HomeMy WebLinkAbout029940 ORD - 08/27/2013CERTIFICATE FOR ORDINANCE
THE STATE OF TEXAS
COUNTIES OF NUECES, ARANSAS,
KLEBERT, AND SAN PATRICIO
CITY OF CORPUS CHRISTI
§
THE UNDERSIGNED HEREBY CERTIFIES that:
I. The City Council (the City Council) of the City of Corpus Christi, Texas (the
City), convened on the 27th day of August, 2013 in regular session in the regular meeting place
of the City at the City Mall (the Meeting), which Meeting was at all times open to the public, the
duly constituted officers and members of the City Council being as follows:
Nelda Martinez Mayor
Kelley Allen Councilmember, District 1
Chad Magill Councilmember, District 2
Priscilla Leal Councilmember, District 3
Colleen McIntyre Councilmember, District 4
Rudy Garza Jr. Councilmember, District 5
David Loeb Councilmember, At Large
Lillian Riojas Councilmember, At Large
Mark Scott Councilmember, At Large
with the following being absent: McIntyre and Scott, constituting a quorum, at which time
among other business considered at the Meeting the attached ordinance (the "Ordinance ")
entitled:
AUTHORIZING THE ISSUANCE OF ONE OR MORE SERIES OF CITY OF
CORPUS CIIRISTI, TEXAS UTILITY SYSTEM REVENUE IMPROVEMENT
BONDS, 1N AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
$106,000,000, PURSUANT TO THE DELEGATION PROVISIONS SET
FORTH HEREIN; MAKING PROVISIONS FOR THE PAYMENT
AND SECURITY THEREOF ON A PARITY WITH CERTAIN
CURRENTLY OUTSTANDING UTILITY SYSTEM REVENUE
OBLIGATIONS; STIPULATING THE TERMS AND CONDITIONS FOR
THE ISSUANCE OF ADDITIONAL REVENUE BONDS ON A
PARITY THEREWITH; PRESCRIBING THE FORMS, TERMS,
CONDITIONS, AND RESOLVING OTHER MATTERS INCIDENT AND
RELATED TO TIIE ISSUANCE, SALE, AND DELIVERY OF EACH SERIES
OF BONDS; INCLUDING THE APPROVAL AND DISTRIBUTION OF ONE
OR MORE OFFICIAL STATEMENTS PERTAINING THERETO;
AUTHORIZING THE EXECUTION OF ONE OR MORE PAYING
AGENT/REGISTRAR AGREEMENTS, AND ONE OR MORE PURCHASE
CONTRACTS; COMPLYING WITH THE REQUIREMENTS IMPOSED BY
THE LETTER OF REPRESENTATIONS PREVIOUSLY EXECUTED WITII
57164615.2
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INDEXED
THE DEPOSITORY TRUST COMPANY; ESTABLISHING THE CITY'S
INTENTION TO REIMBURSE ITSELF FROM THE PROCEEDS OF ANY
SUCH SERIES OF BONDS FOR THE PRIOR LAWFUL EXPENDITURE OF
FUNDS TO CONSTRUCT VARIOUS CITY IMPROVEMENTS;
DELEGATING THE AUTHORITY TO THE MAYOR AND CERTAIN
MEMBERS OF THE CITY STAFF TO EXECUTE CERTAIN DOCUMENTS
RELATING TO THE SALE OF EACH SERIES OF BONDS; AND
PROVIDING AN EFFECTIVE DATE
was duly introduced and submitted to the City Council for passage and adoption. After
presentation and due consideration of the Ordinance, the Ordinance was passed and adopted in
accordance with the City's Home Rule Charter, and carried by the following vote:
1 voted "For" voted "Against" ...m abstained
all as shown in the official Minutes of the Board for the Meeting.
2. The attached Ordinance is a true and correct copy of the original on file in the
official records of the City; the duly qualified and acting members of the Council of the City on
the date of the Meeting are those persons shown above, and, according to the records of my
office, each member of the Council was given actual notice of the time, place, and purpose of the
Meeting and had actual notice that the Ordinance would be considered; and the Meeting and
deliberation of the aforesaid public business, was open to the public and written notice of said
meeting, including the subject of the Ordinance, was posted and given in advance thereof in
compliance with the provisions of Chapter 551, as amended, Texas Government Code.
IN WITNESS WHEREOF, I have signed my name officially and affixed the seal of the
City, this 27th day of August, 2013.
(SEAL)
57184616/
City Secretary
City of Corpus Christi, Texas
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ORDINANCE NO. 029940
AUTHORIZING THE ISSUANCE OF ONE OR MORE SERIES OF CITY
OF CORPUS CHRISTI, TEXAS UTILITY SYSTEM REVENUE
IMPROVEMENT BONDS, IN AN AGGREGATE PRINCIPAL AMOUNT
NOT TO EXCEED 5106,000,000, PURSUANT TO THE DELEGATION
PROVISIONS SET FORTH HEREIN; MAKING PROVISIONS FOR THE
PAYMENT AND SECURITY THEREOF ON A PARITY WITH CERTAIN
CURRENTLY OUTSTANDING UTILITY SYSTEM REVENUE
OBLIGATIONS; STIPULATING THE TERMS AND CONDITIONS FOR
TIIE ISSUANCE OF ADDITIONAL REVENUE BONDS ON A PARITY
THEREWITH; PRESCRIBING THE FORMS, TERMS, CONDITIONS,
AND RESOLVING OTHER MATTERS INCIDENT AND RELATED TO
THE ISSUANCE, SALE, AND DELIVERY OF EACH SERIES OF BONDS;
INCLUDING THE APPROVAL AND DISTRIBUTION OF ONE OR
MORE OFFICIAL STATEMENTS PERTAINING THERETO;
AUTHORIZING THE EXECUTION OF ONE OR MORE PAYING
AGENT/REGISTRAR AGREEMENTS, AND ONE OR MORE
PURCHASE CONTRACTS; COMPLYING WITH THE REQUIREMENTS
IMPOSED BY THE LETTER OF REPRESENTATIONS PREVIOUSLY
EXECUTED WITH THE DEPOSITORY TRUST COMPANY;
ESTABLISHING THE CITY'S INTENTION TO REIMBURSE ITSELF
FROM THE PROCEEDS OF ANY SUCH SERIES OF BONDS FOR THE
PRIOR LAWFUL EXPENDITURE OF FUNDS TO CONSTRUCT
VARIOUS CITY IMPROVEMENTS; DELEGATING THE AUTHORITY
TO THE MAYOR AND CERTAIN MEMBERS OF THE CITY STAFF TO
EXECUTE CERTAIN DOCUMENTS RELATING TO THE SALE OF
EACH SERIES OF BONDS; AND PROVIDING AN EFFECTIVE DATE
WI IEREAS, the City Council (the City Council) of the City of Corpus Christi, Texas (the
City) has heretofore issued, and there are currently Outstanding, revenue bonds (the Previously
Issued Priority Bonds) secured by a first and prior lien on and pledge of the Net Revenues (as
hereinafter defined) of the City's combined utility systems (as further described and defined
herein, the System); and
WHEREAS, in the City ordinances authorizing the issuance of the Previously Issued
Priority Bonds, the City reserved the right to issue revenue bonds on a parity with the Previously
Issued Priority Bonds; and
WHEREAS, the City Council has heretofore authorized the issuance of revenue bonds
(the Junior Lien Obligations) secured by a lien on and pledge of Net Revenues that is junior and
inferior to the lien thereon and pledge thereof securing the repayment of the Priority Bonds; and
WHEREAS, in the City ordinances authorizing the issuance of the Junior Lien
Obligations, the City reserved the right to issue revenue bonds on a parity with the Junior Lien
Obligations from time to time outstanding; and
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WHEREAS, the City Council has heretofore entered into a certain Federal Contract (as
hereinafter defined) supported by a lien on and pledge of the Net Revenues of the System
inferior to the lien thereon and pledge thereof securing the Previously Issued Priority Bonds the
Junior Lien Obligations, and the Previously Issued Subordinate Lien Obligations (such Federal
Contract, the Previously Issued Inferior Lien Obligations); and
WHEREAS, the City deems it appropriate and in its best interest to issue the hereinafter
authorized revenue bonds, in one or more series, for the primary purpose of acquiring,
purchasing, constructing, improving, repairing, extending, equipping, and renovating the System;
and
WIIEREAS, the City Council hereby finds and determines that, pursuant to the authority
provided by Chapter 1371, as amended, Texas Government Code (Chapter 1371), the delegation
to each Authorized Official (defined herein) of the authority to execute an Approval Certificate
relating to each series of bonds issued hereunder (a form of which certificate is attached hereto as
Schedule I) to establish and approve the final terms of sale of any such series of bonds (within
the parameters specified herein) is in the best interest of the City; and
WHEREAS, the City is empowered by the provisions of Chapters 1371 and 1502, as
amended, Texas Government Code, and the City's Home Rule Charter to issue revenue bonds in
the manner herein contemplated; and
WHEREAS, prior to the issuance of a series of bonds hereunder, the City may elect to
initially utilize other lawfully available funds to enter into various contracts to finance some or
all of the capital costs associated with the System improvements for which bonds are to be issued
hereunder; and
WHEREAS, the provisions of Section 1201.042, as amended, Texas Government Code
(Section 1201.042) provide that the proceeds from the sale of obligations issued to finance the
acquisition, construction, equipping, or furnishing of any project or facilities, such as the System
improvements for which bonds are issued hereunder, may be used to reimburse the City for costs
attributable to such project or facilities paid or incurred before the date of issuance of such
bonds; and
WHEREAS, the United States Department of Treasury (the Department) released
Regulation Section 1.150 -2 (the Regulations) which establishes when the proceeds of obligations
are spent and therefore are no longer subject to various federal income tax restrictions contained
in the Internal Revenue Code of 1986, as amended (the Code); and
WHEREAS, the City intends to reimburse itself, within eighteen months from the later of
the date of expenditure or the date the property financed is placed in service (but in no event
more than three years after the original expenditures are paid), for the prior lawful capital
expenditure of funds from the proceeds of a series of bonds issued hereunder; and
WHEREAS, under the Regulations, to fund such reimbursement with proceeds of bonds
issued hereunder, the City must declare its expectation ultimately to make such reimbursement
before making the expenditures; and
7901. 7907.5
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WHEREAS, the City Council hereby finds and determines that the reimbursement for the
prior expenditure of funds of the City is not inconsistent with the City's budgetary and financial
circumstances; and
WHEREAS, the City Council hereby finds and determines that the actions authorized
hereby and the adoption of this Ordinance are in the best interest of the citizens of the City, now,
therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI,
TEXAS:
SECTION 1: Bonds Authorized. One or more series of revenue bonds of the City shall
be and are hereby authorized to be issued, from time to time and in accordance with the
limitations described in Section 2, to be designated CITY OF CORPUS CHRISTI, TEXAS
UTILITY SYSTEM REVENUE IMPROVEMENT BONDS (as further designated by series and
to reflect to the priority of the lien on revenue securing the repayment thereof, pursuant to
Section 2) (each such series, the Bonds), under and in accordance with the terms of this
ordinance (the Ordinance), for the purposes of (i) acquiring, purchasing, constructing,
improving, repairing, extending, equipping, and renovating the System and (ii) paying the costs
of issuance relating thereto. The Bonds shall be payable from and equally and ratably secured by
a lien on and pledge of the all or a portion of the Net Revenues (at such level of priority as is
determined by an Authorized Representative in accordance with Section 2), which pledge shall
be on parity with the lien on and pledge of the City's utility system revenue bonds from time to
time outstanding that are payable from a lien on and pledge of Net Revenues at such level of
priority. The Bonds are authorized to be issued pursuant to the authority conferred by and in
conformity with the laws of the State of Texas, including, particularly Chapters 1371 and 1502,
as amended, Texas Government Code (together, the Act), the City's Home Rule Charter, and this
Ordinance.
SECTION 2: Delegation of Authority. As authorized by Chapter 1371, as amended,
Texas Government Code (Chapter 1371), the Mayor of the City, the City Manager of the City,
the Assistant City Manager for General Government and Operations Support, and the City's
Director of Financial Services (each of the foregoing, an Authorized Official) 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 the:
(1) Aggregate principal amount of each maturity of the Bonds;
(2) Rate of interest to be borne on the principal amount of each maturity;
(3) Interest payment dates;
(4) Extraordinary, optional, and/or mandatory redemption provisions;
(5) Pricing of each series of Bonds, including use of premium, discount,
underwriters' compensation, and costs of issuance;
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(6) Underwriting syndicate for each series of Bonds, including the
identification of the senior and book running manager and co- managers, respectively, for
each such series;
(7) Dated Date (defined herein);
(8) Priority of the pledge of and lien on Net Revenues securing the repayment
of the particular series of Bonds (being a pledge of and lien on Net Revenues that is on
parity with the lien thereon and pledge thereof that secures the Previously Issued Priority
Bonds or the Junior Lien Obligations, respectively); and
(9) Further designation of each series of Bonds by year issued, number of
similarly - secured series of bonds issued during the then- current calendar year, and the
priority of lien on and pledge of Net Revenues securing such series of Bonds.
Each series of Bonds issued under this Ordinance shall be issued within the following
parameters:
(1) The total principal amount of all series of Bonds issued hereunder shall
not exceed $106,000,000;
(2) The maximum maturity for any series of Bonds issued hereunder shall be
July 15, 2053;
(3) On a combined basis by series (and not on a per maturity basis within a
series), the maximum true interest cost (as determined by federal arbitrage yield)
applicable to any series of Bonds issued hereunder shall not exceed a rate greater 7% per
annum, calculated in a manner consistent with the provisions of Chapter 1204, as
amended, Texas Government Code;
(4) The final series of Bonds issued hereunder must be sold not later than
August 27, 2014 (though the closing of a particular series of Bonds sold in accordance
with this provision may occur after August 27, 2014, so long as such closing period is
determined by an Authorized Representative to be of reasonable duration); and
(5) Each series of Bonds must be sold on a negotiated basis to an underwriting
syndicate selected in accordance with this Section 2 (as provided in subpart (6) above).
In addition to the foregoing, each Authorized Official 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 Official chooses to purchase a debt service reserve surety policy or similar credit
facility relating to the Bonds, then the Authorized Official shall be permitted to execute an
insurance or similar reimbursement agreement in substantially the form attached hereto as
Exhibit F (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
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
79017907 5 -4-
authorized to complete a substantially similar version of this Ordinance, completed (as
appropriate) with the information included in the applicable Approval Certificate and by
incorporation of the terms of Exhibit A or Exhibit B hereto (as applicable) into Section 9 hereof,
to reflect such final terms of the applicable series of Bonds issued hereunder.
SECTION 3: Fully Registered Obligations - Authorized Denominations - Stated
Maturities - Interest Rates - Dated Date. The Bonds are issuable in fully registered form only;
shall be dated November 1, 2013 (the Dated Date) shall be in denominations of $5,000 or any
integral multiple thereof, shall be lettered "R -" and numbered consecutively from One (1)
upward and principal shall become due and payable on July 15 in each of the years and in
principal amounts (the Stated Maturities) and bear interest on the unpaid principal amounts from
the Dated Date, or the most recent Interest Payment Date to which interest has been paid or duly
provided for, to the earlier of redemption or Stated Maturity, at the rates per annum in
accordance with the following schedule:
Stated Maturities
(July 15) Principal Amounts ($1 Interest Rates ( %)
2014 1,000,000 3.000
* * **
* * ** * * **
2016 1,000,000 3.000
2017 1,000,000 5.000
2018 1,000,000 5.000
2019 1,000,000 5.000
2020 1,000,000 5.000
2021 2,245,000 5.000
2022 2,360,000 5.000
2023 2,480,000 5.000
2024 2,600,000 5.000
2025 2,730,000 5.000
2026 2,870,000 5.000
2027 3,010,000 5.000
2028 3,160,000 5.000
2029 3,320,000 4.250
2030 3,460,000 5.000
2031 3,635,000 4.500
* * ** * * ** * * **
2033 7,775,000 4.625
* * ** * * ** * * **
2038 22,970,000 5.000
* * ** * * ** * * **
2043 29,315,000 5.000
SECTION 4: Payment of Bonds - Interest Payments - Paying Agent/Registrar. The
principal of, premium, if any, and interest on the Bonds, due and payable by reason of Stated
Maturity, redemption, or otherwise, shall be payable in any coin or currency of the United States
of America which at the time of payment is legal tender for the payment of public and private
79417907 5
debts, and such payment of principal of and interest on the Bonds shall be without exchange or
collection charges to the Holder (as hereinafter defined) of the Bonds.
The Bonds shall bear interest on the unpaid principal amount thereof at the per annum
rates shown above in Section 3, 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 (the Interest Payment Date), commencing July 15, 2014, while the Bonds are Outstanding.
The selection and appointment of The Bank of New York Mellon Trust, N.A., Dallas,
Texas, to serve as the initial Paying Agent/Registrar (the Paying Agent /Registrar) for the Bonds
is hereby approved and confirmed, and the City agrees and covenants to cause to be kept and
maintained at the corporate trust office of the Paying Agent/Registrar books and records (the
Security Register) for the registration, payment, and transfer of the Bonds, all as provided herein,
in accordance with the terms and provisions of a Paying Agent/Registrar Agreement, attached, in
substantially final form, as Exhibit D hereto, and such reasonable rules and regulations as the
Paying Agent/Registrar and the City may prescribe. The City covenants to maintain and provide
a Paying Agent/Registrar at all times while the Bonds are Outstanding, and any successor Paying
Agent/Registrar shall be (i) a national or state banking institution or (ii) an association or a
corporation organized and doing business under the laws of the United States of America or of
any state, authorized under such laws to exercise trust powers. Such Paying Agent/Registrar
shall be subject to supervision or examination by federal or state authority and authorized by law
to serve as a Paying Agent/Registrar.
The City reserves the right to appoint a successor Paying Agent/Registrar upon providing
the previous Paying Agent/Registrar with a certified copy of a resolution or ordinance
terminating such agency. Additionally, the City agrees to promptly cause a written notice of this
substitution to be sent to each Holder of the Bonds by United States mail, first -class postage
prepaid, which notice shall also give the address of the new Paying Agent/Registrar.
Both principal of, premium, if any, and interest on the Bonds, due and payable by reason
of Stated Maturity, redemption or otherwise, shall be payable only to the registered owner of the
Bonds appearing on the Security Register (the Holder or Holders) maintained on behalf of the
City by the Paying Agent/Registrar as hereinafter provided (i) on the Record Date (defined
herein) for purposes of payment of interest thereon and (ii) on the date of surrender of the Bonds
for purposes of receiving payment of principal thereof at the Bonds' Stated Maturity or upon
prior redemption of the Bonds. The City and the Paying Agent/Registrar, and any agent of
either, shall treat the Molder as the owner of a Bond for purposes of receiving payment and all
other purposes whatsoever, and neither the City nor the Paying Agent/Registrar, or any agent of
either, shall be affected by notice to the contrary.
Principal of, and premium, if any, on the Bonds shall be payable only upon presentation
and surrender of the Bonds to the Paying Agent/Registrar at its corporate trust office. Interest on
the Bonds shall be paid to the Holder whose name appears in the Security Register at the close of
business on the last business day of the month next preceding an Interest Payment Date for the
Bonds (the Record Date) and shall be paid (i) by check sent by United States mail, first -class
postage prepaid, by the Paying Agent/Registrar, to the address of the Holder appearing in the
79017907.5
Security Register or (ii) by such other method, acceptable to the Paying Agentfkegistrar,
requested in writing by the Holder at the Holder's risk and expense.
If the date for the payment of the principal of, premium, if any, or interest on the Bonds
shall be a Saturday, Sunday, a legal holiday, or a day on which banking institutions in the city
where the corporate trust office of the Paying Agent/Registrar is located are authorized by law or
executive order to close, then the date for such payment shall be the next succeeding day which
is not such a day. The payment on such date shall have the same force and effect as if made on
the original date any such payment on the Bonds was due,
In the event of a non - payment of interest on a scheduled payment date, and for thirty (30)
days thereafter, a new record date for such interest payment (a Special Record Date) will be
established by the Paying Agent/Registrar, if and when funds for the payment of such interest
have been received from the City. Notice of the Special Record Date and of the scheduled
payment date of the past due interest (the Special Payment Date - which shall be fifteen (15)
days after the Special Record Date) shall be sent at least five (5) business days prior to the
Special Record Date by United States Mail, first -class postage prepaid, to the address of each
I Iolder appearing on the Security Register at the close of business on the last business day next
preceding the date of mailing of such notice.
SECTION 5: Redemption.
A. Mandatory Redemption of Bonds. The Bonds stated to mature on July 15, 2033, July
15, 2038, and July 15, 2043, respectively, are referred to herein as the "Term Bonds ". The Term
Bonds are subject to mandatory sinking fund redemption prior to their stated maturities from
money required to be deposited in the Bond Fund (but not the Reserve Fund) for such purpose
and shall be redeemed in part, by lot or other customary method, 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 Mature Term Bonds Stated to Mature Tenn Bonds Stated to Mature
on July 15, 2033 on July 15, 2038 on July 15, 2043
Principal Principal Principal
Year Amount ($) Year Amount ($) Year Amount ($)
2032 3,800,000 2034 4,155,000 2039 5,305,000
2033 3,975,000* 2035 4,365,000 2040 5,570,000
2036 4,585,000 2041 5,850,000
2037 4,810,000 2042 6,140,000
2038 5,055,000* 2043 6,450,000*
*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 City, 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 City and delivered to
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the Paying Agent/Registrar for cancellation, (2) shall have been purchased and canceled by the
Paying Agent/Registrar at the request of the City with money in the Bond Fund (but not the
Reserve Fund), or (3) shall have been redeemed pursuant to the optional redemption provisions
set forth below and not theretofore credited against a mandatory redemption requirement.
B. Optional Redemption. The Bonds having Stated Maturities on and after July 15,
2024 shall be subject to redemption prior to Stated Maturity, at the option of the City, on July 15,
2023, or any date thereafter, as a whole or in part, in principal amounts of $5,000 or any integral
multiple thereof (and if within a Stated Maturity selected at random and by lot by the Paying
Agent/Registrar), at the redemption price of par plus accrued interest to the date of redemption.
