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HomeMy WebLinkAbout2000-2446 - Ordinance - 04/13/2000ORDINANCE NO. 2446 ORDINANCE AUTHORIZING THE ISSUANCE OF $10,500,000 CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE BONDS, SERIES 2000; AUTHORIZING EXECUTION OF A PAYING AGENT/REGISTRAR AGREEMENT; AND APPROVING ALL OTHER MATTERS RELATED TO ISSUANCE OF THE BONDS, INCLUDING IMMEDIATE EFFECTIVENESS WHEREAS, the City Council of the City of College Station, Texas (the "City" or the "Issuer") has heretofore issued the following described outstanding bonds (collectively, the "Previously Issued Parity Bonds") to- wit: CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE AND REFUNDING BONDS, SERIES 1993 in the original principal amount of $5,850,000and presently outstanding in the principal amount of $3,250,000 (the "Series 1993 Bonds"); CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE BONDS, SERIES 1994 in the original principal amount of $16,500,000 and presently outstanding in the principal amount of $11,550.000 (the "Series 1994 Bonds"); CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE REFUNDING BONDS, TAXABLE SERIES 1995 in the original principal amount of $7,125,000and presently outstanding in the principal amount of $840,000 (the "Taxable Series 1995 Bonds"); CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE BONDS, SERIES 1995 in the original principal amount of $6,000,000 and presently outstanding in the principal amount of $4,800,000 (the "Series 1995 Bonds"); CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE AND REFUNDING BONDS, SERIES 1996 in the original principal amount of $10,110,000 and presently outstanding in the principal amount of $9,330,000 (the "Series 1996 Bonds"); and CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE BONDS, SERIES 1998 in the original principal amount of $2,700,000 and presently outstanding in the amount of $2,600,000 (the "Series 1998 Bonds"); WHEREAS, all of the Previously Issued Parity Bonds are secured by a pledge of the net revenues from the operation of the City's combined waterworks system, sewer system, and electric light and power system and are on a parity with each other (and any Parity Bonds, hereinafter defined, which are hereafter authorized, issued, and delivered); THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF COLLEGE STATION, TEXAS THAT: Section 1. Bonds Authorized. Pursuant to Chapter 1502, Texas Government Code, as amended, and other applicable law, the City's bonds are hereby authorized to be issued to be designated as the "City of College Station, Texas Utility System Revenue Bonds, Series 2000" in the aggregate principal amount of $10,500,000 for financing water system and wastewater system improvements and paying the costs of issuance of the Bonds. Section 2. Dates~ Maturities~ and Interest Rates. The Bonds shall be dated April I, 2000, shall be in the denomination of $5,000 or any integral multiple thereof, shall be numbered I-1 for the Initial Bond and consecutively from R-I upward for the definitive bonds, and shall mature on the maturity date, in each of the years, and in the amounts, respectively, as set forth in the following schedule and shall bear interest at the following rates per annum: MATURITY DATE: FEBRUARY 1 INTEREST INTEREST YEAR AMOUNTS RATES YEAR AMOUNTS RATES 2001 $185,000 5.875% 2010 $580,000 5.100% 2002 385,000 7.000 2011 615,000 5.200 2003 405,000 7.000 2012 650,000 5.250 2004 425,000 7.000 2013 685,000 5.300 2005 445,000 7.000 2014 725,000 5.400 2006 470,000 7.000 2015 770,000 5.500 2007 495,000 5.000 2016 815,000 5.500 2008 525,000 5.000 2017 865,000 5.500 2009 550,000 5.100 2018 910,000 5.500 Such interest shall be payable on August 1, 2000, and semiannually thereafter on February I and August 1. Said interest shall be payable to the registered owner of any such Bond in the manner provided in the FORM OF BONDS set forth in this Ordinance. Section 3. Right of Prior Redemption. (a) Optional. The City reserves the right to redeem the Bonds maturing on or after February 1,2011, in whole or in part in principal amount of $5,000 or any integral multiple thereof, on February 1, 2010, or any date thereal~er, at the par value thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot Bonds, or portions thereof, within such maturity or maturities and in such principal amounts, for redemption. (b) Notice of Redemption. Notice of such redemption shall be given as provided in the FORM OF BOND in Section 5 hereof. If such notice of redemption is given, and if due provision for such payment is made, the Bonds, or the portions thereof which are to be so redeemed, thereby automatically shall be redeemed prior to their scheduled maturities, and shall not bear interest after the date fixed for their redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all such redemptions of principal of the Bonds or any portion thereof. By the date fixed for any such redemption due provision shall be made by the City with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds, or the portions thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such notice of redemption is given and if due provision for such payment is made, all as provided above, the Bonds, or the portions thereof which are to be so redeemed, thereby automatically shall be redeemed prior to their scheduled maturities and shall not bear interest after the date fixed for their redemption and shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. If a portion of any Bond shall be redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the writ'ten request of the registered owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the City all as provided in this Ordinance. Section 4. Pavine AnentlRel~istrar. (a) The City shall keep or cause to be kept at the principal corporate trust office of the Paying Agent/Registrar herein named, or such other bank, trust company, financial institution, or other entity duly qualified and legally authorized to serve and perform duties of and services of Paying Agent/Registrar, named in accordance with the provisions of (g) of this Section (the "Paying Agent/Registrar"), books or records of the registration and transfer of the Bonds (the "Registration Books"), and the City hereby appoints the Paying Agent/Registrar as its registrar and transfer agent to keep such books or records and make such transfers and registrations under such reasonable regulations as the City and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such transfers and registrations as herein provided. It shall be the duty of the Paying Agent/Registrar to obtain from the registered owner and record in the Registration Books the address of such registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided. The City or its designee shall have the right to inspect the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the Paying Agent/Registrar shall keep the Registration Books 2 confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. Registration of each Bond may be transferred in the Registration Books only upon presentation and surrender of such bond to the Paying Agent/Registrar for transfer of registration and cancellation, together with proper written instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing the assignment of the bond, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and the right of such assignee or assignees to have the bond or any such portion thereof registered in the name of such assignee or assignees. Upon the assignment and transfer of any Bond or any portion thereof, a new substitute bond or bonds shall be issued in exchange therefor in the manner herein provided. (b) The entity in whose name any Bond shall be registered in the Registration Books at any time shall be treated as the absolute owner thereof for all purposes of this Ordinance, whether or not such bond shall be overdue, and the City and the Paying Agent/Registrar shall not be affected by any notice to the contrary unless otherwise required by law; and payment of, or on account of, the principal of, premium, if any, and interest on any such bond shall be made only to such registered owner. All such payments shall be valid and effectual to satisfy and discharge the liability upon such bond to the extent of the sum or sums so paid. (c) The City hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of and interest on the Bonds, and to act as its agent to exchange or replace Bonds, all as provided in this Ordinance. The Paying Agent/Registrar shall keep proper records of all payments made by the City and the Paying Agent/Registrar with respect to the Bonds, and of all exchanges of such bonds, and all replacements of such bonds, as provided in this Ordinance. (d) Each Bond may be exchanged for fully registered bonds in the manner set forth herein. Each bond issued and delivered pursuant to this Ordinance, to the extent of the unpaid or unredeemed principal balance or principal amount thereof, may, upon surrender of such bond at the principal corporate trust office of the Paying Agent/Registrar, together with a written request therefor duly executed by the registered owner or the assignee or assignees thereof, or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory to the Paying Agent/Registrar, at the option of the registered owner or such assignee or assignees, as appropriate, be exchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORM OF BONDS set forth in this Ordinance, in the denomination of $$,000, or any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated maturity date), as requested in writing by such registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid or unredeemed principal amount of any bond or bonds so surrendered, and payable to the appropriate registered owner, assignee, or assignees, as the case may be. If a portion of any Bond shall be redeemed prior to its scheduled maturity as provided herein, a substitute bond or bonds having the same maturity date, bearing interest at the same rate, in the denomination or denominations of any integral multiple of $5,000 at the request of the registered owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon surrender thereof for cancellation. If any Bond or portion thereof is assigned and transferred, each bond issued in exchange therefor shall have the same principal maturity date and bear interest at the same rate as the bond for which it is being exchanged. Each substitute bond shall bear a letter and/or number to distinguish it from each other bond. The Paying Agent/Registrar shall exchange or replace Bonds as provided herein, and each fully registered bond delivered in exchange for or replacement of any bond or portion thereof as permitted or required by any provision of this Ordinance shall constitute one of the Bonds for all purposes of this Ordinance, and may again be exchanged or replaced. It is specifically provided, however, that any bond delivered in exchange for or replacement of another bond prior to the first scheduled interest payment date on the Bonds (as stated on the face thereo0 shall be dated the same date as such bond, but each substitute bond so delivered on or after such first scheduled interest payment date shall be dated as of the interest payment date preceding the date on which such substitute bond is delivered, unless such bond is delivered on an interest payment date, in which case it shall be dated as of such date of delivery; provided, however, that if at the time of delivery of any substitute bond the interest on the bond for which it is being exchanged has not been paid, then such bond shall be dated as of the date to which such interest has been paid in full. On each substitute bond issued in exchange for or replacement of any bond or bonds issued under this Ordinance there shall be printed thereon a Paying AgentdRegistrar's Authentication Certificate, in the form hereinafter set forth. An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such bond, date such by dating the Authentication Certificate in the manner set forth above, and manually sign such Certificate, and no such bond shall be deemed to be issued or outstanding unless such Certificate is so executed. The Paying Agent/Registrar promptly shall cancel all Bonds surrendered for exchange or replacement. No additional ordinances, orders, or resolutions need be passed or adopted by the City Council or any other body or person so as to accomplish the foregoing exchange or replacement of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute bonds in the manner prescribed herein, and said bonds shall be of type composition printed on paper with lithographed or steel engraved borders of customary weight and strength pursuant to Section 1207.031, Texas Government Code, the duty of such exchange or replacement of bonds as aforesaid is hereby imposed upon the Paying Agent/Registrar, and upon the execution of the aforementioned Paying Agent/Registrar's Authentication Certificate, the exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which