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HomeMy WebLinkAbout84-564 04-24-1984RESOLUTION NO. 84 -564 RESOLUTION APPROVING RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF TRINITY RIVER AUTHORITY OF TEXAS (TARRANT COUNTY WATER PROJECT) REVENUE BONDS, SERIES 1984, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO THE STATE OF TEXAS COUNTY OF TARRANT CITY OF EULESS WHEREAS, it is necessary and advisable that the City approve the Resolution Authorizing The Issuance, Sale, and Delivery of Trinity River Authority of Texas (Tarrant County Water Project) Revenue Bonds, Series 1984, and Approving and Authorizing Instruments and Procedures Relating Thereto here- inafter described. THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EULESS: 1. That a draft of a "RESOLUTION AUTHORIZING THE ISSU- ANCE, SALE, AND DELIVERY OF TRINITY RIVER AUTHORITY OF TEXAS (TARRANT COUNTY WATER PROJECT) REVENUE BONDS, SERIES 1984, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO" (the "Bond Resolution ") proposed to be adopted by the Board of Directors of Trinity River Authority.of Texas (the "Authority ") on April 25, 1984, has been submitted to the City in the form attached hereto, and made a part hereof for all purposes. Said draft is hereby approved by the City as to form and substance, and the bonds (the "Bonds ") described therein may be issued by Trinity River Authority of Texas in accordance with the terms and provisions set forth therein. 2. That it is acknowledged and agreed by the City that bonds authorized pursuant to said Bond Resolution (the "Bonds ") will be issued in strict conformance and compliance with the water supply contract dated as of January 21, 1972, executed between the Authority and the City, and amended as of January 22, 1975, and further amended as of December 5, 1979, relating to the Project as defined in said Contract and described in said Bond Resolution, and that the City will be fully bound by the provisions of said Bond Resolution insofar as they pertain to the City, and the City will be unconditionally obligated to make the payments with respect to said Bonds as required by the Contract and said Bond Resolution. 3. That a case of emergency exists which requires the City to request the Authority to finance and construct the facilities for which the Bonds are to be issued, and the City hereby formally requests the Authority to proceed with such financing and construction. CERTIFICATE FOR RESOLUTION APPROVING RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF TRINITY RIVER AUTHORITY OF TEXAS (TARRANT COUNTY WATER PROJECT) REVENUE BADS, SERIES 1984, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO THE STATE OF TEXAS COUNTY OF TARRANT CITY OF EULESS We, the undersigned officers of said City, hereby certify as follows: 1. The City Council of said City convened in REGULAR MEETING ON THE 24TH DAY OF APRIL, 1984, at the City Hall, and the roll was called of the duly constituted officers and members of said City Council, to -wit: Kay Rainey, City Secretary Bob Eden Robert Pippin Ron Sternfels Harold Samuels, Mayor Mrs. Willie Mae McCormick Mayor Pro Tem Glenn Walker and all of said persons were present, except the following absentees: none were absent , thus constituting a quorum. thereupon, among other business, the following was transacted at said Meeting: a written RESOLUTION APPROVING RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DE- LIVERY OF TRINITY RIVER AUTHORITY OF TEXAS (TARRANT COUNTY WATER PROJECT) REVENUE BONDS, SERIES 1984, AND APPROVING AND AUTHORIZING INSTRUMENTS AND PROCEDURES RELATING THERETO was duly introduced for the consideration of said City Council and duly read. It was then duly moved and seconded that said Resolution be adapted; and, after due discussion, said motion, carrying with it the adoption of said Resolution, prevailed and carried by the following vote: AYES: All members of said City Council shown present above voted "Aye ". NAYS: None. 2. That a true, full, and correct copy of the aforesaid Resolution adopted at the Meeting described in the above and foregoing paragraph is attached to and follows this Certificate; that said Resolution has been duly recorded in said City Council's minutes of said Meeting; that the above and foregoing paragraph is a true, full, and correct excerpt from said City Council's minutes of said Meeting pertaining to the adoption of said Resolution; that the persons named in the above and foregoing paragraph are the duly chosen, qualified, and acting officers and members of said City Council as indicated therein; and that each of the officers and members of said City Council was duly and sufficiently notified officially and personal- ly, in advance, of the time, place, and purpose of the aforesaid Meeting, and that said Resolution would be introduced and considered for adoption at said Meeting; and that said Meeting was open to the public, and public notice of the time, place, and purpose of said Meeting was given, all as required by Vernon's Ann. Civ. St. Article 6252 -17. 3. That the Mayor of said City has approved, and hereby approves, the aforesaid Resolution; that the Mayor and the City Secretary of said City have duly signed said Resolution; and that the Mayor and the City Secretary of said City hereby declare that their signing of this Certificate shall constitute the signing of the attached and following copy of said Resolution for all pur- poses. SI rC -cre f (SEAL.) SEALED the 24th day of April, 1984. I, the unders - -•, City Attorney of certify ghat I read and approved as to leg Resolution, prior to its adoption. Mayor of E,,iless, Texas f atta City Attorney RESOLUTION NO. R -589 RESOLUTION AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF TRINITY RIVER AUTHORITY OF TEXAS (TARRANT COUNTY WATER PROJECT) REVENUE BONDS, SERIES 1984, AND APPROVING AND AUTHORIZ- ING INSTRUMENTS AND PROCEDURES RELATING THERETO WHEREAS, water supply contracts, each dated as of January 21, 1972, and amended as of January 22, 1975, and as of December 5, 1979, have been duly executed between the Trinity River Authority of Texas (the "Issuer ") and the Cities of Bedford and Euless, Texas, respectively, and water supply con- tracts, each dated as of April 25, 1979, and amended as of December 5, 1979, and as of April 23, 1980, have been duly ex- ecuted between the Authority and the Cities of Colleyville, Grapevine, and North Richland Hills, Texas, with all of the above named cities being hereinafter collectively called the "Cities "; and WHEREAS, all of the contracts, as amended, with the Cities, respectively, described above are hereinafter col- lectively called the "Contracts ", and the Contracts are hereby adopted by reference for all purposes, with the same effect as if they had been set forth in their entirety in this resolu- tion; and WHEREAS, pursuant to the Contracts the following Series of bonds are presently outstanding: Trinity River Authority of Texas (Tarrant County Water Project) Revenue Bonds, Series 1975, dated February 1, 1975 (the "Series 1975 Bonds "); Trinity River Authority of Texas (Tarrant County Water Project) Revenue Bonds, Series 1979, dated April 1, 1979 (the "Series 1979 Bonds "); and Trinity River Authority of Texas (Tarrant County Water Project) Revenue Bonds, Series 1980, dated May 1, 1980 (the "Series 1980 Bonds "), (the "Outstanding Bonds "); and WHEREAS, the Contracts relate to the financing of the ac- quisition and construction of the Project, as defined therein, being water supply facilities to serve the Cities and others, as described in the engineering report entitled "Report on Pro- posed Bedford - Euless Water System to Trinity River Authority of Texas ", dated July 1, 1971, and as such report is amended or supplemented to provide expanded service (the "Engineering Report "); and the Engineering Report has been supplemented by a document entitled "Trinity River Authority of Texas Tarrant County Water Project Master Plan Modification to serve Bedford, Euless, Colleyville, Grapevine, and North Richland Hills, dated October, 1976 ", prepared by Knowlton - English - Flowers, Inc. (the "Consulting Engineers "), and has been further supplemented by a document dated August, 1978, entitled "Supplement to the En- gineering Report on Proposed Bedford - Euless Water System which was Dated July, 1971" by the Consulting Engineers, and has further supplemented by a document entitled "Master Plan Modi- fication which was dated October, 1976- Trinity River Authority of Texas Tarrant. County Water Project Transmission Facilities - for Serving Colleyville, Grapevine, and North Richland Hills, dated April 1, 1979 ", prepared by the Consulting Engineers and has been further supplemented by a document entitled "Supplement to the Master Plan Modification which was dated October 1, 1976- Trinity River Authority of Texas Tarrant County Water Project Raw Water Parallel Pipeline Segment I and 1 Interim Supply Interconnection Facilities, dated April, 1984 ", prepared by the Consulting Engineers; and WHEREAS, the Engineering Report, including the aforesaid supplements, provides for improvements, betterments, and extensions of the Project so as to provide expanded service to the Cities and others, and the Issuer has determined to issue bonds for such purpose as hereinafter provided; and WHEREAS, the bonds hereinafter authorized are to be issued and delivered pursuant to Chapter 518, Acts of the Regular Session of the 54th Legislature, Regular Session, 1955, as amended (the "Authority Act "), Vernon's Ann. Tex. Civ. St. Article 4413(32c) (the "Interlocal Cooperation Act "), and other applicable laws; and WHEREAS, the bonds hereinafter authorized are "Improvement Bonds" and "Additional Bonds" as such terms are defined and as such bonds are permitted in the resolutions authorizing the issuance of the Outstanding Bonds, and all of the bonds herein- after authorized are "Bonds ", as defined and permitted in the Contracts, and will be payable from net revenues derived by the Issuer from the Contracts. THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF TRINITY RIVER AUTHORITY OF TEXAS THAT: Section 1. AMOUNT AND PURPOSE OF THE BONDS. The bond or bonds of Trinity River Authority of Texas (the "Issuer ") are hereby authorized to be issued and delivered in the aggregate principal amount of $1,500,000, FOR THE PURPOSE OF THE ACQUISITION AND CONSTRUCTION OF IMPROVEMENTS, BETTERMENTS, EXTENSIONS, AND REPLACEMENTS OF THE TRINITY RIVER AUTHORITY OF TEXAS TARRANT COUNTY WATER PROJECT. Section 2. DESIGNATION OF THE BONDS. Each bond issued pursuant to this Resolution shall be designated: "TRINITY RIVER AUTHORITY OF TEXAS (TARRANT COUNTY WATER PROJECT) REVENUE BOND, SERIES 1984" and initially there shall be issued, sold, and delivered hereunder a single fully registered bond, without interest coupons, payable in installments of principal (the "Initial Bond "), but the Initial Bond may be assigned and transferred and /or converted into and exchanged for a like aggregate principal amount of fully registered bonds, without interest coupons, having serial maturities, and in the denomi- nation or denominations of $5,000 or any integral multiple of $5,000, all in the manner hereinafter provided. The term "Bonds" as used in this Resolution shall mean and include collectively the Initial Bond and all substitute bonds ex- changed therefor, as well as all other substitute bonds and replacement bonds issued pursuant hereto, and the term "Bond" shall mean any of the Bonds. Section 3. INITIAL DATE, DENOMINATION, NUMBER, MATURI- TIES, INITIAL REGISTERED OWNER, AND CHARACTERISTICS OF THE INITIAL BOND. (a) The Initial Bond is hereby authorized to be issued, sold, and delivered hereunder as a single fully registered Bond, without interest coupons, dated MAY 1, 1984, in the denomination and aggregate principal amount of $1,500,000, numbered R -1, payable in annual installments of principal to the initial registered owner thereof, to -wit: FIRST CITY NATIONAL BANK OF AUSTIN, AUSTIN, TEXAS, or to the registered assignee or assignees of said Bond or any portion or portions thereof (in each case, the "registered owner "), with the annual installments of principal of the Initial Bond to be payable on the dates, respectively, and in 2 the principal amounts, respectively, stated in the FORM OF INITIAL BOND set forth in this Resolution. (b) The Initial Bond (i) may and shall be prepaid or redeemed prior to the respective scheduled due dates of in- stallments of principal thereof, (ii) may be assigned and transferred, (iii) may be converted and exchanged for other Bonds, (iv) shall have the characteristics, and (v) shall be signed and sealed, and the principal of and interest on the Initial Bond shall be payable, all as provided, and in the manner required or indicated, in the FORM OF INITIAL BOND set forth in this Resolution. Section 4. INTEREST. The unpaid principal balance of the Initial Bond shall bear interest from the date of the Initial Bond to the respective scheduled