C. Exercise of Redemption Option. At least forty-five (45) days prior to a date set for
the redemption of Bonds (unless a shorter notification period shall be satisfactory to the Paying
Agent/Registrar), the City shall notify the Paying Agent/Registrar of its decision to exercise the
right to redeem Bonds, the principal amount of each Stated Maturity to be redeemed, and the
date set for the redemption thereof. The decision of the City to exercise the right to redeem
Bonds shall be entered in the minutes of the City Council.
D. Selection of Bonds for Redemption. If less than all Outstanding Bonds of the same
Stated Maturity are to be redeemed on a redemption date, the Paying Agent/Registrar shall select
at random and by lot the Bonds to be redeemed, provided that if less than the entire principal
amount of a Bond is to be redeemed, the Paying Agent/Registrar shall treat such Bond then
subject to redemption as representing the number of Bonds Outstanding which is obtained by
dividing the principal amount of such Bond by $5,000.
E. Notice of Redemption. Not less than thirty (30) days prior to a redemption date for
the Bonds, a notice of redemption shall be sent by United States Mail, first -class postage prepaid,
in the name of the City and at the City's expense, by the Paying Agent/Registrar to each Holder
of a Bond to be redeemed, in whole or in part, at the address of the Holder appearing on the
Security Register at the close of business on the business day next preceding the date of mailing
such notice, and any notice of redemption so mailed shall be conclusively presumed to have been
duly given irrespective of whether received by the Holder.
All notices of redemption shall (i) specify the date of redemption for the Bonds,
(ii) identify the Bonds to be redeemed and, in the case of a portion of the principal amount to be
redeemed, the principal amount thereof to be redeemed, (iii) state the redemption price, (iv) state
that the Bonds, or the portion of the principal amount thereof to be redeemed, shall become due
and payable on the redemption date specified, and the interest thereon, or on the portion of the
principal amount thereof to be redeemed, shall cease to accrue from and after the redemption
date, and (v) specify that payment of the redemption price for the Bonds, or the principal amount
thereof to be redeemed, shall be made at the corporate trust office of the Paying Agent/Registrar
only upon presentation and surrender thereof by the Holder. If a Bond is subject by its terms to
redemption and has been called for redemption and notice of redemption thereof has been duly
given or waived as herein provided, such Bond (or the principal amount thereof to be redeemed)
so called for redemption shall become due and payable, and if money sufficient for the payment
of such Bonds (or of the principal amount thereof to be redeemed) at the then applicable
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redemption price is held for the purpose of such payment by the Paying Agent/Registrar, then on
the redemption date designated in such notice, interest on said Bonds (or the principal amount
thereof to be redeemed) called for redemption shall cease to accrue, and such Bonds shall not be
deemed to be Outstanding in accordance with the provisions of this Ordinance. This notice may
also be published once in a financial publication, journal, or reporter of general circulation
among securities dealers in the City of New York, New York (including, but not limited to, The
Bond Buyer and The Wall Street Journal), or in the State of Texas (including, but not limited to,
The Texas Bond Reporter).
F. Transfer/Exchange. Neither the City nor the Paying Agent/Registrar shall be required
(i) to transfer or exchange any Bond during a period beginning forty -five (45) days prior to the
date fixed for redemption of the Bonds or (ii) to transfer or exchange any Bond selected for
redemption, provided; however, such limitation of transfer shall not be applicable to an exchange
by the Holder of the unredeemed balance of a Bond which is subject to redemption in part.
SECTION 6: Execution - Registration. The Bonds shall be executed on behalf of the
City by its Mayor, its seal reproduced or impressed thereon, and attested by the City Secretary.
The signature of either officer on the Bonds may be manual or facsimile. Bonds bearing the
manual or facsimile signatures of individuals who were, at the time of the Dated Date, the proper
officers of the City shall bind the City, notwithstanding that such individuals or either of them
shall cease to hold such offices prior to the delivery of the Bonds to the Purchasers (defined
herein), all as authorized and provided in Chapter 1201, as amended, Texas Government Code.
No Bond shall be entitled to any right or benefit under this Ordinance, or be valid or
obligatory for any purpose, unless there appears on such Bond either a certificate of registration
substantially in the form provided in Section 9A(3), executed by the Comptroller of Public
Accounts of the State of Texas or his duly authorized agent by manual signature, or a certificate
of registration substantially in the form provided in Section 9A(4), executed by the Paying
Agent/Registrar by manual signature, and either such certificate upon any Bond shall be
conclusive evidence, and the only evidence, that such Bond has been duly certified or registered
and delivered.
SECTION 7: Registration - Transfer - Exchange of Bonds - Predecessor Bonds. The
Paying Agent/Registrar shall obtain, record, and maintain in the Security Register the name and
address of every owner of the Bonds, or, if appropriate, the nominee thereof. Any Bond may, in
accordance with its terms and the terms hereof, be transferred or exchanged for Bonds of other
authorized denominations upon the Security Register by the Holder, in person or by his duly
authorized agent, upon surrender of such Bond to the Paying Agent/Registrar for cancellation,
accompanied by a written instrument of transfer or request for exchange duly executed by the
Holder or by his duly authorized agent, in form satisfactory to the Paying Agent/Registrar.
Upon surrender for transfer of any Bond at the corporate trust office of the Paying
Agent/Registrar, the City shall execute and the Paying Agent/Registrar shall register and deliver,
in the name of the designated transferee or transferees, one or more new Bonds of authorized
denomination and having the same Stated Maturity and of a like interest rate and aggregate
principal amount as the Bond or Bonds surrendered for transfer.
79017907.3
At the option of the Holder, Bonds may be exchanged for other Bonds of the same series
and of authorized denominations and having the same Stated Maturity, bearing the same rate of
interest and of like aggregate principal amount as the Bonds surrendered for exchange upon
surrender of the Bonds to be exchanged at the corporate trust office of the Paying
Agent/Registrar. Whenever any Bonds are so surrendered for exchange, the City shall execute,
and the Paying Agent/Registrar shall register and deliver, the Bonds, to the Holder requesting the
exchange.
All Bonds issued upon any transfer or exchange of Bonds shall be delivered at the
corporate trust office of the Paying Agent/Registrar, or be sent by registered mail to the Holder at
his request, risk, and expense, and upon the delivery thereof, the same shall be the valid and
binding obligations of the City, evidencing the same obligation to pay, and entitled to the same
benefits under this Ordinance, as the Bonds surrendered upon such transfer or exchange.
All transfers or exchanges of Bonds pursuant to this Section shall be made without
expense or service charge to the Holder, except as otherwise herein provided, and except that the
Paying Agent/Registrar shall require payment by the Holder requesting such transfer or exchange
of any fee, tax or other governmental charges required to be paid with respect to such transfer or
exchange.
Bonds canceled by reason of an exchange or transfer pursuant to the provisions hereof are
hereby defined to be Predecessor Bonds, evidencing all or a portion, as the case may be, of the
same debt evidenced by the new Bond or Bonds registered and delivered in the exchange or
transfer therefor. Additionally, the term Predecessor Bonds shall include any Bond registered
and delivered pursuant to Section 15 in lieu of a mutilated, lost, destroyed, or stolen Bond which
shall be deemed to evidence the same obligation as the mutilated, lost, destroyed, or stolen Bond.
SECTION 8: Initial Bond(s). The Bonds herein authorized shall be issued initially
either (1) as a single fully- registered Bond in the total principal amount of $97,930,000 with
principal installments to become due and payable as provided in Section 3 and numbered T -1, or
(ii) as one (1) fully- registered Bond for each year of Stated Maturity in the applicable principal
amount and denomination and to be numbered consecutively from T -1 and upward (the Initial
Bond(s)) and, in either case, the Initial Bond(s) shall be registered in the name of the initial
purchasers or the designee thereof. The Initial Bond(s) shall be the Bonds submitted to the
Office of the Attorney General of the State of Texas for approval, certified and registered by the
Office of the Comptroller of Public Accounts of the State of Texas and delivered to the initial
purchasers. Any time after the delivery of the Initial Bond(s), the Paying Agent/Registrar shall
cancel the Initial Bond(s) delivered hereunder and exchange therefor definitive Bonds of
authorized denominations, Stated Maturities, principal amounts and bearing applicable interest
rates for transfer and delivery to the Holders named at the addresses identified therefor; all
pursuant to and in accordance with such written instructions from the initial purchasers, or the
designee thereof, and such other information and documentation as the Paying Agent/Registrar
may reasonably require.
79017907.5
SECTION 9: Provisions Applicable to the Bonds Based on Priority of Lien on and
Pledge of Net Revenues.
A. Forms.
(1) Forms Generally. The Bonds, the Registration Certificate of the
Comptroller of Public Accounts of the State of Texas, the Certificate of Paying
Agent/Registrar, and the form of Assignment to be printed on each of the Bonds shall be
substantially in the forms set forth in this Section with such appropriate insertions,
omissions, substitutions, and other variations as are permitted or required by this
Ordinance and may have such letters, numbers, or other marks of identification
(including insurance legends in thc event the Bonds, or any Stated Maturities thereof, are
insured and identifying numbers and letters of the Committee on Uniform Securities
Identification Procedures of the American Bankers Association) and such legends and
endorsements (including any reproduction of an opinion of counsel) thereon as may,
consistent herewith, be established by the City or determined by the officers executing
the Bonds as evidenced by their execution thereof. Any portion of the text of any Bond
may be set forth on the reverse thereof, with an appropriate reference thereto on the face
of the Bond.
The definitive Bonds shall be printed, lithographed, or engraved, produced by any
combination of these methods, or produced in any other similar manner, all as determined by the
officers executing the Bonds as evidenced by their execution thereof, but the Initial Bond(s)
submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise
reproduced.
(2) Form of Definitive Bond.
REGISTERED
REGISTERED PRINCIPAL AMOUNT
NO. $
United States of America
State of Texas
Counties of Nueces, Aransas, Kleberg, and San Patricio
CITY OF CORPUS CHRISTI, TEXAS UTILITY SYSTEM
JUNIOR LIEN REVENUE IMPROVEMENT BONDS, SERIES 2013
Dated Date: Interest Rate: Stated Maturity:
November 1, 2013
CUSIP NO:
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Corpus Christi, Texas (the City), a body corporate and a municipal
corporation located in the Counties of Nueces, Aransas, Kleberg, and San Patricio, State of
Texas, for value received, hereby promises to pay to the order of the Registered Owner specified
79017907,5
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 Dated Date or
from the most recent interest payment date to which interest has been paid 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 of 30 -day months; such interest being payable on January 15
and July 15 of each year commencing July 15, 2014.
Principal and premium, if any, of the Bond shall be payable to the Registered Owner
hereof (the Holder) upon presentation and surrender, at the corporate trust office of the Paying
Agent/Registrar executing the registration certificate appearing hereon or a successor thereof.
Interest shall be payable to the Holder of this Bond (or one or more Predecessor Bonds, as
defined in the Ordinance hereinafter referenced) whose name appears on the Security Register
maintained by the Paying Agent/Registrar at the close of business on the Record Date, which is
the last business day of the month next preceding each interest payment date. All payments of
principal of and interest on this Bond shall be in any coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public and private debts.
Interest shall be paid by the Paying Agent/Registrar by check sent on the appropriate date of
payment by United States Mail, first-class postage prepaid, to the Holder hereof at the address
appearing in the Security Register or by such other method, acceptable to the Paying
Agent/Registrar, requested by the Holder hereof at the Molder's risk and expense.
This Bond is one of the series specified in its title issued in the aggregate principal
amount of $97,930,000 (the Bonds) pursuant to an ordinance adopted by the governing body of
the City (the Ordinance), for the purpose of (i) building, improving, extending, renovating,
enlarging, and repairing the System and (ii) the payment of their costs of issuance. The Bonds
are authorized to be issued pursuant to the authority conferred by and in conformity with the
Constitution and laws of the State of Texas, particularly Chapters 1371 and 1502, as amended,
Texas Government Code, the City's Home Rule Charter, and the Ordinance.
The Bonds stated to mature on July 15, 2033, July 15, 2038, and July 15, 2043 are
referred to herein as the Term Bonds. The Term Bonds are subject to mandatory sinking fund
redemption prior to their stated maturities from money required to be deposited in the Bond Fund
(but not the Reserve Fund) for such purpose and shall be redeemed in part, by lot or other
customary method, at the principal amount thereof plus accrued interest to the date of
redemption in the following principal amounts on July 15 in each of the years as set forth below:
79017907.5
t2-
Term Bonds Stated to Mature Term Bonds Stated to Mature Term Bonds Stated to Mature
on July 15, 2033 on July 15, 2038 on July 15, 2043
Principal Principal Principal
Year Amount ($) Year Amount ($) Year Amount ($)
2032 3,800,000 2034 4,155,000 2039 5,305,000
2033 3,975,000* 2035 4,365,000 2040 5,570,000
2036 4,585,000 2041 5,850,000
2037 4,810,000 2042 6,140,000
2038 5,055,000* 2043 6,450,000*
*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 City, 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 City 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 City with money in the Bond Fund (but not the
Reserve Fund), or (3) shall have been redeemed pursuant to the optional redemption provisions
set forth below and not theretofore credited against a mandatory redemption requirement.
The Bonds stated to mature on and after July 15, 2024 may be redeemed prior to their
Stated Maturities, at the option of the City, on July 15, 2023 or on any date, in whole or in part in
principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity
selected at random and by lot by the Paying Agent/Registrar) at the redemption price of par,
together with accrued interest to the date of redemption, and upon thirty (30) days prior written
notice being given by United States mail, first-class postage prepaid, to Holders of the Bonds to
be redeemed, and subject to the terms and provisions relating thereto contained in the Ordinance.
If this Bond is subject to redemption prior to Stated Maturity and is in a denomination in excess
of $5,000, portions of the principal sum hereof in installments of $5,000 or any integral multiple
thereof may be redeemed, and, if less than all of the principal sum hereof is to be redeemed,
there shall be issued, without charge therefor, to the Holder hereof, upon the surrender of this
Bond to the Paying Agent/Registrar at its corporate trust office, a new Bond or Bonds of like
Stated Maturity and interest rate in any authorized denominations provided in the Ordinance for
the then unredeemed balance of the principal sum hereof.
If this Bond (or any portion of the principal sum hereof) shall have been duly called for
redemption and notice of such redemption duly given, then upon such redemption date this Bond
(or the portion of the principal sum hereof to be redeemed) shall become due and payable, and, if
money for the payment of the redemption price and the interest accrued on the principal amount
to be redeemed to the date of redemption is held for the purpose of such payment by the Paying
Agent/Registrar, interest shall cease to accrue and be payable hereon from and after the
redemption date on the principal amount hereof to be redeemed. In the event of a partial
redemption of the principal amount of this Bond, payment of the redemption price of such
principal amount shall be made to the registered owner only upon presentation and surrender of
this Bond to the corporate trust office of the Paying Agent/Registrar and, there shall be issued to
79017907.5
-13-
the registered owner hereof, without charge, a new Bond or Bonds of like maturity and interest
rate in any authorized denominations provided in the Ordinance for the then unredeemed balance
of the principal sum hereof. If this Bond is called for redemption, in whole or in part, the City or
the Paying Agent/Registrar shall not be required to issue, transfer, or exchange this Bond within
forty -five (45) days of the date fixed for redemption; provided, however, such limitation of
transfer shall not be applicable to an exchange by the Holder of the unredeemed balance hereof
in the event of its redemption in part.
The Bonds of this series are special obligations of the City, issued as the initial series of
Junior Lien Obligations, payable from and equally and ratably secured by a lien on and pledge of
the Junior Lien Pledged Revenues, being (primarily) a lien on and pledge of the Net Revenues
derived from the operation of the City's utility system (as further described in the Ordinance, the
System), that is junior and inferior to the lien thereon and pledge thereof securing the repayment
of the Priority Bonds, but senior and superior to the lien thereon and pledge thereof securing the
repayment of the Subordinate Lien Obligations and the Inferior Lien Obligations. In the
Ordinance, the City reserves and retains the right to issue Additional Priority Bonds, Additional
Junior Lien Obligations, Additional Subordinate Lien Obligations, and Additional Inferior Lien
Obligations without limitation as to principal amount but subject to any terms, conditions, or
restrictions set forth in the Ordinance or as may be applicable thereto under law or otherwise.
The Bonds do not constitute a legal or equitable pledge, charge, lien, or encumbrance upon any
property of the City or System, except with respect to the Junior Lien Pledged Revenues.
The Holder hereof shall never have the right to demand payment of this obligation out of
any funds raised or to be raised by taxation.
Reference is hereby made to the Ordinance, a copy of which is on file in the corporate
trust office of the Paying Agent/Registrar, and to all of the provisions of which the Holder by his
acceptance hereof hereby assents, for definitions of terms; the description and nature of the
Junior Lien Pledged Revenues pledged for the payment of the Bonds; the terms and conditions
under which the City may issue Additional Priority Bonds, Additional Junior Lien Obligations,
Additional Subordinate Lien Obligations, and Additional Inferior Lien Obligations; the terms
and conditions relating to the transfer or exchange of the Bonds; the conditions upon which the
Ordinance may be amended or supplemented with or without the consent of the Holders; the
rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and
provisions upon which this Bond may be redeemed or discharged at or prior to the Stated
Maturity thereof, and deemed to be no longer Outstanding thereunder; and for the other terms
and provisions specified in the Ordinance. Capitalized terms used herein have the same
meanings assigned in the Ordinance.
This Bond, subject to certain limitations contained in the Ordinance, may be transferred
on the Security Register upon presentation and surrender at the corporate trust office of the
Paying Agent/Registrar, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Paying Agent/Registrar duly executed by the Holder hereof, or his duly
authorized agent, and thereupon one or more new fully registered Bonds of the same Stated
Maturity, of authorized denominations, bearing the same rate of interest, and of the same
aggregate principal amount will be issued to the designated transferee or transferees.
74017407 5
The City and the Paying Agent/Registrar, and any agent of either, shall treat the Holder
hereof whose name appears on the Security Register (i) on the Record Date as the owner hereof
for purposes of receiving payment of interest hereon, (ii) on the date of surrender of this Bond as
the owner hereof for purposes of receiving payment of principal hereof at its Stated Maturity, or
its redemption, in whole or in part, and (iii) on any other date as the owner hereof for all other
purposes, and neither the City nor the Paying Agent/Registrar, or any such agent of either, shall
be affected by notice to the contrary. In the event of a non - payment of interest an a scheduled
payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a
Special Record Date) will be established by the Paying Agent/Registrar, if and when funds for
the payment of such interest have been received from the City. Notice of the Special Record
Date and of the scheduled payment date of the past due interest (the Special Payment Date -
which shall be fifteen (15) days after the Special Record Date) shall be sent at least five (5)
business days prior to the Special Record Date by United States mail, first -class postage prepaid,
to the address of each Holder appearing an the Security Register at the close of business on the
last business day next preceding the date of mailing of such notice.
It is hereby certified, covenanted, and represented that all acts, conditions, and things required to
be performed, exist, and be done precedent to the issuance of this Bond in order to render the
same a legal, valid, and binding special obligation of the City have been performed, exist, and
have been done, in regular and due time, form, and manner, as required by law, and that issuance
of the Bonds does not exceed any constitutional or statutory limitation; and that due provision
has been made for the payment of the principal of and interest on the Bonds by a pledge of and
lien on the Junior Lien Pledged Revenues. In case any provision in this Bond or any application
thereof shall be deemed invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions and applications shall not in any way be affected or
impaired thereby. The terms and provisions of this Bond and the Ordinance shall be construed in
accordance with and shall be governed by the laws of the State of Texas.
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79017947.5 4 -'
IN WITNESS WHEREOF, this Bond has been signed with the imprinted or lithographed
facsimile signature of the Mayor of the City, attested by the imprinted or lithographed facsimile
signature of the City Secretary, and the official seal of the City has been duly affixed to, printed,
lithographed or impressed on this Bond.
CITY OF CORPUS CHRISTI, TEXAS
Mayor
ATTEST:
City Secretary
(SEAL)
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79017907.5
(3) *Form of Registration Certificate of Comptroller of Public Accounts to
Appear on Initial Bond(s) 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)
* Bond to Printer: Not to appear on printed Bonds
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79017907.5 -17-
(4) *Form of Certificate of Paving Agent/Registrar to Appear on Definitive
Bonds Only.
CERTIFICATE OF PAYING AGENTIREGISTRAR
This Bond has been duly issued under the provisions of the within - mentioned Ordinance;
the Bond or Bonds of the above - entitled and designated series originally delivered having been
approved by the Attorney General of the State of Texas and registered by the Comptroller of
Public Accounts, as shown by the records of the Paying Agent/Registrar.
Registered this date:
* Bond to Printer: to appear on printed Bonds
The Bank of New York Mellon Trust
Company, N.A., Dallas, Texas,
as Paying Agent/Registrar
By: .a.
Authorized Signature
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79017907,5
(5) 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):
thc 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:
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79017907.5
(6) The Initial Bond(s) shall be in the form set forth in paragraph B of this
Section, except that the form of a single fully registered Initial Bond shall be modified as
follows:
(a) immediately under the name of the Bond(s) the headings "Interest
Rate" and "Stated Maturity" shall both be completed "as shown below";
(b) the first two paragraphs shall read as follows:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of Corpus Christi, Texas (the City), a body corporate and a municipal
corporation located in the Counties of Nucces, Aransas, Kleberg, and San Patricia, State of
Texas, for value received, 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 3 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 Dated Date, or from the most recent interest payment
date to which interest has been paid 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 of
30 -day months; such interest being payable on January 15 and July 15 of each year, commencing
July 15, 2014.
Principal of this Bond shall be payable to the Registered Owner hereof (the Holder),
upon its presentation and surrender, at the corporate trust office of The Bank of New York
Mellon Trust Company, N.A., Dallas, Texas (the Paying Agent /Registrar). Interest shall be
payable to the Holder of this Bond whose name appears on the Security Register maintained by
the Paying Agent/Registrar at the close of business on the Record Date, which is the last business
day of the month next preceding each interest payment date. All payments of principal of and
interest on this Bond shall be in any coin or currency of the United States of America which at
the time of payment is legal tender for the payment of public and private debts. Interest shall be
paid by the Paying Agent/Registrar by check sent on or prior to the appropriate date of payment
by United States mail, first -class postage prepaid, to the Holder hereof at the address appearing
in the Security Register or by such other method, acceptable to the Paying Agent/Registrar,
requested by, and at the risk and expense of, the Holder hereof.
