HomeMy WebLinkAbout88-671 02-09-1988RESOLUTION NO. 88 -671;
RESOLUTION
APPROVING RESOLUTION AUTHORIZING THE ISSUANCE, SALE,
AND DELIVERY OF TRINITY RIVER AUTHORITY OF TEXAS
(TARRANT COUNTY WATER PROJECT) REVENUE BONDS, SERIES
1988, 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 1988, 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 1988, 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 February 24, 1988, 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 the interest rates for the Bonds, the purchaser
of the Bonds, and the price to be paid for the Bonds, shall be
set forth in the Bond Resolution in the manner determined by
the Board of Directors of Trinity River Authority of Texas
pursuant to bids to be received by said Authority for the Bonds
on February 24, 1988, at public sale in accordance with a
Notice of Sale and Bidding Instructions and Official Statement
prepared under the supervision of the Authority and First
Southwest Company, its Financial Advisor; and such interest
rates, purchaser, and price as so determined are hereby ap-
proved by the City.
3. 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.
4. 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.
RESOLUTION NO. R -716
RESOLUTION
AUTHORIZING THE ISSUANCE, SALE, AND DELIVERY OF TRINITY
RIVER AUTHORITY OF TEXAS (TARRANT COUNTY WATER PROJECT)
REVENUE BONDS, SERIES 1988, AND APPROVING AND AUTHORIZING
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 Decem-
ber 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 contracts, each
dated as of April 25, 1979, and amended as of December 5, 1979,
and as of April 23, 1980, have been duly executed 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, 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 Svstem 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 Proiect 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 - Trinitv River Authority
of Texas Tarrant County Water Proiect 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 "Supple-
ment to the Master Plan Modification which was dated October 1,
1976 - Trinitv River Authority of Texas Tarrant County Water
Project Raw Water Parallel Pipeline Segment I and Interim
Supply Interconnection Facilities. dated April. 1984 ", prepared
1
by the Consulting Engineers, and has been further supplemented
by a document entitled "Supplement to the Master Plan Modifica-
tion which was dated October, 1976 - Trinity River Authority of
Texas Tarrant County Water Proiect Raw Water Parallel Pipeline
Segments II and III, Interim Supply Interconnection with
Arlington, Storage & Pumping Facilities & Plant Expansion to 27
MGD ", dated July, 1984, and further supplemented by a document
entitled "1986 Update of Master Plan ", dated June. 1986,
prepared by the Consulting Engineers; and
WHEREAS, pursuant to the Contracts parts of 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 ");
Trinity River Authority of Texas (Tarrant County
Water Project) Revenue Bonds, Series 1980, dated
May 1, 1980 (the "Series 1980 Bonds "); and
Trinity River Authority of Texas (Tarrant County
Water Project) Revenue Bonds, Series 1984 -A, dated
September 1, 1984 (the "Series 1984 -A Bonds "); and
WHEREAS, under the Contracts and the resolutions authoriz-
ing the above described bonds, additional parity revenue bonds
may be issued as "Improvement Bonds" and "Additional Bonds" on
a parity with the aforesaid bonds; 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 described above, and all of
the bonds hereinafter authorized are "Bonds ", as defined and
permitted in the Contracts, and will be payable from Net
Revenues derived by the Authority from the Contracts; 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 717q, and other applicable laws.