originally were delivered pursuant to this Ordinance, approved by the Attorney General, and registered by the Comptroller of Public Accounts. Neither the City nor the Paying Agent]Registrar shall be required (1) to issue, transfer, or exchange any Bond subject to redemption during a period beginning at the opening of business 15 days before the day of the fu'st mailing of a notice of redemption of Bonds and ending at the close of business on the day of such mailing, or (2) to transfer or exchange any Bond after it is selected for redemption, in whole or in part when such redemption is scheduled to occur within 30 calendar days; provided, however, that such limitation shall not be applicable to an exchange by the owner of the uncalled principal balance of a Bond. (e) All Bonds issued in exchange or replacement of any other Bond or portion thereof, (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such bonds to be payable only to the registered owners thereof, (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed and sealed, and (vii) the principal of and interest on the Bonds shall be payable, all as provided, and in the manner required or indicated, in the FORM OF BONDS set forth in this Ordinance. (f) The City shall pay all of the Paying Agent/Registrar's reasonable and customary fees and charges for making transfers, conversions, and exchanges of the Bonds in accordance with an agreement between the City and the Paying Agent/Registrar, but the registered owner of any Bond requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. In addition, the City hereby covenants with the registered owners of the Bonds that it will pay the reasonable and standard or customary fees and charges of the Paying Agent/Registrar for its services with respect to the payment of the principal of and interest on the Bonds, when due. (g) The City covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the City will provide a competent and legally qualified bank, trust company, financial institution, or other entity duly qualified and legally authorized to serve as and perform the duties and services of Paying Agent/Registrar, to act as and perform the services of Paying Agent/Registrar for the Bonds under this Ordinance, and that the Paying Agent/Registrar will be one entity. The City reserves the right to, and may, at its option, change the Paying Agent/Registrar upon not less than 60 days written notice to the Paying Agent/Registrar. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by merger, acquisition, or other method) should resign or otherwise cease to act as such, the City covenants that promptly it will appoint a competent and legally qualified national or state banking institution which shall be a corporation organized and doing business under the laws of the United States of America or of any state, authorized under such laws to exercise trust powers, subject to supervision or examination by federal or state Authority. and whose qualifications substantially are similar to the previous Paying Agent/Registrar to act as Paying Agent/Registrar under this Ordinance. Upon any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall transfer and deliver the Registration Books (or a copy thereo0, along with all other pertinent books and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by the City. Upon any change in the Paying Agent/Registrar, the City promptly will cause a written notice thereof to be sent by the new Paying Agent/Registrar to each registered owner of the Bonds, by United States mail, postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Ordinance, and a certified copy of this Ordinance shall be delivered to each Paying Agent/Registrar. Section 5. Forms. The form of the Bonds, including the form of Paying Agent/Registrar's Certificate, the form of Assignment, the form of Statement of Insurance, and the form of the Comptroller's Registration Certificate to accompany the Bonds on the initial delivery thereof, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Ordinance: FORM OF DEFINITIVE BONDS NO. FORM OF BONDS: United States of America State of Texas CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE BOND, SERIES 2000 MATURITY DATE INTEREST RATE ISSUE DATE CUSIP % April 1, 2000 REGISTERED OWNER: PRINCIPAL AMOUNT: $ THE CITY OF COLLEGE STATION, TEXAS (the "City") hereby promises to pay to the Registered Owner, specified above, or the registered assignee (the "registered owner") the Principal Amount, specified above, and to pay interest thereon from the Issue Date, specified above, to the Maturity Date, specified above, at the Interest Rate, specified above, with said interest being payable on August 1, 2000, and semiannually on each February ! and August 1 thereafter. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity at the designated payment office of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, Houston, Texas, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof as shown by the Registration Books kept by the Paying Agent/Registrar at the close of business on the Record Date by check drawn by the Paying Agent/Registrar on, and payable solely from, funds of the City required to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, postage prepaid, on each such interest payment date, to the registered owner at its address as it appears on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. The record date ("Record Date") for the interest payable on any interest payment date means the fifteenth calendar day of the month preceding a scheduled interest payment. In the event of a non-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the City. Notice of the Special Record Date and of the scheduled payment date of the past due interest (the "Special Payment Date", which shall be 15 calendar days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class, postage prepaid, to the address of each registered owner of a Bond appearing on the books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. The City covenants with the registered owner of this Bond that no later than each principal payment date and interest payment date for this Bond it will make available to the Paying Agent/Registrar the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due, in the manner set forth in the ordinances authorizing the issuance of the bonds adopted by the City Council of the City (the "Ordinance"). THE TERMS AND PROVISIONS of this Bond are continued on the reverse side hereof and shall for all purposes have the same effect as though fully set forth at this place. *IF THE DATE for the payment of the principal of or interest on this Bond shall be a Saturday, a Sunday, a legal holiday, or a day on which banking institutions in the city where the Paying Agent/Registrar is located are authorized by law or executive order to close, then the date for such payment shall be the next succeeding day which is not such a Saturday, Sunday, legal holiday, or day on which banking institutions are authorized to close; and payment on such date shall have the same force and effect as if made on the original date payment was due. *THIS BOND is one of a series of bonds of like tenor and effect except as to denomination, number, maturity, interest rate and right of prior redemption, issued in the aggregate principal amount of $10,500,000 for financing water system and wastewater system improvements and paying the costs of issuance of the Bonds. *THE BONDS of this series scheduled to mature on and at~er February 1,2011 may be redeemed prior to their scheduled maturities, in whole or in part, in principal amounts of $5,000 or any integral multiple thereof, at the option of the City, on February 1, 2010, or on any date thereat~er, for the principal amount thereof plus accrued interest to the date fixed for redemption. *NOTICE OF REDEMPTION shall be sent by the Paying Agent/Registrar by United States mail, first- class postage prepaid, at least 30 days prior to the date fixed for any such redemption, to the registered owner of each Bond, or portion thereof to be redeemed, at its address as it appeared on the Registration Books on the 45th day prior to such redemption date and to major securities depositories, national bond rating agencies, and bond information services; provided, however, that the failure to send, mail, or receive such notice, or any defect therein or in the sending or mailing thereof, shall not affect the validity or effectiveness of the proceedings for the redemption of any Bond. By the date fixed for any such redemption, due provision shall be made by the City with the Paying Agent/Registrar for the payment of the required redemption price for this Bond or the portion hereof which is to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such notice of redemption is given, and if due provision for such payment is made, all as provided above, this Bond, or the portion thereof which is to be so redeemed, thereby automatically shall be redeemed prior to its scheduled maturity, and shall not bear interest at~er the date fixed for its redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/ Registrar shall record in the Registration Books all such redemptions of principal of this Bond or any portion hereof. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000, at the written request of the registered owner, and in aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the City, all as provided in the Ordinance. *ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons, in the denomination of any integral multiple of $5,000. As provided in the Ordinance, this Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or assignees hereof, be assigned, transferred, and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, payable to the appropriate registered owner, assignee, or assignees, as the case may be, having the same maturity date, and bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 as requested in writing by the appropriate registered owner, assignee, or assignees, as the case may be, upon surrender of this Bond to the Paying Agent/Registrar for cancellation, all in accordance with the form and procedures set forth in the Ordinance. Among other requirements for such assignment and transfer, this Bond must be presented and surrendered to the Paying Agent/Registrar, together with proper instruments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral multiple of $5,000 to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be transferred and registered. The form of Assignment printed or endorsed on this Bond may be executed by the registered owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying Agent/Registrar may be used to evidence the assignment of this Bond or any portion or portions hereof from time to time by the registered owner. The City shall pay the Paying Agent/Registrar's reasonable standard or customary fees and charges for transferring, converting and exchanging any Bond or portion thereof; provided, however, that any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such transfer, conversion and exchange. In any circumstance, neither the City nor the Paying Agent/Registrar shall be required (1) to make any transfer or exchange during a period beginning at the opening of business 15 days before the day of the first mailing of a notice of redemption of bonds and ending at the close of business on the day of such mailing, or (2) to transfer or exchange any Bonds so selected for redemption when such redemption is scheduled to occur within 30 calendar days; provided, however, such limitation shall not be applicable to an exchange by the registered owner of the uncalled principal balance of a Bond. *IN THE EVENT any Paying Agent/Registrar for the Bonds is changed by the City, resigns, or otherwise ceases to act as such, the City has covenanted in the Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds. *BY BECOMING the registered owner of this Bond, the registered owner thereby acknowledges all of the terms and provisions of the Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Ordinance is duly recorded and available for inspection in the official minutes and records of the City, and agrees that the terms and provisions of this Bond and the Ordinance constitute a contract between each registered owner hereof and the City. *THE CITY HAS RESERVED THE RIGHT, subject to the restrictions stated, and adopted by reference, in the Ordinance, to issue additional parity revenue bonds which also may be made payable from, and secured by, a first lien on and pledge of the "Net Revenues" of the City's combined waterworks system, sewer system, and electric light and power system (as defined and described in the Ordinance) on a parity with the previously issued parity bonds including the Bonds. *THE REGISTERED OWNER HEREOF shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation, or from any source whatsoever other than the aforesaid Net Revenues. IT IS HEREBY certified and covenanted that this Bond has been duly and validly