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HomeMy WebLinkAbout022740 RES - 11/12/1996RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE ON BEHALF OF THE CITY OF CORPUS CHRISTI, TEXAS, THE "NUECES RIVER AUTHORITY - CITY OF CORPUS CHRISTI WATER TRANSMISSION FACILITIES CONTRACT", WHICH IS MADE PART OF THIS RESOLUTION FOR ALL PURPOSES, FOR THE PURPOSE OF FINANCING AND CONSTRUCTING A PIPELINE TO TRANSPORT CORPUS CHRISTI'S WATER FROM LAKE TEXANA TO THE CORPUS CHRISTI AREA NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS, THAT: The City Manager of the City of Corpus Christi is hereby authorized to execute on behalf of the City the "Nueces River Authority - City of Corpus Christi Water Transmission Facilities Contract," substantially and materially as set forth in the attached Exhibit A, and the City Council hereby approves said contract, the findings therein, and the obligations undertaken by the City thereunder, which Exhibit A is attached hereto, incorporated herein, and made part of this Resolution, for all purposes. The City Manager is directed to report to the City Council monthly regarding progress of the Lake Texana Pipeline Project, and more often if necessary or directed by the City Council. City Secretary APPROVED THIS THE 3 DAY OF JAMES R. BRAY, JR., CITY ATTORNEY 4.R. MAYOR THE CITY F CORPUS CHRISTI n%vituAlp e , 1996: &CaofILMED Corpus Christi, Texas Ia-Hh day of \-/I) ovetrh blhJ , 19 The above resolution was passed by the following vote: Ito Mary Rhodes Dr. Jack Best Betty Black Melody Cooper Tony Heldenfels Betty Jean Longoria John Longoria Edward A. Martin Dr. David McNichols x6 LID c'0 CITY OF CORPUS CHRISTI CERTIFICATION OF FUNDS (City Charter Article IV, Sections 7 & 8) I, the Director of Finance of the City of Corpus Christi, Texas (or his/her duly authorized representative), hereby certify to the City Council and other appropriate officer that the money required for the contract, agreement, obligation or expenditure described below is in the Treasury to the credit of the Fund specified below, from which it is to be drawn, and has not been appropriated for any other purpose: Debt service on an amount not to exceed Amount Required: $135.000.000. and overhead reimbursements to the Nueces River Authority, as required in "Nueces River Authority -City of Corpus Christi Water Transmission Faci es.Contr t" approved by the City Council on Description of Contract, Agreement, obligation, or Expenditure: November 12, 1996. "Nueces River Authority -City of Corpus Christi Water Transmission Facilities Contract" Fund from which Money is to be Drawn: Utility System Fund (moneys anticipated to come into the treasury before maturity of the obligation) nft Dfrector of Finance Date: i//i( FOR OFFICE USE ONLY Fund No. and Name Activity/Project No. Activity/Project Name Appropriation Ordinance: Yes No Ordinance/Motion No.: Council Meeting Dated: FIN 2-55 (Rev. 10-30-96) NUECES RIVER AUTHORITY - CITY OF CORPUS CHRISTI WATER TRANSMISSION FACILITIES CONTRACT NUECES RIVER AUTHORITY - CITY OF CORPUS CHRISTI WATER TRANSMISSION FACILITIES CONTRACT TABLE OF CONTENTS Page No. RECITALS 1 ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1.01. Definitions 3 Section 1.02. Interpretation 9 ARTICLE II ACQUISITION AND CONSTRUCTION OF THE PROJECT Section 2.01. General 9 Section 2.02. Location of Project; Acquisition of Land Interests 10 Section 2.03. Construction 10 Section 2.04. Selection of Project Engineer; Plans and Specifications 10 Section 2.05. Award of Constriction Contracts 11 Section 2.06. Liens 11 Section 2.07. Revisions of Plans 11 Section 2.08. Approvals 11 Section 2.09. Completion 12 Section 2.10. Conveyance of the Project 12 ARTICLE III FINANCING OF THE PROJECT Section 3.01. Issuance of Bonds 13 Section 3.02. Proceeds of Bonds 15 Section 3.03. Refunding of Bonds 15 Section 3.04. Redemption of Bonds 15 Section 3.05. Debt Service on Bonds and Other Bond Funding Requirements 15 Section 3.06. Authority's Rights Assigned to Trustee 16 Section 3.07. Tax -Exempt Bonds 17 /kr 1829.012WRA-cc\co TrRACr Page No. Section 3.08. Payment to Rebate Fund 17 Section 3.09. City's Obligations 17 Section 3.10. Interest on Monies 18 Section 3.11. Sale and Offering Documents 18 Section 3.12. Right of City to Prepay 18 ARTICLE IV BOND PAYMENTS; SYSTEM COVENANTS Section 4.01. Annual Estimate of Bond Payments 18 Section 4.02. Bond Payments by the City 18 Section 4.03. Source of Payment 19 Section 4.04. Authority Overhead Payments by the City 20 Section 4.05. Annual Budgeting by the City 20 Section 4.06. Revenue Sources Pledged 20 Section 4.07. General Covenants 21 (a) Performance 21 (b) City's Legal Authority 21 (c) Acquisition and Construction; Operation and Maintenance 21 (d) Title 21 (e) Liens 22 (t) Books, Records, and Accounts 22 (g) Insurance 22 (h) Audits 23 (i) Governmental Agencies 23 (j) No Competition 23 (k) Rights of Inspection 23 (1) Sale, Lease, or Disposal of Property by the City 23 ARTICLE V CONTINUING DISCLOSURE Section 5.01. Annual Reports 24 Section 5.02. Material Event Notices 25 Section 5.03. Limitations, Disclaimers, and Amendments 25 ARTICLE VI GENERAL PROVISIONS Section 6.01. Participation by the Parties 27 1829.012 W RA.CC1CONTRACr ii Page No. Section 6.02. Insurance 27 Section 6.03. Force Majeure 28 Section 6.04. Unconditional Obligation to Make Payment 28 Section 6.05. Term of Contract 29 Section 6.06. Modification 29 Section 6.07. Addresses and Notice 29 Section 6.08. State or Federal Laws, Rules, Orders, or Regulations 30 Section 6.09. Severability 30 Section 6.10. Remedies Upon Default 30 Section 6.11. Legal Authority 31 Section 6.12. Indemnification 31 Section 6.13. Contract not for Benefit of Third Parties 32 Section 6.14. Succession and Assignment 32 Execution 33 Exhibit A Exhibit B Exhibit C Description of Project Description of Project as of Completion Date Bond Resolution Relating to the Initial Series of Bonds Ary: 1829.012 W RALC\COMRACT iii NUECES RIVER AUTHORITY - CITY OF CORPUS CHRISTI WATER TRANSMISSION FACILITIES CONTRACT THIS WATER TRANSMISSION FACILITIES CONTRACT (the "Contract") is dated and entered into as of the 12th day of November, 1996, by and between the Nueces River Authority (the "Authority"), a conservation and reclamation district and political subdivision of the State of Texas (the "State"), created and existing under the laws of the State, including particularly Article XVI, Section 59 of the State Constitution and TEX. WATER CODE AUX. LAWS, art. 8280-115 (Act of November 1, 1935, 44th Leg., 1st C.S., ch. 427, 1935 Tex. Gen. Laws 1660), as amended, and the City of Corpus Christi, Texas, a home -rule city and a political subdivision of the State (the "City"). RECITALS WHEREAS, the City and the Lavaca-Navidad River Authority (the "LNRA"), under the authority of the Texas Interlocal Cooperation Act, TEX. GOVT CODE ANN. §791.026, and other laws, entered into a water delivery and conveyance contract dated as of December 14, 1993 (the "LNRA Contract") under the terms of which water from Lake Texana has been sold to the City and is to be delivered by the LNRA to the City at a mutually agreeable delivery point (the "Delivery Point"); and WHEREAS, the LNRA Contract was frilly validated in Lavaca-Navidad River Authority et al. v. City of Corpus Christi ex rel Henry Berryhill et al. No. 03-94-00306, Third District Court of Appeals, Austin (July 12, 1995), and the City is presently making payments under the LNRA Contract in excess of $1,000,000 per year; and WHEREAS, the LNRA Contract was entered into pursuant to the City's long-time policy of securing an adequate water supply not only for itself, but also for the region it has historically served; and WHEREAS, the Authority was created for the purpose of securing adequate water supplies for an area which includes the area historically served by the City, and the Authority and the City have cooperated in the past for the benefit of citizens within their joint service area, and the Authority and the City are joint owners of water rights under Certificate of Adjudication No. 21-3214 (Choke Canyon Dam and Reservoir) to divert and use water for municipal and industrial purposes in Aransas, Atascosa, Bee, Duval, Jim Wells, Kleberg, Live Oak, McMullen, Nueces, and San Patricio Counties, and both the Authority and the City are vitally concerned with assuring an adequate water supply for the region; and Ay: I929.012NRA.CCICONTIRACr 1 WHEREAS, the Nueces River watershed has historically been the predominant source of water for the City and its service area, and the severe drought which has persisted in the Nueces River watershed for the past three and one-half years gravely threatens the health and prosperity of the region and its citizens; and WHEREAS, existing water sources for the region have been proven unreliable and new water sources must be secured as soon as possible, and it is critical to the health and prosperity of the region that the Lake Texana water which has been purchased and is presently being paid for be made available to alleviate the region's water needs as expeditiously as possible; and WHEREAS, the City has obtained the necessary permit from the Texas Natural Resources Conservation Commission for the interbasin transfer of the water; and WHEREAS, the City and the Authority, exercising their mutual authority and furthering their mutual and urgent interests, wish to enter into this Contract in order to most efficiently and quickly obtain the capability to deliver the Lake Texana water; and WHEREAS, in order to deliver the water to which the City is entitled under the LNRA Contract from the Delivery Point to a point in the Corpus Christi area to be chosen by the City, it is necessary that a waterline, booster pumps, and other appurtenances sufficient to deliver the water to which the City is entitled under the LNRA Contract and additional water which the City may acquire (the "Lake Texans Water Transmission Facilities" or "Facilities") be constructed and that the easements, rights-of-way, and other interests in land necessary for the acquisition, construction, and operation of the Facilities (collectively, the "Land Interests") be purchased (the "Land Interests" and the "Lake Texana Water Transmission Facilities", together the "Project"); and WHEREAS, it is expected by the Authority and the City that as soon as practicable after the execution of this Contract the Authority will issue its Bonds (as hereinafter defined), payable from and secured by payments to be made by the City under this Contract for the acquisition and construction of the Project; and WHEREAS, the Authority shall in general do or cause to be done all such things as may be required for the proper acquisition and construction of the Project; and WHEREAS, the Authority and the City acknowledge, recognize, and agree that the Port of Corpus Christi Authority of Nueces County, Texas, a navigation district organized and existing under Article XVI, Section 59 of the State Constitution (the "Port") will acquire portions of the Land Interests in the name of the Authority and has awarded certain professional services contracts relating to the Project, including but not limited to those professional service contracts respecting engineering design for construction of the Lake Texana Water Transmission Facilities and the development of the Plans and Specifications (as hereinafter defined), all in accordance with the Preliminary Contract (as hereinafter defined) entered into by the Authority, the Port, and /]0^ 11129.012WRA-CC\COMRACr 2 the City, and that those contracts will be assigned to the Authority when the Bonds are issued; and WHEREAS, the City and the Authority hereby ratify and affirm their respective obligations under the Preliminary Contract, including particularly those obligations relating to the design, acquisition, and construction of the Project; and WHEREAS, simultaneously with the execution of this Contract, the Port and the Authority have entered into an agreement under which the Port will undertake to oversee and coordinate the acquisition and construction of the Project on behalf of the Authority and the City hereby approves said contract between the Authority and the Port. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the sufficiency of which are hereby acknowledged, and upon and subject to the terms and conditions hereinafter set forth, the City and the Authority mutually undertake, promise, and agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1.01. Definitions. In addition to the terms defined above, the following terms shall have the meaning assigned to them below wherever they are used in this Contract, unless the context clearly requires otherwise: "Accountant" means a nationally recognized independent certified public accountant, or an independent firm of certified public accountants, selected by the City. "Approval Certificate" means the certificate or certificates of the President or Authorized Representative of the Authority approving certain terms of a series of Bonds. "Authority" means the Nueces River Authority and its lawful successors and assigns. "Authority Overhead Payment" means the amount of money to be paid to the Authority by the City for Overhead Expenses pursuant to Section 4.04 of this Contract. "Authorized Representative" means any person at the time delegated authority to act on behalf of the City, the Authority, and the Port, as the case may be, and designated as such in a written certificate, containing a specimen signature of such person, which, for the City shall be the City Manager of the City or such other officer or employee of the City authorized to act on behalf of the City during the City Manager's absence or incapacity, for the Authority shall be the Executive Director of the Authority or such other officer or employee of the Authority authorized to act on behalf of the Authority during the Executive Director's absence or incapacity, and for hy: 1829.012WRA.COCONCRACT 3 the Port shall be the Executive Director of the Port or such other officer or employee of the Port authorized to act on behalf of the Port during the Executive Director's absence or incapacity, unless a party notifies the other party in writing of a change in its Authorized Representative or, with respect to the Port, unless the Authority has received notice of a change in the Port's Authorized Representative and has furnished a copy of such notice to the City. "Bond Payment" means