due dates, or to the respec- tive dates of prepayment or redemption, of the installments of principal of the Initial Bond, and said interest shall be payable, all in the manner provided and at the rates and on the dates stated in the FORM OF INITIAL BOND set forth in this Resolution. Section 5. FORM OF INITIAL BOND. The form of the Initial Bond, including the form of Registration Certificate of the Comptroller of Public Accounts of the State of Texas to be endorsed on the Initial Bond, shall be substantially as follows: FORM OF INITIAL BOND NO. R -1 $1,500,000 UNITED STATES OF AMERICA STATE OF TEXAS TRINITY RIVER AUTHORITY OF TEXAS (TARRANT COUNTY WATER PROJECT) REVENUE BOND SERIES 1984 TRINITY RIVER AUTHORITY OF TEXAS (the "Issuer "), being a political subdivision of the State of Texas, hereby promises to pay to FIRST CITY NATIONAL BANK OF AUSTIN, AUSTIN, TEXAS, or to the registered assignee or assignees of this Bond or any portion or portions hereof (in each case, the "registered owner ") the aggregate principal amount of $1,500,000 (ONE MILLION FIVE HUNDRED THOUSAND DOLLARS) in annual installments of principal due and payable on FEBRUARY 1 in each of the years, and in the respective principal amounts, as set forth in the following schedule: YEAR 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 3 PRINCIPAL AMOUNT $ 75,000 75,000 100,000 100,000 125,000 125,000 150,000 150,000 175,000 200,000 225,000 and to pay interest, from the date of this Bond hereinafter stated, on the balance of each such installment of principal, respectively, from time to time remaining unpaid, at the rates as follows: 7.00% per annum on each such installment of principal from May 1, 1984, to February 1, 1985; 13.00% per annum on each such installment of principal from February 1, 1985, to February 1, 1986; 14.00% per annum on each such installment of principal from February 1, 1986, to February 1, 1987; and 15.00% per annum on each such installment of principal from February 1, 1987 to the date upon which each such installment of principal is due and payable; with said interest being payable on FEBRUARY 1, 1985, and semi- annually on each AUGUST 1 and FEBRUARY 1 thereafter while this Bond or any portion hereof is outstanding and unpaid. THE INSTALLMENTS OF PRINCIPAL OF AND THE INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The install- ments of principal and the interest on this Bond are payable to the registered owner hereof through the services of First City National Bank of Austin, Austin, Texas, which is the "Paying Agent/ Registrar" for this Bond. Payment of all principal of and interest on this Bond shall be made by the Paying Agent/ Registrar to the registered owner hereof on each principal and /or interest payment date by check or draft, dated as of such date, drawn by the Paying Agent /Registrar on, and payable solely from, funds of the Issuer required by the resolution authorizing the issuance of this Bond (the "Bond Resolution ") to be on deposit with the Paying Agent /Registrar for such purpose as hereinafter provided; and such check or draft shall be sent by the Paying Agent /Registrar by United States Mail, first -class postage prepaid, on each such principal and /or interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared on the 15th day of the month next preceding each such date (the "Record Date ") on the Registration Books kept by the Paying Agent/ Registrar, as hereinafter described. The Issuer covenants with the registered owner of this Bond that on or before each principal and /or interest payment date for this Bond it will make avail- able to the Paying Agent /Registrar, from the "Interest and Redemption Fund" created by the Bond Resolution, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on this Bond, when due. IF THE DATE for the payment of the principal of or inter- est on this Bond shall be a Saturday, 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 has been authorized in accordance with the Constitution and laws of the State of Texas FOR THE PURPOSE OF THE ACQUISITION AND CONSTRUCTION OF IMPROVEMENTS, BETTERMENTS, EXTENSIONS, AND REPLACEMENTS OF THE TRINITY RIVER AUTHORITY OF TEXAS TARRANT COUNTY WATER PROJECT. 4 ON AUGUST 1, 1984, or on any date whatsoever thereafter, the unpaid installments of principal of this Bond may be prepaid or redeemed prior to their respective scheduled due dates, at the option of the Issuer, with funds derived from any available source, in whole, or in part (provided that if in part, such part must be in an integral multiple of $5,000), at the prepayment or redemption price of par plus accrued interest to the date fixed for prepayment or redemption, and without premium. AT LEAST five (5) days prior to the date fixed for any such prepayment or redemption the Issuer shall cause a written notice of such prepayment or redemption to be delivered to the Paying Agent /Registrar. By the date fixed for any such prepay- ment or redemption due provision shall be made by the Issuer with the Paying Agent /Registrar for the payment of the required prepayment or redemption price for this Bond or the portion hereof which is to be so prepaid or redeemed, plus accrued interest thereon to the date fixed for prepayment or redemp- tion. If such written notice of prepayment or 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 prepaid or redeemed, thereby automatically shall be treated as prepaid or redeemed prior to its scheduled due date, and shall not bear interest after the date fixed for its prepayment or redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the prepayment or redemption price plus accrued inter- est to the date fixed for prepayment or 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 prepayments or redemptions of principal of this Bond or any portion hereof. THIS BOND, to the extent of the unpaid or unredeemed principal balance hereof, or any unpaid and unredeemed portion hereof in any integral multiple of $5,000, may be assigned by the initial registered owner hereof and shall be transferred only in the Registration Books of the Issuer kept by the Paying Agent /Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Resolution. Among other requirements for such transfer, this Bond must be presented and surrendered to the Paying Agent /Registrar for cancellation, together with proper instru- ments of assignment, in form and with guarantee of signatures satisfactory to the Paying Agent /Registrar, evidencing assignment by the initial registered owner 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 trans- ferred and registered. Any instrument or instruments of assignment satisfactory to the Paying Agent /Registrar may be used to evidence the assignment of this Bond or any such portion or portions hereof by the initial registered owner hereof. A new bond or bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds) or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, shall be delivered by the Paying Agent /Registrar in conversion of and exchange for this Bond or any portion or portions hereof, but solely in the form and manner as provided in the next paragraph hereof for the conversion and exchange of this Bond or any portion hereof. The registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent /Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent 5 of such payment, and the Issuer and the Paying Agent /Registrar shall not be affected by any notice to the contrary. AS PROVIDED above and in the Bond Resolution, this Bond, to the extent of the unpaid or unredeemed principal balance hereof, may be converted into and exchanged for a like aggre- gate principal amount of fully registered bonds, without interest coupons, payable to the assignee or assignees duly designated in writing by the initial registered owner hereof, or to the initial registered owner as to any portion of this Bond which is not being assigned and transferred by the initial registered owner, in any denomination or denominations in any integral multiple of $5,000 (subject to the requirement here- inafter stated that each substitute bond issued in exchange for any portion of this Bond shall have a single stated principal maturity date), upon surrender of this Bond to the Paying Agent /Registrar for cancellation, all in accordance with the form and procedures set forth in the Bond Resolution. If this Bond or any portion hereof is assigned and transferred or converted each bond issued in exchange for any portion hereof shall have a single stated principal maturity date correspond- ing to the due date of the installment of principal of this Bond or portion hereof for which the substitute bond is being exchanged, and shall bear interest at the rate applicable to and borne by such installment of principal or portion thereof. Such bonds, respectively, shall be subject to redemption prior to maturity on the same dates and for the same prices as the corresponding installment of principal of this Bond or portion hereof for which they are being exchanged. No.such bond shall be payable in installments, but shall have only one stated principal maturity date. AS PROVIDED IN THE BOND RESOLUTION, THIS BOND IN ITS PRESENT FORM MAY BE ASSIGNED AND TRANSFERRED OR CONVERTED ONCE ONLY, and to one or more assignees, but the bonds issued and delivered in exchange for this Bond or any portion hereof may be assigned and transferred, and converted, subsequently, as provided in the Bond Resolution. The Issuer shall pay the Paying Agent /Registrar's standard or customary fees and charges for transferring, converting, and exchanging this Bond or any portion thereof, but the one requesting such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto. The Paying Agent /Registrar shall not be required to make any such assignment, conversion, or exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for prepayment or redemption prior to maturity, within 45 days prior to its prepayment or redemption date. IN THE EVENT any Paying Agent /Registrar for this Bond is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Resolution that it promptly will appoint a competent and legally qualified sub- stitute therefor, and promptly will cause written notice thereof to be mailed to the registered owner of this Bond. IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, sold,and de- livered; 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 and other bonds constitute special obligations of the Issuer, secured by and payable from a first lien on and pledge of (1) the Issuer's Net Revenues from its water supply contracts, each dated as of January 21, 1972, and amended as of January 22, 1975, and as of December 5, 1979, with the Cities 6 of Bedford and Euless, Texas, and its water supply contracts, each dated as of April 25, 1979, and amended as of December 5, 1979, and as of April 23, 1980, with the Cities of Colleyville, Grapevine, and North Richland Hills, Texas, all relating to the Issuer's Tarrant County Water Project described in said con- tracts, all as more fully described in said contracts and in the Bond Resolution, to each of which reference is hereby made for all purposes, and (2) the Net Revenues the Issuer may receive from other parties, if any, with whom the Issuer may contract in the future for supplying treated water from the Issuer's Tarrant County Water Project. THE ISSUER has reserved the right, subject to the restric- tions stated in the Bond Resolution, to issue Additional Bonds payable from and secured by a first lien on and pledge of the aforesaid Net Revenues on a parity with this Bond. THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Resolution, to amend the Bond Resolution with the approval of the owners of two - thirds in principal amount of all outstanding bonds secured by and payable from a first lien on and pledge of the aforesaid Net Revenues. THE REGISTERED OWNER hereof shall never have the right to demand payment of this Bond or the interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than specified in the Bond Resolution. BY BECOMING the registered owner of this Bond, the regis- tered owner thereby acknowledges all of the terms and provi- sions of the Bond Resolution, agrees to be bound by such terms and provisions, acknowledges that the Bond Resolution is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Resolu- tion constitute a contract between the registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the manual signature of the President of the Board of Directors of the Issuer and countersigned with the manual signature of the Secretary of the Board of Directors of the Issuer, has caused the official seal of the Issuer to be duly impressed on this Bond, and has caused this Bond to be dated MAY 1, 1984. Secretary, Board of Directors President, Board of Directors Trinity River Authority of Trinity River Authority of Texas Texas (AUTHORITY SEAL) FORM OF REGISTRATION CERTIFICATE OF THE COMPTROLLER OF PUBLIC ACCOUNTS: COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. I hereby certify