authorized, issued and delivered; that all acts, conditions and things required or proper to be performed, exist and be done precedent to or in the authorization, issuance, and delivery of this Bond have been performed, existed and been done in accordance with law; that this Bond is a special obligation; and that the principal of and interest on this Bond together with outstanding parity revenue bonds are payable from, and secured by a first lien on and pledge of, the Net Revenues. IN TESTIMONY WHEREOF, the City Council has caused the seal of the City to be duly impressed or placed in facsimile hereon, and this Bond to be signed with the imprinted facsimile signature of the Mayor and countersigned by the facsimile signature of the City Secretary. COUNTERSIGNED: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX City Secretary, City of College Station XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Mayor, City of College Station (CITY SEAL) FORM OF STATEMENT OF INSURANCE * STATEMENT OF INSURANCE Financial Guaranty Insurance Company ("Financial Guaranty") has issued a policy containing the following provisions with respect to the City of College Station, Texas, Utility System Revenue Bonds, Series 2000 (the "Bonds"), such policy being on file at the principal office of Chase Bank of Texas, National Association, as paying agent (the "Paying Agent/Registrar"). Financial Guaranty hereby unconditionally and irrevocably agrees to pay for disbursement to the Bondholders that portion of the principal of and interest on the Bonds which is then due for payment and which the issuer of the Bonds (the "Issuer") shall have failed to provide. Due for payment means, with respect to the principal, the stated maturity date thereof, or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which the payment of principal of the Bonds is due by reason of call for redemption (other than mandatory sinking fund redemption), acceleration, or other advancement of maturity, and with respect to interest, the stated date for payment of such interest. Upon receipt of telephonic or telegraphic notice, subsequently confirmed in writing, or written notice by registered or certified mail, fi.om a Bondholder or the Paying Agent/Registrar to Financial Guaranty that the required payment of principal or interest has not been made by the Issuer to the Paying Agent/Registrar, Financial Guaranty on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with State Street Bank and Trust Company, N.A., or its successor as its agent (the "Fiscal Agent"), sufficient to make the portion of such payment not paid by the Issuer. Upon presentation to the Fiscal Agent of evidence satisfactory to it of the Bondholder's right to receive such payment and any appropriate instruments of assignment required to vest all of such Bondholder's right to such payment in Financial Guaranty, the Fiscal Agent will disburse such amount to the Bondholder. As used herein, the term "Bondholder" means the person other than the Issuer as such term is defined in the bond documents, who at the time of nonpayment of a Bond is entitled under the terms of such Bond to payment thereof. The policy is non-cancellable for any reason. FINANCIAL GUARANTY INSURANCE COMPANY FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE [Not included on Initial Bond] PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Ordinance described on the face of this Bond; and that this Bond has been issued in exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, Paying Agent/Registrar By Authorized Representative FORM OF ASSIGNMENT *ASSIGNMENT FOR VALUE RECEIVED, the undersigned registered owner representative or attorney thereof, hereby assigns this Bond to of this Bond, or duly authorized / / (Assignee's Social Security or T0.x Payer Identification number) (Print or type Assignce's names and address including zip code) and hereby irrevocably constitutes and appoints attorney to transfer thc registration of this Bond on the Paying Agent/Registrar's Registration Books with full power of substitution in the premises. Dated Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. NOTICE: The signature above must correspond with the name of the Registered Owner as it appears upon the front of this Bond in every particular, without alteration or enlargement or any change whatsoever. The following abbreviations, when used in the assignment above or on the face of the within Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenant with right of survivorship and not as tenants in common UNIF GIFT MIN ACT - Custodian (Cust) (Minor) under Uniform Git~s to Minor Act (State) Additional abbreviations may also be used though not in the list above. NOTE TO PRINTER: *¶s to be on reverse side of definitive bonds FORM OF INITIAL BOND The Initial Bond shall be in the form set forth above for the Definitive Bonds, except the following shall replace the heading and the first three paragraphs: NO. 1-1 $10,500,000 United States of America State of Texas CITY OF COLLEGE STATION, TEXAS UTILITY SYSTEM REVENUE BOND, SERIES 2000 ISSUE DATE: APRIL 1, 2000 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: TEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($10,500,000) THE CITY OF COLLEGE STATION, TEXAS (the "City" or the "Issuer"), for value received, acknowledges itself indebted to and hereby promises to pay to the order of the Registered Owner, specified above, or the registered assigns thereof (the "Registered Owner"), the Principal Amount, specified above, with principal installments payable on February 1 in each of the years, and bearing interest at per annum rates in accordance with the following schedule: YEARS OF PRINCIPAL INTEREST STATED MATURITIES INSTALLMENTS RATES $ % (Information to be inserted from schedule in Section 2 hereof.) INTEREST on the unpaid Principal Amount hereof from the Issue Date, specified above, or from the most recent interest payment date to which interest has been paid or duly provided for until the Principal Amount has become due and payment thereof has been made or duly provided for shall be paid computed on the basis of a 360- day year of twelve 30-day months; such interest being payable on February I and August ! of each year, commencing August 1, 2000. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The final payment of principal of this Bond shall be paid to the Registered Owner hereof upon presentation and surrender of this Bond at final maturity, at the designated payment office of CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, Houston, Texas, which is the "Paying Agent/Registrar" for this Bond. The payment of principal installments and interest on this Bond shall be made by the Paying Agent/Registrar to the Registered Owner hereof as shown by the Registration Books kept by the Paying Agent/Registrar at the close of business on the Record Date by check drawn by the Paying Agent/Registrar on, and payable solely fi.om, funds of the City required to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check shall be sent by the Paying Agent/Registrar by United States mail, postage prepaid, on each such payment date, to the registered owner hereof at its address as it appears on the Registration Books kept by the Paying Agent/Registrar, as hereinafter described. The record date ("Record Date") for payments hereon means the fifteenth calendar day of the month preceding a scheduled payment. In the event of a non- payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment thereof have been received fi.om the City. Notice of the Special Record Date and of the scheduled payment date of the past due payment (the "Special Payment Date", which shall be 15 calendar days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, fLrst class, postage prepaid, to the address of the Registered Owner appearing on the books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. The City covenants with the Registered Owner that no later than each principal installment payment date and interest payment date for this Bond it will make available to the Paying Agent/Registrar the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due, in the manner set forth in the ordinance authorizing the issuance of the Bonds adopted by the City Council of the City on April 13, 2000 (the "Ordinance"). FORM OF COMPTROLLER'S CERTIFICATE (ATTACHED TO THE INITIAL BOND) OFFICE OF COMPTROLLER: REGISTER NO. STATE OF TEXAS: I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas, and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this (SEAL) Comptroller of Public Accounts of the State of Texas [END OF FORMS] Section 6. Definitions. As used in this Ordinance, in addition to other defined terms herein, the following terms shall have the meanings set forth below, unless the text hereof specifically indicates otherwise: "Additional Bonds" means the additional parity obligations which the City reserves the right to issue in the future, as provided in Section 12 of this Ordinance. "Bond" or "Bonds" means one or more, as the case may be, of the Bonds authorized to be issued by this Ordinance. l0 "Bond Fund" means the fund provided for in the ordinances authorizing the issuance of the Previously Issued Parity Bonds. thereof. "City" and "Issuer" mean the City of College Station, Texas, or where appropriate, the City Council "City Council" means the governing body of the City. "Code" means the Internal Revenue Code of 1986, as amended. "Initial Purchasers" means Coastal Securities, as representative of a group of underwriters. "Net Revenues" means the gross revenues of the Systems less the reasonable expenses of operation and maintenance of the Systems, 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 Council, reasonably and fairly exercised, are necessary to keep the plant or utility in operation and render adequate service to the City and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the Parity Bonds shall be deducted in determining the "Net Revenues". Bonds. "Parity Bonds" means collectively the Previously Issued Parity Bonds, the Bonds, and any Additional "Parity Bonds Ordinances" means collectively the ordinances authorizing the Parity Bonds. "Previously Issued Parity Bonds" means the outstanding Series 1993 Bonds, Series 1994 Bonds, Taxable Series 1995 Bonds, Series 1995 Bonds, Series 1996 Bonds, and Series 1998 Bonds. "Reserve Minimum" is defined in Section 12(e) hereof. "Series 1993 Bonds" means the bonds described in the preamble to this Ordinance. "Series 1994 Bonds" means the bonds described in the preamble to this Ordinance. "Series 1995 Bonds" means the bonds described in the preamble to this Ordinance. "Series 1996 Bonds" means the bonds described in the preamble to this Ordinance. "Series 1998 Bonds" means the bonds described in the preamble to this Ordinance. "Systems" means the City's entire existing waterworks system, sewer system, and electric light and power system, including all present and future extensions, enlargements, additions, replacements, and improvements thereto. "Systems Fund" means that fund described in Section 9 hereof. "Taxable Series 1995 Bonds" means the bonds described in the preamble to this Ordinance. "Year" or "fiscal year" means the regular fiscal year used by the City in connection with the operation of the Systems, which may be any 12 consecutive months period established by the City Council. Section 7. Pledee. The principal of the Parity Bonds, redemption premium, if any, and any interest payable thereon, are and shall be secured by and payable from an irrevocable first lien on and pledge of the Net Revenues, and the Net Revenues are further pledged irrevocably to the establishment and maintenance of the funds created by the Parity Bonds Ordinances. The Parity Bonds are not and will not be secured by or payable from a mortgage or deed of trust on any real, personal, or mixed properties constituting the Systems. The owners of the II Parity Bonds shall never have the right to demand payment of such obligations out of any funds raised or to be raised by taxation, or from any source whatsoever other than the Net Revenues. This Ordinance shall not be construed as requiring the City to expend any funds which are derived from sources other than the operation of the Systems, but nothing herein shall be construed as preventing the City from doing so. Section 8. Rates. The City covenants and agrees with the holders of the Parity Bonds that it will: (a) fix and maintain rates and collect charges for the facilities and services afforded by the Systems which will provide revenues sufficient at all times: (1) to pay all operation, maintenance, depreciation, replacement, and betterment charges of the Systems; (2) to establish and maintain the Bond Fund; (3) to generate in each year Net Revenues equal to 1.25 times the maximum annual requirements for the payment of the principal of and interest on the Parity Bonds at the time outstanding (although amounts shall be paid into the Bond Fund only in accordance with Section 9 hereof); and (4) to pay all indebtedness outstanding against the Systems, other than the Parity Bonds, as and when the same become due; and (b) deposit as collected all revenues derived from the operation of the Systems into the Systems Fund. Section 9. Flow of Funds. There has been created and established on the books of the City, and accounted for separate and apart from all other funds of the City, a special Systems Fund. All gross revenues received from operation of the Systems are and shall be deposited into and credited to the Systems Fund immediately upon receipt. The necessary and reasonable expenses of operation and maintenance of the Systems shall first be paid from the Systems Fund. The City shall then make substantially equal monthly payments into the Bond Fund (commencing with respect to the Bonds and any Additional Bonds on the date of delivery to the initial purchaser thereof) during each year in which any of the Parity Bonds are outstanding in an aggregate amount equal to 100% of the amounts required to meet the interest and principal payments falling due on or before the next maturity date of the Parity Bonds. The City shall, at least five days prior to each February 1 and August I, deposit into the Bond Fund any additional Net Revenues available in the Systems Fund which may be necessary to pay in full the interest on and principal, if any, coming due on the Parity Bonds such February I or August 1. In no event shall any amount in excess of the amounts stated above be placed in the Bond Fund for the payment of the interest on or principal of the Parity Bonds, and any amount so placed may be withdrawn by the City and replaced in the Systems Fund. Any funds remaining in the Systems Fund, after provision for the reasonable cost of operating and maintaining the Systems, and after paying the amounts required to be paid into the Bond Fund, may be used for any lawful purpose. Section 10. Investments. Money in any Fund established by the Parity Bonds Ordinances may, at the option of the City, be placed or invested in any investments then permitted by Texas law and permitted in the Parity Bonds Ordinances. Section 11. Funds Secured. Money in all Funds created by this Ordinance, to the extent not invested, shall be secured in the manner prescribed by law for securing funds of the City. Section 12. Additional Bonds. In addition to inferior lien obligations, the City expressly reserves the right hereafter to issue additional parity bonds and other evidences of indebtedness now or hereafter authorized by the Legislature of Texas (collectively, the "Additional Bonds"), and the Additional Bonds, when issued, may be secured by and payable from a first lien on and pledge of the Net Revenues in the same manner and to the same extent as the outstanding Parity Bonds but subjec~ to the remaining provisions hereof, and the Previously Issued Parity Bonds, the Bonds, and the Additional Bonds may be in all respects of equal dignity. It is provided, however, that no Additional Bonds shall be issued unless: (a) As long as any of the Previously Issued Parity Bonds are outstanding and unpaid, all material conditions set forth in the Parity Bonds Ordinances are satisfied; (b) As long as any of the Previously Issued Parity Bonds are outstanding, the "net earnings" (defined below) of the Systems for the fiscal year next preceding the month in which the ordinance authorizing such Additional Bonds is adopted, were equal to each of the provisions following in items (c)(i) and (ii) below, determined independently and certified by an independent firm of certified public accountants, based upon an annual audit of the books of the Systems; 12 (c) An independent firm of certified public accountants, based upon an annual audit of the books of the Systems, certified that the net earnings of the Systems for the previous fiscal year or for any 12 consecutive month period ending not more than 90 days prior to the date of the adoption of the ordinance authorizing such Additional Bonds or other evidence of indebtedness were equal to each of the following determined independently: (i) at least ! .40 times the average annual requirements for the payment of principal and interest on the then outstanding Parity Bonds and other evidences of indebtedness payable from the revenues of the Systems and on said Additional Bonds or other evidences of indebtedness, when issued, sold, and delivered; and (ii) at least 1.25 times the maximum annual requirement for the payment of the principal of and interest on the Parity Bonds then outstanding and on such Additional Bonds, when issued, sold, and delivered; provided, however, should the certificate of the accountant certify that the net earnings of the Systems for the period covered thereby were, in either case, less than required above, and a change in the rates and charges for the services afforded by the Systems became effective at least 60 days prior to the scheduled date of adoption of the ordinance authorizing such Additional Bonds, then such Additional Bonds may nevertheless be issued if an independent engineer or engineering f'mn having a favorable reputation with respect to such matters certifies that, had such change in rates and charges been effective for the entire period covered by the accountant's certificate would have met the tests specified in (i) and (ii) above. The term "net earnings" as used in this Section shall mean all of the Net Revenues, exclusive of income received specifically for capital items, after deduction of the reasonable expenses of operation and maintenance of the Systems excluding expenditures which under standard accounting practice should be charged to capital expenditures or depreciation; (d) Such Additional Bonds or other evidences of indebtedness are made to mature on February I in each of the years in which they are scheduled to mature; and (e) The entire issue of such Additional Bonds is insured in a manner similar to the Previously Issued Parity Bonds by an insurance company or association of companies whose insured obligations are rated by either Moody's Investors Service or Standard & Public Finance Ratings in the same or a higher rating category than the insured obligations of MBIA Insurance Corporation (at the time such Additional Bonds are to be issued) or the City shall establish a reserve fund for such Additional Bonds by any method or combination of methods that the City deems reasonable and appropriate provided that (i) the amount of such reserve fund (or coverage of any surety bond in lieu thereof) shall at least equal the maximum annual debt service requirements of such Additional Bonds, not to exceed the maximum then permitted by applicable regulations, procedures, or published rulings of the Internal Revenue Service (the "Reserve Minimum"); (ii) if any cash reserve fund is funded by making transfers of Net Revenues in the Systems Fund, such transfers shall be made each month in an amount reasonably sufficient to reach the Reserve Minimum within a period of not more than five years after such Additional Bonds are sold and delivered; and (iii) such reserve fund shall be for the equal benefit of the owner of (x) such Additional Bonds, (y) any Parity Bonds theretofore issued which are not insured in manner similar to the Previously Issued Parity Bonds, and (z) any Additional Bonds thereafter issued which are not so insured. Section 13. General Covenants. The City further covenants, warrants, and agrees that in accordance with and to the extent required or permitted by law while the Parity Bonds are outstanding and unpaid: (a) PERFORMANCE. It will faithfully perform at ali times any and all covenants, undertakings, stipulations, and provisions contained in each Parity Bonds Ordinances, and in each and every Parity Bond; it will promptly pay or cause to be paid the principal of and interest on every Parity Bond, on the dates and in the places and manner prescribed in the Parity Bonds Ordinances; and it will, at the times and in the manner prescribed, deposit, or cause to be deposited, the amounts required to be deposited into the Bond and the Reserve Fund, if any; and any holder of the Parity Bonds may require the City, its officials and employees, to carry out, respect, or enforce the covenants and obligations of the Parity Bonds Ordinances by all legal and equitable means, including specifically, but without limitation, the use and filing of mandamus proceedings in any court of competent jurisdiction against the City, its officials and employees. 13 (b) CITY'S LEGAL AUTHORITY. It is a duly created and existing home rule city of the State of Texas, and is duly authorized under the laws of the State of Texas to create and issue the Parity Bonds; all action on its part for the creation and issuance of said obligations has been duly and effectively taken; and said obligations in the hands of the holders and owners thereof are and will be valid and enforceable special obligations of the City in accordance with their terms. (c) TITLE. It has or will obtain lawful title to the lands, buildings, structures, and facilities constituting the Systems; it will defend the title to all the aforesaid lands, buildings, structures, and facilities, and every part thereof, for the benefit of the holders and owners of the Parity Bonds against the claims and demands of all persons whomsoever; it is lawfully qualified to pledge the Net Revenues to the payment of the Parity Bonds in the manner prescribed herein; and it has lawfully exercised such rights. (d) LIENS. It will from time to time and before the same become delinquent pay and discharge all taxes, assessments, and governmental charges, if any, which shall be lawfully imposed upon it or the Systems; it will pay all lawful claims for rents, royalties, labor, materials, and supplies which if unpaid might by law become a lien or charge thereon, the lien of which would be prior to or interfere with the liens hereof, so that the priority of the liens granted hereunder shall be fully preserved in the manner provided herein; and it will not create or suffer to be created any mechanic's, laborer's materialman's, or other lien or charge which might or could be prior to the liens hereof, or do or suffer any matter or thing whereby the liens hereof might or could be impaired; provided, however, that no such tax, assessment, or charge, and that no such claims which might be used as the basis of a mechanic's, laborer's, materialman's, or other lien or charge, shall be required to be paid so long as the validity of the same shall be contested in good faith by the City. (e) OPERATION OF SYSTEMS; NO FREE SERVICE. It shall continuously and efficiently operate the Systems and maintain the Systems in good condition, repair, and working order, all at reasonable cost. No free service of the Systems shall be allowed, and should the City or any of its agencies or instrumentalities, lessees, or concessionaires make use of the services and facilities of the Systems, payment monthly of the standard retail price of the services provided shall be made by the City or any of its agencies or instrumentalities, lessees, or concessionaires out of funds from sources other than the revenues of the Systems. (f) FURTHER ENCUMBRANCE. It shall not additionally encumber the Net Revenues in any manner, except as permitted in the Parity Bonds Ordinances in connection with Additional Bonds, unless said encumbrance is made junior and subordinate in all respects to the liens, pledges, covenants, and agreements of the Parity Bonds Ordinances; but the right of the City to issue obligations payable from a subordinate lien on the surplus Net Revenues is specifically recognized and retained. (g) SALE OR DISPOSAL OF PROPERTY. It shall not sell, convey, mortgage, encumber, lease, or in any manner transfer title to, or dedicate to other use, or otherwise dispose of the Systems, or any significant or substantial part thereof; provided, however, that when the City deems it necessary to dispose of any other property to other use, it may do so either when it has made arrangements to replace the same or provide substitutes therefor, or it is determined by resolution of the City Council that no such replacement or substitute is necessary. (h) INSURANCE. It agrees to maintain insurance on the Systems, for the benefit of the holders or owners of the Parity Bonds, of a kind and in an amount which usually would be carried by private companies engaged in a similar type of business in the same area. (i) RECORDS AND AUDITS. It shall keep proper books, records, and accounts, separate from all other books, records, and accounts, in which complete and correct entries shall be made of all transactions relating to the Systems. Upon written request made not more than 60 days following the close of the fiscal year, the City shall furnish to any holder of any Parity Bonds complete financial statements of the Systems in reasonable detail covering such fiscal year, certified by the City's auditor. Any holders of 25% in principal amount of the Parity Bonds at the