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HomeMy WebLinkAbout737 04-26-1983ORDINANCE NO. AN ORDINANCE by the City Council of the City of Euless, Texas, authorizing the issuance of $3,000,000 "CITY OF EULESS, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 198311, dated May 15, 1983; prescribing the form of the bonds and the form of the interest coupons; pledging the net revenues of the City's combined Waterworks and Sanitary Sewer System to the payment of the principal of and interest on said bonds; enacting provisions incident and related to the subject and purpose of this ordinance; and declaring an emergency. WHEREAS, the City Council hereby finds and determines that revenue bonds in the total principal amount of $3,000,000 should be issued and sold at this time for the purposes hereinafter shown; such revenue bonds having been approved at an election held in the City on January 17, 1970 and a summary of the revenue bonds approved at said election, the respective authorized purposes and amounts approved therefor, amounts previously issued and being issued pursuant to this ordinance from such voted authorization and amounts remaining to be issued subsequent to the date hereof being as follows: PURPOSE Waterworks Improvements and Extensions Sewer Improvements and Extensions TOTAL AMOUNTS AMOUNTS AMOUNT PREVIOUSLY BEING UNISSUED VOTED ISSUED ISSUED BALANCE $4,000,000 $500,000 $3,000,000 $ 500,000 $1,000,000 $300,000 -0- $ 700,000 AND WHEREAS, the City Council further finds and determines that all of the revenue bonds authorized by this ordinance can and should be issued on a parity with the outstanding and unpaid revenue bonds of the City (hereinafter called and defined as "Previously Issued Bonds ") payable from and secured by a first lien on and pledge of the Net Revenues of the City's combined Waterworks and Sanitary Sewer System (the "System ") in that (i) the City is not now in default as to any covenant, condition or obligation contained in the ordinances authorizing the issuance of the outstanding Previously Issued Bonds, (ii) the laws of the State of Texas now in force provide for the issuance of the bonds herein authorized to be issued, (iii) each of the Funds created and reaffirmed by the ordinances authorizing the Previously Issued Bonds contains the amount of money now required to be on deposit therein; (iv) that the "Net Revenues" of the System for the twelve -month period preceding the month of the adoption of this ordinance, as shown by a report of a Certified Public Accountant or licensed public accountant, are equal to at least one and one - fourth (1 -1/4) times the average annual principal and interest requirements of all bonds secured by a first lien on and pledge of the Net Revenues of the System, and which will be outstanding upon the issuance of the bonds herein authorized; (v) this ordinance provides in Section 16 hereof that the amount to be accumulated and maintained in the Bond Reserve Fund shall be increased to an i J amount equal to not less than the average annual principal and interest requirements of all bonds payable from and secured by a first lien on and pledge of the Net Revenues of the System (after giving effect to the issuance of the bonds herein authorized) and any additional amount to be maintained in said Fund shall be accumulated within not more than five (5) years and one (1) month from the date of the passage of this ordinance; and (vi) the bonds herein authorized shall mature on July 15 in each year; and WHEREAS, the City Council further reserves the right and authority to issue and sell in one or more installments the balance of the bonds authorized at said election, when in the judgment of said City Council the amounts thereof are needed by the City for the purposes for which authorized; now therefore, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF EULESS, TEXAS: SECTION 1: Authorization - Principal Amount- Designation. That, pursuant to authority conferred at the aforesaid election and in accordance with the General Laws of the, State of Texas, particularly Article 1111, et seq., V.A.T.C.S., there shall be and there is hereby ordered to be issued a series of coupon, bearer bonds, to be designated "CITY OF EULESS, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BONDS, SERIES 198311, in the total principal amount of THREE MILLION DOLLARS ($3,000,000) for the purpose of providing funds for constructing improvements and extensions to the City's Waterworks System, which series of bonds, together with the outstanding and unpaid Previously Issued Bonds, shall be payable as to both principal and interest solely from and equally secured by a first lien on and pledge of the net revenues of the City's combined Waterworks and Sanitary Sewer System. SECTION 2: Date - Numbers - Maturity - Option - Interest Rates. That said bonds shall be dated May 15, 1983, shall be numbered consecutively from One (1) through Six Hundred (600), shall each be in the denomination of Five Thousand Dollars ($5,000); and shall become due and payable serially on July 15 in each of the years and bear interest at per annum rates in accordance with the following schedule: BOND NUMBERS INTEREST (All Inclusive) MATURITY AMOUNT RATE 1 to 15 1985 75,000 10.75 16 to 30 1986 75,000 10.75 0% 31 to 45 1987 75,000 10.75 46 to 65 1988 100,000 10.75 66 to 85 1989 100,000 10.25 86 to 105 1990 100,000 7.75 106 to 130 1991 125,000 8.00 131_ to 155 1992 125,000 8.10 156 to 185 1993 150,000 8.25 186 to 235 1994 250,000 8.40 236 to 270 1995 175,000 8.50 271 to 310 1996 200,000 8.60 311 to 350 1997 200,000 8.70 351 to 395 1998 225,000 —80-0/. 396 to 445 1999 250,000 9.00 7. 446 to 495 2000 250,000 -2—.0-0/01. 496 to 550 2001 275,000 9100 551 to 600 2002 250,000 -3. 