HomeMy WebLinkAbout025238 ORD - 03/25/2003Approved 3/25/03
ORDINANCE NO.
AN ORDINANCE approving and authorizing the issuance of commercial paper notes
in an aggregate principal amount not to exceed $75,000,000 to provide interim
financing to pay Project Costs for Eligible Projects and to refund obligations issued
in connection with an Eligible Project; authorizing the execution and delivery ora loan
note, and prescribing the terms, features and characteristics of such instruments;
approving and authorizing certain authorized officers and employees to act on behalf
of the City in the selling and delivery of such commercial paper notes, within the
limitations and procedures specified herein; making certain covenants and agreements
in connection therewith; resolving other matters incident and related to the issuance,
sale, security and delivery of such commercial paper notes, including the approval of
an Issuing and Paying Agent Agreement, a Credit Agreement and a Dealer
Agreement; approving the use of an Offering Memorandum in connection with the
sale from time to time of such commercial paper notes; and providing an effective
date.
THE STATE OF TEXAS
COUNTIES OF NUECES AND SAN PATRICIO
CITY OF CORPUS CHRISTI
WHEREAS, the City of Corpus Christi, Texas (the "City" or the "Issuer") is a "Home-Rule
City", acting as such under the Constitution and laws of the State of Texas, and has a population in
excess of 50,000; and
WHEREAS, on November 11, 1997, the City Council of the City adopted an ordinance (the
"1997 Ordinance") which authorized the issuance of its short term obligations pursuant to the
provisions of Article 717q, V.A T.C S. (subsequently codified as Chapter 137 I, Texas Government
Code), to provide interim financing for additions, improvements and extensions to the City's
waterworks system, wastewater disposal system and gas system (the "System"); and
WHEREAS, the City currently has outstanding revenue bonds (hereinafter defined as the
"Outstanding Priority Bonds") payable from and secured by a first lien on and pledge of "Pledged
Revenues", which include the net revenues of the System; and
WHEREAS, in addition to the Outstanding Priority Bonds, the City has heretofore entered
into a contract (hereinafter defined as the "Federal Contract") by and among the United States of
America, the City and the Nueces River Authority, with respect to the Nueces River Reclamation
Project, more commonly referred to as the Choke Canyon Reservoir Project, pursuant to which the
City has pledged the revenues of its waterworks system in support of the payment obligations of the
City under the Federal Contract, subordinate to the operating and maintenance expenses of the
System and the debt service, reserve, and other requirements in respect to the Outstanding Priority
Bonds and revenue bonds issued on a parity therewith; and
WHEREAS, by a letter agreement executed by the City, the United States of America and
the Nueces River Authority, the parties to the Federal Contract have agreed that a lien on and pledge
of the revenues of the System in respect to the issuance of commercial paper notes will be deemed
under the terms of the Federal Contract to be the equivalent ora pledge in support of revenue bonds,
and thus superior to the lien granted to the United States of America under the Federal Contract; and
WHEREAS, the ordinances authorizing the issuance of the Outstanding Priority Bonds
reserve to the City the right to issue bonds, notes, or other obligations (such bonds, notes, or other
obligations are hereinafter defined as "Subordinated Obligations"), with such bonds, notes, or other
obligations payable from and secured by a lien on and pledge of the Pledged Revenues, which include
the net revenues of the System, subordinate to the lien on and pledge of the Pledged Revenues
securing the Outstanding Priority Bonds; and
WHEREAS, the City currently does not have outstanding any obligations under the 1997
Ordinance; and
WHEREAS, the City Council hereby finds that the adoption of this Ordinance is necessary
to enable the City to (i) to establish a new commercial paper program for the System, (ii) name a new
dealer, a new issuing and paying agent and a new credit and/or liquidity provider in connection with
the new commercial paper program, and (iii) make such changes as to permit the program authorized
hereby to be consistent with the changes in Texas and federal law and the commercial paper public
debt market that have occurred since the adoption of the 1997 Ordinance; and
WHEREAS, the commercial paper notes authorized to be issued pursuant to this Ordinance
constitute bond anticipation notes which the City intends to retire through the issuance of its revenue
bonds; and
WHEREAS, the City Council hereby finds and determines that the issuance of commercial
paper notes and a bank note, subject to the terms, conditions and limitations hereinafter prescribed,
should be approved and authorized at this time;
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCiL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Unless the context shall indicate a contrary meaning or intent, the
terms below defined, for all purposes of this ordinance or any ordinance amendatory or supplemental
hereto, shall be construed, are used and are intended to have the following meanings, to-wit:
"Act" shall mean Chapter 1371 and Chapter 1502
"Authorized Representative" shall mean one or more of the following officers or employees
of the City, acting in concert or individually, to-wit: the Mayor, the City Manager, the Deputy City
Manager, the Director of Finance, or such other officer or employee of the City designated in writing
by the City Manager, and approved by the City Council, to act as an Authorized Representative.
"Bank" shall mean WESTLB AG, acting through its New York Branch, any other Lender (as
defined in the Credit Agreement) or any subsequent or succeeding party to the Credit Agreement.
"Bank Payment Account" shall mean the account so designated in Section 2.13 hereof
"Bond Counsel" shall mean McCall, Parkhurst & Horton L.L.P., or any other firm of
nationally recognized bond counsel selected by the City.
"Bonds" shall mean Priority Bonds and Subordinated Obligations.
"Business Day" shall mean any day (a) when banks are not authorized to be closed in the City
and (b) when banks or the New York Stock Exchange are not authorized to be closed in New York,
New York.
"Chapter 551" shall mean Chapter 551, Texas Government Code.
"Chapter 1206" shall mean Chapter 1206, Texas Government Code.
"Chapter 1208" shall mean Chapter 1208, Texas Government Code.
"Chapter 1371" shall mean Chapter 1371, Texas Government Code.
"Chapter 1502" shall mean Chapter 1502, Texas Government Code.
"City" or "Issuer" shall mean the City of Corpus Christi, Texas.
"City Council" shall mean the governing body of the City.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Commercial Paper Note" shall mean a note issued pursuant to the provisions of this
Ordinance, having the terms and characteristics specified in Section 2.03 hereof and in the form
described in Section 2.05 hereof
"Commitment" shall have the same meaning given said term in the Credit Agreement.
"Credit Agreement" shall mean the agreement approved and authorized to be entered into by
Section 2.16 hereof, as from time to time amended or supplemented, or other credit facility provided
in lieu thereof in accordance with the provisions of Section 4.05 hereof
"Credit Facility" shall mean a policy of municipal bond insurance, a surety bond or a letter or
line of credit issued in support of any Bonds (including specifically, but not by way of limitation, the
Commercial Paper Notes), including, without limitation, the Credit Agreement, all in accordance with
the terms of the Priority Bond Ordinance or any ordinance authorizing the issuance of Subordinated
Obligations, including this Ordinance.
"Dealer" shall mean the entity or entities so designated in Section 3.04 hereo£
"Dealer Agreement" shall mean the Dealer Agreement approved and authorized to be entered
into by Section 3.04 hereof, as from time to time amended or supplemented.
"Defeasance Securities" shall mean (i) direct, noncallable obligations of the United States of
America, including obligations that are unconditionally guaranteed by the United States of America,
(ii) noncallable obligations of an agency or instrumentality of the United States of America, including
obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that,
on the date of the purchase thereof are rated as to investment quality by a nationally recognized
investment rating firm not less than AAA or its equivalent, and (iii) noncallable obligations ora state
or an agency or a county, municipality, or other political subdivision of a state that have been
refunded and that, on the date the governing body of the City adopts or approves the proceedings
authorizing the financial arrangements are rated as to investment quality by a nationally recognized
investment rating firm not less than AAA or its equivalent.
"Designated Office" shall mean the corporate trust office of the Issuing and Paying Agent
where Commercial Paper Notes must be presented and delivered for receipt of payment of the
principal amount thereof.
"DTC" shall mean The Depository Trust Company or any substitute securities depository
appointed pursuant to this Ordinance, or any nominee thereof.
"DTC Participant" shall mean a member of, or the participant in, DTC that will act on behalf
of a Holder.
"Eligible Investments" shall mean any or all of the authorized investments described in the
Public Funds Investment Act of 1987, Chapter 2256, Texas Government Code, in which the City may
purchase, sell and invest its funds and funds under its control.
"Eligible Project" shall mean the acquisition or construction of improvements, additions or
extensions to the System, including capital assets and facilities incident and related to the operation,
maintenance and administration thereof, all as provided in the Act or Chapter 1502, Texas
Government Code.
"Federal Contract" shall mean Contract No. 6-07-01-X0675, by and among the United States
of America, the City and the Nueces River Authority, dated June 30, 1976, together with any
amendments thereto including, without limitation, the Letter Agreement.
"Fiscal Year" shall mean the fiscal year used by the City in connection with the operation of
the System.
"Gross Revenues" and "Gross Revenues of the System" shall mean all revenues, income, and
receipts derived or received by the City from the operation and ownership of the System, including
the interest income from the investment or deposit of money in any Fund maintained pursuant to the
Priority Bond Ordinance or maintained by the City in connection with the System, other than those
amounts subject to payment to the United States of America as rebate pursuant to section 148 of the
Code.
"Holder" or "Noteholder" shall mean any person, firm, association, or corporation who is in
possession of any Note drawn, issued or endorsed to such person, firm, association or corporation
or to the order of such person, firm, association or corporation or to bearer or in blank.
"Issuing and Paying Agent", "Paying Agent/Registrar" or "Registrar" shall mean the agent
appointed pursuant to Section 2.02 hereof, or any successor to such agent.
"Issuing and Paying Agent Agreement" shall mean the agreement approved and authorized
to be entered into by Section 3.03 hereof, as from time to time amended or supplemented.
"Loan" shall mean a loan made under and subject to the conditions set forth in the Credit
Agreement.
"Loan Note" shall mean a promissory note or notes issued pursuant to the provisions of this
Ordinance and the Credit Agreement in evidence of Loans or Term Loans made by the Bank under
the Credit Agreement, having the terms and characteristics contained therein and issued in accordance
with the terms thereof
"Letter Agreement" shall mean the letter agreement among the United States of America, the
City and the Nueces River Authority, dated April 12, 2002.
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"Master Note" shall have the meaning given said term in Section 2.02 hereo£
"Maximum Interest Rate" shall mean 10% per annum.
"Maximum Maturity Date" shall mean seven years following the date of passage of this
Ordinance.
"Net Revenues of the System" and "Net Revenues" shall mean all Gross Revenues less
Operating Expenses.
"Note" or "Notes" shall mean the evidences of indebtedness authorized to be issued and at
any time Outstanding pursuant to this Ordinance and shall include Commercial Paper Notes (including
the Master Note), notes in such form or forms as shall be approved by the City Council in an
ordinance amending this Ordinance, and the Loan Note, as appropriate.