the amount of money to be paid to the Authority by the City from the revenues of the City System as an operating and maintenance expense of the City System at the times and in the amounts required by Sections 3.05 and 4.02 of this Contract. "Bond Resolution" means any resolution and/or trust indenture of the Authority, authorizing the issuance of and securing the Bonds and all amendments and supplements thereto and including the Approval Certificate, if any, authorized by such resolution to establish certain of the terms of the Bonds authorized by such resolution. "Bonds" means all bonds, notes, or other obligations hereafter issued by the Authority, whether in one or more series or issues, to pay the cost of the Project (including any bonds or notes issued to complete the Project) or to refund any Bonds or to refund any such refunding Bonds. "City" means the City of Corpus Christi, Texas. "City Engineer of Record" means the City Engineer of Record so designated by the City Council of the City with notice to the Authority. "City System" means and includes the City's existing combined waterworks system, wastewater disposal system, and gas system, together with all future extensions, improvements, enlargements, and additions thereto, including, to the extent permitted by law, storm sewer and drainage within the waterworks system, and all replacements thereof; provided that, notwithstanding the foregoing, and to the extent now or hereafter authorized or permitted by law, the term City System shall not include any waterworks, wastewater, or gas facilities which are declared by the City not to be a part of the City System and which are hereafter acquired or constructed by the City with the proceeds from the issuance of "Special Facilities Bonds", which are hereby defined as being special revenue obligations of the City which are not secured by or payable from the net revenues of the City System, 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 City System, unless and to the extent otherwise provided in the ordinance or ordinances authorizing the issuance of such "Special Facilities Bonds". "City Utility Bonds" means the City's bonds and notes outstanding from time to time secured by a pledge of the net revenues of the City System or any part thereof, regardless of lien priority. Ay: 1829. o 121NRACCCONTRAC7 4 "Claim", as used in Section 6.12 of this Contract, means claims, demands, and expenses, including reasonable attorney's fees. "Code" means the Internal Revenue Code of 1986, and any amendments thereto, as in force and effect on the date of delivery of any series of Bonds. "Completion Date" means such term as it is defined in Section 2.09 of this Contract. "Credit Agreement" means any credit agreement, as defined in and authorized by the provisions ofArt.717q of V.AT.C.S., which the Authority enters into relating to its obligations with respect to the Bonds. "Delivery Point" means the place to which the LNRA will deliver to the City the water purchased by the City pursuant to the LNRA Contract. "Fiscal Year" means the City's fiscal year, which currently begins on August 1 of each year, as it may be changed from time to time with notice to the Authority. "Force Majeure" means such term as it is defined in Section 6.03 of this Contract. "Lake Texana Water Transmission Facilities" or "Facilities" means a waterline, booster pumps, and other appurtenances sufficient to deliver the water to which the City is entitled under the LNRA Contract, or other water acquired by the City, from the Delivery Point to the City System and any improvements, additions, or extensions to such Facilities hereafter acquired or constructed to deliver water between such places. "Land Interests" means the easements, right-of-way, and other interests in real property necessary for the acquisition, construction, and operation of the Facilities. "LNRA" means the Lavaca-Navidad River Authority and its lawful successors. "LNRA Contract" means the Water Delivery and Conveyance Contract dated as of December 14, 1993, between the City and LNRA. duties. "MSRB" means the Municipal Securities Rulemaking Board and any successor to its "NRMSIR" means each person whom the SEC or its staff has determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Overhead Expenses" means the Authority's reasonable and necessary costs and expenses incurred at any time from and after August 23, 1996, directly related to the issuance and servicing of the Bonds, the acquisition of Land Interests required for the Project, the design, permitting, /ky: 1829.012wxn-CCCormtACT financing, acquisition, construction, and ownership of the Project and any other activities required of or involving the Authority in connection with or attributable to the Project or the Bonds, including, but not limited to: (a) per diem and reimbursable expenses incurred by the Directors of the Authority for special meetings of the Authority's Board of Directors related to the Project; (b) services of the professional, technical, skilled and unskilled persons and firms engaged by or associated with the Authority, other than Authority staff personnel, together with their reimbursable expenses paid or required to be paid by the Authority; (c) salaries of the Authority's staff attributable to the Project or the Bonds based on time expended, as documented or reasonably estimated by the Executive Director of the Authority, times an overhead factor of two (2), which factor shall be subject to adjustment by the Authority from time to time in response to actual or reasonably projected overhead expenses of the Authority; (d) the costs of preparing applications for and obtaining all approvals and authorizations required for the Project or the Bonds from the regulatory authorities having jurisdiction; (e) the cost of property casualty and public liability insurance incurred prior to the Completion Date; including any insurance deductible charged to or required to be paid by the Authority; provided that if the Authority is unable to obtain such insurance on an occurrence basis, then any expense incurred by the Authority from and after the Completion Date for casualty and public liability insurance, including any insurance deductible, shall be paid by the City; (f) all costs incurred in litigation involving or relating to the Project; and (g) any and all other costs and expenses, including out-of-pocket expenses, incurred by the Authority attributable to the Project or the Bonds, whether enumerated above or not, and whether or not included in the definition or as a part of Project Costs. "Permitted Liens" means: (a) Minor irregularities, charges, liens, encumbrances, defects, easements, licenses, rights- of-way, servitudes, restrictions, mineral rights, and clouds on title which, in the opinion of counsel to the Authority, a copy of which shall be forwarded to the City, do not materially impair the use of the Project for the purposes for which it is designed. (b) Easements for roads (as used in this Contract, the term "roads" shall include, without limitation, streets, curbs, gutters, drains, ditches, sewers, conduits, canals, mains, aqueducts, aerators, connections, ramps, docks, viaducts, alleys, driveways, parking areas, walkways, and trackage), utilities (which for purposes of this Contact shall include, without limitation, water, sewer, electricity, gas, telephone, pipeline, railroad, and other collection, transportation, light, Ary: 1829.012\NRALC\CONIRACr 6 heat, power, and communication systems) and similar easements and other easements, rights-of- way, rights of flowage, flooding, diversion or outfall, licenses, restrictions, and obligations relating to the operation of the Project which, in the opinion of counsel to the Authority, a copy of which shall be forwarded to the City, do not materially impair the use of the Project for the purposes for which it is designed. (c) Rights of the United States or any state or political subdivision thereof, or other public or governmental authority or agency or any other entity vested with the power of eminent domain to take or control property or to terminate any right, power, franchise, grant, license, or permit previously in force. "Plans and Specifications" means the plans and specifications prepared for the Project by the Project Engineer, as the same may be revised from time to time in accordance with this Contract. "Port" means the Port of Corpus Christi Authority of Nueces County, Texas and its lawful successors. "Preliminary Contract" means the Contract For Payment of Necessary Preliminary Costs of Water Pipeline Project To Be Reimbursed From Bond Proceeds, dated September 17, 1996, among the City, the Authority, and the Port. "Project" means, collectively, the Land Interests and the Facilities as described in the recitals to this Contract and in Exhibit A to this Contract. "Project Costs" means and includes, without limitation, the following costs incurred for the Project by or on behalf of the Authority, the City, or the Port: (a) the cost of acquisition of the Land Interests, including appraisals, closing costs and title insurance policies; (b) the cost of acquisition, construction, repair, replacement, or improvement of the Lake Texans Water Transmission Facilities, and any structure, item of equipment, or other item, used for, or in connection with, the Project; (c) the cost of site preparation of the Land Interests, including demolition or removal of structures and improvements as necessary or incident to accomplishing the Project; (d) the cost of engineering, legal, architectural or other related services; (e) the preparation cost of plans, specifications, studies, surveys, cost estimates, and other expenses necessary or incident to planning, providing, or financing the Project; /Icy: 1879.012'NRACC\CONiRACr 7 (0 the cost of machinery, equipment, furnishings, and facilities necessary or incident to placing the Project in operation; (g) finance charges and interest before, during, and after construction; (h) costs incurred in connection with financing the Project, including, without limitation: (1) financing, legal, accounting, financial advisory, rating agency, and auditing fees, expenses and disbursements; (2) the cost of printing, engraving, and reproduction services; and (3) the cost of a trustee's or paying agent's initial or acceptance fee and subsequent fees. (i) all costs, fees and expenses of litigation of all kinds; G) the cost of property casualty and public liability insurance; (k) the Authority's Overhead Expenses; and (1) other costs generally recognized as a part of project construction costs. "Project Engineer" means such engineering firm or firms as may be selected by the Authority with the approval of the City. "Prudent Utility Practice" means 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, that 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 City 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. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission and any successor to its duties. ay: 122s.o12\NRA-cMcoNrRAcr 8 "SID" means any entity designated by the State or an authorized department, officer, or agency thereof as, and determined by the SEC or its staff to be, a state information depository within the meaning of the Rule from time to time. "Sale and Offering Documents" means any official notice of sale, official bid form, preliminary official statement, official statement, or other offering document for the Bonds. "State" means the State of Texas. "Trustee" means any trustee named under a trust indenture entered into by the Authority securing the payment of the Bonds and authorized by a Bond Resolution. Section 1.02. Interpretation. The table of contents and caption headings of this Contract are for reference purposes only and shall not affect its interpretation in any respect. Unless the context otherwise requires, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa. This Contract and all the terms and provisions shall be liberally construed to effectuate the purpose set forth herein and to sustain the validity of this Contract. ARTICLE II ACQUISITION AND CONSTRUCTION OF THE PROJECT Section 2.01. General. Subject to the remaining terms and provisions of this Contract, and as contemplated by the Preliminary Contract, the Authority agrees to issue the Bonds and to acquire and construct the Project. The City hereby acknowledges its approval of the Port as Project Manager under the Project Management Agreement entered into between the Authority and the Port relating to the acquisition and construction of the Project. It is estimated that the Project will be placed in operation on or before March 31, 1998, or as soon thereafter as practicable. It is expressly understood and agreed that any obligations on the part of the Authority to finance, acquire, construct, and complete the Project and to provide the Project to the City shall be (i) conditioned upon the Authority's ability to obtain all necessary permits, material, labor, and equipment, and upon the ability of the Authority to finance the cost of the Project through the actual sale of the Bonds, including any Bonds needed to complete the Project and (ii) subject to all present and future valid laws, orders, rules, and regulations of the United States of America, the State, and any regulatory body having jurisdiction. The Project shall be acquired and constructed by the Authority with all reasonable dispatch, and the Authority will diligently pursue such acquisition and construction in order that it may be completed as soon as practicable, delays incident to events of Force Majeure only excepted; but if for any reason there should be delays in or the entire failure of such acquisition, construction, and improvement, there shall be no diminution in or postponement of the Bond Payments to be made by the City hereunder and no resulting liability on the part of the Authority. Ary:.1829.0I2\NRA-COCON7RACr 9 Until the delivery of the initial series of Bonds, the Preliminary Contract will remain in effect. The City and the Authority each acknowledge their respective approval of all actions taken prior to the date of this Contract under the Preliminary Contract. The provisions of the Preliminary Contract shall govern any conflict between the provisions of the Preliminary Contract and this Contract occurring prior to such delivery of Bonds. Any such conflict occurring after the delivery of such Bonds shall be governed