0- PROVIDED, HOWEVER, that the City reserves the right to redeem the bonds of this series maturing on and after July 15, 1994, in whole or any part thereof, on July 15, 1993, or on any 2 interest payment date thereafter, at the price of par and accrued interest to the date fixed for redemption; PROVIDED, FURTHER, that at least thirty (30) days prior to a date any of said bonds are to be redeemed, a notice of redemption, signed by the City Secretary (specifying the serial numbers and amount of bonds to be redeemed), shall have been filed with the BANKERS TRUST COMPANY, New York, New York and the MERCANTILE NATIONAL BANK AT DALLAS, Dallas, Texas, (the paying agents named in each of said bonds); and if the City shall have made available by the redemption date funds in amounts sufficient to pay the bonds to be redeemed and accrued interest thereon, any bond or bonds not presented for redemption pursuant to such notice shall cease to bear interest from and after the date so fixed for redemption. SECTION 3: Interest. That said bonds shall bear interest from date to maturity, or the redemption thereof in accordance.with the terms prescribed therefor, at the per annum rates shown above, such interest to be evidenced by proper coupons attached to each of said bonds; and said interest shall be payable on January 15, 1984, and semiannually thereafter on July 15 and January 15 in each year. SECTION 4: Place of Payment. That both principal of and interest on this issue of bonds shall be payable in lawful money of the United States of America, without exchange or collection charges to the owner or holder, at the BANKERS TRUST COMPANY, New York, New York, or, at the option of the holder, the MERCANTILE NATIONAL BANK AT DALLAS, Dallas, Texas, upon presentation and surrender of bonds or proper coupons. SECTION 5: Execution of Bonds and Coupons. That the seal of said City may be impressed on each of said bonds, or in the alternative, a facsimile of such seal may be printed on said bonds. The bonds and interest coupons appurtenant thereto may be executed by the imprinted facsimile signatures of the Mayor and City Secretary of the City and execution in such manner shall have the same effect as if such bonds and coupons had been signed by the Mayor and City Secretary in person by their manual signatures. Inasmuch as such bonds are required to be registered by the Comptroller of Public Accounts of the State of Texas, only his signature (or that of a deputy designated in writing to act for the Comptroller) shall be required to be manually subscribed to such bonds in connection with his registration certificate to appear thereon, as hereinafter provided; all in accordance with the provisions of Article 717j -1, V.A.T.C.S. SECTION 6: Form of Bonds. That the form of said bonds shall be substantially as follows: NO. UNITED STATES OF AMERICA $5,000 STATE OF TEXAS COUNTY OF TARRANT CITY OF EULESS, TEXAS WATERWORKS AND SEWER SYSTEM REVENUE BOND, SERIES 1983 FOR VALUE RECEIVED, the City of Euless, a municipal corporation of the State of Texas, hereby promises to pay to the bearer hereof, as hereinafter stated, on the 15th day of July, the principal sum of FIVE THOUSAND DOLLARS 3 ($5,000), in lawful money of the United States of America, together with interest thereon from the date hereof to maturity, or the redemption hereof in accordance with the terms prescribed therefor, at the rate of PER CENTUM ( %) per annum, such interest being payable on January 15, 1984, and semiannually thereafter on July 15 and January 15 in each year, and evidenced by interest coupons attached hereto. BOTH PRINCIPAL AND INTEREST are payable only upon presentation and surrender of this bond and the interest coupons hereto attached as the same severally become due at the BANKERS TRUST COMPANY, New York, New York, or, at the option of the holder, the MERCANTILE NATIONAL BANK AT DALLAS, Dallas, Texas, without exchange or collection charges to the owner or holder, and the bearer of this bond and its appurtenant coupons shall be deemed the owner thereof for purposes of receiving payment and all other purposes, and neither the City nor the aforementioned places of payment shall be affected by any notice to the contrary. THIS BOND is one of a series of bonds (the "Bonds "), dated May 15, 1983, numbered consecutively from One (1), through Six Hundred (600), each in the denomination of Five Thousand Dollars ($5,000), aggregating in principal amount THREE MILLION DOLLARS ($3,000,000) issued for the purpose of providing funds for constructing improvements, and extensions to the City's Waterworks System, in accordance with the Constitution and laws of the State of Texas, particularly Articles 1111 et seq., V.A.T.C.S., by authority of an election held in the City for that said purpose and pursuant to an ordinance (the "Ordinance ") passed by the City Council of the City of Euless, Texas, and duly recorded in the Minutes of said City Council. THE BONDS OF SAID SERIES maturing on and after July 15, 1994, may be redeemed prior to their scheduled maturity at the option of the City, in whole or any part thereof, on July 15, 1993, or on any interest payment date thereafter at the price of par and accrued interest to the date of redemption; PROVIDED, HOWEVER, that at least thirty (30) days prior to a date any of said bonds are to be redeemed, a notice of redemption, signed by the City Secretary (specifying the serial numbers and amount of bonds to be redeemed), shall have been filed with the BANKERS TRUST COMPANY, New York, New York, and the MERCANTILE NATIONAL BANK AT DALLAS, Dallas, Texas; and if the City shall have made available by the redemption date an amount sufficient to pay the bonds to be redeemed and accrued interest thereon, any bond or bonds not presented for redemption pursuant to such notice shall cease to bear interest from and after the date so fixed for redemption. THE BONDS constitute special obligations of the City of Euless, Texas, and, together with the outstanding and unpaid Previously Issued Bonds (identified and defined in the Ordinance) are payable solely from and equally secured by a first lien on and pledge of the Net Revenues (as defined in the Ordinance) of the City's combined Waterworks and Sanitary Sewer System. THE CITY expressly reserves the right to issue additional revenue obligations in all things on a parity with the outstanding and unpaid Previously Issued Bonds and the