that this Bond has been examined, certi- fied 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 Comptroller of Public Accounts of the State of Texas (COMPTROLLER'S SEAL) Section 6. ADDITIONAL CHARACTERISTICS OF THE BONDS. Registration and Transfer. (a) The Issuer shall keep or cause to be kept at the principal corporate trust office of First City National Bank of Austin, Austin, Texas, the "Paying Agent /Registrar ") books or records of the registration and transfer of the Bonds (the "Registration Books "), and the Issuer 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 Issuer and Paying Agent /Registrar may prescribe; and the Paying Agent /Registrar shall make such transfers and registrations as herein provided. The Paying Agent /Registrar shall obtain and record in the Registration Books the address of the registered owner of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but it shall be the duty of each registered owner to notify the Paying Agent /Registrar in writing of the address to which payments shall be mailed, and such interest payments shall not be mailed unless such notice has been given. The Issuer 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 Regis- tration Books 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 Registra- tion 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 satis- factory to the Paying Agent /Registrar, (i) evidencing the assignment of the Bond, or any portion thereof in any integral multiple of $5,000, to the assignee or assignees thereof, and (ii) 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 conversion and exchange therefor in the manner herein provided. The Initial Bond, to the extent of the unpaid or unredeemed principal balance thereof, may be assigned and transferred by the initial registered owner thereof once only, and to one or more assignees designated in writing by the initial registered owner thereof. All Bonds issued and de- livered in conversion of and exchange for the Initial Bond shall be in any denomination or denominations of any integral multiple of $5,000 (subject to the requirement hereinafter stated that each substitute Bond shall have a single stated principal maturity date), shall be in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Resolution, and shall have the characteristics, and may be assigned, trans- ferred, and converted as hereinafter provided. If the Initial Bond or any portion thereof is assigned and transferred or converted the Initial Bond must be surrendered to the Paying Agent /Registrar for cancellation, and each Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If only a portion of the Initial Bond is assigned and transferred, there shall be delivered to and 8 registered in the name of the initial registered owner substi- tute Bonds in exchange for the unassigned balance of the Initial Bond in the same manner as if the initial registered owner were the assignee thereof. If any Bond or portion thereof other than the Initial Bond is assigned and transferred or converted 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 exchanged. A form of assign- ment shall be printed or endorsed on each Bond, excepting the Initial Bond, which shall be executed by the registered owner or its duly authorized attorney or representative to evidence an assignment thereof. Upon surrender of any Bonds or any portion or portions thereof for transfer of registration, an authorized representative of the Paying Agent /Registrar shall make such transfer in the Registration Books, and shall deliver a new fully registered substitute Bond or Bonds, having the characteristics herein described, payable to such assignee or assignees (which then will be the registered owner or owners of such new Bond or Bonds), or to the previous registered owner in case only a portion of a Bond is being assigned and trans- ferred, all in conversion of and exchange for said assigned Bond or Bonds or any portion or portions thereof, in the same form and manner, and with the same effect, as provided in Section 6(d), below, for the conversion and exchange of Bonds by any registered owner of a Bond. The Issuer shall pay the Paying Agent /Registrar's standard or customary fees and charges for making such transfer and delivery of a substitute Bond or Bonds, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect •thereto. The Paying Agent /Registrar shall not be required to make transfers of registration of any Bond or any portion thereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. (b) Ownership of Bonds. The entity in whose name any Bond shall be registered in the Registration Books at any time shall be deemed and treated as the absolute owner thereof for all purposes of this Resolution, whether or not such Bond shall be overdue, and the Issuer and the Paying Agent /Registrar shall not be affected by any notice to the contrary; 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) Pa -ment of Bonds and Interest. The Issuer 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 convert and exchange or replace Bonds, all as provided in this Resolution. The Paying Agent /Registrar shall keep proper records of all payments made by the Issuer and the Paying Agent /Registrar with respect to the Bonds, and of all conversions and exchanges of Bonds, and all replacements of Bonds, as provided in this Resolution. (d) Conversion and Exchange or Replacement; Authenti- cation. Each Bond issued and delivered pursuant to this Resolution, 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 9 representatives, with guarantee of signatures satisfactory to the Paying Agent /Registrar, may, at the option of the regis- tered owner or such assignee or assignees, as appropriate, be converted into and exchanged for fully registered bonds, without interest coupons, in the form prescribed in the FORM OF SUBSTITUTE BOND set forth in this Resolution, in the denomina- tion of $5,000, 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 unre- deemed principal balance or 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 the Initial Bond is assigned and transferred or converted each substitute Bond issued in exchange for any portion of the Initial Bond shall have a single stated principal maturity date, and shall not be payable in installments; and each such Bond shall have a principal maturity date corresponding to the due date of the installment of principal or portion thereof for which the substitute Bond is being exchanged; and each such Bond shall bear interest at the single rate applicable to and borne by such installment of principal or portion thereof for which it is being exchanged. If a portion of any Bond (other than the Initial 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 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 (other than the Initial Bond) is assigned and transferred or converted, 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 convert and exchange or replace Bonds as provided herein, and each fully registered bond delivered in conversion of and exchange for or replacement of any Bond or portion thereof as permitted or required by any provision of this Resolution shall constitute one of the Bonds for all purposes of this Resolution, and may again be converted and exchanged or replaced. It is specifically provided that any Bond authenticated in conversion of and exchange for or replacement of another Bond on or prior to the first scheduled Record Date for the Initial Bond shall bear interest from the date of the Initial Bond, but each substitute Bond so authenti- cated after such first scheduled Record Date shall bear inter- est from the interest payment date next preceding the date on which such substitute Bond was so authenticated, unless such Bond is authenticated after any Record Date but on or before the next following interest payment date, in which case it shall bear interest from such next following interest payment date; provided, however, that if at the time of delivery of any substitute Bond the interest on the Bond for which it is being exchanged is due but has not been paid, then such Bond shall bear interest from the date to which such interest has been paid in full. THE INITIAL BOND issued and delivered pursuant to this Resolution is not required to be, and shall not be, authenticated by the Paying Agent /Registrar, but on each substitute Bond issued in conversion of and exchange for or replacement of any Bond or Bonds issued under this Resolution there shall be printed a certificate, in the form substantially as follows: 10 "PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Bond Resolution described on the face of this Bond; and that this Bond has been issued in conversion of and 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 FIRST CITY NATIONAL BANK OF AUSTIN, AUSTIN, TEXAS Paying Agent /Registrar Authorized Representative" An authorized representative of the Paying Agent /Registrar shall, before the delivery of any such Bond, date and manually sign the above Certificate, and no such Bond shall be deemed to be issued or outstanding unless such Certificate is so ex- ecuted. The Paying Agent /Registrar promptly shall cancel all Bonds surrendered for conversion and exchange or replacement. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the Issuer or any other body or person so as to accomplish the foregoing conversion and exchange or replacement of any Bond or portion thereof, and the Paying Agent /Registrar shall provide for the printing, execu- tion, 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 Vernon's Ann. Tex. Civ. St. Art. 717k -6, and particularly Section 6 thereof, the duty of conversion and exchange or replacement of Bonds as aforesaid is hereby imposed upon the Paying Agent /Registrar, and, upon the execution of the above Paying Agent /Registrar's Authentication Certificate, the converted and exchanged or replaced Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Initial Bond which originally was issued pursuant to this Resolution, ap- proved by the Attorney General, and registered by the Comptroller'of Public Accounts. The Issuer shall pay the Paying Agent /Registrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting any such transfer, conversion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition precedent to the exercise of such privilege of conversion and exchange. The Paying Agent /Registrar shall not be required to make any such conversion and exchange or replacement of Bonds or any portion thereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. (e) In General. All Bonds issued in conversion and 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 and shall be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and ex- changed 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 11 the manner required or indicated, in the FORM OF SUBSTITUTE BOND set forth in this Resolution. (f) Payment of Fees and Charges. The Issuer hereby covenants with the registered owners of the Bonds that it will (i) pay the 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, and (ii) pay the fees and charges of the Paying Agent /Registrar for services with respect to the transfer of registration of Bonds, and with respect to the conversion and exchange of Bonds solely to the extent above provided in this Resolution. (g) Substitute Paying Agent /Registrar. The Issuer covenants with the registered owners of the Bonds that at all times while the Bonds are outstanding the Issuer will provide a competent and legally qualified bank, trust company, financial institution, or other agency to act as and perform the services of Paying Agent /Registrar for the Bonds under this Resolution, and that the Paying Agent /Registrar will be one entity. The Issuer reserves the right to, and may, at its option, change the Paying Agent /Registrar upon not less than 120 days written notice to the Paying Agent /Registrar, to be effective not later than 60 days prior to the next principal or interest payment date after such notice. 