by the provisions of this Contract. In order to permit the City to enforce each contract or agreement entered into by the Authority, or the Port on behalf of the Authority, under this Contract, each such contract or agreement shall be assignable to the City, without the consent of the other party to such contract or agreement, and all warranties under each of such contracts or agreements shall be enforceable by the City. Section 2.02. Location of Project: Acquisition of Land Interests. The Lake Texana Water Transmission Facilities will be constructed and located on the Land Interests. The Authority shall, as soon as possible after the delivery of this Contract, and subject to the receipt of the Bond proceeds or funds from the City, undertake the acquisition of the Land Interests. Each deed, easement, or other evidence of an interest in real property relating to any portion of the Land Interests shall include a provision that it is assignable to or otherwise transferable to the City pursuant to the provisions of this Contract. The Authority shall inform the City of its intention to acquire each portion of the Land Interests and shall not acquire any such portion without the approval of the City. The Authority shall be responsible for ensuring that proper filings of each instrument conveying a portion of the Land Interests are made in the deed records of the appropriate counties to ensure that all interested parties have proper notice of the Authority's and the City's interests in the Land Interests. As each deed, easement, or other evidence of an interest in real property comprising a portion of the Land Interests is acquired by the Authority, a copy of such instrument, together with evidence of its filing in the deed records of the counties in which such portion lies, shall be given to the City. The Authority shall acquire a title insurance policy or a title opinion showing good and marketable title with respect to each Land Interest acquired. Each such title insurance policy or title opinion shall include the City as an insured party under the policy or as an addressee of such opinion, as the case may be. A copy of each such title insurance policy or title opinion shall be given to the City. Section 2.03. Construction. The Authority shall, as soon as possible, undertake to make, execute, deliver, and prosecute all contracts, orders, receipts, writings, and instructions with or to other persons, and in general do or cause to be done all such other things, as may be required for the proper acquisition and construction of the Facilities. Section 2.04. Selection of Project Engineer: Plans and Specifications. The City hereby acknowledges its approval of the employment of HDR Engineering, Inc., as the Project Engineer, by the Port, acting on behalf of the Authority. Through the Port, the Authority shall cause the Project Engineer to complete the Plans and Specifications and the other materials to be used in obtaining bids for construction of the Facilities and to perform such other engineering tasks as shall be necessary for construction of the Facilities. The engineering contract with the Project /ky: 1829.012\NRACC\CONTRACT 10 Engineer has been received and approved by the City. All Plans and Specifications and bid documents shall be submitted to the City for approval. The bid documents shall include appropriate alternatives to assure the most advantageous price consistent with expeditious completion. The specifications for the Project may include as an owner cost any or all insurance coverages either required by law or deemed necessary or advisable by the Authority. The City, the Authority, and the Port shall be named as insured parties on all insurance policies which may protect their interests. The Authority will cause portions of the Plans and Specifications and bid documents to be submitted in an efficient manner as they are being developed so that approvals will result in as little delay as possible. Section 2.05. Award of Construction Contracts. Upon the approval of the Plans and Specifications and bid documents by the City, the Authority, through its Project Engineer, will promptly advertise for sealed bids for the Project to the extent and as required by law. The Authority, with the consent of the City, may break the sealed bids into several contracts or phases as it determines is best for the timely acquisition and construction of the Facilities. After the receipt of bids, the Authority shall provide the City with a tabulation of bids received and shall identify the lowest and best bidder(s). The City shall have the right to approve the bids and authorize the Authority to select the lowest and best bidder. After receiving the City's approval and determining the contractor(s) submitting the lowest and best bid(s), the Authority shall award the contract(s). If all bids are rejected, bids will again be solicited, following the procedure outlined above in this Section, until such time as bids satisfactory to the Authority and approved by the City have been received. The Authority shall not be obligated to award a construction contract unless the proceeds from the Bonds are available to pay the contract(s). Each contract shall be assignable to the City pursuant to the provisions of this Contract. Section 2.06. Liens. Neither the City nor the Authority will create or permit or suffer to exist any lien, encumbrance, or charge upon the Project or any interest therein at any time, except Permitted Liens. Section 2.07. Revisions of Plans. The Plans and Specifications may be revised prior to the Completion Date. Minor revisions and change orders may be implemented by the Authority, with notice to the City. A minor revision or change order is one that does not (1) change the cost of the item being modified by more than plus or minus 5% of the cost of the contract pursuant to which the revision or change order is being made, or (2) constitute a material revision to the design or function or the item being modified. Any other change order or revision of Plans and Specifications will require advance approval of the City. Section 2.08. Approvals. Unless otherwise required by law, each consent, approval, or other official action required of the City, the Authority, or the Port by any provision of this Contract shall be deemed in compliance with this Contract when written evidence of such action, signed by the respective Authorized Representative, is delivered to the party who is to receive evidence of such action. All contracts to be entered into shall be authorized by the Authority's Board of Directors. The City will cooperate with the Authority and the Port in the design, financing, acquisition, and construction of the Project and, following the adoption of the Bond hy: 1829.012\NRACC CONTRACT 11 Resolution by the Authority's Board of Directors, will not take any action or fail to take any action (including, without limitation, any exercise or denial of its consent or approval of any action proposed to be taken by the Authority or any of its agents hereunder), if taking or failing to take such action, respectively, would unreasonably delay or obstruct the completion of the Project by the Authority. Section 2.09. Completion. (a) Except as otherwise provided in subsection (b) of this Section, when the Facilities have been completed, the Authority shall deliver to the City a certificate of the Authority and the Project Engineer stating that, as of a specified date, the Facilities have been substantially completed and are ready to be placed in service (the date specified in such certificate being herein called the "Completion Date"). At least thirty days prior to the Completion Date, the Authority will provide to the City a complete list, including legal description, of all real property or interest therein acquired in connection with the Project, and all appurtenances, fixtures, personal property, or property of any description whatsoever acquired in connection with the Project, and after examination by the City for verification, said list shall be attached to this Contract as Exhibit B. (b) In the event that the Authority determines that the proceeds of the initial series of Bonds will be insufficient to complete the acquisition and construction of the Project, it agrees to use its best efforts, subject to the City's approval, to issue Bonds in an amount sufficient to complete the Project. The City Council must approve any issuance which would cause the total amount of Bonds issued under this Contract to exceed $135,000,000. If, by the 60th day following the Authority's request for approval to issue additional completion Bonds in an amount sufficient, in the judgment of the Authority, to complete the Project, the City has not approved the issuance of the Bonds or furnished funds to the Authority in such amount, notwithstanding anything to the contrary contained in this Contract, the Authority's obligation to acquire and construct the Project shall terminate. The date of such termination shall constitute the Completion Date and all right, title, and interest of the Authority in and to the Project shall automatically be conveyed to the City as provided in Section 2.10. In such event, not later than thirty (30) days after such Completion Date, the Authority will provide to the City a complete list, including legal description, of all real property or interest therein acquired to such date in connection with the Project, and all appurtenances, fixtures, personal property, or property of any description whatsoever acquired to such date in connection with the Project, and after examination by the City for verification, said list shall be attached to this Contract as Exhibit B. Section 2.10. Conveyance of the Project. Prior to the Completion Date, the Authority shall own the Project. On the Completion Date, all of the Authority's right, title, and interest of every nature whatsoever in and to the Project automatically shall vest irrevocably in the City, and shall become part of the City System, without the necessity of the execution of any conveyance by the Authority, and such transaction shall result in the automatic sale and delivery of the Project by the Authority to the City, and the vesting of title to the Project hi the City, in consideration for the agreement of the City to make, or cause to be made, the Bond Payments and other payments, covenants, agreements, representations, and indemnities required under this Contract. The Authority will execute and deliver to the City a special warranty deed acknowledging that such fly: 1829.012 \ NRALCCONTRACr 12 sale, delivery, and vesting of title has occurred, but such instrument shall not be necessary to effect the automatic sale, delivery, and vesting of title, which shall occur as described above. Upon said conveyance, the City shall succeed to all rights and interests of the Authority in each contract and agreement entered into by the Authority pursuant to Article II of this Contract and the Authority shall deliver to the City an instrument or instruments assigning all of the Authority's rights and interests in such contracts and agreements to the City. As contemplated in Sections 3.05 and 4.02 herein, the payments required to be made by the City under this Contract shall be made in all events, regardless of whether title to the Project or any part thereof is in the Authority or in the City. The Authority hereby waives, releases, relinquishes, and renounces any and all liens which it may have in the Project arising as a result of the conveyance of the Project or any portion thereof to the City, including, without limitation, any vendor's lien and/or privilege thereon. THE CONVEYANCES BY THE AUTHORITY UNDER THIS SECTION ARE MADE WITHOUT WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR PARTICULAR USE, OR ANY OTHER WARRANTY EXCEPT THOSE WARRANTIES SET FORTH IN THE SPECIAL WARRANTY DEED. After the Completion Date and the resulting sale, delivery, and vesting of title in and to the City, the Authority shall have no right, title, or interest in, or responsibility with respect to, the Project. The City shall own and operate the Project as a part of the City System, and the City shall be solely.responsible for all costs of operation, maintenance, repair, replacement, additions, improvements, and any other expenses of any kind associated with the Project. ARTICLE III FINANCING OF THE PROJECT Section 3.01. Issuance of Bonds. (a) The Authority's acquisition and construction of the Project will be financed by the Authority through the issuance of one or more series or issues of its Bonds payable from and secured by an assignment of the Bond Payments made under this Contract. In consideration of the covenants and agreements set forth in this Contract, and to enable the Authority to issue the Bonds to carry out the intents and purposes hereof, this Contract is executed to assure the issuance of the Bonds and to provide for and guarantee the due and punctual payment by the City to the Authority, or to the Trustee under the trust indenture securing the Bonds, of amounts not less than those required to pay, as and when due (whether at stated maturity, upon redemption, acceleration of maturity, or otherwise), all of the principal ol; redemption premium, if any, and interest on the Bonds and all other payments required to be made by the Authority pursuant to the Bonds and the Bond Resolution or under any Credit Agreement related thereto. The City hereby agrees to make, or cause to be made, each Bond Payment, as and when due, for the benefit of the owners of the Bonds, as provided in the Bonds and the Bond Resolution. /Icy: 1829.012WRA-CCCON RACr 13 (b) The proceeds from the sale of the Bonds will be used for the payment of the Project Costs. The Bonds will be issued by the Authority, subject to the approval of the City, in the amount anticipated to be required to acquire and construct the Project, including payment of all Project Costs incurred by the Authority, the City, or the Port prior to the date of issuance of the Bonds, and to fund, to the extent deemed advisable by the Authority, a debt service reserve fund and interest on the Bonds during construction and for up to one year after the Completion Date. Unless otherwise authorized by the City Council of the City, such Bonds will be issued in an amount not to exceed $135,000,000, which is estimated to be at least sufficient to cover all the aforesaid costs and expenses and other amounts