time outstanding shall have the right at all reasonable times to inspect the Systems and all records, accounts, and data of the City relating thereto. (,j) GOVERNMENTAL AGENCIES. It has or will obtain and keep in full force and effect all franchises, permits, authorization, and other requirements applicable to or necessary with respect to the acquisition, 14 construction, equipment, operation, and maintenance of the Systems, and it will comply with all of the terms and conditions of any and all franchises, permits and authorizations applicable to or necessary with respect to the Systems. (k) NO COMPETITION. It will not operate, or grant any franchise or, to the extent it legally may, permit the acquisition, construction, or operation of, any facilities which would be in competition with the Systems, and to the extent that it legally may, the City will prohibit any such competing facilities. Section 14. Covenants ReRardin~ Tax Matters. (a) General. The City covenants to take any action to maintain, or refrain from any action which would adversely affect, the treatment of the Bonds as obligations described in section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), the interest on which is not includable in "gross income" for federal income tax purposes. In furtherance thereof, the City specifically covenants as follows: (i) To refrain from taking any action which would result in the Bonds being treated as "private activity bonds" within the meaning of section 141(b) of the Code; (ii) To take any action to assure that no more than 10% of the proceeds of the Bonds or the projects financed therewith are used for any "private business use," as defined in section 141(bX6) of the Code or, if more than 10% of the proceeds or the projects financed therewith 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 Resolution or any underlying arrangement, directly or indirectly, secure or provide for the payment of more than 10% of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code; (iii) To take any action to assure that in the event that the "private business use" described in paragraph (ii) hereof exceeds 5% of the proceeds of the Bonds or the projects financed therewith, then the amount in excess of 5% 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; (iv) To take any action to assure that no amount which is greater than the lesser of $5,000,000 or 5% of the proceeds of the Bonds 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; (v) To refrain from taking any action which would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (vi) Except to the extent permitted by section 148 of the Code and the regulations and rulings thereunder, to refrain from using any portion of the proceeds of the Bonds, 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 Bonds. (vii) To otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as may be necessary, so that the Bonds 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); (viii) Except to the extent otherwise provided in section 148(0 of the Code and the regulations and rulings thereunder, to pay to the United States of America at least once during each five year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90% 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 Bonds have been paid in full, 100% of the amount then required to be paid as a result of Excess Earnings under section 148(0 of the Code; 15 (ix) To maintain such records as will enable the City to fulfill its responsibilities under this subsection and sections 141 and 148 of the Code and to retain such records for at least six years following the final payment of principal and interest on the Bonds; and (x) To comply with the information reporting requirements of section 149(3) of the Code. For the purposes of the foregoing, in the case of a refunding bond, the term proceeds includes transferred proceeds and, for purposes of paragraphs (ii) and (iii), proceeds of the refunded bonds. The covenants contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department of Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the City will not be required to comply with any covenant contained herein to the extent that such modification or expansion, in the opinion of nationally-recognized bond counsel, will not adversely affect the exclusion fi.om gross income of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the City agrees to comply with the additional requirements to the extent necessary, in the opinion of nationally-recognized bond counsel, to preserve the exclusion fi.om gross income of interest on the Bonds under section 103 of the Code. Proper officers of the City charged with the responsibility of issuing the Bonds are hereby authorized and directed 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 Bonds. Notwithstanding any other provision in this Resolution, to the extent necessary to preserve the exclusion from gross income of interest on the Bonds under section 103 of the Code the covenants contained in this subsection shall survive the later of the defeasance or discharge of the Bonds. (b) Covenants Regarding Sale, Lease, or Disposition of Financed Property. The City covenants that the City will regulate the use of the property financed, directly or indirectly, with the proceeds of the Bonds and will not sell, lease, or otherwise dispose of such property unless (i) the City takes the remedial measures as may be required by the Code and the regulations and rulings thereunder in order to preserve the exclusion from gross income of interest on the Bonds under section 103 of the Code or (ii) the City seeks the advice of nationally-recognized bond counsel with respect to such sale, lease, or other disposition. Section 15. Amendment of Ordinance. (a) The holders of the Parity Bonds aggregating in principal amount 51% of the aggregate principal amount of then outstanding Parity Bonds shall have the right from time to time to approve any amendment to this Ordinance which may be deemed necessary or desirable by the City; provided, however, that without the consent of the holders of all of the Parity Bonds at the time outstanding, nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in this Ordinance or in the Parity Bonds so as to: (i) Make any change in the maturity of the outstanding Parity Bonds; (ii) Reduce the rate of interest borne by any of the outstanding Parity Bonds; (iii) Reduce the amount of the principal payable on the outstanding Parity Bonds; (iv) Modify the terms of payment of principal of or interest on the outstanding Parity Bonds or impose any conditions with respect to such payment; (v) Affect the rights of the holders of less than all of the Parity Bonds; or (vi) Change the minimum percentage of the principal amount of Parity Bonds necessary for consent to such amendment. 16 (b) If at any time the City shall desire to amend the Ordinance under this Section, the City shall cause notice of the proposed amendment to be published in a financial newspaper or journal published in The City of New York, New York, once during each calendar week for at least two successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Paying Agent/Registrar for inspection by all holders of Parity Bonds. Such publication is not required, however, if notice in writing is given to each holder of the Parity Bonds. (c) When at any time not less than 30 days, and within one year, from the date of the first publication of said notice or other service of written notice, the City shall receive an instrument or instruments executed by the holders of at least 51% in aggregate principal amount of all Parity Bonds, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying Agent/Registrar, the City Council may pass the amendatory ordinance in substantially the same form. (d) Upon the passage of any amendatory ordinance pursuant to the provisions of this Section, this Ordinance shall be deemed to be amended in accordance with such amendatory ordinance, and the respective rights, duties, and obligations under this Ordinance of the City and all the holders of Parity Bonds shall thereafter be determined, exercised, and enforced hereunder, subject in all respects to such amendments. (e) Any consent given by the holder of a Parity Bond pursuant to the provisions of this Section shall be irrevocable for a period of six months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future holders of the same Parity Bond during such period. Such consent may be revoked at any time at~er six months from the date of the first publication of such notice by the holder who gave such consent, or by a successor in title, by filing notice thereof with the Paying Agent and the City, but such revocation shall not be effective if the holders of 51% in aggregate principal amount of the Parity Bonds as in this Section defined have, prior to the attempted revocation, consented to and approve the amendment. (f) For the purpose of this Section the fact of the holding of Parity Bonds issued in registered form without coupons and the amounts and numbers of such Parity Bonds and the date of their holding same shall be proved by the Registration Books of the Paying Agent/Registrar. The City may conclusively assume that such ownership continues until written notice to the contrary is served upon the City. (g) The foregoing provisions of this Section notwithstanding, the City by action of the City Council may amend this Ordinance for any one or more of the following purposes: (i) To add to the covenants and agreements of the City in this Ordinance contained, other covenants and agreements thereafter to be observed, grant additional rights or remedies to bondholders, or to surrender, restrict, or limit any right or power herein reserved to or conferred upon the City; (ii) To make such provisions for the purpose of curing any ambiguity, or curing, correcting, or supplementing any defective provision contained in this Ordinance, or in regard to clarifying matters or questions arising under this Ordinance, as are necessary or desirable and not contrary to or inconsistent with this Ordinance and which shall not adversely affect the interests oftbe holders of the Parity Bonds; (iii) To modify any of the provisions of this Ordinance in any other respect whatever, provided that (i) such modification shall be, and be expressed to be, effective only after all Parity Bonds outstanding at the date of the adoption of such modification shall cease to be outstanding, and (ii) such modification shall be specifically referred to in the text of all Additional Bonds issued after the date of the adoption of such modification. Section 16. Damaged. Mutilated~ Lost~ Stolen~ or Destroyed Bonds. (a) In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the applicant for a replacement 17 bond shall furnish to the City and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, the1% or destruction of a Bond, the applicant shall furnish to the City and to the Paying Agent/Registrar evidence to their satisfaction of the loss, thet~, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the applicant shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. (c) Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the City may authorize the payment of the same (without surrender thereof expect in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Prior to the issuance of any replacement bond, the Paying Agent/Registrar shall charge the owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the City whether or not the lost, stolen or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Ordinance equally and proportionately with any and ali other Bonds duly issued under this Ordinance. (e) In accordance with Section 1207.031, Texas Government Code, as amended, this Section of this Ordinance shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the City or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such bonds in the form and manner and with the effect, as provided in Section 4(d) of this Ordinance for Bonds issued in exchange for other Bonds. Section 17. Book-Entry Only System. It is intended that the Bonds initially be registered so as to participate in a securities depository system (the "DTC System") with The Depository Trust Company, New York, New York, or any successor entity thereto ("DTC"), as set forth herein. The definitive Bonds shall be issued in the form of a separate single definitive Bond for each maturity. Upon issuance, the ownership of each such Bond shall be registered in the name of Cede & Co., as the nominee of DTC, and all of the outstanding Bonds shall be registered in the name of Cede & Co., as the nominee of DTC. The City and the Paying Agent/Registrar are authorized to execute, deliver, and take the actions set forth in such letters to or agreements with DTC as shall be necessary to effectuate the DTC System, including a "Letter of Representation" (the "Representation Letter"). With respect to the Bonds registered in the name of Cede & Co., as nominee of DTC, the City and the Paying Agent/Registrar shall have no responsibility or obligation to any broker-dealer, bank, or other financial institution for which DTC holds the Bonds from time to time as securities depository (a "Depository Participant") or to any person on behalf of whom such a Depository Participant holds an interest in the Bonds (an "Indirect Participant"). Without limiting the immediately preceding sentence, the City and the Paying Agent/Registrar shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co., or any Depository Participant with respect to any ownership interest in the Bonds, or (ii) the delivery to any Depository Participant or any Indirect Participant or any other Person, other than a registered owner of a Bond, of any amount with respect to principal of, premium, if any, or interest on the Bonds. While in the DTC System, no person other than Cede & Co., or any successor thereto, as nominee for DTC, shall receive a Bond evidencing the obligation of the City to make payments of principal, premium, if any, and interest pursuant to this Ordinance. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions in this Ordinance with respect to interest checks or drains being mailed to the holder, the word "Cede & Co." in this Ordinance shall refer to such new nominee of DTC. In the event that (a) the City determines that DTC is incapable of discharging its responsibilities described herein and in the Representation Letter, (b) the Representation Letter shall be terminated for any reason, or (c) DTC or the City determines that it is in the best interest of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the City shall notify the Paying Agent/Registrar, DTC, and Depository Participants of the availability within a reasonable period of time through DTC of certificated certificates, and the Bonds shall no 18 longer be restricted to being registered in the name of Cede & Co., as nominee of DTC. At that time, the City may determine that the Bonds shall be registered in the name of and deposited with a successor depository operating a securities depository system, as may be acceptable to the City, or such depository's agent or designee, and if the City and the Paying Agent/Registrar do not select such alternate securities depository system then the Bonds may be registered in whatever names the registered owners of Bonds transferring or exchanging the Bonds shall designate, in accordance with the provisions hereof. Notwithstanding any other provision of this Ordinance to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Representation Letter. Section 18. Defeasance of the Bonds. (a) Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (an "Defeased Bond") within the meaning of this Ordinance, except to the extent provided in subsection (c) of this Section, when payment of the principal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemption, or otherwise) either (i) shall have been made or caused to be made in accordance with the terms thereof (including the giving of any required notice of redemption), or (ii) shall have been provided for on or before such due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such payment (1) lawful money of the United States of America sufficient to make such payment or (2) direct obligations of the United States of America, or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, and which may be book entry form (herein "Government Obligations") which mature as to principal and interest in such amounts and at such time as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the City with the Paying Agent/Registrar for the payment of its services until all Defeased Bonds shall have become due and payable. At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid, such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the benefits of, the revenue herein levied and pledged as provided in this Ordinance, and such principal and interest shall be payable solely from such money or Government Obligations. (b) Any money so deposited with the Paying Agent/Registrar may at the written direction of the City also be invested as hereinbefore set forth, and all income from such Government Obligations received by the Paying Agent/Registrar which is not required for the payment of the Bonds and interest thereon, with respect to which such money has been so deposited, shall be turned over to the City, or deposited as directed in writing by the City. (c) Until all Defeased Bonds shall have become due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar for such Defeased Bonds the same as if they had not been defeased, and the City shall make proper arrangements to provide and pay for such services as required by this Ordinance. Section 19. Sale and Delivery of Bonds. (a) Sale. The Bonds are hereby sold and shall be delivered to the Initial Purchasers pursuant to a public sale. It is hereby officially found, determined, and declared that the bid of the Initial Purchasers is the best bid and the terms of this sale are the most advantageous reasonably obtainable. The Initial Bond shall be registered in the name of Cede & Co. The officers of the City are hereby authorized and directed to execute and deliver such certificates, instruction, or other instruments as are required or necessary to accomplish the purposes of this Ordinance. (b) Legal Opinion. The Initial Purchasers' obligation to accept delivery of the Bonds is subject to their being furnished an opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., Attorneys, such opinion to be dated and delivered as of the date of delivery and payment for the Bonds. (c) Registration and Delivery. Upon the registration of the Initial Bond, the Comptroller of Public Accounts of the State of Texas is authorized and instruct to deliver the Initial Bond pursuant to the instruction of the Mayor for delivery to the Purchaser. (d) Approval of Official Statement. The City hereby approves the form and content of the Official Statement relating to the Bonds and any addenda, supplement, or amendment thereto, and approves the distribution 19 of such Official Statement in the reoffering of the Bonds by the Initial Purchaser in final form, with such changes therein or additions thereto as the officer executing the same may deem advisable, such determination to be conclusively evidenced by his execution thereof. The form and content of and the distribution and use of the Preliminary Official Statement dated March 23, 2000, prior to the date hereof is hereby ratified and conf'u~ned. The Council finds and determines that the Preliminary Official Statement is "deemed final" as that term is defined in 17 C.F.R. Section 240.15c2-12. Section 20. Use of Proceeds. The proceeds from the sale of the Bonds shall be as follows: (i) accrued interest on the Bonds shall be deposited to the credit of the Bond Fund and (ii) the balance of the proceeds shall be deposited to a conslniction fund held at the City's depository bank and used for the purposes described in Section 1. Any amounts remaining in the Construction Fund after completion of the improvements shall be transferred to the Bond Fund. Section 21. Pavinl~ Agen~/Rel~istrar Agreement. The Paying Agent/Registrar Agreement, between the City and the Paying Agent/Registrar attached hereto as Exhibit "C" is hereby approved, and the Mayor is authorized to execute and the City Secretary is authorized to attest same. Section 22. Continuinl~ Disclosure Undertaking. (a) Annual Reports. The Issuer shall provide annually to each nationally recognized municipal securities information repository ("NRMSIR") and any state information depository ("SID"), within six months after the end of each fiscal year ending in or after 2000, financial information and operating data with respect to the Issuer of the general type included in the Offficial Statement, being the information described in Exhibit B hereto. Any financial statements so to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit B hereto and (2) audited, if the Issuer commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, the Issuer shall provide audited financial statements for the applicable fiscal year to each NRMSIR and any SID when and if the audit report on such statements becomes available. If the Issuer changes its fiscal year, it will notify each NRMSIR and any SID of the change (and of the date of the new fiscal year end) prior to the next date by which the Issuer otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or may be included by specific reference to any document (including an official statement or other offering document, if it is available from the Municipal Securities Rulemaking Board ("MSRB") that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. (b) Material Event Notices. The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: (i) principal and interest payment delinquencies; (ii) non-payment related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (vii) modifications to rights of holders of the Bonds; (viii) bond calls; (ix) defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds; and (xi) ratings. The Issuer shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any failure by the Issuer to provide financial information or operating data in accordance with this Section by the time required by this Section. (c) Limitations, Disclaimers, and Amendments. The Issuer shall be obligated to observe and perform the covenants specified in this Section for so long as, but only for so long as, the Issuer remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the Issuer in any event will give notice of any deposit made in accordance with subsection (b) above, that causes the Bonds no longer to be Outstanding and any call of Bonds made in connection therewith. 20 The provisions of this Section are for the sole benefit of the beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Issuer undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the Issuer's financial results, condition, or prospects or hereby undertake to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The Issuer does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any t~ature date. UNDER NO CIRCUMSTANCES SHALL THE ISSUER BE LIABLE TO THE BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE ISSUER, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR M,~ND,~MU$ OR SPECIFIC PERFORMANCE. No default by the Issuer in observing or performing its obligations under this Section shall comprise a breach of or default under this Ordinance for purposes of any other provisions of this Ordinance. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the Issuer under federal and state securities laws. The provisions of this Section may be amended, supplemented, or repealed by the Issuer from time to time under the following circumstances, but not otherwise: (!) to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the Issuer, if the provisions of this Section, as so supplemented or amended, would have permitted an underwriter to purchase or sell Bonds in the present offering in compliance with the Rule and either the Holders of a majority in aggregate principal amount of the Outstanding Bonds consent to such amendment, supplement, or repeal, or any State agency or official determines that such amendment, supplement, or repeal will not materially impair the interests of the beneficial owners of the Bonds, (2) upon repeal of the applicable provisions of the Rule, or any judgment by a court of final jurisdiction that such provisions are invalid, or (3) in any other circumstance or manner permitted by the Rule. Section 23. Further Procedures. The Mayor, the City Secretary, the Director of Management and Budget, the City's Financial Advisor, and all other officers, employees, attorneys, and agents of the City, and each of them, shall be and they are hereby expressly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the seal and on behalf of the City, all such instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Ordinance, the Bonds, and the Official Statement. Prior to the initial delivery of the Bonds, the Mayor and Bond Counsel to the City are hereby authorized and directed to approve any technical changes or corrections to this Ordinance or to any of the instruments authorized by this Ordinance necessary in order to (i) correct any ambiguity or mistake or properly or more completely document the transactions contemplated and approved by this Ordinance, (ii) obtain a rating from any of the national bond rating agencies, or (iii) obtain the approval of the Bonds by the Texas Attorney General's office. Section 24. Miscellaneous Provisions. (a) Titles Not Restrictive. The titles assigned to the various sections of this Ordinance are for convenience only and shall not be considered restrictive of the subject matter of any section or of any part of this Ordinance. (b) Preamble Adopted. The preamble to this Ordinance is hereby adopted as a part of the this Ordinance. (c) Inconsistent Provisions. All orders and resolutions, or parts thereof, which are in conflict or inconsistent with any provision of this Ordinance are hereby repealed and declared to be inapplicable, and the provisions of this Ordinance shall be and remain controlling as to the matters prescribed herein. 