79017907 S
-20-
(7) Insurance Legend. If bond insurance is obtained by the Purchasers or the
City for the Bonds, the definitive Bonds and the Initial Bond(s) shall bear an appropriate
legend as provided by the insurer.
B. Pledge of Junior Lien Pledged Revenues.
(1) The City hereby covenants and agrees that the Junior Lien Pledged
Revenues of the System are hereby irrevocably pledged to the payment and security of
the Junior Lien Obligations, including the establishment and maintenance of the special
funds or accounts created for the payment and security thereof, all as hereinafter
provided; and it is hereby resolved that the Junior Lien Obligations, and the interest
thereon, shall constitute a lien on and pledge of the Junior Lien Pledged Revenues and be
valid and binding without any physical delivery thereof or further act by the City, and the
lien created hereby on the Junior Lien Pledged Revenues for the payment and security of
the Junior Lien Obligations, shall be, subject to the subordinate lien nature of the Junior
Lien Pledged Revenues as herein described otherwise, prior in right and claim as to any
other indebtedness, liability, or obligation of the City or the System. The Junior Lien
Obligations are and will be secured by and payable only from the Junior Lien 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,
(2) Chapter 1208, as amended, Texas Government Code, applies to the
issuance of the Bonds and the pledge of Junior Lien 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 Junior Lien Obligations are
Outstanding and unpaid such that the pledge of the Junior Lien Pledged Revenues
granted by the City is to be subject to the filing requirements of Chapter 9, Texas
Business & Commerce Code, then in order to preserve to the registered owners of the
Junior Lien Obligations the perfection of the security interest in this pledge, the City
Council 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 this
pledge to occur.
C. Rates and Charges. For the benefit of the Holders of the Bonds and in addition to all
provisions and covenants in the laws of the State of Texas and in this Ordinance, the City hereby
expressly stipulates and agrees, while any of the Junior Lien Obligations are Outstanding, to
establish and maintain rates and charges for facilities and services afforded by the System that
are reasonably expected, on the basis of available information and experience and with due
allowance for contingencies, to produce Gross Revenues in each Fiscal Year sufficient:
(1) To pay all Operating Expenses, or any expenses required by statute to be a
first claim on and charge against the Gross Revenues of the System.
(2) To produce Net Revenues, together with any other lawfully available
funds, sufficient to satisfy the rate covenant contained in the ordinances authorizing the
issuance of the Priority Bonds and to pay the principal of and interest on the Priority
79017907.5 -21-
Bonds and the amounts required to be deposited in any reserve or contingency fund or
account created for the payment and security of the Priority Bonds, and any other
obligations or evidences of indebtedness issued or incurred that are payable from and
secured solely by a prior and first lien on an pledge of the Net Revenues of the System;
(3) To produce Net Revenues, together with any other lawfully available
funds, equal to at least 1.15 times Average Annual Debt Service Requirements on the
then - Outstanding Junior Lien Obligations and to deposit the amounts required to be
deposited in any reserve or contingency fund or account created for the payment and
security of the Junior Lien Obligations, and any other obligations or evidences of
indebtedness issued or incurred that are payable from and secured solely by a lien on and
pledge of the Net Revenues, including the Junior Lien Pledged Revenues, that is junior
and inferior to the lien thereon and pledge thereof securing the repayment of the Priority
Bonds but senior and superior to the lien thereon and pledge thereof securing the
repayment of the Inferior Lien Obligations;
(4) To produce Net Revenues, together with any other lawfully available
funds, sufficient to pay the amounts that may be deposited in the special funds
established for the payment of the Subordinate Lien Obligations;
(5) To produce Net Revenues, together with any other lawfully available
funds, sufficient to pay the principal of and interest on the Inferior Lien Obligations as
the same become due and payable and to deposit the amounts required to be deposited in
any reserve or contingency fund or account created for the payment and security of the
Inferior Lien Obligations, and any other obligations or evidences of indebtedness issued
or incurred that are payable from and secured solely by a lien on and pledge of the Net
Revenues that is subordinate and inferior to the Iien thereon and pledge thereof securing
the repayment of the Priority Bonds and the Junior Lien Obligations; and
(6) To pay, together with any other lawfully available funds, any other legally
incurred Debt payable from the Net Revenues of the System and/or secured by a lien on
any part of the System.
The determination of the amount of principal of and interest on any obligations identified
in this Section for the purpose of confirming the sufficiency of System rates and charges shall be
made after giving consideration as an offset to debt service the receipt or anticipated receipt of a
refundable tax credit or similar payment relating to any series of obligations irrevocably
designated as refundable tax credit bonds pursuant to the City ordinance authorizing their
issuance or otherwise relating thereto.
D. System Fund. The City hereby covenants, agrees, and ratifies its prior covenants and
agreements that the Gross Revenues of the System shall be deposited, as collected and received,
into a separate Fund or account (previously created and established and to be maintained with the
Depository) known as the "City of Corpus Christi, Texas Utility System Revenue Fund" (the
System Fund) and that the Gross Revenues of the System shall be kept separate and apart from
all other funds of the City. All Gross Revenues deposited into the System Fund shall be pledged
and appropriated to the extent required for the following uses and in the order of priority shown:
79017907.5
-22-
(1) First: To the payment of all necessary and reasonable Operating Expenses
or other expenses required by statute to be a first charge on and claim against the
revenues of the System.
(2) Second: To the payment of the amounts required to be deposited into the
special funds and accounts created and established for the payment, security and benefit
of the Previously Issued Priority Bonds and any Additional Priority Bonds hereafter
issued by the City.
(3) Third: To the payment of the amounts required to be deposited into the
special funds and accounts created and established for the payment, security and benefit
of the Junior Lien Obligations and any Additional Junior Lien Obligations hereafter
issued by the City.
(4) Fourth: To the payment of the amounts required to be deposited into the
special funds and accounts created and established for the payment, security and benefit
of the Previously Issued Subordinate Lien Obligations and any Additional Subordinate
Lien Obligations hereafter issued by the City.
(5) Fifth: To the payment of the amounts that must be deposited in any
special funds and accounts created and established for the payment, security, and benefit
of the Previously Issued Inferior Lien Obligations and any Additional Inferior Lien
Obligations hereafter issued by the City.
Any Net Revenues remaining in the System Fund following such transfers may be used
by the City for payment of other obligations of the System, and for any other lawful purpose;
provided, however, that for so long as any Priority Bonds remain Outstanding, transfers made for
purposes other than for payment of obligations of the System shall be made only at the end of the
Year (if such limitation is imposed, and then, only to the extent imposed in the City ordinances
authorizing the issuance of the Priority Bonds.
E. Bond Fund - Excess Funds. For purposes of providing funds to pay the principal of
and interest on the currently Outstanding Junior Lien Obligations as the same become due and
payable, the City agrees to maintain, at the Depository, a separate and special Fund or account to
be created and known as the "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Improvement Bonds Interest and Sinking Fund" (the Bond Fund). The City covenants that there
shall be deposited by an Authorized Official into the Bond Fund prior to each principal and
interest payment date from the available Net Revenues an amount equal to one hundred per cent
(100 %) of the amount required to fully pay the interest on and the principal of the currently
Outstanding Junior Lien Obligations then falling due and payable, such deposits to pay maturing
principal and accrued interest on the currently Outstanding Junior Lien Obligations to be made in
substantially equal monthly installments on or before the 10i1' day of each month, beginning on
or before the 10th day of the month next following the delivery of the Bonds to the Purchasers.
As described further in Subsection 9G hereof, if the Junior Lien Pledged Revenues in any month
are insufficient to make the required payments into the Bond Fund, then the amount of any
deficiency in such payment shall be added to the amount otherwise required to be paid into the
Bond Fund in the next month.
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The required monthly deposits to the Bond Fund for the payment of principal of and
interest on the currently Outstanding Junior Lien Obligations shall continue to be made as
hereinabove provided until such time as (i) the total amount on deposit in the Bond Fund and
Reserve Fund is equal to the amount required to fully pay and discharge all Outstanding Junior
Lien Obligations (principal and interest) or (ii) the Junior Lien Obligations are no longer
Outstanding.
Any proceeds of the Bonds, and investment income thereon, not expended for authorized
purposes shall be deposited into the Bond Fund and shall be taken into consideration and reduce
the amount of monthly deposits required to be deposited into the Bond Fund from the Net
Revenues of the System.
Any surplus proceeds from the sale of the Bonds, including investment income thereon,
not expended for authorized purposes shall be deposited in the Bond Fund, and such amounts so
deposited shall reduce the sums otherwise required to be deposited in such Fund from the Junior
Lien Pledged Revenues.
F. Reserve Fund. To accumulate and maintain a reserve for the payment of the Bonds
equal to 100% of the Average Annual Debt Service Requirements or such lesser amount as
restricted by the Code (calculated by the City Council at the beginning of each Fiscal Year and
as of the date of issuance of the Bonds and each series of Additional Junior Lien Obligations) for
the Bonds (the Required Reserve Amount), the City hereby creates and establishes, and shall
maintain at a Depository a separate and special fund known as the "Corpus Christi, Texas Utility
System Junior Lien Revenue Improvement Bonds Reserve Fund" (the Reserve Fund). Earnings
and income derived from the investment of amounts held for the credit of the Reserve Fund shall
be retained in the Reserve Fund until the Reserve Fund contains the Required Reserve Amount;
thereafter, such earnings and income shall be deposited to the credit of the System Fund. All
funds deposited into the Reserve Fund shall be used solely for the payment of the principal of
and interest on the Bonds, when and to the extent other funds available for such purposes are
insufficient, and, in addition, may be used to retire the last Stated Maturity or Stated Maturities
of or interest on the Bonds.
The City may acquire a Credit Facility or Facilities issued by a Credit Provider in
amounts equal to all or part of the Required Reserve Amount for the Bonds in lieu of depositing
cash into the Reserve Fund; provided, however, that no such Credit Facility may be so
substituted unless the substitution of the Credit Facility will not, in and of itself, cause any
ratings then assigned to the Bonds by any Rating Agency to be lowered and the resolution
authorizing the substitution of the Credit Facility for all or part of the Required Reserve Amount
for the Bonds contains (i) a finding that such substitution is cost effective and (ii) a provision that
the interest due on any repayment obligation of the City by reason of payments made under such
Credit Facility does not exceed the highest lawful rate of interest which may be paid by the City
at the time of the delivery of the Credit Facility. The City reserves the right to use Junior Lien
Pledged Revenues to fund the payment of (1) periodic premiums on the Credit Facility as a part
of the payment of the City's Operating Expenses, and (2) any repayment obligation incurred by
the City (including interest) to the Credit Provider, the payment of which will result in the
reinstatement of such Credit Facility, prior to making payments required to be made to the
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Reserve Fund pursuant to the provisions of this Section to restore the balance in such fund the
Required Reserve Amount for the Bonds.
Until the issuance of any Additional Junior Lien Obligations (or as from time to time
recalculated by the City as provided in the first paragraph of this Section), the Required Reserve
Amount is $18,092,666.79 (inclusive of the Bonds). Of this amount, $6,533,923.03,
representing the portion of the Required Reserve Amount attributable to the issuance of the
Bonds, shall be deposited to the Reserve Fund at such time as may be required pursuant to the
provisions of this Section from Revenues, paid from the System Fund at such level of priority as
specified in Subsection 9D, by the deposit of monthly installments, made on or before the 10th
day of each month following the month in which such obligation to fund the Reserve Fund
arises, of not less than 1/60th of the amount to be maintained in the Reserve Fund.
As and when Additional Junior Lien Obligations are delivered or incurred, the Required
Reserve Amount shall be increased, if required, to an amount calculated in the manner provided
in the first paragraph of this Section. Any additional amount required to be maintained in the
Reserve Fund shall be so accumulated by the deposit of all or a portion of the necessary amount
from the proceeds of the issue or other lawfully available funds in the Reserve Fund immediately
after the delivery of the then proposed Additional Junior Lien Obligations, or, at the option of the
City, by the deposit of monthly installments, made on or before the business day before the 10th
day of each month following the month of delivery of the then proposed Additional Junior Lien
Obligations, of not less than 1 /60th of the additional amount to be maintained in the Reserve
Fund by reason of the issuance of the Additional Junior Lien Obligations then being issued (or
1/60th of the balance of the additional amount not deposited immediately in cash) (such deposits,
the Required Reserve Fund Deposits), thereby ensuring the accumulation in the Reserve Fund of
the appropriate Required Reserve Amount.
When and for so long as the cash and investments in the Reserve Fund equal the
Required Reserve Amount, no deposits need be made to the credit of the Reserve Fund; but, if
and when the Reserve Fund at any time contains less than the Required Reserve Amount (other
than as the result of the issuance of Additional Junior Lien Obligations as provided in the
preceding paragraph), the City covenants and agrees to cure the deficiency in the Required
Reserve Amount by resuming the Required Reserve Fund Deposits to the Reserve Fund from the
Junior Lien Pledged Revenues in monthly deposit amounts equal to not less than 1160th of the
Required Reserve Amount covenanted by the City to be maintained in the Reserve Fund. Any
such deficiency payments shall be made on or before the 10th day of each month until the
Required Reserve Amount has been fully restored. The City further covenants and agrees that,
subject only to the prior payments to be made to the Bond Fund, the Junior Lien Pledged
Revenues shall be applied and appropriated and used to establish and maintain the Required
Reserve Amount and to cure any deficiency in such amounts as required by the terms of this
Ordinance, any City ordinance authorizing the issuance of the Priority Bonds, and any other
ordinance pertaining to the issuance of Additional Junior Lien Obligations.
During such time as the Reserve Fund contains the Required Reserve Amount, the City
Council may, at its option, withdraw all surplus funds in the Reserve Fund in excess of the
Required Reserve Amount. Any such withdrawn surplus shall be deposited to the Bond Fund or
used by the City for any other lawful purpose; provided, however, to the extent that such excess
79017907.5
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amount represents Bond proceeds, then such amount must be transferred to the Bond Fund or be
otherwise used in accordance with then - applicable State law.
In the event a Credit Facility issued to satisfy all or a part of the City's obligation with
respect to the Reserve Fund causes the amount then on deposit in the Reserve Fund to exceed the
Required Reserve Amount for the Bonds, the City may transfer such excess amount to any fund
or funds established for the payment of or security for the Bonds (including any escrow
established for the final payment of any such obligations pursuant to the provisions of Chapter
1207), or be used for any lawful purposes; provided, however, to the extent that such excess
amount represents Bond proceeds, then such amount must be transferred to the Bond Fund or be
otherwise used in accordance with then - applicable State law.
Notwithstanding anything to the contrary contained in this Section 9F, the requirements
set forth above to fund the Reserve Fund in the amount of the Required Reserve Amount shall be
suspended for such time as the Junior Lien Pledged Revenues for each Fiscal Year are equal to at
least 110% of the Average Annual Debt Service Requirements. In the event that the Junior Lien
Pledged Revenues for any two consecutive Fiscal Years are less than 110% (unless such
percentage is below 100% in any Fiscal Year, in which case the hereinafter — specified
requirements will commence after such Fiscal Year) of the Average Annual Debt Service
Requirements, the City will be required to commence making the deposits to the Reserve Fund,
as provided above, and to continue making such deposits until the earlier of (i) such time as the
Reserve Fund contains the Required Reserve Amount or (ii) the Junior Lien Pledged Revenues
for a Fiscal Year have been equal to not less than 110% of the Average Annual Debt Service
Requirements.
G. Deficiencies - Excess Junior Lien Pledged Revenues.
(1) If on any occasion there shall not be sufficient Junior Lien Pledged
Revenues to make the required deposits into the Bond Fund, then such deficiency shall be
cured as soon as possible from the next available unallocated Junior Lien Pledged
Revenues, or from any other sources available for such purpose, and such payments shall
be in addition to the amounts required to be paid into these Funds or accounts during such
month or months.
(2) Subject to making the required deposits to the Bond Fund when and as
required by any ordinance or resolution authorizing the issuance of the currently
Outstanding Priority Bonds, the Junior Lien Obligations, the Subordinate Lien
Obligations, and the Inferior Lien Obligations, the excess Net Revenues of the System
may be used by the City for any lawful purpose (as further provided in Subsection 9D
hereof).
H. Payment of Bonds. While any of the Bonds are Outstanding, an Authorized Official
shall cause to be transferred to the Paying Agent/Registrar therefor, from funds on deposit in the
Bond Fund, amounts sufficient to fully pay and discharge promptly each installment of interest
on and principal of the Bonds as such installment accrues or matures; such transfer of funds must
be made in such manner as will cause immediately available fiords to be deposited with the
79017907.5
Paying Agent/Registrar for the Bonds at the close of the business day next preceding the date a
debt service payment is due on the Bonds.
I. Investments. Funds held in any Fund or account created, established, or maintained
pursuant to this Ordinance shall, at the option of the City, be placed in time deposits, certificates
of deposit, guaranteed investment contracts or similar contractual agreements as permitted by the
provisions of the Public Funds Investment Act, as amended, Chapter 2256, Texas Government
Code, or any other law, and secured (to the extent not insured by the Federal Deposit Insurance
Corporation) by obligations of the type hereinafter described, including investments held in
book -entry form, in securities including, but not limited to, direct obligations of the United States
of America, obligations guaranteed or insured by the United States of America, which, in the
opinion of the Attorney General of the United States, are backed by its full faith and credit or
represent its general obligations, or invested in indirect obligations of the United States of
America, including, but not limited to, evidences of indebtedness issued, insured, or guaranteed
by such governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks,
Banks for Cooperatives, Federal Home Loan Banks, Government National Mortgage
Association, Farmers Home Administration, Federal Home Loan Mortgage Association, or
Federal Housing Association; provided that all such deposits and investments shall be made in
such a manner that the money required to be expended from any Fund or account will be
available at the proper time or times. Such investments (except State and Local Government
Series investments held in book entry form, which shall at all times be valued at cost) shall be
valued in terms of current market value within 45 days of the close of each Fiscal Year. All
interest and income derived from deposits and investments in the Bond Fund immediately shall
be credited to, and any losses debited to, the Bond Fund. All such investments shall be sold
promptly when necessary to prevent any default in connection with the Bonds.
J. Application of the Covenants and Agreements of the Priority Bonds. It is the
intention of the City Council and accordingly hereby recognized and stipulated that the
provisions, agreements, and covenants contained herein bearing upon the management and
operations of the System, and the administering and application of Gross Revenues derived from
the operation thereof, shall to the extent possible be harmonized with like provisions,
agreements, and covenants contained in the City ordinances authorizing the issuance of the
Priority Bonds now or hereafter Outstanding, and to the extent of any irreconcilable conflict
between the provisions contained herein and in the City ordinances authorizing the issuance of
the Priority Bonds now or hereafter Outstanding, the provisions, agreements and covenants
contained therein shall prevail to the extent of such conflict and be applicable to this Ordinance,
especially the priority of rights and benefits conferred thereby to the holders of the Priority
Bonds now or hereafter Outstanding. It is expressly recognized that prior to the issuance of any
Additional Junior Lien Obligations or Additional Inferior Lien Obligations, that the City must
comply with each of the conditions precedent contained in this Ordinance and the City
ordinances authorizing the issuance of the then- Outstanding Priority Bonds, as appropriate.
K. Issuance of Additional Priority Bonds, Additional Junior Lien Obligations, Additional
Subordinate Lien Obligations, and Additional Inferior Lien Obligations. Subsequent to the
issuance of the Bonds and the Concurrently Issued Bonds (the issuance of each of which without
compliance with the terms of this Subsection are hereby approved), the City hereby expressly
reserves the right to hereafter issue bonds, notes, warrants, certificates of obligation, or similar
790179075
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obligations, payable, wholly or in part, as appropriate, from and secured by a pledge of and lien
on the Net Revenues of the System with the following priorities, without limitation as to
principal amount, but subject to any terms, conditions, or restrictions applicable thereto under
existing ordinances, laws, or otherwise:
(1) Additional Priority Bonds payable from and equally and ratably secured
by a first and prior lien on and pledge of the Net Revenues of the System upon satisfying
each of the conditions precedent contained in the City ordinances authorizing the
issuance of the Priority Bonds now or hereafter Outstanding.
(2) Additional Junior Lien Obligations, secured by and payable from the
Junior Lien Pledged Revenues, which includes (primarily) a lien on and pledge of Net
Revenues that is junior and inferior to the lien thereon and pledge thereof securing the
repayment of the Priority Bonds but senior and superior to the lien there on and pledge
thereof securing the repayment of the Subordinate Lien Obligations and the Inferior Lien
Obligations, upon satisfying each of the following conditions precedent:
(a) The City Manager (or other officer of the City then having the
responsibility for the financial affairs of the City) shall have 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
Net 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 Net 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 Junior Lien Obligations,
but such certificate shall not be dated prior to the date an ordinance is passed
authorizing the issuance of such Additional Junior Lien Obligations.
