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Home My WebLink AboutOrdinance 18085-05-2008THE STATE OF TEXAS COUNTIES OF TA~It]LZANT AND DENTON CITY OF FORT WORTH On the 13th day of May, 2008, the City Council of the City of Fort Worth, Texas, met in regular, open, public meeting in the City Council Chamber in the City Hall with the following members present, to-wit: Mike Moncrief, Mayor Salvador Espino, Chuck Silcox, Danny Scarth, Frank Moss, Junius Jordan, ~ Councilmembers, Carter Burdette, Kathleen Hicks, Joel Burns, Dale A. Fisseler, City Manager, David Yett, City Attorney, Marty Hendrix, City Secretary, Karen Montgomery, Assistant City Manager/Chief Financial Officer thus constituting more than a quorum present; and after the City Council had transacted certain business, the following business was transacted, to-wit: Councilmember ~ introduced an ordinance and moved its passage. The motion was seconded by Councilmember ~.r~s . The ordinance was read by the City Secretary. The motion, carrying with it the passage of the ordinance prevailed by a vote of ~ YEAS, ~ NAYS. The ordinance as passed is as follows: ORDINANCE NO. ~~~-0`>-2008 SIXTEENTH SUPPLEMENTAL ORDINANCE AUTHORIZING TIC ISSUANCE AND SALE OF CITY OF FORT WORTH, TEXAS WATER AND SEWER SYSTEM REVETtLTE REFLTNI.~ING BONDS, SERIES 2008 IN THE AGGREGATE PRINCII'AL AMOUNT OF $44,085,000; APPROVIl~TG THE EXECUTION OF A BOND PURCHASE CONTRACT AND OTHER INSTRUMENTS RELATED THERETO; REPEALING ALL ORDINANCES IN .CONFLICT HEREWITH; AND PROVIDING THAT THIS ORDINANCE SHALL BE IN FORCE AND EFFECT FROM AND AFTER THE DATE OF ITS PASSAGE. THE STATE OF TEXAS COUNTIES OF TARItANT AND DENTON CITY OF FORT WORTH WHEREAS, the City of Fort Worth, Texas (the "City" or the "Issuer"), a "home-rule" city operating under ahome-rule charter adopted pursuant to Section 5 of Article XI of the Texas Constitution, with a population according to the latest federal decennial census of in excess of 50,000, has established and currently owns and operates a combined waterworks and sanitary sewer system (the "System"); and WHEREAS, the City heretofore has established the City of Fort Worth, Texas Water and Sewer System Revenue Financing Program for the purpose of providing a financing structure for revenue supported indebtedness of the System; and WHEREAS, said Program was established pursuant to the terms of a "Master Ordinance Establishing the City of Fort Worth, Texas Water and Sewer System Revenue Financing Program" (the "Master Ordinance"); and WI~REAS, unless otherwise defined herein, terms used herein shall have the meaning given in the Master Ordinance; and WI~REAS, the Master Ordinance authorizes revenue supported indebtedness to be issued, incurred or assumed pursuant to the terms of supplemental ordinances (any such ordinance being a "Supplement"); and WHEREAS, pursuant to the terms of the Master Ordinance, the City has adopted fifteen Supplements (designated as the "First Supplement", "Second Supplement", "Third Supplement", "Fourth Supplement", "Fifth Supplement", "Sixth Supplement", "Seventh Supplement", "Eighth Supplement", "Ninth Supplement", "Tenth Supplement", "Eleventh Supplement", "Twelfth Supplement", "Thirteenth Supplement", "Fourteenth Supplement" and "Fifteenth Supplement", respectively, and the "Prior Supplements", collectively) pursuant to which (i) the City of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 1991 A and Series 1991B, the City of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 1993, the City of Fort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 1996, the City ofFort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 1997, the City ofFort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 1998, the City of Fort Worth, Texas Water and Sewer System Revenue Bonds, Series 2000, the City ofFort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 2000B, the City ofFort Worth, Texas Water and Sewer System Revenue Bonds, Series 2001, the City ofFort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 2003, the City of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 2003A, the City of Fort Worth, Texas Water and Sewer System Auction Rate Revenue Bonds, Series 2004, the City of Fort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 2005, the City of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 2005A and the City of Fort Worth, Texas Water and Sewer Revenue Bonds, Series 2007 were issued, and (ii) the City entered into two respective ISDA Master Agreements (referred to herein as the "Swap Agreements"), one with Lehman Brothers Special Financing Inc., and the other with GBDP, L.P.; and WHEREAS, the aforesaid Series 1991A Bonds, Series 1991B Bonds, Series 1993 Bonds, Series 1996 Bonds and Series 1997 Bonds are no longer are outstanding, and the aforesaid Series 1998 Bonds, Series 2000 Bonds, Series 2000B Bonds, Series 2001 Bonds, Series 2003 Bonds, Series 2003A Bonds, Series 2004 Bonds, Series 2005 Bonds, Series 2005A Bonds and Series 2007 Bonds are hereinafter refereed to as the "Previously Issued Parity Bonds"; and Wi~REAS, the Swap Agreements entered into pursuant to the terms of the Fourth Supplement by their respective terms have expired, and the City has no further obligations thereunder; and WHEREAS, the Previously Issued Parity Bonds are secured by a first lien on and pledge of the Pledged Revenues of the System; and VVF~REAS, in addition to the Previously Issued Parity Bonds, the City has authorized the issuance of up to $150,000,000 of its Water and Sewer System Commercial Paper Notes, Series A (the "Commercial Paper Notes"), for the purpose of providing a method of interim financing to improve and extend the City's Water and Sewer System; and WHEREAS, in connection with the Commercial Paper Notes, the City has obtained a line of credit from Bank of America, N.A. (the "Bank"); and WEIEREAS, the obligations of the City under the agreement with the Bank are secured by a lien on and pledge of the Pledged Revenues of the System, subordinate to the lien on and pledge of the Pledged Revenues of the System in favor of the owners of the Previously Issued Parity Bonds; and WHEREAS, the City currently does not have any Commercial Paper Notes outstanding; and WHEREAS, one of the series of Previously Issued Parity Bonds currently outstanding is the City of Fort Worth, Texas Water and Sewer System Auction Rate Revenue Bonds, Series 2004, -2- currently outstanding in the aggregate principal amount of $43,950,000 (the "Series 2004 Bonds"); and WE~REAS, the interest rate on the Series 2004 Bonds is determined through an auction procedure implemented in accordance with the terms of the Twelfth Supplement, the resulting of which is that the Series 2004 Bonds bear interest at rates that change in accordance with then existing market conditions; and WF-IEREAS, because of the variable nature of the interest rate on the Series 2004 Bonds, the City budgets annually a presumed interest rate to be borne by the Series 2004 Bonds, which, in the current fiscal year, was established at 5.29% per annum; and . WHEREAS, in recent months, the auction rate market has experienced extensive failures and declining participation by investors, one result of which is an increase in interest rates borne by bonds whose interest rates are established through an auction, including the Series 2004 Bonds; and WI~REAS, it is determined to be in the best interests of the City to refund the Series 2004 Bonds with the bonds hereinafter authorized, which shall bear interest at a fixed rate which is below the presumed rate of interest to be borne by the Series 2004 Bands in this fiscal year; and WHEREAS, the bonds hereinafter authorized are to be issued and delivered pursuant to Chapter 1207, Texas Government Code, for the purposes set forth above. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF TI-~ CITY OF FORT WORTH, TEXAS: SECTION 1. DEFINITIONS. That in addition to the definitions set forth in the preamble of this Sixteenth Supplement, the terms used in this Sixteenth Supplement (except in the FORM OF BOND) and not otherwise defined shall have the meanings given in the Master Ordinance, the Priar Supplements or in Exhibit A to this Sixteenth Supplement. Any references in this Sixteenth Supplement to the "FORM OF BOND" shall be to the form of the Bonds as set forth in Exhibit B to this Sixteenth Supplement. Section 2. BONDS AUTHORIZED. That there shall be authorized to be issued, sold, and delivered hereunder the Bonds, numbered consecutively from R-1 upward, payable to the initial registered owner thereof, or to the registered assignee or assignees of the Bonds or any portion or portions thereof, in the denomination of $5,000 or any integral multiple thereof (an "Authorized Denomination"). The Bonds are hereby authorized to be issued in the aggregate principal amount of $44,085,000 for the purpose of (i) refunding all of the outstanding Series 2004 Bonds, and (ii) paying the costs of issuance of the Bonds. The Bonds shall be designated as the "City of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 2008". Section 3. DATES AND MATURITIES; INTEREST RATES. (a) Dated Date and Maturity. That the Bonds shall be dated May 1, 2008, and shall mature on February 15, 2024. -3- (b) Interest Rate. The Bonds shall bear interest at the rate of 3.88% per annum, payable to the registered owner of any such Bond, in the manner provided in the FORM OF BOND, on August 15, 2008, and semiannually thereafter on February 15 and August 15 of each year until maturity or prior redemption. Section 4. RIGHT OF PRIOR REDEMPTION. (a) motional Redemption. That the City re- serves the right to redeem the Bonds in whole or in part in principal amounts of $5,000 or any integral multiple thereof, on February 15, 2018, or on any date thereafter, at the redemption price of par plus accrued interest to the date fixed for redemption. If less than all of the Bonds are to be redeemed by the City, the City shall determine the maturity or maturities and the amounts thereof to be redeemed and shall direct the Paying Agent/Registrar to call by lot Bonds, or portions thereof, within such maturity or maturities and in such principal amounts, for redemption. (b) Mandatory Redemption. The Bonds shall be subject to mandatory sinking fund redemption prior to their scheduled maturity, on the dates, in the amounts, and in the manner provided in the FORM OF BOND. (~) General 7~otice. Notice of an ry edemption of Bonds shall be given in the following manner, to-wit, (i) a written notice of such redemption shall be given to the registered owner of each Bond or a portion thereof being called for redemption not more than sixty (60) days nor less than thirty (30) days prior to the date fixed for such redemption by depositing such notice in the United States mail, first-class postage prepaid, addressed to each such registered owner at his address shown on the Registration Books of the Paying Agent/Registrar and (ii) at least thirty (30) days prior to the date fixed for such redemption, a notice of such redemption shall either be published one time or posted electronically on the website of a financial journal or publication of general circulation in the United States of America or the State of Texas which carries as a regular feature notices of redemption of municipal bonds; provided, however, that the failure to send, mail, or receive such notice described in clause (i) above, 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, as publication or posting of notice as described in clause (ii) above shall be the only notice actually required in connection with or as a prerequisite to the redemption of any Bonds. By the date fixed for any such redemption due provision shall be made by the City with the Paying Agent/Registrar for the payment of the required redemption price for the Bonds or the portions thereof which are to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such notice of redemption is given, and if due provision for such payment is made, all as provided above, the Bonds, or the portions thereof which are to be so redeemed, thereby automatically shall be redeemed prior to their scheduled maturities, and shall not bear interest after the date fixed for their redemption, and shall not be regarded as being outstanding except for the right of the owner to receive the redemption price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying AgentlRegistrar shall record in the Registration Books all such redemptions of principal of the Bonds or any portion thereof. If a portion of any Bond shall be redeemed, a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any Authorized Denomination at the written request of the owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the owner upon the -4- surrender thereof for cancellation, at the expense of the City, all as provided in this Sixteenth Supplement. The maturities of Bonds to be called for redemption shall be determined by the City. The Bonds or portions to be redeemed within each such maturity shall be selected by lot or other customary random method selected by the Paying Agent/Registrar (provided that a portion of a Bond maybe redeemed only in an integral multiple of $5,000). The City shall give written notice to the Paying Agent/Registrar of any such redemption of Bonds at least sixty (60) calendar days (or such shorter period as is acceptable to the Paying Agent/Registrar) prior to such redemption. (d) Notice to Securities Depositories. (i) In addition to the manner of providing notice of redemption of Bonds as set forth above, the Paying Agent/Registrar shall give notice of redemption of Bonds by United States mail, first-class postage prepaid, at least thirty (30) days prior to a redemption date to each registered securities depository and to any national information service that disseminates redemption notices. In addition, in the event of a redemption caused by an advance refunding of the Bonds, the Paying Agent/Registrar shall send a second notice of redemption to the persons specified in the irnnnediately preceding sentence at least thirty (30) days but not more than ninety (90) days prior to the actual redemption date. Any notice sent to the registered securities depositories or such national information services shall be sent so that they are received at least two (Z) days prior to the general mailing or publication date of such notice. The Paying Agent/Registrar shall also send a notice of prepayment or redemption to the owner of any Bond who has not sent the Bonds in for redemption sixty (60) days after the redemption date. (ii) Each redemption notice, whether required in the FORM OF BOND or otherwise by this Sixteenth Supplement, shall contain a description of the Bonds to be redeemed including the complete name of the Bonds, the series, the date of issue, the interest rate, the maturity date, the CUSIP number, if any, the amounts called for redemption, the publication and mailing date for the notice, the date of redemption, the redemption price, the name ofthe Paying Agent/R.egistrar and the address at which the Bond maybe redeemed including a contact person and telephone number. (iii) All redemption payments made by the Paying Agent/Registrar to the registered owners of the Bonds shall include a CUSIP number relating to each amount paid to such registered owner. Sections. CHARACTERISTICS OF'TI~BONDS. (a) Registration, Transfer, Conversion and Exchange; Authentication. The City shall keep or cause to be kept at the designated corporate trust office of Wells Fargo Bank, National Association (the "Paying Agent/Registrar"), books or records for the registration of the transfer, conversion and exchange of the Bonds (the "Registration Books"), and the City hereby appoints the Paying AgentlRegistrar as its registrar and transfer agent to keep such books or records and make such registrations of transfers, conversions and exchanges under such reasonable regulations as the City and the Paying Agent/Registrarrnay prescribe; and the Paying Agent/Registrar shall make such registrations, transfers, conversions and exchanges as herein provided. The Paying Agent/Registrar shall obtain and record in the Registration Books the address of the 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 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 City shall have the right to inspect at the Designated Trust Office the Registration Books during regular business hours of the Paying Agent/Registrar, but otherwise the -5- Paying Agent/Registrar shall keep the Registration Books confidential and, unless otherwise required by law, shall not permit their inspection by any other entity. Except as otherwise provided in the FORM OF BOND, the owner of each Bond requesting a conversion, transfer, exchange and delivery of such Bond shall pay the Paying Agent/Registrar's standard or customary fees and charges for making such