"Operating Expenses" shall mean the expenses of operation and maintenance of the System,
including all salaries, labor, materials, repairs, and extensions necessary to render efficient service,
provided, however, that only such repairs and extensions, as in the judgment of the City, reasonably
and fairly exercised by the passage of appropriate ordinances, are necessary to render adequate
service, or such as might be necessary to meet some physical accident or condition which would
otherwise impair the Bonds. Operating Expenses shall include the purchase of water, sewer and gas
services as received from other entities and the expenses related thereto, and, to the extent permitted
by law, Operating Expenses may include payments made on or in respect of a Credit Facility.
Depreciation and payments from the System Fund to other funds established in this Ordinance shall
never be considered as expenses of operation and maintenance.
"Outstanding Priority Bonds" shall mean the outstanding and unpaid bonds of the City issued
pursuant to the terms of the Priority Bond Ordinance, currently being the Series 1994 Bonds, the
Series 1994-A Bonds, the Series 1995 Bonds, the Series 1995-A Bonds, the Series 1999 Bonds, the
Series 1999-A Bonds, the Series 2000 Bonds, the Series 2000-A Bonds and the Series 2002 Bonds.
"Pledged Revenues" shall mean (1) the Net Revenues, plus (2) any additional revenues,
income, receipts, or other resources, including, without limitation, any grants, donations, or income
received or to be received from the United States Government, or any other public or private source,
whether pursuant to an agreement or otherwise, which hereafter are pledged to the payment of the
Bonds.
"Priority Bond Ordinance" shall mean collectively the ordinances authorizing the Outstanding
Priority Bonds.
"Priority Bonds" shall mean collectively the Outstanding Priority Bonds and any bonds, notes,
or similar obligations (other than the Notes or the Credit Agreement (including any Loan Note), but
including a Credit Facility the payment of which is secured by Pledged Revenues) issued on a parity
therewith in accordance with the terms of the Priority Bond Ordinance.
"Project Costs" shall mean all costs and expenses incurred in relation to Eligible Projects,
including, without limitation, design, planning, engineering and legal costs, acquisition costs of land,
interests in land, rights-of-way and easements, construction costs, costs of machinery, equipment, and
other capital assets incident and related to the operation, maintenance, and administration of an
Eligible Project, financing costs, including interest during construction and thereafter, underwriter's
discount and/or fees for legal, financial, and other professional services, and reimbursement for such
Project Costs attributable to Eligible Projects incurred prior to the issuance of any Commercial Paper
Notes.
"Series B Note Construction Account" shall mean the account so designated in Section 2.12
hereo£
"Series B Note Payment Fund" shall mean the fund so designated in Section 2.09 hereof
"Series 1994 Bonds" shall mean the City of Corpus Christi, Texas Utility System Revenue
Bonds, Series 1994, or any bonds issued to refund the same.
"Series 1994-A Bonds" shall mean the City of Corpus Christi Texas Utility System Revenue
Bonds, Series 1994-A, or any bonds issued to refund the same.
"Series 1995 Bonds" shall mean the City of Corpus Christi, Texas Utility System Revenue
Bonds, Series 1995, or any bonds issued to refund the same.
"Series 1995-A Bonds" shall mean the City of Corpus Christi Texas Utility System Revenue
Bonds, Series 1995-A, or any bonds issued to refund the same.
"Series 1999 Bonds" shall mean the City of Corpus Christi Texas Utility System Revenue
Refunding and Improvement Bonds, Series 1999, or any bonds issued to refund the same.
"Series 1999-ABonds" shall mean the City of Corpus Christi Texas Utility System Revenue
Refunding and Improvement Bonds, Series 1999-A, or any bonds issued to refund the same.
"Series 2000 Bonds" shall mean the City of Corpus Christi, Texas Utility System Revenue
Refunding Bonds, Series 2000, or any bonds issued to refund same.
"Series 2000-A Bonds" shall mean the City of Corpus Christi, Texas Utility System Revenue
Refunding Bonds, Series 2000-A, or any bonds issued to refund same.
"Series 2002 Bonds" shall mean the City of Corpus Christi, Texas Utility System Revenue
Refunding and Improvement Bonds, Series 2002, or any bonds issued to refund same.
"Stated Termination Date" shall have the meaning given said term in the Credit Agreement.
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"Subordinated Obligations" shall mean any bonds, notes, or other obligations issued or
contractual obligations incurred pursuant to law payable in whole or in part from the Pledged
Revenues and subordinate to the Prior Lien Bonds, including, without limitation, Commercial Paper
Notes and the Loan Note, and the payment obligations of the City under the terms of the Federal
Contract.
"System" shall mean and include the City's existing combined waterworks system, wastewater
disposal system and gas system, together with all future extensions, improvements, enlargements, and
additions thereto, including, to the extent permitted by law, storm sewer and drainage, and all
replacements thereof; provided that, notwithstanding the foregoing, and to the extent now or
hereafter authorized or permitted by law, the term System shall not include any waterworks,
wastewater or gas facilities which are declared by the City not to be a part of the System and which
are hereafter acquired or constructed by the City with the proceeds from the issuance of "Special
Facilities Bonds", which are hereby defined as being special revenue obligations of the City which are
not secured by or payable from the Pledged Revenues, but which are secured by and payable solely
from special contract revenues or payments received from the System, any other legal entity, or any
combination thereof, in connection with such facilities; and such revenues or payments shall not be
considered as or constitute Gross Revenues of the System, unless and to the extent otherwise
provided in the ordinance of ordinances authorizing the issuance of such "Special Facilities Bonds".
"Term Loan" shall having the meaning given said term in the Credit Agreement.
Section 1.02. Construction of Terms Utilized in this Ordinance. If appropriate in the context
of this Ordinance, words of the singular number shall be considered to include the plural, words of
the plural number shall be considered to include the singular, and words of the masculine, feminine
or neuter gender shall be considered to include the other genders. For all purposes of this Ordinance,
unless the context requires otherwise, all references to designated Sections and other subdivisions are
to the Sections and other subdivisions of this Ordinance. The words "herein", "hereof' and
"hereunder" and other words of similar import refer to this Ordinance as a whole and not to any
particular Section or other subdivision. References to any named person means that party and its
successors and assigns. References to any constitutional, statutory or regulatory provision means
such provision as it exists on the date this Ordinance is adopted by the City and any future
amendments thereto or successor provisions thereof All references to time shall refer to New York
City time. All references to FORM OF NOTE shall refer to the form of the Commercial Paper Notes
attached hereto as Exhibit A. Certain terms not defined herein shall have the meaning given said
terms in the Credit Agreement.
ARTICLE II
AUTHORIZATION OF NOTES
Section 2.01. General Authorization, Pursuant to authority conferred by and in accordance
with the provisions of the Constitution and laws of the State of Texas, particularly the Act,
Commercial Paper Notes shall be and are hereby authorized to be issued in an aggregate principal
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amount not to exceed SEVENTY-FIVE MILLION DOLLARS ($75,000,000) at any one time
outstanding for the purpose of financing Project Costs of Eligible Projects and to refinance, renew
or refund Prior Lien Bonds, Notes, and other Subordinated Obligations, including interest thereon,
all in accordance with and subject to the terms, conditions, and limitations contained herein; and a
Loan Note shall be and is hereby authorized to be issued in the initial aggregate principal amount of
EIGHTY MILLION FIVE HUNDRED FORTY-SEVEN THOUSAND NINE HUNDRED
FORTY-FIVE DOLLARS AND TWENTY-ONE CENTS ($80,547,945.21) at any one time
outstanding for the purpose of evidencing Loans to retire Commercial Paper Notes; all in accordance
with and subject to the terms, conditions and limitations contained herein and, with respect to the
Loan Note, the Credit Agreement. For purposes of this Section 2.01, any portion of outstanding
Notes to be paid from money on deposit in the Series B Note Payment Fund and from the available
proceeds of Notes or Bonds on the day of calculation shall not be considered outstanding. The
authority to issue Commercial Paper Notes from time to time under the provisions of this Ordinance
shall exist until the Maximum Maturity Date, regardless of whether prior to the Maximum Maturity
Date there are at any time no Commercial Paper Notes outstanding. Until such time as the
Commitment under the Credit Agreement is increased as provided in Section 2.16 hereof,
Commercial Paper Notes shall not be issued to exceed at any one time outstanding $75,000,000 in
principal amount. Anything to the contrary herein notwithstanding, Commercial Paper Notes may
not be issued to refinance or refund Prior Lien Bonds or finance payments due and owing by the City
under the Federal Contract without the prior approval of the City Council.
In connection with the refinancing or refunding of Notes, Prior Lien Bonds, Subordinated
Obligations and any other authorized obligations of the System, including interest thereon, such
Notes, Prior Lien Bonds, Subordinated Obligations and any other authorized obligations of the
System shall qualify as "obligations", as such term is defined in Chapter 1371 at the time any such
refinancing or refunding occurs. Further, any such refunding or refinancing, other than a
simultaneous refunding, of Notes, Prior Lien Bonds, Subordinated Obligations and other obligations
of the System, to the extent then required by applicable law, shall be by means of a gross defeasance
established at the time of the issuance of the refunding Commercial Paper Notes, and the selection
of Notes, Prior Lien Bonds, Subordinated Obligations and any other authorized obligations of the
System to be so refunded or refinanced shall be made in the manner as determined by the City
Council. The foregoing notwithstanding, the City may refinance or refund the payment obligations
of the City under the Federal Contract with the proceeds of Commercial Paper Notes should the City
receive the approving opinion of the Office of the Attorney General of the State of Texas with respect
to such transaction, if such approving opinion is then required by Texas law.
Section 2.02. Terms Applicable to Notes - General. Subject to the limitations contained
herein, Commercial Paper Notes herein authorized shall be dated as of their date of issuance or prior
thereto, but within 30 days of the date of issuance (the "Note Date"), as determined by an Authorized
Representative; shall bear no interest or bear interest at such rate or rates (either fixed, variable or
floating) per annum computed on the basis of either actual days elapsed or twelve 30-day months
whichever is applicable, and on a 365-day or 366-day year (but in no event in any case to exceed the
Maximum Interest Rate) as may be determined by an Authorized Representative and all Commercial
Paper Notes authorized herein shall mature on or prior to the Maximum Maturity Date.
Commercial Paper Notes issued hereunder may contain terms and provisions for the
redemption or prepayment thereof prior to maturity, subject to any applicable limitations contained
herein, as shall be determined by an Authorized Representative.
Subject to applicable terms, limitations and procedures contained herein, Commercial Paper
Notes may be sold in such manner at public or private sale and at par or at such discount (within the
interest rate and yield restrictions provided herein) as an Authorized Representative shall approve at
the time of the sale thereof.