Bonds, payable solely from and equally secured by a first lien on and pledge of the Net Revenues of the City's combined Waterworks and Sanitary Sewer System; PROVIDED, HOWEVER, that any and all such additional obligations may be so issued only in accordance with and subject to the covenants, 0 conditions, limitations and restrictions relating thereto which are set out and contained in the Ordinance and to which Ordinance reference is hereby made for more complete and full particulars. THE HOLDER hereof shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation. AND IT IS HEREBY CERTIFIED AND RECITED that the issuance of the Bonds is duly authorized by law; that all acts, conditions and things required to exist and to be done precedent to and in the issuance of the Bonds to render the same lawful and valid have been properly done, have happened and have been performed in regular and due time, form and manner as required by the Constitution and laws of the State of Texas and the Ordinance; that the Bonds do not exceed any constitutional or statutory limitation; and that provision has been made for the payment of the principal of and interest on the Bonds by irrevocably pledging the Net Revenues of the combined Waterworks and Sanitary Sewer System of the City of Euless, Texas, as hereinabove recited. IN TESTIMONY WHEREOF, the City Council of the City of Euless, Texas, in accordance with the provisions of Article 717j -1, V.A.T.C.S., has caused the seal of said City to be impressed or a facsimile thereof to be printed hereon, and this Bond and its appurtenant coupons to be executed by the imprinted facsimile signatures of the Mayor and City Secretary of said City. Mayor, City of Euless, Texas COUNTERSIGNED: City Secretary, City of Euless, Texas SECTION 7: Coupon Form. That the form of said interest coupons shall be substantially as follows: NO. ON THE 15TH DAY OF $ unless the bond to which this coupon pertains has been redeemed in accordance with its terms, the CITY OF EULESS, a municipal corporation in the County of Tarrant, State of Texas, hereby promises to pay to the bearer hereof the amount shown hereon, out of funds specified in the bond to which this coupon is attached (without right to demand payment out of any funds raised or to be raised by taxation), in lawful money of the United States of America, upon presentation and surrender of this coupon, at BANKERS TRUST COMPANY, New York, New York, or, at the option of the holder the MERCANTILE NATIONAL BANK AT DALLAS, Dallas, Texas, without exchange or collection charges, said amount being interest due on such date on "CITY OF EULESS, TEXAS, WATERWORKS AND SEWER SYSTEM REVENUE BOND, SERIES 1983," dated May 15, 1983. Bond No. City Secretary Mayor SECTION 8: Form of Comptroller's Certificate. That substantially the following shall be printed on the back of each bond: 61 OFFICE OF COMPTROLLER § § REGISTER NO. STATE OF TEXAS § I HEREBY CERTIFY that there is on file and of record in my office a certificate of the Attorney General of the State of Texas to the effect that this bond has been examined by him as required by law, and that he finds that it has been issued in conformity with the Constitution and laws of the State of Texas, and that it is a valid and binding special obligation of the City of Euless, Texas, payable from the revenues pledged to its payment by and in the ordinance authorizing same, and said bond has this day been registered by me. WITNESS MY HAND AND SEAL OF OFFICE, at Austin, Texas, Comptroller of Public Accounts of the State of Texas SECTION 9: Definitions. That for all purposes of-this ordinance and in particular for clarity with respect to the issuance of the bonds herein authorized and the pledge and appropriation of revenues therefor, the following definitions are provided: (a) The term "Additional Bonds" shall mean the additional parity revenue bonds the City reserves the right to issue in accordance with the terms and conditions prescribed in Section 20 hereof. (b) The term "Bonds" shall mean the revenue bonds authorized by this ordinance. (c) The term "Bonds Similarly Secured" shall mean the Previously Issued Bonds, the Bonds and Additional Bonds. (d) The term "Fiscal Year" shall mean the twelve -month operating period for the System ending September 30 of each year. (e) The term "Net Revenues" shall mean and include the gross revenues derived from the operation of the System, less reasonable expenses of operation and maintenance, including all salaries, labor, materials, repairs and extensions necessary to render efficient service, provided, however, that only such repairs and extensions as in the judgment of the City Council, reasonably and fairly,exercised, are necessary to keep the System in operation and render adequate service to the areas served thereby and the inhabitants thereof, or such as might be necessary to meet some physical accident or condition which would otherwise impair the security of any bonds payable from and secured by a lien on the Net Revenues of the System shall be deducted in determining "Net Revenues ". (f) The term "Previously Issued Bonds" shall mean the outstanding and unpaid revenue bonds, payable from and secured by a first lien on and pledge of the Net Revenues of the System, of the following issues or series, identified as follows: (1) City of Euless, Texas, Waterworks and Sewer System Revenue Bonds, Series 1965, dated July 15, 1965 and issued in the original principal amount of $3,600,000, 6 (2) City of Euless, Texas, Waterworks and Sewer System Revenue Refunding Bonds, Series 1967, dated January 15, 1967, and issued in the original principal amount of $2,200,000; and (3) City of Euless, Texas, Waterworks and Sewer System Revenue Bonds, Series 1971, dated March 15, 1971 and issued in the original principal amount of $800,000. (g) The term "System" shall mean the City's combined Waterworks and Sanitary Sewer System, including all present and future additions, extensions, replacements and improve- ments thereto, whether situated within or without the corporate limits of the City. SECTION 10: Pledge. That the City hereby covenants and agrees that all of the Net Revenues derived from the operation of the System, with the exception of those in excess of the amounts required to establish and maintain the special Funds created for the payment and security of the Bonds Similarly Secured, are hereby irrevocably pledged for the payment of the Previously Issued Bonds, the Bonds, and Additional Bonds, if issued, and the interest thereon, and it is hereby ordained that the Previously Issued Bonds, the Bonds and the Additional Bonds, if issued, and the interest thereon, shall constitute a first lien on the Net Revenues of the System. SECTION 11: Rates and Charges. That the City hereby covenants and agrees with the holders of the Bonds that rates and charges for water and sewer services afforded by the System will be established and maintained to provide revenues sufficient at all times to pay: (a) all operating, maintenance, depreciation, replacement, betterment and other costs deductible in determining Net Revenues as herein defined; (b) the interest on and principal of the Bonds Similarly Secured and the amounts required to be deposited into the special Funds created and established for the payment and security of the Bonds Similarly Secured; and (c) any other legally incurred indebtedness payable from the revenues of the System and /or secured by a lien on the System or the revenues thereof. SECTION 12: Segregation of Revenues /Fund Designations. All revenues and income derived from the operation and ownership of the System shall be kept separate from other funds of the City and deposited from day to day, as collected in the "System Fund" (created and established in connection with the issuance of the Previously Issued Bonds), which Fund is hereby reaffirmed and shall continue to be kept and maintained at an official depository bank of the City while the Bonds remain outstanding. Furthermore, the special funds or accounts created and established in connection with the issuance of the Previously Issued Bonds are hereby reaffirmed for the benefit of the Bonds, to wit: (i) Bond Fund, which at the Bankers T. York, and moneys be used only for principal of and Secured. Fund is kept rust Company, deposited in the purpose interest on 7 and maintained New York, New said Fund shall of paying the the Bonds Similarly (ii) Emergency Fund, which Fund is kept and maintained at the City's official depository bank, and moneys deposited in said Fund shall be used, upon proper order of the City Council, to pay any special or extraordinary repairs or replacements to the System necessitated by the occurrence of an emergency and for payment of which no other funds are available and, additionally for the payment of the principal and /or interest requirements of the Bonds Similarly Secured to prevent a default in the payment thereof when moneys in the Bond Fund and /or Bond Reserve Fund are deficient. (iii) Bond Reserve Fund, which Fund is kept and maintained at the Bankers Trust Company, New York, New York, and moneys deposited in said Fund shall be used to pay the principal of and interest on the Bonds Similarly Secured falling due at any time when there is insufficient money available in the Bond Fund for such purpose. SECTION 13: System Fund. The City hereby reaffirms its covenant to the holders of the Previously Issued Bonds and agrees with the holders of the Bonds that the moneys deposited in the System Fund shall be used first for the payment of the reasonable and proper expenses of operating and maintaining the System, as identified in Section 9(e) hereof. All moneys deposited in the System Fund in excess of the amounts required to pay operating and maintenance expenses of the System, as hereinabove provided, shall be applied and appropriated, to the extent required and in the order of priority prescribed, as follows: (i) To the payment of the amounts required to be deposited in the Bond Fund for the payment of principal of and interest on the Bonds Similarly Secured as the same become due and payable, (ii) To the payment of the amounts, if any, required to be deposited in the Emergency Fund to accumulate and /or restore the total amount required to be maintained therein, and (iii) To the payment of the amounts required to deposited in the Bond Reserve Fund to accumulate and maintain the reserve amount as security for the payment of the principal of and interest on the Bonds Similarly Secured. SECTION 14: Bond Fund. That, in addition to the required deposits to the Bond Fund for the payment of principal of and interest on the Previously Issued Bonds, the City hereby agrees and covenants to deposit to the Bond Fund an amount equal to one hundred percentum (100 %) of the amount required to fully pay the interest on and principal of the Bonds falling due on or before each maturity and interest payment date, such payments to be made in substantially equal monthly installments on or before the 10th day of each month beginning on or before the 10th day of the month next following the month the Bonds are delivered to the initial purchaser. The required monthly deposits to the Bond Fund for the payment of principal of and interest on the Bonds shall continue to be made as hereinabove provided until such time n as (i) the total amount on deposit in the Bond Fund and Bond Reserve Fund is equal to the amount required to fully pay and discharge all outstanding Bonds Similarly Secured (principal and interest) or (ii) the Bonds are no longer outstanding, i.e., fully paid as to principal and interest or all the Bonds have been refunded. Accrued interest and premium, if any, received from the purchaser of the Bonds, as well as any proceeds of the Bonds not required to complete the improvements and extensions to the System, shall be deposited in the Bond Fund, and shall be taken into consideration and reduce the amount of the monthly deposits hereinabove required which would otherwise be required to be deposited in the Bond Fund from the Net Revenues of the System. Furthermore, a transfer of funds from the Bond Reserve Fund and Emergency Fund, as