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 $13,300,000, FOR THE PURPOSE OF OBTAINING
FUNDS FOR 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 1988" 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 MARCH 1, 1988, in the
denomination and aggregate principal amount of $14,850,000
numbered R -1, payable in annual installments of principal to
the initial registered owner thereof, to -wit:
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
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 fol-
lows:
FORM OF INITIAL BOND
NO. R -1 $13,300,000
UNITED STATES OF AMERICA
STATE OF TEXAS
TRINITY RIVER AUTHORITY OF TEXAS
(TARRANT COUNTY WATER PROJECT) REVENUE BOND
SERIES 1988
TRINITY RIVER AUTHORITY OF TEXAS (the "Issuer "), being a
political subdivision of the State of Texas, hereby promises to
pay to
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
$13,300,000
(THIRTEEN MILLION THREE 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
PRINCIPAL
AMOUNT
YEAR
PRINCIPAL
AMOUNT
1991 $300,000 2001 $ 600,000
1992 300,000 2002 700,000
1993 300,000 2003 700,000
1994 400,000 2004 800,000
1995 400,000 2005 900,000
1996 400,000 2006 900,000
1997 500,000 2007 1,000,000
1998 500,000 2008 1,100,000
1999 500,000 2009 1,200,000
2000 600,000 2010 1,200,000
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:
% per annum on the above installment due in 1991;
% per annum on the above installment due in 1992;
% per annum on the above installment due in 1993;
% per annum on the above installment due in 1994;
% per annum on the above installment due in 1995;
% per annum on the above installment due in 1996;
% per annum on the above installment due in 1997;
% per annum on the above installment due in 1998;
% per annum on the above installment due in 1999;
% per annum on the above installment due in 2000;
% per annum on the above installment due in 2001;
% per annum on the above installment due in 2002;
% per annum on the above installment due in 2003;
% per annum on the above installment due in 2004;
% per annum on the above installment due in 2005;
% per annum on the above installment due in 2006;
% per annum on the above installment due in 2007;
% per annum on the above installment due in 2008;
% per annum on the above installment due in 2009;
% per annum on the above installment due in 2010,
with said interest being payable on AUGUST 1, 1988, and semi-
annually on each FEBRUARY 1 and AUGUST 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
REPUBLICBANK FORT WORTH, N.A., FORT WORTH, TEXAS, which is the
"Paying Agent /Registrar" for this Bond. Payment of all princi-
pal of and interest on this Bond shall be made by the Paying
Agent /Registrar to the registered owner hereof on each princi-
pal and /or interest payment date by check, dated as of such
date, drawn by the Paying Agent /Registrar on, and payable
5
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 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 regis-
tered 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 in the aggregate
principal amount of $13,300,000, FOR THE PURPOSE OF OBTAINING
FUNDS FOR THE ACQUISITION AND CONSTRUCTION OF IMPROVEMENTS,
BETTERMENTS, EXTENSIONS, AND REPLACEMENTS OF THE TRINITY RIVER
AUTHORITY OF TEXAS TARRANT COUNTY WATER PROJECT.
ON FEBRUARY 1, 1999, or on any interest payment date
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 the principal amount
thereof and accrued interest thereon to the date fixed for
prepayment or redemption, and without premium.
AT LEAST 30 days prior to the date fixed for any such
prepayment or redemption a written notice of such prepayment or
redemption shall be mailed by the Paying Agent /Registrar to the
registered owner hereof. By the date fixed for any such
prepayment or redemption due provision shall be made by the
Issuer with the Paying Agent /Registrar for the payment of the
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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
redemption. 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 instruments of
assignment, in form and with guarantee of signatures satisfac-
tory 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 transferred 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 conver-
sion 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 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
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
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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, evidencing (1) 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 trans-
ferred, there shall be delivered to and registered in the name
of the initial registered owner substitute 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 assignment 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 transferred, 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 /Regis-
trar'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
12
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) Payment 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 represen-
tatives, with guarantee of signatures satisfactory to the
Paying Agent /Registrar, may, at the option of the registered
owner or such assignee or assignees, as appropriate, be con-
verted into and exchanged for fully registered bonds, without
interest coupons, in the form prescribed in the FORM OF SUBSTI-
TUTE BOND set forth in this Resolution, in the denomination 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 unredeemed
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
13
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:
"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.
14
FIRST REPUBLICBANK FORT WORTH, N.A.,
FORT WORTH, TEXAS
Paying Agent /Registrar
Dated
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 Comptrol-
ler 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
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 regis-
tration 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
16
Agent /Registrar shall be deemed to have agreed to the provi-
sions of this Resolution, and a certified copy of this Resolu-
tion 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 1988
INTEREST RATE
MATURITY DATE CUSIP NO.