The Commercial Paper Notes shall be issued in registered form, without coupons; provided,
however, Commercial Paper Notes maturing not more than one year from the Note Date may be
registered to bearer. The principal of, premium, if any, and interest on the Commercial Paper Notes
shall be payable in lawful money of the United States of America, without exchange or collection
charges to the Holder of the Commercial Paper Note; the principal thereof to be payable upon
presentation and surrender of the Commercial Paper Note at the Designated Office of the Issuing and
Paying Agent and interest thereon to be payable to the registered owner thereof (when registered
other than to bearer) either (i) by check sent by United States mail, first class postage prepaid, to the
address of the registered owner appearing on the Registration Books of the City maintained by the
Registrar or (ii) by such other method, acceptable to the Issuing and Paying Agent, requested by the
Holder, but interest on a Commercial Paper Note registered to bearer shall be payable only upon
presentation of the Commercial Paper Note at the Designated Office of the Issuing and Paying Agent.
The selection and appointment of U.S Bank National Association to serve as Issuing and
Paying Agent, Paying Agent/Registrar and Registrar for the Commercial Paper Notes is hereby
confirmed and the City covenants and agrees to keep and maintain with the Registrar at its
Designated Office books and records (the "Registration Books") for the registration, payment,
transfer and exchange of the Commercial Paper Notes, all as provided herein and such reasonable
rules and regulations as the Registrar may prescribe. The City covenants to maintain and provide a
Registrar at all times while the Commercial Paper Notes are outstanding, which shall be a national
or state banking association or corporation or trust company organized and doing business under the
laws of the United States of America or of any state and authorized under such laws to exercise trust
powers. Should a change in the Paying Agent/Registrar for the Commercial Paper Notes occur, the
City agrees to promptly cause a written notice thereof to be (i) sent to each registered owner of the
Commercial Paper Notes then outstanding by United States mail, first class postage prepaid and (ii)
published in a financial newspaper or journal of general circulation in The City of New York, New
York, once during each calendar week for at least two calendar weeks; provided, however, the
publication of such notice shall not be required if notice is sent to each Holder of the Commercial
Paper Notes. Such notice shall give the address of the successor Paying Agent/Registrar. A
successor Paying Agent/Registrar may be appointed by the City without the consent of the Holders.
The City and the Paying Agent/Registrar may treat the bearer (in the case of Commercial
Paper Notes so registered) or the registered payee thereof as the absolute owner of any Commercial
Paper Note for the purpose of receiving payment thereof and for ali purposes, and the City and the
Paying Agent/Registrar shall not be affected by any notice or knowledge to the contrary.
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If an Authorized Representative determines that it is possible and desirable to provide for a
book-entry only system of registration with DTC for the Commercial Paper Notes, such Authorized
Representative, acting for and on behalf of the City, is hereby authorized to approve, execute, and
deliver a Letter of Representations to DTC and to enter into such other agreements and execute such
instruments as are necessary to implement such book-entry only system, such approval to be
conclusively evidenced by the execution thereof by said Authorized Representative. Under the initial
book-entry only system with DTC, (i) no physical Commercial Paper Note certificates will be
delivered to DTC and (ii) the City will execute and deliver to the Issuing and Paying Agent, as
custodian for DTC, a master note relating to the Commercial Paper Notes (the "Master Note") in
substantially the form set forth in Exhibit B. Except as provided herein, the ownership of the
Commercial Paper Notes shall be registered in the name of Cede & Co., as nominee of DTC, which
will serve as the initial securities depository for the Commercial Paper Notes. Ownership of beneficial
interests in the Commercial Paper Notes shall be shown by book-entry on the system maintained and
operated by DTC and DTC Participants, and transfers of ownership of beneficial interests shall be
made only by DTC and the DTC Participants by book-entry, and the City and the Issuing and Paying
Agent shall have no responsibility therefor DTC will be required to maintain records of the positions
of the DTC Participants in the Commercial Paper Notes, and the DTC Participants and persons acting
through the DTC Participants will be required to maintain records of the purchasers of beneficial
interests in the Commercial Paper Notes. Except as provided in clause (i) of this paragraph, the
Commercial Paper Notes shall not be transferable or exchangeable, except for transfer to another
securities depository or to another nominee of a securities depository.
With respect to Commercial Paper Notes registered in the name of DTC or its nominee,
neither the City nor the Issuing and Paying Agent shall have any responsibility or obligation to any
DTC Participant or to any person on whose behalf a DTC Participant holds an interest in the
Commercial Paper Notes. Without limiting the immediately preceding sentence, neither the City nor
the Issuing and Paying Agent shall have any responsibility or obligation with respect to (i) the
accuracy of the records of DTC or any DTC Participant with respect to any ownership interest in the
Commercial Paper Notes, (ii) the delivery to any DTC Participant or any other person, other than a
registered owner of the Commercial Paper Notes, as shown on the Registration Books, of any notice
with respect to the Commercial Paper Notes, including any notice of redemption, and (iii) the
payment to any DTC Participant or any other person, other than a registered owner of the
Commercial Paper Notes, as shown in the Registration Books, of any amount with respect to
principal of and premium, if any, or interest on the Commercial Paper Notes.
Whenever, during the term of the Commercial Paper Notes, the beneficial ownership thereof
is determined by a book entry at DTC, the requirements in this Ordinance of holding, registering,
delivering, exchanging, or transferring the Commercial Paper Notes shall be deemed modified to
require the appropriate person or entity to meet the requirements of DTC as to holding, registering,
delivering, exchanging, or transferring the book-entry to produce the same effect.
Either the City or DTC may determine to discontinuing the book-entry only system and in
such case, unless a new book-entry only system is put in place, physical certificates in the form set
forth in Section 2.05 shall be provided to the Beneficial Holders.
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If at any time, DTC ceases to hold the Commercial Paper Notes, all references herein to DTC
shall be of no further force or effect.
Whenever the beneficial ownership of the Commercial Paper Notes is determined by a book-
entry at DTC, delivery of Commercial Paper Notes for payment at maturity shall be made pursuant
to DTC's payment procedures as are in effect from time to time and the DTC Participants shall
transmit payment to beneficial owners whose Commercial Paper Notes have matured. The City and
each of the Issuing and Paying Agent, the Bank, and the Dealer are not responsible for transfer of
payment to the DTC Participants or beneficial owners.
Section 2.03. Commercial Paper Notes. Under and pursuant to the authority granted hereby
and subject to the limitations contained herein, Commercial Paper Notes to be designated "City of
Corpus Christi, Texas Utility System Commercial Paper Notes, Series B" are hereby authorized
to be issued and sold and delivered from time to time in such principal amounts as determined by an
Authorized Representative in denominations orS 100,000 or in integral multiples orS 1,000 in excess
thereof, numbered in ascending consecutive numerical order in the order of their issuance and to
mature and become due and payable on such dates as an Authorized Representative shall determine
at the time of sale; provided, however, that no Commercial Paper Note shall (i) mature after the
Maximum Maturity Date, (ii) have a term in excess of two hundred seventy (270) calendar days or
(iii) mature no later than fifteen (15) calendar days prior to the Stated Termination Date. Anything
to the contrary herein notwithstanding, the Master Note shall not mature later than the Maximum
Maturity Date.
Interest, if any, on Commercial Paper Notes shall be payable at maturity with principal.
Section 2.04. Loan Note. Under and pursuant to authority granted hereby and subject to the
limitations contained herein and in the Credit Agreement, a Loan Note to be designated "City of
Corpus Christi, Texas Utility System Credit Agreement Loan Note" (with such other designation
as may be determined by the Bank and approved by an Authorized Representative, so as to
distinguish among Term Notes, if any) is hereby authorized and approved in accordance with the
terms of this ordinance, the Credit Agreement and the form thereof set forth in the Credit Agreement.
Section 2.05. Form of Commercial Paper Notes. The Commercial Paper Notes and the
Certificate of Authentication to appear on each of the Commercial Paper Notes shall be substantially
in the form set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other
variations as are permitted or required by this ordinance and may have such letters, numbers or other
marks of identification (including identifying numbers and letters of the Committee on Uniform
Securities Identification Procedures of the American Banks Association) and such legends and
endorsements thereon as may, consistently herewith, be approved by an Authorized Representative.
Any portion of the text of any Commercial Paper Notes may be set forth on the reverse thereof, with
an appropriate reference thereto on the face of the Commercial Paper Notes.
The Notes shall be printed, lithographed, or engraved or produced in any other similar
manner, or typewritten, all as determined and approved by an Authorized Representative.
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If Commercial Paper Notes are issued in book-entry only form pursuant to Section 2.02, they
shall be issued in the form of a Master Note in substantially the form attached hereto as Exhibit B,
to which there shall be attached the form of Commercial Paper Note as prescribed above, and it is
hereby declared that the provisions of the Commercial Paper Note as prescribed above are
incorporated into and shall be a part of the Master Note. It is further provided that this Ordinance
and the form of Commercial Paper Note prescribed above shall constitute the "underlining records"
referred to in the Master Note. Notwithstanding the provisions of Section 2.06, the Master Note
shall be executed on behalf of the City by the manual signature of the City Manager or the Deputy
City Manager.
Section 2.06. Execution - Authentication. In the exercise of authority granted to the City
Council by Section 1371.055, Texas Government Code, the Notes (other than the Master Note) shall
be executed on behalf of the City by the City Manager and attested by the City Secretary under its
seal reproduced or impressed thereon, all as provided in Section 2.05 hereof. The signature of said
officers on the Notes may be manual or facsimile. Commercial Paper Notes bearing the manual or
facsimile signatures of individuals who are or were the proper officers of the City on the date of
passage of this Ordinance shall be deemed to be duly executed on behalf of the City, notwithstanding
that such individuals or either of them shall cease to hold such offices at the time of the initial sale and
delivery of Commercial Paper Notes authorized to be issued hereunder or at the time Commercial
Paper Notes are delivered in subsequent sales, exchanges and transfers, all as authorized and provided
in Chapter 1206.
No Commercial Paper Note shall be entitled to any right or benefit under this Ordinance, or
be valid or obligatory for any purpose, unless there appears on such Commercial Paper Note a
certificate of authentication executed by the Paying Agent/Registrar by manual signature, or, in the
case of the Master Note, the Paying Agent/Registrar has executed the Master Note, and the execution
of any Commercial Paper Note by the Paying Agent/Registrar shall be conclusive evidence, and the
only evidence, that such Commercial Paper Note has been duly certified or registered and delivered.
Section 2.07. Notes Mutilated, Lost, Destroyed or Stolen. If any Note shall become
mutilated, the City, at the expense of the Holder of said Note, shall execute and deliver a new Note
of like tenor and number in exchange and substitution for the Note so mutilated, but only upon
surrender to the City of the Note so mutilated. If any Note shall be lost, destroyed or stolen, evidence
of such loss, destruction or theft may be submitted to the City and, if such evidence be satisfactory
to it and indemnity satisfactory to it shall be given, the City, at the expense of the owner, shall execute
and deliver a new Note of like tenor in lieu of and in substitution for the Note so lost, destroyed or
stolen. Neither the City nor the Paying Agent/Registrar shall be required to treat both the original
Note and any duplicate Note as being outstanding for the purpose of determining the principal
amount of Notes which may be issued hereunder, but both the original and the duplicate Note shall
be treated as one and the same.