registration, transfer, conversion, exchange and delivery of a substitute Bond or Bonds. Registration of assignments, transfers, conversions and exchanges of Bonds shall be made in the manner provided and with the effect stated in the in the FORM OF BOND. Each substitute Bond shall bear a letter and/or number to distinguish it from each other Bond: An authorized representative of the Paying Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the "Paying Agent/Registrar's Authentication Certificate" in the form set forth in the FORM OF BOND (the "Authentication Certificate"), and, except as provided below, no such Bond shall be deemed to be issued or Outstanding unless the Authentication Certificate is so executed; the foregoing notwithstanding, the Authentication Certificate need not be executed if any suchBond is accompanied by an executed "Comptroller's Registration Certificate" in the form set forth in the FORM OF BOND. The Paying Agent/Registrarpronptly shall cancel all paid Bonds and Bonds surrendered for conver- sion and exchange. No additional ordinances, orders, or resolutions need be passed or adopted by the governing body of the City or any other body or person so as to accomplish the foregoing conversion and exchange of any Bond or portion thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the substitute Bonds in the manner prescribed herein. Pursuant to Chapter 1206, the duty of conversion and exchange of Bonds as aforesaid is hereby imposed uponthe Paying Agent/Registrar, and, uponthe execution ofthe Authentication Cer- tificate, the converted and exchanged Bond shall be valid, incontestable, and enforceable in the same manner and with the same effect as the Bonds which initially were issued and delivered pursuant to this Sixteenth Supplement, approved by the Attorney General, and registered by the Comptroller of Public Accounts. As of the date this Sixteenth Supplement is approved by the City, the Designated Trust Office is the Fort Worth, Texas corporate trust office of Wells Fargo Bank, National Association. (b) Payment of Bonds and Interest. The City hereby further appoints the Paying Agent/Registrar to act as the paying agent for paying the principal of, premium, if any, and interest on the Bonds, all as provided in this Sixteenth Supplement. The Paying Agent/Registrar shall keep proper records of all payments made by the City and the Paying Agent/Registrartyith respect to the Bonds. (c) In General. The Bonds (i) shall be issued in fully registered form, without interest coupons, with the principal of and interest on such Bonds to be payable only to the registered owners thereof, (ii) may be redeemed prior to their scheduled maturities, (iii) may be transferred and assigned, (iv) may be converted and exchanged for other Bonds, (v) shall have the characteristics, (vi) shall be signed, sealed, executed and authenticated, (vii) the principal of and interest on the Bonds shall be payable, and (viii) shall be administered and the Paying Agent/Registraravd the City shall have certain duties and responsibilities with respect to the Bonds, all as provided, and in the manner and to the effect as required or indicated, in the FORM OF BOND. The Bonds initially issued and delivered pursuant to this Sixteenth Supplement are not required to be, and shall not be, authenticated by the -6- Paying Agent/Registrar, but on each substitute Bond issued in conversion of and exchange for any Bond or Bonds issued under this Sixteenth Supplement the Paying Agent/Registrar shall execute the Authentication Certificate. (d) Substitute Pang Agent/Re isg tray. The City covenants with the owners of the Bonds that at all times while the Bonds are Outstanding a competent and legally qualified entity shall act as and perform the services of Paying Agent/Registrar for the Bonds under this Sixteenth Supplement, and that the Paying AgentlRegistrar will be one' entity. Such entity maybe the City, to the extent permitted by law, or a bank, trust company, financial institution, or other agency, as selected by the City. The City reserves the right to, and may, at its option, change the Paying AgentlRegistrarupnn not less than one hundred and twenty (120) days written notice to the Paying Agent/Registrar, to be effective not later than sixty (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 otherwise cease to act as such, the City covenants that promptly it will appoint a competent and legally qualified entity to act as Paying Agent/Registraruvder this Sixteenth Supplement. Upon any change in the Paying AgentlRegistrar, the previous Paying Agent/Registrar 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 Pavin Agent/Registrar designated and appointed by the City. Upon any change in the Paying Agent/Registrar, the City promptly will cause a written notice thereof to be sent by the new Paying AgentlRegistrar toeach owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall give the address of the new Paying Agent/Registrar. By accepting the position and performing as such, each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Sixteenth Supplement, and a certified copy of this Sixteenth Supplement shall be delivered to each Paying Agent/Registrar. Section 6. FORM OF BONDS. (a) Form of Bonds. That the form of all Bonds, including the form of the Authentication Certificate, the form of Assignment, and the form of the Comptroller's Registration Certificate to be attached only to the Bonds initially issued and delivered pursuant to this Sixteenth Supplement, shall be, respectively, substantially as set forth in Exhibit B, with such appro- priatevariations, omissions, or insertions as are permitted or required by this Sixteenth Supplement and the Purchase Contract. (b) Printing Bond Counsel Opinion and Statement of Insurance. The printer of the Bonds is hereby authorized to print on the Bonds the form of bond counsel's opinion relating to the Bonds, and is hereby authorized to print on the Bonds an appropriate statement of insurance furnished by a municipal bond insurance company providing municipal bond insurance, if any, covering all or any part of the Bonds. Section 7. ESTABLISFIlVIENT OF FINANCING PROGRAM AND ISSUANCE OF PARITY OBLIGATIONS. That by adoption of the Master Ordinance the City has established the City of Fort Worth, Texas Water and Sewer System Revenue Financing Program for the purpose of providing a financing structure for revenue supported indebtedness of the System. The Master -7- Ordinance is intended to establish a master plan under which revenue supported debt of the System can be incurred. This Sixteenth Supplement provides for the authorization, issuance, sale, delivery, form, characteristics, provisions of payment and redemption, and security of the Bonds which are a series of Parity Obligations. The Master Ordinance is incorporated herein by reference and as such made a part hereof for all purposes, except to the extent modified and supplemented hereby, and the Bonds are hereby declared to be Parity Obligations under the Master Ordinance. The City hereby determines that it will have sufficient funds to meet the financial obligations of the System, including sufficient Pledged Revenues to safisfy the Annual Debt Service Requirements of the System and to meet all financial obligations of the City relating to the System. Section 8. PLEDGE. (a) That the Bonds are and shall be secured by and payable from a first lien on and pledge of the Pledged Revenues; and the Pledged Revenues are further pledged to the establishment and maintenance of the Debt Service Fund, and to the Reserve Fund to the extent hereinafter provided. The Bonds are and will be secured by and payable only from the Pledged Revenues, and are not secured by or payable from a mortgage or deed of trust on any properties, whether real, personal, or mixed, constituting the System. (b) Chapter 1208 applies to the issuance of the Bonds and the pledge of the Pledged Revenues granted by the City under subsection (a) of this Section, and such pledge is therefore valid, effective, and perfected. If Texas law is amended at any time while the Bonds are outstanding and unpaid such that the pledge of the Pledged Revenues granted by the City is to be subj ect to the filing requirements of Chapter 9, Texas Business & Commerce Code, then in order to preserve to the registered owners of the Bonds the perfection of the security interest in said pledge, the City agrees to take such measures as it determines are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter 9, Texas Business & Commerce Code and enable a filing to perfect the security interest in said pledge to occur. Section 9. DEBT SERVICE FUND ACCOUNTS. That with respect to the Bonds no special account need be established to facilitate the payment of debt service on the Bonds. Section 10. RESERVE FUND. That deposits shall not be made to the credit of the Reserve Fund with respect to the Bonds, for the reasons described in Section 12(b) of this Sixteenth Supplement. Section 11. INVESTMENTS. That investments shall be sold promptly when necessary to prevent any default in connection with the Bonds. Earnings derived from the investment of moneys on deposit in the various Funds and Accounts shall be credited to the Fund or Account from which moneys used to acquire such investment shall have come. Section 12. FLOW OF FUNDS. That all monies in the System Fund not required for paying Operating Expenses during each month shall be applied by the City, on or before the 10th day of the following month, commencing during the months and in the order of priority with respect to the Funds and Accounts that such applications are hereinafter set forth in this Section. -8- (a) Debt Service Fund - To the credit of the Debt Service Fund, in the following order of priority, to-wit: (1) such amounts, deposited in approximately equal monthly installments, commencing during the month in which the Bonds are delivered, or the month thereafter if delivery is made after the 10th day thereof, as will be sufficient, together with other amounts, if any, in the Debt Service Fund available for such purpose, to pay the interest scheduled to come due an the Bonds on the next succeeding interest payment date; and (2) such amounts, deposited in approximately equal monthly installments, commencing during the month which shall be the later to occur of, (i) the twelfth month before the first maturity date ofthe Bonds, or (ii) the month in which the Bonds are delivered, or the month thereafter if delivery is made after the 10th day thereof, as will be sufficient, together with other amounts, if any, in the Debt Service Fund available for such purpose, to pay the principal (including mandatory sinking fund redemption payments, if any) scheduled to mature or come due on the Bonds on the next succeeding principal payment date or mandatory sinking fund redemption date, as the case maybe. (b~RPSer~ce F»nc~ Acting in accordance with the provisions of the Master Ordinance specifically, without limitation, Section 7 thereof, and with the consent of the Purchaser, as set forth in the Purchase Contract, it has been agreed that as a condition for the purchase of the Bonds by the Purchaser, it is not necessary for the Bonds to be secured by the Reserve Fund established for the benefit of the owners of Parity Obligations, and therefore the City shall not be required to make deposits to the credit of the Reserve Fund with respect to the Bonds. Section 13. PAYMENT OF BONDS. That on or before the first scheduled interest payment date, and on or before each interest payment date and principal payment date thereafter while any of the Bonds are Outstanding and unpaid, the City shall make available to the Paying Agent/Registrar, out of the Debt Service Fund (and the Reserve Fund, if necessary) monies sufficient to pay such interest on and such principal amount ofthe Bonds, as shall become due on such dates, respectively, at maturity or by redemption prior to maturity. The Paying Agent/Registrar shall destroy all paid Bonds and furnish the City with an appropriate certificate of cancellation or destruction. Section 14. COVENANTS REGARDING TAX-EXEMPTION. That the Issuer covenants to refrain from any action which would adversely affect, or to take such action as to ensure, the treatment of the Bonds as obligations described in section 103 of the Code, the interest on which is not includable in the "gross income" of the holder for purposes of federal income taxation. In furtherance thereof, the Issuer covenants as follows: (a) to take any action to assure that no more than ten percent of the proceeds of the Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if any) are used for any "private business use", as defined in section 141(b)(6) of the Code or, if more than ten percent (10%) of the proceeds are so used, that amounts, whether or not received by the Issuer, with respect to such private business use, do not, under the terms of this Sixteenth Supplement or any underlying arrangement, directly or indirectly, secure or -9- provide for the payment of more than ten percent (10%) of the debt service on the Bonds, in contravention of section 141(b)(2) of the Code; (b) to take any action to assure that in the event that the "private business use" described in subsection (a) hereof exceeds five percent (5%) of the proceeds of the Bonds or the projects financed therewith (less amounts deposited into a reserve fund, if any) then the amount in excess of five percent (5%) is used fora "private business use" which is "related" - aril not "disproportionate"; within the rneaning-of section 141(b)(3)-ofthe-Code-to-the--------- governmentaluse; (c) to take any action to assure that no amount which is greater than the lesser of $5,000,000, or five percent (5%) of the proceeds ofthe Bonds (less amounts deposited into a reserve fund, if any) is directly or indirectly used to finance loans to persons, other than state or local governmental units, in contravention of section 141(c) of the Code; (d) to refrain from taking any action which would otherwise result in the Bonds being treated as "specified private activity bonds" within the meaning of section 141(b) of the Code; (e) to refrain from taking any action that would result in the Bonds being "federally guaranteed" within the meaning of section 149(b) of the Code; (f) to refrain from using any portion of the proceeds of the Bonds, directly or indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire investment property (as defined in section 148(b)(2) ofthe Code) which produces a materially higher yield over the term of the Bonds, other than investment property acquiredwith - (1) proceeds of the Bonds invested for a reasonable temporary period until such proceeds are needed for the purpose for which the Bonds are issued, (2) amounts invested in a bona fide debt service fund, within the meaning of section 1.148-1(b) of the Treasury Regulations, and (3) amounts deposited in any reasonably required reserve or replacement fund to the extent such amounts do not exceed ten percent of the proceeds of the Bonds; (g) to otherwise restrict the use of the proceeds of the Bonds or amounts treated as proceeds of the Bonds, as maybe necessary, so that the Bonds do not otherwise contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the extent applicable, section 149(d) of the Code (relating to advance refiandings); and (h) to pay to the United States of America at least once during each five-year period (beginning on the date of delivery of the Bonds) an amount that is at least equal to ninety percent (90%) of the "Excess Earnings", within the meaning of section 148(f) of the -10- Code and to pay to the United States of America, not later than sixty (60) days after the Bonds have been paid in full, one hundred percent (100%) of the amount then required to be paid as a result of Excess Earnings under section 148(f) of the Code. For purposes of the foregoing clauses (a) and (b) above, the Issuer understands that the term "proceeds" included "disposition proceeds" as defined in the Treasury Regulations and, in the case of a refunding bond, transferred proceeds (if any) and proceeds of the refunded bonds expended prior ~- -~ -~--"- to the date of the issuance o~'~the Bonds.