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 MARCH 1, 1988, to the maturity
date specified above, or the date of redemption prior to
maturity, at the interest rate per annum specified above; with
interest being payable on AUGUST 1, 1988, and semiannually on
each FEBRUARY 1 and AUGUST 1 thereafter, except that if the
date of authentication of this Bond is later than JULY 15,
1988, such principal amount shall bear interest from the
interest payment date next preceding the date of authentica-
tion, 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
17
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 REPUBLICBANK FORT WORTH, N.A., FORT
WORTH, 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, 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 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.
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
MARCH 1, 1988, authorized in accordance with the Constitution
and laws of the State of Texas in the aggregate principal
amount of $13,300,000, FOR THE PURPOSE OF OBTAINING FUNDS FOR
18
THE ACQUISITION AND CONSTRUCTION OF IMPROVEMENTS, BETTERMENTS,
EXTENSIONS, AND REPLACEMENTS OF THE TRINITY RIVER AUTHORITY OF
TEXAS TARRANT COUNTY WATER PROJECT.
ON FEBRUARY 1, 1999, or on any interest payment date
thereafter, the outstanding Bonds of this Series may be re-
deemed 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 desig-
nated 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 the principal amount thereof and accrued
interest thereon to the date fixed for redemption, and without
premium.
AT LEAST 30 days prior to the date fixed for any redemp-
tion of Bonds or portions thereof prior to maturity a written
notice of such redemption shall be published once in a finan-
cial publication, journal, or reporter of general circulation
among securities dealers in The City of New York, New York
(including, but not limited to, The Bond Buyer and The Wall
Street Journal), or in the State of Texas (including, but not
limited to, The Texas Bond Reporter). Such notice also shall
be sent by the Paying Agent /Registrar by United States mail,
first -class postage prepaid, not less than 30 days prior to the
date fixed for any such redemption, to the registered owner of
each Bond to be redeemed at its address as it appeared on the
45th day prior to such redemption date; provided, however, that
the failure to send, mail, or receive such notice, or any
defect therein or in the sending or mailing thereof, shall not
affect the validity or effectiveness of the proceedings for the
redemption of any Bond, and it is hereby specifically provided
that the publication of such notice as required above shall be
the only notice actually required in connection with or as a
prerequisite to the redemption of any Bonds or portions there-
of. 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 published and if due provision for such
payment is made, all as provided above, the Bonds or portions
thereof which are to be so redeemed thereby automatically shall
be treated as redeemed prior to their scheduled maturities, and
they shall not bear interest after the date fixed for redemp-
tion, 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 provided for such payment. If a
19
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 unre-
deemed 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
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.
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
21
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.
22
(facsimile signature)
Secretary, Board of Directors,
Trinity River Authority of
Texas
(facsimile signature)
President, Board of'Directors,
Trinity River Authority of
Texas
(ISSUER SEAL)
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 REPUBLICBANK FORT WORTH, N.A.,
FORT WORTH, 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
/ /
(Assignee's Social (print or typewrite Assignee's name and
Security or Taxpayer address, including zip code)
Identification Number)
and hereby irrevocably constitutes and appoints
attorney to transfer the registration of this Bond on the
Paying Agent /Registrar's Registration Books with full power of
substitution in the premises.
23
Dated:
Signature Guaranteed:
NOTICE: This signature must be
guaranteed by a member of the
New York Stock Exchange or a
commercial bank or trust
company.
Registered Owner
NOTICE: This signature must
correspond with the name of
the Registered Owner appear-
ing on the face of this Bond.
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.
(e) "Bonds" and "Series 1988 Bonds" mean collectively the
Initial Bond as described and defined in Sections 1 and 2
hereof, and all substitute bonds exchanged therefor, as well as
all other substitute and replacement bonds, issued as provided
in this Resolution.
(f) "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.
(g) "Cities" means the Cities of Bedford, Euless,
Colleyville, Grapevine, and North Richland Hills, Texas.