21 (d) Severability. If any word, phrase, clause, paragraph, sentence, part, portion, or provision of this Ordinance or the application thereof to any person or circumstance shall be held to be invalid, the remainder of this Ordinance shall nevertheless be valid and the City hereby declares that this Ordinance would have been enacted without such invalid word, phrase, clause, paragraph, sentence, pan, portion, or provisions. (e) Governing Law. This Ordinance shall be construed and enforced in accordance with the laws of the State of Texas. (f) Open Meeting. The City officially f'mds and determines that the meeting at which this Ordinance is adopted was open to the public; and that public notice of the time, place, and purpose of such meeting was given, all as required by Chapter 551, Texas Government Code. (g)Immediate Effect. Notwithstanding any charter provision or other applicable laws, this Ordinance shall immediately effective upon its adoption by the City Council. PASSED AND APPROVED this April 13, 2000. /s/ Connie Hooks /s/ Lyn Mcllhaney City Secretary, City of College Station, Texas Mayor, City of College Station, Texas (CITY SEAL) 22 EXHIBIT A PAYING AGENT/REGISTRAR AGREEMENT THIS PAYING AGENT/REGISTRAR AGREEMENT entered into as of April 1, 2000 (the "Agreement"), by and between the CITY OF COLLEGE STATION, TEXAS (the "Issuer"), and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, Houston, Texas, a banking association duly organized and existing under the laws of the United States of America (the "Bank"). RECITALS WHEREAS, the Issuer has duly authorized and provided for the issuance of its "City of College Station, Texas Utility System Revenue Bonds, Series 2000" (the "Securities"), such Securities to be issued in fully registered form only as to the payment of principal and interest thereon; WHEREAS, the Securities are scheduled to be delivered to the initial purchaser thereof as provided in the "Ordinance" (hereinafter defined); WHEREAS, the Issuer has selected the Bank to serve as Paying Agent/Registrar in connection with the payment of the principal of, premium, if any, and interest on the Securities and with respect to the registration, transfer, and exchange thereof by the registered owners thereof; WHEREAS, the Bank has agreed to serve in such capacities for and on behalf of the Issuer and has full power and authority to perform and serve as Paying Agent/Registrar for the Securities; NOW, THEREFORE, it is mutually agreed as follows: ARTICLE I. APPOINTMENT OF BANK AS PAYING AGENT AND REGISTRAR Section 1.01. Appointment. The Issuer hereby appoints the Bank to serve as Paying Agent with respect to the Securities. As Paying Agent for the Securities, the Bank shall be responsible for paying on behalf of the Issuer the principal, premium (if any), and interest on the Securities as the same become due and payable to the registered owners thereof, all in accordance with this Agreement and the Ordinance. The Issuer hereby appoints the Bank as Registrar with respect to the Securities. As Registrar for the Securities, the Bank shall keep and maintain for and on behalf of the Issuer books and records as to the ownership of said Securities and with respect to the transfer and exchange thereof as provided herein and in the Ordinance. The Bank hereby accepts its appointment, and agrees to serve as the Paying Agent and Registrar for the Securities. Section 1.02. Compensation. As compensation for the Bank's services as Paying Agent/Registrar, the Issuer hereby agrees to pay the Bank the fees and amounts set forth in Schedule A attached hereto for the first year of this Agreement and thereafter the fees and amounts set forth in the Bank's current fee schedule then in effect for services as Paying Agent/Registrar for municipalities, which shall be supplied to the Issuer on or before 90 days prior to the close of the Fiscal Year of the Issuer, and shall be effective upon the first day of the following Fiscal Year. In addition, the Issuer agrees to reimburse the Bank upon its request for all reasonable expenses, disbursements and advances incurred or made by the Bank in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its agents and counsel). A-! ARTICLE I1. DEFINITIONS Section 2.01. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: "Bank Office" means the designated principal corporate trust office of the Bank as indicated on the signature page hereof. The Bank will notify the Issuer in writing of any change in location of the Bank Office. "Bank Principal Payment Office" means Dallas, Texas. "Fiscal Year" means the fiscal year of the Issuer, ending September 30. "Holder" and "Security Holder" each means the Person in whose name a Security is registered in the Security Register. "Issuer Request" and "Issuer Ordinance" means a written request or order signed in the name of the Issuer by the Mayor of the Issuer, the Director of Finance of the Issuer, the City Administrator, or the City Secretary of the Issuer, any one or more of said officials, delivered to the Bank. "Legal Holiday" means a day on which the Bank is required or authorized to be closed. "Ordinance" mean the ordinance of the governing body of the Issuer pursuant to which the Securities are issued, certified by the City Secretary or any other officer of the Issuer and delivered to the Bank. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision of a government. "Predecessor Securities" of any particular Security means every previous Security evidencing all or a portion of the same obligation as that evidenced by such particular Security (and, for the purposes of this definition, any mutilated, lost, destroyed, or stolen Security for which a replacement Security has been registered and delivered in lieu thereof pursuant to Section 4.06 hereof and the Ordinance). "Redemption Date" when used with respect to any Security to be redeemed means the date fixed for such redemption pursuant to the terms of the Ordinance. "Responsible Officer" when used with respect to the Bank means the Chairman or Vice-Chairman of the Board of Directors, the Chairman or Vice-chairman of the Executive Committee of the Board of Directors, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, the Cashier, any Assistant Cashier, any Trust Officer or Assistant Trust Officer, or any other officer of the Bank customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Security Register" means a register maintained by the Bank on behalf of the Issuer providing for the registration and transfer of the Securities. "Stated Maturity" means the date specified in the Ordinance the principal of a Security is scheduled to be due and payable. Section 2.02. Other Definitions. The terms "Bank," Issuer," and "Securities (Security)" have the meanings assigned to them in the recital paragraphs of this Agreement. A-2 The term "Paying Agent/Registrar" refers to the Bank in the performance of the duties and functions of this Agreement. ARTICLE IlL PAYING AGENT Section 3.01. Duties of Paving Agent. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer, pay on behalf of the Issuer the principal of each Security at its Stated Maturity, Redemption Date, or Acceleration Date, to the Holder upon surrender of the Security to the Bank at the Bank Principal Payment Office. As Paying Agent, the Bank shall, provided adequate collected funds have been provided to it for such purpose by or on behalf of the Issuer. pay on behalf of the Issuer the interest on each Security when due, by computing the amount of interest to be paid each Holder and preparing and sending checks by United States Mail, first class postage prepaid, on each payment date. to the Holders of the Securities (or their Predecessor Securities) on the respective Record Date, to the address appearing on the Security Register or by such other method, acceptable to the Bank, requested in writing by the Holder at the Holder's risk and expense. Section 3.02. Payment Dates. The Issuer hereby instructs the Bank to pay the principal of and interest on the Securities on the dates specified in the Ordinance. ARTICLE IV. REGISTRAR Section 4.01. Security Register = Transfers and Exchanges. The Bank agrees to keep and maintain for and on behalf of the Issuer at the Bank Principal Payment Office books and records (herein sometimes referred to as the "Security Register") for recording the names and addresses of the Holders of the Securities, the transfer, exchange, and replacement of the Securities, and the payment of the principal of and interest on the Securities to the Holders and containing such other information as may be reasonably required by the Issuer and subject to such reasonable regulations as the Issuer and the Bank may prescribe. All transfers, exchanges, and replacement of Securities shall be noted in the Security Register. Every Security surrendered for transfer or exchange shall be duly endorsed or be accompanied by a written instrument of transfer, the signature on which has been guaranteed by an officer of a federal or state bank or a member of the National Association of Securities Dealers, in form satisfactory to the Bank, duly executed by the Holder thereof or his agent duly authorized in writing. The Bank may request any supporting documentation it feels necessary to effect a re-registration, transfer, or exchange of the Securities. To the extent possible and under reasonable circumstances, the Bank agrees that, in relation to an exchange or transfer of Securities, the exchange or transfer by the Holders thereof will be completed and new Securities delivered to the Holder or the assignee of the Holder in not more than three business days at~er the receipt of the Securities to be cancelled in an exchange or transfer and the written instrument of transfer or request for exchange duly executed by the Holder, or his duly authorized agent, in form and manner satisfactory to the Paying Agent/Registrar. Section 4.02. Certificates. The Issuer shall provide an adequate inventory of printed Securities to facilitate transfers or exchanges thereof. The Bank covenants that the inventory of printed Securities will be kept in safekeeping pending their use, and reasonable care will be exercised by the Bank in maintaining such Securities in safekeeping, which shall be not less than the care maintained by the Bank for debt securities of other political subdivisions or corporations for which it serves as registrar, or that is maintained for its own securities. Section 4.03. Form of Security Register. The Bank, as Registrar, will maintain the Security Register relating to the registration, payment, transfer, and exchange of the Securities in accordance with the Bank's general A-3 practices and procedures in effect from time to time. The Bank shall not be obligated to maintain such Security Register in any form other than those which the Bank has currently available and currently utilizes at the time. The Security Register may be maintained in written form or in any other form capable of being converted into written form within a reasonable time. Section 4.04. List of Security Holders. The Bank will provide the Issuer at any time requested by the Issuer, upon payment of the required fee, a copy of the information contained in the Security Register. The Issuer may also inspect the information contained in the Security Register at any time the Bank is customarily open for business, provided that reasonable time is allowed the Bank to provide an up-to-date listing or to convert the information into written form. Unless required by law, the Bank will not release or disclose the contents of the Security Register to any person other than to, or at the written request of, an authorized officer or employee of the Issuer, except upon receipt of a court order or as otherwise required by law. Upon receipt of a court order and prior to the release or disclosure of the contents of the Security Register, the Bank will noti~ the Issuer so that the Issuer may contest the court order or such release or disclosure of the contents of the Security Register. Section 4.0S. Return of Cancelled Certificates. All Securities surrendered for payment, redemption, transfer, exchange, or replacement, if surrendered to the Bank, shall be promptly cancelled by it and, if surrendered to the Issuer, shall be delivered to the Bank and, if not already cancelled, shall be promptly cancelled by the Bank. The Issuer may at any time deliver to the Bank for cancellation any Securities previously authenticated and delivered which the Issuer may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Bank. All cancelled Securities held by the Bank shall be destroyed, and evidence of such destruction furnished to the Issuer at such reasonable intervals as it determines subject to applicable rules and regulations of the Securities and Exchange