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 other- wise cease to act as such, the Issuer covenants that promptly it will appoint a competent and legally qualified bank, trust company, financial institution, or other agency to act as Paying Agent /Registrar under this Resolution. Upon any change in the Paying Agent /Registrar, the previous Paying Agent /Regis- trar promptly shall transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books and records relating to the Bonds, to the new Paying Agent /Regis- trar designated and appointed by the Issuer. Upon any change in the Paying Agent /Registrar, the Issuer promptly will cause a written notice thereof to be sent by the new Paying Agent /Regi- strar to each registered owner of the Bonds, by United States Mail, first -class 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 /Regis- trar shall be deemed to have agreed to the provisions of this Resolution, and a certified copy of this Resolution shall be delivered to each Paying Agent /Registrar. Section 7. FORM OF SUBSTITUTE BONDS. The form of all Bonds issued in conversion and exchange or replacement of any other Bond or portion thereof, including the form of Paying Agent /Registrar's Certificate to be printed on each of such Bonds, and the Form of Assignment to be printed on each of the Bonds, shall be, respectively, substantially as follows, with such appropriate variations, omissions, or insertions as are permitted or required by this Resolution. NO. FORM OF SUBSTITUTE BOND UNITED STATES OF AMERICA PRINCIPAL AMOUNT STATE OF TEXAS $ TRINITY RIVER AUTHORITY OF TEXAS (TARRANT COUNTY WATER PROJECT) REVENUE BOND SERIES 1984 MATURITY DATE CUSIP NO. 12 ON THE MATURITY DATE specified above TRINITY RIVER AUTHOR- ITY OF TEXAS (the "Issuer "), being a political subdivision of the State of Texas, hereby promises to pay to or to the registered assignee hereof (either being hereinafter called the "registered owner ") the principal amount of and to pay interest thereon from MAY 1, 1984, to the maturity date specified above, or the date of redemption prior to maturity, at the following rates of interest per annum: 7.00% per annum from May 1, 1984 to February 1, 1985; 13.00% per annum from February 1, 1985 to February 1, 1986; 14.00% per annum from February 1, 1986 to February 1, 1987; and 15.00% per annum from February 1, 1987 to the earlier of the maturity date specified above or the date of redemption prior to maturity; with interest being payable on FEBRUARY 1, 1985, and semi- annually on each AUGUST 1 and FEBRUARY 1 thereafter, except that if the date of authentication of this Bond is later than JANUARY 15, 1985, such principal amount shall bear interest from the interest payment date next preceding the date of authentication, unless such date of authentication is after any Record Date (hereinafter defined) but on or before the next following interest payment date, in which case such principal amount shall bear interest from such next following interest payment date. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to maturity, at the principal corporate trust office of First City National Bank of Austin, Austin, 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 on each interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying Agent /Registrar on, and payable solely from, funds of the Issuer required by the resolution authorizing the issuance of the Bonds (the "Bond Resolution ") to be on deposit with the Paying Agent /Registrar for such purpose as hereinafter provided; and such check or draft shall be sent by the Paying Agent /Registrar by United States Mail, first -class postage prepaid, on each such interest payment date, to the registered owner hereof, at the address of the registered owner, as it appeared on the 15th day of the month next preceding each such date (the "Record Date ") on the Registration Books kept by the Paying Agent /Registrar, as hereinafter described. Any accrued interest due upon the redemption of this Bond prior to maturity as provided herein shall be paid to the registered owner at the principal corpor- ate trust office of the Paying Agent /Registrar upon presen- tation and surrender of this Bond for redemption and payment at the principal corporate trust office of the Paying Agent /Regis- trar. The Issuer covenants with the registered owner of this Bond that on or before each principal payment date, interest payment date, and accrued interest payment date for this Bond it will make available to the Paying Agent /Registrar, from the "Interest and Sinking Fund" created by the Bond Resolution, the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. 13 IF THE DATE for the payment of the principal of or inter- est on this Bond shall be a Saturday, 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 an issue of Bonds initially dated MAY 1, 1984, authorized in accordance with the Constitution and laws of the State of Texas in the principal amount of $1,500,000, FOR THE PURPOSE OF THE ACQUISITION AND CONSTRUCTION OF IMPROVEMENTS, BETTERMENTS, EXTENSIONS, AND REPLACEMENTS OF THE TRINITY RIVER AUTHORITY OF TEXAS TARRANT COUNTY WATER PROJECT. ON AUGUST 1, 1984, or on any date whatsoever thereafter, the outstanding Bonds of this Series may be redeemed prior to their scheduled maturity, at the option of the Issuer, with funds derived from any available source, as a whole, or in part, and, if in part, the particular Bonds, or portions thereof, to be redeemed shall be selected and designated by the Issuer (provided that a portion of a Bond may be redeemed only in an integral multiple of $5,000), at the redemption price of par plus accrued interest to the date fixed for. redemption, and without premium. AT LEAST five (5) days prior to the date fixed for any redemption of Bonds or portions thereof prior to maturity the Issuer shall cause a written notice of such redemption to be delivered to the Paying Agent /Registrar. By the date fixed for any such redemption due provision shall be made with the Paying Agent /Registrar for the payment of the required redemption price for the Bonds or portions thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such written notice of redemption is given and if due provision for such payment is made, all as provided above, the Bonds or portions thereof which are to be so re- deemed thereby automatically shall be treated as redeemed prior to their scheduled maturities, and they shall not bear interest after the date fixed for redemption, and they shall not be regarded as being outstanding except for the right of the registered owner to receive the redemption price plus accrued interest from the Paying Agent /Registrar out of the funds pro- vided 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 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 Issuer, all as provided in the Bond Resolution. THIS BOND OR ANY PORTION OR PORTIONS HEREOF IN ANY INTE- GRAL MULTIPLE OF $5,000 may be assigned and shall be trans- ferred only in the Registration Books of the Issuer kept by the Paying Agent /Registrar acting in the capacity of registrar for the Bonds, upon the terms and conditions set forth in the Bond Resolution. 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 satisfac- tory to the Paying Agent /Registrar, evidencing assignment of this Bond or any portion or portions hereof in any integral 14 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 shall be executed by the registered owner or its duly authorized attorney or representa- tive,to evidence the assignment hereof. A new Bond or Bonds payable to such assignee or assignees (which then will be the new registered owner or owners of such new Bond or Bonds), or to the previous registered owner in the case of the assignment and transfer of only a portion of this Bond, may be delivered by the Paying Agent /Registrar in conversion of and exchange for this Bond, all in the form and manner as provided in the next paragraph hereof for the conversion and exchange of other Bonds. The Issuer shall pay the Paying Agent /Registrar's standard or customary fees and charges for making such trans- fer, but the one requesting such transfer shall pay any taxes or other governmental charges required to be paid with respect thereto. The Paying Agent /Registrar shall not be required to make transfers of registration of this Bond or any portion hereof (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or any portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. The registered owner of this Bond shall be deemed and treated by the Issuer and the Paying Agent /Registrar as the absolute owner hereof for all purposes, including payment and discharge of liability upon this Bond to the extent of such payment, and the Issuer and the Paying Agent /Registrar shall not be affected by any notice to the contrary. 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 Bond Resolution, this Bond, or any unredeemed portion hereof, may, at the request of the registered owner or the assignee or as- signees hereof, be converted into 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 sur- render of this Bond to the Paying Agent /Registrar for cancella- tion, all in accordance with the form and procedures set forth in the Bond Resolution. The Issuer shall pay the Paying Agent /Registrar's standard or customary fees and charges for transferring, converting, and exchanging any Bond or any portion thereof, but the one requesting such transfer, conver- sion, and exchange shall pay any taxes or governmental charges required to be paid with respect thereto as a condition prece- dent to the exercise of such privilege of conversion and exchange. The Paying Agent /Registrar shall not be required to make any such conversion and exchange (i) during the period commencing with the close of business on any Record Date and ending with the opening of business on the next following principal or interest payment date, or, (ii) with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days prior to its redemption date. IN THE EVENT any Paying Agent /Registrar for the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Resolution that it promptly will appoint a competent and legally qualified substi- tute therefor, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds. 15 IT IS HEREBY certified, recited, and covenanted that this Bond has been duly and validly authorized, issued, sold,and de- livered; 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 and other bonds constitute special obligations of the Issuer, secured by and payable from a first lien on and pledge of (1) the Issuer's Net Revenues from its water supply contracts, each dated as of January 21, 1972, and amended as of January 22, 1975, and as of December 5, 1979, with the Cities of Bedford and Euless, Texas, and its water supply contracts, each dated as of April 25, 1979, and amended as of December 5, 1979, and as of April 23, 1980, with the Cities of Colleyville, Grapevine, and North Richland Hills, Texas, all relating to the Issuer's Tarrant County Water Project described in said con- tracts, all as more fully described in said contracts and in the Bond Resolution, to each of which reference is hereby made for all purposes, and (2) the Net Revenues the Issuer may receive from other parties, if any, with whom the Issuer may contract in the future for supplying treated water from the Issuer's Tarrant County Water Project. THE ISSUER has reserved the right, subject to the restric- tions stated in the Bond Resolution, to issue Additional Bonds payable from and secured by a first lien on and pledge of the aforesaid Net Revenues on a parity with this Bond. THE ISSUER also has reserved the right, subject to the restrictions stated in the Bond Resolution, to amend the Bond Resolution with the approval of the owners of two - thirds in principal amount of all outstanding bonds secured by and payable from a first lien on and pledge of the aforesaid Net Revenues. THE REGISTERED OWNER hereof shall never have the right to demand payment of this Bond or the interest hereon out of any funds raised or to be raised by taxation or from any source whatsoever other than specified in the Bond Resolution. BY BECOMING the registered owner of this Bond, the regis- tered owner thereby acknowledges all of the terms and provi- sions of the Bond Resolution, agrees to be bound by such terms and provisions, acknowledges that the Bond Resolution is duly recorded and available for inspection in the official minutes and records of the governing body of the Issuer, and agrees that the terms and provisions of this Bond and the Bond Resolu- tion constitute a contract between each registered owner hereof and the Issuer. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed with the facsimile signature of the President of the Board of Directors of the Issuer and countersigned with the facsimile signature of the Secretary of the Board of Directors of the Issuer, and has caused the official seal of the Issuer to be duly impressed, or placed in facsimile, on this Bond. (facsimile signature) Secretary, Board of Directors, Trinity River Authority of Texas (facsimile signature) President, Board of Directors, Trinity River Authority of Texas (ISSUER SEAL) 16 FORM OF PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE PAYING AGENT /REGISTRAR'S AUTHENTICATION CERTIFICATE It is hereby certified that this Bond has been issued under the provisions of the Bond Resolution described on the face of this Bond; and that this Bond has been issued in conversion of and 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 FIRST CITY NATIONAL BANK OF AUSTIN, AUSTIN, TEXAS, Paying Agent /Registrar Authorized Representative FORM OF ASSIGNMENT: ASSIGNMENT For value received, the undersigned registered owner of this Bond, or duly authorized representative or attorney thereof, hereby assigns this Bond to (print or type the name and address of the assignee and any other relevant information) and authorizes the Paying Agent /Registrar to transfer the registration of this Bond in the Registration Books. Dated Registered Owner The signature above is hereby verified as true and genuine. Section 8. DEFINITIONS. In each place throughout this Resolution wherein the following terms, or any of them, are used, the same, unless the context shall indicate another or different meaning or intent, shall be construed and are in- tended to have meanings as follows: (a) "Act" and "Authority Act" mean Chapter 518, Acts of the Fifty- Fourth Legislature of the State of Texas, Regular Session, 1955, as amended. (b) "Additional Bonds" means the additional parity rev- enue bonds as defined and permitted in Sections 14.01 and 14.02 of this Resolution. (c) "Authority" and "Issuer" mean Trinity River Authority of Texas and any other public body or agency at any time succeeding to the property and principal rights, power and obligations of said Authority. (d) "Board of Authority" and "Board" mean the Board of Directors of the Authority. 