(b) Conditions Precedent for Issuance of Additional Junior Lien
Obligations - Capital Improvements and for any other Lawful Purpose except for
Capital Additions or for Refunding. The City covenants and agrees that
Additional Junior Lien Obligations 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 K(2)(c) and Subsection 9L this Section, respectively)
unless and until the conditions precedent in Subsection K(2)(a) of this Section
have been satisfied and, in addition thereto, the City has secured a certification of
the City Manager to the effect that, according to the books and records of the
City, the Net Earnings (as hereinafter defined) for the preceding Fiscal Year or for
12 consecutive months out of the 15 months inunediately preceding the month the
ordinance authorizing the Additional Junior Lien Obligations is adopted are at
least equal to 1.15 times the Average Annual Debt Service Requirements for all
then- Outstanding Priority Bonds or Junior Lien Obligations after giving effect to
the Additional Junior Lien Obligations then proposed. The foregoing
notwithstanding, the City covenants and agrees that Additional Junior Lien
79017907 .,5
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79017907.5
Obligations may not be issued for the purpose of financing Capital Improvements
when other Outstanding Junior Lien Obligations which have been issued for the
purpose of financing Capital Additions and for which capitalized interest for such
other Junior Lien Obligations has been provided for at least the twelve months
subsequent to the date of issuance of the Additional Junior Lien Obligations 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 K(2)(b) as set forth above cannot be satisfied, the
City has satisfied the conditions precedent in Subsection K(2)(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 certification of the City Manager to the effect that, according to the
books and records of the City, the Net Earnings for the preceding Fiscal Year or
for 12 consecutive months out of the 15 months immediately preceding the month
the ordinance authorizing the Additional Junior Lien Obligations is adopted are at
least equal to 1.15 times the Average Annual Debt Service Requirements for all
then - Outstanding Priority Bonds and Junior Lien Obligations (other than any
Priority Bonds or Junior Lien Obligations 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 Junior Lien Obligations proposed to be
issued) after giving effect to the Additional Junior Lien Obligations then proposed
to be issued,
(c) Conditions Precedent for Issuance of Additional Junior Lien
Obligations - Capital Additions: Initial Issue. The City covenants and agrees that
Additional Junior Lien Obligations will not be issued for the purpose of financing
Capital Additions, unless the same conditions precedent specified in
Subsection K(2)(a) above have been satisfied and, in addition thereto, either the
relevant conditions precedent specified in Subsection K(2)(a) above are satisfied
or, in the alternative, the City shall have obtained: (i) from the Engineer 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 Fiscal 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
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79017907 .5
(ii) a certificate of the Engineer to the effect that, based on an engineering report
prepared thereby for each Capital Addition, the projected Net Earnings for each of
the five Fiscal Years subsequent to the date the Capital Addition becomes
commercially operative (as estimated in the engineering report) will be equal to at
least 1.15 times the Average Annual Debt Service Requirements for the currently
Outstanding Junior Lien Obligations or incurred and all Additional Junior Lien
Obligations 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 Fiscal 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 K(2)(c)(i) and (ii) above
and the initial Junior Lien Obligations issued therefor are delivered, the City
reserves the right to issue Additional Junior Lien Obligations 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 K(2)(c)(i) and (ii) or Subsection K(2)(a) of this Section but subject to
satisfaction of the following conditions precedent: (i) the City makes a forecast
(the Forecast) of thc operations of the System demonstrating the System's ability
to pay all obligations, payable from the Net Revenues of the System to be
Outstanding after the issuance of the Additional Junior Lien Obligations then
being issued for the period (the Forecast Period) of each ensuing Fiscal Year
through thc fifth Fiscal Year subsequent to the latest estimated date such Capital
Addition is expected to be commercially operative; and (ii) the Engineer 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
Net Revenues of the System will be adequate to pay all the obligations, payable
from the Junior Lien Pledged Revenues of the System to be Outstanding after the
issuance of the Additional Junior Lien Obligations then being issued for the
Forecast Period and (B) the proceeds from the sale of such Additional Junior Lien
Obligations are estimated to be sufficient to complete such acquisition and
construction.
(e) Computations; Reports. With reference to Junior Lien Obligations
anticipated and estimated to be issued or incurred, the Average Annual Debt
Service 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 refundable tax credit or similar
payment relating to any series of Junior Lien Obligations irrevocably designated
as refundable tax credit bonds, which payment shall be treated as an offset to
regularly scheduled debt service of the series of Junior Lien Obligations to which
it relates. In the preparation of the engineering report required in
Subsection K(2)(c)(i) above, the Engineer may rely on other experts or
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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 Junior Lien Obligations
for Capital Additions, the certification of the City Manager and the Engineer,
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.
(f) Combination Issues. Junior Lien Obligations for Capital Additions
may be combined in a single issue with Junior Lien Obligations for Capital
Improvements or for any lawful purpose provided the conditions precedent set
forth in Subsections K(2)(b) through (d) are complied with as the same relate to
the appropriate purpose.
(g) 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 and those items identified in the SECOND
level of priority in Subsection 9D, but not expenditures which, under standard
accounting practice, should be charged to capital expenditures.
(h) Determination of Net Earnings. In making a determination of Net
Earnings for any of the purposes described in this Section, the City Manager 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 City Manager's certification or opinion based on such change in rates and
charges being in effect for the entire period covered by the City Manager's
certificate or opinion.
(3) The City may issue Additional Subordinate Lien Obligations secured by a
lien on and pledge of the Net Revenues of the System subordinate and inferior to the lien
thereon and pledge thereof securing the Priority Bonds and that is included in the Junior
Lien Pledged Revenues, respectively, but senior and superior to the lien there on and
pledge thereof securing the repayment of the Inferior Lien Obligations, on the terms and
conditions desired by the City, subject only to the limitations imposed by applicable and
upon satisfying each of the conditions precedent contained in the ordinances authorizing
the issuance of the currently - Outstanding Priority Bonds, this Ordinance, and the
Previously Issued Subordinate Lien Obligations.
(4) The City may issue Additional Inferior Lien Obligations secured by a lien
on and pledge of the Net Revenues of the System subordinate and inferior to the lien
thereon and pledge thereof securing the Priority Bonds and that is included in the Junior
Lien Pledged Revenues, respectively, on the terms and conditions desired by the City,
subject only to the limitations imposed by applicable and upon satisfying each of the
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conditions precedent contained in the ordinances authorizing the issuance of the
currently- Outstanding Priority Bonds, this Ordinance, and, to the extent applicable, the
Federal Contract.
L. Refunding Bonds. The City reserves the right to issue refunding bonds to refund all
or any part of the currently Outstanding Debt, pursuant to any applicable law then available,
upon such terms and conditions as the City Council may deem to be in the best interest of the
City, and if less than all such currently Outstanding Debt are refunded, the conditions precedent
prescribed for the issuance of Additional Junior Lien Obligations set forth in Subsection 9k of
this Ordinance shall be satisfied and the City Managers' certification required in Section 9k shall
give effect to the Debt Service Requirements of the proposed refunding bonds (but shall not give
effect to the Debt Service Requirements of the obligations being refunded following their
cancellation or provision being made for their payment).
SECTION 10: Security of Funds. All money on deposit in the funds or accounts for
which this Ordinance makes provision (except any portion thereof as may be at any time
properly invested as provided herein) shall be secured in the manner and to the fullest extent
required by the laws of Texas for the security of public funds, and money on deposit in such
Funds or accounts shall be used only for the purposes permitted by this Ordinance.
SECTION 11: Remedies in Event of Default. In addition to all the rights and remedies
provided by the laws of the State of Texas, the City covenants and agrees particularly that in the
event the City (a) defaults in the payments to be made to the Bond Fund, or (b) defaults in the
observance or performance of any other of the covenants, conditions, or obligations set forth in
this Ordinance, the Holders of any of the Bonds shall be entitled to seek a writ of mandamus
issued by a court of proper jurisdiction compelling and requiring the governing body of the City
and other officers of the City to observe and perform any covenant, condition, or obligation
prescribed in this Ordinance.
No delay or omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver of any such default or
acquiescence therein, and every such right and power may be exercised from time to time and as
often as may be deemed expedient. The specific remedy herein provided shall be cumulative of
all other existing remedies and the specification of such remedy shall not be deemed to be
exclusive.
For the avoidance of doubt, no default with respect to any obligation that is secured by
and payable from a lien on and pledge of Net Revenues that is junior and subordinate to the lien
thereon and pledge thereof securing the Priority Bonds shall ever be deemed to be a default with
respect to the Priority Bonds.
SECTION 12: Notices to Holders Waiver. Wherever this Ordinance provides for notice
to Holders of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and sent by United States Mail, first -class postage prepaid, to
the address of each Holder as it appears in the Security Register.
In any case where notice to Holders is given by mail, neither the failure to mail such
notice to any particular Holders, nor any defect in any notice so mailed, shall affect the
79017907.5
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sufficiency of such notice with respect to all other Holders. Where this Ordinance provides for
notice in any manner, such notice may be waived in writing by the Holder entitled to receive
such notice, either before or after the event with respect to which such notice is given, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Paying Agent/Registrar, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 13: Bonds Are Negotiable Instruments. Each of the Bonds authorized herein
shall be deemed and construed to be a "security" and as such a negotiable instrument with the
meaning of the Chapter 8 of the Texas Uniform Commercial Code.
SECTION 14: Cancellation. All Bonds surrendered for payment, transfer, redemption,
exchange, or replacement, if surrendered to the Paying Agent/Registrar, shall be promptly
canceled by it and, if surrendered to the City, shall be delivered to the Paying Agent/Registrar
and, if not already canceled, shall be promptly canceled by the Paying Agent/Registrar. The City
may at any time deliver to the Paying Agent/Registrar for cancellation any Bonds previously
certified or registered and delivered which the City may have acquired in any manner
whatsoever, and all Bonds so delivered shall be promptly canceled by the Paying
Agent/Registrar. All canceled Bonds held by the Paying Agent/Registrar shall be destroyed as
directed by the City.
SECTION 15: Mutilated, Destroyed, Lost, and Stolen Bonds. If (1) any mutilated Bond
is surrendered to the Paying Agent/Registrar, or the City and the Paying Agent/Registrar receive
evidence to their satisfaction of the destruction, loss, or theft of any Bond, and (2) there is
delivered to the City and the Paying Agent/Registrar such security or indemnity as may be
required to save each of them harmless, then, in the absence of notice to the City or the Paying
Agent/Registrar that such Bond has been acquired by a bona fide purchaser, the City shall
execute and, upon its request, the Paying Agent/Registrar shall register and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost, or stolen Bond, a new Bond of the same
Stated Maturity and interest rate and of like tenor and principal amount, bearing a number not
contemporaneously Outstanding.
In case any such mutilated, destroyed, lost, or stolen Bond has become or is about to
become due and payable, the City in its discretion may, instead of issuing a new Bond, pay such
Bond.
Upon the issuance of any new Bond or payment in lieu thereof, under this Section, the
City may require payment by the Holder of a sum sufficient to cover any tax or other
governmental charge imposed in relation thereto and any other expenses (including attomey's
fees and the fees and expenses of the Paying Agent/Registrar) connected therewith.
Every new Bond issued pursuant to this Section in lieu of any mutilated, destroyed, lost,
or stolen Bond shall constitute a replacement of the prior obligation of the City, whether or not
thc mutilated, destroyed, lost, or stolen Bond shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Ordinance equally and ratably with all other
Outstanding Bonds.
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The provisions of this Section are exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement and payment of mutilated, destroyed,
lost, or stolen Bonds.
SECTION 16: Sale of Bonds - Official Statement Approval — Approval of Purchase
Contract — Use of proceeds. The Bonds authorized by this Ordinance are hereby sold by the City
to Piper Jaffray & Co., 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 December 6, 2013 (the Purchase
Contract) attached hereto as Exhibit C and incorporated herein by reference as a part of this
Ordinance for all purposes. The pricing terms of the sale of the Bonds are hereby found and
determined to be the most advantageous reasonably obtainable by the City. The Initial Bonds
shall be registered in the name of Piper Jaffray & Co. 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 City hereby ratifies, confirms, and approves in all respects (i) the City'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 December 6, 2013,
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 City
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.
Proceeds from the sale of the Bonds shall be applied as follows:
A. The City received a net original reoffering premium from the sale of the Bonds of
$2,595,541.50, $400,000.00 of which is hereby allocated by the City to pay certain costs of
issuance and the balance allocated by the City in the manner described in Subsection B below.
B. The balance of the proceeds (after paying other costs of issuance and the other
deposits referred to in paragraph A above) shall be deposited into the special construction
account or accounts created for the projects to be constructed with the Bond proceeds. This
special construction account shall be established and maintained at the City's depository bank
and shall be invested in accordance with the provisions of Section 9I of this Ordinance. Interest.
earned on the proceeds of the Bonds pending completion of the projects financed with such
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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. Thereafter, such amounts shall be expended in accordance with Section 9E.
SECTION 17: Covenants to Maintain Tax - Exempt Status.
A. Definitions. When used in this Section, the following terms have the following
meanings:
Code means the Internal Revenue Code of 1986, as amended by all legislation, if any,
effective on or before the Closing Date.
Computation Date has the meaning set forth in Section 1.148 -1(b) of the Regulations.
Gross Proceeds means any proceeds as defined in Section 1.148 -1(b) of the
Regulations, and any replacement proceeds as defined in Section 1.148 -1(c) of the
Regulations, of the Bonds.
Investment has the meaning set forth in Section 1.148 -1(b) of the Regulations.
Nonpurpose Investment means any investment property, as defined in section 148(b)
of the Code, in which Gross Proceeds of the Bonds are invested and which is not
acquired to carry out the governmental purposes of the Bonds.
Rebate Amount has the meaning set forth in Section 1.148 -1(b) of the Regulations.
Regulations means any proposed, temporary, or final Income Tax Regulations issued
pursuant to sections 103 and 141 through 150 of the Code, and 103 of the Internal
Revenue Code of 1954, which are applicable to the Bonds. Any reference to any specific
Regulation shall also mean, as appropriate, any proposed, temporary or final Income Tax
Regulation designed to supplement, amend or replace the specific Regulation referenced.
Yield of
(a) any Investment has the meaning set forth in Section 1.148 -5 of the
Regulations; and
(b) the Bonds has the meaning set forth in Section 1.148 -4 of the
Regulations.
B. Not to Cause Interest to Become Taxable. The City shall not use, permit the use of,
or omit to use Gross Proceeds or any other amounts (or any property the acquisition, construction
or improvement of which is to be financed or refinanced directly or indirectly with Gross
Proceeds) in a manner which if made or omitted, respectively, would cause the interest on any
Bond to become includable in the gross income, as defined in section 61 of the Code, of the
owner thereof for federal income tax purposes. Without limiting the generality of the foregoing,
unless and until the City receives a written opinion of counsel nationally recognized in the field
of municipal bond law to the effect that failure to comply with such covenant will not adversely
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affect the exemption from federal income tax of the interest on any Bond, the City shall comply
with each of the specific covenants in this Section.
C. No Private Use or Private Payments. Except as would not cause the Bonds to become
"private activity bonds" within the meaning of section 141 of the Code and the Regulations and
rulings thereunder, the City shall at all times prior to the last Stated Maturity of Bonds:
(I) exclusively own, operate and possess all property the acquisition,
construction or improvement of which is to be financed or refinanced directly or
indirectly with Gross Proceeds of the Bonds, and not use or permit the use of such Gross
Proceeds (including all contractual arrangements with terms different than those
applicable to the general public) or any property acquired, constructed or improved with
such Gross Proceeds in any activity carried on by any person or entity (including the
United States or any agency, department and instrumentality thereof) other than a state or
local government, unless such use is solely as a member of the general public; and
(2) not directly or indirectly impose or accept any charge or other payment by
any person or entity who is treated as using Gross Proceeds of the Bonds or any property
the acquisition, construction or improvement of which is to be financed or refinanced
directly or indirectly with such Gross Proceeds, other than taxes of general application
within the City or interest earned on investments acquired with such Gross Proceeds
pending application for their intended purposes.
D. No Private Loan. Except as would not cause the Bonds to become "private activity
bonds" within the meaning of section 141 of the Code and the Regulations and rulings
thereunder, the City shall not use Gross Proceeds of the Bonds, to make or finance loans to any
person or entity other than a state or local government. For purposes of the foregoing covenant,
such Gross Proceeds are considered to be "loaned" to a person or entity if: (1) property acquired,
constructed or improved with such Gross Proceeds is sold or leased to such person or entity in a
transaction which creates a debt for federal income tax purposes; (2) capacity in or service from
such property is committed to such person or entity under a take -or -pay, output or similar
contract or arrangement; or (3) indirect benefits, or burdens and benefits of ownership, of such
Gross Proceeds or any property acquired, constructed or improved with such Gross Proceeds are
otherwise transferred in a transaction which is the economic equivalent of a loan.
E. Not to Invest at Higher Yield. Except as would not cause the Bonds to become
"arbitrage bonds" within the meaning of section 148 of the Code and the Regulations and rulings
thereunder, the City shall not at any time prior to the final Stated Maturity of the Bonds directly
or indirectly invest Gross Proceeds in any Investment, if as a result of such investment the Yield
of any Investment acquired with Gross Proceeds, whether then held or previously disposed of,
materially exceeds the Yield of the Bonds.
F. Not Federally Guaranteed. Except to the extent permitted by section 149(b) of the
Code and the Regulations and rulings thereunder, the City shall not take or omit to take any
action which would cause the Bonds to be federally guaranteed within the meaning of section
149(b) of the Code and the Regulations and rulings thereunder.
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G. Information Report. The City shall timely file the information required by section
149(e) of the Code with the Secretary of the Treasury on Form 8038 -G or such other form and in
such place as the Secretary may prescribe.
H. Rebate of Arbitrage Profits. Except to the extent otherwise provided in section 148(0
of the Code and the Regulations and rulings thereunder:
(1) The City shall account for all Gross Proceeds (including all receipts,
expenditures and investments thereof) on its books of account separately and apart from
all other funds (and receipts, expenditures and investments thereof) and shall retain all
records of accounting for at least six years after the day on which the last Outstanding
Bond is discharged. However, to the extent permitted by law, the City may commingle
Gross Proceeds of the Bonds with other money of the City, provided that the City
separately accounts for each receipt and expenditure of Gross Proceeds and the
obligations acquired therewith.
(2) Not less frequently than each Computation Date, the City shall calculate
the Rebate Amount in accordance with rules set forth in section 148(0 of the Code and
the Regulations and rulings thereunder. The City shall maintain such calculations with its
official transcript of proceedings relating to the issuance of the Bonds until six years after
the final Computation Date.
(3) As additional consideration for the purchase of the Bonds by the
Purchasers and the loan of the money represented thereby and in order to induce such
purchase by measures designed to insure the excludability of the interest thereon from the
gross income of the owners thereof for federal income tax purposes, the City shall pay to
the United States out of the Bond Fund or its general fund, as permitted by applicable
Texas statute, regulation or opinion of the Attorney General of the State of Texas, the
amount that when added to the future value of previous rebate payments made for the
Bonds equals (1) in the case of a Final Computation Date as defined in Section 1.148 -
3(e)(2) of the Regulations, one hundred percent (100 %) of the Rebate Amount on such
date; and (ii) in the case of any other Computation Date, ninety percent (90 %) of the
Rebate Amount on such date. In all cases, the rebate payments shall be made at the
times, in the installments, to the place and in the manner as is or may be required by
section 148(1) of the Code and the Regulations and rulings thereunder, and shall be
accompanied by Form 8038 -T or such other forms and information as is or may be
required by section 148(1) of the Code and the Regulations and rulings thereunder.
(4) The City shall exercise reasonable diligence to assure that no errors are
made in the calculations and payments required by paragraphs (2) and (3), and if an error
is made, to discover and promptly correct such error within a reasonable amount of time
thereafter (and in all events within one hundred eighty (180) days after discovery of the
error), including payment to the United States of any additional Rebate Amount owed to
it, interest thereon, and any penalty imposed under Section 1.148 -3(h) of the Regulations.
I. Not to Divert Arbitrage Profits. Except to the extent permitted by section 148 of the
Code and the Regulations and rulings thereunder, the City shall not, at any time prior to the
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earlier of the Stated Maturity or final payment of the Bonds, enter into any transaction that
reduces the amount required to be paid to the United States pursuant to Subsection H of this
Section because such transaction results in a smaller profit or a larger loss than would have
resulted if the transaction had been at arm's length and had the Yield of the Bonds not been
relevant to either party.
J. Bonds Not Hedge Bonds,
(1) The City reasonably expects to spend at least 85% of the spendable
proceeds of the Bonds within three years after such Bonds are issued.
(2) Not more than 50% of the proceeds of the Bonds will be invested in
Nonpurpose Investments having a substantially guaranteed Yield for a period of 4 years
or more.
K. Elections. The City hereby directs and authorizes each Authorized Official, or any
combination of them, to make elections permitted or required pursuant to the provisions of the
Code or the Regulations, as they deem necessary or appropriate in connection with the Bonds, in
the Certificate as to Tax Exemption or similar or other appropriate certificate, form or document.
Such elections shall be deemed to be made on the Closing Date.
SECTION 18: Control and Custody of Bonds. The Mayor shall be and is hereby
authorized to take and have charge of all necessary orders and records pending investigation by
the Attorney General of the State of Texas and shall take and have charge and control of the
Bonds pending their approval by the Attorney General of the State of Texas, the registration
thereof by the Comptroller of Public Accounts of the State of Texas and the delivery of the
Bonds to the Purchasers.
Furthermore, any Authorized Official or any combination of them are hereby authorized
and directed to furnish and execute such documents relating to the City and its financial affairs as
may be necessary for the issuance of the Bonds, the approval of the Attorney General and their
registration by the Comptroller of Public Accounts and, together with the City's Bond Counsel
and the Paying Agent/Registrar, make the necessary arrangements for the delivery of the Initial
Bond(s) to the Purchasers.
SECTION 19: Satisfaction of Obligation of City. If the City shall pay or cause to be paid,
or there shall otherwise be paid to the Holders, the principal of, premium, if any, and interest on
the Bonds, at the times and in the manner stipulated in this Ordinance, then the lien on and
pledge of System Revenues made under this Ordinance and all covenants, agreements, and other
obligations of the City to the Holders shall thereupon cease, terminate, and be discharged and
satisfied.
The Bonds, or any principal amount(s) thereof, shall be deemed to have been paid within
the meaning and with the effect expressed above in this Section when (i) money sufficient to pay
in full such Bonds or the principal amount(s) thereof at Stated Maturity or to the redemption date
therefor, together with all interest due thereon, shall have been irrevocably deposited with and
held in trust by the Paying Agent/Registrar or an authorized escrow agent, or (ii) Government
Securities shall have been irrevocably deposited in trust with the Paying Agent/Registrar, or an
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authorized escrow agent, which Government Securities have, in the case of a net defeasance,
been certified by an independent accounting firm to mature as to principal and interest in such
amounts and at such times as will insure the availability, without reinvestment, of sufficient
money, together with any money deposited therewith, if any, to pay when due the principal of
and interest on such Bonds, or the principal amount(s) thereof, on and prior to the Stated
Maturity thereof or (if notice of redemption has been duly given or waived or if irrevocable
arrangements therefor acceptable to the Paying Agent/Registrar have been made) the redemption
date thereof for the Bonds. In the event of a gross defeasance of the Bonds, the City shall deliver
a certificate from its financial advisor, the Paying Agent/Registrar, or another qualified third
party concerning the deposit of cash and /or Government Securities to pay, when due, the
principal of, redemption premium (if any), and interest due on any defeased Bonds. The City
covenants that no deposit of money or Government Securities will be made under this Section
and no use made of any such deposit which would cause the Bonds to be treated as arbitrage
bonds within the meaning of section 148 of the Code (as defined in Section 17 hereof).