Commission. Section 4.06. Mutilnted~ Destroyed, Lost, or Stolen Securities. The Issuer hereby instructs the Bank, subject to the applicable provisions of the Ordinance, to deliver and issue Securities in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities as long as the same does not result in an over issuance. In case any Security shall be mutilated, or destroyed, lost, or stolen, the Bank, in its discretion, may execute and deliver a replacement Security of like form and tenor, and in the same denomination and bearing a number not contemporaneously outstanding, in exchange and substitution for such mutilated Security, or in lieu of and in substitution for such destroyed lost or stolen Security, only after (i) the filing by the Holder thereof with the Bank of evidence satisfactory to the Bank of the destruction, loss, or theft of such Security, and of the authenticity of the ownership thereof and (ii) the furnishing to the Bank of indemnification in an amount satisfactory to hold the Issuer and the Bank harmless. All expenses and charges associated with such indemnity and with the preparation, execution, and delivery of a replacement Security shall be borne by the Holder of the Security mutilated, or destroyed, lost, or stolen. Section 4.07. Transaction Information to Issuer. The Bank will, within a reasonable time after receipt of written request from the Issuer, furnish the Issuer information as to the Securities it has paid pursuant to Section 3.01, Securities it has delivered upon the transfer or exchange of any Securities pursuant to Section 4.01, and Securities it has delivered in exchange for or in lieu of mutilated, destroyed, lost, or stolen Securities pursuant to Section 4.06. Section 4.08. Redemption of Securities. Securities which are redeemable before their stated maturity shall be redeemable in accordance with Section 3 of the Ordinance and terms in accordance with this Article IV. Section 4.09. Notice of Redemption. Notice of redemption shall be given by the Bank in the name at the expense of the Issuer not less than 30 or more than 45 days prior to the date of redemption, to each Registered Owner of Securities to be redeemed and otherwise required by the Ordinance. A-4 All notices of redemption shall include the CUSIP number and statement as to: (a) the date of redemption; (b) the price of the Securities expressed as a percentage of par amount of the Securities; (c) the principal amount of Securities to be redeemed, and, if less than all outstanding Securities are to be redeemed, the identification (and, in case of partial redemption, the principal amounts) of the Securities to be redeemed; (d) that on the date of redemption the principal of each of the Securities to be redeemed will become due and payable and that the interest thereon shall cease to accrue from and after said date; and (e) that the Securities to be redeemed are to be surrendered for payment of the price stated in the notice of redemption at the designated principal payment office of the Bank, and the address of such office. The Bank shall, at the expense of the Issuer, provide notice to designated securities depositories and information services based upon the then current guidelines of the Securities and Exchange Commission relating to redemptions and refundings of municipal bonds, including the Securities. The Bank, at the expense of the Issuer, shall also provide notice to any other addressees as the Issuer shall designate in writing. ARTICLE V. THE BANK Section $.01. Duties of Bank. The Bank undertakes to perform the duties set forth herein and agrees to use reasonable care in the performance thereof. Section 5.02. Reliance on Documents~ Etc. (a) The Bank may conclusively rely, as to the truth of the statements and correctness of the opinions expressed therein, on certificates or opinions furnished to the Bank. (b) The Bank shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Bank was negligent in ascertaining the pertinent facts. (c) No provisions of this Agreement shall require the Bank to expend or risk its own funds or otherwise incur any financial liability for performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risks or liability is not assured to it. (d) The Bank may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document believed by it to be genuine and to have been signed or presented by the proper patty or parties. Without limiting the generality of the foregoing statement, the Bank need not examine the ownership of any Securities, but is protected in acting upon receipt of Securities containing an endorsement or instruction of transfer or power of transfer which appears on its face to be signed by the Holder or an agent of the Holder. The Bank shall not be bound to make any investigation into the facts or matters stated in a resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, note, security, or other paper or document supplied by Issuer. (e) The Bank may consult with counsel, and the written advice of such counsel or any opinion of counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by it hereunder in good faith and in reliance thereon. (O The Bank may exercise any of the powers hereunder and perform any duties hereunder either directly or by or through agents or attorneys of the Bank. A-5 Section 5.03. Recitals of Issuer. The recitals contained herein with respect to the Issuer and in the Securities shall be taken as the statements of the Issuer, and the Bank assumes no responsibility for their correctness. The Bank shall in no event be liable to the Issuer, any Holder or Holders of any Security, or any other Person for any amount due on any Security from its own funds. Section 5.04. May Hold Securities. The Bank, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Issuer with the same rights it would have if it were not the Paying Agent/Registrar, or any other agent. Section 5.05. Money Held by Bank. (a) Money held by the Bank hereunder shall be held for the benefit of the Registered Owners of the Securities. (b) The Bank shall be under no obligation to pay interest on any money received by it hereunder. (c) Except to the extent provided otherwise in the Ordinance, any money deposited with the Bank for the payment of the principal on, redemption premium, if any, or interest on any security and remaining unclaimed for three years after the dates such amounts have become due and payable shall be reported and disposed of by the Bank in accordance with the provisions of Title 6 of the Texas Property Code, as amended, to the extent that such provisions are applicable to such amounts. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demands, or controversy over its person as well as funds on deposit, in either the District Court of Harris County, Texas, or the United States Federal District Court for the Southern District of Texas, waive personal service of any process, and agree that service of process by certified or registered mail, return receipt requested, to the address set forth in Section 6.03 hereof shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction, at the expense of the Issuer, to determine the rights of any persons claiming any interest herein. Section 5.06. Indemnification. To the extent permitted by law, the Issuer agrees to indemnify the Bank for, and hold it harmless against, any loss, liability, or expense incurred without negligence or bad faith on its part, arising out of or in connection with its acceptance or administration of its duties hereunder, including the cost and expense against any claim or liability in connection with the exercise or performance of any of its powers or duties under this Agreement. Section 5.07. Interpleader. The Issuer and the Bank agree that the Bank may seek adjudication of any adverse claim, demand, or controversy over its person as well as funds on deposit, in either a Federal or State District Court located in the State and County where either the Bank Office or the administrative offices of the Issuer is located, and agree that service of process by certified or registered mail, return receipt requested, to the address referred to in Section 6.03 of this Agreement shall constitute adequate service. The Issuer and the Bank further agree that the Bank has the right to file a Bill of Interpleader in any court of competent jurisdiction to determine the rights of any Person claiming any interest herein. Section 5.08. Depository Trust Company Services. It is hereby represented and warranted that, in the event the Securities are otherwise qualified and accepted for "Depository Trust Company" services or equivalent depository trust services by other organizations, the Bank has the capability and, to the extent within its control, will comply with the "Operational Arrangements," effective August 1, 1987, which establishes requirements for securities to be eligible for such type depository trust services, including, but not limited to, requirements for the timeliness of payments and funds availability, transfer turnaround time, and notification of redemptions and calls. ARTICLE VI. MISCELLANEOUS PROVISIONS A-6 Section 6.01. Amendment. This Agreement may be amended only by an agreement in writing signed by both of the parties hereto. Section 6.02. Assignment. This Agreement may not be assigned by either party without the prior written consent of the other. Section 6.03. Notices. Any request, demand, authorization, direction, notice, consent, waiver, or other document provided or permitted hereby to be given or furnished to the Issuer or the Bank shall be mailed or delivered to the Issuer or the Bank, respectively, at the addresses shown on the signature page of this Agreement. Section 6.04. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. Section 6.05. Successors and Assigns. All covenants and agreements herein by the Issuer shall bind its successors and assigns, whether so expressed or not. Section 6.06. Severability. In case any provision herein shall be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 6.07. Benefits of Agreement. Nothing herein, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim hereunder. Section 6.08. Entire Aereement. This Agreement and the Ordinance constitute the entire agreement between the parties hereto relative to the Bank acting as Paying Agent/Registrar and if any conflict exists between this Agreement and the Ordinance, the Ordinance shall govern. Section 6.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one and the same Agreement. Section 6.10. Termination. This Agreement will terminate (i) on the date of final payment of the principal of and interest on the Securities to the Holders thereof or (ii) may be earlier terminated by either party upon 60 days written notice; provided, however, an early termination of this Agreement by either party shall not be effective until (a) a successor Paying Agent/Registrar has been appointed by the Issuer and such appointment accepted and Co) notice has been given to the Holders of the Securities of the appointment of a successor Paying Agent/Registrar. Furthermore, the Bank and Issuer mutually agree that the effective date of an early termination of this Agreement shall not occur at any time which would disrupt, delay, or otherwise adversely affect the payment of the Securities. Upon an early termination of this Agreement, the Bank agrees to promptly transfer and deliver the Security Register (or a copy thereof), together with other pertinent books and records relating to the Securities, to the successor Paying Agent/Registrar designated and appointed by the Issuer. The provisions of Section 1.02 and of Article Five shall survive and remain in full force and effect following the termination of this Agreement. (Remainder of page intentionally left blank) A-7 Section 6.11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Attest: CHASE BANK OF TEXAS, NATIONAL ASSOCIATION Houston, Texas By Title (BANK SEAL) By. Title Address: 600 Travis, Suite 1150 Houston, Texas 77002 Attest: City Secretary (ISSUER SEAL) CITY OF COLLEGE STATION, TEXAS 'Mayor ' ' . / Address: 1 ! 01 Texas Avenue College Station, Texas 77840 A-8 SCHEDULE A Paying Agent/Registrar Fee Schedule (To be furnished by the Bank) A-1 EXHIBIT B DESCRIPTION OF ANNUAL FINANCIAL INFORMATION The following information is referred to in Section 22 of this Ordinance. Annual Financial Statements and Operating Data The f'mancial information and operating data with respect to the Issuer to be provided annually in accordance with such Section are as specified (and included in the Appendix or under the headings of the Official Statement referred to below): 1. The "Audit Report" for the most recently concluded fiscal year. 2. The information included in the Official Statement under the following captions, but for the most recently concluded fiscal year: Tables I through 9 and Appendix B. Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in paragraph 1 above, as such principles may be changed from time to time to comply with state law or regulation. B-1