(h) "Contracts" means the contracts between the Authority
and the Cities as described and defined in the preamble to this
Resolution.
(i) "Depository" means the bank or banks which the Au-
thority belects (whether one or more), in accordance with law,
as its depository.
(j) "Engineering Report" means the Report dated July 1,
1971, and the supplements thereto with respect to the Author-
ity'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.
(k) "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.
(1) "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.
(m) "Outstanding Bonds" means the unpaid bonds described
in the preamble to this Resolution which will be outstanding
after the delivery of the Initial Bond and payable from Net
Revenues from the Contracts.
(n) "Parity Bonds" means collectively the Bonds and the
Outstanding Bonds.
(o) "Paying Agents" means collectively the banks where
the principal of and interest on the Parity 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 resolu-
tions authorizing the Outstanding Bonds, and it is hereby
25
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
1979 Bonds and the Series 1980 Bonds, and Sections 10.01
through 16.07 of the resolution authorizing the Series 1984 -A
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
26
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 First RepublicBank 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
deposit therein and available for such purpose, to pay the
interest scheduled to come due on all 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
principal of all Parity Bonds coming due and maturing or
required to be redeemed on the next interest payment date.
(b) There shall be deposited into the Interest and
Sinking Fund, immediately after the delivery of the Initial
Bond, the accrued interest received from the sale and delivery
of the Initial Bond, together with the additional sum of
$673,396 from the proceeds from the sale and delivery of the
Initial Bond, which amounts shall be used to pay interest on
the Bonds during the construction of the project for which the
Bonds are issued; and the amounts which otherwise would be
required to be deposited into the Interest and Sinking Fund
shall be reduced to that extent.
(c) The First RepublicBank Fort Worth, N.A., Fort Worth,
Texas, shall make such arrangements as are necessary to insure
27
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 First
RepublicBank 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
insufficient for such purpose.
(b) There is now on deposit in the Reserve Fund money and
investments in an amount in market value at least equal to the
average annual principal and interest requirements of the
Outstanding Bonds. There shall be deposited into the Reserve
Fund, from the proceeds from the sale and delivery of the
Initial Bond, immediately after the receipt of such proceeds,
such sum as will cause the Reserve Fund to contain money and
investments in market value equal to the average annual princi-
pal and interest requirements on all Parity Bonds to be out-
standing after the delivery of the Initial Bond. 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 Re-
serve Required Amount, until the Reserve Fund contains the
Required Reserve Amount.
(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
Parity Bonds and any Additional Bonds which remain outstanding
from time to time, calculated as of the date of such reduction.
28
(d) Any excess in the Reserve Fund over the Reserve
Required Amount in effect at any time shall be deposited to the
credit of 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 net proceeds
from the sale of the Initial Bond shall be deposited in the
Construction and Acquisition Fund and such 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 unconditionally guaran-
teed by the United States; such obligations at all times shall
be at least equal in market value to the amount in the Con-
struction 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
29
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 First RepublicBank Fort Worth, N.A.,
Fort Worth, Texas, for the benefit of the holders of the Parity
Bonds and Additional Bonds permitted hereunder.
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
30
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
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
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
31
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 exist-
ence 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 Engineering Report, 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 contin-
uously operated by the Authority 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.
Section 12.04. OPERATION OF THE SYSTEM. The Authority
shall use its best efforts to see that the System is properly
and efficiently operated.
32
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 outstanding, 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 14.01 and 14.02 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
33
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
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
34
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 recom-
mendation in writing of a registered professional engineer
concerning such proposed sale or leasing.
Section 12.12. SUCCESSOR PAYING AGENTS FOR COUPON BONDS.