-It is -the understanding oft e Issuer-t -at-t ~ covenants ~--~-~~ -- - contained herein are intended to assure compliance with the Code and any regulations or rulings promulgated by the U. S. Department of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated which modify or expand provisions of the Code, as applicable to the Bonds, the Issuer will not be required to comply with any covenant contained herein to the extent that such failure to comply, in the opinion of nationally-recognized bond counsel, will not adversely. affect the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In the event that regulations or rulings are hereafter promulgated which impose additional requirements which are applicable to the Bonds, the Issuer agrees to comply with the additional requirements to the extent necessary, in the opinion ofnationally-recognized bond counsel, to preserve the exemption from federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of the foregoing, the Mayor, the City Manager, the Chief Financial Officer of the City, any Assistant City Manager, and the Director of Finance may execute any certificates or other reports required by the Code and to make such elections, on behalf of the City, which may be permitted by the Code as are consistent with the purpose for the issuance of the Bonds. In order to facilitate compliance with the above clause (h), a "Rebate Fund" is hereby established by the City for the sole benefit of the United States of America, and such Rebate Fund shall not be subject to the claim of any other person, including without limitation the registered owners of the Bonds. The Rebate Fund is established for the additional purpose of compliance with section 148 of the Code. Section 15. DISPOSITION OF PROPERTY. That the City covenants that the property refinanced with the proceeds of the Bonds will not be sold or otherwise disposed in a transaction resulting in the receipt by the City of cash or other compensation, unless the City obtains an opinion ofnationally-recognized bond counsel substantially to the effect that such sale or other disposition will not adversely affect the tax-exempt status ofthe Bonds. For purposes ofthis Section, the portion of the property comprising personal property and disposed of in the ordinary course of business shall not be treated as a transaction resulting in the receipt of cash or other compensation. For purposes of this Section, the City shall not be obligated to comply with this covenant if it obtains an opinion of nationally-recognized bond counsel to the effect that such failure to comply will not adversely affect the excludability for federal income tax purposes from gross income of the interest. Section 16. REASONS FOR REFUNDING. The City hereby finds that the issuance of the Bonds for the purpose of refunding all of the outstanding Series 2004 Bonds is in the public interest and is a public purpose. The interest rate on the Series 2004 Bonds is established periodically (currently, every thirty-five (35) days) through an auction procedure where bids on interest rates are -11- made and accepted by the "Auction Agent" appointed pursuant to the provisions of the Twelfth ~, Supplement. The national auction rate bond market has experienced extensive failures and declining participation by investors, resulting in failed auctions and corresponding increases in interest rates !, borne by such bonds, including the Series 2004 Bonds. The City currently budgets for the Series 2004 Bonds to bear interest at an interest rate that exceeds the interest rate to be borne by the Bonds. ~, Because of the continuing diminished participation by investors in the auction rate bond market, and the uncertainty of interest rates that may be borne by the Series 2004 Bonds as a result thereof, the manner in which the refilriding of the Series 2004 Bonds is being executed bythe City does not make - - it practicable to make the determinations required by subsection (a) of Section 1207.008, Texas Government Code. Section 17. AMENDMENT OF SIXTEENTH SUPPLEMENT. (a) That the owners of a majority in Outstanding Principal Amount of the Bonds shall have the right from time to time to approve any amendment to this Sixteenth Supplement which maybe deemed necessary or desirable by the City, provided, however, that nothing herein contained shall permit or be construed to permit the amendment of the terms and conditions in this Sixteenth Supplement or in the Bonds so as to: (1) Make any change in the maturity of any of the Outstanding Bonds; (21 Reduce the rate of interest borne b~any of the Outstanding Bonds; (3) Reduce the amount of the principal payable on the Outstanding Bonds; (4) Modify the terms of payment of principal of, premium, if any, or interest on the Outstanding Bonds or impose any conditions with respect to such payment; (5) Affect the rights of the owners of less than all of the Bonds then Outstanding; (6) Amend this clause (a) of this Section; or (7) Change the minimum percentage of the principal amount of Bonds necessary for consent to any amendment; unless such amendment or amendments shall be approved by the owners of all of the Bonds then Outstanding. (b) That if at any time the City shall desire to amend the Sixteenth Supplement under this Section, the City shall cause notice of the proposed amendment to be published in a financial newspaper or journal published in the City of New York, New York, and a newspaper of general circulation in the City, once during each calendar week for at least two (2) successive calendar weeks. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file at the principal office of the Paying Agent/Registrar for inspection by all owners of the Bonds. Such publication is not required, however, if notice in writing is given to each owner of the Bonds. (c) That 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 City shall receive an instrument or instruments executed by the owners of at least a majority in Outstanding Principal Amount of the Bonds then Outstanding, which instrument or instruments shall refer to the proposed -12- amendment described in said notice and which specifically consent to and approve such amendment in substantially the form of the copy thereof on file with the Paying Agent/R.egistrar, the governing body of the City may pass such amendment in substantially the same form. (d) That upon the passage of any such amendment pursuant to the provisions of this Section, this Sixteenth Supplement shall be deemed to be amended in accordance with such amendment, and the respective rights, duties and obligations under this Sixteenth Supplement of the City and all the owners of then Outstanding Bonds shall thereafter be determined, exercised and enforced hereunder, - - -- subject-in all respects to such-amendment: -- - - (e) .That any consent given by the owners of a Bond pursuant to the provisions of this Section shall be irrevocable for a period of six (6) months from the date of the first publication of the notice provided for in this Section, and shall be conclusive and binding upon all future owners of the same 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 owner who gave such consent, or by a successor in title, by filing written notice thereofwith the Paying Agent/Registrar and the City, but such revocation shall not be effective if the owners of at least a majority in Outstanding Principal Amount of the Bonds have, prior to the attempted revocation, consented to and approved the amendment. (f) The foregoing provisions of this Section notwithstanding, the City by action of the City ounc may amen t s ixteent upp ement wrt out t e consent o any owner o t e on s or any other Parity Obligations, solely for any one or more of the following purposes: (1) To add to the covenants and agreements ofthe City inthis Sixteenth Supplement contained, other covenants and agreements thereafter to be observed, grant additional rights or remedies to the owners of the Bonds or to surrender, restrict or limit any right or power herein reserved to or conferred upon the City; (2) To make such provisions for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained in this Sixteenth Supplement, or in regard to clarifying matters or questions arising under this Sixteenth Supplement, as are necessary or desirable and not contrary to or inconsistent with this Sixteenth Supplement and which shall not adversely affect the interests of the owners of the Bonds then Outstanding; (3) To modify any ofthe provisions ofthis Sixteenth Supplement in any other respect whatever, provided that such modification shall be, and be expressed to be, effective only after the Bonds Outstanding at the date of the adoption of such modification shall cease to be Outstanding; (4) To make such amendments to this Sixteenth Supplement as maybe required, in the opinion of Bond Counsel, to ensure compliance with sections 103 and 141 through 150 of the Code and the regulations promulgated thereunder and applicable thereto; (5) To make such changes, modifications or amendments as may be necessary or desirable in order to allow the owners of the Bonds to thereafter avail themselves of a book- -13- entry system for payments, transfers and other matters relating to the Bonds, which changes, modifications or amendments are not contrary to or inconsistent with other provisions ofthis Sixteenth Supplement and which shall not adversely affect the interests of the owners of the Bonds; (6) To make such changes, modifications or amendments as are permitted by Section 19(c)(v) of this Sixteenth Supplement; (7) To make such changes, modifications or amendments as may be necessary or desirable in order to obtain or maintain the granting of a rating on the Bonds by a Rating Agency or to obtain or maintain a Credit Agreement or a Credit Facility issued in support of the Bonds; and (S) To make such changes, modifications or amendments as may be necessary or desirable, which shall not adversely affect the interests of the owners of the Bonds, in order, to the extent permitted by law, to facilitate the economic and practical utilization of interest rate swap agreements, foreign currency exchange agreements, or similar type of agreements with respect to the Bonds. Notice of any such amendment may be published by the City in the manner described in clause (b) of this Section; provided, however, that the publication of such notice shall not constitute a condition precedent to the adoption of such amendatory ordinance and the failure to publish such notice shall not adversely affect the implementation of such amendment as adopted pursuant to such amendatory ordinance. (g) Ownership of the Bonds shall be established by the Registration Books maintained by the Paying Agent/Registrar, in its capacity as registrar and transfer agent for the Bonds. Section 18. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED BONDS. (a) That in the event any Outstanding Band is damaged, mutilated, lost, stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered, a new bond of the same principal amount, maturity, and interest rate, as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the manner hereinafter provided. (b) Application for replacement of damaged, mutilated, lost, stolen, or destroyed Bonds shall be made to the Paying Agent/Registrar. In every case of loss, theft, or destruction of a Bond, the applicant for a replacement bond shall furnish to the City and to the Paying Agent/Registrar such security or indemnity as may be required by them to save each of them harmless from any loss or damage with respect thereto. Also, in every case of loss, theft, or destruction of a Bond, the applicant shall furnish to the City and to the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such Bond, as the case may be. In every case of damage or mutilation of a Bond, the applicant shall surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated. -14- (c) Notwithstanding the foregoing provisions ofthis Section, in the event any such Bond shall have matured, and no default has occurred which is then continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond, the City may authorize the payment of the same (without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a replacement Bond, provided security or indemnity is furnished as above provided in this Section. (d) Prior to the issuance of any replacement bond, the Paying AgentlRegistrar shall charge the owner of such Bond with all legal, printing, and other expenses in connection therewith. Every replacement bond issued pursuant to the provisions of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a contractual obligation of the City whether or not the lost, stolen, or destroyed Bond shall be found at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Sixteenth Supplement equally and proportionately with any and all other Bonds duly issued under this Sixteenth Supplement. (e) In accordance with Chapter 1206, this Section of this Sixteenth Supplement shall constitute authority for the issuance of any such replacement bond without necessity of further action by the governing body of the City or any other body or person, and the duty of the replacement of such bonds is hereby authorized and imposed upon the Paying Agent/Registrar, and the Paying Agent/Registrar s a aut enticate an e aver suc on s m t e orm an manner an wi e e ec , as provided in Section 5(a) of this Sixteenth Supplement for Bonds issued in exchange for other Bonds. Section 19. CONTINUING DISCLOSURE UNDERTAKING. (a) Annual Reports. (i) The City shall provide annually to each NRMSIR, and any SID, within six months after the end of each Fiscal Year ending in or after 2008, financial information and operating data with respect to the City of the general type described in Exhibit C hereto. Any financial statements so to be provided shall be (1) prepared in accordance with the accounting principles described in Exhibit C hereto, or such other accounting principles as the City maybe required to employ from time to time pursuant to state law or regulation, and (2) audited, if the City commissions an audit of such statements and the audit is completed within the period during which they must be provided. If the audit of such financial statements is not complete within such period, then the City shall provide unaudited financial statements within such period and shall provide audited financial statements for the applicable Fiscal Year to each NIZMSIR and any SID, when and if the audit report on such statements becomes available. (ii) If the City changes its Fiscal Year, it will notify each NRIVISIR and any SID of the change (and of the date of the new Fiscal Year end) prior to the next date by which the City otherwise would be required to provide financial information and operating data pursuant to this Section. The financial information and operating data to be provided pursuant to this Section may be set forth in full in one or more documents or maybe included by specific reference to any document (including an official statement or other offering document, if it is available from the MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC. -15- (b) Material Event Notices. The City shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such event is material within the meaning of the federal securities laws: 1. Principal and interest payment delinquencies; 2. Non-payment related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers, or their failure to perform; 6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds; 7. Modifications to rights of holders of the Bonds; 8. Bond calls; 9. Defeasances; 10. Release, substitution, or sale ofproperty securing repayment oftheBonds; and 11. Rating changes. The City shall notify any SID and either each NRIVISIR or the MSRB, in a timely manner, of any failure by the City to provide financial information or operating data in accordance with subsection (a) of this Section by the time required by such subsection. Any filing under this Section may be made solely by transmitting such filing to the MAC as provided at http://www:disclosureusa.or~; u ess t e SEC as wrt raven t e interpretive a vice state m its etter to t e ate eptem er 7, 2004. (c) Limitations Disclaimers and Amendments. (i) The City shall be obligated to observe and perform the covenants specified in this Section for so long as, but only. for so long as, the City remains an "obligated person" with respect to the Bonds within the meaning of the Rule, except that the City in any event will give notice of any deposit made in accordance with this Sixteenth Supplement or applicable law that causes Bonds no longer to be outstanding. (ii) The provisions of this Section are for the sole benefit of the Holders and beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The City undertakes to provide only the financial information, operating data, financial statements, and notices which it has expressly agreed to provide pursuant to this Section and does not hereby undertake to provide any other information that may be relevant or material to a complete presentation of the City's financial results, condition, or prospects or to update any information provided in accordance with this Section or otherwise, except as expressly provided herein. The City does not make any representation or warranty concerning such information or its usefulness to a decision to invest in or sell Bonds at any future date. (iii) UNDERNO CIRCUMSTANCES SHALL THE CITYBE LIABLE TO THE HOLDER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART FROM ANY BREACH BY THE CITY, WHETHER NEGLIGENT OR WITHOUT FAULT ON ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND REMEDY OF ANY -16- SUCHPERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF ANY SUCH BREACH SHALL BE LIlVL[TED TO AN ACTION FOR MANDAMt7S OR SPECIFIC PERFORMANCE. (iv) No default by the City in observing or performing its obligations under this Section shall comprise a breach of or default under this Sixteenth Supplement for purposes of any other provision of this Sixteenth Supplement. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit the duties of the City under federal and state securities laws. (v) The provisions of this Section may be amended by the City from time to time to adapt to changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or.type of operations of the City, but only if (1) the provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any amendments or interpretations of the Rule since such offering as well as such changed circumstances and (2) either (a) the Holders of a majority in aggregate principal amount (or any greater amount required by any other provision of this Sixteenth Supplement that authorizes such an amendment) of the outstanding Bonds consent to such amendment or (b) a person that is unaffiliated with the City (such as nationally recognized bond counsel) determines that such amendment will not materially impair the interest of the holders and beneficial owners of the Bonds. If the City so amends the provisions of this Section, if shall include with any arnended financial information or operating data next provided in accordance " - - wrt su section a o t s ection an exp anation, m narrative orm, o t e reason or a amen men and of the impact of any change in the type of financial information or operating data so provided. Section 20. DEFAULT AND REMEDIES. (a) Events of Default. Each of the following occurrences or events for the purpose of this Sixteenth Supplement is hereby declared to be an Event of Default: (i) the failure to make payment of the principal of or interest on any of the Bonds when the same becomes due and payable; or (ii) default in the performance or observance of any other covenant, agreement or obligation of the City, the failure to perform which materially, adversely affects the rights of the registered owners of the Bonds, including, but not limited to, their prospect or ability to be repaid in accordance with this Sixteenth Supplement, and the continuation thereof for a period of sixty (60) days after notice of such default is given by any registered owner to the City. (b) Remedies for Default. (i) Upon the happening of any Event of Default, then and in every case, any registered owner or an authorized representative thereof, including, but not limited to, a trustee or trustees therefor, may proceed against the City, or any official, officer or employee of the City in their official capacity, for the purpose of protecting and enforcing the rights of the registered owners under this Sixteenth Supplement, by mandamus or other suit, action or special proceeding in equity or at law, in any court of competent jurisdiction, for any relief -17- permitted by law, including the specific performance of any covenant or agreement contained herein, or thereby to enjoin any act or thing that may be unlawful or in violation of any right of the registered owners hereunder or any combination of such remedies. (ii) It is provided that all such proceedings shall be instituted and maintained for the equal benefit of all registered owners of Bonds then outstanding. (c) Remedies Not Exclusive. (i) No remedy herein conferred or reserved 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 given hereunder or under the Bonds or now or hereafter existing at law or in equity; provided, however, that notwithstanding any other provision of this Sixteenth Supplement, the right to accelerate the debt evidenced by the Bonds shall not be available as a remedy under this Sixteenth Supplement. (ii) The exercise of any remedy herein conferred or reserved shall not be deemed a waiver of any other available remedy. ___ __ __ _ (iii) By accepting the delivery of aBon~3c. authorized under this Sixteent --Supp ernerit~ -------"- - suc registere owner agrees t at t e certi cations require o e ec a e any covenan s or representations contained in this Sixteenth Supplement do not and shall never constitute or give rise to a personal or pecuniary liability or charge against the officers, employees or members of the City or the City Council. (iv) None of the members of the City Council, nor any other official or officer, agent, or employee of the City, shall be charged personally by the registered owners with any liability, or be held personally liable to the registered owners under any term or provision of this Sixteenth .Supplement, or because of any Event of Default or alleged Event of Default under this Sixteenth Supplement. Section 21. SIXTEENTH SUPPLEMENT TO CONSTITUTE A CONTRACT; EQUAL SECURITY. That in consideration of the acceptance of the Bonds, the issuance of which is authorized hereunder, by those who shall hold the same from time to time, this Sixteenth Supplement shall be deemed to be and shall constitute a contract between the City and the Holders from time to time of the Bonds and the pledge made in this Sixteenth Supplement by the City and the covenants and agreements set forth in this Sixteenth Supplement to be performed by the City shall be for the equal and proportionate benefit, security, and protection of all Holders, without preference, priority, or distinction as to security or otherwise of any of the Bonds authorized hereunder over any of the others by reason of time of issuance, sale, or maturity thereof or otherwise for any cause whatsoever, except as expressly provided in or permitted by this Sixteenth Supplement. Section 22. SEVERABII,ITY OF INVALID PROVISIONS. That if any one or more of the covenants, agreements, or provisions herein contained shall be held contraryto any express provisions of law or contrary to the policy of express law, though not expressly prohibited, or against public -18- policy, or shall for any reason whatsoever be held invalid, then such covenants, agreements, or provisions shall be null and void and shall be deemed separable from the remaining covenants, agreements, or provisions and shall in no way affect the validity of any of the other provisions hereof or of the Bonds issued hereunder. Section 23. PAYMENT AND PERFORMANCE ON BUSINESS DAYS. That, except as provided to the contrary in the FORM OF BOND, whenever under the terms of this Sixteenth Supplement or the Bonds, the performance date of any provision hereof or thereof, including the payment of principal of or interest on the Bonds, shall occur on a day other than a Business Day, then the performance thereof, including the payment of principal of and interest on the Bonds, need not be made on such day but may be performed or paid, as the case may be, on the next succeeding Business Day with the same force and effect as if made an the date of performance or payment. Section 24. LIlVIITATION OF BENEFITS WITH RESPECT TO THE SIXTEENTH Supplement. That with the exception of the rights or benefits herein expressly conferred, nothing expressed or contained herein or implied from the provisions of this Sixteenth Supplement or the Bonds is intended or should be construed to confer upon or give to any person other than the City, the Holders, and the Paying AgentlRegistrar, any legal or equitable right, remedy, or claim under or by reason of or in respect to this Sixteenth Supplement or any covenant, condition, stipulation, ~~ ~ promise, agreement, or provision herein contained-This Sixteenth Supp ement and all of the - covenants, conditions, stipulations, promises, agreements, an provisions ereo are mten e to e and shall be for and inure to the sole and exclusive benefit of the City, the Holders, and the Paying Agent/Registrar as herein and therein provided. Section 25. FURTHER PROCEDURES. That the Mayor, the City Manager, the Chief Financial Off cer of the City, any .Assistant City Manager, the Director of Finance, the City Secretary or any Assistant City Secretary, and all other officers, employees, and agents of the City, and each of them, shall be and they are hereby expressly authorized, empowered and directed from time to time and at any time to do and perform all such acts and things and to execute, acknowledge and deliver in the name and under the corporate seal and on behalf of the City all such instruments, whether herein mentioned, as may be necessary or desirable in order to carry out the terms and provisions of this Sixteenth Supplement and the Bonds, including, but not limited to, conforming documents to receive the approval of the Attorney General of the State of Texas and to receive ratings from municipal bond rating agencies. The City Manager or the designee thereof shall take such actions as are necessary to cause the (i) redemption of the Series 2004 Bonds on the next scheduled interest payment date on the Series 2004 Bonds immediately following the date of delivery of the Bonds and the provision of the required notice of redemption in accordance with the terms of the Twelfth Supplement and (ii) deposit of funds with the paying agent of the Series 2004 Bonds in an amount sufficient to pay the principal of and interest on the outstanding Series 2004 Bonds on the next scheduled interest payment date on the Series 2004 Bonds immediately following the date of delivery of the Bonds. Section 26. APPROVAL AND REGISTRATION OF BONDS. That the City Manager of the City is hereby authorized to have control ofthe Bonds and all necessary records and proceedings pertaining to the Bonds pending their delivery and their investigation, examination and approval by the Attorney General of the State of Texas, and their registration by the Comptroller of Public -19- AccountsoftheStateofTexas. UponregistrationoftheBonds,saidComptrollerofPublicAccounts (or a deputy designated in writing to act for said Comptroller) shall manually sign the Comptroller's Registration Certificate accompanying the Bonds, and the seal of said Comptroller shall be impressed, or placed in facsimile, on each such certificate. The City Council hereby authorizes the payment of the fee of the OiTice of the Attorney General of the State of Texas for the examination of the proceedings relating to the issuance of the Bonds, in the amount determined in accordance with the provisions of Section 1202.004, Texas Government Code. Section 27. PURCHASE CONTRACT. That the sale ofthe Bonds to the Purchaser pursuant to the terms of the Purchase Contract is hereby authorized, ratified and confirmed. It is hereby officially found, deternned and declared that the Bonds were sold at terms that were the most advantageous reasonably obtained. The City Manager is authorized to execute the Purchase Contract on behalf of the City, in substantially the form attached to this Sixteenth Supplement as Exhibit D. Any accrued interest received from the sale of the Bonds shall be deposited to the Debt Service Fund, and any proceeds representing premium on the Bonds shall be used in a manner consistent with the provisions of Section 1201.042(d), Texas Government Code. __ Section 28. DTC REGISTRATION. That should the terms of the Purchase Contract so _ provide, the Bonds initially shall be issued and delivered in such manner that no physical distribution of the Bonds will be made to the public, and DTC initially will act as depository for the Bonds. DTC has represented to the City that it is a limited purpose trust company incorporated under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered under Section 17A ofthe Securities Exchange Act of 1934, as amended, and the City accepts, but in no way verifies, such representations. The definitive Bonds delivered to the Purchaser may be registered in the name of CEDE & CO., the nominee of DTC, if the terms of the Purchase Contract so provide. So long as each Bond is registered in the name of CEDE & CO., the Paying Agent/Registrar shall treat and deal with DTC the same in all respects as if it were the actual and beneficial owner thereof. DTC may maintain abook-entry system which will identify ownership of the Bonds in Authorized Denominations, with transfers of ownership being effected on the records of DTC and its participant pursuant to rules and regulations established by them, and that, if the terms of the Purchase Contract so provide, the Bonds deposited with DTC shall be immobilized and not be further exchanged for substitute Bonds except as hereinafter provided. The City is not responsible or liable for any functions of DTC, will not be responsible for paying any fees or charges with respect to its services, will not be responsible or liable for maintaining, supervising, or reviewing the records of DTC or its participants, or protecting any interests or rights of the beneficial owners ofthe Bonds. The City does not represent, nor does it in any way covenant that the initial book-entry system established with DTC will be maintained in the future. If for any reason any of the originally delivered Bonds is duly filed with the Paying Agent/Registrarvith proper request for transfer- and substitution, as provided for in this Ordinance, substitute Bonds will be duly delivered as provided in this Ordinance, and there will be no assurance or representation that any book-entry system will be maintained for the Bonds. Should there be established abook-entry system with DTC in respect to the Bonds, the City heretofore has executed a "Blanket Letter of Representations" prepared by DTC in order to implement the book-entry system described above. -20- Section 29. USE OF PROCEEDS. That the proceeds from the sale of the Bonds shall be used in the manner described in the letter of instructions executed by the City, or on behalf of the City by its financial advisor. Section 30. PREAMBLE. That the preamble to this Sixteenth Supplement is hereby incorporated by reference, and is to be considered a part of the operative text of this Sixteenth Supplement. Section 31. RULES OF CONSTRUCTION. For all purposes ofthis Sixteenth Supplement, unless the context requires otherwise, all references to designated Sections and other subdivisions are to the Sections and other subdivisions of this Sixteenth Supplement. The words "herein", "hereof' and "hereunder" and other words of similar import refer to this Sixteenth Supplement as a whole and not to any particular Section or other subdivision. Except where the context otherwise requires, terms defined in this Sixteenth Supplement to impart the singular number shall be considered to include the plural number and vice versa. References to any named person means that party and its successors and assigns. References to any constitutional, statutory or regulatory provision means such provision as it exists on the date this Sixteenth Supplement is adopted by the City and any future -amendments thereto or successor provisions thereof. All ordinances and resolutions or parts thereof __ _ in conflict herewith are hereby repealed. Section 32. IlVINIEDIATE EFFECT. That this Sixteenth Supplement shall be effective immediately from and after its passage in accordance with the provisions of Section 1201.028, Texas Government Code, and it is accordingly so ordained. SIGNED AND SEALED THIS 13TH DAY OF MAY, 2008. Mayor, `°~ City of Fort Worth, Texas City Secretary VED AS TO FORM AND LEGALITY: v~~GGL-lam' , City Attorney (SEAL) -21- EXHIBIT A That, as used in this Sixteenth Supplement, the following terms shall have the meanings set forth below, unless the text hereof specifically indicates otherwise: "Authentication Certificate" shall have the meaning given said term in Section 5(a) of the Sixteenth Supplement. "Authorized Denomination" shall have the meaning given said term in Section 2(a) of the Sixteenth Supplement. "Bonds" means the Series 2008 Bonds. "Business Day" means a day other than a Sunday, Saturday, a legal holiday, or a day on which banking institutions in the city where the Designated Trust Office of the Paying Agent/Registrar is located are authorized by law or executive order to close. --~ - ---"Chapter 1206" means Chapter 1-ZO~Texas Government Code. "Chapter 1207" means Chapter 1207, Texas Government Code. "Chapter 1208" means Chapter 1208, Texas Government Code. "Designated Trust Office" means the city so designated in Section 5(a) of the Sixteenth Supplement. "DTC" shall have the meaning given said term in Section 28 of the Sixteenth Supplement. "Eighth Supplement" means the ordinance authorizing the issuance of the Series 2000B Bonds. "Eleventh Supplement" means the ordinance authorizing the issuance of the Series 2003A BOnds. "Fifteenth Supplement" means the ordinance authorizing the issuance of the Series 2007 Bonds. "Fourteenth Supplement" means