17 (e) "Bonds" means collectively the Initial Bond as described and defined in Section 1 hereof, and all substitute bonds exchanged therefor as provided by this Resolution. (f) "Parity Bonds" means collectively the Outstanding Bonds and the Series 1984 Bonds authorized by this Resolution. (g) "Certified Public Accountant" means any certified public accountant, licensed public accountant or firm of such public accountants of suitable experience and qualifications not regularly in the employ of the Authority, selected by the Authority. (h) "Cities" means the Cities of Bedford, Euless, Colleyville, Grapevine, and North Richland Hills, Texas. (i) "Contracts" means the contracts between the Authority and the Cities as described and defined in the preamble to this Resolution. (j) "Depository" means the bank or banks which the Au- thority selects (whether one or more), in accordance with law, as its depository. (k) "Engineering Report" means the Report and the supplements thereto with respect to the Authority's Tarrant County Water Project, all as described and defined in the preamble to this Resolution, as such Engineering Report may be further amended or supplemented prior to the'execution of construction contracts and changed by change orders entered after construction contracts have been executed, or as such report may be amended or supplemented to provide expanded service in the future. (1) "Fiscal Year" means the twelve month period beginning December 1 of each year, or such other twelve month period as may in the future be designated as the Fiscal Year of Au- thority. (m) "Independent Consulting Engineer" means the Engineer or engineering firm or corporation at the time employed by the Authority under the provisions of Section 12.13 of this reso- lution. (n) "Outstanding Bonds" means the bonds described in the preamble to this resolution. (o) "Paying Agents" means collectively the banks where the principal of and interest on the Bonds are payable. (p) "Resolution" means this Resolution authorizing the Bonds. (q) "System" and "Authority's System" mean all of Author- ity's facilities constructed pursuant to the Engineering Report, as supplemented or amended. Section 9. BONDS AND SECURITY THEREFOR. (a) The Bonds are hereby designated as, and shall be, "Improvement Bonds" and "Additional Bonds" as described and permitted by the resolutions authorizing the Outstanding Bonds, and it is hereby determined, declared, and resolved that all of the Parity Bonds (including the Outstanding Bonds and the Bonds) are and shall be secured and payable equally and ratably on a parity, and that Sections 10.01 through 16.07 of this Resolution are supplemental to and cumulative of Articles III through IX of the resolution authorizing the Series 1975 Bonds and Sections 9.01 through 15.07 of the resolutions authorizing the Series 18 1979 Bonds and the Series 1980 Bonds, with Sections 10.01 through 16.07 of this resolution being equally applicable to all of the Outstanding Bonds and the Bonds (herein collectively called the "Parity Bonds "). (b) The Parity Bonds and any Additional Bonds, and the interest thereon, are and shall be secured by and payable from a first lien on and pledge of the Net Revenues as hereinafter described and provided. Section 10.01. REVENUE FUND. All revenues of the System received by the Authority, including the net proceeds to the Authority of the Contracts with the Cities shall be collected and paid over promptly upon collection to the Depository and the Authority hereby covenants and agrees so to do. Such revenues shall be held by the Depository in a special fund to be known as the "Trinity River Authority of Texas (Tarrant County Water Project) Revenue Bonds Revenue Fund" (hereinafter called the "Revenue Fund "), and shall be disbursed or applied for the purpose of paying Operation and Maintenance Expenses of the System, and for the making of transfers hereinafter re- quired. Section 10.02. (a) OPERATION AND MAINTENANCE EXPENSES. The term "Operation and Maintenance Expenses" shall mean all costs of operation and maintenance of the Authority's System including, but not limited to, repairs and replacements for which no special fund is created in any bond resolution, the cost of utilities, supervision, engineering, accounting, auditing, legal services, and any other supplies, services, administrative costs and equipment necessary for proper opera- tion and maintenance of the Authority's System, and payments made by Authority in satisfaction of judgments resulting from claims not covered by Authority's insurance or not paid by one of the Cities arising in connection with the operation and maintenance of the System. The term also includes the fees of the bank or banks where the Parity Bonds are payable. Depre- ciation shall not be considered an item of Operation and Maintenance Expense. (b) Except for other transfers herein required, the moneys in the Revenue Fund shall be subject to withdrawal by the Authority for the payment of Operation and Maintenance Expenses only upon checks and vouchers, stating the purpose of the payment (which shall be in accordance with the current Annual Budget of the Authority) signed by the President of the Authority and countersigned by its Treasurer, or signed and countersigned by such officers or employees of the Authority as may from time to time be designated by resolution of the Board of Authority. At the end of each Authority Fiscal Year any surplus funds remaining in the Revenue Fund shall be trans- ferred to the Interest and Sinking Fund. Section 10.03. INTEREST AND SINKING FUND. (a) For the sole purpose of paying the principal of and interest on the Parity Bonds, and any Additional Bonds, as the same come due, there has been created and established, and there shall be maintained at InterFirst Bank Fort Worth, N.A., Fort Worth, Texas, a separate fund entitled the "Trinity River Authority of Texas (Tarrant County Water Project) Revenue Bonds Interest and Sinking Fund" (hereinafter called the "Interest and Sinking Fund "). It shall be the duty of the Authority to transfer from Net Revenues in the Revenue Fund to the credit of the Interest and Sinking Fund the amounts and at times as follows: (1) such amounts, in equal monthly installments, made on or before the 15th day of each month hereafter, as will be sufficient, together with any other amounts on 19 deposit therein and available for such purpose, to pay the interest scheduled to come due on the Parity Bonds on the next interest payment date; (2) such amounts, in equal monthly installments, made on or before the 15th day of each month hereafter, as will be sufficient, together with any other amounts on deposit therein and available for such purpose, to pay the next maturing principal on the Outstanding Bonds; and (3) such amounts, in equal monthly installments, made on or before February 15, 1986, and on or before the 15th day of each month thereafter, as will be sufficient, together with any other amounts on deposit therein and available for such purpose, to pay the next maturing principal of the Bonds. (b) There shall be deposited into the Interest and Sinking Fund, immediately after the delivery of the Bonds, the accrued interest and any premium, plus an additional amount from the proceeds from the sale and delivery of the Bonds, sufficient, together with said accrued interest and premium, if any, to pay the interest on the Bonds through November 30, 1984, which is the estimated period of acquisition and con- struction of the project for which the Bonds are issued, and the amounts which otherwise would be deposited into the Inter- est and Sinking Fund from Net Revenues shall be reduced to that extent. (c) The InterFirst Bank Fort Worth, N.A. shall make such arrangements as are necessary to insure that sufficient funds from the Interest and Sinking Fund are available at each paying agent to pay the principal of and interest on all Parity Bonds when due. Section 10.04. RESERVE FUND. (a) There has been created and established, and there shall be maintained, at InterFirst Bank Fort Worth, N.A., Fort Worth, Texas, a separate fund entitled the "Trinity River Authority of Texas (Tarrant County Water Project) Revenue Bonds Reserve Fund" (hereinafter called the "Reserve Fund "). The Reserve Fund shall be used solely for the purpose of finally retiring the last of the Parity Bonds and Additional Bonds, or for paying principal of and interest on any Parity Bonds and Additional Bonds, when and to the extent the amount in the Interest and Sinking Fund is insuffi- cient for such purpose. (b) There is now on deposit in the Reserve Fund money and investments in an amount equal in market value to not less than $575,000. There shall be deposited in the Reserve Fund, from the proceeds from the sale and delivery of the Bonds, immedia- tely after the receipt of such proceeds, such sum as will cause the Reserve Fund to contain money and investments equal in market value to the average annual principal and interest requirements of all Parity Bonds to be outstanding after the delivery of the Bonds. So long as the Reserve Fund contains an amount of money and investments equal to the average annual principal and interest requirements of all outstanding Parity Bonds and Additional Bonds calculated as of the date of the Bonds (the "Reserve Required Amount "), no further deposits shall be made to the Reserve Fund. If the Reserve Fund should be depleted below the Reserve Required Amount, then the amount of such depletion shall be restored and the Authority shall transfer into the Reserve Fund from Net Revenues in the Revenue Fund (subject to making the required deposits into the Interest and Sinking Fund), on or before the 15th day of each month, an amount equal to 1 /60th of the Reserve Required Amount, until the Reserve Fund contains the Required Reserve Amount. 20 (c) It is specifically provided, however, that after the Series 1975 Bonds described in the preamble of this resolution shall have been paid or retired, or after due legal provision for their payment or retirement shall have been made, the Re- serve Required Amount to be kept and maintained in the Reserve Fund may, at the option of the Authority, be reduced to an amount of money and investments in market value equal to the average annual principal and interest requirements of the Series 1979 Bonds, the Series 1980 Bonds, the Bonds, and any then outstanding Additional Bonds, calculated as of the date of such reduction, and any excess in the Reserve Fund after such reduction shall be deposited into the Interest and Sinking Fund. Section 10.05. CONSTRUCTION AND ACQUISITION FUND. There has been created and there shall be established and maintained at the Depository a separate fund to be entitled the "Trinity River Authority of Texas (Tarrant County Water Project) Revenue Bonds Construction and Acquisition Fund" (hereinafter called the "Construction and Acquisition Fund "). The Construction and Acquisition Fund shall be subject to and charged with a lien in favor of the holders of the Bonds until the money in said Fund has been paid out as herein provided. The Depository shall be required to secure the Construction and Acquisition Fund in its possession by pledging obligations of or obligations uncon- ditionally guaranteed by the United States; such obligations at all times shall be at least equal in market value to the amount in the Construction and Acquisition Fund in its possession. Section 10.06. DISBURSEMENTS FROM CONSTRUCTION AND ACQUI- SITION FUND. (a) Money in the Construction and Acquisition Fund shall be subject to disbursement by the Authority for payment of Project Costs to be incurred in the acquisition and construction of the project for which the Bonds are issued. Such disbursements shall be made only upon checks stating the purpose of the payment signed and countersigned by such offi- cers of the Authority as may from time to time be designated by the Authority by resolution, and duly certified to the Deposi- tory. Disbursements for payments to construction contractors and disbursements for construction material, supplies, and equipment shall be approved by a registered professional engineer. (b) "Project Costs" as used herein includes all acquisi- tion costs and construction costs as those terms are generally understood in standard accounting practice as applied to projects of this nature, and without limiting the generality of the foregoing, it shall include purchase of equipment, proper- ty, rights in property, capitalized interest, costs of land, easements, and rights of way, including damages to land and property, engineering, financing, financial consultants, administrative, auditing, and legal expenses incurred in connection with the performance of the Contracts. The costs for engineering, financial consultants, administrative, and legal expense paid from bond proceeds incurred by the Authority shall be reasonable and at usual and customary rates. Damages to land and property, whenever accruing, adjusted under Article I, Section 17 of the Constitution of Texas shall constitute a part of Project Costs. After completion of the Project, any residue remaining in the Construction and Acquisition Fund shall be deposited in the Interest and Sinking Fund. Section 10.07. TRUST FUNDS. The Interest and Sinking Fund and the Reserve Fund shall constitute trust funds and shall be held in trust by The First National Bank of Fort Worth for the benefit of the holders of the Parity Bonds and Addi- tional Bonds permitted hereunder. 