If any of the paying agents for any Parity Bonds which are
coupon bonds payable to bearer, 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 engineer-
ing 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
35
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 recon-
struction 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
36
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 resolu-
tion, 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
37
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
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 accumu-
lated in the Reserve Fund shall be no less than the average
annual principal and interest requirements for all then out-
standing Parity Bonds, and for the installment or series of
Additional Bonds then proposed to be issued. Such average
annual requirements shall be calculated 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 outstand-
ing 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 Con-
tracts and any amendments thereof. Provided, that if less than
all of such bonds at any time outstanding are refunded the
38
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 in equity,
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
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
39
(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 and Additional Bonds aggregating in
principal amount two - thirds of the aggregate principal amount
of the Parity Bonds and Additional Bonds at the time outstand-
ing (but not including in any case any Parity Bonds or Addi-
tional 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 and Addi-
tional Bonds, shall:
(a) Make any change in the maturity of the Parity Bonds
or Additional Bonds;
(b) Reduce the rate of interest borne by any of the
Parity Bonds or Additional Bonds;
(c) Reduce the amount of the principal payable on the
Parity Bonds or Additional Bonds;
(d) Modify the terms of payment of principal of or
interest on the Parity Bonds or Additional 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 and Additional Bonds
then outstanding;
(f) Change the minimum percentage of the principal amount
of Parity Bonds and Additional Bonds necessary for
consent to such amendment.
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 Additional Bonds and
40
•
with the Secretary of the Board of Authority for inspection by
all holders or owners of Parity Bonds and Additional Bonds.
Such publication is not required, however, if notice in writing
is given to each holder and owner of Parity Bonds and Addi-
tional 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
at least two - thirds in aggregate principal amount of Parity
Bonds and Additional 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 and Additional 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 or Additional Bond
pursuant to the provisions 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 or Additional 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 and
Additional Bonds outstanding as herein defined have, prior to
the attempted revocation, consented to and approved the amend-
ment.
Section 16.07. PROOF OF OWNERSHIP. The fact of the
holding of Parity Bonds and Additional Bonds by any Bondholder
and the amount and numbers of such Parity Bonds and Additional
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 or Additional Bonds described in such certificate. The
Authority may conclusively assume that such ownership continues
until written notice to the contrary is served upon the Author-
ity. All matters relating to the ownership of fully registered
Parity Bonds and Additional Bonds shall be ascertained from the .
registration books therefor kept by the registrar.
Section 17. DEFEASANCE OF BONDS (SERIES 1988). (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 (wheth-
er such due date be by reason of maturity, upon redemption, or
otherwise) either (i) shall have been made or caused to be made
in accordance with the terms thereof (including the giving of
any required notice of redemption), or (ii) shall have been
provided for on or before such due date by irrevocably deposit-
ing 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 interest in such amounts and
at such times as will insure the availability, without rein-
vestment, 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 Obligations.
(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.
42
(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 18. DAMAGED, MUTILATED, LOST, STOLEN, OR DE-
STROYED BONDS (SERIES 1988). (a) Replacement Bonds. In the
event any outstanding Bond is damaged, mutilated, lost, stolen,
or destroyed, the Paying Agent /Registrar shall cause to be
printed, executed, and delivered, a new bond of the same
principal amount, maturity, and interest rate, as the damaged,
mutilated, lost, stolen, or destroyed Bond, in replacement for
such Bond in the manner hereinafter provided.
(b) Application for Replacement 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.
43
(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 witbsall 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 18 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 19. COVENANTS REGARDING TAX- EXEMPT STATUS OF
BONDS. The Issuer hereby covenants to take such action or
refrain from such action necessary to ensure the status of the
Bonds as obligations described in section 103 of the Internal
Revenue Code of 1986 or any predecessor thereof. In particu-
lar, but not by way of limitation, the Issuer covenants as
follows:
(a) None of the proceeds of the Bonds (including
investment earnings thereon) will be used, directly or
indirectly, in the trade or business of a person, other
than the Issuer. For purposes of the foregoing, any use
of such proceeds in any manner contrary to the guidelines
set forth in Revenue Procedures 82 -14 and 82 -15, 1982 -1
C.B. 459, 460, or any amendments, revisions or supplements
thereto, shall constitute the use of such proceeds in the
trade or business of such person;
(b) None of the proceeds of the Bonds (including
investment earnings thereon) will be used, directly or
indirectly, to finance loans to any persons;
(c) Not by way of limitation, the Issuer will take
such action or will refrain from any action which would
adversely affect the exemption from federal income
44
v s.