Section 2.08. Negotiability, Registration and Exchangeability. The obligations issued
hereunder shall be, and shall have all of the qualities and incidents of, a negotiable instrument under
13
the laws of the State of Texas, and each successive holder, in accepting any of the obligations, shall
be conclusively deemed to have agreed that such obligations shall be and have all of the qualities and
incidents of a negotiable instrument under the laws of the State of Texas.
The Registration Books relating to the registration, payment and transfer or exchange of the
Commercial Paper Notes shall at all times be kept and maintained by the City at the Designated Office
of the Registrar, and the Registrar shall obtain, record and maintain in the Registration Books the
name and address of each registered owner of the Commercial Paper Notes, except for Commercial
Paper Notes registered to bearer, issued under and pursuant to the provisions of this Ordinance, and
the Registrar further shall provide such information to the City as described in Section 2.02 hereo£
Any Commercial Paper Note may, in accordance with its terms and the terms hereof, be transferred
or exchanged for Commercial Paper Notes of like tenor and character and of other authorized
denominations upon the Registration Books by the Holder in person or by his duly authorized agent,
upon surrender of such Commercial Paper Note to the Registrar for cancellation, accompanied by a
written instrument of transfer or request for exchange duly executed by the Holder or by his duly
authorized agent, in form satisfactory to the Registrar.
Upon surrender for transfer of any Commercial Paper Note at the Designated Office of the
Registrar, the Registrar shall register and deliver, in the name of the designated transferee or
transferees (or to bearer, as appropriate), one or more new Commercial Paper Notes executed on
behalf of, and furnished by, the City of like tenor and character and of authorized denominations and
having the same maturity, bearing interest at the same rate and ora like aggregate principal amount
as the Commercial Paper Note or Commercial Paper Notes surrendered for transfer.
Furthermore, Commercial Paper Notes may be exchanged for other Commercial Paper Notes
of like tenor and character and of authorized denominations and having the same maturity, beating
the same rate of interest and of like aggregate principal amount as the Commercial Paper Notes
surrendered for exchange, upon surrender of the Commercial Paper Notes to be exchanged at the
Designated Office of the Registrar. Whenever any Commercial Paper Notes are so surrendered for
exchange, the Registrar shall register and deliver new Commercial Paper Notes of like tenor and
character as the Commercial Paper Notes exchanged, executed on behalf of, and furnished by, the
City to the Holder requesting the exchange.
The City and the Registrar may charge the Noteholder a sum sufficient to reimburse them for
any expenses incurred in making any exchange or transfer after the first such exchange or transfer.
The Registrar or the City may also require payment from the Holder ora sum sufficient to cover any
tax, fee or other governmental charge that may be imposed in relation thereto. Such charges and
expenses shall be paid before any such new Commercial Paper Note shall be delivered.
New Commercial Paper Notes delivered upon any transfer or exchange shall be valid special
obligations of the City, evidencing the same debt as the Commercial Paper Notes surrendered, shall
be secured by this ordinance and shall be entitled to all of the security and benefits hereof to the same
extent as the Commercial Paper Notes surrendered
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The City reserves the right to change the above registration and transferability provisions of
the Commercial Paper Notes at any time on or prior to the delivery thereof in order to comply with
applicable laws and regulations of the United States in effect at the time of issuance thereo£
Section 2.09. Series B Note Payment Fund. There is created and established with the Issuing
and Paying Agent a separate and special fund to be designated as the "City of Corpus Christi,
Texas Utility System Series B Note Payment Fund" (the "Series B Note Payment Fund"). Moneys
on deposit in the Series B Note Payment Fund shall be used to pay principal of and interest on
CommerciaI Paper Notes at the respective interest payment and maturity dates of each issue thereof
as provided herein and the repayment of any Loans and Term Loans made pursuant to the Agreement
(evidenced by the Loan Note). Amounts remaining in the Series B Note Payment Fund not then
necessary for the purposes thereof may be transferred to the Series B Note Construction Account
(created pursuant to Section 2.12 hereof) upon request of an Authorized Representative.
Additionally all proceeds of Loans shall be deposited into the Series B Note Payment Fund
and used to pay the principal of and interest on the Commercial Paper Notes.
Moneys held in the Series B Note Payment Fund shall remain uninvested pending their
expenditure.
Section 2.10. Pledge; Payments. The Notes are special obligations of the City payable from
and secured solely by the funds pledged therefor pursuant to this Ordinance. The City agrees to cause
payments to be made into the Series B Note Payment Fund at such times and in such amounts as are
necessary to provide for the full payment of the principal of and the interest on the Notes when due.
To provide security for the payment of the principal of and interest on the Notes and any other
amounts due under the Credit Agreement as the same shall become due and payable, there is hereby
granted a lien on and pledge off subject only to the provisions of this Ordinance permitting the
application thereof for purposes and on the terms and conditions set forth herein, (i) the proceeds
from (a) the sale of the Bonds issued for such purpose and (b) the sale of Commercial Paper Notes
issued pursuant to this Ordinance for such purpose, (ii) Loans, (iii) the amounts held in the Series B
Note Payment Fund until the amounts deposited therein are used for authorized purposes, provided,
however, amounts in the Series B Note Payment Fund attributable to and derived from Loans shall
be used only to pay, prior to any application to the payment of the Loan Note, the principal of and
interest on the Commercial Paper Notes in full, and (iv) the amounts remaining on deposit in the
Series B Note Construction Account after the payment of all Project Costs, and it is hereby resolved
and declared the principal of and interest on the Notes and any other amounts due under the Credit
Agreement shall be and are hereby equally and ratably secured by and payable from a lien on and
pledge of the sources hereinabove identified in clauses (i), (ii), (iii) and (iv) subject and subordinate
only to the exceptions noted therein. Additionally, to provide security for the payment of the
principal of and interest on the Loan Note and other amounts due under the Credit Agreement as the
same shall become due and payable, there is hereby granted a lien on and pledge of, subject only to
the provisions of this Ordinance permitting the application thereof for purposes and on the terms and
conditions set forth herein, such lien on and pledge of Pledged Revenues to the Loan Notes and other
amounts due under the Credit Agreement, however, being subordinate only to the lien and pledge of
the Pledged Revenues securing the payment of the Priority Bonds and the debt service and reserve
15
funds relating thereto. Unless a Loan Note is paid from the proceeds of Commercial Paper Notes or
Bonds issued for such purposes, or amounts available in the Series B Note Payment Fund or the
Series B Note Construction Account, all as described above, such payments are to be made from
Pledged Revenues on deposit in the Bank Payment Account herein established within the Series B
Note Payment Fund.
The pledge and lien of Pledged Revenues in favor of the Bank created by this Ordinance shall
be valid and binding without any physical delivery thereof or further act by the City. Chapter 1208
applies to the issuance of the Commercial Paper Notes, the execution of the Credit Agreement and
the pledge hereinabove described, and such pledge is therefore valid, effective, and perfected. If
Texas law is amended at any time while the Commercial Paper Notes are outstanding and unpaid such
that the pledge granted to the Bank is to be subject to the filing requirements of Chapter 9, Texas
Business & Commerce Code, then in order to preserve to the Bank the perfection of the security
interest in said pledge, the City agrees to take such measures as it determines are reasonable and
necessary under Texas law to comply with the applicable provisions of Chapter 9, Texas Business &
Commerce Code and enable a filing to perfect the security interest in said pledge to occur.
Section 2.11. Application of Prior Covenants. The covenants and agreements (to the extent
the same are not inconsistent herewith) contained in the Priority Bond Ordinance are hereby
incorporated herein and shall be deemed to be for the benefit and protection of the Loan Notes and
the Holder thereof in like manner as applicable to the Priority Bonds; provided, however, in the event
of any conflict between the terms, covenants and agreements contained herein and the terms,
covenants and agreements contained in the Priority Bond Ordinance, the provisions of the Priority
Bond Ordinance shall control over the provisions hereof Specifically, consistent with the provisions
of the Priority Bond Ordinance, if any property or facilities is sold or exchanged and such property
or facilities constituted property or facilities comprising all or a part of a system within the System,
the acquisition, improvement or extension of such system having not been financed by the City in any
manner with the proceeds of Bonds, or with the proceeds of obligations which were refunded in
whole or in part with the proceeds of Bonds, then the City may utilize the proceeds of such sale or
exchange for any lawful purpose.
Section 2.12. Series B Note Construction Account. There is hereby created and established
a separate account hereby designated as the "City of Corpus Christi, Texas Utility System Series
B Note Construction Account" (the "Series B Note Construction Account"). The Series B Note
Construction Account shall be held at a depository of the City. Moneys deposited in the Series B
Note Construction Account shall remain therein until from time to time expended to pay for Project
Costs, and to refund obligations issued in connection with Eligible Projects and shall not be used for
any other purposes whatsoever, except as otherwise provided below, and pending such expenditure,
moneys in the Series B Note Construction Account may be invested at the direction of the Director
of Finance or the designee thereof in Eligible Investments. Any income received from such
investments (except as otherwise required to be rebated to the United States of America in
accordance with the provisions of Section 4.08 hereof) shall be held in the Series B Note
Construction Account.
Any amounts on deposit in the Series B Note Construction Account designated by an
Authorized Representative as eligible to pay interest during construction and thereafter may be
16
transferred from time to time at the direction of an Authorized Representative to the credit of either
the Series B Note Payment Fund or the Bank Payment Account for use in accordance with the terms
of Sections 2.09 and 2.10 hereof Any amounts remaining in the Series B Note Construction
Account after the payment of all Project Costs shall be paid at the direction of an Authorized
Representative into either the Series B Note Payment Fund or the Series B Note Bank Repayment
Fund and used for the payment of such maturities of the Commercial Paper Notes coming due at such
times as may be selected by an Authorized Representative or for the payment of the Loan Notes, as
the case may be. In the event no Commercial Paper Notes are outstanding and there are no
outstanding Loans, any amounts in the Series B Note Construction Account not anticipated to be
needed to pay Project Costs shall be transferred to the Debt Service Fund established by the Priority
Bond Ordinance.
Section 2.13. Loan Note Account, There is hereby created and there shall be established and
maintained within the Series B Note Payment Fund established by this Ordinance a separate account
to be known as the "Loan Note Account" for the sole benefit of the Loan Note. After satisfying the
requirements of the Priority Bond Ordinance and any other ordinance with respect to the Priority
Bonds, with respect to the payment of principal of, and premium, if any, and interest on the Priority
Bonds and funding the reserve fund therefor, there shall be deposited by the City to the Loan Note
Account the amounts required by Section 2.10 hereof for the payment of the Loan Note.
Section 2.14. Cancellation. All Commercial Paper Notes which at maturity are surrendered
to the Paying Agent/Registrar for the collection of the principal and interest thereof or are
surrendered for transfer or exchange pursuant to the provisions hereof shall, upon payment or
issuance of new Commercial Paper Notes, be cancelled by the Paying Agent/Registrar, and the Paying
Agent/Registrar forthwith shall transmit to the City a certificate identifying such Commercial Paper
Notes and that such Commercial Paper Notes have been duly cancelled and destroyed.