21 Section 10.08. SECURITY OF FUNDS. The Authority shall cause the Depository to secure and keep secured, in the manner required by law, all funds on deposit with it, and will cause each paying agent to secure all funds deposited with it or them as other trust funds are secured. The Authority covenants and agrees that no money will be allowed to be or remain deposited with the Depository unless secured as above provided. Section 10.09. PLEDGE. The Contracts provide for the payment by the Cities to the Authority (a) an amount equal to all Operation and Maintenance Expenses, (b) the amount neces- sary to pay all the principal of and the interest coming due on the Parity Bonds on each principal and /or interest payment date, (c) during each Fiscal Year, the proportionate part of any special or reserve funds required to be established and /or maintained by the provisions of the Bond Resolution, and (d) an amount in addition thereto sufficient to restore any deficiency in any of such funds or accounts required to be accumulated and maintained by the provisions of the Bond Resolution. The term "Net Revenues" as used in this resolution shall mean and be defined as all of the gross revenues or payments received by the Authority (i) from the Cities under the Contracts and (ii) from the parties, if any, with whom the Authority may contract in the future for supplying treated water from the System, after deducting therefrom the amounts paid to the Authority for the purpose of paying Operation and Maintenance Expenses, with the result that the Net Revenues shall consist of the amounts necessary to pay all principal and /or interest coming due on the Parity Bonds on each principal and /or interest payment date, and any amounts payable under (c) and (d) above. The Parity Bonds and the interest thereon are and shall be payable from and secured by a first lien on and pledge of said Net Revenues, and said Net Revenues are hereby pledged for such purpose and to the establishment and maintenance of the Inter- est and Sinking Fund and the Reserve Fund. Section 10.10. INVESTMENT OF FUNDS. The money in all Funds maintained hereunder shall be invested and reinvested in securities permitted by Section 8 -B of the Authority Act which mature in not more than fifteen (15) years from the date of their purchase. All income and profits from the investment of all funds hereunder shall be deposited in the Interest and Sinking Fund not later than the January 15 or July 15 next following the receipt thereof. Section 11.01. PREPARATION OF BUDGET. Not less than forty (40) days before the commencement of each Fiscal Year while any of the Parity Bonds or interest coupons appertaining thereto are outstanding and unpaid, the Authority will prepare and file with the Cities the annual budget (herein called "Annual Budget ") of Operation and Maintenance Expenses for the ensuing Fiscal Year, and, except as otherwise provided, the total expenditures in any division thereof will not exceed the total expenditures in the corresponding division in the Annual Budget. The Authority covenants that the current Operation and Maintenance Expenses incurred in any Fiscal Year will not exceed the reasonable and necessary amount of such expenses, and that it will not expend any amount or incur any obligation for maintenance, repair, and operation in excess of the amounts provided for current Operation and Maintenance Expenses in the Annual Budget; provided, however, that if at any time the Board of Authority shall determine that the amount of the appropria- tion for any item in the Annual Budget is in excess of the amount which will be required for such term, the Board of Authority may reduce such appropriation and made appropriation for any item or items not covered by the Annual Budget or increase the appropriation for any other item or items by an amount not exceeding the amount of such reduction; and provided 22 further, that the Board of Authority may at any time adopt an amended or supplemental budget for the remainder of the then current Fiscal Year in case of an emergency caused by some extraordinary occurrence which shall be clearly defined in such resolution. Any such supplemental budget shall be filed immediately with the Cities. Section 11.02. ACCOUNTING AND REPORTING. The Authority covenants that proper books of record and account will be kept in which true, full, and correct entries will be made of all income, expense, and transactions of and in relation to the System, and each and every part thereof. Within three months after each full Fiscal Year, a statement certified as correct by a Certified Public Accountant showing the Gross Revenues and the Operation and Maintenance Expenses for such Fiscal Year, shall be furnished to the Cities, and to the original pur- chasers of the Bonds. Each such audit will be available during regular office hours at the administration offices of the Authority for inspection by any holder of any of the Bonds. Section 11.03. PUBLIC INSPECTION. The Authority further covenants and agrees that the System, and each and every part thereof, and all books, records, accounts, documents, and vouchers relating to the construction, operation, maintenance, repair, improvement, and extension thereof, will at all times be open to inspection by the Cities. Section 12.01. PAYMENT OF PARITY BONDS .AND INTEREST THEREON. The Authority covenants and agrees that, out of the pledged Net Revenues, it will duly and punctually pay, or cause to be paid, the principal of every Parity Bond and the interest thereon, on the date and at the place and in the manner speci- fied in the Parity Bonds and in any interest coupons thereto appertaining, and that it will faithfully do and perform and at all times fully observe any and all covenants, undertakings, and provisions contained herein or in any Parity Bond. Section 12.02. LEGAL ABILITY. The Authority represents that it is a conservation and reclamation district, a political subdivision of the State of Texas, and a governmental agency and body politic and corporate, duly created, organized, and existing under the Constitution and laws of the State of Texas and has proper authority from all other public bodies and authorities, if any, having jurisdiction thereof to construct, acquire, operate, maintain, improve, extend, better, repair, renew, and replace the System as herein described, and to levy and collect rates, tolls, rents, fees, and other charges, and to pledge its revenues in the manner and form as herein done or intended, and that all corporate action on its part to that end has been duly and validly taken. The Authority covenants and agrees that it will at all times maintain its corporate existence and maintain a lawful Board of Directors, and at all times function and act in the best interest of the System and the owners and holders of the Parity Bonds. Section 12.03. CONSTRUCTION AND OPERATION. The Authority further covenants that it will forthwith proceed to acquire and construct the improvements, betterments, and extensions to the System as described in the supplement to the Engineering Report dated April 1984, as soon as practicable in accordance with plans and specifications which have been prepared by its Independent Consulting Engineer, and thereafter each and every part of the System will be continuously operated by the Author- ity in an efficient and economical manner and will be kept in thorough repair and maintained in a high state of operating efficiency and in such manner that the interest of the Cities, the people of the State of Texas, the bondholders or owners, and the Authority will be promoted. 23 Section 12.04. OPERATION OF THE SYSTEM. The Authority shall use its best efforts to see that the System is properly and efficiently operated. Section 12.05. CONTRACTORS. Authority shall require each person, firm, or corporation with whom (or which) it may contract for construction in connection with the System to furnish a performance bond in the full amount of any contract and a payment bond as required by law, and to carry such workmen's compensation or employers' liability insurance as may be required by law and such public liability, property damage, and builders' risk insurance, if any, as may be appropriate and necessary. The Authority further covenants and agrees that the proceeds of any such performance bond will forthwith, upon receipt of such proceeds, be applied toward the completion of the contract in connection with which such performance bond shall have been furnished. Section 12.06. COVENANT TO MAINTAIN SUFFICIENT INCOME. To the end that Authority income will be sufficient to pay the Parity Bonds and the interest thereon when due, the Authority will keep in effect and enforce the Contracts, and will cause the System to be operated and maintained at an annual cost that will be within its income other than the income required to pay the Parity Bonds and the interest thereon and the fees of each paying agent and Paying Agent /Registrar. The Authority will not voluntarily consent to any amendment to the Contracts which would reduce the amounts payable thereunder or extend the time of the payment of such amounts or which would'in any manner impair or adversely affect the rights of the holders or owners of the Parity Bonds from time to time. If any of the Cities fails to make payments as required by the Contracts and if it shall appear that enforcement of the Contracts has become ineffective or will be ineffective to the extent that a default in payment of principal of or interest on the Parity Bonds occurs or is threatened, the Authority will take all necessary action to preserve and protect the rights of the holders or owners of the Parity Bonds and to assure payment of the princi- pal thereof and the interest thereon. Section 12.07. NO OTHER LIENS. The Authority further covenants that there is not now outstanding, except as regards the Parity Bonds, and-that the Authority will not at any time while the Parity Bonds are outsanding, create or allow to accrue or to exist any lien upon the System, or any rights owned, or the revenues pledged herein to the payment of the principal of and interest on the Parity Bonds, at any time derived from the operation thereof, or any of its Funds, except as authorized by Sections 13.01 and 13.02 of this Resolution in connection with Additional Bonds and other bonds; that the security of the Parity Bonds will not be impaired in any way as a result of any action or any non - action on the part of the Authority, its Board of Directors, or officers, or any thereof, and that the Authority has, and will, subject to the provisions hereof, continuously preserve good and indefeasible title to the System and each and every part thereof. Section 12.08. KEEP FRANCHISES AND PERMITS IN EFFECT. The Authority further covenants that no franchises, permits, privileges, or easements will be allowed to lapse or be for- feited so long as the same shall be necessary for the proper operation of the System. Section 12.09. GOVERNMENTAL REQUIREMENTS; LIENS; CLAIMS. The Authority covenants that it will duly observe and comply with all valid requirements of any governmental authority relative to the System or any part thereof, and that it will pay or cause to be discharged, or will make adequate provision 24 to satisfy and discharge, all lawful claims and demands for labor, materials, supplies, or other objects which if unpaid, might by law become a lien upon such System or any part thereof or the revenue