Any money so deposited with the Paying Agent/Registrar, and all income from
Government Securities held in trust by the Paying Agent/Registrar, or an authorized escrow
agent, pursuant to this Section which is not required for the payment of the Bonds, or any
principal amount(s) thereof, or interest thereon with respect to which such money has been so
deposited shall be remitted to the City or deposited as directed by the City. Furthermore, any
money held by the Paying Agent/Registrar for the payment of the principal of and interest on the
Bonds and remaining unclaimed for a period of three (3) years after the Stated Maturity, or
applicable redemption date, of the Bonds such money was deposited and is held in trust to pay
shall upon the request of the City be remitted to the City against a written receipt therefor,
subject to the unclaimed property laws of the State of Texas.
Notwithstanding any other provision of this Ordinance to the contrary, it is hereby
provided that any determination 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.
SECTION 20: Ordinance a Contract: Amendments - Outstanding Bonds. The City
acknowledges that the covenants and obligations of the City herein contained are a material
inducement to the purchase of the Bonds. This Ordinance shall constitute a contract with the
Holders from time to time, binding on the City and its successors and assigns, and it shall not be
amended or repealed by the City so long as any Bond remains Outstanding except as permitted in
this Section. The City may, without the consent of or notice to any Holders, from time to time
and at any time, amend this Ordinance in any manner not detrimental to the interests of the
Holders, including the curing of any ambiguity, inconsistency, or formal defect or omission
herein. In addition, the City may, with the written consent of Holders holding a majority in
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aggregate principal amount of the Bonds then Outstanding affected thereby, amend, add to, or
rescind any of the provisions of this Ordinance; provided that, without the consent of all Holders
of Outstanding Bonds, no such amendment, addition, or rescission shall (1) extend the time or
times of payment of the principal of and interest on the Bonds, reduce the principal amount
thereof, the redemption price therefor, or the rate of interest thereon, or in any other way modify
the terms of payment of the principal of or interest on the Bonds, (2) give any preference to any
Bond over any other Bond, or (3) reduce the aggregate principal amount of Bonds required for
consent to any such amendment, addition, or rescission.
SECTION 21: Printed Opinion. The Purchasers' obligation to accept delivery of the
Bonds is subject to their being furnished a final opinion of Fulbright & Jaworski LLP, as Bond
Counsel, approving certain legal matters as to the Bonds, said opinion to be dated and delivered
as of the date of initial delivery and payment for such Bonds. Printing of a true and correct copy
of said opinion on the reverse side of each of said Bonds, with appropriate certificate pertaining
thereto executed by facsimile signature of the City's Secretary is hereby approved and
authorized.
SECTION 22: CUSIP Numbers. CUSIP numbers may be printed or typed on the
definitive Bonds. It is expressly provided, however, that the presence or absence of CUSIP
numbers on the definitive Bonds shall be of no significance or effect as regards the legality
thereof, and neither the City nor attorneys approving said Bonds as to legality are to be held
responsible for CUSIP numbers incorrectly printed or typed on the definitive Bonds.
SECTION 23: Effect of Headings; Definition of Terms. The Section headings herein are
for convenience only and shall not affect the construction hereof. Capitalized terms used herein
without definition shall have the applicable meaning ascribed thereto in Exhibit C hereto, which
is hereby incorporated by reference as though reproduced herein.
SECTION 24: Benefits of Ordinance. Nothing in this Ordinance, expressed or implied, is
intended or shall be construed to confer upon any person other than the City, Bond Counsel,
Paying Agent/Registrar, and the Holders, any right, remedy, or claim, legal or equitable, under or
by reason of this Ordinance or any provision hereof, this Ordinance and all its provisions being
intended to be and being for the sole and exclusive benefit of the City, Bond Counsel, Financial
Advisors, the Paying Agent/Registrar, and the Holders.
SECTION 25: Inconsistent Provisions. All resolutions and ordinances, or parts thereof,
which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed to
the extent of such conflict, and the provisions of this Ordinance shall be and remain controlling
as to the matters resolved herein.
SECTION 26: Governing Law. This Ordinance shall be construed and enforced in
accordance with the laws of the State of Texas and the United States of America.
SECTION 27: Severability. If any provision of this Ordinance or the application thereof
to any person or circumstance shall be held to be invalid, the remainder of this Ordinance and the
application of such provision to other persons and circumstances shall nevertheless be valid, and
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the City Council hereby declares that this Ordinance would have been enacted without such
invalid provision.
SECTION 28: Incorporation of Preamble Recitals. The recitals contained in the
preamble hereof are hereby found to be true, and such recitals are hereby made a part of this
Ordinance for all purposes and are adopted as a part of the judgment and findings of the City
Council.
SECTION 29: Authorization of Paving Agent/Registrar Agreement. The City Council
hereby finds and determines that it is in the best interest of the City to authorize the execution of
a Paying Agent/Registrar Agreement concerning the payment, exchange, and transferability of
the Bonds. A copy of the Paying Agent/Registrar Agreement is attached hereto, in substantially
final form, as Exhibit D and is incorporated by reference to the provisions of this Ordinance.
SECTION 30: Public Meeting. It is officially found, determined, and declared that the
meeting at which this Ordinance is adopted was open to the public and public notice of the time,
place, and subject matter of the public business to be considered at such meeting, including this
Ordinance, was given, all as required by Chapter 551, as amended, Texas Government Code.
SECTION 31: Continuing Disclosure of Information.
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 intemet through the uniform resource locator (URL)
http://www.emm a. msrb.org.
MSRB means the Municipal Securities Rulemaking Board.
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, (1) within six months
after the end of each fiscal year of the City ending in or after 2013, financial information and
operating data with respect to the System of the general type included in the final Official
Statement authorized by Section 16 of this Ordinance, being the information described in
Exhibit F hereto, and (2) if not provided as part 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 F 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 (11) audited, if the City commissions an audit
of such financial 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 file unaudited financial statements within such period and audited financial
statements for the applicable fiscal year to the MSRB, when and if the audit report on such
statements becomes available.
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If the City changes its fiscal year, it will file notice thereof with the MSRB of the change
(and of the date of the new fiscal year end) 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. Notice of Certain Events. The City shall file notice of any of the following events
with respect to the Bonds to the MSRB in a timely manner and not more than 10 business days
after occurrence of the event:
(1) Principal and interest payment delinquencies;
(2) Non - payment related defaults, if material;
(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, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form
5701 -TEB), or other material notices or determinations with respect to the tax status of
the Bonds, or other material events affecting the tax status of the Bonds;
(7) Modifications to rights of Holders of the Bonds, if material;
(8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds,
if material;
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership, or similar event of the City, which
shall occur as described below;
(13) The consummation of a merger, consolidation, or acquisition involving the
City or the sale of all or substantially all of its assets, other than in the ordinary course of
business, the entry into of a definitive agreement to undertake such an action or the
termination of a definitive agreement relating to any such actions, other than pursuant to
its terms, if material; and
(14) Appointment of a successor or additional Paying Agent/Registrar or the
change of name of a Paying Agent/Registrar, if material.
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For these purposes, any event described in thc immediately preceding paragraph (12) is
considered to occur when any of following occur: the appointment of a receiver, fiscal agent,
or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any
other proceeding under state or federal law in which a court or governmental authority has
assumed jurisdiction over substantially all of the assets or business of the City, or if such
jurisdiction has been assumed by leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or governmental authority, or the
entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or
governmental authority having supervision or jurisdiction over substantially all of the assets or
business of the City.
The City shall file notice with the MSRB, in a timely manner, 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 for so long as, but only for so long as, 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 give notice of any deposit that causes the Bonds to be no
longer Outstanding.
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 City's financial results, condition, or prospects 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 laws.
79017907 5 -
The provisions of this Section may be amended by the City from time to time to adapt to
changed circumstances that arise 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, the City shall include with any amended financial
information or operating data next provided in accordance with this Section an 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 obligations 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 32: Book -Entry Only System. The Bonds are initially registered so as to
participate in a securities depository system (the DTC System) with the Depository Trust
Company, New York, New York, or any successor entity thereto (DTC), as set forth herein.
Each Stated Maturity of the Bonds shall be issued (following cancellation of the Initial Bond(s)
described in Section 8) in the form of a separate single definitive Bond. Upon issuance, the
ownership of each such Bond shall be registered in the name of Cede & Co., as the nominee of
DTC, and all of the Outstanding Bonds shall be registered in the name of Cede & Co., as the
nominee of DTC. The City and the Paying Agent/Registrar are authorized to execute, deliver,
and take the actions set forth in such letters to or agreements with DTC as shall be necessary to
79017907.5
effectuate the DTC System, including the Letter of Representations attached hereto as Exhibit H
(the Representation Letter).
With respect to the Bonds registered in the name of Cede & Co., as nominee of DTC, the
City and the Paying Agent/Registrar shall have no responsibility or obligation to any
broker - dealer, bank, or other financial institution for which DTC holds the Bonds from time to
time as securities depository (a Depository Participant) or to any person on behalf of whom such
a Depository Participant holds an interest in the Bonds (an Indirect Participant). Without
limiting the immediately preceding sentence, the City 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 Depository Participant with respect to any ownership interest in the Bonds, (ii) the
delivery to any Depository Participant or any other person, other than a registered owner of the
Bonds, as shown on the Security Register, of any notice with respect to the Bonds, including any
notice of redemption, or (iii) the delivery to any Depository Participant or any Indirect
Participant or any other Person, other than a Holder of a Bond, of any amount with respect to
principal of, premium, if any, or interest on the Bonds. While in the DTC System, no person
other than Cede & Co., or any successor thereto, as nominee for DTC, shall receive a bond
certificate evidencing the obligation of the City 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 or
drafts being mailed to the Holder, the word "Cede & Co." in this Ordinance shall refer to such
new nominee of DTC.
In the event that (a) the City determines that DTC is incapable of discharging its
responsibilities described herein and in the Representation Letter, (b) the Representation Letter
shall be terminated for any reason, or (c) DTC or the City determines that it is in the best interest
of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the City shall
notify the Paying Agent/Registrar, DTC, and the Depository Participants of the availability
within a reasonable period of time through DTC of bond certificates, and the Bonds shall no
longer be restricted to being registered in the name of Cede & Co., as nominee of DTC. At that
time, the City may determine that the Bonds shall be registered in the name of and deposited
with a successor depository operating a securities depository system, as may be acceptable to the
City, or such depository's agent or designee, and if the City and the Paying Agent/Registrar do
not select such alternate securities depository system then the Bonds may be registered in
whatever name or names the Holders of Bonds transferring or exchanging the Bonds shall
designate, in accordance with the provisions hereof.
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 33: Declaration of Intent to Reimburse for the Prior Expenditure of Certain
Expenses. This Ordinance shall serve as a declaration of intent to establish the City's
reasonable, official intent under Section 1.150 -2 of the Regulations and Section 1201.042 to
reimburse itself from certain of the proceeds of the Bonds for any capital expenditures previously
79017907 5
-45-
incurred (not more than 60 clays prior to the date hereof) or to be incurred with respect to the
Project from the City's General Fund or other lawfully available funds of the City.
The City intends to issue one or more series of Bonds hereunder and, within 30 days after
the date of issuance of a series Bonds, allocated the proceeds therefrom to reimburse the City for
prior lawful expenditures with respect to the System improvements for which the Bonds are
issued in a manner to comply with the Regulations. Any such reimbursed expenditures will be a
type properly chargeable to a capital account (or would be so chargeable with a proper election)
under general federal income tax principals. The City intends to otherwise comply, in addition
to those matters addressed within this Ordinance, with all the requirements contained in the
Regulations.
With respect to the proceeds of a series of Bonds allocated to reimburse the City for prior
expenditures, the City shall not employ an abusive device under Section 1.148 -10 of the
Regulations, including using within one year of the reimbursement allocation, the funds
corresponding to the proceeds of such series of Bonds in a manner that results in the creation of
"replacement proceeds ", as defined in Section 1.148 -1 of the Regulations, of the particular series
of Bonds or another issue of tax - exempt obligations.
SECTION 34: Further Procedures. The officers and employees of the City are hereby
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 or not herein mentioned, as may be
necessary or desirable in order to carry out the terms and provisions of this Ordinance, the initial
sale and delivery of the Bonds, the Agreement, the Paying Agent/Registrar Agreement, and the
Purchase Contract. In addition, prior to the initial delivery of the Bonds, each Authorized
Official and Bond Counsel are hereby authorized and directed to approve any technical changes
or corrections to this Ordinance or to any of the instruments authorized and approved by this
Ordinance necessary in order to (i) correct any ambiguity or mistake or properly or more
completely document the transactions contemplated and approved by this Ordinance and as
described in the Official Statement, (ii) obtain a rating from any of the national bond rating
agencies, or (iii) obtain the approval of the Bonds by the Texas Attorney General's office. In
case any officer of the City whose signature shall appear on any certificate shall cease to be such
officer before the delivery of such certificate, such signature shall nevertheless be valid and
sufficient for all purposes the same as if such officer had remained in office until such delivery.
SECTION 35: Unavailability of Authorized Publication. If, because of the temporary or
permanent suspension of any newspaper, journal, or other publication, or, for any reason,
publication of notice cannot be made meeting any requirements herein established, any notice
required to be published by the provisions of this Ordinance shall be given in such other manner
and at such time or times as in the judgment of the City or of the Paying Agent/Registrar shall
most effectively approximate such required publication and the giving of such notice in such
manner shall for all purposes of this Ordinance be deemed to be in compliance with the
requirements for publication thereof.
79017907.5
-46-
SECTION 36: No Recourse Against City Officials. No recourse shall be had for the
payment of principal of premium, if any, or interest on any Bond or for any claim based thereon
or on this Ordinance against any official of the City or any person executing any Bond.
SECTION 37: Automatic Budget Amendments to Reflect Final Debt Service Payments.
To the extent that the City Council has adopted an annual budget that includes payment of debt
service on any Bonds issued (or to be issued) pursuant to this Ordinance based on the City's
reasonable expectations and projections relative to those Bonds, such budget entries shall, upon
the issuance of Bonds, be automatically adjusted to reflect actual debt service payments on those
Bonds coming due during the period of time covered by such budget. Each Authorized Official,
or the designee thereof, is authorized to make such necessary budget entries and/or adjustments
to reflect these final debt service amounts.
SECTION 38: Covenants of Compliance. The City shall faithfully and punctually
perform all duties with reference to the System required by the Act, all other applicable laws of
the State of Texas, and the provisions of this Ordinance and that the City shall render no free
service to any customers or other persons.
SECTION 39: Construction of Terms. If appropriate in the context of this Ordinance,
words of the singular number shall be considered to include the plural, words of the plural
number shall be considered to include the singular, and words of the masculine, feminine, or
neuter gender shall be considered to include the other genders.
SECTION 40: Effective Date. This Ordinance shall be in force and effect from and after
its final passage, and it is so resolved.
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79017907.5 "'`
SIGNED AND SEALED THIS 27th DAY OF AUGUST, 2013.
ATTEST:
City Secretary
(SEAL)
CITY OF CORPUS CHRISTI, TEXAS
\NW.
Mayor
APPROVED THIS DAY OF RU6dST , 2013:
Carlos Valdez, City Attorney
79017907 5
S_ l
INDEX TO SCHEDULES AND EXHIBITS
Schedule I Form of Approval Certificate
Exhibit A Ordinance Provisions Relating to Priority Bonds
Exhibit B Ordinance Provisions Relating to Junior Lien Obligations
Exhibit C Defined Terms
Exhibit D Purchase Contract
Exhibit E Paying AgentlRegistrar Agreement
Exhibit F Description of Annual Financial Information
Exhibit G Form of Reimbursement Agreement
Exhibit H DTC Letter of Representations
79017907.5
S -2
THE STATE OF TEXAS §
COUNTY OF NUECES §
CITY OF CORPUS CHRISTI §
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 27th day of
August, 2013, authorizing the issuance of one or more series of the City's Utility System
Revenue Improvement Bonds, 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 27th day of August, 2013.
19011907 5
City Secretary
(CITY SEAL)
S.3
SCHEDULE 1
Form of Approval Certificate
See Tab No. 2
79017907.5 Schedule I-1
EXHIBIT A
Ordinance Provisions Relating to Priority Bonds
(NOT USED)
79017907..5 A-
A. Forms.
(1) Forms Generally. The Bonds, the Registration Certificate of the
Comptroller of Public Accounts of the State of Texas, the Certificate of Paying
Agent/Registrar, and the form of Assignment to be printed on each of the Bonds shall be
substantially in the forms set forth in this Section with such appropriate insertions,
omissions, substitutions, and other variations as are permitted or required by this
Ordinance and may have such letters, numbers, or other marks of identification
(including insurance legends in the event the Bonds, or any Stated Maturities thereof, are
insured and identifying numbers and letters of the Committee on Uniform Securities
Identification Procedures of the American Bankers Association) and such legends and
endorsements (including any reproduction of an opinion of counsel) thereon as may,
consistent herewith, be established by the City or determined by the officers executing
the Bonds as evidenced by their execution thereof. Any portion of the text of any Bond
may be set forth on the reverse thereof, with an appropriate reference thereto on the face
of the Bond.
The definitive Bonds shall be printed, lithographed, or engraved, produced by any
combination of these methods, or produced in any other similar manner, all as determined by the
officers executing the Bonds as evidenced by their execution thereof, but the Initial Bond(s)
submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise
reproduced.
(2) 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 SERIES 2013
Bond Date: Interest Rate: Stated Maturity:
, 20_
CUSIP No.:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
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, 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
79017907.5
A -2
pay interest on the unpaid Principal Amount hereof from the Bond Date 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 15, 20
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 , 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 (thc 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 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 Purchasers, 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 Purchasers, to an account at a financial
institution located in the United States designated by the Purchasers.
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 $ (herein sometimes called the Bonds), issued for the
purposes of (i) acquiring, purchasing, constructing, improving, repairing, extending, equipping,
79017907.5 A-3
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.
The Bonds stated to mature on July 15, 20 are referred to herein as the Term Bonds.
The Term Bonds are subject to mandatory sinking fund redemption prior to their stated
maturities 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, by lot or other customary method, 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
Mature on July 15.20
Principal
Year Amount ($)
*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 City, 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 City 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 City 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 below and not theretofore credited against a mandatory redemption
requirement.
The City reserves the right to redeem the Bonds stated to mature on and after July 15,
20_, in whole or in part, on July 15, 20_, 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.
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
79017907.5
A -4
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 (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 I3ond 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
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
79017907,5
A -5
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 AgentlRegistrar 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, 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 Iien 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.
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.
790179075
A -6
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 WI-IEREOF, 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)
79017907.5
CITY OF CORPUS CHRISTI, TEXAS
Mayor
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A -7
Only.
(3) Form of Comptroller's Registration Certificate to Apnear on Initial Bonds
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)
(4) Form of Registration Certificate of Paving 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:
79011907 „5
A -8
, Texas, as Paying
Agent/Registrar
By:
Authorized Signature
(5) 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): m.m. - ••••••••�••••••�
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:
Signature guaranteed:
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.
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79017907.5 A"
(6) 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:
(i) immediately under the name of the Bond, the headings "Interest Rate
" and "Stated Maturity " shall both be completed "as shown below";
and
(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, 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 3 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 Bond Datc, 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 I 5 of each year, commencing 15, 20_
(7) 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.
B. Pledge.
(1) 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 arc 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.
(2)
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
79017907 5
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the City under Subsection B2 of this Section, and such pledge is therefore valid,
effective, and perfected. If Texas law is amended al. 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 fling 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
(3) 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.
C. 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.
D. Debt Service Fund.
(1) 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 Improvement 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.
(2) 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.
(3) 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.
(4) 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
79017907.5
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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.
E. Reserve Fund.
(1) 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 Improvement 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 Debt Service Requirements of the Outstanding Priority Bonds
after giving consideration as an offset to debt service the receipt or anticipated receipt of
a refundable tax credit or similar payment relating to a series of Priority Bonds
irrevocably designated as refundable tax credit bonds pursuant to a prior parity lien
ordinance amendment (the Required Reserve Amount). The City may, at its option,
withdraw and transfer to the System Fund, all surplus in the Reserve Fund over the
Required Reserve Amount. Upon the issuance of the Bonds, the Required Reserve
Amount shall be $ , representing an increase of $ attributable to the
issuance of the Bonds. As permitted by Subsection J(1) of this Section, the City will
satisfy this increase in the Required Reserve Amount attributable to the issuance of the
Bonds by depositing not less than $ to the Reserve Fund not later than the
10th day of each month for 60 consecutive months, commencing , 20�
(2) 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 Reserve
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 transfer 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.
(3) 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
7901 7907 5 A-12
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.
(4) 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 Reserve Amount, then the City shall satisfy the
Required Reserve Amount by depositing Reserve Fund Obligations into the Reserve
Fund in monthly installments of not less than 1/60 of the Required Reserve Amount made
on or before the 10th day of each month following such termination or expiration.
(5) 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 Reserve 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.
(6) Reimbursement of Credit Provider. In the event there is a draw upon a
Credit Facility, the City shall reimburse the Credit 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.
(7) Additional Priority Bonds. Upon the issuance of Additional Priority
Bonds the money in the Reserve Fund shall be increased to the newly - established
Required Reserve Amount in accordance with the provisions of Subsection I(1) of this
Ordinance.
F. 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.
G. 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
withdrawals are made therefrom. Such investments shall be sold promptly when necessary to
79017907.5
l3
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.
H. 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.
I. 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.
(1) Debt Service Fund. To the credit of the Debt Service Fund, in the
following order of priority, to -wit:
(a) 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, dedicated thereto), to pay the interest
scheduled to come due on Priority Bonds on the next succeeding interest payment
date;
(b) 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
(c) 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.
(2) 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 Reserve Amount, until
such time as such amounts together with other amounts, if any, in the Reserve Fund,
equal the Required Reserve Amount. When and so long as the Reserve Fund Obligations
in the Reserve Fund are not less than the Required Reserve Amount, no deposits need be
79017907.5
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made to the credit of the Reserve Fund. When and if the Reserve Fund at any time
contains less than the Required Reserve Amount due to any cause or condition other than
the 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 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
Reserve 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.B 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
Reserve Amount.