taxation of the interest paid on the Bonds, including
without limitation any action that would permit any of the
Bonds to be treated as "private activity bonds" within the
meaning of section 141 of the Code or as "federally
guaranteed" within the meaning of section 149(b) of the
Code, and will take, or require to be taken, such acts as
may be reasonably within its ability and as may from time
to time be required under applicable law or regulation to
continue to cause interest on the Bonds to be excludable
from gross income of the holder, including the preparation
and filing of any statements or information reports
required to be filed by the Issuer in order to maintain
the tax - exempt status of the interest on the Bonds; and
(d) The Issuer has not taken, has no present inten-
tion of taking any action and knows of no action taken or
intended which would cause interest on the Bonds to be
includable in the gross income of any bondholders for
federal income tax purposes.
Section 20. COVENANTS REGARDING ARBITRAGE. (a) A Rebate
Fund is hereby established by the Issuer. Such Fund shall be
for the benefit of the United States of America. The Rebate
Fund is established for the purpose of compliance with section
148 of the Internal Revenue Code of 1986 (the "Code ").
(b) At the close of each "Bond Year," the Issuer shall
compute the amount of "Excess Earnings," if any, for the period
beginning on the date of delivery of the Initial Bond and
ending at the close of such "Bond Year" and transfer to the
Rebate Fund an amount equal to the difference, if any, between
the amount then in the Rebate Fund and the Excess Earnings so
computed. The term "Bond Year" means with respect to the Bonds
each one -year period ending on the anniversary of the date of
delivery of the Initial Bond. If, at the close of any Bond
Year, the amount in the Rebate Fund exceeds the amount that
would be required to be paid to the United States of America
under paragraph (d) below if the Bonds had been paid in full,
such excess may be transferred from the Rebate Fund and paid to
the Issuer.
(c) In general, "Excess Earnings" for any period of time
means the sum of
(i) the excess of --
(A) the aggregate amount earned during such
period of time on all "Nonpurpose Obligations"
(including gains on the disposition of such Obli-
gations) in which "Gross Proceeds" of the issue are
45
invested (other than amounts attributable to an
excess described in this subparagraph (c)(i)), over
(B) the amount that would have been earned
during such period of time if the "Yield" on such
Nonpurpose Obligations (other than amounts attrib-
utable to an excess described in this subparagraph
(c)(i)) had been equal to the yield on the issue,
plus
(ii) any income during such period of time attrib-
utable to the excess described in subparagraph (c)(i)
above.
"Excess Earnings" will not include amounts, if any, which need
not be taken into account under the special rules of section
148(f)(4)(A) and (B) of the Code relating to bona fide debt
service funds and the six -month temporary investment period.
The terms "Nonpurpose Obligations," "Gross Proceeds" and
"Yield" shall have the meanings prescribed by section 148 of
the Code and shall be applied in the manner prescribed in such
section.
(d) The Issuer shall pay to the United States of America
at least once every five -years an amount that ensures that at
least 90 percent of the Excess Earnings from the date of
delivery of the Bonds to the close of the period for which the
payment is being made will have been paid. The Issuer shall
pay to the United States of America not later than 60 days
after the Bonds have been paid in full 100 percent of the
amount then required to be paid under section 148(f) of the
Code as a result of Excess Earnings.
(e) The Issuer shall keep such records as will enable the
Issuer to fulfill its responsibilities under this section and
section 148(f) of the Code and shall retain such records for at
least six years following the final payment of principal and
interest on the Bonds.