therefrom; provided, however, that nothing in this Section contained shall require the Authority to pay or cause to be discharged, or make provision for, any such lien or charge, so long as the validity thereof shall be contested in good faith and by appropriate legal proceedings. Section 12.10. FURTHER ASSURANCE. The Authority cove- nants that it will take such further action as may be required to carry out the purposes of this Resolution and to assure its validity. Section 12.11. SALE AND LEASE OF PROPERTY. (a) The Authority covenants that so long as any of the Parity Bonds or interest payable thereon shall be outstanding, and except as in this Section otherwise permitted, it will not sell, lease, or otherwise dispose of or encumber any part of the System except as provided herein. (b) The Authority may from time to time dispose of any rights, machinery, fixtures, apparatus, tolls, instruments, or other movable property and any materials used in connection therewith, if the Authority shall determine that such are no longer needed or are no longer useful in connection with the operation and maintenance of the System. The Authority may from time to time sell such real estate that is not needed or serves no useful purposes in connection with the maintenance and operation of the System. The proceeds of any sale of real or personal property acquired from the proceeds of the Parity Bonds shall be deposited in the Revenue Fund. (c) The Authority may lease any of its lands for any purpose, if such lease or the use of such lands will not be detrimental to the operation and maintenance of the System. It may also lease any of its real property for oil, gas, and mineral purposes. No lease shall be made which will result in any damage to or substantial diminution of the value of other property of the Authority. The rental to be charged under all such leases shall be not less than the fair and reasonable rental in relation to the character and value of the property leased. All rentals, revenues, receipts, and royalties derived by the Authority from any and all leases so made, shall be deposited in the Revenue Fund. (d) It is covenanted and agreed by Authority that no such property of any nature shall be sold or leased by Authority unless, prior to any action taken by Authority concerning such sale or leasing, Authority shall procure the advice and recommendation in writing of a registered professional engineer concerning such proposed sale or leasing. Section 12.12. SUCCESSOR PAYING AGENTS FOR OUTSTANDING BONDS. If any of the paying agents for the Outstanding Bonds or Additional Bonds or their successors, become unable for any reason to act as a paying agent for said bonds, the Authority covenants that it will appoint a bank in the same city as the paying agent initially appointed, where said bonds and interest thereon shall be paid. Section 12.13. INDEPENDENT ENGINEER. (a) The Authority covenants that, until the Parity Bonds and the interest thereon shall have been paid or provision for such payment shall have been made, it will, for the purpose of performing and carrying out the duties imposed on the Independent Consulting Engineer by this Resolution, employ an independent engineer or 25 engineering firm or corporation having a favorable repute for skill and experience in such work. (b) The Authority covenants that it will at all appropri- ate times cause the Independent Consulting Engineer to submit and give all necessary or desirable advice and recommendations concerning renewals, replacements, extensions, betterments, and improvements for the System, to the end that the System shall be operated and maintained in the most efficient and satisfac- tory manner. Further, Authority shall cause the Independent Consulting Engineer to make in writing a full survey, review, and report on the physical condition of the System once every three years. (c) Authority further covenants that it will cause the Independent Consulting Engineer to make an annual report to it which shall set forth such Engineer's recommendations and advice as to (1) the proper maintenance, repair, and operation of the System, including their findings as to whether or not the properties of the System have been maintained in good repair and sound operating condition; (2) the extensions, improvements, renewals, and replacements which should be made during the ensuing Fiscal Year; (3) the amounts and types of insurance which should be carried by the Authority on the properties; and (4) any revisions or changes of rates, fees, and charges. (d) The expense incurred under this Section 12.13 shall constitute Operation and Maintenance Expenses. Section 12.14. PARITY BONDS AND INTEREST NOT PAYABLE FROM TAXES. The holders and owners of the Parity Bonds and the interest payable thereon shall never have the right to demand payment thereof out of funds raised or to be raised by taxa- tion, or from any source other than the Net Revenues as defined and described herein. Section 13.01. INSURANCE COVERAGE. The Authority cove- nants that it will at all times keep insured such of the System's plants, structures, buildings, stations, machinery, equipment, apparatus, pipelines, and equipment as are usually insured by corporations operating like properties, with a responsible insurance company or companies, against risks, accidents, or casualties against which and to the extent insurance is usually carried by corporations operating like properties, and will also at all times maintain workmen's compensation insurance and insurance against public liability and property damages, in a reasonable amount with responsible insurance companies; provided, however, that at any time while any contractor engaged in construction work shall be fully responsible therefor, the Authority shall not be required to carry such insurance. All such policies shall be open to the inspection of the bondholders and their representatives at all reasonable times. Section 13.02. INSURANCE PROCEEDS. In the event of any loss of or damage to the System the Authority covenants that it will reconstruct or repair the destroyed or damaged portion of the property and will apply the proceeds of the insurance policies covering such loss or damage solely for that purpose. The Authority covenants that it will begin such work of reconstruction or repair promptly after such loss or damage shall occur and will continue and properly complete the same as expeditiously as possible and will pay or cause to be paid all costs and expenses in connection therewith so that the same shall be so completed and the property be free and clear of all mechanics' and other liens and claims. The Authority agrees that it will procure the advice and recommendation in writing 26 of a registered professional engineer concerning such recon- struction before it is undertaken. Section 13.03. UNUSED INSURANCE PROCEEDS. Any insurance proceeds remaining after the completion of and payment for any such reconstruction or repair shall be deposited in the Revenue Fund. Section 14.01. ADDITIONAL BONDS. As used in this resolution, the following additional definitions shall apply: (a) "Completion Bonds" means any bonds issued to complete construction of the System to enable the Authority to provide water supply services to the Cities and to others, as the System is described in the Engineering Report defined in the Contracts. (b) "Improvement Bonds" means bonds issued for improve- ments, betterments, extensions, and replacements of the System. (c) "Special Project Bonds" means any bonds issued to finance construction and /or acquisition of facilities which will not constitute a part of the System and which will not be paid out of revenues from the Contracts. (d) "Refunding Bonds" means any bonds issued for the purpose of refunding all or a part of the Parity Bonds or Additional Bonds. (e) "Additional Bonds" means and includes Completion Bonds, Improvement Bonds, and Refunding Bonds. Section 14.02. COMPLETION BONDS AND IMPROVEMENT BONDS. The Authority reserves the right to issue Completion Bonds and Improvement Bonds payable from and secured by a pledge of the Net Revenues, on a parity of lien with the Parity Bonds, or junior to the Parity Bonds, or a portion of them may be such first lien bonds and a portion may such junior lien bonds. The Completion Bonds and Improvement Bonds may be issued in one or more series or installments, and from time to time as author- ized by the Board of Authority, provided, however, that no installment or series of Completion Bonds or Improvement Bonds, if it is on a parity with the lien of the Parity Bonds, shall be issued unless: (a) A certificate is executed by the President and Secretary of the Board of Authority to the effect that no default exists in connection with any of the covenants or requirements of the resolutions authorizing the issuance of all then outstanding bonds which are secured by and payable from the Net Revenues; (b) A certificate is executed by the President and the Secretary of the Board of Authority to the effect that the Interest and Sinking Fund and the Reserve Fund contain the amounts then required to be on deposit therein; (c) The then proposed Completion Bonds or Improve- ment Bonds are made to mature on August 1 and /or February 1 of each of the years in which they are scheduled to mature. Section 14.03. SPECIAL PROJECT BONDS. Special Project Bonds payable from and secured by revenues may be issued by the Authority for the purpose of providing additional facilities to enable the Authority to render service to other users, provided that such Special Project Bonds are not payable from or secured by a pledge of Net Revenues. Special Project Bonds may be 27 additionally secured by a mortgage or deed of trust lien upon only the physical properties of the project purchased or constructed with the proceeds of such bonds. Section 14.04. INCREASE IN RESERVE FUND. If Completion Bonds or Improvement Bonds are issued, the maximum amount required to be deposited and maintained in the Reserve Fund shall be increased so that the aggregate amount to be accumulated in the Reserve Fund shall be no less than the average annual principal and interest requirements for all then outstanding Parity Bonds, Completion Bonds, or Improvement Bonds, and for the installment or series of bonds then proposed to be issued. Such average annual requirements shall be calcu- lated as of the date of any such Additional Bonds. Provided, as of the date of any such Additional Bonds, it shall be sufficient if the aggregate amount in the Reserve Fund is equal to the average annual requirement on the Parity Bonds and Additional Bonds outstanding and to be outstanding, and if the amount exceeds such average annual requirement, any surplus in the Reserve Fund shall be transferred to the Interest and Sinking Fund, unless otherwise required by any bond resolution. Section 14.05. TAX BONDS. No provisions in this Resolu- tion shall in any way affect the statutory right of the Author- ity to issue bonds supported wholly by ad valorem taxes. Section 14.06. REFUNDING BONDS. The Authority reserves the right to issue Refunding Bonds to refund any outstanding bonds secured by a pledge of the Net Revenues from the Contracts and any amendments thereof. Provided, that if less than all of such bonds at any time outstanding are refunded the principal and interest requirements shall not be increased in any year in which any of the bonds not being refunded are scheduled to mature. It is further specifically provided, however, that the second sentence of this Section 14.06 shall not be applicable, shall have no force or effect, and need not be complied with after the Series 1975 Bonds described in the preamble to this resolution shall have been paid or retired, or after due legal provision for such payment or retirement shall have been made. Section 15.01. DEFAULT PROVISIONS AND REMEDIES. In the event of a default or a threatened default in the payment of principal of or interest on the Parity Bonds, any court of competent jurisdiction may, upon petition of holders or owners of twenty -five per cent of the outstanding Parity Bonds, appoint a receiver with authority to collect and receive all income from the System, employ, and discharge agents, em- ployees, and consultants of the Authority, take charge of pledged funds on hand and manage the proprietary affairs of the Authority without consent or hindrance by the Board of Author- ity. Such receiver may also be authorized to make contracts for providing water treatment services or renew such contracts with the approval of the court appointing him. The Court may vest the receiver with such other powers and duties as the court may find necessary for the protection of the holders or owners of the Parity Bonds. Section 15.02. OTHER REMEDIES; REMEDIES NOT WAIVED. No remedy herein specified is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy available to the holders or owners of the said Parity Bonds, or now or hereafter existing at law or inequity, or