the ordinance authorizing the issuance of the Series 2005A Bonds. "MAC" means the Municipal Advisory Council of Texas. "Master Ordinance" means the "Master Ordinance establishing the City of Fort Worth Texas Water and Sewer System Revenue Financing Program", passed by the City on December 10, 1991. A-1 "MSRB" means the Municipal Securities Rulemaking Board. "Ninth Supplement" means the ordinance authorizing the issuance of the Series 2001 Bonds. "NRIVISIR" means each person whom the SEC or its staffhas determined to be a nationally recognized municipal securities information repository within the meaning of the Rule from time to time. "Paying Agent/Registrar" means the financial institution specified in Section 5(a) of the Sixteenth Supplement. "Previously Issued Parity Bonds" means the Series 1998 Bonds, the Series 2000 Bonds, the Series 2000B Bonds, the Series 2001 Bonds, the Series 2003 Bonds, the Series 2003A Bonds, the Series 2004 Bonds, the Series 2005 Bonds, the Series 2005A Bonds and the Series 2007 Bonds. "Purchase Contract" means the bond purchase agreement relating to the Bonds, between the City and Purchaser. "Purchaser" means JP -organ Chase Bank,-N-A., who has contracted~o purchase the Bonds -- pursuant tot e terms o t e urc ase on rac . "Registration Books" shall have the meaning given said term in Section 5(a) of the Sixteenth Supplement. "Rule" means SEC Rule 15c2-12, as amended from time to time. "SEC" means the United States Securities and Exchange Commission. "Series 1998 Bonds" means the City ofFort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 1998, authorized by the Sixth Supplement. "Series 2000 Bonds" means the City ofFort Worth, Texas Water and Sewer System Revenue Bonds, Series 2000, authorized by the Seventh Supplement. "Series 2000B Bonds" means the City of Fort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 2000B, authorized by the Eighth Supplement. "Series 2001 Bonds" means the City ofFort Worth, Texas Water and Sewer System Revenue Bonds, Series 2001, authorized by the Ninth Supplement. "Series 2003 Bonds" means the City ofFort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 2003, authorized by the Tenth Supplement. "Series 2003A Bonds" means the City of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 2003A, authorized by the Eleventh Supplement. A-2 "Series 2004 Bonds" means the City ofFort Worth, Texas Water and Sewer System Auction Rate Revenue Bonds, Series 2004, authorized by the Twelfth Supplement. "Series 2005 Bonds" means the City ofFort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 2005, authorized by the Thirteenth Supplement. "Series 2005A Bonds" means the City of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 2005A, authorized by the Fourteenth Supplement. "Series 2007 Bonds" means the City ofFort Worth, Texas Water and Sewer System Revenue Bonds, Series 2007, authorized by the Fifteenth Supplement. "Series 2008 Bonds" means the City ofFort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 2008, authorized by the Sixteenth Supplement. "Seventh Supplement" means the ordinance authorizing the issuance of the Series 2000 Bonds. "'SID" means any person design~ta~ ed by the State of-'Texas or an authorized deparrtmen~t, o cer, or agency t ereo as, an a ermine y e or i s s o e, a s a e i orma ion depository within the meaning of the Rule from time to time. The MAC currently acts as the SID for the State of Texas. "Sixteenth Supplement" means the ordinance authorizing the issuance of the Bonds. "Sixth Supplement" means the ordinance authorizing the issuance of the Series 1998 Bonds. "Tenth Supplement" means the ordinance authorizing the issuance of the Series 2003 Bonds. "Term Bonds" means those Bonds, if any, identified in the Purchase Contract as "term bonds". "Thirteenth Supplement" means the ordinance authorizing the issuance of the Series 2005 Bonds. "Twelfth Supplement" means the ordinance authorizing the issuance of the Series 2004 Bonds. A-3 EXHIBIT B NO. FORM OF BOND: UNITED STATES OF AMERICA STATE OF TEXAS COUNTIES OF TA]l2RANT AND DENTON CITY OF FORT WORTH, TEXAS WATER AND SEWER SYSTEM REVEN[.TE REFUNDING BOND, SERIES 2008 MATURITY DATE INTEREST RATE DATED DATE CUSIl' ON THE MATURITY DATE SPECIFIED ABOVE, THE CITY OF FORT WORTH, IN TA~.RRA7'~T AND DENTON COUNTIES, TEXAS (the "Issuer"), hereby .promises to pay to ~~- _----- , or to the registe~re assignee hereof (either being hereinafter called the "---~---~ registere owner t e prmcipa amount o and to pay interest thereon from the dated date specified above, on August 15, 2008 and semiannu- ally on each February 15 and August 15 thereafter to the maturity date specified above, or the date of redemption prior to maturity, at the interest rate per annum specified above; except that if the Paying Agent/Registrar's Authentication Certificate appearing on the face of this Bond is dated later than August 15, 2008, such interest is payable semiannually on each February 15 and August 15 following such date. THE PRINCIPAL OF AND INTEREST ON this Bond are payable in lawful money of the United States of America, without exchange or collection charges. The principal of this Bond shall be paid to the registered owner hereof upon presentation and surrender of this Bond at maturity or upon the date fixed for its redemption prior to maturity, at the designated corporate trust office in Fort Worth, Texas (the "Designated Trust Office"), of Wells Fargo Bank, National Association, which is the "Paying Agent/Registrar" for this Bond. The payment of interest on this Bond shall be made by the Paying Agent/Registrar to the registered owner hereof on each interest payment date by check or draft, dated as of such interest payment date, drawn by the Paying Agent/Registrar on, and payable solely from, funds of the Issuer required by the ordinance authorizing the issuance of this Bond (the "Bond Ordinance") to be on deposit with the Paying Agent/Registrar for such purpose as hereinafter provided; and such check or draft shall be sent by the Paying Agent/Registrar by United States mail, first-class postage prepaid, on each such interest payment date, to the registered owner hereof, at its address as it appeared on the last Business Day (as defined in the Bond Ordinance) 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 at maturity or upon the B-1 redemption of this Bond prior to maturity as provided herein shall be paid to the registered owner upon presentation and surrender of this Bond for redemption and payment at the Designated Trust Office of the Paying Agent/Registrar. The Issuer has covenanted in the Bond Ordinance 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 "Debt Service Fund" created by the ordinance establishing the City ofFort Worth, Texas Water and Sewer System Revenue Financing Program (the "Master Ordinance"), the amounts required to provide for the payment, in immediately available funds, of all principal of and interest on the Bonds, when due. IN THE.EVENT of anon-payment of interest on a scheduled payment date, and for 30 days thereafter, a new record date for such interest payment (a "Special Record Date") will be established by the Paying Agent/Registrar, if and when funds for the payment of such interest have been received from the Issuer. Notice of the Special Record Date and of the scheduled payment date of the past due interest ("Special Payment Date", which shall be 15 days after the Special Record Date) shall be sent at least five business days prior to the Special Record Date by United States mail, first class postage prepaid, to the address of each registered owner appearing on the registration books of the Paying Agent/Registrar at the close of business on the last business day next preceding the date of mailing of such notice. ------------------ - IF THE DATE for the payment of the principal of of interest on t sB on s - e a~ atur ay; Sun ay, a eg o 1 ay, or a ay on w e g mstrtutions m t e rty w ere t o esigna a rus Office of the Paying Agent/Registrar issocated 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. Notwithstanding the foregoing, during any period in which ownership of the Bonds is determined only by a book entry at a securities depository for the Bonds, any payment to the securities depository, or its nominee or registered assigns, shall be made in accordance with existing arrangements between the Board and the securities depository. THIS BOND is one of a series of bonds of like tenor and effect except as to number, principal amount, interest rate, maturity, and right of prior redemption, dated as of the dated date specified above, aggregating $44,085,000 (herein sometimes called the "Bonds") issued for the purpose of (i) refunding all ofthe outstanding Series 2004 Bonds (as defined intheBond Ordinance), and (ii) paying the costs of issuance associated with the Bonds. All capitalized terms not defined herein shall have the same meaning as given said terms in the Master Ordinance or the Bond Ordinance. THE OUTSTANDING BONDS may be redeemed prior to their scheduled maturities, at the option of the Issuer, in whole, or in part on February 15, 2018, or on any date thereafter, at the redemption price of the principal amount of the Bonds called for redemption, plus accrued interest thereon to the date fixed for redemption, and without premium; provided, that during any period in which ownership of the Bonds is determined only by a book entry at a securities depository for the Bonds, if fewer than all of the Bonds of the same maturity and bearing the same interest rate are to be redeemed, the particular Bonds of such maturity and bearing such interest rate shall be selected in accordance with the arrangements between the Board and the securities depository. B-2 THE BONDS are also subject to mandatory redemption in part by lot pursuant to the terms of the Bond Ordinance, on February 15 in each of the years 2009 through 2023, inclusive, with respect to Bonds maturing February 15, 2024, in the following years and in the following amounts, at a price equal to the principal amount thereof and accrued and unpaid interest to the date of redemption, without premium: Year Princ~al Amount ($) 2009 2,025,000 2010 2,1 O5, 000 2011 2,190.000 2012 2,275,000 2013 2,370,000 2014 2,460,000 2015 2,560,000 2016 2,660,000 2017 2,765,000 2018 2,875,000 2019 2,990,000 2020 3,105,000 2021 3230;000._____.__._...__.__...._ _ -- -___-.- > > 2023 2024* * Final Maturity 3,490,000 3,630,000 To the extent, however, that Bonds subject to sinking fund redemption have been previously purchased or called for redemption in part and otherwise than from a sinking fund redemption payment, each annual sinking fixnd payment for such Bond shall be reduced by the amount obtained by multiplying the principal amount of Bonds so purchased or redeemed by the ratio which each remaining annual sinking fund redemption payment for such Bonds bears to the total. remaining sinking fund payments, and by rounding each such payment to the nearest $5,000 integral; provided, that during any period in which ownership of the Bonds is determined only by a book entry at a securities depository for the Bonds, the particular Bonds to be called for mandatory redemption shall be selected in accordance with the arrangements between the Issuer and the securities depository. NOTICE OF any such redemption of Bonds shall be given in the following manner, to-wit, (i) a written notice of such redemption shall be given to the registered owner of each Bond or a portion thereof being called for redemption not more than 60 days nor less than 30 days prior to the date fixed for such redemption by depositing such notice in the United States mail, first-class postage prepaid, addressed to each such registered owner at his address shown on the Registration Books of the Paying Agent/Registrar and (ii) at least 30 days prior to the date fixed for such redemption, a notice of such redemption shall either be published one time or posted electronically on the website of a financial journal or publication of general circulation in the United States of America or the State of Texas which carries as a regular feature notices of redemption of municipal bonds; provided, however, that the failure to send, mail, or receive such notice described in clause (i) above, or any B-3 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, as publication or posting of notice as described in clause (ii) above shall be the only notice actually required in connection with or as a prerequisite to the redemption of any Bonds. By the date fixed for any such redemption due provision shall be made by the Issuer with the Paying Agent/Registrar for the payment of the required redemption price for this Bond or the portion hereof which is to be so redeemed, plus accrued interest thereon to the date fixed for redemption. If such notice of redemption is given, and if due provision for such payment is made, all as provided above, this Bond or the portion hereof which is to be so redeemed, thereby auto- matically shall be redeemed prior to its scheduled maturity, and shall not bear or accrue interest after the date fixed for its redemption, and shall not be regarded as being outstanding except for the right of the registered owner to receive the redemptian price plus accrued interest to the date fixed for redemption from the Paying Agent/Registrar out of the funds provided for such payment. The Paying Agent/Registrar shall record in the Registration Books all such redemptions of principal amount of this Bond or any portion hereof. If a portion of any Bond shall be redeemed a substitute Bond or Bonds having the same maturity date, bearing interest at the same rate, in any denomination or denominations in any integral multiple of $5,000 (an "Authorized Denomination") at the written request of the registered owner, and in an aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered owner upon the surrender thereof for cancellation, at the expense of the Issuer, all as provided in the Bond Ordinance. The years of maturity of the ___. __________~onds_called_for_such redemption_shall_be_selected by the_Issuer. _ The Bonds_or portons_thereof ______,_ ______ rPC~PPmPd within a mah~rity shall be selected b~ lot or other customary random method selected by the Paying Agent/Registrar (provided that a portion of a Bond may be redeemed only in an Authorized Denomination). ALL BONDS OF THIS SERIES are issuable solely as fully registered bonds, without interest coupons, in the denomination of any Authorized Denomination. As provided in the Bond Ordinance, this Bond may, at the request ofthe registered owner or the assignee or assignees hereof, be assigned, transferred, converted into and exchanged for a like aggregate amount of fully registered Bonds, without interest coupons, payable to the appropriate registered owner, assignee or assignees, as the case may be, having any authorized denomination or denominations as requested in writing by the appropriate registered owner, assignee or assignees, as the case maybe, 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 Ordinance. Among other requirements for such assignment and transfer; this Bond must be presented and surrendered to the Paying Agent/Registrar at the Designated Trust Office, together with proper instruments of assignment, inform and with guarantee of signatures satisfactory to the Paying Agent/Registrar, evidencing assignment of this Bond or any portion or portions hereof in any authorized denomination to the assignee or assignees in whose name or names this Bond or any such portion or portions hereof is or are to be registered. The form of Assignment printed or endorsed on this Bond maybe executed by the registered owner to evidence the assignment hereof, but such method is not exclusive, and other instruments of assignment satisfactory to the Paying AgentlRegistrar may be used to evidence the assignment of this Bond or any portion or portions hereof from time to time by the registered owner. The one requesting such conversion and exchange shall pay the Paying Agent/Registrar'syeasonable standard or customary fees and charges for convert- ing and exchanging any Bond or portion thereof. In any circumstance, any taxes or governmental charges required to be paid with respect thereto shall be paid by the one requesting such assignment, transfer, conversion or exchange, as a condition precedent to the exercise ofsuch privilege. The fore- going notwithstanding, in the case of the conversion and exchange of an assigned and transferred B-4 Bond or Bonds or any portion or portions thereof, such fees and charges of the Paying Agent/Registrar will be paid by the Issuer. The Paying Agent/Registrar shall not be required (i) to make any such transfer, conversion or exchange during the period beginning at the opening of business 30 days before the day of the first mailing of a notice of redemption and ending