required. (c) (1) Each Bond Resolution of the Authority shall specify the maximum principal amount of the Bonds to be issued thereunder. The Bonds shall mature not more than thirty (30) years from the date of such Bonds and shall bear interest at not to exceed the maximum legal rate then permitted by law, and the Bond Resolution may create and provide for the maintenance of a revenue fund, an interest and sinking fund, a debt service reserve fund, and any other funds deemed prudent by the Authority, all in the manner and amounts as provided in such Bond Resolution. (2) Prior to the final adoption of a Bond Resolution or any amendment of a Bond Resolution by the Authority's Board of Directors or the execution of an Approval Certificate by the Authority, a copy of the proposed Bond Resolution, the Approval Certificate, if any, and the Sale and Offering Documents shall be presented to the City for review and approval. (3) Upon the City approval of (i) each Bond Resolution hereafter adopted by the Authority, (ii) any amendments to any Bond Resolution, (iii) an Approval Certificate authorized by a Bond Resolution, and (iv) the Sale and Offering Documents by the delivery to the Authority of a certification signed by the Authorized Representative of the City to the effect that the Bond Resolution, including any Approval Certificate, and the Sale and Offering Documents comply with this Contract, then upon the adoption and approval of the Bond Resolution and the Approval Certificate, if any, in such final form by the Authority's Board of Directors or Authorized Representative, as the case may be, and the issuance and delivery of the Bonds to the purchaser thereof, the Bond Resolution shall for all purposes be considered approved by the City and deemed to be in compliance with this Contract in all respects, and the Bonds issued thereunder will constitute Bonds as defined in this Contract for all purposes. Any owner of Bonds is entitled to rely fully and unconditionally on any such approval. (4) All covenants and provisions in the Bond Resolution affecting, or purporting to bind, the City, shall, upon the delivery of the Bonds, become absolute, unconditional, valid, and binding covenants and obligations of the City so long as said Bonds and interest thereon are outstanding and unpaid, and may be enforced Ay: ! 829.012WRA-CCCONTRACr 14 as provided in this Contract and the Bond Resolution. Particularly, the obligation of the City to make, promptly when due, all Bond Payments specified in this Contract and all payments described in Section 3.08 hereof shall be absolute and unconditional, and said obligation may be enforced as provided in this Contract. In addition, subject to the approval of the City, the Authority may enter into Credit Agreements for the purpose of achieving the lowest financing costs for the Project. (d) The Bond Resolution authorizing the initial series of Bonds, as adopted by the Authority's Board of Directors in substantially the form attached to this Contract as Exhibit C, is hereby approved by the City. Section 3.02. Proceeds of Bonds. Subject to the terms and provisions of this Contract, the proceeds of the Bonds shall be used by the Authority for the purpose of financing and funding the Authority's acquisition and construction of the Project as provided in Section 3.01. The Authority shall use its best efforts to issue its Bonds, in one or more series, in amounts which will be sufficient to accomplish such purpose. The proceeds of the Bonds shall be deposited in a construction fund established pursuant to the terms of a trust indenture to be authorized by the Bond Resolution. The trust indenture will be entered into between the Authority and a corporate trustee for the purpose of securing the payment of the Bonds. The trust indenture will establish procedures for the payment of the costs of the Project out of the construction fund. Section 3.03. Refunding of Bonds. After the issuance of the Bonds, the Authority shall not refund the Bonds or change or modify the Bonds in any way without the prior written approval of the City; nor shall the Authority redeem the Bonds prior to their scheduled maturities, or change or modify the Bond Resolution, without the prior written approval of the City, unless such redemption is required by the Bond Resolution. The Authority shall use its best efforts to refund any outstanding Bonds if requested by the City. Section 3.04. Redemption of Bonds. The Authority, upon the written request of the City (and provided that the affected Bonds are subject to redemption or prepayment prior to maturity at the option of the Authority or the City, and provided that such request is received in sufficient time prior to the date upon which such redemption or prepayment is proposed), forthwith shall take or cause to be taken all action that may be necessary under the applicable redemption provisions of the Bonds to redeem the Bonds or any part thereof, to the full extent of funds either made available for such purpose by the City or already on deposit under the Bond Resolution and available for such purpose. The redemption of any outstanding Bonds prior to maturity at any time shall not relieve the City of its absolute and unconditional obligation to pay each remaining Bond Payment with respect to any outstanding Bonds, as specified in the Bond Resolution. If a redemption of Bonds is required pursuant to the provisions of the Bond Resolution, the City agrees as provided herein to forthwith make Bond Payments sufficient to pay the principal of, premium, if any, and interest on the Bonds to be redeemed at the times specified in the Bond Resolution. hy: 11129.012WRACMCON ItACr 15 Section 3.05. Debt Service on Bonds and Other Bond Funding Requirements. It is acknowledged and agreed that payments to be made under this Contract will be the only source available to the Authority to provide the monies necessary for the Authority to meet its obligations with respect to the Bonds and any Credit Agreements. The City therefore agrees to pay all Bond Payments, as outlined in subsections (a) through (d) below, in full when due as provided in this Contract. Bond Payments shall be due by the close of business on the business day prior to each date on which any of the following payments or deposits shall be due and shall be in an amount equal to all such payments and deposits due on such date: (a) debt service on the Bonds and related payments and deposits, as follows: (1) principal of, redemption premium, if any, and interest on, the Bonds, less interest to be paid out of Bond proceeds or from other sources if permitted by any Bond Resolution, and the redemption price of any Bonds to be redeemed prior to maturity when and as provided in any Bond Resolution plus the fees, expenses, and indemnities of the Trustee for the Bonds, if any, and those of the paying agent/registrar for paying the principal of and interest on the Bonds and for authenticating, registering, and transferring Bonds on the registration books; and (2) deposits required to be made to any special, contingency, or reserve fund by the provisions of any Bond Resolution; and (3) any deposit in addition thereto required to restore any deficiency in any of such funds by the provisions of any Bond Resolution; (b) amounts payable by the Authority under a Credit Agreement; and (c) the fees, expenses, and indemnities of the remarketing agent, rate setting agent, authentication agent, arbitrage rebate compliance firm, and tender agent, if any, for the Bonds. Section 3.06. Authority's Rights Assigned to Trustee. The City is advised and recognizes that as security for the payment of the Bonds, the Authority will assign to the Trustee, pursuant to one or more trust indentures to be authorized by the Bond Resolution, the Authority's rights under this Contract, including the right to receive the Bond Payments hereunder and the amounts described in Section 3.08 hereof (but not the right to receive payments, if any, under Sections 4.04 and 6.12 hereof). The City herewith assents to such assignment and will make the Bond Payments and the payments described in Section 3.08 hereof directly to the Trustee without defense or set-off by reason of any dispute between the City and the Authority or the Trustee. All rights against the City arising under this Contract or the Bond Resolution and assigned to the Trustee may be enforced by the Trustee, or the owners of the Bonds, to the extent provided in the Bond Resolution, and the Trustee, or the owners of the Bonds, shall be entitled to bring any suit, action, or proceeding against the City, to the extent provided in the Bond Resolution, for the enforcement of this Contract, and it shall not be necessary in any such suit, action, or proceeding to make the Authority a party thereto. icy: 11129.0121NRA—CCCONTRACr 16 Section 3.07. Tax -Exempt Bonds. The parties hereto understand and agree that the Authority will use its best efforts to provide for, but will not be liable for a failure to produce, the lowest overall debt service cost for the Bonds to be issued for the Project. In connection therewith, the parties intend that the Authority will, with the approval of the City, issue Bonds the interest on which is excludable from the gross income of the owners thereof for federal income tax purposes. The parties hereto acknowledge their understanding that the federal income tax laws impose certain restrictions on the use and investment of proceeds of such tax-exempt bonds and on the use of the property financed therewith and the output produced therefrom. Accordingly, the parties agree and covenant that if the Bonds are offered to investors with the understanding that the interest will be exempt from federal income taxation, then the parties, their assigns and agents, will take such action to assure, and refrain from such action which will adversely affect, the treatment of such Bonds as obligations described in section 103 of the Code. Should either party fail to comply with such covenant, the effect of which being that the Bonds no longer qualify as obligations described in the Code, such defaulting party shall be liable for all costs resulting from the loss of the tax-exempt status of the Bonds. The parties hereby agree and covenant to comply with all of the representations and covenants relating to such exemption which are set out in any Bond Resolution. The parties further agree and covenant that in the event the Bonds issued are to be tax-exempt, they will modify such agreements, make such filings, restrict the yield on investments, and take such other action necessary to fulfill the applicable provisions of the Code. For these purposes, the parties may rely on the respective opinion of any firm of nationally -recognized bond attorneys selected by them. In the event that a conflict arises in the opinions of the respective firms of each of the parties, the parties will identify a different firm, that is mutually acceptable to both parties, in order to resolve the conflict of opinion. Section 3.08. Payment to Rebate Fund. In the event that tax-exempt Bonds are issued as provided in Section 3.07, the City hereby covenants and agrees to make the determinations and to pay any deficiency into a rebate fund, at the times and as described in the Bond Resolution to comply with the provisions of Section 148(0(2) of the Code. In any event, if the amount of cash held in the rebate fund shall be insufficient to permit the Trustee to make payment to the United States of America of any amount due on any date under Section 148(0(2) of the Code, the City forthwith shall pay the amount of such insufficiency on such date to the Trustee in immediately available funds for such purpose. The obligations of the City under this Section 3.08 are direct obligations of the City, acting under the authorization of, and on behalf of, the Authority and the Authority shall have no further obligation or duty with respect to the rebate fund. Section 3.09. City's Obligations. In the event the Project is not completed for any of the reasons contemplated herein or otherwise, or any proceeds from issuance of the Bonds are not used for completion of the Project for any reason, any Bond proceeds and earnings thereon not used for completion of the Project shall be utilized to satisfy amounts due and owing on the Bonds as contemplated in the Bond Resolution, and herein, so as to reduce the Bond Payments which would otherwise be due hereunder, or be applied for the benefit of the City as provided in the Bond Resolution. The City has covenanted absolutely and unconditionally, in accordance with all other terms of this Contract, to make the Bond Payments, as provided herein, in Ay: 1829.012 \NRA-COCONIRACT 17 consideration for such application of those moneys as well as the other covenants and obligations of the Authority and others set forth or contemplated herein. Section 3.10. Interest on Monies. All legally available monies respecting the Bonds shall be invested in the manner set forth in the Bond Resolution. Any interest earnings on the Bond proceeds may be used to pay principal of and interest on the Bonds or for the payment of any Project Costs or other costs related to the Project approved by the City, subject to Section 3.07. Section 3.11. Sale and Offering Documents. At the request of the Authority, the City shall provide to the Authority current and historical information concerning the City System, the financial condition, results, and prospects of the City, and such other information concerning the City as the Authority shall deem advisable for inclusion in the Sale and Offering Documents for the Bonds of each series and shall certify to the Authority and the underwriters of any offering of Bonds to be made by means of such Sale and Offering Documents when and if the City deems such Sale and Offering Documents to be complete and final for purposes of the Rule. The City represents and warrants that all statements concerning the City (including, without limitation, its financial condition, results, and prospects, the City System, and any demographic and economic information concerning the area served by the City System) that are contained in any Sale and Offering Document approved by the City pursuant to Section 3.01 hereof shall be true in all material respects and shall not omit to state any material fact necessary to make the statements made in such Sale and Offering Document, in the light of the