by statute. No delay or omission to exercise any right or power shall impair any such right or power or shall be con- strued to be a waiver of any such default or acquiescence 28 therein, and every such right and power may be exercised from time to time and so often as may be deemed expedient. Section 16.01. AMENDMENTS OF RESOLUTION BY AUTHORITY. Without any prior action by or notice to the holders or owners of the Parity Bonds, Authority may, from time to time, and at any time, amend the Resolution: (a) to add to the covenants and undertakings of the Authority contained in this Resolution such additional covenants and undertakings as may be authorized or per- mitted by law; and (b) to cure any ambiguous, defective, or inconsis- tent provisions of this Resolution and to accomplish any other purposes not inconsistent with the provisions of this Resolution and which shall not impair the security afforded hereby. Section 16.02. AMENDMENTS BY CONSENT. The holders and owners of Parity Bonds aggregating in principal amount two - thirds of the aggregate principal amount of the Parity Bonds at the time outstanding (but not including in any case any Parity Bonds which may then be held or owned by or for the account of the Authority) shall have the right from time to time to approve an amendment of this Resolution which may be deemed necessary or desirable by the Authority; provided, however, that no amendment, without the consent of the holders and owners of all of the outstanding Parity Bonds, 'shall: (a) Make any change in the maturity of the Parity Bonds; (b) Reduce the rate of interest borne by any of the Parity Bonds; (c) Reduce the amount of the principal payable on the Parity Bonds; (d) Modify the terms of payment of principal of or interest on the Parity Bonds, or any of them, or impose any conditions with respect to such payment; (e) Affect the rights of the holders or owners of less than all of the Parity Bonds then outstanding; (f) Change the minimum percentage of the principal amount of Parity Bonds necessary for consent to such amend- ment. Section 16.03. NOTICE REQUIRED. If at any time the Authority shall desire to amend this Resolution under Section 16.02, the Authority shall cause notice of the proposed amend- ment 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 four 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 with each paying agent for the Parity Bonds and with the Secretary of the Board of Authority for inspection by all holders or owners of Parity Bonds. Such publication is not required, however, if notice in writing is given to each holder and owner of Parity Bonds. Section 16.04. ADOPTION OF AMENDMENT. Whenever at any time not less than thirty (30) days and within one year from the date of the first publication of said notice or other service of written notice the Authority shall receive an instrument or instruments executed by the holders and owners of 29 at least two - thirds in aggregate principal amount of Parity Bonds then outstanding, which instrument or instruments shall refer to the proposed amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the paying agents and Authority, the Authority may adopt the amendatory resolution in substantially the same form. Section 16.05. EFFECTIVE UPON ADOPTION. Upon the adop- tion of any amendatory resolution pursuant to the provisions hereof, this Resolution shall be deemed to be amended in accor- dance with such amendatory resolution, and the respective rights, duties, and obligations under this Resolution of the Authority and all the holders or owners of outstanding Parity Bonds shall thereafter be determined, exercised, and enforced hereunder, subject in all respects to such amendments. Section 16.06. REVOCATION OF CONSENT. Any consent given by the holder or owner of a Parity Bond pursuant to the provi- sions hereof shall be irrevocable for a period of six months from the date of the first publication of the notice provided for herein, and shall be conclusive and binding upon all future holders and owners of the same Parity Bond during such period. Such consent may be revoked at any time after six months from the date of the first publication of such notice by the holder or owner who gave such consent, or by a successor in title, by filing notice thereof with the paying agent and the Authority, but such revocation shall not be effective if the holders or owners of two - thirds aggregate principal amount of the Parity Bonds outstanding as herein defined have, prior to the at- tempted revocation, consented to and approved the amendment. Section 16.07. PROOF OF OWNERSHIP. The fact of the holding of Parity Bonds by any Bondholder and the amount and numbers of such Parity Bonds, and the date of his holding same may be proved by the affidavit of the person claiming to be such holder or owner, or by a certificate executed by any trust company, bank, banker, or any other depository, wherever situated showing that on the date therein mentioned such person had on deposit with such trust company, bank, banker, or other depository, the Parity Bonds described in such certificate. The Authority may conclusively assume that such ownership continues until written notice to the contrary is served upon the Authority. All matters relating to the ownership of fully registered Parity Bonds shall be ascertained from the registra- tion books therefor kept by the registrar. Section 17.01. APPLICATION OF SERIES 1984 BOND PROCEEDS. Upon delivery of and payment for the Bonds, the proceeds from the sale of the Bonds shall be applied as follows: (a) the amount required by Section 10.03(b) hereof shall be deposited into the Interest and Sinking Fund. (b) the amount required by Section 10.04(b) hereof shall be deposited into the Reserve Fund. (c) the balance shall be deposited into the Construction and Acquisition Fund. Section 17.02. ARBITRAGE. The Authority covenants to and with the purchasers of the Parity Bonds that it will make no use of the proceeds of the Parity Bonds at any time throughout the term of the issues of Parity Bonds which, if such use had been reasonably expected on the date of delivery of the Parity Bonds to and payment for the Parity Bonds by the purchasers, would have caused the Parity Bonds to be arbitrage bonds within the meaning of Section 103(c) of the Internal Revenue Code of 30 1954, as amended, or any regulations or rulings pertaining thereto; and by this covenant the Authority is obligated to comply with the requirements of the aforesaid Section 103(c) and all applicable and pertinent Department of the Treasury regulations relating to arbitrage bonds. The Authority further covenants that the proceeds of the Parity Bonds will not otherwise be used directly or indirectly so as to cause all or any part of the Parity Bonds to be or become arbitrage bonds within the meaning of the aforesaid Section 103(c), or any regulations or rulings pertaining thereto. Section 18. DEFEASANCE OF BONDS (SERIES 1984). (a) Any Bond and the interest thereon shall be deemed to be paid, retired, and no longer outstanding (a "Defeased Bond ") within the meaning of this Resolution, except to the extent provided in subsection (d) of this Section, when payment of the princi- pal of such Bond, plus interest thereon to the due date (whether such due date be by reason of maturity, upon redemp- tion, 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 irrev- ocably 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) Government Obligations which mature as to principal and inter- est in such amounts and at such times as will insure the availability, without reinvestment, of sufficient money to provide for such payment, and when proper arrangements have been made by the Issuer 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 Pledged Revenues as provided in this Resolution, and such principal and interest shall be payable solely from such money or Government Obliga- tions. (b) Any moneys so deposited with the Paying Agent /Regis- trar may at the written direction of the Issuer also be in- vested in Government Obligations, maturing in the amounts and times 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 depos- ited, shall be turned over to the Issuer, or deposited as directed in writing by the Issuer. (c) The term "Government Obligations" as used in this Section shall mean direct obligations of the United States of America, including obligations the principal of and interest on which are unconditionally guaranteed by the United States of America, which may be United States Treasury obligations such as its State and Local Government Series, which may be in book -entry form. (d) 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 Issuer shall make proper arrangements to provide and pay for such services as required by this Resolution. Section 19. DAMAGED, MUTILATED, LOST, STOLEN, OR DE- STROYED BONDS (SERIES 1984). (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent /Registrar shall cause to be 31 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 Bonds. Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made by the registered owner thereof to the Paying Agent /Registrar. In every case of loss, theft, or destruction of a Bond, the registered owner applying for a replacement bond shall furnish to the Issuer and to the Paying Agent /Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the registered owner shall furnish to the Issuer and to the Paying Agent /Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the registered owner shall surrender to the Paying Agent /Registrar for cancellation the Bond so damaged or muti- lated. (c) No Default Occurred. Notwithstanding the foregoing provisions of this Section, in the event any such Bond shall have matured, and no default has occurred which is then con- tinuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the Issuer may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement bond, the Paying Agent /Registrar shall charge the registered 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 Issuer 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 Resolution equally and proportionately with any and all other Bonds duly issued under this Resolution. (e) Authority for Issuing Replacement Bonds. In accor- dance with Section 6 of Vernon's Ann. Tex. Civ. St. Art. 717k -6, this Section 19 of this Resolution shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the Issuer 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 authen- ticate and deliver such Bonds in the form and manner and with the effect, as provided in Section 6(d) of this Resolution for Bonds issued in conversion and exchange for other Bonds. Section 20. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS; BOND COUNSEL'S OPINION, AND CUSIP NUMBERS. The President of the Board of Directors of the Issuer is hereby authorized to have control of the Initial Bond issued hereunder and all necessary records and proceedings pertaining to the Initial Bond pending its delivery and its investigation, examination, and approval by the Attorney General of the State of Texas, and its registration by the Comptroller of Public Accounts of the State of Texas. Upon registration of the Initial Bond said Comptroller of Public Accounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the 32 Comptroller's Registration Certificate on the Initial Bond, and the seal of said Comptroller shall be impressed, or placed in facsimile, on the Initial Bond. The approving legal opinion of the Issuer's Bond Counsel and the assigned CUSIP numbers may, at the option of the Issuer, be printed on the Initial Bond or on any Bonds issued and delivered in conversion of and exchange or replacement of any Bond, but neither shall have any legal effect, and shall be solely for the convenience and information of the registered owners of the Bonds. Section 21. SALE OF INITIAL BOND. The Initial Bond is hereby sold and shall be delivered to FIRST CITY NATIONAL BANK OF AUSTIN, AUSTIN, TEXAS, for cash for the principal amount thereof plus accrued interest to the date of delivery. It is hereby found and determined by the Board that the price and terms for the sale of the Initial Bond are the most advan- tageous reasonably obtainable. Section 22. FURTHER PROCEDURES. The President of the Board, the Secretary of the Board, the General Manager of the Issuer, and all other officers, employees, and agents of the Issuer, and each of them, shall be and they are hereby express- ly authorized, empowered, and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and under the corporate seal and on behalf of the Issuer all such instru- ments, whether or not herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Bond Resolution and the Bonds. In case any officer whose signature shall appear on the Initial Bond shall cease to be such officer before the delivery of the Initial Bond, such signature shall nevertheless be valid and sufficient for all purposes the same as if he or she had remained in office until such delivery. 33