shall be given to the
registered owner of each Bond or a portion thereof being called for redemption by depositing
such notice in the United States mail, first class postage prepaid, addressed to each such
registered owner at his address shown on the Registration Books kept by the Paying
Agent/Registrar. By the date fixed for any such redemption due provision shall be made by the
City with the Paying Agent/Registrar for the payment of the required redemption price for the
Bonds or the portions thereof which are to be so redeemed, plus accrued interest thereon to the
date fixed for redemption. If such written notice of redemption is given, and if due provision for
such payment is made, all as provided above, the Bonds, or the portions thereof which are to be
so redeemed, thereby automatically shall be redeemed prior to their scheduled maturities, shall
not bear interest after the date fixed for their redemption, and shall not be regarded as being
Outstanding except for the right of the registered owner to receive the redemption price plus
accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the
funds provided for such payment. The Paying Agent/Registrar shall record in the Registration
Books all such redemptions of principal of the Bonds or any portion thereof. If a portion of any
Bonds shall be redeemed, a substitute Bond or Bonds having the same stated maturity date,
bearing interest at the same interest rate, in any denomination or denominations in any integral
multiple of $5,000, at the written request of the registered owner, and in an aggregate principal
amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the
surrender thereof for cancellation, at the expense of the City, all as provided in the Ordinance.
All Bonds of this series are issuable solely as fully registered bonds, without interest
coupons, in an Authorized Denomination. As provided in the Bond Ordinance, this Bond may,
at the request of the registered owner or the assignee or assignees hereof, be assigned,
transferred, converted into and exchanged for a like aggregate amount of fully registered Bonds,
without interest coupons, payable to the appropriate registered owner, assignee or assignees, as
the case may be, having any Authorized Denomination or Denominations as requested in writing
by the appropriate registered owner, assignee or assignees, as the case may be, upon surrender of
this Bond to the Paying Agent/Registrar at its Designated Trust Office for cancellation, all in
accordance with the form and procedures set forth in the Bond Ordinance. Among other
requirements for such assignment and transfer, this Bond must be presented and surrendered to
the Paying Agent/Registrar, together with proper instruments of assignment, in form and with
guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this
Bond or any portion or portions hereof in any authorized denomination to the assignee or
assignees in whose name or names this Bond or any such portion or portions hereof is or are to
be registered. The form of Assignment printed or endorsed on this Bond may be executed by the
registered owner to evidence the assignment hereof, but such method is not exclusive, and other
instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence
the assignment of this Bond or any portion or portions hereof from time to time by the registered
owner. The one requesting such conversion and exchange shall pay the Paying
Agent/Registrar's reasonable standard or customary fees and charges for converting and
exchanging any Bond or portion thereof. In any circumstance, any taxes or governmental
90083261.5
B-4
charges required to be paid with respect thereto shall be paid by the one requesting such
assignment, transfer, conversion or exchange, as a condition precedent to the exercise of such
privilege. The foregoing notwithstanding, in the case of the conversion and exchange of an
assigned and transferred Bond or Bonds or any portion or portions thereof, such fees and charges
of the Paying Agent/Registrar will be paid by the Issuer. The Paying Agent/Registrar shall not
be required (i) to make any such transfer, conversion or exchange during the period beginning at
the opening of business 30 days before the day of the first mailing of a notice of redemption and
ending at the close of business on the day of such mailing, or (ii) to transfer, convert or exchange
any Bonds so selected for redemption when such redemption is scheduled to occur within 30
calendar days; provided, however, such limitation of transfer shall not be applicable to an
exchange by the registered owner of an unredeemed balance of a Bond called for redemption in
part.
Whenever the beneficial ownership of this Bond is determined by a book entry at a
securities depository for the Bonds, the foregoing requirements of holding, delivering or
transferring this Bond shall be modified to require the appropriate person or entity to meet the
requirements of the securities depository as to registering or transferring the book entry to
produce the same effect.
In the event any Paying Agent/Registrar for the Bonds is changed by the Issuer, resigns,
or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it
promptly will appoint a competent and legally qualified substitute therefor, whose qualifications
substantially are similar to the previous Paying Agent/Registrar it is replacing, and promptly will
cause written notice thereof to be mailed to the registered owners of the Bonds.
By becoming the registered owner of this Bond, the registered owner thereby
acknowledges all of the terms and provisions of the Bond Ordinance, agrees to be bound by such
terms and provisions, acknowledges that the Bond Ordinance is duly recorded and available for
inspection in the official minutes and records of the Issuer, and agrees that the terms and
provisions of this Bond and the Bond Ordinance constitute a contract between each registered
owner hereof and the Issuer.
The Bonds are special obligations of the Issuer payable solely from and equally secured,
together with the currently Outstanding Previously Issued Priority Bonds and the Series 2010A
Bonds, by a first lien on and pledge of the Pledged Revenues of the System. The Issuer has
reserved the right, subject to the restrictions stated, and adopted by reference, in the Bond
Ordinance, to issue Additional Priority Bonds which also may be made payable from, and
secured by a first lien on and pledge of, the aforesaid Pledged Revenues, as well as Subordinated
Obligations payable from a junior and inferior lien on and pledge of the Pledged Revenues. For
a more complete description and identification of the revenues and funds pledged to the payment
of the Bonds, and other obligations of the Issuer secured by and payable from the same source or
sources as the Bonds, reference is hereby made to the Bond Ordinance.
The Issuer has reserved the right, subject to the restrictions stated, and adopted by
reference, in the Bond Ordinance, to amend the Bond Ordinance; and under some {but not all)
circumstances amendments must be approved by the owners of a majority in aggregate principal
amount of the Outstanding Priority Bonds.