at the close of business on the day of such mailing, or (ii) to transfer, convert or exchange any Bonds so selected for redemption when such redemption is scheduled to occur within 30 calendar days; provided, however, such limitation of transfer shall not be applicable to an exchange by the registered owner of an unredeemed balance of a Bond called for redemption in part. IN THE EVENT any Paying Agent/Registrarfnr the Bonds is changed by the Issuer, resigns, or otherwise ceases to act as such, the Issuer has covenanted in the Bond Ordinance that it promptly will appoint a competent and legally qualified substitute therefor, whose qualifications are substan- tially similar to the previous Paying Agent/R.egistrar it is replacing, and promptly will cause written notice thereof to be mailed to the registered owners of the Bonds. Wi-lENEVER the beneficial ownership of this Bond is determined by a book entry at a securities depository for the Bonds, the foregoing requirements of holding, delivering or transferring this Bond shall be modified to require the appropriate person or entity to meet the requirements of the securities depository as to registering or transferring the book entry to produce the same effect. t o registere owner o t s on , e regis ere owner ere y acknowledges all of the terms and provisions of the Master Ordinance and the Bond Ordinance, agrees to be bound by such terms and provisions, acknowledges that the Master Ordinance and the Bond Ordinance are duly recorded and available for inspection in the official minutes and records of the Issuer, and agrees that the terms and provisions of this Bond, the Master Ordinance and the Bond Ordinance constitute a contract between each registered owner hereof and the Issuer. THE BONDS are special obligations of the Issuer payable solely from and equally secured by a first lien on and pledge of the Pledged Revenues of the System. The Issuer has reserved the right, subject to the restrictions stated, and adopted by reference, in the Master Ordinance, to issue additional parity revenue obligations which also may be made payable from, and secured by a first lien on and pledge of, the Pledged Revenues. For a more complete description and identification of the revenues and funds pledged to the payment of the Bonds, and other obligations of the Issuer secured by and payable from the same source or sources as the Bonds, reference is hereby made to the Master Ordinance and the Bond Ordinance. THE ISSUER has reserved the right, subject to the restrictions stated, and adopted by reference, in the Bond Ordinance, to amend the Bond Ordinance; and under some (but not all) circumstances amendments must be approved by the owners of a majority in Outstanding Principal Amount of the Bonds. THE REGISTERED OW.NERHEREOF shall never have the right to demand payment of this obligation out of any funds raised or to be raised by taxation. IT IS HEREBY certified and covenanted that this Bond has been duly and validly authorized, issued and delivered; and that all acts, conditions and things required or proper to be performed, exist B-5 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. IN WITNESS WHEREOF, this Bond has been signed with the imprinted or lithographed manual or facsimile signature of the Mayor of said Issuer, attested by the imprinted or lithographed facsimile signature of the City Secretary, and approved as to form and legality by the imprinted or lithographed facsimile signature of the City Attorney, and the official seal of said Issuer has been duly affixed to, printed, lithographed or impressed on this Bond. CITY OF FORT WORTH, TEXAS (SEAL) By Mayor ATTEST: APPROVED AS TO FORM AND LEGALITY: City Attorney B-6 FORM OF PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE: PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (To be executed if this Bond is not accompanied by an executed Registration Certificate of the Comptroller of Public Accounts of the State of Texas) It is hereby certified that this Bond has been issued under the provisions of the proceedings adopted by the Issuer as described in the text of this Bond; and that this Bond has been issued in exchange for or replacement of a bond, bonds, or a portion of a bond or bonds of an issue which originally was approved by the Attorney General of the State of Texas and registered by the Comptroller of Public Accounts of the State of Texas. Dated WELLS FARGO BANK, NATIONAL ASSOCIATION, Paying Agent/R.egistrar BY ut onze ignatory B-7 FORM OF COMPTROLLER'S REGISTRATION CERTIFICATE: OFFICE OF COMPTROLLER REGISTER NO. STATE OF TEXAS I hereby certify that this Bond has been examined, certified as to validity, and approved by the Attorney General of the State of Texas and that this Bond has been registered by the Comptroller of Public Accounts of the State of Texas. Witness my signature and seal this (SEAL) NOTE TO PRINTER: Comptroller of Public Accounts of the State of Texas *¶ not to be printed on Bonds B-8 FORM OF ASSIGNMENT: ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Please insert Social Security or Taxpayer Identification Number of Transferee (Please print or typewrite name and address, including zip code of Transferee) the within Bond and ali rights thereunder, and hereby irrevocably constitutes and appoints attorney to register the transfer of the within Bond on t e books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. NOTICE: The signature(s) above must correspond with the name of the Registered Owner as it appears upon the front of this Bond in every particular, without alteration or enlargement or any change whatsoever. B-9 Exhibit C to Sixteenth Supplemental Ordinance DESCRIPTION OF ANNUAL FINANCIAL INFOF:MATION The following information is referred to in Section 19 of this Sixteenth Supplement. Annual Financial Statements and Operating Data The financial information and operating data with respect to the City to be provided annually in accordance with such Section are as specified below: The City has heretofore filed with each N.RMSIR and the SID its official statement with respect to that certain issue of $73,075,000 City of Fort Worth, Texas Water and Sewer System RevenueRefunding Bonds, Series 2005A. In the ordinance authorizing the issuance of such Bonds, the City agreed to update annually financial information and operating data with respect to the City of the general type included in such official statement in tables 1 through 16, inclusive, contained in such official statement, and Appendix B to such Official Statement, "Excerpts from the Annual Financial Report of the City of Fort Worth, Texas". The above-described financial information and operating data with respect to the City is hereby incorporate y re erence, an m ection o this Sixteenth Supplement the City has agreed to annually update such financial information and operating data in accordance with Rule 15c2-12, promulgated by the United States Securities and Exchange Commission. Accounting Principles The accounting principles referred to in such Section are the accounting principles described in the notes to the financial statements referred to in paragraph 1 above. EXHIBIT D PURCHASE CONTRACT TIC STATE OF TEXAS COUNTIES OF TA.~I~]~.ANT AND DENTON CITY OF FORT WORTH I, Marty Hendrix, City Secretary of the City of Fort Worth, in the State of Texas, do hereby certify that I have compared the attached and foregoing excerpt from the minutes of the regular, open, public meeting of the City Council of the City of Fort Worth, Texas held on May 13, 2008, and of the ordinance authorizing the issuance of Water and Sewer System Revenue Refunding Bonds, Series 2008, which was duly passed at said meeting, and that said copy is a true and correct copy of said excerpt and the whole of said ordinance. Said meeting was open to the public, and public notice of the time, place, and purpose of said meeting was given, all as required by Chapter 551, Texas Government Code, as amended. In testimony whereof, I have set my hand and have hereunto affixed the seal of said City of Fort Worth, this 13th day of May, 2008. City Secretary o the City of Fort Worth, Texas SE GENERAI. CERTIFICATE THE STATE OF TEXAS COUNTIES OF TARRANT AND DENTON CITY OF FORT WORTH We, the undersigned, hereby officially certify that we are the City Manager and the Assistant City Manager/Chief Financial Officer, respectively, of the City of Fort Worth, Texas (the "City"), and we further certify as follows: General 1. That this certificate is given for the benefit of the Attorney General of the State of Texas, and JPMorgan Chase Bank, National Association (the "Purchaser"), the purchaser of City of Fort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 2008, in the aggregate principal amount of $44,085,000 (herein refereed to as the "Bonds"). The Bonds are being issued in accordance with the terms of the "Master Ordinance Establishing the City of Fort Worth, Texas Water and Sewer System Revenue Financing Program" (the "Master Ordinance") and the "Sixteenth Supplemental Ordinance" to the Master Ordinance authorizing the issuance of the Bonds (the "Sixteenth Supplement" and, together with the Master Ordinance, referred to herein as the "Ordinance"). Defined terms used herein shall have the meaning ascribed to said terms in the Ordinance. 2. That any certificate signed by any official of the City delivered to the Purchaser or the Attorney General of the State of Texas shall be deemed a representation and warranty by the City as to the statements made therein. The Public Finance Division of the Office of the Attorney General of the State of Texas is hereby authorized to date this Certificate as of the date of approval of the Bonds and is entitled to rely upon the accuracy of the information contained herein unless notified by telephone or telecopy to the contrary. Matters Relating to the City 3. That the City is a duly incorporated home-rule municipality that adopted its charter under Section 5, Article XI, Texas Constitution, has more than 50,000 inhabitants, and operates and exists under the Constitution and laws of the State of Texas and the duly adopted Home Rule Charter of the City, which Charter has not been changed or amended since the issuance of the City of Fort Worth, Texas Drainage Utility System Revenue Bonds, Series 2007 on November 15, 2007. 4. That the seal an impression of which appears below is the corporate seal of the City; that said seal has been used continuously as such corporate seal for more than forty years and was duly adopted as the seal of the City by the City Council of the City; and that since its adoption, no seal other than said seal has been used as the corporate seal of the City. 5. That each ofthe following persons is the duly acting, constituted and qualified officer of the City of Fort Worth as herein shown, respectively: Michael Moncrief, Salvador Espino, Chuck Silcox, Danny Scarth, Frank Moss, fungus Jordan, Carter Burdette, Kathleen Hicks, Joel Burns, Dale A. Fisseler, David Yett, Marty Hendrix, KarenMontgomery, Mayor Councilmembers, City Manager, City Attorney, City Secretary, Assistant City Manager/ChiefFinancial Officer 6. That no litigation of any nature has been filed or, to the best of our knowledge, threatened, pertaining to, affecting or contesting: (a) the issuance, delivery, payment, security or validity of the proposed Bonds and the bond purchase agreement relating to the sale of the Bonds (the "Purchase Agreement"); (b) the ability of the City or the authority of the officers of the City to issue, execute and deliver the proposed Bonds or the Purchase Agreement; (c) the validity of the corporate existence or the Charter of the City; or (d) the boundaries of the City. Matters Relating to the System 7. That the City is in compliance with all covenants contained in the Master Ordinance and the Supplements authorizing the outstanding City ofFort Worth, Texas Water and Sewer System Revenue Refunding Bonds, Series 1993, Series 2003A and Series 2005A, the outstanding City of Fort Worth, Texas Water and Sewer System Revenue Refunding and Improvement Bonds, Series 1996, Series 1997, Series 1998, Series 2000B, Series 2003 and Series 2005, the outstanding City of Fort Worth, Texas Water and Sewer System Revenue Bonds, Series 2000, Series 2001 and Series 2007, and the outstanding City ofFort Worth, Texas Water and Sewer System Auction Rate Revenue Bonds, Series 2004 (herein referred to as the "Previously Issued Parity Bonds"), the City's Water and Sewer System Commercial Paper Notes, Series A (the "Commercial Paper Notes"), the credit agreement executed by the City to provide liquidity in connection with the Commercial Paper Notes, and the ordinances authorizing the above-referenced obligations; that the City is not in default in the performance and observance of any of the terms, provisions and conditions of the ordinances hereinabove referenced; and that the Debt Service Fund and the Reserve Fund established and maintained pursuant to said ordinances each contains the amounts required to be therein. The outstanding Previously Issued Parity Bonds are rated Aa2/AA/AA+. 8. That the City is not in default as to any covenant, condition or obligation in connection with the outstanding City of Fort Worth, Texas Water and Sewer System Subordinate Lien Revenue Bonds, Series 1995, Series 1996, Series 1998, Series 1999, Series 1999A, Series 2001, Series 2003, Series 2005, Series 2005A and Series 2005B (the "Previously Issued Subordinate LienBonds"), and the ordinances authorizing the same; and that the Debt Service Fund and the Reserve Fund established and maintained pursuant to said ordinances each contains the amounts required to be therein. -2- 9. That other than for the payment of the principal of and interest on the Previously Issued Parity Bonds, the credit agreement executed by the City to provide liquidity in connection with the Commercial Paper Notes, the Previously Issued Subordinate Lien Obligations, the City of Fort Worth, Texas Certificates of Obligation, Series 1989, Series 2000A, Series 2001, Series 2001B, Series 2003, Taxable Series 2005 and Series 2005A, and the City ofFort Worth, Texas Combination Tax and Limited Surplus Revenue Certificates of Obligation, Series 2007, the Net Revenues of the City's Water and Sewer System have not been pledged to the payment of any other debt or obligation of the City. The pledge of Net Revenues to each series of said Certificates of Obligation is a limited pledge and is inferior to the pledge of Net Revenues to the Previously Issued Subordinate Lien Obligations and the Subordinate Lien Obligations. 10. That attached hereto as Exhibit A is a schedule showing the debt service requirements for the Bonds and all outstanding revenue bonds payable from the Net Revenues of the Water and Sewer System of the City. Currently, there are no outstanding Commercial Paper Notes. 11. That attached hereto as Exhibit B is a true and correct summary of the Water and Sewer service rates now in effect in the City of Fort Worth, which rates have been established by ordinances duly passed by the City Council of the City. 12. That attached hereto as Exhibit C is a condensed statement of income of the City's Water and Sewer System available for debt service. Matters Relating to the Execution of the Bonds 13. That in connection with the execution of the Bonds: (a) The Mayor, the City Secretary and the City Attorney of the City have officially executed and signed the Bonds initially delivered to the Purchaser by affixing thereto their manual or facsimile signatures; and by executing this Certificate the Mayor, the City Secretary and the City Attorney hereby adopt said facsimile signatures as their own, respectively, and declare that said facsimile signatures constitute their signatures the same as if they had manually signed each of the Bonds; (b) The Bonds are substantially in the form, and have been duly executed and signed in the manner, prescribed in the Sixteenth Supplement; (c) At the time the Bonds were executed and signed, the Mayor, the City Secretary and the City Attorney were, and at the time of executing this certificate are, the duly chosen, qualified and acting officers indicated therein, and authorized to execute the same; (d) The official seal of the City has been impressed, or printed, or lithographed on each of the Bonds; and said seal has been duly adopted as, and is hereby declared to be, the official seal of the City. -3- 14. That the true and correct signatures of the Mayor, the City Secretary and the City Attorney are set forth in Exhibit D attached hereto. Matters Relating~~to the Purchase Agreement 15. That: (a) the representations and warranties of the City in the Purchase Agreement, or in any certificate or document delivered by the City pursuant to the provisions of the Purchase Agreement, are true and correct on and as of the date hereof as though such representations and warranties were made on and as of the date hereof; (b) all agreements or conditions to be performed or complied with by the City under the Purchase Agreement on or prior to the date hereof have been performed or complied with in all material respects; (c) no litigation is pending or, to our knowledge, threatened in any court to restrain or enjoin the issuance or delivery of the Bonds, or the collection of the Pledged Revenues to pay the debt service on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity of the Bonds, the Ordinance or the Purchase Agreement, or contesting the powers of the City to issue the Bonds, or contesting the authorization of the Bonds, the Purchase Agreement or the Ordinance; and (d) there has not been any material and adverse change in the affairs or financial condition of the City or the System since the latest date as of which audited information is available. [Execution Page Follows] -4- SIGNED AND SEALED this n~ City Manager. City of Fort Worth, Texas :~ Assistant City Manager/Chief Fin cial Offic r, City of Fort Worth, Texas (SEAL) -s- EXI-~BIT D OFFICIAL TITLE Mayor, City of Fort Worth, Texas City Secretary, City of Fort Worth, Texas City Attorney, City of Fort Worth, Texas ~~ Before me, on this day personally appeared the foregoing individuals, known to me to be the persons whose names are subscribed to the foregoing instrument in my presence. Given under my hand and seal of office this P~-~~. ~ ~~~ ~~_. __ J ~1~ PY° ~. SYLVIA D. GLOVER ~ v~r= ~ ~ - '~~ I ~~2--J :~ ~: _*; :*= MY COMMISSION pcPIRES Nota ~ Public ~.