(3) 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.
J. Deficiencies. If on any occasion there shall not be sufficient Pledged Revenues to
make the deposits and other applications of money required by Subsection I of this Section 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 Subsection I of this Section) 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.
K. 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.
79017907.5 A- 1 5
L. Issuance of Additional Priority Bonds.
(1) 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.
(2) 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
lOth day of each month following the delivery of such Additional Priority Bonds, of not
less than 1/60th of said required additional amount (or 1 /60th 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.
(3) Calculations. All calculations of Average Annual Debt Service
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.
M. Further Requirements for Additional Priority Bonds.
(1) 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 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 an 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
79017907 5
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not be dated prior to the date an ordinance is passed authorizing the issuance of such
Additional Priority Bonds.
(2) 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 fmancing 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 Subsections M(2), (3), (4) or (5) of this Section) unless
and until the conditions precedent in Subsection M(2) 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 Debt
Service 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 M(1) 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 M(2) as set forth above
cannot be satisfied, the City has satisfied the conditions precedent in Subsection M(3) 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 Debt
Service 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.
(3) 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 M(1) above have been satisfied and, in
addition thereto, either the relevant conditions precedent specified in Subsection M(2)
above are satisfied or, in the alternative, the City shall have obtained: (i) from the
Engineer a comprehensive Engineering Report for each Capital Addition to be financed,
which report shall (A) contain (l) detailed estimates of the cost of acquiring and
79017907 ,5
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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 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 Debt Service
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.
(4) Completion Issues. Once a Capital Addition has been initiated by meeting
the conditions precedent specified in Subsection k(3) 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 M3(i) and (ii) or Subsection M(2) 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 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.
(5) 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
79017907 .5
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Subsection M(1) and M(2) of this Section shall be satisfied and the Accountant's
certificate or opinion required by Subsection M(2) 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.
(6) Computations; Reports. With reference to Priority Bonds anticipated and
estimated to be issued or incurred, the Average Annual Debt Service 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
refundable 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 an 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
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,
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.
(7) 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 M(2) through
M(5) are complied with as the same relate to the appropriate purpose.
(8) 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.
7901 7907, 5 A-19
(9) 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.
(10) 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 becamc 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.
N. General Covenants. The City further covenants and agrees that in accordance with
and to the extent required or permitted by law:
(1) 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, an 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.
(2) 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.
(3) 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
79017907,5
A -20
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.
(4) 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 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.
(5) 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.
(6) 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.
(7) 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.
(8) 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:
79017907.5 A-21
(a) 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 (B) the proceeds of such sale are $250,000 or less,
or it shall have received a certificate executed by the Engineer 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 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 M(11) of this Section. The proceeds of any such sale or exchange not
used to 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
(b) 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 casements 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 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.
(9) 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.
(10) Insurance.
79017907 .5
A -22
(a) Except as otherwise permitted in clause (b) below, k 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.
(b) In lieu of obtaining policies for insurance as provided above, the
City may self- insure against risks, accidents, claims or casualties described in
clause (a) above.
(c) 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
hereinbeforc made have been paid.
(11) 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 Debt Service
Requirements of all then Outstanding Priority Bonds; or (2) to pay the sum of (A) all
current Operating Expenses, (B) the Average Annual Debt Service 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 Debt Service 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 and (2) the receipt or anticipated receipt
of a refundable 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.
79017907 „5
A -23
(12) 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.
(13) 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.
(14) 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 a substitute for the System's facilities, and, to the extent
that it legally may, the City will prohibit any such competing facilities.
(15) Rights of Inspection. The Engineer 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 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 or such registered owner may from
time to time reasonably request.
790179075 A-24
79017907 .5
EXHIBIT B
Ordinance Provisions Relating to Junior Lien Obligations
(INCORPORATED INTO BODY OF ORDINANCE)
B -1
A. Forms.
(1) Forms Generally. The Bonds, the Registration Certificate of the
Comptroller of Public Accounts of the State of Texas, the Certificate of Paying
Agent/Registrar, and the form of Assignment to be printed on each of the Bonds shall be
substantially in the forms set forth in this Section with such appropriate insertions,
omissions, substitutions, and other variations as are permitted or required by this
Ordinance and may have such letters, numbers, or other marks of identification
(including insurance legends in the event the Bonds, or any Stated Maturities thereof, are
insured and identifying numbers and letters of the Committee on Uniform Securities
Identification Procedures of the American Bankers Association) and such legends and
endorsements (including any reproduction of an opinion of counsel) thereon as may,
consistent herewith, be established by the City or determined by the officers executing
the Bonds as evidenced by their execution thereof. Any portion of the text of any Bond
may be set forth on the reverse thereof, with an appropriate reference thereto on the face
of the Bond.
The definitive Bonds shall be printed, lithographed, or engraved, produced by any
combination of these methods, or produced in any other similar manner, all as determined by the
officers executing the Bonds as evidenced by their execution thereof, but the Initial Bond(s)
submitted to the Attorney General of Texas may be typewritten or photocopied or otherwise
reproduced.
(2) Form of Definitive Bond.
REGISTERED
REGISTERED PRINCIPAL AMOUNT
NO. S
United States of America
State of Texas
Counties of Nueces, Aransas, Kleberg, and San Patricio
CITY OF CORPUS CHRIST[, TEXAS UTILITY SYSTEM
JUNIOR LIEN REVENUE IMPROVEMENT BONDS, SERIES 2013
Dated Date: Interest Rate: Stated Maturity: CUSIP NO:
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The City of Corpus Christi, Texas (the City), a body corporate and a municipal
corporation located in the Counties of Nueces, Aransas, Kleberg, and San Patricio, State of
Texas, for value received, 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
79017907 5
B -2
redemption), and to pay interest on the unpaid Principal Amount hereof from the Dated Date or
from the most recent interest payment date to which interest has been paid 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 of 30 -day months; such interest being payable on January 15
and July 15 of each year commencing
Principal and premium, if any, of the Bond shall be payable to the Registered Owner
hereof (the Holder) upon presentation and surrender, at the corporate trust office of the Paying
Agent/Registrar executing the registration certificate appearing hereon or a successor thereof.
Interest shall be payable to the Holder of this Bond (or one or more Predecessor Bonds, as
defined in the Ordinance hereinafter referenced) whose name appears on the Security Register
maintained by the Paying Agent/Registrar at the close of business on the Record Date, which is
the last business day of the month next preceding each interest payment date. All payments of
principal of and interest on this Bond shall be in any coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public and private debts.
Interest shall be paid by the Paying Agent/Registrar by check sent on the appropriate date of
payment by United States Mail, first -class postage prepaid, to the Holder hereof at the address
appearing in the Security Register or by such other method, acceptable to the Paying
Agent/Registrar, requested by the Holder hereof at the Holder's risk and expense.
This Bond is one of the series specified in its title issued in the aggregate principal
amount of $ (the Bonds) pursuant to an ordinance adopted by the governing body of the
City (the Ordinance), for the purpose of (i) building, improving, extending, renovating,
enlarging, and repairing the System and (ii) the payment of their costs of issuance. The Bonds
are authorized to be issued pursuant to the authority conferred by and in conformity with the
Constitution and laws of the State of Texas, particularly Chapters 1371 and 1502, as amended,
Texas Government Code, the City's Home Rule Charter, and the Ordinance.
The Bonds stated to mature on July 15, 20_ are referred to herein as the Term Bonds.
The Term Bonds arc subject to mandatory sinking fund redemption prior to their stated
maturities from money required to be deposited in the Bond Fund (but not the Reserve Fund) for
such purpose and shall be redeemed in part, by lot or other customary method, 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:
79017907 5
13-3
Term Bonds Stated to
Mature on July 15, 20
Principal
Year Amount ($)
*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 City, 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 City 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 City with money in the Bond Fund (but not the
Reserve Fund), or (3) shall have been redeemed pursuant to the optional redemption provisions
set forth below and not theretofore credited against a mandatory redemption requirement.
The Bonds stated to mature on and after July 15, 20_ may be redeemed prior to their
Stated Maturities, at the option of the City, on July 15, 20_ or on any date, in whole or in part in
principal amounts of $5,000 or any integral multiple thereof (and if within a Stated Maturity
selected at random and by lot by the Paying Agent/Registrar) at the redemption price of par,
together with accrued interest to the date of redemption, and upon thirty (30) days prior written
notice being given by United States mail, first -class postage prepaid, to Holders of the Bonds to
be redeemed, and subject to the terms and provisions relating thereto contained in the Ordinance. ,
If this Bond is subject to redemption prior to Stated Maturity and is in a denomination in excess
of $5,000, portions of the principal sum hereof in installments of $5,000 or any integral multiple
thereof may be redeemed, and, if less than all of the principal sum hereof is to be redeemed,
there shall be issued, without charge therefor, to the Holder hereof, upon the surrender of this
Bond to the Paying Agent/Registrar at its corporate trust office, a new Bond or Bonds of like
Stated Maturity and interest rate in any authorized denominations provided in the Ordinance for
the then unredeemed balance of the principal sum hereof.
If this Bond (or any portion of the principal sum hereof) shall have been duly called for
redemption and notice of such redemption duly given, then upon such redemption date this Bond
(or the portion of the principal sum hereof to be redeemed) shall become due and payable, and, if
money for the payment of the redemption price and the interest accrued on the principal amount
to be redeemed to the date of redemption is held for the purpose of such payment by the Paying
Agent/Registrar, interest shall cease to accrue and be payable hereon from and after the
redemption date on the principal amount hereof to be redeemed. In the event of a partial
redemption of the principal amount of this Bond, payment of the redemption price of such
79017907 5
B-4
principal amount shall be made to the registered owner only upon presentation and surrender of
this Bond to the corporate trust office of the Paying Agent/Registrar and, there shall be issued to
the registered owner hereof, without charge, a new Bond or Bonds of like maturity and interest
rate in any authorized denominations provided in the Ordinance for the then unredeemed balance
of the principal sum hereof. If this Bond is called for redemption, in whole or in part, the City or
the Paying Agent/Registrar shall not be required to issue, transfer, or exchange this Bond within
forty -five (45) days of the date fixed for redemption; provided, however, such limitation of
transfer shall not be applicable to an exchange by the Holder of the unredeemed balance hereof
in the event of its redemption in part.
The Bonds of this series are special obligations of the City, issued as the initial series of
Junior Lien Obligations, payable from and equally and ratably secured by a lien on and pledge of
the Junior Lien Pledged Revenues, being (primarily) a lien on and pledge of the Net Revenues
derived from the operation of the City's utility system (as further described in the Ordinance, the
System), that is junior and inferior to the lien thereon and pledge thereof securing the repayment
of the Priority Bonds, but senior and superior to the lien thereon and pledge thereof securing the
repayment of the Subordinate Lien Obligations and the Inferior Lien Obligations. In the
Ordinance, the City reserves and retains the right to issue Additional Priority Bonds, Additional
Junior Lien Obligations, Additional Subordinate Lien Obligations, and Additional Inferior Lien
Obligations without limitation as to principal amount but subject to any terms, conditions, or
restrictions set forth in the Ordinance or as may be applicable thereto under law or otherwise.
The Bonds do not constitute a legal or equitable pledge, charge, lien, or encumbrance upon any
property of the City or System, except with respect to the Junior Lien Pledged Revenues.
The Holder hereof shall never have the right to demand payment of this obligation out of
any funds raised or to be raised by taxation.
Reference is hereby made to the Ordinance, a copy of which is on file in the corporate
trust office of the Paying Agent/Registrar, and to all of the provisions of which the Holder by his
acceptance hereof hereby assents, for definitions of terms; the description and nature of the
Junior Lien Pledged Revenues pledged for the payment of the Bonds; the terms and conditions
under which the City may issue Additional Priority Bonds, Additional Junior Lien Obligations,
Additional Subordinate Lien Obligations, and Additional Inferior Lien Obligations; the terms
and conditions relating to the transfer or exchange of the Bonds; the conditions upon which the
Ordinance may be amended or supplemented with or without the consent of the Holders; the
rights, duties, and obligations of the City and the Paying Agent/Registrar; the terms and
provisions upon which this Bond may be redeemed or discharged at or prior to the Stated
Maturity thereof, and deemed to be no longer Outstanding thereunder; and for the other terms
and provisions specified in the Ordinance. Capitalized terms used herein have the same
meanings assigned in the Ordinance.
This Bond, subject to certain limitations contained in the Ordinance, may be transferred
on the Security Register upon presentation and surrender at the corporate trust office of the
Paying Agent/Registrar, duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Paying Agent /Registrar duly executed by the Holder hereof, or his duly
authorized agent, and thereupon one or more new fully registered Bonds of the same Stated
79017907 5
8-5
Maturity, of authorized denominations, bearing the same rate of interest, and of the same
aggregate principal amount will be issued to the designated transferee or transferees.
The City and the Paying Agent/Registrar, and any agent of either, shall treat the Holder
hereof whose name appears on the Security Register (i) on the Record Date as the owner hereof
for purposes of receiving payment of interest hereon, (ii) on the date of surrender of this Bond as
the owner hereof for purposes of receiving payment of principal hereof at its Stated Maturity, or
its redemption, in whole or in part, and (iii) on any other date as the owner hereof for all other
purposes, and neither the City nor the Paying Agent/Registrar, or any such agent of either, shall
be affected by notice to the contrary. In the event of a non - payment of interest on a scheduled
payment date, and for thirty (30) days thereafter, a new record date for such interest payment (a
Special Record Date) will be established by the Paying Agent/Registrar, if and when funds for
the payment of such interest have been received from the City. Notice of the Special Record
Date and of the scheduled payment date of the past due interest (the Special Payment Date -
which shall be fifteen (l 5) days after the Special Record Date) shall be sent at least five (5)
business days prior to the Special Record Date by United States mail, first -class postage prepaid,
to the address of each Holder appearing on the Security Register at the close of business on the
last business day next preceding the date of mailing of such notice.
It is hereby certified, covenanted, and represented that all acts, conditions, and things required to
be performed, exist, and be done precedent to the issuance of this Bond in order to render the
same a legal, valid, and binding special obligation of the City have been performed, exist, and
have been done, in regular and due time, form, and manner, as required by law, and that issuance
of the Bonds does not exceed any constitutional or statutory limitation; and that due provision
has been made for the payment of the principal of and interest on the Bonds by a pledge of and
lien on the Junior Lien Pledged Revenues. In case any provision in this Bond or any application
thereof shall be deemed invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions and applications shall not in any way be affected or
impaired thereby. The terms and provisions of this Bond and the Ordinance shall be construed in
accordance with and shall be governed by the laws of the State of Texas.
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79017907.5 B -6
IN WITNESS WHEREOF, this Bond has been signed with the imprinted or lithographed
facsimile signature of the Mayor of the City, attested by the imprinted or lithographed facsimile
signature of the City Secretary, and the official seal of the City has been duly affixed to, printed,
lithographed or impressed on this Bond.
ATTEST:
City Secretary
(SEAL)
79017907.5
CITY OF CORPUS CHRISTI, TEXAS
Mayor
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B,w7
(3) *Form of Registration Certificate of Comptroller of Public Accounts to
Annear on Initial Bond(s) Onhh.
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)
* Bond to Printer: Not to appear on printed Bonds
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79017907 5 13-8
(4) *Form of Certificate of Paving Agent/Registrar to Appear on Definitive
Bonds Only.
CERTIFICATE OF PAYING AGENT/REGISTRAR
This Bond has been duly issued under the provisions of the within - mentioned Ordinance;
the Bond or Bonds of the above - entitled and designated series originally delivered having been
approved by the Attorney General of the State of Texas and registered by the Comptroller of
Public Accounts, as shown by the records of the Paying Agent/Registrar.
Registered this date: , as Paying
Agent/Registrar
* Bond to Printer: to appear on printed Bonds
By:
Authorized Signature
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79017907 5 B-9
(5) 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):
w� .,,
the within Bond and all rights thereunder, and hereb y irrevocably constitutes and
appoints attomey to transfer the within Bond on the books kept
for registration thereof, with full power of substitution in the premises.
DATED:
Signature guaranteed:
79017907,5
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.
(The remainder of this page intentionally left blank.]
B -10
(6) The Initial Bond(s) shall be in the form set forth in paragraph B of this
Section, except that the form of a single fully registered Initial Bond shall be modified as
follows:
(a) immediately under the name of the Bond(s) the headings "Interest
Rate" and "Stated Maturity" shall both be completed "as shown below";
(b) the first two paragraphs shall read as follows:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of Corpus Christi, Texas (the City), a body corporate and a municipal
corporation located in the Counties of Nueces, Aransas, Kleberg, and San Patricio, State of
Texas, for value received, 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 3 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 Dated Date, or from the most recent interest payment
date to which interest has been paid 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 of
30 -day months; such interest being payable on January 15 and July 15 of each year, commencing
Principal of this Bond shall be payable to the Registered Owner hereof (the Holder),
upon its presentation and surrender, at the corporate trust office of
(the Paying Agent/Registrar). Interest shall be payable
to the Holder of this Bond whose name appears on the Security Register maintained by the
Paying Agent/Registrar at the close of business on the Record Date, which is the last business
day of the month next preceding each interest payment date. All payments of principal of and
interest on this Bond shall be in any coin or currency of the United States of America which at
the time of payment is legal tender for the payment of public and private debts. Interest shall be
paid by the Paying Agent/Registrar by check sent on or prior to the appropriate date of payment
by United States mail, first -class postage prepaid, to the Holder hereof at the address appearing
in the Security Register or by such other method, acceptable to the Paying Agent/Registrar,
requested by, and at the risk and expense of, the Holder hereof.
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(7) Insurance Legend. If bond insurance is obtained by the Purchasers or the
City for the Bonds, the definitive Bonds and the Initial Bond(s) shall bear an appropriate
legend as provided by the insurer.
B. Pledge of Junior Lien Pledged Revenues.
(1) The City hereby covenants and agrees that the Junior Lien Pledged
Revenues of the System are hereby irrevocably pledged to the payment and security of
the Junior Lien Obligations, including the establishment and maintenance of the special
funds or accounts created for the payment and security thereof, all as hereinafter
provided; and it is hereby resolved that the Junior Lien Obligations, and the interest
thereon, shall constitute a lien on and pledge of the Junior Lien Pledged Revenues and be
valid and binding without any physical delivery thereof or further act by the City, and the
lien created hereby on the Junior Lien Pledged Revenues for the payment and security of
the Junior Lien Obligations, shall be, subject to the subordinate lien nature of the Junior
Lien Pledged Revenues as herein described otherwise, prior in right and claim as to any
other indebtedness, liability, or obligation of the City or the System. The Junior Lien
Obligations are and will be secured by and payable only from the Junior Lien 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.
(2) Chapter 1208, as amended, Texas Government Code, applies to the
issuance of the Bonds and the pledge of Junior Lien 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 Junior Lien Obligations are
Outstanding and unpaid such that the pledge of the Junior Lien Pledged Revenues
granted by the City is to be subject to the filing requirements of Chapter 9, Texas
Business & Commerce Code, then in order to preserve to the registered owners of the
Junior Lien Obligations the perfection of the security interest in this pledge, the City
Council 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 this
pledge to occur.
C. Rates and Charges. For the benefit of the Holders of the Bonds and in addition to all
provisions and covenants in the laws of the State of Texas and in this Ordinance, the City hereby
expressly stipulates and agrees, while any of the Junior Lien Obligations are Outstanding, to
establish and maintain rates and charges for facilities and services afforded by the System that
are reasonably expected, on the basis of available information and experience and with due
allowance for contingencies, to produce Gross Revenues in each Fiscal Year sufficient:
(1) To pay all Operating Expenses, or any expenses required by statute to be a
first claim on and charge against the Gross Revenues of the System.
(2) To produce Net Revenues, together with any other lawfully available
funds, sufficient to satisfy the rate covenant contained in the ordinances authorizing the
issuance of the Priority Bonds and to pay the principal of and interest on the Priority
79017907,5
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Bonds and the amounts required to be deposited in any reserve or contingency fund or
account created for the payment and security of the Priority Bonds, and any other
obligations or evidences of indebtedness issued or incurred that arc payable from and
secured solely by a prior and first lien on an pledge of the Net Revenues of the System;
(3) To produce Net Revenues, together with any other lawfully available
funds, equal to at least 1.15 times Average Annual Debt Service Requirements on the
then - Outstanding Junior Lien Obligations and to deposit the amounts required to be
deposited in any reserve or contingency fund or account created for the payment and
security of the Junior Lien Obligations, and any other obligations or evidences of
indebtedness issued or incurred that are payable from and secured solely by a lien on and
pledge of the Net Revenues, including the Junior Lien Pledged Revenues, that is junior
and inferior to the lien thereon and pledge thereof securing the repayment of the Priority
Bonds but senior and superior to the lien thereon and pledge thereof securing the
repayment of the Inferior Lien Obligations;
(4) To produce Net Revenues, together with any other lawfully available
funds, sufficient to pay the amounts that may be deposited in the special funds
established for the payment of the Subordinate Lien Obligations;
(5) To produce Net Revenues, together with any other lawfully available
funds, sufficient to pay the principal of and interest on the Inferior Lien Obligations as
the same become due and payable and to deposit the amounts required to be deposited in
any reserve or contingency fund or account created for the payment and security of the
Inferior Lien Obligations, and any other obligations or evidences of indebtedness issued
or incurred that are payable from and secured solely by a lien on and pledge of the Net
Revenues that is subordinate and inferior to the lien thereon and pledge thereof securing
the repayment of the Priority Bonds and the Junior Lien Obligations; and
(6) To pay, together with any other lawfully available funds, any other legally
incurred Debt payable from the Net Revenues of the System and/or secured by a lien on
any part of the System.
The determination of the amount of principal of and interest on any obligations identified
in this Section for the purpose of confirming the sufficiency of System rates and charges shall be
made after giving consideration as an offset to debt service the receipt or anticipated receipt of a
refundable tax credit or similar payment relating to any series of obligations irrevocably
designated as refundable tax credit bonds pursuant to the City ordinance authorizing their
issuance or otherwise relating thereto.