90083261.5
B-5
The Registered Owner hereof shall never have the right to demand payment of this Bond
out of any funds raised or to be raised by taxation.
It is hereby certified and covenanted that this Bond has been duly and validly authorized,
issued and delivered; and that all acts, conditions and things required or proper to be performed,
exist and be done precedent to or in the authorization, issuance and delivery of this Bond have
been performed, existed and been done in accordance with law. Capitalized terms used in this
Bond without definition shall have the respective means ascribed to them in the Bond Ordinance.
IN WITNESS WHEREOF, this Bond has been signed with the imprinted or lithographed
facsimile signature of the Mayor of said Issuer, attested by the imprinted or lithographed
facsimile signature of the City Secretary, and the official seal of said Issuer has been duly affixed
to, printed, lithographed or impressed on this Bond.
ATTEST:
City Secretary
(SEAL)
90083261.5
CITY OF CORPUS CHRISTI, TEXAS
Mayor
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B-6
B. FORM OF COMPTROLLER'S REGISTRATION CERTIFICATE TO APPEAR ON
INITIAL BONDS ONLY.
REGISTRATION CERTIFICATE OF
COMPTROLLER OF PUBLIC ACCOUNTS
OFFICE OF THE COMPTROLLER OF
PUBLIC ACCOUNTS
REGISTER NO.
THE STATE OF TEXAS
I HEREBY CERTIFY that this Bond has been examined, certified as to validity and
approved by the Attorney General of the State of Texas, and duly registered by the Comptroller
of Public Accounts of the State of Texas.
WITNESS my signature and seal of office this
Comptroller of Public Accounts
of the State of Texas
(SEAL)
C. FORM OF REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR.
REGISTRATION CERTIFICATE OF PAYING AGENT/REGISTRAR
This Bond has been duly issued and registered under the provisions of the
within -mentioned Bond Ordinance; the Bond or Bonds of the above entitled and designated
series originally delivered having been approved by the Attorney General of the State of Texas
and registered by the Comptroller of Public Accounts, as shown by the records of the Paying
Agent/Registrar.
Registered this date:
90083261.5
B-7
WELLS FARGO BANK, NATIONAL
ASSOCIATION, Austin, Texas, as Paying
Agent/Registrar
By:
Authorized Signature
D. FORM OF ASSIGNMENT.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and transfers unto
{Print or typewrite name, address, and zip code of transferee):
(Social Security or other identifying number):
the within Bond and all rights thereunder, and hereby irrevocably constitutes and
appoints attorney to transfer the within Bond on the books kept
for registration thereof, with full power of substitution in the premises.
DATED:
NOTICE: The signature on this assignment must
correspond with the name of the registered owner as it
appears on the face of the within Bond in every particular.
Signature guaranteed:
90083261.5
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B-8
E. FORM OF INITIAL BOND(S).
The Initial Bond(s) shall be in the form set forth in paragraph (a) of this Section, except
that the form of the single fully registered Initial Bond shall be modified as follows:
and
(i) immediately under the name of the Bond, the headings "Interest Rate
" and "Stated Maturity " shall both be completed "as shown below";
(ii) the first paragraph shall read as follows:
The City of Corpus Christi, Texas (the "City"), a body corporate and municipal
corporation in the Counties of Nueces, Aransas, Kleberg, and San Patricio, State of Texas, for
value received, acknowledges itself indebted to and hereby promises to pay to the order of the
Registered Owner named above, or the registered assigns thereof, the Principal Amount specified
above on the fifteenth day of July in each of the years and in principal amounts and bearing
interest at per annum rates in accordance with the following schedule:
Years of Principal Interest
Stated Maturity Amounts ($) Rates (%)
(Information to be inserted from
schedule in Section 2 hereof).
(or so much thereof as shall not have been paid upon prior redemption) and to pay interest on the
unpaid Principal Amount hereof from the Closing Date (anticipated to occur on or about
August 17, 2010), or from the most recent interest payment date to which interest has been paid
or duly provided for until the Principal Amount has become due and payment thereof has been
made or duly provided for, at the per annum rates of interest specified above computed on the
basis of a 360 -day year of twelve 30 -day months; such interest being payable on January 15 and
July 15 of each year, commencing January 15, 2011.
F. INSURANCE LEGEND.
If bond insurance is obtained by the City for any Bond, the appropriate definitive Bonds
and the Initial Bonds shall bear an appropriate legend as provided by the insurer.
90083261.5
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13-9
90083261.5
EXHIBIT C
PAYING AGENT/REGISTRAR AGREEMENT
SEE TAB NO.
C-1
90083261.5
EXHIBIT D
PURCHASE CONTRACT
SEE TAB NO.
D-1
90083261.5
EXHIBIT E
DTC LETTER OF REPRESENTATIONS
SEE TAB NO.
E-1
EXHIBIT F
DESCRIPTION OF ANNUAL FINANCIAL INFORMATION
The following information is referred to in Section 30 of this Ordinance.
Annual Financial Statements and Operating Data
The financial information and operating data with respect to the City to be provided
annually in accordance with such Section for each Year ending in and after 2010 are as specified
(and included in the Appendix of the Application referred to below):
1. The City's audited financial statements for the most recently concluded fiscal year or
to the extent these audited financial statements are not available, unaudited financial
statements of the City for the most recently concluded fiscal year.
2. Tables 1 through 23 contained in the Official Statement; and the Audited Financial
Statement of the City, as set forth in Appendix B to the Official Statement.
Accounting Principles
The accounting principles referred to in such Section are the accounting principles
described in the notes to the financial statements referred to above.
90083261.5
F-1