~~, September 19,2009 ,;;€... ~4;~~~~ May 13, 2008 Honorable Mayor and City Council City of Fort Worth 1000 Throckmorton Fort Worth, Texas 76102 Re: $44,085,000 City of Fort Worth, Texas, Water and Sewer System Revenue Refunding Bonds, Series 2008, dated May 1, 2008 Ladies and Gentlemen: JPMorgan Chase Bank, National Association, Fort Worth, Texas and its successors or assigns (collectively, the "Purchaser") hereby offers to purchase from the City of Fort Worth, Texas (the "City") the captioned Bonds (the "Bonds"), and, upon acceptance of this offer by the City, such offer will become a binding agreement between the Purchaser and the City. This offer must be accepted by 10:00 p.m., Fort Worth time, May 13, 2008, and if not so accepted will be subject to Capitalized terms not otherwise defined herein shall have the meanings a ~, ~-,~.r-, , 1. Purchase Price: The purchase price for the Bonds will be at par. 2. Terms of Bonds: The Bonds shall consist of one term bond in the principal amount of '44,085,000 maturing on February 15, 2024, bearing interest from the date of delivery at an interest rate of 3.88% per annum with interest being payable on August 15, 2008, and semiannually on each February 15 and August 15 thereafter, and with mandatory sinking fund redemption payments as set forth on Schedule I hereto. The Bonds are also subject to optional redemption, in whole or in part upon thirty (30) days notice, on February 15, 2018, or on any date thereafter at a redemption price of par plus accrued interest to the date of redemption. The Bonds shall have such other teams and conditions as are set forth in the Master Ordinance Establishing the City of Fort Worth, Texas Water and Sewer System Revenue Financing Program adopted by the City on December 10, 1991 (the "Master Ordinance") and the Sixteenth Supplemental Ordinance Authorizing the Issuance of the Bonds adopted by the City on May 13, 2008 (the "Sixteenth Supplement" and, together with the Master Ordinance, the "Ordinance"). The Purchaser acknowledges receipt prior to the date hereof of an executed copy of the Master Ordinance and an unsigned copy. of the Sixteenth Supplement. Pursuant to and as more fully described m the Ordinance, the Bonds shall be secured by a first priority lien on and pledge of the Pledged Revenues of the City's Water and Sewer System (the "System) on a parity with the Parity Obligations.heretofore or hereafter issued in accordance with the provisions of the Master Ordinance; provided, however, that pursuant to the Sixteenth Supplement, and as authorized by the Master Ordinance, the Bonds shall not be secured by or payable from any funds on deposit in the Reserve Fund described in and established pursuant to Section 7 of the Master Ordinance. Closing: At the Closing (defined below) the City shall deliver and the Purchaser shall purchase the Bonds. Upon payment of the purchase price therefor, the City shall deliver the Bonds to the Purchaser. Payment of the purchase price and delivery of the Bonds shall occur at 10:00 a.m. Fort Worth time, on June 11, 2008, or at such other time as shall be mutually agreed upon (hereinafter referred to as the "Closing"). The Closing shall take place at the offices of Kelly Hart & withdrawal. signed such 935667_2 • Hallman LLP, Fort Worth, Texas, or such other location as may be mutually agreed upon. 4. Conditions to Closing: The Purchaser shall not have any obligation to consummate the purchase of the Bonds unless the following requirements have been satisfied prior to Closing: (a) The City shall have adopted the Ordinance authorizing the issuance of the Bonds. (b) The Purchaser shall have received a certified copy of the Ordinance. (c) McCall, Parkhurst & Horton L.L.P. and Kelly Hart & Hallman LLP, Co- .Bond Counsel, shall have issued their approving legal opinion as to the due authorization, issuance and delivery of the Bonds and as to the exemption of the interest thereon from federal income taxation. (d) The Bonds shall have been approved by the Attorney General of the State of Texas and shall have been registered by the Comptroller of Public Accounts of the State of Texas. (e) Nothing shall have occurred prior to the Closing which in the reasonable opuuon o t e urc aser as a or cou reasona y e expecte to ave a materially adverse effect on the City's business, property or financial condition. 5. Nature of Purchase: The Purchaser acknowledges that no official statement or other disclosure or offering document has been prepared in connection with the issuance and sale of the Bonds. The Purchaser is a financial institution or other accredited investor as defined in the Securities .Act of 1933, Regulation D, 17 C.F.R. §230.501(a), accustomed to purchasing tax-exempt obligations such as the Bonds. McCall, Parkhurst & Horton L.L.P. and Kelly Hart & Hallman LLP, Co- Bond Counsel, have not undertaken steps to ascertain the accuracy or completeness of information furnished to the Purchaser with respect to the City or the Bonds, and the Purchaser has not looked to either firm for, nor has either firm made, any representations to the Purchaser with respect to that information. The Purchaser has satisfied itself that it may lawfully purchase the Bonds. The Bonds (i) are not being registered under the Securities Act of 1933 and are not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state; (ii) will not be listed on any stock or other securities exchange; and (iii) will not carry any rating from any rating service. The Purchaser is familiar with the financial condition and affairs of the City, particularly with respect to its ability to pay revenue supported obligations such as the Bonds. The Purchaser has had the opportunity to obtain information from the City regarding the financial condition of the City and its water and sewer system (the "System") and has received from the City all information that it has requested in order for it to assess and evaluate the security and source of payment for the Bonds. The Purchaser is purchasing the Bonds for its own account or for that of an affiliate as evidence of a loan to the City, and has no intention to make a public distribution or sale of the Bonds. Except for a transfer to JPMorgan Chase & Co, in no event will the Purchaser (or JPMorgan Chase & Co.) sell the Bonds, other than through loan participations to a purchaser which is a Qualified Institutional Buyer (as defined in Rule 144A under the Securities Act of 1933, as amended. 6. Financial Statements: In consideration of the purchase of the Bonds by the Purchaser, the City agrees to provide the Purchaser with audited annual financial statements upon their approval by the City and with any other financial information regarding the System that the Purchaser may reasonably request from time to time. 7. No Oral Agreements: To the extent allowed by law, the parties hereto agree to be bound by the terms of the following notice: THIS PURCHASE AGREEMENT, THE ORDINANCE OF THE CITY AUTHORIZING THE BONDS, THE ATTORNEY GENERAL OPINION, THE OPINION OF CO-BOND COUNSEL AND TIC BONDS TOGETHER REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THIS TRANSACTION AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF 'TI-IE PARTIES. THERE AR.E NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THIS TRANSACTION. [Signatures begin on next page] If this purchase agreement meets with the City's approval, please execute it in the place provided below. CHASE BANK, NATIONAL ASSOC~ATI By: ~`~ Ul. Name: J. Mi hae Wilson Title: Senior Vic President ACCEPTED BY THE CITY OF FORT W~ TH, TEXAS ,~ _._,~--, -~ ATTEST: :1~~ 4 B y City Secretary AS TO FORM: City Attorney (CITY SEAL) SCHEDULE I Mandatory Sinking Fund Redemptions The Bonds are subject to mandatory sinking fund redemption in part by lot pursuant to the terms of the Sixteenth Supplement, on February 15 in each of the years 2009 through 2023, inclusive, with respect to Bonds maturing February 15, 2024, in the following years and in the following amounts, at a price equal to the principal amount thereof and accrued and unpaid interest to the date of redemption, without premium: Year Principal Amount ($) 2009 2,025,000 2010 2,105,000 2011 2,190.000 2012 2,275,000 2013 2,370,000 2015 2,560,000 2016 2,660,000 2017 2,765,000 2018 2,875,000 2019 2,990,000 2020 3,105,000 2021 3,230,000 2022 3,355,000 2023 3,490,000 2024* 3,630,000 * Final Maturity To the extent that Bonds subject to sinking fund redemption have been previously purchased or called purchased or called for redemption in part and otherwise than from a sinking fund redemption payment, each annual sinking fund payment for such Bond shall be reduced by the amount obtained by multiplying the principal amount of Bonds so purchased or redeemed by the ratio which each remaining annual sinking fund redemption payment for such Bonds bears to the total remaining sinking fund payments, and by rounding each such payment to the nearest $5,000 integral; pf•ovided, that during any period in which ownership of the Bonds is determined only by a book entry at a securities depository for the Bonds, the particular Bonds to be called for mandatory redemption shall be selected in accordance with the arrangements between the Issuer and the securities depository. Form ~®30-ra 9nformation Return for Tax-Exempt Governmental Obligations - Under Internal Revenue Code section 149(e) OMB No. 1545-0720 (Rev. November 2000) ~ See separate Instructions. Depanment of the Treasury Caution: If the issue price is under $100,000, use Form 8038-GC. Internal Revenue Service Rnnnrtinn Dirrhnrity If Amended Return. check here ~ I I 1 Issuer's name 2 Issuer's employer identification number FORT WORTH, TEXAS (CITY OF) 75 6000528 3 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 4 Report number 1000 THROCKMORTON STREET 3 01 5 City, town, or post office, state, and ZIP code 6 Date of issue FORT WORTH, TEXAS 76102 06!11!2008 7 Name of issue 8 CUSIP number WATER AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 2008 9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative KAREN MONTGOMERY, ASST CITY MANAGER /CHIEF FINANCIAL OFFICER ( 817 ) 392-66222 ° . Tyge of Issue (check applicable box(es) and enter the issue price) See instructions and attach schedule 11 ^ Education 12 ^ Health and hospital 13 ^ Transportation 14 ^ Public safety. 15 ^ Environment (including sewage bonds) . 16 ^ Housing 17 ©Utilities 18 ^ Other. Describe ~ a e T s or RANs check box ®^ If obli ations are BANs check box ® ^ 20 if obli ations are in the form of a lease or installment sale, check box s rlncrrir~Yinn of rlhlinatinnc (~mm~lata fnr tha antis iccf is fnr inrhich this fnrfn is filer!- (a) Final maturity date (b) Issue price (c) Stated redemption price at matunty (d) Weighted average maturity (e) Yield 21 02/15/2024 $ 44,085,000 ~ 44,085,000 8.998 ears 3.8805 ° • Uses of Proceeds of Bond Issue includin underwriters' discount Proceeds used for accrued interest 22 22 -0- column (b)) rice of entire issue (enter amount from line 21 23 Issue 23 44,085,000 , . p 24 Proceeds used for bond issuance costs (including underwriters' discount) 24 135,000 25 Proceeds used for credit enhancement 25 -0- . 26 Proceeds allocated to reasonably required reserve or replacement fund 26 -0- refund prior issues 27 Proceeds used to currentl 27 -0- y 28 Proceeds used to advance refund prior issues 28 -0' 29 Total (add lines 24 through 28) 29 135,OD0 . 30 Nonrefundinq proceeds of the issue (subtract line 29 from line 23 and enter amount here) , 30 43,950,000 ° • Description of Refunded Bonds (Complete this part only for refunding bonds.) 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . - 9.127 years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . ~ NIA years 33 Enter the last date on which the refunded bonds will be called . . d 06/1212008 34 Enter the date(s) the refunded bonds were issued 1- 02/03/2004 neous __ _ 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) 35 -0_ 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) 36a ___. -_.__ -0_ b Enter the final maturity date of the guaranteed investment contract 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a -0- b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ® ^ and enter the name of the issuer ® and the date of the issue ® N/A 38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box ® ^ 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box ~ ^ . . . . . . . . . . . . . . . . . . . . . . . 40 If the issuer has identified a hed e, check box ® ^ Under penalties or perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. Sign KAREN MONTGOMERY, ASSISTANT CITY Here MANAGER /CHIEF FINANCIAL OFFICER ignature of issuer s authorized repr a tatlve Date Type or print name and title For Paperwork Reduction Act Notice, see page 2 of the structions. Cat. No. 63773S Form 8038-G (Rev. 11-2000) Form ~®~$°G Information Return for Tax-Exempt Governmental Obligations - Under Internal Revenue Code sectioh 149(e) OMB No. 1545-0720 (Rev. November 2000) ®See separate Instructions. Department of the Treasury Caution: !f the issue price is under 5700,000, use Form 8038-GC. Internal Revenue Service -_ Dnnnrtinn flr rthnrity if Amended Return, check here - 1 Issuer's name 2 Issuer's employer identiFcation number FORT WORTH, TEXAS (CITY OF) 75 ; 6000528 3 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 4 Report number 1000 THROCKMORTON STREET 3 01 5 City, town, or post office, state, and ZIP code 6 Date of issue FORT WORTH, TEXAS 76102 06/11/2008 7 Name of issue 8 CUSIP number WATER AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 2008 9 Name and title of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative KAREN MONTGOMERY, ASST CITY MANAGER /CHIEF FINANCIAL OFFICER ( 817 ) 392-66222 Tvoe of Issue (check applicable box(es) and enter the issue price) see instructions and attacn scneoule 11 ^ Education 12 ^ Health and hospital 13 ^ Transportation 14 ^ Public safety. 15 ^ Environment (including sewage bonds) . 16 ^ Housing 17 ©Utilities 18 ^ Other. Describe - 19 If obligations are TANs or RANs, check box - ^ If obligations are BANS, check box - ~ 20 If obis atlons are In a orm o a ease or Ins a men sa e, c ec' x ~- Description of Obligations. Complete for the entire issue for which this form is b 21 22 23 24 25 26 27 28 29 30 31 32 33 34 a) Final maturi[ date (b) Issue rice (c) Stated redemption (d) Weighted ( Y P price at maturity average maturity 02/15/2024 $ 44,085,000 $ 44,085,000 8.998 ear Uses of Proceeds of Bond Issue includin underwriters' discount Proceeds used for accrued interest . Issue price of entire issue (enter amount from line 21, column (b)) . Proceeds used for bond issuance costs (including underwriters' discount) 24 135,000 Proceeds used for credit enhancement . 25 _ _.._ -..