D. System Fund. The City hereby covenants, agrees, and ratifies its prior covenants and
agreements that the Gross Revenues of the System shall be deposited, as collected and received,
into a separate Fund or account (previously created and established and to be maintained with the
Depository) known as the "City of Corpus Christi, Texas Utility System Revenue Fund" (the
System Funs) and that the Gross Revenues of the System shall be kept separate and apart from
all other funds of the City. All Gross Revenues deposited into the System Fund shall be pledged
and appropriated to the extent required for the following uses and in the order of priority shown:
79017907,5
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(1) First: To the payment of all necessary and reasonable Operating Expenses
or other expenses required by statute to be a first charge on and claim against the
revenues of the System.
(2) Second: To the payment of the amounts required to be deposited into the
special funds and accounts created and established for the payment, security and benefit
of the Previously Issued Priority Bonds and any Additional Priority Bonds hereafter
issued by the City.
(3) Third: To the payment of the amounts required to be deposited into the
special funds and accounts created and established for the payment, security and benefit
of the Junior Lien Obligations and any Additional Junior Lien Obligations hereafter
issued by the City.
(4) Fourth: To the payment of the amounts required to be deposited into the
special funds and accounts created and established for the payment, security and benefit
of the Previously Issued Subordinate Lien Obligations and any Additional Subordinate
Lien Obligations hereafter issued by the City.
(5) Fifth: To the payment of the amounts that must be deposited in any
special funds and accounts created and established for the payment, security, and benefit
of the Previously Issued Inferior Lien Obligations and any Additional Inferior Lien
Obligations hereafter issued by the City.
Any Net Revenues remaining in the System Fund following such transfers may be used
by the City for payment of other obligations of the System, and for any other lawful purpose;
provided, however, that for so long as any Priority Bonds remain Outstanding, transfers made for
purposes other than for payment of obligations of the System shall be made only at the end of the
Year (if such limitation is imposed, and then, only to the extent imposed in the City ordinances
authorizing the issuance of the Priority Bonds.
E. Bond Fund - Excess Funds. For purposes of providing funds to pay the principal of
and interest on the currently Outstanding Junior Lien Obligations as the same become due and
payable, the City agrees to maintain, at the Depository, a separate and special Fund or account to
be created and known as the "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Improvement Bonds Interest and Sinking Fund" (the Bond Fund). The City covenants that there
shall be deposited by an Authorized Official into the Bond Fund prior to each principal and
interest payment date from the available Net Revenues an amount equal to one hundred per cent
(100 %) of the amount required to fully pay the interest on and the principal of the currently
Outstanding Junior Lien Obligations then falling due and payable, such deposits to pay maturing
principal and accrued interest on the currently Outstanding Junior Lien Obligations to be made in
substantially equal monthly installments on or before the 1001 day of each month, beginning on
or before the 10t" day of the month next following the delivery of the Bonds to the Purchasers.
As described further in Subsection 9G hereof, if the Junior Lien Pledged Revenues in any month
are insufficient to make the required payments into the Bond Fund, then the amount of any
deficiency in such payment shall be added to the amount otherwise required to be paid into the
Bond Fund in the next month.
79017907.5 B -14
The required monthly deposits to the Bond Fund for the payment of principal of and
interest on the currently Outstanding Junior Lien Obligations shall continue to be made as
hereinabove provided until such time as (i) the total amount on deposit in the Bond Fund and
Reserve Fund is equal to the amount required to fully pay and discharge all Outstanding Junior
Lien Obligations (principal and interest) or (ii) the Junior Lien Obligations are no longer
Outstanding.
Any proceeds of the Bonds, and investment income thereon, not expended for authorized
purposes shall be deposited into the Bond Fund and shall be taken into consideration and reduce
the amount of monthly deposits required to be deposited into the Bond Fund from the Net
Revenues of the System.
Any surplus proceeds from the sale of the Bonds, including investment income thereon,
not expended for authorized purposes shall be deposited in the Bond Fund, and such amounts so
deposited shall reduce the sums otherwise required to be deposited in such Fund from the Junior
Lien Pledged Revenues.
F. Reserve Fund. To accumulate and maintain a reserve for the payment of the Bonds
equal to 100% of the Average Annual Debt Service Requirements or such lesser amount as
restricted by the Code (calculated by the City Council at the beginning of each Fiscal Year and
as of the date of issuance of the Bonds and each series of Additional Junior Lien Obligations) for
the Bonds (the Required Reserve Amount), the City hereby creates and establishes, and shall
maintain at a Depository a separate and special fund known as the "Corpus Christi, Texas Utility
System Junior Lien Revenue Improvement Bonds Reserve Fund" (the Reserve Fund). Earnings
and income derived from the investment of amounts held for the credit of the Reserve Fund shall
be retained in the Reserve Fund until the Reserve Fund contains the Required Reserve Amount;
thereafter, such earnings and income shall be deposited to the credit of the System Fund. All
funds deposited into the Reserve Fund shall be used solely for the payment of the principal of
and interest on the Bonds, when and to the extent other funds available for such purposes are
insufficient, and, in addition, may be used to retire the last Stated Maturity or Stated Maturities
of or interest on the Bonds.
The City may acquire a Credit Facility or Facilities issued by a Credit Provider in
amounts equal to all or part of the Required Reserve Amount for the Bonds in lieu of depositing
cash into the Reserve Fund; provided, however, that no such Credit Facility may be so
substituted unless the substitution of the Credit Facility will not, in and of itself, cause any
ratings then assigned to the Bonds by any Rating Agency to be lowered and the resolution
authorizing the substitution of the Credit Facility for all or part of the Required Reserve Amount
for the Bonds contains (i) a finding that such substitution is cost effective and (ii) a provision that
the interest due on any repayment obligation of the City by reason of payments made under such
Credit Facility does not exceed the highest lawful rate of interest which may be paid by the City
at the time of the delivery of the Credit Facility. The City reserves the right to use Junior Lien
Pledged Revenues to fund the payment of (1) periodic premiums on the Credit Facility as a part
of the payment of the City's Operating Expenses, and (2) any repayment obligation incurred by
the City (including interest) to the Credit Provider, the payment of which will result in the
reinstatement of such Credit Facility, prior to making payments required to be made to the
79017407,5
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Reserve Fund pursuant to the provisions of this Section to restore the balance in such fund the
Required Reserve Amount for the Bonds.
Until the issuance of any Additional Junior Lien Obligations (or as from time to time
recalculated by the City as provided in the first paragraph of this Section), the Required Reserve
Amount is $ (inclusive of the Bonds and the Concurrently Issued Bonds). This amount
shall be deposited to the Reserve Fund at such time as may be required pursuant to the provisions
of this Section from Revenues, paid from the System Fund at such level of priority as specified
in Subsection 9D, by the deposit of monthly installments, made on or before the 10th day of each
month following the month in which such obligation to fund the Reserve Fund arises, of not less
than 1 /60th of the amount to be maintained in the Reserve Fund.
As and when Additional Junior Lien Obligations are delivered or incurred, the Required
Reserve Amount shall be increased, if required, to an amount calculated in the manner provided
in the first paragraph of this Section. Any additional amount required to be maintained in the
Reserve Fund shall be so accumulated by the deposit of all or a portion of the necessary amount
from the proceeds of the issue or other lawfully available funds in the Reserve Fund immediately
after the delivery of the then proposed Additional Junior Lien Obligations, or, at the option of the
City, by the deposit of monthly installments, made on or before the business day before the 10th
day of each month following the month of delivery of the then proposed Additional Junior Lien
Obligations, of not less than 1/60th of the additional amount to be maintained in the Reserve
Fund by reason of the issuance of the Additional Junior Lien Obligations then being issued (or
1160th of the balance of the additional amount not deposited immediately in cash) (such deposits,
the Required Reserve Fund Deposits), thereby ensuring the accumulation in the Reserve Fund of
the appropriate Required Reserve Amount.
When and for so long as the cash and investments in the Reserve Fund equal the
Required Reserve Amount, no deposits need be made to the credit of the Reserve Fund; but, if
and when the Reserve Fund at any time contains less than the Required Reserve Amount (other
than as the result of the issuance of Additional Junior Lien Obligations as provided in the
preceding paragraph), the City covenants and agrees to cure the deficiency in the Required
Reserve Amount by resuming the Required Reserve Fund Deposits to the Reserve Fund from the
Junior Lien Pledged Revenues in monthly deposit amounts equal to not less than 1/60th of the
Required Reserve Amount covenanted by the City to be maintained in the Reserve Fund. Any
such deficiency payments shall be made on or before the 10th day of each month until the
Required Reserve Amount has been fully restored. The City further covenants and agrees that,
subject only to the prior payments to be made to the Bond Fund, the Junior Lien Pledged
Revenues shall be applied and appropriated and used to establish and maintain the Required
Reserve Amount and to cure any deficiency in such amounts as required by the terms of this
Ordinance, any City ordinance authorizing the issuance of the Priority Bonds, and any other
ordinance pertaining to the issuance of Additional Junior Lien Obligations.
During such time as the Reserve Fund contains the Required Reserve Amount, the City
Council may, at its option, withdraw all surplus funds in the Reserve Fund in excess of the
Required Reserve Amount. Any such withdrawn surplus shall be deposited to the Bond Fund or
used by the City for any other lawful purpose; provided, however, to the extent that such excess
79017407.5
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amount represents Bond proceeds, then such amount must be transferred to the Bond Fund or be
otherwise used in accordance with then - applicable State law,
In the event a Credit Facility issued to satisfy all or a part of the City's obligation with
respect to the Reserve Fund causes the amount then on deposit in the Reserve Fund to exceed the
Required Reserve Amount for the Bonds, the City may transfer such excess amount to any fund
or funds established for the payment of or security for the Bonds (including any escrow
established for the final payment of any such obligations pursuant to the provisions of Chapter
1207), or be used for any lawful purposes; provided, however, to the extent that such excess
amount represents Bond proceeds, then such amount must be transferred to the Bond Fund or be
otherwise used in accordance with then- applicable State law.
Notwithstanding anything to the contrary contained in this Section 9F, the requirements
set forth above to fund the Reserve Fund in the amount of the Required Reserve Amount shall be
suspended for such time as the Junior Lien Pledged Revenues for each Fiscal Year are equal to at
least 110% of the Average Annual Debt Service Requirements. In the event that the Junior Lien.
Pledged Revenues for any two consecutive Fiscal Years are less than 110% (unless such
percentage is below 100% in any Fiscal Year, in which case the hereinafter — specified
requirements will commence after such Fiscal Year) of the Average Annual Debt Service
Requirements, the City will be required to commence making the deposits to the Reserve Fund,
as provided above, and to continue making such deposits until the earlier of (i) such time as the
Reserve Fund contains the Required Reserve Amount or (ii) the Junior Lien Pledged Revenues
for a Fiscal Year have been equal to not less than 1 10% of the Average Annual Debt Service
Requirements.
G. Deficiencies - Excess Junior Lien Pledged Revenues.
(1) If on any occasion there shall not be sufficient Junior Lien Pledged
Revenues to make the required deposits into the Bond Fund, then such deficiency shall be
cured as soon as possible from the next available unallocated Junior Lien Pledged
Revenues, or from any other sources available for such purpose, and such payments shall
be in addition to the amounts required to be paid into these Funds or accounts during such
month or months.
(2) Subject to making the required deposits to the Bond Fund when and as
required by any ordinance or resolution authorizing the issuance of the currently
Outstanding Priority Bonds, the Junior Lien Obligations, the Subordinate Lien
Obligations, and the Inferior Lien Obligations, the excess Net Revenues of the System
may be used by the City for any lawful purpose (as further provided in Subsection 9D
hereof).
H. Payment of Bonds. While any of the Bonds are Outstanding, an Authorized Official
shall cause to be transferred to the Paying Agent/Registrar therefor, from funds on deposit in the
Bond Fund, amounts sufficient to fully pay and discharge promptly each installment of interest
on and principal of the Bonds as such installment accrues or matures; such transfer of funds must
be made in such manner as will cause immediately available funds to be deposited with the
79017907.5
13 -'17
Paying Agent/Registrar for the Bonds at the close of the business day next preceding the date a
debt service payment is due on the Bonds.
I. Investments. Funds held in any Fund or account created, established, or maintained
pursuant to this Ordinance shall, at the option of the City, be placed in time deposits, certificates
of deposit, guaranteed investment contracts or similar contractual agreements as permitted by the
provisions of the Public Funds Investment Act, as amended, Chapter 2256, Texas Government
Code, or any other law, and secured (to the extent not insured by the Federal Deposit Insurance
Corporation) by obligations of the type hereinafter described, including investments held in
book -entry form, in securities including, but not limited to, direct obligations of the United States
of America, obligations guaranteed or insured by the United States of America, which, in the
opinion of the Attorney General of the United States, are backed by its full faith and credit or
represent its general obligations, or invested in indirect obligations of the United States of
America, including, but not Iimited to, evidences of indebtedness issued, insured, or guaranteed
by such governmental agencies as the Federal Land Banks, Federal Intermediate Credit Banks,
Banks for Cooperatives, Federal Home Loan Banks, Government National Mortgage
Association, Farmers Home Administration, Federal Home Loan Mortgage Association, or
Federal Housing Association; provided that all such deposits and investments shall be made in
such a manner that the money required to be expended from any Fund or account will be
available at the proper time or times. Such investments (except State and Local Government
Series investments held in book entry form, which shall at all times be valued at cost) shall be
valued in terms of current market value within 45 days of the close of each Fiscal Year. All
interest and income derived from deposits and investments in the Bond Fund immediately shall
be credited to, and any losses debited to, the Bond Fund. All such investments shall be sold
promptly when necessary to prevent any default in connection with the Bonds.
J. Application of the Covenants and Agreements of the Priority Bonds. It is the
intention of the City Council and accordingly hereby recognized and stipulated that the
provisions, agreements, and covenants contained herein bearing upon the management and
operations of the System, and the administering and application of Gross Revenues derived from
the operation thereof, shall to the extent possible be harmonized with like provisions,
agreements, and covenants contained in the City ordinances authorizing the issuance of the
Priority Bonds now or hereafter Outstanding, and to the extent of any irreconcilable conflict
between the provisions contained herein and in the City ordinances authorizing the issuance of
the Priority Bonds now or hereafter Outstanding, the provisions, agreements and covenants
contained therein shall prevail to the extent of such conflict and be applicable to this Ordinance,
especially the priority of rights and benefits conferred thereby to the holders of the Priority
Bonds now or hereafter Outstanding. It is expressly recognized that prior to the issuance of any
Additional Junior Lien Obligations or Additional Inferior Lien Obligations, that the City must
comply with each of the conditions precedent contained in this Ordinance and the City
ordinances authorizing the issuance of the then- Outstanding Priority Bonds, as appropriate.
K. Issuance of Additional Priority Bonds, Additional Junior Lien Obliaations_Additional
Subordinate Lien Obligations, and Additional Inferior Lien Obligations. Subsequent to the
issuance of the Bonds and the Concurrently Issued Bonds (the issuance of each of which without
compliance with the terms of this Subsection are hereby approved), the City hereby expressly
reserves the right to hereafter issue bonds, notes, warrants, certificates of obligation, or similar
79017907.5
B -18
obligations, payable, wholly or in part, as appropriate, from and secured by a pledge of and lien
on the Net Revenues of the System with the following priorities, without limitation as to
principal amount, but subject to any terms, conditions, or restrictions applicable thereto under
existing ordinances, laws, or otherwise:
(1) Additional Priority Bonds payable from and equally and ratably secured
by a first and prior lien on and pledge of the Net Revenues of the System upon satisfying
each of the conditions precedent contained in the City ordinances authorizing the
issuance of the Priority Bonds now or hereafter Outstanding.
(2) Additional Junior Lien Obligations, secured by and payable from the
Junior Lien Pledged Revenues, which includes (primarily) a lien on and pledge of Net
Revenues that is junior and inferior to the lien thereon and pledge thereof securing the
repayment of the Priority Bonds but senior and superior to the lien there on and pledge
thereof securing the repayment of the Subordinate Lien Obligations and the Inferior Lien
Obligations, upon satisfying each of the following conditions precedent:
(a) The City Manager (or other officer of the City then having the
responsibility for the financial affairs of the City) shall have 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
Net 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 Net 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 Junior Lien Obligations,
but such certificate shall not be dated prior to the date an ordinance is passed
authorizing the issuance of such Additional Junior Lien Obligations.
(b) Conditions Precedent for Issuance of Additional Junior Lien
Obligations - Capital Improvements and for anv other Lawful Purpose except for
Capital Additions or for Refunding, The City covenants and agrees that
Additional Junior Lien Obligations 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 K(2)(c) and Subsection 9L this Section, respectively)
unless and until the conditions precedent in Subsection K(2)(a) of this Section
have been satisfied and, in addition thereto, the City has secured a certification of
the City Manager to the effect that, according to the books and records of the
City, the Net Earnings (as hereinafter defined) for the preceding Fiscal Year or for
12 consecutive months out of the 15 months immediately preceding the month the
ordinance authorizing the Additional Junior Lien Obligations is adopted are at
least equal to 1.15 times the Average Annual Debt Service Requirements for all
then- Outstanding Priority Bonds or Junior Lien Obligations after giving effect to
the Additional Junior Lien Obligations then proposed. The foregoing
notwithstanding, the City covenants and agrees that Additional Junior Lien
790!7907.5
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79017907 ,5
Obligations may not be issued for the purpose of financing Capital Improvements
when other Outstanding Junior Lien Obligations which have been issued for the
purpose of financing Capital Additions and for which capitalized interest for such
other Junior Lien Obligations has been provided for at least the twelve months
subsequent to the date of issuance of the Additional Junior Licn Obligations 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 K(2)(b) as set forth above cannot be satisfied, the
City has satisfied the conditions precedent in Subsection K(2)(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 certification of the City Manager to the effect that, according to the
books and records of the City, the Net Earnings for the preceding Fiscal Year or
for 12 consecutive months out of the 15 months immediately preceding the month
the ordinance authorizing the Additional Junior Lien Obligations is adopted are at
least equal to 1.15 times the Average Annual Debt Service Requirements for all
then- Outstanding Priority Bonds and Junior Lien Obligations (other than any
Priority Bonds or Junior Lien Obligations 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 Junior Lien Obligations proposed to be
issued) after giving effect to the Additional Junior Licn Obligations then proposed
to be issued.
(c) Conditions Precedent for Issuance of Additional Junior Lien
Obligations - Capital Additions: Initial Issue. The City covenants and agrees that
Additional Junior Lien Obligations will not be issued for the purpose of financing
Capital Additions, unless the same conditions precedent specified in
Subsection K(2)(a) above have been satisfied and, in addition thereto, tither the
relevant conditions precedent specified in Subsection K(2)(a) above are satisfied
or, in the alternative, the City shall have obtained: (i) from the Engineer 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 Fiscal 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
B -20
(ii) a certificate of the Engineer to the effect that, based on an engineering report
prepared thereby for each Capital Addition, the projected Net Earnings for each of
the five Fiscal Years subsequent to the date the Capital Addition becomes
commercially operative (as estimated in the engineering report) will be equal to at
least 1.15 times the Average Annual Debt Service Requirements for the currently
Outstanding Junior Lien Obligations or incurred and all Additional Junior Lien
Obligations 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 Fiscal 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 K(2)(c)(i) and (ii) above
and the initial Junior Lien Obligations issued therefor are delivered, the City
reserves the right to issue Additional Junior Lien Obligations 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 K(2)(c)(i) and (ii) or Subsection K(2)(a) of this Section but subject to
satisfaction of the following conditions precedent: (1) 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 Net Revenues of the System to be
Outstanding after the issuance of the Additional Junior Lien Obligations then
being issued for the period (the Forecast Period) of each ensuing Fiscal Year
through the fifth Fiscal Year subsequent to the latest estimated date such Capital
Addition is expected to be commercially operative; and (ii) the Engineer 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
Net Revenues of the System will be adequate to pay all the obligations, payable
from the Junior Lien Pledged Revenues of the System to be Outstanding after the
issuance of the Additional Junior Lien Obligations then being issued for the
Forecast Period and (13) the proceeds from the sale of such Additional Junior Lien
Obligations are estimated to be sufficient to complete such acquisition and
construction.
(e) Computations: Reports. With reference to Junior Lien Obligations
anticipated and estimated to be issued or incurred, the Average Annual Debt
Service 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 refundable tax credit or similar
payment relating to any series of Junior Lien Obligations irrevocably designated
as refundable tax credit bonds, which payment shall be treated as an offset to
regularly scheduled debt service of the series of Junior Lien Obligations to which
it relates. In the preparation of the engineering report required in
Subsection K(2)(c)(i) above, the Engineer may rely on other experts or
79617907 5 B -21
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 Junior Lien Obligations
for Capital Additions, the certification of the City Manager and the Engineer,
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.
(f) Combination Issues. Junior Lien Obligations for Capital Additions
may be combined in a single issue with Junior Lien Obligations for Capital
Improvements or for any lawful purpose provided the conditions precedent set
forth in Subsections K(2)(b) through (d) are complied with as the same relate to
the appropriate purpose.
(g) 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 and those items identified in the SECOND
level of priority in Subsection 9D, but not expenditures which, under standard
accounting practice, should be charged to capital expenditures.
(h) Determination of Net Earnings. In making a determination of Net
Earnings for any of the purposes described in this Section, the City Manager 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 City Manager's certification or opinion based on such change in rates and
charges being in effect for the entire period covered by the City Manager's
certificate or opinion.
(3) The City may issue Additional Subordinate Lien Obligations secured by a
lien on and pledge of the Net Revenues of the System subordinate and inferior to the lien
thereon and pledge thereof securing the Priority Bonds and that is included in the Junior
Lien Pledged Revenues, respectively, but senior and superior to the lien there on and
pledge thereof securing the repayment of the Inferior Lien Obligations, on the terms and
conditions desired by the City, subject only to the limitations imposed by applicable and
upon satisfying each of the conditions precedent contained in the ordinances authorizing
the issuance of the currently- Outstanding Priority Bonds, this Ordinance, and the
Previously Issued Subordinate Lien Obligations.