Section 2.15. Fiscal and Other Agents. In furtherance of the purposes ofthis Ordinance, the
City may from time to time appoint and provide for the payment of such additional fiscal, paying or
other agents or trustees as it may deem necessary or appropriate in connection with the Notes.
Section 2.16. Credit Agreement, The Credit Agreement, substantially in the form attached
hereto as Exhibit C, is hereby approved, and shall be entered into with the Bank. The form of the
Loan Note substantially in the form contained in the Credit Agreement is hereby approved with the
interest rate to be determined as set forth therein. The City Manager is hereby authorized to execute
and deliver any Loan Note, and the City Secretary is authorized to attest and to place the City seal
on the Credit Agreement and the Loan Note. The City shall notify the rating agencies listed in
Section 6.10 hereof of any change in the Bank, in the manner described in Section 6.10 hereo£
Section 2.17. Funds Secured, That moneys in all such Funds, to the extent not invested as
permitted hereunder, shall be secured in the manner prescribed by law for securing funds of the City.
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ARTICLE IH
ISSUE AND SALE OF NOTES
Section 3.01. Issuance and Sale of Notes. (a) The Commercial Paper Notes shall be
completed and delivered by the Issuing and Paying Agent in accordance with telephonic, computer
or written instructions of the Director of Finance or the designee thereof and in the manner specified
below and in the Issuing and Paying Agent Agreement. To the extent such instructions are not
written, they shall be confirmed in writing by the Director of Finance or the designee thereof within
24 hours. Said instructions shall specify such principal amounts, dates of issue, maturities, rates of
discount or interest, or the formula or method of calculating interest and the basis upon which it is
to be computed, and other terms and conditions which are hereby authorized and permitted to be
fixed by the Director of Finance or the designee thereof at the time of sale of the Commercial Paper
Notes. Such instructions shall include the purchase price of the Commercial Paper Notes, and a
request that the Issuing and Paying Agent authenticate such Commercial Paper Notes by counter
signature of its authorized officer or employee and deliver them to the named purchaser or purchasers
thereof upon receipt of payment in accordance with the custom then prevailing in the New York
financial market in regard to such Commercial Paper Notes. The rules of the New York
Clearinghouse shall apply thereto. Such instructions shall also contain provisions representing that
all action on the part of the City necessary for the valid issuance of the Commercial Paper Notes then
to be issued has been taken, that all provisions of Texas and federal law necessary for the valid
issuance of such Commercial Paper Notes with provision for interest exemption from federal income
taxation have been complied with, if applicable, and that such Commercial Paper Notes in the hands
of the Holders thereofwiI1 be valid and enforceable obligations of the City according to their terms,
subject to the exercise of judicial discretion in accordance with general principles of equity and
bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights
heretofore or hereafter enacted to the extent constitutionally applicable and that, if applicable, based
upon the advice of Bond Counsel, the stated interest on the Commercial Paper Notes is exempt from
federal income taxation. Such instructions shall also certify that:
(i) no Event of Default under Section 5.01 hereof has occurred and is continuing
as of the date of such Certificate;
(ii) the City is in compliance with the covenants set forth in Article IV hereof as
of the date of such instructions;
(iii) the City has been advised by Bond Counsel that the projects to be financed
with the proceeds of the Commercial Paper Notes will constitute Eligible Projects, the
obligations to be refunded were issued in connection with Eligible Projects and, further, that
the proposed expenditure of the proceeds of such Commercial Paper Notes for such projects
and refunding will not cause the City to be in violation of its covenants set forth in Section
4.08 hereof,
(iv) the sum of the interest payable on such Commercial Paper Note will not
exceed a yield (calculated on the principal amount of the Commercial Paper Note on the basis
of a 365-day or 366-day, as may be applicable, year and actual number of days elapsed) to
18
the maturity date of such Commercial Paper Note in excess of the Maximum Interest Rate in
effect on the date of issuance of such Commercial Paper Note; and
(v) after the proposed issuance, the principal amount of Commercial Paper Notes
to be Outstanding after such issuance and the interest thereon does not exceed the
Commitment available under the terms of the Credit Agreement
(b) The Loan Note shall be or has been delivered to the Bank and indebtedness may be
incurred thereunder in accordance with the terms of the Credit Agreement,
Section 3.02. Proceeds of Sale of Commercial Paper Notes, The proceeds ofthe sale ofany
Commercial Paper Notes (net of all expenses and costs of sale and issuance) shall be applied for any
or all of the following purposes as directed by an Authorized Representative:
(i) Proceeds to be used for the payment and redemption of outstanding
Commercial Paper Notes at or before maturity and the repayment of any borrowing
(evidenced by any Loan Note) or other amounts due under the Credit Agreement shall be
retained in the Series B Note Bank Repayment Fund, and expended therefor; and
(ii) Proceeds not retained in the Series B Note Bank Repayment Fund as provided
in subparagraph (i) above shall be transferred and deposited to the Series B Note
Construction Account and used and applied in accordance with the provisions of Section 2.12
hereo£
Section 3.03. Issuing and Paying Agent Agreement. The Issuing and Paying Agent
Agreement by and among the City, the Bank and the Issuing and Paying Agent, relating to the
Commercial Paper Notes, in substantially the form attached to this Ordinance as Exhibit D, is hereby
approved, and any Authorized Representative is hereby authorized and directed to execute the same
for and on behalf of the City and the City Secretary is authorized to attest and place the City seal on
such instrument. Any Authorized Representative is hereby authorized to enter into any supplemental
agreements with the Issuing and Paying Agent or with any successor Issuing and Paying Agent in
order to implement the functions of the Issuing and Paying Agent or Registrar with respect to the
Commercial Paper Notes including, without limitation, authorizing the Issuing and Paying Agent to
effect draws upon the Credit Facility in such manner as may be provided in the Issuing and Paying
Agent Agreement. The City shall notify the rating agencies listed in Section 6.10 hereof of any
change in the Issuing and Paying Agent, in the manner described in Section 6.10 hereof
Section 3.04. Dealer Agreement. The Dealer Agreement to be entered into with Morgan
Stanley & Co, Incorporated (the "Dealer") pertaining to the sale, from time to time, of Commercial
Paper Notes or the purchase of Commercial Paper Notes from the City, all for a fee to be set forth
in the Dealer Agreement, in substantially the form attached to this Ordinance as Exhibit E, is hereby
approved, and any Authorized Representative is hereby authorized and directed to execute the same
for and on behalf of the City and the City Secretary is authorized to attest and place the City seal on
19
such instrument. The City shall notify the rating agencies listed in Section 6.10 hereof of any change
in the Dealer, in the manner described in Section 6.10 hereof.
ARTICLE IV
COVENANTS OF THE CITY
Section 4.01. Limitation on Issuance. Unless this Ordinance is amended and modified bythe
City Council and in accordance with the provisions of Section 6.01 hereof, the City covenants that
there will not be issued and outstanding at any time under this ordinance more than $75,000,000 in
principal amount of Commercial Paper Notes. For purposes of this Section 4.01 any portion of
outstanding Commercial Paper Notes to be paid on a particular day from moneys on deposit in the
Series B Note Payment Fund and available proceeds of Notes or Bonds shall not be considered
outstanding on such day.
Additionally, the City covenants and agrees that the total principal amount of all Commercial
Paper Notes outstanding at any one time and the total amount of interest accrued or to accrue thereon
shall not exceed the Commitment available under the terms of the Credit Agreement.
Section 4.02. Rates and Charges. The City hereby agrees and reaffirms its covenants to the
holders of the Priority Bonds and covenants to the Holder of the Loan Note that it will at all times
maintain rates and charges for the services furnished, provided, and supplied by the System which
shall comply with the provisions of the Priority Bond Ordinance, be reasonable and nondiscriminatory
and produce income and revenues sufficient to pay:
(a) all maintenance and operating expenses, depreciation, replacement and betterment
expenses and other costs as may be required by law (including specifically Section 1502.056, Texas
Government Code);
(b) the interest on and principal of all Priority Bonds, as and when the same shall become
due, and to maintain the Funds and Accounts created and established for the payment and security
of the Priority Bonds;
(c) to the extent the same are reasonably anticipated to be paid with Pledged Revenues,
the interest on and principal of the Loan Notes and other amounts due the Bank under the Credit
Agreement, as and when the same shall become due;
(d) the payment obligations of the City under the Federal Contract, as and when the same
shall become due; and
(e) any legal debt or obligation of the System as and when the same shall become due.
2o
Section 4.03. System Fund. Pursuant to Section 2.11 hereof, the City hereby reaffirms its
covenant to the holders of the Priority Bonds, and hereby covenants with respect to the Holder of the
Loan Notes, that all Gross Revenues shall be deposited as received in the "City of Corpus Christi
1Jtility System Fund" (hereinafter referred to as "System Fund"), which is required by the Priority
Bond Ordinance, which shall be kept separate and apart from all other funds of the City. Revenues
received for the System Fund shall be deposited from time to time as received in such bank or banks
as may be selected by the City in accordance with applicable laws relating to the selection of City
depositories.
Section 4.04. Priority of Deposits and Payments From System Fund. The City shall make the
deposits and payments from the Pledged Revenues in the System Fund when and as required by the
Priority Bond Ordinance and such deposits shall be made in the order and with the priorities set forth
in the Priority Bond Ordinance. After satisfying the requirements of the Priority Bond Ordinance and
any ordinance with respect to payment of principal, premium, if any, and interest on the Priority
Bonds and the respective debt service and reserve fund requirements therefor, there shall be deposited
by the City to the Bank Payment Account the amounts required by Section 2.10 hereof for the
payment of the Loan Note.
Section 4.05. Maintenance of Available Credit Facilities Requirement. The City agrees and
covenants that at all times up to and including the Maximum Maturity Date, unless the Commercial
Paper Notes are no longer outstanding it will maintain credit or liquidity facilities with banks in
amounts such that, assuming that all then outstanding Commercial Paper Notes were to become due
and payable immediately, the amount available for borrowing under such facilities would be sufficient
at that time to pay principal and interest of all Commercial Paper Notes. No Commercial Paper Note
shall be issued which if, after giving effect to the issuance thereof and, if applicable, the immediate
application of the proceeds thereof to retire other Commercial Paper Notes secured by the credit or
liquidity facility, the aggregate principal amount of all Commercial Paper Notes secured by or payable
from the credit or liquidity facility would exceed the amount of the commitment thereunder. The
availability for borrowing of such amounts under such facilities may be subject to reasonable
conditions precedent, including but not limited to, bankruptcy of the City. In furtherance of the
foregoing covenant, the City agrees that it will not issue any Commercial Paper Notes or make any
borrowing which will result in a violation of such covenant, will not amend the Credit Agreement in
a manner which will cause a violation of such covenant and, if and to the extent necessary to maintain
compliance with such covenant, will arrange for new credit or liquidity facilities prior to, or
contemporaneously with, the expiration of the Credit Agreement.