(f) The Issuer will not use any portion of the proceeds
of the Bonds directly or indirectly to acquire "higher yielding
investments," or to replace funds which were used directly or
indirectly to acquire "higher yielding investments." The term
higher yielding investments means any investment property (as
defined in section 148(b)(2) of the Code) which produces a
yield over the term of the issue which is materially higher
than the yield on the issue (as defined above). The foregoing
limitation on higher yielding investments shall not apply to --
46
(1) proceeds of the Bonds invested for a reasonable
temporary period of 3 years or less until such proceeds
are needed for the purpose for which the bonds are issued,
or
(2) amounts invested in a bona fide debt service
fund if the gross earnings on such fund are less than
$100,000 in any bond year.
(g) The Issuer covenants to restrict the use of Initial
Bond proceeds in such manner and to such extent, as may be
necessary, so that the Bonds will not constitute arbitrage
bonds under section 148 of the Code. Any authorized represen-
tative of the Issuer having responsibility with respect to the
issuance of the Bonds is authorized and directed, alone or in
conjunction with any other official, employee or consultant of
the Issuer to give an appropriate certificate on behalf of the
Issuer, for inclusion in the transcript of proceedings for the
Bonds, setting forth the facts, estimates and circumstances and
reasonable expectations pertaining to section 148 of the Code
and, to the extent applicable, section 149(d) of the Code.
(h) The requirements of this Section are subject to, and
shall be interpreted in accordance with section 148 of the
Code.
Section 21. CUSTODY, APPROVAL, AND REGISTRATION OF BONDS;
BOND COUNSEL'S OPINION, CUSIP NUMBERS, AND INSURANCE. The
President of the Boad of Directors of the Issuer is hereby
authorized to have control of the Initial Bond issued hereunder
and all necesary 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 Acounts (or a deputy
designated in writing to act for said Comptroller) shall
manually sign the Comptroller's Registration Certificate on the
Initial Bond, and the seal of said Comptroller shall be im-
pressed, 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 deliv-
ered 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. If the purchaser of the Initial Bond exercises its
option to obtain insurance on the Bonds, as permitted in the
Notice of Sale and Bidding Instructions and Official Statement
hereinafter described, the Initial Bond and all the Bonds shall
47
bear an appropriate legend concerning insurance as provided by
the insurer.
Section 22. SALE OF INITIAL BOND AND APPROVAL OF OFFICIAL
STATEMENT. The Initial Bond is hereby sold and shall be
delivered to for cash
for $ and accrued interest on the Initial Bond to
date of delivery. It is hereby found, determined, and declared
that the Initial Bond has been sold at public sale to the
bidder offering the lowest interest cost, after receiving
sealed bids pursuant to an Official Notice of Sale and Bidding
Instructions and Official Statement dated February 10, 1988,
prepared and distributed in connection with the sale of the
Initial Bond. Said Official Notice of Sale and Bidding In-
structions and Official Statement, and any addenda, supplement,
or amendment thereto have been and are hereby approved by the
Board, and their use in the offer and sale of the Bonds is
hereby approved. It is further officialy found, determined,
and declared that the statements and representations contained
in said Official Notice of Sale and Official Statement are true
and correct in all material respects, to the best knowledge and,
belief of the Board. It is further found and determined by the
Board that the price and terms for the sale of the Initial Bond
are the most advantageous reasonably obtainable.
Section 23. FURTHER PROCEDURES. The President of the
Board of Directors of the Authority, the Secretary of said
Board, the General Manager of the Authority, and all other
officers, employees, and agents of the Authority, and each of
them, shall be and they are hereby expressly authorized,
empowered, and directed from time to time and at any time to do
and perform all such acts and things and to execute, acknowl-
edge, and deliver in the name and on behalf of the Authority
all such instruments and agreements, whether or not herein
mentioned, as may be necessary or desirable in order to carry
out the terms and provisions of this Bond Resolution, the
Bonds, the sale and delivery of the Initial Bond and the other
Bonds, and the Official Statement. In case any officer whose
signature shall appear on any Bond shall cease to be such
officer before the delivery of such Bond, such signature shall
nevertheless be valid and sufficient for all purposes the same
as if such officer had remained in office until such delivery.
48