hereinafter prescribed, shall be taken into consideration and reduce the amount of the monthly deposits otherwise required to be deposited in the Bond Fund from the Net Revenues. SECTION 15: Emergency Fund. In accordance with the provisions of the ordinances authorizing the issuance of the Previously Issued Bonds, the amount required to be accumulated and maintained in the Emergency Fund is $100,000,00, which amount is currently on deposit therein, and no additional amount shall be required to be deposited in said Fund by reason of the issuance of the Bonds. As long as the sum of $100,000.00 is on deposit in said Fund, no further amounts shall be required to be deposited therein; provided, however, should the amount on deposit in said Fund ever be less than $100,000.00, the City covenants and agrees to immediately resume, and cause to be made to said Fund, monthly deposits in the amount of $1,000 on or before the 10th day of each month until the total amount required to be maintained in said Fund has been fully restored, such monthly deposits to be made with available Net Revenues of the System in the System Fund and be subject only to the required deposits to the Bond Fund. Furthermore, when the amount on deposit in the Emergency Fund equals or exceeds the total amount required to be maintained therein, moneys realized from the investment of funds in the Emergency Fund in excess of the balance required to be maintained therein may be transferred to the Bond Fund. SECTION 16: Bond Reserve Fund. The City reaffirms its covenant to the holders of the Previously Issued Bonds and agrees with the owners of the Bonds that there shall be accumulated and maintained in the Bond Reserve Fund an amount equal to at least the average annual principal and interest requirement of the outstanding Bonds Similarly Secured. In accordance with the ordinances authorizing the issuance of the Previously Issued Bonds, there is currently on deposit to the credit of the Bond Reserve Fund the sum of $ 265,000.00 By reason of the issuance of the Bonds, the amount to be maintained in said Fund, subject to adjustment as hereinafter provided in this Section, shall be $ 520,400 (the "Required Reserve "), which amount totals not less than the average annual principal and interest requirement of the outstanding Bonds Similarly Secured after giving effect to the issuance of the Bonds. Beginning on or before June 10, 1983 and on or before the 10th day of each following month until the Required Reserve has been accumulated in said Fund, the City covenants and agrees to cause an amount to be deposited in the Bond Reserve Fund equal to at least 1 /59th of the differance between the Required Reserve and the amount currently on deposit in said Fund so that the total E Required Reserve will be accumulated in said Fund on or prior to April 10, 1988. Notwithstanding the provisions of the preceding paragraph relating to the Required Reserve, the total amount to be accumulated and maintained in the Bond Reserve Fund may, at the option of the City, be recomputed and adjusted to an amount equal to the average annual principal and interest requirements of the Bonds Similarly Secured at any time outstanding, and such adjustment is particularly anticipated at such time as Bonds Similarly Secured may be redeemed and retired prior to their stated maturity. Any amount in the Bond Reserve Fund in excess of the total amount required to be maintained in said Fund may be transferred to the Bond Fund. Furthermore, when the amount on deposit in the Bond Reserve Fund equals or exceeds the total amount required to be maintained therein, moneys realized from the investment of funds in the Bond Reserve Fund in excess of the balance required to be maintained in said Fund may be transferred to the Bond Fund. SECTION 17: Investments. Moneys on deposit in the Bond Reserve Fund and the Emergency Fund may be invested as follows: (a) Bond Reserve Fund in direct obligations of or obligations unconditionally guaranteed by the United States of America having maturities not in excess of ten (10) years from the making of such investment as the City Council may direct. Such obligations shall be held by the custodian bank where said Fund is maintained, and if at any time uninvested funds shall be insufficient to permit payment of principal and interest at maturity of the Bonds Similarly Secured, the custodian bank of said Fund shall sell on the open market such amount of the securities as is required to pay such Bonds Similarly Secured and interest thereon when due and shall give notice thereof to the City Manager. (b) Emergency Fund in direct obligations of or obligations unconditionally guaranteed by the United States of America having maturities not in excess of five (5) years from the making of such investment as the City Council may direct. Such investment securities shall be held by the custodian bank where said Fund is maintained and if at any time it becomes necessary to liquidate same to provide sums'for any purpose for which such Fund was created, the City shall notify the custodian bank of said Fund who shall promptly sell on the open market such amount thereof as may be required, making the proceeds immediately available. Should the purpose be for meeting bond requirements, the City agrees promptly to accomplish the required transfers to the paying agent bank for the Bonds Similarly Secured. SECTION 18: Payment of Bonds. While any of the Bonds are outstanding, the proper officers of the City are hereby authorized to transfer or cause to be transferred to the Paying Agent therefor, from funds on deposit in the Bond Fund and, if necessary, in the Bond Reserve Fund and Emergency Fund, amounts sufficient to fully pay and discharge promptly as each installment of interest and principal of the Bonds accrues or matures or comes due by reason of redemption prior to maturity; such transfer of funds to be made in such 10 manner as will cause immediately available funds to be deposited with the Paying Agent for the Bonds at the close of the business day next preceding the date of