Section 4.06. Bonds. The City hereby acknowledges that the Commercial Paper Notes are
being issued as bond anticipation notes, and therefore the City in good faith shall endeavor to sell a
sufficient principal amount of the Bonds in order to have funds available, together with other moneys
available therefor, to pay the Notes and the interest thereon, or any renewals thereof, as the same shall
become due, and other amounts due under the Credit Agreement.
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Section 4.07. Punctual Payment. The City will punctually pay or cause to be paid the
principal of and interest, if any, on the Notes (but only from the sources pledged herein), in
conformity with the Notes, this Ordinance and the Credit Agreement.
Section 4.08. Commercial Paper Notes to Remain Tax Exempt. The City covenants to take
any action to assure, or refrain from any action which would adversely affect, the treatment of the
Commercial Paper Notes as obligations described in section 103 of the Code, the interest on which
is not includable in the "gross income" of the holder for purposes of federal income taxation if such
Commercial Paper Notes are designated by the City as "tax exempt". In furtherance thereof, the City
covenants as follows:
(a) to take any action to assure that no more than 10 percent of the proceeds of
the Commercial Paper Notes or the projects financed therewith (less amounts deposited to
a reserve fund, if any) are used for any "private business use", as defined in section 141(b)(6)
of the Code or, if more than 10 percent of the proceeds are so used, that amounts, whether
or not received by the City, with respect to such private business use, do not, under the terms
of this Ordinance or any underlying arrangement, directly or indirectly, secure or provide for
the payment of more than 10 percent of the debt service on the Commercial Paper Notes, in
contravention of section 141 (b)(2) of the Code;
(b) to take any action to assure that in the event that the "private business use"
described in subsection (a) hereof exceeds 5 percent of the proceeds of the Commercial Paper
Notes or the projects financed therewith (less amounts deposited into a reserve fund, if any)
then the amount in excess of 5 percent is used for a "private business use" which is "related"
and not "disproportionate", within the meaning of section 141(b) (3) of the Code, to the
governmental use;
(c) to take any action to assure that no amount which is greater than the lesser of
$5,000,000, or 5 percent of the proceeds of the Commercial Paper Notes (less amounts
deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons,
other than state or local governmental units, in contravention of section 141 (c) of the Code;
(d) to refrain from taking any action which would otherwise result in the
Commercial Paper Notes being treated as "specified private activity bonds" within the
meaning of section 141 (b) of the Code;
(e) to refrain from taking any action that would result in the Commercial Paper
Notes being "federally guaranteed" within the meaning of section 149(b) of the Code;
(f) to refrain from using any portion of the proceeds of the Commercial Paper
Notes, directly or indirectly, to acquire or to replace funds which were used, directly or
indirectly, to acquire "investment property" (as defined in section 148(b)(2) of the Code)
which produces a materially higher yield over the term of the Commercial Paper Notes, other
than investment property acquired with ~-
22
(1) proceeds of the Commercial Paper Notes invested for a reasonable
temporary period of 3 years or less until such proceeds are needed for the purpose for
which the obligations are issued,
(2) amounts invested in a bona fide debt service fund, within the meaning
of section 1.148-1 (b) of the Treasury Regulations, and
(3) amounts deposited in any reasonably required reserve or replacement
fund to the extent such amounts do not exceed 10 percent of the proceeds of the
Commercial Paper Notes;
(g) to otherwise restrict the use of the proceeds of the Commercial Paper Notes
or amounts treated as proceeds of the Commercial Paper Notes, as may be necessary, so that
the Commercial Paper Notes do not otherwise contravene the requirements of section 148
of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code
(relating to advance refundings); and
(h) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Commercial Paper Notes) an amount that is
at least equal to 90 percent of the "Excess Earnings", within the meaning of section 148(0 of
the Code, and to pay to the United States of America, not later than 60 days after the
Commercial Paper Notes have been paid in full, 100 percent of the amount then required to
be paid as a result of Excess Earnings under section 148(0 of the Code.
The City represents and covenants that it will not expend, or permit to be expended, the
proceeds of any Commercial Paper Notes in any manner inconsistent with its reasonable expectations
as certified in a federal tax certificate to be executed from time to time with respect to the
Commercial Paper Notes; provided, however, that the City may expend Commercial Paper Note
proceeds in any manner if the City first obtains an unqualified opinion of Bond Counsel that such
expenditure will not impair the exemption from federal income taxation of interest paid on the
Commercial Paper Notes. The City represents that it has not been notified of any listing or proposed
listing by the Internal Revenue Service to the effect that it is an issuer whose arbitrage certifications
may not be relied upon.
The City understands that the term "proceeds" includes "disposition proceeds" as defined in
the Regulations and, in the case of a refunding bond, transferred proceeds (if any) and proceeds of
the refunded bonds expended prior to the date of the issuance of the Commercial Paper Notes. It is
the understanding of the City that the covenants contained herein are intended to assure compliance
with the Code and any regulations or rulings promulgated by the U.S, Department of the Treasury
pursuant thereto, In the event that regulations or rulings are hereafter promulgated which modi~,
or expand provisions of the Code, as applicable to the Commercial Paper Notes, the City will not be
required to comply with any covenant contained herein to the extent that such failure to comply, in
the opinion of Bond Counsel, will not adversely affect the exemption from federal income taxation
of interest on the Commercial Paper Notes under section 103 of the Code. In the event that
23
regulations or rulings are hereafter promulgated which impose additional requirements which are
applicable to the Commercial Paper Notes, the City agrees to comply with the additional requirements
to the extent necessary, in the opinion of Bond Counsel, to preserve the exemption from federal
income taxation of interest on the Commercial Paper Notes under section 103 of the Code. In
furtherance of such intention, the City Council hereby authorizes and directs any Authorized
Representative to execute any documents, certificates or reports required by the Code, and to make
such elections on behalf of the City which may be permitted by the Code as are consistent with the
purpose for the issuance of the Commercial Paper Notes.
In order to facilitate compliance with the above clause (h), a "Rebate Fund" is hereby
established by the City for the sole benefit of the United States of America, and such Fund shall not
be subject to the claim of any other person, including without limitation the Noteholders. The Rebate
Fund is established for the additional purpose of compliance with section 148 of the Code.
Section 4.09. Allocation of, and Limitation on, Expenditures for Eligible Projects. That the
City covenants to account for on its books and records the expenditure of proceeds from the sale of
the Commercial Paper Notes and any investment earnings thereon to be used for Eligible Projects by
allocating proceeds to expenditures within eighteen (18) months of the later of the date that (a) the
expenditure on a Eligible Project is made or (b) each Eligible Project is completed; but in no event
later than three (3) years after the date on which the expenditure is paid. The foregoing
notwithstanding, the City recognizes that in order for proceeds to be expended under the Code, sale
proceeds or investment earnings must be expended no more than sixty (60) days after the earlier of
(a) the fifth anniversary of the date of delivery of the Commercial Paper Notes or (b) the date the
Commercial Paper Notes are retired. The City agrees to obtain the advice of Bond Counsel if such
expenditure fails to comply with the foregoing to assure that such expenditure will not adversely
affect the tax-exempt status of the Commercial Paper Notes. For purposes of this Section, the City
shall not be obligated to comply with this covenant if it obtains an opinion of Bond Counsel to the
effect that such failure to comply will not adversely affect the excludability for federal income tax
purposes from gross income of the interest.
Section 4.10. Disposition of Eligible Projects. That the City covenants that the property
constituting an Eligible Project financed with the proceeds of the Commercial Paper Notes will not
be sold or otherwise disposed in a transaction resulting in the receipt by the City of cash or other
compensation, unless the City obtains an opinion of Bond Counsel substantially to the effect that such
sale or other disposition will not adversely affect the tax-exempt status of the Commercial Paper
Notes. For purposes of this Section, the portion of the property comprising personal property and
disposed of in the ordinary course of business shall not be treated as a transaction resulting in the
receipt of cash or other compensation. For purposes of this Section, the City shall not be obligated
to comply with this covenant if it obtains an opinion of Bond Counsel to the effect that such failure
to comply will not adversely affect the excludability for federal income tax purposes from gross
income of the interest.
Section 4.11. Taxable Obligations. That the provisions of Section 4.08 of this Ordinance
notwithstanding, the City reserves the ability to issue Commercial Paper Notes in a manner such that
24
such obligations are not obligations described in section 103 (a) of the Code or are obligations which
constitute "private activity bonds" within the meaning of section 141(b) of the Code. If Commercial
Paper Notes are so issued, the Authorized Representative is authorized to designate such Commercial
Paper Notes in such a manner as to distinguish such Commercial Paper Notes from those Commercial
Paper Notes that are issued as obligations described in section 103(a) of the Code.
Section 4.12. Supplemental Ordinances. Other than as permitted herein with respect to the
issuance of additional obligations of the City secured by the Net Revenues of the System, the City
will not adopt any supplemental ordinances with respect to the Pledged Revenues of the System,
pursuant to the Priority Bond Ordinance or otherwise, without the consent of the Bank.
Section 4.13. Opinion of Bond Counsel. The City shall cause the legal opinion of Bond
Counsel as to the validity of the Notes and as to the exemption of interest on the Commercial Paper
Notes from federal income taxation to be furnished to any Noteholder without cost. In addition, a
copy of said opinion may be printed on each of the Commercial Paper Notes. In addition, in
connection with the annual updating of the Offering Memorandum (as provided in accordance with
Section 6.08 hereof) as required by the Dealer Agreement, there shall be provided an annual updated
opinion of Bond Counsel, at the cost of the City or the Dealer as agreed to in the Dealer Agreement.
Section 4.14. Compliance With Priority Bond Ordinance and Other Documents The City
will comply with the terms and provisions of the Priority Bond Ordinance, the Federal Contract, and
any other ordinance or contract to which the City is a party, the non-compliance with which would
materially adversely affect the ability of the City to make payments on the Notes when due.
Section 4.15. Reservation of Right to Issue Priority Bonds and Obligations of Inferior Lien.
The City hereby expressly reserves the right to hereafter issue Priority Bonds in accordance with the
provisions of the Priority Bond Ordinance, payable from and secured by a lien on and pledge of the
Pledged Revenues of the System prior in right and claim to the lien and pledge securing the payment
of the Loan Note. The City also retains the right to issue bonds, notes, or other evidences of
indebtedness or to incur contractual obligations secured by a lien on and pledge of the Pledged
Revenues of the System junior and subordinate to the lien and pledge securing the Loan Note. The
payment obligation of the City under the Federal Contract is junior and subordinate to the payment
obligations of the City under the Loan Note.