circumstances in which they are made, not misleading. Section 3.12. Right of City to Prepay. The City shall have the right at any time to prepay all or any portion of the Bond Payments. Subject to the provisions of Section 3.07, such prepaid Bond Payments shall be used and invested by the Authority as directed by the City (i) as a credit against future Bond Payment obligations of the City, (ii) to redeem Bonds pursuant to the provisions of Section 3.04, or (iii) to provide for the defeasance of the Bonds pursuant to the provisions of the Bond Resolution. Any such prepayment will not cause a termination of this Contract until all other amounts owed or to be incurred by the Authority or any other person under the provisions of the Bond Resolution have been paid in full or waived by such person. ARTICLE IV BOND PAYMENTS: SYSTEM COVENANTS Section 4.01. Annual Estimate of Bond Payments. Not less than ninety (90) days prior to each Fiscal Year, the Authority shall furnish to the City an estimate and schedule of the Bond Payments required to be paid by the City in such Fiscal Year. Section 4.02. Bond Payments by the City. (a) The City hereby agrees that it will make payments of the Bond Payments to the Authority, or to the Trustee on behalf of the Authority, as provided in the Bond Resolution by wire transfer not later than one day prior to the date the /ky: 1829.0121NRACCICONTRACT 18 payment is required to be made by the Bond Resolution, a Credit Agreement, or any other instrument. If the City at any time disputes the amount to be paid by it to the Authority, the City shall nevertheless promptly make such payment or payments, but if it is subsequently determined by agreement or court decision that such disputed payments made by the City should have been less, or more, the Authority shall promptly revise the charges for the City in such manner that the City will recover its overpayment or the Authority will recover the amount due it. The Authority shall pursue all legal remedies against the City to enforce and protect the rights of the Authority and the owners of the Bonds, and the City shall not be relieved of the liability to the Authority for the payment of all amounts which are due by it hereunder. (b) Except to the extent otherwise provided by the Bond Resolution, all amounts due under this Contract shall be paid and be due in Uvalde County, Texas, which is the County in which the principal administrative offices of the Authority are located. (c) The Authority shall redetermine the estimate and schedule of Bond Payments due in any Fiscal Year at any time during such Fiscal Year, as and to the extent deemed necessary or advisable by the Authority to accurately forecast the amount and date of Bond Payments to be made by the City, if (i) the Authority issues Bonds to complete the Project or to refund any Bonds or enters into, amends, or terminates a Credit Agreement, (ii) actual interest rates on any variable interest rate Bonds differ from those projected by the Authority, or (iii) any other event occurs which results in an increase or decrease in the Bond Payments required to be made by the City in such Fiscal Year. (d) It during any Fiscal Year, the City's Bond Payment is redetermined in any manner as provided or required in this Section, the Authority will promptly furnish the City with an updated schedule of payments reflecting such redetermination. (e) Notwithstanding anything herein to the contrary, no failure of the Authority to estimate, and no mistake by the Authority in any estimate of, the amount of or schedule for Bond Payments due from the City in any Fiscal Year shall relieve the City from (or defer) its absolute and unconditional obligation to make all Bond Payments in full when due. Section 4.03. Source of Payment. (a) The City represents and covenants that all payments to be made by it under this Contract shall constitute reasonable and necessary "operating expenses", as defined in TEX. REV. CIV. STAT. ANN. art. 1113, of the City System, and the City shall not be obligated to make the payments under this Contract from any source other than the revenues of the City System. The City further represents that the City Council of the City has determined that the services to be provided by the Project are absolutely necessary and essential to the present and future operation of the City System, that the Project will be an extension of the City System necessary to render efficient service and necessary, in the judgment of the City Council of the City, to keep the City System in operation and render adequate service to the City and to meet conditions resulting from a severe drought which would otherwise impair the outstanding City Utility Bonds and the ability of the City to comply with its covenants contained in the ordinances authorizing the issuance and delivery of the City Utility Bonds, and hy: 1829.012WRACC\CONflACT 19 that the Project constitutes the only reasonable method for obtaining the ability to transport the Lake Texana water supply as hereinbefore described and, accordingly, all payments required by this Contract to be made by the City shall constitute reasonable and necessary operating expenses of the City System, with the effect that the obligation to make such payments from revenues of the City System shall have priority over any obligation to make any payments from such revenues of principal, interest, or otherwise, with respect to all bonds or other obligations heretofore or hereafter issued by the City, except for the obligations of the City under the LNRA Contract, the Contract Between Nueces River Authority and City of Corpus Christi on Nueces River Reclamation Project, Texas (Choke Canyon Reservoir Project), and any other contract under which the City is required to make payments which constitute operation and maintenance expenses of the City System. The City may not obtain the services or facilities provided under this Contract to transport the Lake Texana water from any source other than the Authority, without the Authority's advance written consent. (b) The City agrees throughout the term of this Contract to fix and collect such rates and charges for services to be supplied by the City System as will produce revenues at all times during the term of this Contract in an amount at least equal to (i) all of the expenses of operation and maintenance of the City System, including specifically its payments under this Contract and the contracts specified in (a) above, and (ii) all other amounts as required by law and the provisions of the ordinances or resolutions authorizing the City Utility Bonds or other obligations now or hereafter outstanding payable, in whole or in part, from the revenues of the City System, including the amounts required to pay all principal of and interest on such City Utility Bonds and other obligations. (c) No tax revenues of the City shall be pledged to the payment of any amounts to be paid by the City to the Authority under this Contract, nor shall the Authority have the right to demand payment of any amounts to be paid by the City under this Contract be paid from funds raised or to be raised from taxation from the City and the obligations under this Contract shall never be construed to be a debt or obligation of the City of such kind as to require the City to levy and collect a tax to discharge its obligations. Section 4.04. Authority Overhead Payments by the City. To the extent not paid out of the proceeds of the Bonds, or otherwise, the City shall pay and reimburse the Authority for all Overhead Expenses incurred by it throughout the term of this Contract within thirty (30) days of receipt of documentation therefor from the Authority. Provided, however, that litigation overhead costs shall be offset by any recovery of damages obtained by the Authority against a third party in a validation or other lawsuit where such damages recover losses suffered by the City; and provided further, that any such recovery in excess of litigation overhead costs shall be divided by the Authority and the City in relation to their respective losses. Section 4.05. Annual Budgeting. by the City. The City shall make provision in each annual City budget and shall appropriate an amount sufficient, at a minimum, for the payment of all amounts required to be paid by the City under this Contract. /Icy: 1829.012WRA-COCONIRACT 20 Section 4.06. Revenue Sources Pledged. The City hereby pledges the revenues of the City System to the payment of its obligations under this Contract and recognizes that the Authority will, and authorizes the Authority to, pledge the Bond Payments owing to it by the City under this Contract to the payment of the Bonds and Credit Agreements. The Authority agrees to make the payments for the Bonds and Credit Agreements when and as required by the Bond Resolution, the Credit Agreements, and this Contract, from and to the extent of proceeds of the Bonds not expended for the Project and Bond Payments made by the City. Section 4 07. General Covenants. The City further represents, covenants and agrees that in accordance with and to the extent permitted by law: (a) Performance. It will faithfully perform at all times any and all covenants, undertakings, stipulations, and provisions contained in each ordinance or resolution authorizing the issuance of City Utility 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 fund and accounts created by said ordinances, but only from and to the extent of the sources of funds and after satisfaction of all prior obligations described therein. (b) City's Legal Authority. It is a duly created and existing home rule city of the State and is duly authorized under the laws of the State to enter into this Contract; that all action on its part for the execution and delivery of this Contract has been duly and effectively taken; and that this Contract is a valid and enforceable special obligation of the City in accordance with its terms. (c) Acquisition and Construction: Operation and Maintenance. (1) It shall use its best efforts in accordance with Prudent Utility Practice to acquire and construct, or cause to be acquired and constructed, any capital improvements to the City System, which shall mean and include any capital extensions, improvements, and betterments, 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 City System properly and in an efficient manner, consistent with Prudent Utility Practice, and shall use its best efforts to maintain, preserve, reconstruct and keep the same or cause the same to be so maintained, preserved, reconstructed and kept, with the appurtenances and every part and parcel thereof, in good repair, working order and condition, and shall from time to time make, or use its best efforts to cause to be made, all necessary and proper repairs, replacement, and renewals so that at all times the operation of the City System may be properly and advantageously conducted. (d) Title. It has or will obtain lawful title, whether such title is in fee or lesser interest, to the lands, buildings, structures, and facilities constituting the City System; it will defend the title to all the aforesaid lands, buildings, structures, and facilities, and every part thereof, for the benefit of the Authority and the owners of the Bonds, against the claims and demands of all persons whomsoever; and it is lawfully qualified to pledge the revenues of the City System to the Acv: 1829.012\NRA.CCCONTRACr 21 payment of the payments required by this Contract in the manner prescribed herein, and has lawfully exercised such rights. (e) Liens. It will from time to time and before the same become delinquent pay and discharge all taxes, assessments, and governmental charges, if any, which shall be lawfully imposed upon the City 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 lien 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 lien 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. (0 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 City System, the Bonds, and the City, and shall cause said books and accounts to be audited annually as of the close of each Fiscal Year by the Accountant. At the request of the Authority, the City shall allow the Authority to audit such books, records, and accounts at any reasonable time and from time to time. (g) Insurance. (1) Except as otherwise permitted in clause (2) below, it shall cause to be insured such parts of the City 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 Authority at all reasonable times. (2) In lieu of obtaining policies for insurance as provided above, the City may self -insure against risks, accidents, claims, or casualties described in clause (1) above. (3) The annual audit hereinafter required shall contain a section commenting on whether or not the City has complied with the requirements of this Section with respect to the maintenance of insurance, and listing the areas of insurance for which the City is self-insuring, all policies carried, and whether or not all insurance premiums upon the insurance policies to which reference is hereinbefore made have been paid. /Icy: 1829.012\NRA.CQCON7RACr 22 (h) Audits. After the close of each Fiscal Year while this Contract is in effect, an audit will be made of the books and accounts relating to the City System and the revenues of the City System by the Accountant. As soon as practicable after the close of each such Fiscal Year, and when said audit has been completed and made available to the City, a copy of such audit for the preceding Fiscal Year shall be mailed to the Authority. Such annual audit reports shall be open to the inspection of the Authority, its agents and representatives, the Trustee, and the owners of the Bonds at all reasonable times. (i) 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 City 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, authorizations, and other requirements applicable to or necessary with respect to the acquisition, construction, equipment, operation, and maintenance of the City System. (j) 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 City System's facilities, and, to the extent that it legally may, the City will prohibit any such competing facilities. (k) Rights of Inspection. The Authority, the Trustee, and the owners of 10% or more in principal amount of the Bonds of any series shall have the right at all reasonable times to inspect the City System and all records, accounts, and data of the City relating thereto, and upon request the City shall furnish to the Authority, the Trustee, and such owners of Bonds such financial statements, reports, and other information relating to the City and the City System as any such person may from time to time reasonably request. (1) Sale, Lease, or Disposal of Property by the City. No part of the City System shall be sold, leased, mortgaged, demolished, removed, or otherwise disposed of, except as follows: (1) To the extent permitted by law, the City may sell or exchange at any time and from time to time any property or facilities constituting part of the City System only if (i) it shall determine such property or facilities are not useful in the operation of the System, or (ii) the proceeds of such sale are $250,000 or Tess, or it shall have received a certificate executed by the City Engineer of Record and the City Manager stating, in their opinion, that the fair market value of the property or facilities exchanged is $250,000 or less, or (iii) if such proceeds or fair market value exceeds $250,000 it shall have received a certificate executed by the City Engineer of Record and the City Manager stating (A) that system within the System of which the property or facilities comprises a part thereof and (B) 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 Section 4.03(b) of this Contract. 