payment for the Bonds. The Paying Agent shall cancel or destroy all paid Bonds, and the coupons, if any, appertaining thereto, and furnish the City with an appropriate certificate of cancellation or destruction. SECTION 19: Deficiencies in Funds. That, if in any month the City sha 1, for any reason, fail to pay into the Bond Fund, the Emergency Fund or Bond Reserve Fund, the full amounts above stipulated, amounts equivalent to such deficiencies shall be set apart and paid into said Funds from the first available and unallocated Net Revenues of the System in the following month or months and such payments shall be in addition to the amounts hereinabove provided to be otherwise paid into said Funds during such month or months. SECTION 20: Excess Revenues. Any surplus Net Revenues of the System remaining after all payments have been made into the Bond Fund, Emergency Fund and Bond Reserve Fund, and after all deficiencies in making deposits to said Funds have been remedied, may be transferred and used for any. lawful general or special purpose, as permitted by the terms of Article 1113a, V.A.T.C.S.; including the use thereof either for the retirement in advance of maturity of the Bonds Similarly Secured, according to the provisions made for their prior redemption, or for the purchase of any of such Bonds Similarly Secured on the open market at not exceeding the market value thereof. Nothing herein, however, shall be construed as impairing the right of the City to pay, in accordance with the provisions thereof, any junior lien bonds legally issued by it and payable out of the Net Revenues of the System. SECTION 21: Security of Funds. That moneys on deposit in the special Funds referred to in this ordinance (except any amounts as may be properly invested) shall be secured in the manner and to the fullest extent required by the laws of the State of Texas for the security of public funds, and moneys on deposit in such special Funds shall be used only for the purposes permitted by this ordinance and the ordinances authorizing the issuance of the Previously Issued Bonds. SECTION 22: Issuance of Additional Parity Bonds. That, in addition to the right to issue bonds of inferior lien as authorized by the laws of the State of Texas, the City hereby reserves the right to issue Additional Bonds which, when duly authorized and issued in compliance with the terms and conditions hereinafter appearing, shall be on a parity with the Previously Issued Bonds and the Bonds herein authorized, payable from and equally secured by a first lien on and pledge of the Net Revenues of the System. The Additional Bonds may be issued in one or more instal- lments, provided, however, that none shall be issued unless and until the following conditions have been met: (a) That the City is not then in default as to any covenant, condition or obligation contained in the ordinances authorizing the issuance of the then outstanding Bonds Similarly Secured; (b) That the laws of force at such time provide such Additional Bonds; 11 the State of Texas in for the issuance of (c) That each of the Special Funds created for the payment, security and benefit of the Bonds Similarly Secured contains the amount of money then required to be on deposit therein; (d) The Net Revenues of the System for the twelve -month period preceding the month of the adoption of the ordinance authorizing the issuance of the Additional Bonds, as shown by a report of a certified public accountant or licensed public accountant, are equal to at least one and one - fourth (1 -1/4) times the average annual principal and interest requirements of all bonds which will be secured by a first lien on and pledge of the Net Revenues of the System, and which will be outstanding upon the issuance of the Additional Bonds. The term "Net Revenues" as used in this Section 22 shall mean the gross revenues after deducting the expenses of operation and maintenance but not deducting expenditures which, under standard accounting procedures, should be charged to capital expenditures; (e) The Additional Bonds are made to mature on July 15 of each of the years in which they are scheduled to mature; and (f) The ordinance authorizing the issuance of Additional Bonds provides that the amount to be accumulated and maintained in the Bond Reserve Fund shall be increased to an amount equal to not less than the average annual principal and interest requirements of all bonds payable from and secured by a first lien on and pledge of the Net Revenues of the System (after giving effect to the issuance of the proposed Additional Bonds). The additional amount to be accumulated in said Fund shall be deposited therein in not more than five (5) years and one (1) month from the date of the passage of the ordinance authorizing the issuance of the Additional Bonds. At such time as the Series 1965 and Series 1967 bonds identified in Section 9(f) (1) and (2) of this ordinance have been paid off, refunded or cancelled and are no longer outstanding, the City may issue Additional Bonds secured by a first lien on and pledge of the Net Revenues of the System on a parity with the Bonds Similarly Secured then outstanding, provided all conditions above set forth in this Section have been met, except that the test for subparagraph (d) of this Section shall then be as follows: (d) The Net Revenues of the System for the twelve -month period or for the fiscal year next preceding the month of the adoption of the ordinance authorizing the issuance of the Additional Bonds, as shown by a report of a certified public accountant or licensed public accountant, are equal to at least one and one - fourth (1 -1/4) times the average annual principal and interest requirements of all bonds which will be secured by a first lien on and pledge of the Net Revenues of the System, and which will be outstanding upon the issuance of the Additional Bonds. The term "Net Revenues" as used in this Section shall mean the gross revenues after deducting the expenses of operation and maintenance but not deducting expenditures which, under standard accounting procedures, should be charged to capital expenditures. 