Section 4.16. Ongoing Continuing Disclosure Covenant. To the extent required by the
provisions of Rule 15c2-12, promulgated by the U.S. Securities and Exchange Commission (the
"Rule"), the City agrees to enter into an agreement to file financial information and operating data
with respect to the Commercial Paper Notes with such entities as are designated pursuant to the terms
of the Rule as nationally recognized municipal securities information repositories and the state
information depository in Texas. The City currently anticipates issuing Commercial Paper Notes with
stated maturities of 270 days or less, and under the provisions of the Rule, as they exist on the date
this Ordinance is adopted, the City is exempted from complying with the undertaking described in the
25
first sentence of this Section 4.16 if the Commercial Paper Notes are so issued with stated maturities
of the duration hereinabove described.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES OF NOTEHOLDERS
Section 5.01. Events of Default. If one or more of the following events shall occur:
(a) if default shall be made in the due and punctual payment of any installment of
principal of any Commercial Paper Note when and as the same shall become due and payable,
whether at maturity as therein expressed, by declaration or otherwise;
(b) if the City shall fail to make due and punctual payment of any installment of
interest on any Commercial Paper Note when and as such interest installment shall become
due and payable and such failure shall continue for five (5) Business Days;
(c) if the principal of any Loan Note (and interest accrued thereon) shall become
due and payable prior to the maturity thereof under such Loan Note and the Credit
Agreement;
(d) if default shall be made by the City in the performance or observance of any
other of the covenants, agreements or conditions on its part in this ordinance or in the
Commercial Paper Notes contained, and such default shall continue for a period of sixty (60)
days after written notice thereof; provided, however, if such default cannot be cured within
the sixty (60) day period but corrective action to cure such default is commenced and
diligently pursued until the default is corrected no such Event of Default shall be deemed to
have occurred;
(e) if there shall occur the dissolution (without a successor being named to assume
the rights and obligations) or liquidation of the City or the filing by the City of a voluntary
petition in bankruptcy, or adjudication of the City as a bankrupt, or assignment by the City
for the benefit of its creditors, or the entry by the City into an agreement of composition with
its creditors, or the approval by a court of competent jurisdiction with its creditors, or the
approval by a court of competent jurisdiction of a petition applicable to the City in any
proceeding for its reorganization instituted under the provisions of the Bankruptcy Code, as
amended, or under any similar act in any jurisdiction which may now be in effect or hereafter
enacted; or
(f) if an order or decree shall be entered, with the consent or acquiescence of the
City, appointing a receiver or receivers of the System, or any part thereof, or of the rents,
fees, charges or other revenues therefrom, or if such order or decree, having been entered
26
without the consent or acquiescence of the City shall not be vacated or discharged or stayed
within ninety (90) days after the entry thereof;
then such event as described above shall constitute an "Event of Default" under this Ordinance.
Section 5.02. Suits at Law or in Equity and Mandamus. In case one or more Events of
Default shall occur, then and in every such case the Holder of any Note at the time outstanding shall
be entitled to proceed to protect and enforce such Holder's rights by such appropriate judicial
proceeding as such Holder shall deem most effectual to protect and enforce any such right, either by
suit in equity or by action at law, whether for the specific performance of any covenant or agreement
contained in this Ordinance, or in aid of the exercise of any power granted in this Ordinance, or to
enforce any other legal or equitable right vested in the Holders of Notes by this Ordinance or the
Notes or by law. The provisions of this Ordinance shall be a contract with each and every Holder of
Notes and the duties of the City shall be enforceable by any Noteholder by mandamus or other
appropriate suit, action or proceeding in any court of competent jurisdiction.
Section 5.03. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the
Holders of Notes is intended to be exclusive of any other remedy, and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing, at law or in equity or by statute or otherwise, and may be exercised at any time or from time
to time, and as often as may be necessary, by the Holder of any one or more of the Notes.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments or Modifications Without Consent of Holders of Notes. (a) This
Ordinance and the rights and obligations of the City and of the Holders of Notes may be modified or
amended at any time by a supplemental ordinance, without notice to or the consent of any
Noteholders, but only to the extent permitted by law, and, subject to the rights of the holders of the
Notes, only for any one or more of the following purposes --
(1) to add to the covenants and agreements of the City in this Ordinance
contained, other covenants and agreements thereafter to be observed, or to surrender any
right or power herein reserved to or conferred upon the City;
(2) to cure any ambiguity or inconsistency, or to cure or correct any defective
provision contained in this Ordinance, upon receipt by the City of an approving opinion of
Bond Counsel selected by the City, that the same is needed for such purpose, and will more
clearly express the intent of this Ordinance; or
(3) to supplement the security for the Notes, replace or provide additional credit
facilities, make such changes, modifications or amendments as may be necessary or desirable
in order to obtain or maintain the granting ora rating on the Bonds by a nationally recognized
27
municipal bond rating service, or change the form of the Notes or make such other changes
in the provisions hereof as the City may deem necessary or desirable and which shall not
materially adversely affect the interests of the Holders of the Notes;
provided, however, that nothing herein contained shall permit or be construed to permit the
amendment of the terms and conditions of this ordinance or of the Commercial Paper Notes so as to:
(1) Make any change in the maturity of any of the outstanding Commercial Paper
Notes;
(2) Reduce the rate of interest borne by any of the outstanding Commercial Paper
Notes;
(3) Reduce the amount of the principal payable on any of the outstanding
Commercial Paper Notes;
(4) Modify the terms of payment of principal of or interest on the outstanding
Commercial Paper Notes, or impose any conditions with respect to such payment;
(5) Affect the rights of the Holders of less than all of the outstanding Commercial
Paper Notes; or
(6) Reduce or restrict the pledge made pursuant to Section 2.10 hereof for
payment of the CommerciaI Paper Notes
without the consent of the Holders of all Outstanding Commercial Paper Notes; and provided,
further, that no change, modification or amendment shall be made in this Ordinance or become valid
and effective (i) without the approval of such change, modification or amendment by the Attorney
General of the State of Texas, to the extent required by the Act and (ii) without the consent of the
Bank, if the Bank is not in default under the terms of the Credit Agreement.
(b) If at any time the City shall desire to amend this Ordinance in a manner that requires the
consent of the Holders of all Outstanding Commercial Paper Notes under the terms of subsection (a),
the City shall cause notice of the proposed amendment to be published in a financial newspaper or
journal of general circulation in The City of New York, New York, once during each calendar week
for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the
proposed amendment and shall state that a copy thereof is on file at the principal office of the Issuing
and Paying Agent for inspection by all owners of Commercial Paper Notes issued hereunder. Such
publication is not required, however, if the City gives or causes to be given such notice in writing to
DTC, if the Commercial Paper Notes are held in a book-entry only system, or to each owner of
Commercial Paper Notes. A copy of such Notice shall be provided in writing to (i) the Bank at the
address shown in the Credit Agreement as the address to which notices to the Bank are to be sent and
(ii) to each national rating agency maintaining a rating on the Commercial Paper Notes.
28
(c) Whenever at any time not less than thirty (30) days, and within one year, from the date
of the first publication of said notice or other service of written notice of the proposed amendment
the City shall receive an instrument or instruments executed by all of the owners of the Commercial
Paper Notes, which instrument or instruments shall refer to the proposed amendment described in said
notice and which specifically consent to and approve such amendment in substantially the form of the
copy thereof on file as aforesaid, the City may adopt the amendatory ordinance in substantially the
same form.
(d) Upon the adoption by the City of any ordinance to amend this Ordinance pursuant to the
provisions of this Section, this Ordinance shall be deemed to be amended in accordance with the
amendatory ordinance, and the respective rights, duties, and obligations of the City and all the owners
of then Outstanding Commercial Paper Notes and all future Commercial Paper Notes shall thereafter
be determined, exercised, and enforced under this Ordinance, as amended.
(e) Any consent given by any owner of Commercial Paper Notes pursuant to the provisions
of this Section shall be irrevocable for a period of six months from the date of the first publication or
other service of the notice provided for in this Section 6.01, and shall be conclusive and binding upon
all future owners of the same Commercial Paper Notes during such period. Such consent may be
revoked at any time after six months from the date of the first publication of such notice by the owner
who gave such consent, or by a successor in title, by filing notice thereof with the Issuing and Paying
Agent and the City, but such revocation shall not be effective if the owners of all of the Outstanding
Commercial Paper Notes consented to and approved the amendment prior to the attempted
revocation.
Section 6.02. Additional Actions. (a) The Mayor, the City Secretary, the Authorized
Representatives and the other officers of the City are hereby authorized and directed, jointly and
severally, to do any and all things and to execute and deliver any and all documents which they may
deem necessary or advisable in order to consummate the issuance, sale and delivery of the Notes and
otherwise to effectuate the purposes of this Ordinance, the Credit Agreement, the Dealer Agreement,
the Offering Memorandum and the Issuing and Paying Agent Agreement. Specifically, by the
adoption of this Ordinance, the City Council hereby authorizes the payment of the fees and expenses
incurred and to be paid by the City in connection with the issuance, sale and delivery of the Notes and
the execution and delivery of the Credit Agreement, the Dealer Agreement and the Issuing and Paying
Agent Agreement.
(b) In order for the City Council to be kept informed of the general activities and future needs
of the System, the City Manager or the designee thereof shall report periodically to the City Council,
but no less frequently than once each calendar quarter, and provide the City Council with a summary
of recent events relating to the System and actions taken by the City with respect to such events.
Such report shall include information relating to (i) the financial condition of the System including
the most recent balance sheet and income statement available (or similar financial information
prepared by City staff for review by the City Council) and, once each year, a summary of the annual
audit prepared for or with respect to the System, (ii) major construction projects in progress or
expected to begin during the next six months, (iii) additional major capital projects with respect to
29
the System the City Manager expects the City to undertake in the future, (iv) expectations of the City
Manager relating to the need of the City Council to authorize the issuance of additional indebtedness
payable from revenues of the System or raising utility rates during the next twelve months, and (v)
such other matters as the City Council, acting through the Mayor, may request in writing.
Section 6.03. Ordinance to Constitute a Contract; Equal Security. In consideration of the
acceptance of the Notes, the issuance of which is authorized hereunder, by those who shall hold the
same from time to time, this Ordinance shall be deemed to be and shall constitute a contract between
the City and the Holders from time to time of the Notes and the pledge made in this ordinance by the
City and the covenants and agreements set forth in this Ordinance to be performed by the City shall
be for the equal and proportionate benefit, security and protection of all Holders of the Notes,
without preference, priority or distinction as to security or otherwise of any of the Notes authorized
hereunder over any of the others by reason of time of issuance, sale or maturity thereof or otherwise
for any cause whatsoever, except as expressly provided in or permitted by this Ordinance or, with
respect to the Loan Note, the Credit Agreement.
Section 6.04. Severability of Invalid Provisions. If any one or more of the covenants,
agreements or provisions herein contained shall be held contrary to any express provisions of law or
contrary to the policy of express law, though not expressly prohibited, or against public policy, or
shall for any reason whatsoever be held invalid, then such covenants, agreements or provisions shall
be null and void and shalI be deemed separable from the remaining covenants, agreements or
provisions and shall in no way affect the validity of any of the other provisions hereof or of the Notes
issued hereunder.
Section 6.05. Payment and Performance on Business Days. Whenever under the terms of
this Ordinance or the Commercial Paper Notes, the performance date of any provision hereof or
thereof, including the payment of principal of or interest on the Commercial Paper Notes, shall occur
on a day other than a Business Day, then the performance thereof, including the payment of principal
of and interest on the Commercial Paper Notes, need not be made on such day but may be performed
or paid, as the case may be, on the next succeeding Business Day with the same force and effect as
if made on the date of performance or payment.