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 City System shall forthwith, at the option of the City be used as provided in the ordinances of the City authorizing its City Utility Bonds. /Icy: 1829.012\NRACCCONTRACr 23 (2) To the extent permitted by law, the City may lease or make contracts or grant licenses for the operation o1; or make arrangements for the use of, or grant easements or other rights with respect to, any part of the City System, provided that any such lease, contract, license, arrangement, easement or right (i) does not impede the operation by the City of the City System and (ii) does not in any manner impair or adversely affect the rights or security of the Authority under this Contract; 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 City Engineer of Record and the City Manager that the action of the City with respect thereto does not result in a breach of the conditions under this subsection (b). Any payments received by the City under or in connection with any such lease, contract, license, arrangement, easement or right in respect of the City System or any part thereof shall constitute gross revenues of the City System. ARTICLE V CONTINUING DISCLOSURE Section 5.01. Annual Reports. Following the issuance of Bonds of any series, the offer or sale of which is not exempt from the Rule and, until the City is no longer obligated, contingently or otherwise, to make Bond Payments in respect of the Bonds of such series, the City undertakes to and shall provide annually to each NRMSIR and any SID, within six months after the end of each Fiscal Year, (1) financial information and operating data of the general type included in the Sale and Offering Documents for the Bonds of such series, as specified in the City's approval of such Sale and Offering Documents pursuant to Section 3.01 hereof and (2) audited general purpose financial statements of the City, if then available. Any financial statements so to be provided shall be (1) prepared in accordance with generally accepted accounting principles for governmental agencies or such other accounting principles as the City may be required to employ from time to time pursuant to state law or regulation, and (2) audited, if the City commissions an audit of such statements and the audit is completed within the period during which it must be provided. If the audit of such financial statements is not complete within such period, then the City shall provide unaudited financial statements within the required period, and shall provide audited financial statements for the applicable Fiscal Year to each NRMSIR and any SID, when and if the audit report on such statements become available. If the City changes its Fiscal Year, it will notify the Trustee, each NRMSIR, and any SID in writing 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. The 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 incorporated by specific reference to any document or specific part thereby (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID hv: 1829.0I21NRA-COCON7RACr 24 or filed with the SEC. Copies of such information and operating data shall be furnished to the Authority at the same time the information and data are furnished to any NRMSIR or SID. Section 5 02. Material Event Notices. (a) The following are the events with respect to the Bonds which the Authority must agree to disclose in a timely manner pursuant to the Rule, if "material" under applicable federal securities laws and regulations promulgated thereunder. (1) Principal and interest payment delinquencies; (2) Non-payment related defaults; (3) Unscheduled draws on debt service reserves reflecting financial difficulties; (4) Unscheduled draws on credit enhancements reflecting financial difficulties; (5) Substitution of credit or liquidity providers, or their failure to perform; (6) Adverse tax opinions or events affecting the tax-exempt status of the Bonds; (7) Modifications to rights of holders of the Bonds; (8) Bond calls; (9) Defeasances; (10) Release, substitution, or sale of property securing repayment of the Bonds; and (11) Rating changes. (b) The City shall, promptly after obtaining actual knowledge of the occurrence of any of the events enumerated in (a) above, notify the Authority of such event and provide all information in the format required to satisfy the requirements of the Rule. Further, the City shall provide, in a timely manner, notice of any failure by the City to provide audited financial statements, financial information, and operating data in accordance with Section 1 hereof to each NRMSIR and each SID. Section 5.03. Limitations. Disclaimers. and Amendments. The City shall be obligated to observe and perform the covenants specified in this Article in respect of the Bonds of any series for so long as, but only for so long as, the City remains an "obligated person" with respect to the Bonds of such series within the meaning of the Rule, except that the City in any event will give notice of any deposit made in accordance with the Bond Resolution that causes Bonds of such series no longer to be Outstanding. /ky: 1829.012NRA-Ccscor TRAcr 25 The provisions of this Article are for the sole benefit of (and may be enforced by) the owners and beneficial owners of the Bonds, and nothing in this Article, 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 Article 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 Article or otherwise, except as expressly provided herein. The City makes no 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 OWNER 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 WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS ARTICLE, 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 Article shall comprise a breach of or default under this Contract for purposes of any other provision of this Contract. Nothing in this Article is intended or shall act to disclaim, waive, or otherwise limit the duties of the Authority or the City under federal and state securities laws. The provisions of this Article may be amended by the Authority and 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 Authority or the City, but only if(1) the provisions of this Article, as so amended, would have permitted an underwriter to purchase or sell Bonds of the applicable series in the primary offering of the Bonds of such series in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances, and (2) either (a) the owners ofa majority in aggregate principal amount (or any greater amount required by any other provision of this Contract that authorizes such an amendment) of the outstanding Bonds of each such series affected consent to such amendment or (b) an entity that is unaffiliated with the Authority or the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interest of the owners and beneficial owners of the Bonds of such series and is permitted by the terms of the Article. If the Authority and the City so amend the provisions of this Article in connection with the financial or operating data which the City is required to disclose under Section 5.01 hereof, the City shall provide a notice of such amendment to be filed in accordance with Section 5.02(b) hereof, together with an explanation, in narrative form, of the reason for the amendment and the impact of any change in the type of /ky: 1829.012\NRACC\CONfRACT 26 financial information or operating data to be so provided. The Authority and the City may also amend or repeal the provisions of this Article if the SEC amends or repeals the applicable provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule are invalid, but only if and to the extent that the provisions of this sentence would not prevent an underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds. ARTICLE VI GENERAL PROVISIONS Section 6.01. Participation by the Parties. The Authority and the City each represents to the other that it is empowered by law to participate in the acquisition, construction, and financing of the Project, and to execute this Contract and other agreements and documents as are or may hereafter be required to accomplish the same; and that its participation in the Project and execution of this Contract have been duly authorized by action of its governing body. The Authority and City each agree to finish to the other such documentation or evidence of its authority to so participate and execute the contracts and other agreements as the other party may reasonably request, and to take and perform such other and further actions and execute such other agreements and documents as may be reasonably required to carry out the provisions of this Contract. Section 6.02. Insurance. (a) Until such time as the Project is conveyed to the City pursuant to Section 2.10 of this Contract, the Authority agrees to carry public liability insurance on the Project for purposes and in amounts which ordinarily would be carried by a privately owned utility company owning and operating such facilities, except that the Authority shall not be required to carry liability insurance except to insure itself against risk of loss due to claims for which it can, in the opinion of the Authority's legal counsel, be potentially liable considering relevant governmental immunities of the City and the Authority. Prior to the conveyance of the Project to the City, the Authority shall also carry property casualty insurance in the amount of the full replacement value of all improvements and personal property connected with the Project (less a deductible comparable to the deductible on the City's property insurance for City property generally). All premiums for such insurance shall constitute an Overhead Expense of the Project but may be paid out of the proceeds of the Bonds to the extent that such proceeds are available. The City shall be named as an additional insured on the Authority's insurance, and the Authority shall famish to the City a certificate of insurance showing the required coverage, and providing that the policy may not be canceled, changed, or nonrenewed until the Authority and the City have each been given thirty (30) days prior written notice of such event. In the event the Authority is required to pay a deductible with respect to a claim under any such policy, the amount of such deductible shall constitute an Overhead Expense and shall be paid by the City. ny: i829.012wwAcc\CONrRACr 27 (b) The Authority shall require the contractor or contractors employed for construction of the Project to carry insurance coverages throughout the construction period in at least the following amounts: (1) workers' compensation: state law limits; (2) general liability (including contractual liability) and automobile liability: one million dollars ($1,000,000) per person and per occurrence for bodily injury and one hundred thousand dollars ($100,000) for property damage; (3) builder's risk: full replacement value of improvements; (4) performance and payment bond: full value of contract; (5) cost overrun insurance; and (6) timely completion insurance. The City shall be furnished with a certified copy of such effective policy of insurance prior to commencement of construction. Such insurance policies shall name the Authority and the City as additional insureds, and the Authority and the City shall be provided with a certificate of insurance showing the required coverages and providing that the policies may not be canceled, changed, or nonrenewed until the Authority and the City have been given thirty (30) days prior written notice of such event. (c) The insurance required by this section may be modified by written agreement of the City and the Authority, in accordance with good business practice. Any questions about the scope of coverage required hereunder shall be resolved by written agreement between the City and the Authority. The parties can agree to substitute an owner controlled insurance program for any of the above specified insurance requirements. Section 6.03. Force Majeure. If by reason of Force Majeure either party hereto shall be rendered unable wholly or in part to carry out its obligations under this Contract, other than the obligation of the City to make the payments required under Sections 3.05, 3.08, and 4.02 of this Contract, then if such party shall give notice and full particulars of such Force Majeure in writing to the other party within a reasonable time after the occurrence of the event or cause relied on, the obligation of the party giving such notice, so far as it is affected by such Force Majeure, shall be suspended during the continuance of the inability then claimed, but for no longer period, and any such party shall endeavor to remove or overcome such inability with all reasonable dispatch. The term "Force Majeure" as employed herein shall mean acts of God, strikes, lockouts or other industrial disturbances, acts of public enemy, orders of any kind of the Government of the United States or the State of Texas, or any civil or military authority, insurrection, riots, epidemics, landslides, lightning, earthquake, fires, hurricanes, blue northers, storms, floods, washouts, droughts, arrests, restraint ofgovernment