12 SECTION 23: Maintenance and Operation - Insurance. That the City hereby covenants and agrees that the System shall be operated on a Fiscal Year basis and shall be maintained in good condition and operated in an efficient manner and at reasonable cost. So long as any of the Bonds are outstanding, the City agrees to maintain insurance for the benefit of the holder or holders of such Bonds of the kinds and in the amounts which are usually carried by private companies engaged in a similar type of business. Nothing in this ordinance shall be construed as requiring the City to expend any funds which are derived from sources other than the operation of the System, but nothing herein shall be construed as preventing the City from doing so. SECTION 24: Records - Accounts - Accounting Reports. That the City hereby covenants and agrees so long as any of the Bonds or any interest thereon remain outstanding and unpaid, it will keep and maintain a proper and complete system of records and accounts pertaining to the operation of the System and its component parts separate and apart from all other records and accounts of the City in accordance with generally accepted accounting principles prescribed for municipal corporations, and complete and correct entries shall be made of all transactions relating to said System, as provided by Article 1113, V.A.T.C.S. The holder or holders of any Bonds, or any duly authorized agent or agents of such holders, shall have the right at all reasonable times to inspect all such records, accounts and data relating thereto and to inspect the System and all properties comprising same. The City further agrees that as soon as possible following the close of each Fiscal Year, it will cause an audit of such books and accounts to be made by an independent firm of Certified Public Accountants or Licensed Public Accountants. Each such audit, in addition to whatever other matters may be thought proper by the Accountant, shall particularly include the following: (a) A detailed statement of the income and expenditures of the System for such Fiscal Year; (b) A balance sheet as of the end of such Fiscal Year; (c) The Accountant's comments regarding the manner in which the City has complied with the covenants and requirements of this ordinance and his recommenda- tions for any changes or improvements in the operation, records and accounts of the System; (d) A list of the insurance policies in force at the end of the Fiscal Year on the System properties, setting out as to each policy the amount thereof, the risk covered, the name of the insurer, and the policy's expiration date; (e) A list of the securities which have been on deposit as security for the money in the Bond Fund, the Emergency Fund and the Bond Reserve Fund throughout the Fiscal Year, a list of the securities, if any, in which the Emergency Fund and Bond Reserve Fund has been invested, and a statement of the manner in which money in the System Fund has been secured in such Fiscal Year; (f) The total number of customers connected with the components of the System at the end of the Fiscal Year. 13 Expenses incurred in making the audits above referred to are to be regarded as maintenance and operating expenses of the System and paid as such. Copies of the aforesaid annual audit shall be immediately furnished to the Executive Director of the Municipal Advisory Council of Texas at his office in Austin, Texas, and, upon written request, to the original purchasers and any subsequent holder of the Bonds. SECTION 25: Remedies in Event of Default. That, in addition to all the rights and remedies provided by the laws of the State of Texas, the City covenants and agrees particularly that in the event the City (a) defaults in payments to be made to the Bond Fund or Bond Reserve Fund as required by this ordinance, or (b) defaults in the observance or performance of any other of the covenants, conditions or obligations set forth in this ordinance, the holder or holders of any of the Bonds shall be entitled to a writ of mandamus issued by a court of proper jurisdiction compelling and requiring the City Council and other officers of the City to observe and perform any covenant, condition or obligation prescribed in this ordinance. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power, or shall be construed to be a waiver of any such default or acquiescence therein, and every such right or power may be exercised from time to time and as often as may be deemed expedient. The specific remedies herein provided shall be cumulative of all other existing remedies and the specification of such remedies shall not be deemed to be exclusive. SECTION 26: Special Covenants. The City hereby further covenants as follows: (a) That it has the lawful power to pledge the revenues supporting this issue of Bonds and has lawfully exercised said power under the Constitution and laws of the State of Texas, including Article 1111 et seq., V.A.T.C.S.; that the Previously Issued Bonds, the Bonds, and the Additional Bonds, when issued, shall be ratably secured under said pledge of income in such manner that one bond shall have no preference over any other bond or said issues. (b) That, other than for the payment of the Previously Issued Bonds and the Bonds, the Net Revenues of the System have not in any manner been pledged to the payment of any debt or obligation of the City or of the System. (c) That, so long as any of the Bonds or any interest thereon remain outstanding, the City will not sell, lease or encumber the System or any substantial part thereof; provided, however, this covenant shall not be construed to prohibit the sale of such machinery, or other properties or equipment which has become obsolete or otherwise unsuited to the efficient operation of the System, and, also, with the exception of the Additional Bonds expressly permitted by this ordinance to be issued, it will not encumber the Net Revenues of the System unless such encumbrance is made junior and subordinate to all of the provisions of this ordinance. (d) That no free service of the System shall be allowed, and should the City or any of its agencies or instrumentalities make use of the services and facilities of the System, payment of the reasonable value thereof shall be made by the City out of funds from sources other than the revenues and income of the System. 