(4) The City may issue Additional Inferior Lien Obligations secured by a lien
on and pledge of the Net Revenues of the System subordinate and inferior to the lien
thereon and pledge thereof securing the Priority Bonds and that is included in the Junior
Lien Pledged Revenues, respectively, on the terms and conditions desired by the City,
subject only to the limitations imposed by applicable and upon satisfying each of the
79017907.5
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conditions precedent contained in the ordinances authorizing the issuance of the
currently - Outstanding Priority Bonds, this Ordinance, and, to the extent applicable, the
Federal Contract.
L. Refunding Bonds. The City reserves the right to issue refunding bonds to refund all
or any part of the currently Outstanding Debt, pursuant to any applicable law then available,
upon such terms and conditions as the City Council may deem to be in the best interest of the
City, and if less than all such currently Outstanding Debt are refunded, the conditions precedent
prescribed for the issuance of Additional Junior Lien Obligations set forth in Subsection 9k of
this Ordinance shall be satisfied and the City Managers' certification required in Section 9k shall
give effect to the Debt Service Requirements of the proposed refunding bonds (but shall not give
effect to the Debt Service Requirements of the obligations being refunded following their
cancellation or provision being made for their payment).
79017907.5
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790179071
EXHIBIT C
Defined Terms
B -1
For all purposes of the Ordinance (as defined below), except as otherwise expressly
provided or unless the context otherwise requires: (i) the terms defined in this Exhibit C have the
meanings assigned to them in this Exhibit C, and certain terms used in Sections 17 and 31 of the
Ordinance have the meanings assigned to them in Sections 17 and 31 of the Ordinance, and all
such terms, include the plural as well as the singular; (ii) all references in the Ordinance to
designated "Sections" and other subdivisions are to the designated Sections and other
subdivisions of the Ordinance as originally adopted; and (iii) the words "herein ", "hereof', and
"hereunder" and other words of similar import refer to the Ordinance as a whole and not to any
particular Section or other subdivision.
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 (i) any bonds, notes, warrants, or
other evidences of indebtedness which the City reserves the right to issue or enter into, as the
case may be, in the future under the applicable terms and conditions of this Ordinance and which
are equally and ratably secured by a first and prior lien on and pledge of the Net Revenues of the
System that is senior and superior to the lien thereon and pledge thereof that is made a part of
Junior Lien Pledged Revenues or that may secure the repayment of any Inferior Lien Obligations
and (ii) obligations hereafter issued to refund any of the foregoing if issued in a manner so as to
be payable from and equally and ratably secured by a first and prior lien on and pledge of the Net
Revenues as determined by the City Council in accordance with applicable law.
D. The term Additional Inferior Lien Obligations shall mean (i) any bonds, notes,
warrants, or any similar obligations hereafter issued by the City that are payable wholly or in part
from and equally and ratably secured by a lien and pledge of the Net Revenues, such pledge is
subordinate and inferior to the lien on and pledge of the Net Revenues that are or will be pledged
to the payment of the Priority Bonds, that is included in Junior Lien Pledged Revenues, or that
are or will be pledged to the payment of the Subordinate Lien Obligations, and on parity with the
lien on and pledge of the Net Revenues securing the payment of the then- Outstanding Inferior
Lien Obligations and (ii) obligations hereafter issued to refund any of the foregoing that are
payable from and equally and ratably secured by a subordinate and inferior lien on and pledge of
the Net Revenues as determined by the City Council in accordance with applicable law.
E. The term Additional Junior Lien Obligations shall mean (i) any bonds, notes,
warrants, or any similar obligations hereafter issued by the City that are payable wholly or in part
from and equally and ratably secured by a lien and pledge of the Junior Lien Pledged Revenues,
such pledge to include a pledge of Net Revenues that is junior and inferior to the lien on and
pledge of the Net Revenues that are or will be pledged to the payment of the Priority Bonds now
Outstanding or hereafter issued by the City but senior and superior to the lien thereon and pledge
thereof that are or will be pledged to the payment of the Subordinate Lien Obligations and the
Inferior Lien Obligations now Outstanding or hereafter issued by the City, and (ii) obligations
hereafter issued to refund any of the foregoing that are payable from and equally and ratably
70017907 5
C-
secured solely by a lien on and pledge of the Junior Lien Pledged Revenues, as determined by
the City Council in accordance with applicable law.
F. The term Additional Subordinate Lien Obligations shall mean (i) any bonds, notes,
warrants, or any similar obligations hereafter issued by the City that are payable wholly or in part
from and equally and ratably secured by a lien and pledge of the Net Revenues, such pledge is
subordinate and inferior to the lien on and pledge of the Net Revenues that are or will be pledged
to the payment of the Priority Bands or that is included in Junior Lien Pledged Revenues, but
senior and superior to the lien thereon and pledge thereof that are or will be pledged to the
payment of the Inferior Lien Obligations now Outstanding or hereafter issued by the City, and on
parity with the lien on and pledge of the Net Revenues securing the payment of the then -
Outstanding Subordinate Lien Obligations and (ii) obligations hereafter issued to refund any of
the foregoing that are payable from and equally and ratably secured by a subordinate and inferior
lien on and pledge of the Net Revenues as determined by the City Council in accordance with
applicable law.
G. 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).
H. The term Attorney General shall mean the Office of the Attorney General of the State
of Texas.
I. The term Authorized Denomination shall have the meaning given such term in
Section 3 of this Ordinance.
J. The term Authorized Official shall mean the Mayor of the City, the City Manager of
the City, the Assistant City Manager for General Government and Operations Support, the
Director of Financial Services, and the City Attorney.
K. The term Average Annual Debt Service Requirements shall mcan, (i) with respect to
the Priority Bonds, that amount equal to the average annual principal and interest requirements
(including Amortization Installments) of all Priority Bonds Outstanding. With respect to 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 Debt Service 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); and (ii) with
respect to the Junior Lien Obligations, that average amount which, at the time of computation,
will be required to pay the Debt Service Requirements of obligations when due and derived by
dividing the total of such Debt Service Requirements by the number of years then remaining
before final Stated Maturity (the calculation of Average Annual Debt Service Requirements with
respect to Junior Lien Obligations shall be net of (1) capitalized interest from bond proceeds and
79017907 ..5
C -3
(2) the receipt or anticipated receipt of a refundable tax credit or similar payment relating to a
series of Junior Lien Obligations irrevocably designated as refundable tax credit bonds, which
payment shall be treated as one offset to regularly scheduled debt service of the series of Junior
Lien Obligations to which it relates).
L. The term Bonds shall have the meaning given such term in Section 1 of this
Ordinance.
M. The term Capital Additions shall mean a reservoir or other water storage facilities, a
water or wastewater treatment plant or an interest therein, an electric generation facility and/or
distribution system 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.
N. The term Capital Improvements shall mean any capital extensions, improvements and
betterments to the System other than Capital Additions.
O. The term Capitalized Interest Account shall mean the Account by that name which
may be created within the Debt Service Fund.
P. The term City shall mean the City of Corpus Christi, Texas and, where appropriate,
the City Council of the City.
Q. The term Closing Date shall mean the date of physical delivery of the Initial Bonds in
exchange for the payment in full by the Purchasers.
R. The term Comptroller of Public Accounts shall mean the Office of the Comptroller of
Public Accounts of the State of Texas.
S. The term Credit Agreement shall mean a loan agreement, revolving credit agreement,
agreement establishing a line of credit, letter of credit, reimbursement agreement, insurance
contract, commitments to purchase Debt, purchase or sale agreements, interest rate swap
agreements, or commitments or other contracts or agreements authorized, recognized, and
approved by the City as a Credit Agreement in connection with the authorization, issuance,
security, or payment of any Bond or the payment of any Credit Facility.
T. The term Credit Facility shall mean (i) a policy of insurance or a surety bond, issued
by an issuer of policies of insurance insuring the timely payment of debt service on
governmental obligations, or (ii) a letter or line of credit issued by any financial institution.
U. The term Credit Provider shall mean any bank, financial institution, insurance
company, surety bond provider, or other institution which provides, executes, issues, or
otherwise is a party to or provider of a Credit Agreement or Credit Facility.
V. The term Debt shall mean
(1) all indebtedness payable from Junior Lien Pledged Revenues and/or Net
Revenues incurred or assumed by the City for borrowed money (including indebtedness
79017907.5
C-4
payable from Junior Lien Pledged Revenues and/or Net Revenues arising under Credit
Agreements) and all other financing obligations of the System payable from Junior Lien
Pledged Revenues and/or Net Revenues that, in accordance with generally accepted
accounting principles, are shown on the liability side of a balance sheet; and
(2) all other indebtedness payable from Junior Lien Pledged Revenues and/or
Net Revenues (other than indebtedness otherwise treated as Debt hereunder) for
borrowed money or for the acquisition, construction, or improvement of property or
capitalized lease obligations pertaining to the System that is guaranteed, directly or
indirectly, in any manner by the City, or that is in effect guaranteed, directly or indirectly,
by the City through an agreement, contingent or otherwise, to purchase any such
indebtedness or to advance or supply funds for the payment or purchase of any such
indebtedness or to purchase property or services primarily for the purpose of enabling the
debtor or seller to make payment of such indebtedness, or to assure the owner of the
indebtedness against loss, or to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services irrespective of whether or
not such property is delivered or such services are rendered), or otherwise.
For the purpose of determining Debt, there shall be excluded any particular Debt if, upon
or prior to the maturity thereof, there shall have been deposited with the proper depository (a) in
trust the necessary funds (or investments that will provide sufficient funds, if permitted by the
instrument creating such Debt) for the payment, redemption, or satisfaction of such Debt or (b)
evidence of such Debt deposited for cancellation; and thereafter it shall not be considered Debt.
No item shall be considered Debt unless such item constitutes indebtedness under generally
accepted accounting principles applied on a basis consistent with the financial statements of the
System in prior Fiscal Years.
W. The term Debt Service Requirements shall mean, as of any particular date of
computation, with respect to any obligations and with respect to any period, the aggregate of the
amounts to be paid or set aside by the City as of such date or in such period for the payment of
the principal of, premium, if any, and interest (to the extent not capitalized) on such obligations;
assuming, in the case of obligations without a fixed numerical rate, that such obligations bear
interest calculated by assuming (i) that the interest rate for every 12 -month period on such bonds
is equal to the rate of interest reported in the most recently published edition of The Bond Buyer
(or its successor) at the time of calculation as the "Revenue Bond Index" or, if such Revenue
Bond Index is no longer being maintained by The Bond Buyer (or its successor) at the time of
calculation, such interest rate shall be assumed to be 80% of the rate of interest then being paid
on United States Treasury obligations of like maturity and (ii) that, in the case of bonds not
subject to fixed scheduled mandatory sinking fund redemptions, that the principal of such bonds
is amortized such that annual debt service is substantially level over the remaining stated life of
such bonds or in the manner permitted under Section 1371.057(c), as amended, Texas
Government Code as the same relates to interim or non — permanent indebtedness, and in the case
of obligations required to be redeemed or prepaid as to principal prior to Stated Maturity
according to a fixed schedule, the principal amounts thereof will be redeemed prior to Stated
Maturity in accordance with the mandatory redemption provisions applicable thereto (in each
case notwithstanding any contingent obligation to redeem bonds more rapidly). For the term of
any Credit Agreement in the form of an interest rate hedge agreement entered into in connection
79017907.5
C -5
with any such obligations, Debt Service Requirements shall be computed by netting the amounts
payable to the City under such hedge agreement from the amounts payable by the City under
such hedge agreement and such obligations.
X. The term Depository shall mean an official depository bank of the City.
Y. 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.
Z. The term Engineer shall mean an individual, firm, or corporation engaged in the
engineering profession, being a registered professional engineer under the laws of the State of
Texas, having specific experience with respect to a combined municipal utility system similar to
the System and such individual, firm, or corporation may be employed by, or may be an
employee of, the City.
AA. The term Federal Contract shall mean Contract No. 6 -07 -01 -X0675 entered into
by an among the United States of America, the City and the Nueces River Authority, dated June
30, 1976, and amended on June 16, 1980, with respect to the Nueces River Reclamation Project,
pursuant to which the City has pledged the revenues of its waterworks system in support of the
payment obligations of the City under the Federal Contract, subordinate and inferior to the
pledge of and lien on the Net Revenues securing the payment of the Priority Bonds, the lien
thereon and pledge thereof securing the payment of the Junior Lien Obligations, as a result of
such Net Revenues being included as Junior Lien Pledged Revenues, and the lien thereon and
pledge thereof securing the payment of the Subordinate Lien Obligations.
BB. The term Fiscal Year shall mean the twelve month accounting period used by the
City in connection with the operation of the System which may be any twelve consecutive month
period established by the City, which period presently commences on August 1 of each year and
ends on the following July 31.
CC. The term Government Securities as used herein, shall mean (1) direct noncallable
obligations of the United States, including obligations that are unconditionally guaranteed by, the
United States of America; (ii) 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;
(iii) 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; and (iv) any additional securities and obligations hereafter authorized by the laws
of the State of Texas as eligible for use to accomplish the discharge of obligations such as the
Bonds.
79017907 5 C -6
DD. 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 Code.
EE.The term Holder or Holders shall mean the registered owner, whose name appears in
the Security Register, for any Bond.
FF. The term Inferior Lien Obligations shall mean (i) the Previously Issued Inferior Lien
Obligations, (ii) any Additional Inferior Lien Obligations, and (iii) any obligations issued to
refund the foregoing payable and equally and ratably secured from a subordinate and inferior lien
on and pledge of the Net Revenues as determined by the City Council in accordance with any
applicable law.
GG. The term Interest Payment Date shall mean the date semiannual interest is
payable on the Bonds, being January 15 and July 15 of each year, commencing July 15, 2014,
while any of the Bonds remain Outstanding.
HH. The term Junior Lien Obligations shall mean (1) upon issuance, the Bonds and the
Concurrently Issued Bonds, (ii) any Additional Junior Lien Obligations, and (iii) obligations
hereafter issued to refund any of the foregoing that are payable from and equally and ratably
secured solely by a lien on and pledge of the Junior Lien Pledged Revenues, which includes a
lien on and pledge of Net Revenues that is junior and inferior to the lien thereon and pledge
thereof securing the repayment of the Priority Bonds, but senior and superior to the lien thereon
and pledge thereof securing the repayment of the Subordinate Lien Obligations and the Inferior
Lien Obligations, as determined by the City Council in accordance with applicable law.
II. The term Junior Lien Pledged Revenues means (1) the Net Revenues that remain after
payment of all amounts, and funding of all funds, relating to any Priority Bonds, 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 by the City to the payment of the Bonds, and at the City's discretion, any
Additional Junior Lien Obligations, and excluding those revenues excluded from Gross
Revenues.
JJ. 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.
K.K. The term Net Revenues shall mean all Gross Revenues less Operating Expenses.
LL.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
79017907 .,5
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condition which would otherwise impair any Priority Bonds, Junior Lien Obligations,
Subordinate Lien Obligations, Inferior Lien Obligations, or other Debt of the System, 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.
Operating Expenses shall never include any allowance for depreciation, property retirement,
depletion, obsolescence, and other items not requiring an outlay of cash and any interest on the
Bonds or any Debt.
MM. The term Ordinance shall mean this Ordinance adopted by the City Council on
August 27, 2013 authorizing the issuance of the Bonds.
NN. The term Outstanding shall mean when used in this Ordinance with respect to all
Debt means, as of the date of determination, all Debt except:
(1) those Priority Bonds, Junior Lien Obligations, Subordinate Lien
Obligations, and Inferior Lien Obligations canceled by the Paying Agent/Registrar or
delivered to the Paying Agent/Registrar for cancellation;
(2) those Priority Bonds, Junior Lien Obligations, Subordinate Lien
Obligations, and Inferior Lien Obligations for which payment has been duly provided by
the City in accordance with the provisions of Section 19 of this Ordinance; and
(3) those Priority Bonds, Junior Lien Obligations, Subordinate Lien
Obligations, and Inferior Lien Obligations that has been mutilated, destroyed, lost, or
stolen and replacement Bonds have been registered and delivered in lieu thereof as
provided in Section 15 of this Ordinance.
00. The term Paying Agent /Registrar shall mean the financial institution specified in
Section 3 of this Ordinance, or its herein - permitted successors and assigns.
PP. 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.
QQ. The term Previously Issued Inferior Lien Obligations shall mean the Federal
Contract.
RR. The term Previously Issued Junior Lien Bonds shall mean, as of the Closing Date
the Outstanding and unpaid obligations of the City that are payable solely from and equally and
ratably secured by a lien on and pledge of the Junior Lien Pledged Revenues, identified as
follows:
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(1) "City of Corpus Christi, Texas Utility System Junior Lien Revenue
Improvement Bonds, Series 2012 ", dated November 15, 2012, in the original principal
amount of $69,085,000; and
(2) "City of Corpus Christi, Texas Utility System Junior Lien Revenue and
Refunding Bonds, Series 2012 ", dated November 15, 2012, in the original principal
amount of $ I55,660,000.
SS. The term Previously Issued Priority Bonds shall mean, as of the Closing Date the
Outstanding and unpaid obligations of the City that are payable solely from and equally and
ratably secured by a prior and first lien on and pledge of the Net Revenues of the System,
identified as follows:
(1) "City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 2003 ", dated May 15, 2003, in the original principal amount of $28,870,000;
(2) "City of Corpus Christi, Texas Utility System Revenue Refunding and
Improvement Bonds, Series 2004 ", dated August 15, 2004, in the original principal
amount of $50,000,000;
(3) "City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 2005 ", dated January 1, 2005, in the original principal amount of $70,390,000;
(4) "City of Corpus Christi, Texas Utility System Revenue Refunding Bonds,
Series 2005A ", dated October 1, 2005, in the original principal amount of $68,325,000;
(5) "City of Corpus Christi, Texas Utility System Revenue Refunding and
Improvement Bonds, Series 2006 ", dated October 1, 2006, in the original principal
amount of $84,415,000;
(6) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2009 ", dated March 1, 2009, in the original principal amount of
$96,490,000;
(7) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2010 ", dated March 1, 2010, in the original principal amount of
$8,000,000;
(8) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Taxable Series 2010 (Direct Subsidy -Build America Bonds) ", dated July 1, 2010,
in the original principal amount of S60,625,000;
(9) "City of Corpus Christi, Texas Utility System Revenue Improvement
Bonds, Series 2010A ", dated July 1, 2010, in the original principal amount of
$14,375,000; and
(10) "City of Corpus Christi, Texas Utility System Revenue Bonds, Series
2012 ", dated April 1, 2012, in the original principal amount of $55,000,000.
79017907,5
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TT.The term Previously Issued Subordinate Lien Obligations shall mean the Series 2007
Certificates of Obligation.
UU. The term Priority Bonds shall mean the Previously Issued Priority Bonds, any
Additional Priority Bonds, and obligations hereafter issued to refund any of the foregoing if
issued in a manner so as to be payable from and equally and ratably secured by a first and prior
lien on and pledge of the Net Revenues of the System, as determined by the City Council in
accordance with any applicable law.
VV. 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.
WW. The term Purchasers shall mean the initial purchaser or purchasers of the Bonds
named in Section 16 of this Ordinance.
XX. The term Rating Agency shall mean any nationally recognized securities rating
agency which has assigned a rating to the Priority Bonds.
YY. The term Required Reserve Amount shall have the meaning given such tern in
Section 9F of this Ordinance.
ZZ.The term Reserve Fund shall have the meaning given such term in Section 9F of this
Ordinance.
AAA. The term Reserve Fund Obligations shall mean cash, Eligible Investments, any
Credit Facility, or any combination of the foregoing.
BBB. The term Series 2007 Certificates of Obligation shall mean the City's
"Combination Tax and Utility System Revenue Certificates of Obligation, Series 2007 ", dated
March 1, 2007, in the original principal amount of $6,985,000, being the only series of
Subordinate Lien Obligations currently Outstanding.
CCC. The term Special Project shall mean, to the extent permitted by law, any water,
sewer, wastewater reuse, or municipal drainage system property, improvement, or facility
declared by the City, upon the recommendation of the City Council, not to be part of the System,
for which the costs of acquisition, construction, and installation are paid from proceeds of
Special Project Bonds (as hereinafter defined) being a financing transaction other than the
issuance of bonds payable from ad valorem taxes, Junior Lien Pledged Revenues, or Net
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Revenues and for which all maintenance and operation expenses are payable from sources other
than ad valorem taxes, Junior Lien Pledged Revenues, or Net Revenues, but only to the extent
that and for so long as all or any part of the revenues or proceeds of which are or will be pledged
to secure the payment or repayment of such costs of acquisition, construction, and installation
under such Special Project Bonds.
DDD. The term Stated Maturity shall mean the annual principal payments of the Bonds
payable on July 15 of each year, as set forth in Section 3 of this Ordinance.
EEE. The term Subordinate Lien Obligations shall mean (i) the Previously Issued
Subordinate Lien Obligations, (ii) any Additional Subordinate Lien Obligations, and (iii) any
obligations issued to refund the foregoing payable and equally and ratably secured from a s lien
on and pledge of the Net Revenues that is subordinate and inferior to the lien there on and pledge
thereof securing the payment of the Priority Bonds and the Junior Lien Obligations but superior
to the lien thereon and pledge thereof securing the payment of the Inferior Lien Obligations, as
determined by the City Council in accordance with any applicable law.
FFF. The term System shall mean and include, whether now existing or hereinafter
added (including additions made from time to time in accordance with the provisions of the City
ordinances authorizing the issuance of the Outstanding Priority Bonds), 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 to be a Special Project and not a part of the System
and which are hereafter acquired or constructed by the City with the proceeds from the issuance
of "Special Project Bonds ", which are hereby defined as being special revenue obligations of the
City which are not secured by or payable from all or part of the Junior Lien Pledged Revenues
and /or Net 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 Project
Bonds ".
GGG. The term System Fund shall have the meaning given such term in Section 9D of
this Ordinance.
HHH. 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
79017907.5
C -11
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.
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EXHIBIT D
Purchase Contract
See Tab No. 8
0-1
EXHIBIT E
Paying Agent/Registrar Agreement
See Tab No. 3
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EXHIBIT F
Description of Annual Financial Information
The following information is referred to in Section 31 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 are as specified (and included in the Appendix or
under the headings of the Official Statement 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.
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Fw1
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EXHIBIT G
Form of Reimbursement Agreement
N/A
0-1
EXHIBIT H
DTC Letter of Representations
See Tab No. 4
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