Section 6.06. Defeasance. If, when all or any portion of the Commercial Paper Notes shall
have become due and payable in accordance with their terms or otherwise as provided in this
Ordinance, the entire principal and interest so due and payable upon said Commercial Paper Notes
shall be paid, or if at or prior to the date said Commercial Paper Notes have become due and payable,
sufficient moneys or Defeasance Securities, the principal of and interest on which will provide
sufficient moneys for such payment, shall be held in trust by the Issuing and Paying Agent and
provision shall also be made for paying all other sums payable hereunder by the City with respect to
said Commercial Paper Notes, the pledge herein created with respect to said Commercial Paper Notes
shall thereupon cease, terminate and become discharged and said Commercial Paper Notes shall no
longer be deemed outstanding for purposes of this Ordinance and all the provisions of this Ordinance
relating to the Commercial Paper Notes, including all covenants, agreements, liens and pledges made
herein for the benefit thereof, shall be deemed duly discharged, satisfied and released.
30
Section 6.07. Limitation of Benefits with Respect to the Ordinance. With the exemption of
the rights or benefits herein expressly conferred, nothing expressed or contained herein or implied
from the provisions of this Ordinance or the Notes is intended or should be construted to confer upon
or give to any person other than the City, the Holders of the Notes, the Issuing and Paying Agent and
the parties to the Dealer Agreement and the Credit Agreement, any legal or equitable right, remedy
or claim under or by reason of or in respect to this Ordinance or any covenant, condition, stipulation,
promise, agreement or provision herein contained. This Ordinance and all of the covenants, condi-
tions, stipulations, promises, agreements and provisions hereof are intended to be and shall be for and
inure to the sole and exclusive benefit of the City, the Holders of the Notes, the Issuing and Paying
Agent/Registrar and the parties to the Dealer Agreement and the Credit Agreement as herein and
therein provided.
Section 6.08. Use of Offering Memorandum The use by the Dealer of the Offering
Memorandum, prepared by the Dealer in connection with the sale of Commercial Paper Notes, and
the distribution of the Offering Memorandum by the Dealer, is approved subject to the approval
thereof by an Authorized Representative.
Section 6.09. Approval of Attorney General. The Authorized Representative shall submit
this Ordinance and a transcript of proceedings related thereto to the Attorney General of the State
of Texas for approval, as required by the Act. No Notes herein authorized to be issued shall be sold
or delivered by an Authorized Representative until the Attorney General of the State of Texas shall
have approved this Ordinance, the Credit Agreement and other agreements and proceedings as may
be required in connection therewith, all as required by the Act.
Section 6.10. Notice to Rating Agencies and Bondholders. The City agrees to provide
written notice to each of Moody's Investors Service and Standard & Poor's Ratings Group, a division
of McGraw Hill Corporation, which then rates the Commercial Paper Notes, of any expiration,
termination or extension of the Credit Facility, or any amendment or supplement made to either this
Ordinance, the Credit Agreement, the Issuing and Paying Agent Agreement or the Dealer Agreement,
or any change in the Bank, the Dealer or the Issuing and Paying Agent. Notice of any of the
aforementioned events also shall be given to Holders in accordance with and in the manner described
in Section 6.01(b) hereof.
Section 6.11. Preamble. The preamble to this Ordinance shall be considered an integral part
of this Ordinance, and is herein incorporated as part of the body of this Ordinance for all purposes.
Section 6.12. Immediate Effect. This Ordinance shall be effective immediately from and after
its passage in accordance with the provisions of Section 1201.028, Texas Government Code.
Section 6.13. Open Meeting. It is hereby officially found and determined that the meeting
at which this Ordinance was passed was open to the public, and public notice of the time, place and
purpose of said meeting was given, all as required by Chapter 551.
31
ADOPTED this 25th day of March, 2003.
ATTEST:
Mayor
City S~~
(SEA )
APPROVED AS TO FOKM:
City/~tt~r~
Lisa Aguilar l'~.
Assistant City Attorne~
For Citv
32
Exhibit A:
Form of Commercial Paper Note:
UNITED STATES OF AMERICA
STATE OF TEXAS
CITY OF CORPUS CHRISTI, TEXAS
UTILITY SYSTEM
COMMERCIAL PAPER NOTE,
SERIES B
No, ~
Principal Amount:
Interest to Maturity:
Due at Maturity:
Note Date:
Maturity Date:
Number of Days:
Interest Rate (%):
Owner:
The City of Corpus Christi (the "City"), in Nueces and San Patricio Counties, State of Texas,
FOR VALUE RECEIVED, hereby promises to pay, solely from the sources hereinafter identified and
as hereinafter stated, to the order of the party specified above on the maturity date specified above,
the principal sum specified above and to pay interest, if any, on said principal amount at said maturity
date, from the above specified note date to said maturity date at the per annum interest rate shown
above (computed on the basis of actual days elapsed and a 365-day or 366-day year, as may be
applicable); both principal and interest on this Commercial Paper Note being payable in lawful money
of the United States of America at the designated corporate trust office of the Issuing and Paying
Agent executing the "Certificate of Authentication" endorsed hereon and appearing below, or its
successor. No interest will accrue on the principal amount hereof after said maturity date. Defined
terms used herein shall have the same meaning given to said terms in the hereinafter defined
Ordinance, unless the context of the use of such term indicates otherwise. The interest rate borne by
this Commercial Paper Note shall not exceed the Maximum Interest Rate.
This Commercial Paper Note is one of an issue of Commercial Paper Notes which, together
with other forms of short term obligations, including the below referenced Loan Note, has been duly
authorized and issued in accordance with the provisions of an ordinance (the "Ordinance") passed by
the City Council of the City for the purpose of financing Project Costs of Eligible Projects for the
System; to refund obligations issued in connection with an Eligible Project; and to refinance, renew
or refund Notes, Prior Lien Bonds, and Subordinated Obligations, including interest thereon, in
accordance with the provisions of the Ordinance; all in accordance and in strict conformity with the
provisions of the Act.
This Commercial Paper Note, together with the other Commercial Paper Notes, is payable
from and equally secured by a lien on and pledge of (i) the proceeds from (a) the sale of other
Commercial Paper Notes issued for such purpose and (b) the sale ora series or issue of Bonds to be
issued by the City for such purpose, (ii) Loans under and pursuant to the Credit Agreement between
the City and the Bank pursuant to which the Bank has agreed to provide credit to the City under the
terms and conditions set forth therein, which Loans are to be evidenced, as provided in the Credit
Agreement, by a Loan Note, and (iii) amounts in certain funds established pursuant to the Ordinance.
This Commercial Paper Note, together with the other Commercial Paper Notes, is payable
solely from the sources hereinabove identified securing the payment thereof, and the Commercial
Paper Notes do not constitute a legal or equitable pledge, charge, lien or encumbrance upon any other
property of the City or the System. The holder hereof shall never have the right to demand payment
of this obligation from any sources or properties of the City except as identified above.
It is hereby certified and recited that all acts, conditions and things required by law and the
ordinance to exist, to have happened and to have been performed precedent to and in the issuance
of this Commercial Paper Note, do exist, have happened and have been performed in regular and in
due time, form and manner as required by law and that the issuance of this Commercial Paper Note,
together with all other Commercial Paper Notes, is not in excess of the principal amount of
Commercial Paper Notes permitted to be issued and at any one time be outstanding under the terms
of the Ordinance,
This Commercial Paper Note has all the qualities and incidents of a negotiable instrument
under the laws of the State of Texas.
This Commercial Paper Note shall not be entitled to any benefit under the Ordinance or be
valid or become obligatory for any purpose until this Commercial Paper Note shall have been
authenticated by the execution by the Issuing and Paying Agent of the Certificate of Authentication
hereon.
1N TESTIMONY WHEREOF, the City Council has authorized and caused this Commercial
Paper Note to be executed on its behalf by the manual or facsimile signature of the City Manager and
countersigned by the manual or facsimile signatures of the City Secretary and its official seal to be
impressed or a facsimile thereof to be printed hereon.
COUNTERSIGNED:
City Secretary,
City of Corpus Christi, Texas
City Manager,
City of Corpus Christi, Texas
(SE)dO
ISSUING AND PAYING AGENT'S
CERTIFICATE OF AUTHENTICATION
This Commercial Paper Note is one of the Commercial Paper Notes delivered pursuant to the
within mentioned ordinance.
U.S. BANK NATIONAL AS SOCIAT1ON,
as Issuing and Paying Agent
By:
Authorized Signatory
THE STATE OF TEXAS
COUNTIES OF NUECES AND SAN PATR1CIO
CITY OF CORPUS CHRISTI
I, the undersigned, City Secretary of the City of Corpus Christi, Texas, do hereby certify that
1 have compared the attached and foregoing excerpt from the minutes of the regular meeting of the
City Council of the City of Corpus Christi, Texas which was held on March 25, 2003, and of an
ordinance which was duly passed at said meeting, and that said copy is a true and correct copy of said
excerpt and thewhole of said ordinance. Said meetingwas opento the public, and public noticeof
the time, place and purpose of said meeting was given, all in accordance with Chapter 551, Texas
Government Code.
In testimony whereof, I have set my hand and have hereunto affixed the seal of said City of
Corpus Christi, this 25th day of March, 2003.
of Corpus Christi, Texas
(SEAL)
CERTIlgICATE FOR ORDINANCE
THE STATE OF TEXAS
COUNTIES OF NUECES AND SAN PATRICIO
CITY OF CORPUS CHRISTI
On this the 25th day of March, 2003, the City Council of the City of Corpus Christi, Texas
convened in Regular Meeting, at City Hall, with the following members of said Council present, to-
wit:
Samuel L. Neal, Jr.
Brent Chesney,
Javier D. Colmenero,
John Longoria,
Mark Scott,
Rex A. Kinnison,
Bill Kelly,
Henry Garrett,
Jesse Noyola
George K. Noe,
Jay Reining,
Lee Ann Dumbauld,
Armando Chapa,
with the following absent:
other business was transacted:
Mayor
Councilmembers
Acting CityManager,
Acting CityAttorney,
Director of Finance,
City Secretary
, constituting a quorum, at which time the following among
The Acting City Manager presented for the consideration of the Council an ordinance
authorizing the establishment of a Utility System Commercial Paper program, and approving various
documents in relation thereto. The ordinance was read by the City Secretary. The motion was
carried by the following vote:
AYES:
All members of the City Council shown present above
voted "Aye".
NAYS: None
The Mayor announced that the ordinance had been passed. The ordinance is as follows:
Corpus Christi, Texas
The above ordinance was passed by the following vote:
Samuel L. Neal, Jr. -,~
Javier Colmenero ~,.~...,
Henry Garret[
Bill Kelly
Rex A. Kinnison
John Longoria
Jesse Noyola
Mark Scott