14 (e) That, to the extent that it legally may, the City further covenants and agrees so long as any of the Bonds or any interest thereon are outstanding no franchise shall be granted for the installation or operation of any competing waterworks and sanitary sewer system other than those owned by the City, and the operation of any such system by anyone other than the City is hereby prohibited. SECTION 27: Bonds are Special Obligations. That the Bonds are special obligations of the City payable from the pledged Net Revenues and the holders thereof shall never have the right to demand payment thereof out of funds raised or to be raised by taxation. SECTION 28: Bonds are Negotiable Instruments. That each of the Bonds herein authorized shall be deemed and construed to be a "security ", and as such a negotiable instrument, within the meaning of Article 8 of the Uniform Commercial Code. SECTION 29: Mayor to Have Charge of Records and Books. That the Mayor of the City shall be and is hereby authorized to take and have charge of all necessary orders and records pending investigation by the Attorney General of the State of Texas and shall take and have charge and control of the bonds herein authorized pending their approval by the Attorney General and their registration by the Comptroller of Public Accounts. SECTION 30: Sale of the Bonds. That the sale of the Bonds to Dean Witter Reynolds, Inc. and associates at the price of par and accrued inte delivery, plus a premium of $ -0- Delivery of said Bonds shall be made soon as may be after the adoption of payment therefor in accordance with rest to the date of is hereby confirmed. to said purchaser as this ordinance, upon the terms of sale. SECTION 31: Printed Legal Opinion on Bonds. That the purchaser's obligation to accept delivery of the Bonds is subject to their being furnished a final opinion of Messrs. Dumas, Huguenin, Boothman and Morrow, Attorneys, Dallas, Texas, approving such Bonds as to their validity, said opinion to be dated and delivered as of the date of delivery and payment for such Bonds. Printing of a true and correct copy of said opinion on the reverse side of each of said Bonds with appropriate certificate pertaining thereto executed by facsimile signature of the City Secretary is hereby approved and authorized. SECTION 32: No- Arbitrage. That the City hereby covenants that the proceeds of the Bonds are needed at this time to finance the costs of capital improvements planned by the City; based on current facts, estimates and circumstances, it is reasonably expected final disbursement of the bond proceeds will occur within three years from the date of the receipt thereof by the City; it is not reasonably expected that the proceeds of the Bonds or moneys deposited in the special Funds referred to herein for the payment and security of the Bonds will be used or invested in a manner that would cause the Bonds to be "arbitrage bonds" within the meaning of Section 103(c) of the Internal Revenue Code of 1954, as amended, or any regulations or published rulings pertaining thereto; and save and except for the special Funds referred to herein, no.other funds or accounts have been established or pledged for the payment of the Bonds. Proper officers of the City charged with the responsibility in the issuance of the Bonds are hereby authorized and directed to make, execute and deliver certifications as to facts, estimates and circumstances in existence as of the date of issue of the 15 Bonds and stating whether there are any facts, estimates or circumstances which would materially change the City's current expectations, and the covenants herein made and certifications herein authorized are for the benefit of the holders of the Bonds and coupons appertaining thereto and may be relied upon by the bondholders and bond counsel for the City. SECTION 33: CUSIP Numbers. That CUSIP numbers may be printed on the Bonds herein authorized. It is expressly provided, however, that the presence or absence of CUSIP numbers on the Bonds shall be of no significance or effect as regards the legality thereof and neither the City nor the attorneys approving said Bonds as to legality are to be held responsible for CUSIP numbers incorrectly printed on the Bonds. SECTION 34: Official Statement. That, in reference to the Official Statement prepared in the initial offering and sale of the Bonds by the City, the City Council ratifies and confirms its prior approval of the form and content thereof and hereby approves the form and content of any addendas, supplements and amendments thereto; the use of such Official Statement in the reoffering of the Bonds by the above named purchaser(s) is hereby approved and the proper officials of the City are hereby authorized to execute and deliver a certificate pertaining to said Official Statement as prescribed therein, dated as of the date of payment for and delivery of the Bonds. SECTION 35: Emergency. The fact that it is to the best interest of the City to provide funds for constructing improvements and extensions to the City's Waterworks and Sanitary Sewer System as hereinabove set out at the earliest possible date for the immediate preservation of the public peace, health and safety constitutes and creates an emergency and an urgent public necessity, requiring that the Charter provision that all ordinances shall be read at two regular Council meetings be suspended and requiring that this ordinance be passed and take effect as an emergency measure, and such rule is accordingly suspended and this ordinance is passed as an emergency measure and shall take effect and be in full force from and after its passage. PASSED AND APPROVED, this the 26th day of April, mol-lXIN Mayor, City of Euless, Texas ATTEST: City S "ebretary, Ci£ of Euless, Texas'- , / (City Seal) 16