and people, civil disturbances, explosions, breakage or accidents to machinery, pipelines or canals, partial or entire failure of water supply, or on account of any other causes not reasonably within the control of the party claiming such inability. Section 6.04. Unconditional Obligation to Make Payment. Recognizing the fact that the City urgently requires the facilities and services of the Project, and that such facilities and services are essential and necessary for actual use and for standby purposes, and recognizing the fact that the Bond Payments to be received from the City will be the sole source of funds available to the Authority and the Trustee to pay the Bonds, that purchasers of Bonds will rely on the obligation of the City to make Bond Payments and the payments described in Section 3.08 hereof in accordance with the provisions of this Contract, and that by making the undertaking in this paragraph the City will reduce the aggregate amount of Bond Payments required for it to obtain /ky: 1129.012 W RA.COCONfRACT 28 the Project, the City hereby waives all rights of set-off, recoupment, counterclaim, suspension, deferment, reduction, and amendment, with respect to making the Bond Payments and the payments under Section 3.08, against the Authority, the Trustee, and any other direct or indirect recipients of Bond Payments, and the City agrees that it shall be unconditionally obligated to pay the Bond Payments and the payments under Section 3.08, as provided and determined by this Contract, regardless of whether or not the Authority actually acquires, constructs, completes, or transfers the Project or breaches any obligation on its part hereunder, and whether or not the City actually uses the Project, whether due to Force Majeure or any other reason whatsoever, regardless of any other provisions of this Contract, any other contract or agreement between any of the parties hereto, or the LNRA Contract. This covenant by the City shall be for the benefit of and enforceable by the owners of the Bonds and/or by the Authority. By entering into this Contract and performing its obligations under any Section of this Contract, the City does not release any persons from or waive any claims against such persons the City may have resulting from actions by such persons contrary to that person's legal obligations. Section 6.05. Term of Contract. This Contract shall be effective from and after its date, and this Contract shall continue in force and effect until the principal of and interest on all Bonds shall have been paid or provision for the payment of all of the Bonds has been made in accordance with the terms of the Bond Resolution. When the principal of and interest on all Bonds shall have been paid or provision for the payment of all of the Bonds has been made in accordance with the terms of the Bond Resolution and all amounts owed to the Authority, the Trustee, or any other person hereunder have been paid, all moneys held by the Trustee or the Authority pursuant to the terms of the Bond Resolution shall be paid to the City. Section 6.06. Modification. No change, amendment, or modification of this Contract shall be made or be effective which will affect adversely the prompt payment when due of all moneys required to be paid by the City under the terms of this Contract and no such change, amendment, or modification shall be made or be effective which would cause a violation of any provisions of any Bond Resolution. Section 6.07. Addresses and Notice. Unless otherwise provided herein, any notice, communication, request, reply, or advice (herein severally and collectively, for convenience, called "Notice") herein provided or permitted to be given, made, or accepted by either party to the other party must be in writing and may be given or be served by depositing the same in the United States mail postpaid and registered or certified and addressed to the party to be notified, with return receipt requested, or by delivering the same to an officer of such party, or by prepaid telegram when appropriate, addressed to the party to be notified. Notice deposited in the mail in the manner hereinabove described shall be conclusively deemed to be effective, unless otherwise stated herein, from and after the expiration of three days after it is so deposited. Notice given in any other manner shall be effective only if and when received by the party to be notified. For the purposes of notice, the addresses of the parties shall, until changed as hereinafter provided, be as follows: /Icy: 1829.012\NRA-CC\CONTRACT 29 If to the Authority: If to the City: Executive Director Nueces River Authority P. O. Box 349 Uvalde, Texas 78802-0349 City Manager City of Corpus Christi City Hall, Box 9277 Corpus Christi, Texas 78469-9277 The Authority and the City hereto shall have the right from time to time and at any time to change their respective addresses and each shall have the right to specify as its address any other address by at least fifteen (15) days' written notice to the other party. Section 6.08. State or Federal Laws, Rules. Orders. or Regulations. This Contract is subject to all applicable federal and State laws and any applicable permits, ordinances, rules, orders, and regulations of any local, state, or federal governmental authority having or asserting jurisdiction but nothing contained herein shall be construed as a waiver of any right to question or contest any such law, ordinance, order, rule, or regulation in any forum having jurisdiction and the City and the Authority represent that, to the best of their knowledge, no provisions of any applicable federal or State law, including the City Charter, nor any permit, ordinance, rule, order, or regulation of either party will limit or restrict the ability of either party or the Port to carry out their respective obligations under or contemplated by this Contract. Section 6.09. Severability. The parties hereto specifically agree that in case any one or more of the sections, subsections, provisions, clauses, or words of this Contract or the application of such sections, subsections, provisions, clauses, or words to any situation or circumstance should be, or should be held to be, for any reason, invalid or unconstitutional, under the laws or constitutions of the State or the United States of America, or in contravention of any such laws or constitutions, such invalidity, unconstitutionality, or contravention shall not affect any other sections, subsections, provisions, clauses, or words of this Contract or the application of such actions, subsections, provisions, clauses, or words to any other situation or circumstance, and it is intended that this Contract shall be severable and shall be construed and applied as if any such invalid or unconstitutional section, subsection, provision, clause, or word had not been included herein, and the rights and obligations of the parties hereto shall be construed and remain in force accordingly. Section 6.10. Remedies Upon Default. It is not intended hereby to specify (and this Contract shall not be considered as specifying) an exclusive remedy for any default, but all such other remedies (other than termination) existing at law or in equity may be availed of by either Ary: 1829.012W RALCCOMRACr 30 party hereto and shall be cumulative. Recognizing that failure in the performance of the City's obligations hereunder could not be adequately compensated in money damages alone, the City agrees in the event of any default on its part that the Authority and the owners of the Bonds as third party beneficiaries shall have available to them the remedies of mandamus and specific performance in addition to any other legal or equitable remedies (other than termination) which may also be available to them. Notwithstanding anything to the contrary contained in this Contract, any right or remedy or any default hereunder, except the right of the Authority to receive the Bond Payments and the provisions of Sections 3.07 and 3.08, which shall never be determined to be waived, shall be deemed to be conclusively waived unless asserted by a proper proceeding at law or in equity within two (2) years plus one (1) day after the occurrence of such default. No waiver or waivers of any breach or default (or any breaches or defaults) by any party hereto or of the performance by any other party of any duty or obligation hereunder shall be deemed a waiver thereof in the future, nor shall any such waiver or waivers be deemed or construed to be a waiver of subsequent breaches or defaults of any kind, character or description, under any circumstances. Section 6.11. Legal Authority. In entering into this Contract and performing all duties and obligations hereunder, the City and the Authority exercise their authority under and in accordance with the State Constitution and laws including, but not limited to, Section 791.026, Texas Government Code; Article XVI, Section 59 of the State Constitution; Article 8280-115, Texas Water Code Auxiliary Laws; Article XI, Section 5 of the State Constitution; Articles 1111 through 1118, V.A.T.C.S., the City's Charter; Article 717q V.A.T.C.S., and all other laws which may authorize this Contract, all of which provisions and laws, cited or uncited herein, shall cumulatively provide the authority for this Contract. Section 6.12. Indemnification. (a) During the period of time covering the Authority's acquisition and construction of the Project, including, but not limited to, the Completion Date, to the extent permitted by law, the Authority agrees to indemnify and save and hold harmless the City, its officers, directors, agents, attorneys, and employees from and against all Claims that may arise as a result of any undertaking, act, or omission, whether negligent or not, which is done or omitted to be done by the Authority or any of its officers, directors, agents, attorneys, and employees in acquiring and constructing the Project. However, this indemnity applies only to the extent of the Authority's public liability insurance coverage for a Claim, the amount of which coverage shall not be less than $1,000,000 in the aggregate per event for personal injury and 5500,000 in the aggregate per event for property damage. If any such Claim is brought against any such indemnified person, the Authority shall pay all costs incurred by such person in defending and (subject to applicable rules of attorney conduct) may control the defense of such Claim. The Authority's indemnity under this paragraph shall not exceed the amounts paid under the Authority's insurance coverage. (b) After the Completion Date, and so long as the Bonds are outstanding and unpaid, and also with respect to any Claim that may arise out of the offer and sale of the Bonds of any series or the alleged misstatement or omission of a material fact in or from icy: 11129.012\NRA.CC\CONfRACT 31 any Sale and Offering Document used in connection therewith, to the extent permitted by Mw, the City agrees to indemnify and save and hold harmless the Authority, the Port, their officers, directors, agents, attorneys, and employees, and the underwriters of any such offering and their directors, officers, employees, and agents, and all persons who control the same within the meaning of the federal securities laws, from and against all Claims that may arise as a result of any undertaking, act, or omission, whether negligent or not, which is done or omitted to be done by the City or any of its officers, councilmen, agents, attorneys, and employees, in operating and maintaining the Project or providing information for inclusion in the Sale and Offering Documents. If any such Claim is brought against any such indemnified person, the City shall pay all costs incurred by such person in defending and (subject to applicable rules of attorney conduct) may control the defense of such Claim. Section 6.13. Contract not for Benefit of Third Parties. This Contract is made for the exclusive benefit of the City, the Authority, the Trustee, the owners of the Bonds, the parties to any Credit Agreements, the underwriters of any offering of and remarketing agent and tender agent, if any, for any Bonds, and their respective successors and assigns herein permitted, and not for any third party or parties; and nothing in this Contract, expressed or implied, is intended to confer upon any party or parties other than the Authority (including its officers, directors, employees, agents, and attorneys), the Trustee, the owners of the Bonds, the City, and the parties to any Credit Agreements, the underwriters of any offering of and remarketing agent and tender agent, if any, for any Bonds, the other persons indemnified by Section 6.12 hereof, and their respective successors and assigns herein permitted, any rights or remedies under or by reason of this Contract. Section 6.14. Succession and Assignment. This Contract is binding on and inures to the benefit of the parties hereto and their respective successors, representatives, and assigns. This Contract may not be assigned by either party hereto without (i) complying with any provisions relating to the right of the parties to assign this Contract contained in the Bond Resolution and (ii) prior written notice to and approval by the other party, which consent may be withheld without cause. The provisions of this Section do not affect the assignment of the Authority's rights under this Contract to the Trustee pursuant to Section 3.06. /ky: 1829.012WRACC'COMRACr 32 WITNESS WHEREOF, the parties hereto acting under authority of their respective governing bodies have caused this Contract to be duly executed in several counterparts, each of which shall constitute an original, all as of the day and year first above written, which is the date of this Contract. ATTEST: Secreta , Board of Directors (AUTHORITY SEAL) ATTEST: City Secretary (CITY SEAL) /Icy: 1829.012WRA-CC\CONfRACT 33 NUECES RIVER AUTHORITY oard of Directors CITY OF CORPUS CHRISTI, TEXAS By: City Manager APPROVED AS TO FORM: Z0!.AUTHORIZLL BY COUNCIL 2:12 SECRFrnM EXHIBIT A LAKE TEXANA TO CORPUS CHRISTI WATER PIPELINE PROJECT DESCRIPTION The purpose of the project is to provide conveyance facilities(pipeline) to deliver water from Lake Texana to Corpus Christi. The route of the pipeline is generally depicted on the attached map. The project elements consist of design, environmental permitting, easement acquisition, and construction. Environmental permitting involves the application for and issuance of all required permits from state and federal agencies necessary for construction. Easement acquisition involves the purchase of permanent and temporary easements for the construction operation and maintenance of the facilities. The facilities include approximately 104 miles of pipeline, three pump stations, road and highway crossings, and directional drilling or tunneling under the major creeks and rivers. The pipe diameter wilt range from 56 inch to 64 inch. Selection of the pipe diameter(s) will be dependent on the construction costs, pumping costs, and delivery time frames. Ni economic analysis will be performed upon receipt of bids to determine the pipe size(s) to be installed. Construction will be accomplished via multiple contracts. At this time the contracts are Pipeline Construction (3 contracts) Pumps, Motors and Motor Control Centers Pump Station construction River Crossings HDR Engineering 1 EXJHBIT 13 [ TO BE PROVIDED UPON COMPLETION OF THE PROJECT ] EXHIBIT C RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF NUECES RIVER AUTHORITY WATER SUPPLY FACILITIES REVENUE BONDS (CITY OF CORPUS CHRISTI LAKE TEXANA PROJECT) SERIES 1996, A WATER TRANSMISSION FACILITIES CONTRACT, THE FILING OF A DECLARATORY JUDGMENT ACTION RESPECTING THE FOREGOING BONDS AND CONTRACT, AND OTHER MATTERS IN CONNECTION THEREWITH. WHEREAS, the Nueces River Authority (the "Authority") is a conservation and reclamation district and political subdivision of the State of Texas, created and existing pursuant to Article XVI, Section 59 of the Texas Constitution and the laws of the State of Texas, particularly Article 8280- 115, TEX. WATER CODE AUX. LAWS, as amended, (the "Authority Act"); and WHEREAS, pursuant to law, and particularly the Authority Act, Article 717q, Vernon's Texas Civil Statutes, as amended ("Article 717q"), and Chapter 791 of the Texas Government Code, as amended (the "Interlocal Cooperation Act"), particularly Section 791.026 thereof, the Authority, a "river authority" as such term is used in the Interlocal Cooperation Act and an "issuer" as defined in Article 717q, is empowered to acquire and construct water supply facilities on behalf of a municipality and to convey such facilities to the municipality; and WHEREAS, the Authority Act and Article 717q also authorize the Authority to issue revenue bonds to finance such projects, payable solely from the revenues derived from payments to be made to the Authority by the municipality for the purpose of defraying the cost of financing, acquiring, and constructing the projects; and WHEREAS, pursuant to the provisions of the Interlocal Cooperation Act and the other laws of the State of Texas (the "State"), the Authority and the City of Corpus Christi, Texas (the "City"), a municipality and a home -rule city under the laws of the State, have entered into a Water Transmission Facilities Contract, dated as of the 12th day of November, 1996 (the "Contract") pursuant to which the Authority has agreed to finance, acquire, and construct a water supply pipeline, booster pumps, other appurtenances, and necessary easements and other interests in land (the "Project") to be used by the City to transport water from Lake Texana in Jackson County, outside of the Authority's boundaries, to the City's water system, inside the Authority's boundaries, and under which the City would acquire the pipeline from the Authority and agree to make payments to or on behalf of the Authority in amounts sufficient to meet all of the Authority's obligations relating to bonds issued to finance the Project, including the Authority's obligations under any credit agreements entered into by the Authority in connection with the financing of the Project pursuant to Article 717q; and Ary: 1$29.01 N1ESO2BND -1 V 11116 -PAGE 1 WHEREAS, the recitals and provisions of the Contract are incorporated herein as if set forth in its entirety, and the capitalized terms of this resolution shall have the same meanings, and shall be defined as set forth in the Contract; and WHEREAS, the City has requested that the Authority issue its revenue bonds (the "Bonds") pursuant to the Contract to finance the cost of the Project; and WHEREAS, the Bonds shall be issued pursuant to an Indenture of Trust, the form of which has been presented to the Authority (the "Indenture"), between the Authority and the corporate trustee named therein (the "Trustee"), for the purpose of paying the costs of the Project; and WHEREAS, the principal of the Bonds and the interest thereon are and shall be payable from and secured by a first and superior lien on and pledge of the payments designated as "Bond Payments" to be made by the City pursuant to the Contract in amounts sufficient to pay and redeem, and provide for the payment of the principal of, premium, if any, and interest on the Bonds, when due, and the fees and expenses of the Trustee and paying agent for the Bonds, all as required by this resolution and the Indenture; and WHEREAS, this resolution constitutes a Bond Resolution as that term is defined in the Contract; and WHEREAS, the Authority has determined and does hereby determine that it can finance the Project pursuant the Authority's obligations under the Contract on the most favorable terms through the issuance of the Bonds in accordance with the terms of this resolution and the Indenture; and WHEREAS, in order to ensure the validity of the Bonds and the Contract, the Authority finds it necessary, prudent, and appropriate to file a declaratory judgment action under the authority of Article 717m-1 of the Vernon's Texas Civil Statutes ("717m-1"); NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE NUECES RIVER AUTHORITY, THAT: Section 1. The Authority's Water Supply Facilities Revenue Bonds (City of Corpus Christi Lake Texana Project), Series 1996 (the "Bonds") are authorized to be issued in the maximum aggregate principal amount of $135,000,000 for the purpose of paying the costs of the Project. The Bonds will be dated, will be in such principal amount and mature on such date or dates not later than 30 years from the date thereof and in such amounts, will bear interest at a rate or rates per annum payable on the dates, and shall be subject to optional and mandatory redemption on the dates, in the amounts, and at such prices, all as approved by the Authorized Representative of the Authority by execution of the Approval Certificate on or before the date of issuance of the Bonds. The principal of and interest on the Bonds will be payable at such places and in such manner as are specified in the Indenture. In no event will the interest rate on the Bonds exceed a "net effective interest rate" of 7.5%, as calculated in accordance with the provisions of Article 717k-2, Vemon's Texas Civil &y: 1129.01 I\RFSO2.BND - I1/1 P96 - PAGE 2 Statutes, as amended. The Bonds shall be numbered as provided in the Indenture, and shall have the form, details, and specifications set out in the Indenture. The Bonds may be additionally secured by a policy of municipal bond insurance, and the Indenture may permit the satisfaction of the debt service reserve requirements through an insurance policy or other credit agreement authorized by Article 717q. The Bonds shall be executed on behalf of the Authority with the manual or facsimile signatures of the President and Secretary of the Authority and shall have impressed or imprinted thereon the official seal of the Authority or a facsimile thereof Section a. For the purpose of securing the Bonds, of providing the details thereof and of prescribing the terms and conditions on which the Bonds are to be secured, executed, authenticated, and delivered, the Indenture substantially in the form presented before this meeting is hereby approved. The Authority shall hereafter approve the appointment of the trustee under the Indenture. Section 3. The President and Secretary of the Authority are hereby authorized and directed to execute and deliver the Contract between the Authority and the City in substantially the form presented to the Authority at the meeting at which this resolution is adopted. Section 4. The sale of the Bonds to Morgan, Stanley & Co. Inc., the managing underwriter, at a price as shall be approved by the Authorized Representative of the Authority on or before the date of issuance of the Bonds, but in no event at a price of less than 95% of the principal amount thereof plus accrued interest, if any, from the date thereof to the date of delivery, is hereby authorized and approved, and the Authorized Representative of the Authority is hereby authorized and directed to execute and deliver in the name of the Authority a bond purchase agreement with the underwriters containing such customary terms and conditions as may be necessary to accomplish issuance of Bonds. The execution thereof by the Authorized Representative of the Authority will constitute conclusive evidence of the approval of such bond purchase agreement by the Authority. It is further provided, however, that, notwithstanding the foregoing provisions, the Bonds shall not be delivered unless, subsequent to the date this resolution is adopted but prior to 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. Section 5. The President, the Vice President, and the Executive Director of the Authority are hereby authorized, in the name and on behalf of the Authority, to approve, distribute, and deliver a preliminary official statement and a final official statement relating to the Bonds to be used by the underwriters in the marketing of the Bonds. Section 6. The President, the Vice President, the Executive Director, and the Secretary or any Assistant Secretary are each hereby authorized and directed to execute (i) any letters of representation required by The Depository Trust Company in connection with the book -entry only system; and (ii) any certificates or documents necessary, at the present time or in the future, to comply with Securities and Exchange Commission Rule 15c2-12. Ary: 1t29.0I1WESO2.BND -11/11196 - PAGE 3 Section 7. The officers and the Executive Director are each hereby authorized and directed to execute, attest, seal, and deliver any and all additional certificates, documents, or other papers and to do any and all things deemed necessary to effect the issuance and sale of the Bonds and the execution and delivery of the Contract, the Indenture, the Bonds, and the bond purchase agreement authorized hereby to carry out the intent and purposes of this resolution, including the preambles hereto and to observe and perform the obligations of the Authority under the Bonds, the Indenture, the Contract, and such bond purchase agreement. The officers and the Executive Director are further authorized to make any changes in this resolution, the Indenture, the Contract, the Bonds, or such bond purchase agreement and to take such further action as such persons deem proper to carry out the intent of this resolution, including making any amendments to such instruments as are necessary to secure the approval of the Bonds by the Attorney General or to obtain or maintain a rating on the Bonds from a national bond rating agency. The President, the Vice President, and the Executive Director are hereby authorized to have control of the Bonds initially issued and delivered hereunder and all necessary records and proceedings pertaining to said Bonds pending their delivery and the investigation, examination, and approval by the Attorney General of the State of Texas of the proceedings authorizing the Bonds. Pursuant to Article 717q, the Executive Director is hereby designated as the Authorized Representative of the Authority and as such is hereby authorized, appointed, and designated as the officer or employee of the Authority authorized to act on behalf of the Authority in the selling and delivering of the Bonds and carrying out the other procedures and making the determinations specified in Section 1 of this resolution and the Indenture; in addition, the Executive Director also is authorized to change the designation of the Bonds or any portion thereof to any other Series, date, or designation. Section 7. All details of the Bonds required to be prescribed in this resolution by Article 717q and not fully set forth herein shall be as set forth in the Indenture or the Approval Certificate; the Approval Certificate shall be attached to a copy of this resolution in the records of the Authority and it and the Indenture are hereby incorporated in and made a part of this Resolution as if fully set forth herein. Section 8. The Authority's attorneys are authorized to file a 717m-1 proceeding on behalf of the Authority seeking a declaratory judgment as to the validity of the Bonds, the Contract, and any other matters in connection therewith. Section 9. After the Bonds are issued, this resolution shall not be repealed and shall remain in full force and effect until the Bonds and the interest thereon shall have been fully paid, canceled, and discharged or provision for their payment has been made in accordance with the terms of the Indenture. Section 10. The provisions of this resolution are hereby declared to be separable, and, if any section, phrase, or provision or any application thereof shall for any reason be declared to be invalid,' ht': 1R9.011VUSOZ.BND -11/11/96 - PAGE 4 such declaration shall not affect the validity of the remainder of the sections, phrases, provisions and applications. Section 11. All resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. - Section 12. The findings and recitals set forth in the preamble to this resolution are hereby incorporated in and made a part this resolution. 1»: 1129.011\RESO2BND -11/11/%- PAGE 5 That the foregoing ordinance was read for the first time and passed to its second reading on this the Day of , 1996, by the following vote: Mary Rhodes Betty Jean Longoria Dr. Jack Best John Longoria Betty Black Edward A. Martin Melody Cooper Dr. David McNichols Tony Heldenfels That the foregoing ordinance was read for the second time and passed finally on this the Day of , 1996 by the following vote: Mary Rhodes Betty Jean Longoria Dr. Jack Best John Longoria Betty Black Edward A. Martin Melody Cooper Dr. David McNichols Tony Heldenfels PASSED AND APPROVED, this the Day of , 19 ATTEST: Armando Chapa, City Secretary Mayor The City of Corpus Christi APPROVED: /3 T4 DAY OF A/odem s e , 1996: James R. Bray, Jr., City Attorney By: R. J•. Re', 'ng As stan City Attorney R63726J1.318 8