-- "0" Proceeds allocated to reasonably required reserve or replacement fund 26 "0- Proceeds used to currently refund prior issues 27 -0_ Proceeds used to advance refund prior issues 28 "0" Total (add lines 24 through 28) . Nonrefundin roceeds of the issue (subtract line 29 from line 23 and enter amount here) . . Description of Refunded Bonds (Complete this part only for refunding bonds. Enter the remaining weighted average maturity of the bonds to be currently refunded . - Enter the remaining weighted average maturity of the bonds to be advance refunded Enter the last date on which the refunded bonds will be called , . -~ Enter the date(s) the refunded bonds were issued - (e) Yield -0- 135,000 9.127 years N/A years 06/12/2008 Miscellaneous 35, Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) 35 "0- 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (see instructions) 36a -0- b Enter the final maturity date of the guaranteed investment contract - 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a -0- b If this issue is a loan made from the proceeds of another tax-exempt issue, check box - ^ and enter the name of the issuer - and the date of the issue - N/A 38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box P ^ 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box - ^ . . . . . . . . . . . . . . . . . . . . . . . 40 If the issuer has identified a hed e, check box ®' ^ Under penalties of perJury, I declare that 1 have examined this return and accompanying schedules and statements, and to the best or my knowledge and belief, they are true, correct, and complete. Sign KAREN MONTGOMERY, ASSISTANT CITY Here ~~ MANAGER /CHIEF FINANCIAL OFFICER Signature or Issuer's authorized represen ti Date Type or print name and title For Paperwork Reduction Act Notice, see page 2 of the Inst CtioriS. Cat. No. 637735 Form 8038-G (Rev. 11-2000) Form ~®~~®47 (Rev. November 20D0) Department of the Treasury Internal Revenue Service Information Return for Tax-Exempt Governmental Obligations - Under Internal Revenue Code section 149(e) OMB No. 1545-0720 -~ See separate Instructions. Caution: if the issue price is under $700,000, use Form 8038-GC. Dnru~rtGr~n Arrthnrity If Amended Return, chec ere 1 Issuer's name 2 Issuer's employer identification number FORT WORTH, TEXAS (CITY OF) 75 ; 6000528 3 Number and street (or P.O. box if mail is not delivered to street address) Roomisuite 4 Report number 1000 THROCKMORTON STREET 3 01 5 City, town, or post office, state, and ZIP code 6 Date of issue FORT WORTH, TEXAS 76102 06/11/2008 7 Name of issue 8 CUSIP number WATER AND SEWER SYSTEM REVENUE REFUNDING BONDS, SERIES 2008 9 Name and tt)e of officer or legal representative whom the IRS may call for more information 10 Telephone number of officer or legal representative KAREN MONTGOMERY, ASST CITY MANAGER /CHIEF FINANCIAL OFFICER ( 817 ) 392-66222 of Issue e box(es) and enter the issue price) See instructions and attach schedule 11 ^ Education 12 ^ Health and hospital 13 ^ Transportation 14 ^ Public safety. 15 ^ Environment (including sewage bonds) . 16 ^ Housing 17 ©Utilities 18 ^ Other. Describe ~ 19 If obli ations are TANS or RANs, check box ~ ^ If obligations are BANS, check box ® ^ 20 If obli ations are in the form of a lease or costa ment sa e, c ec ox • Descri tion of Obli ations. Coco lete for the entire issue for which this form is bein filed. (a) Final maturity date (b) Issue price (c) Stated redemption price at maturity (d) Weighted average maturity (e) Yield 21 02/15/2024 $ 44,085,000 $ 44,085,000 8.998 ears 3.8805 • . Uses of Proceeds of Band Issue includin underwriters' discount ued interest d f d P 22 -0- 22 or accr s use rocee column (b)) amount from line 21 ( t i i f i 23 44,085,000 23 , . ssue en er re ce o ent Issue pr underwriters' discount) d for bond issuance costs (includin d P 24 935,000 24 g s use rocee d for credit enhancement d P 25 -0- 25 6 . s use rocee uired reserve or replacement fund re ated to reasonabl ll d P 26 -0- 2 y q s a oc rocee rior issues refund d to currentl d P 27 -0- 27 28 p y s use rocee rior issues ed to advance refund d P 28 -0- 29 p s us rocee h 28) tal (add lines 24 throu T 29 135,000 30 g . o Nonrefundin roceeds of the issue (subtract line 29 from line 23 and enter amount here) . 30 43,950,000 • , Descri tion of Refunded Bonds (Coco lete this art onl for refundin bonds.) 31 32 33 34 Enter the remaining weighted average maturity of the bonds to be currently refunded . ® Enter the remaining weighted average maturity of the bonds to be advance refunded ~ Enter the last date on which the refunded bonds will be called , d Enter the date(s) the refunded bonds were issued ® 9.127 years N/A years 06/12/2008 02/03/2004 ° Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) 35 -0- 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment convact (see instructions) 36a __ ___.__.___. -0- b Enter the final maturity date of the guaranteed investment contract ~ 37 Pooled financings: a Proceeds of this issue that are to be used to make loans to other governmental units 37a -0- b If this issue is a loan made from the proceeds of another tax-exempt issue, check box ~ ^ and enter the name of the issuer ~ and the date of the issue ® NIA 38 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box ~ ^ 39 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box ~ ^ . . . . . . . . . . . . . . . . . . . . . . . 40 If the issuer has identified a hed e, check box ®" ^ Under penalties or perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct and complete. Sign KAREN MONTGOMERY, ASSISTANT CITY Here MANAGER !CHIEF FINANCIAL OFFICER Signature of issuer's authorized repres rive Date Type or print name and title For Paperwork Reduction Act Notice, see page 2 of the Instructions. cat. No, ss77ss Form 8038-G (Rev. ii-2000) FEDERAL TAX CERTIFICATE 1. In General. 1. l . The undersigned is an Assistant City Manager and the Chief Financial Officer of the City of Fort Worth, Texas (the "Issuer"). l .2. This Certificate is executed for the purpose of establishing the reasonable expectations of the Issuer as to future events regarding the Issuer's Water and Sewer System Revenue Bonds, Series 2008 (the "Bonds"). The Bonds are being issued pursuant to an ordinance of the Issuer (the "Ordinance") adopted on the date of sale of the Bonds. The Ordinance is incorporated herein by reference. 1.3 . To the best ofthe undersigned's knowledge, information and belief, the expectations contained in this Certificate are reasonable. 1.4. The undersigned is an officer of the Issuer delegated with the responsibility, among others, of issuing and delivering the Bonds. 1.5. The undersigned is not aware of any facts or circumstances that would cause him to question the accuracy of the representations made by TPMorgan Chase Bank, National Association, Fort Worth, Texas (the "Purchaser") in Section 3 of this Certificate. 2. The Purpose of the Bonds and Useful Lives of Projects. 2. I . The purpose for the issuance of the Bonds, as more fully described in the Ordinance, is to currently refund the Issuer's Water and Sewer System Auction Rate Revenue Bonds, Series 2004 (the "Outstanding Bonds") and to pay the related expenses of issuing the Bonds. The proceeds of the Bonds will be expended for such purpose within 90 days of the date hereof. 2.2. The proceeds of the Outstanding Bonds were used to finance improvements to the System (the "Outstanding Projects"). The Outstanding Projects remain in service and have not been sold or otherwise disposed of by the Issuer. 2.3. The Issuer expects that 120 percent of the aggregate useful lives of the Outstanding Projects, on the later of the date that such Outstanding Projects were placed in service or the date of issuance of the Outstanding Bonds, will exceed 29 years. 2.4. Other than members of the general public, the Issuer expects that throughout the lesser of the term of the Bonds, or the useful lives of the Outstanding Projects, the only user of the Outstanding Projects will be the Issuer or the Issuer's employees and agents (other than a manager or lessee). The Issuer will be the manager of the Outstanding Projects. In no event have the proceeds of the Outstanding Bonds or facilities financed therewith be used for private business use in an amount greater than $15 million. The Issuer does not expect to enter into long-term sales of output from the Outstanding Projects, except on the basis of generally- applicableand uniformly applied rates. The Issuer may apply different rates for different classes of customers, including volume purchasers, which are reasonable and customary. 2.5. Except as stated below, the Issuer expects not to sell or otherwise dispose of property constituting the Outstanding Projects prior to the earlier of the end of such property's useful life or the final maturity of the Bonds. The Ordinance provides that the Issuer will not sell or otherwise dispose of the Outstanding Projects unless the Issuer receives anopinion ofnationally-recognized bond counsel that such sale or other disposition will not adversely affect the tax-exempt status of the Bonds. 2.6. For purposes of Section 2.5 hereof, the Issuer has not included the portion of the Outstanding Projects comprised of personal property that is disposed in the ordinary course at a price that is expected to be less than 25 percent of the original purchase price. The Issuer, upon any disposition of such property, will transfer the receipts from the disposition of such property to the general operating fund and expend such receipts within six months for other governmental programs. Yield. All of the Bonds have been the subject of a bona fide initial offering to the Purchaser who is acquiring as a member of the public and not for purposes of resale at a purchase price of 100 percent of the stated principal amount thereof. 4. Transferred Proceeds and..Disposition Proceeds. As of the date of this Certificate, all of the amounts received from the sale of the Outstanding Bonds and the investment earnings thereon have been expended. 5. Debt Service Fund. 5.1. A separate and special Debt Service Fund has been created and established solely to pay the principal of and interest on the Bonds, with a portion of the Interest and Sinking Fund constituting a bona fide debt service fund for the Bonds, and money deposited into the Debt Service Fund for the Bonds will not be invested at a yield higher than the yield on the Bonds, except during the thirteen month period beginning on the date of each such deposit of money, and the amounts received from the investment of money in the Debt Service Fund will not be invested at a yield higher than the yield on the Bonds, except during the one year period beginning on the date of receipt of such amounts; provided, however, and except that, if any money so deposited, and any amounts received from the investment thereof, are accumulated in the Debt Service Fund and remain on hand in the Debt Service Fund after thirteen months from the date of deposit of any such money or one year after the receipt of any such amounts from the investment thereof, such money and amounts, to the extent of an aggregate not exceeding the lesser of five percent of the proceeds of the Bonds or $100,000 will not be subject to investment yield restrictions, and shall constitute a separate portion of the Interest and Sinking Fund. 5.2. It is expected that a portion of the Debt Service Fund will be used primarily to achieve a proper matching of revenues collected for the Bonds and debt service on the Bonds within each bond year, and it is expected that such portion of the Debt Service Fund will be depleted once a year on a first-in -first-out basis, except for a possible carryover amount which will not exceed the greater of one year's earnings on such fund or 1/12 of annual debt service payable from such fund, but any money and amounts which may be accumulated in the Interest and Sinking Fund, to constitute a debt service reserve fund for the Bonds as described in Section 5.1, above, shall constitute a separate portion of the Debt Service Fund, and will not be depleted annually, and will not be subj ect to yield restrictions; provided that in no event will such debt service reserve fund portion of the Debt Service Fund ever exceed the lesser of five percent of the proceeds of the Bonds or $100,000. 2 6. Invested Sinking Fund Proceeds, Replacement Proceeds. 6.1. The Issuer has, in addition to the moneys received from the sale of the Bonds, certain other moneys that are invested in various funds which are pledged for various purposes. These other funds are not available to accomplish the purposes described in Section 2 of this Certificate. 6.2. Other than the Interest and Sinking Fund, there are, and will be, no other funds or accounts established, or to be established, by or on behalf of the Issuer (a) which are reasonably expected to be used, or to generate earnings to be used, to pay debt service on the Bonds, or (b) which are reserved or pledged as collateral for payment of debt service on the Bonds and for which there is reasonable assurance that amounts therein will be available to pay such debt service if the Issuer encounters financial difficulties. Accordingly, there are no other amounts constituting "gross proceeds" of the Bonds, within the meaning of section 148 of the Internal Revenue Code of 1986 (the "Code"). 7. Other Obli atg ions. There are no other obligations of the Issuer which (a) are sold at substantially the same time as the Bonds, i. e., within 15 days of the date of sale of the Bonds, (b)are sold pursuant to a common plan of financing with the Bonds, and (c) will be payable from the same source of funds as the Bonds. ~Fe~eral-Tax Au~hc ~Responsibilifies. The Issuer acknowledges that in the event of an examination by the Internal Revenue Service (the "Service") to deternune compliance of the Bonds with the provisions of the Code as they relate to tax-exempt obligations, the Issuer will respond, and will direct its agents and assigns to respond, in a commercially reasonable manner to any inquiries from the Service in connection with such an examination. The Issuer understands and agrees that the examination may be subject to public disclosure under applicable Texas law. Record Retention. The Issuer has covenanted in the Ordinance that it will comply with the requirements of the Code relating to the exclusion of the interest on the Bonds under section 103 of the Code. The Service has determined that certain materials, records and information should be retained by the issuers of tax-exempt obligations for the purpose of enabling the Service to confirm the exclusion of the interest on such obligations under section 103 of the Code. ACCORDINGLY, THE ISSUER SHALL TAKE STEPS TO ENSURE THAT ALL MATERIALS, RECORDS AND INFORMATION NECESSARY TO CONFIRM THE EXCLUSION OF THE INTEREST ON THE BONDS UP~TDER SECTION 103 OF THE CODE ARE RETAINED FOR THE PERIOD BEGINNING ON THE ISSUE DATE OF THE OUTSTANDING BONDS OR, IN THE CASE OF A SEQUENCE OF REFUNDINGS, THE ISSUE DATE OF THE OBLIGATIONS ORIGINALLY FINANCING THE OUTSTANDING PROJECT AND ENDING THREE YEARS AFTER THE DATE THE BONDS ARE RETIRED. The Issuer acknowledges receipt of the letter attached hereto as Exhibit "B" which, in part, discusses specific guidance by the Service with respect to the retention of records relating totax-exempt bond transactions. The Issuer also acknowledges that letter does not constitute an opinion of Bond Counsel as to the proper record retention policy applicable to any specific transaction. 10. Rebate to United States. The Issuer has covenanted in the Ordinance that it will comply with the requirements of the Code, including section 148 (f) of the Code, relating to the required rebate to the United States. Specifically, the Issuer will take steps to ensure that all earnings on gross proceeds of the Bonds in excess of the yield on the Bonds required to be rebated to the United States will be timely paid to the United States. The Issuer acknowledges receipt of the memorandum attached hereto as Exhibit "A" which discusses regulations promulgated pursuant to section 148(f) of the Code. This memorandum does not constitute an opinion of Bond Counsel as to the proper federal tax or accounting treatment of any specific transaction. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.] 4 DATED: CITY OF FORT WORTH, TEXAS By: Gt.('.~.vl Assistant City Manager/Chief ancial O cer The undersigned represents that, to the best of the undersigned's lrnowledge, information and belief, the representations contained in Section 3 of this Federal Tax Certificate are accurate. JPMORGAN CHASE BANK, NATIONAL ASSOCIATION By: Exhibit "B" LAW OFFICES M~CALL, PARKHURST & HORTOfV L.L.P. 600 CONGRESS AVENUE 717 NORTH HARWOOD 180D ONE AMERICAN CENTER (JINTH FLOOR AUSTIN, TEXAS 787013248 DALLAS, TEXAS 75201-6587 TELEPHONE: (512) 47838D5 TELEPHONE: (214) 754-920D FACSIMILE: (512)472-0871 FACSIMILE: (214)754-925D May 13, 2008 Ms. Karen Montgomery Assistant City Manager/Chief Financial Officer City of Fort Worth, Texas 1000 Throckmorton Fort Worth, Texas 76102 70D N. ST. MARY'S STREET' 1525 ONE RIVERWALK PLACE SAN ANTONIO, TEXAS 762053503 TELEPHONE: (21D) 225-2800 FACSIMILE: (210)225-2984 Re: City of Fort Worth, Texas Water and Sewer System Revenue Bonds, Series 2008 Dear Ms. Montgomery: As you know, the City of Fort Worth, Texas (the "Issuer") will issue the captioned bonds in order to provide for the refunding of bonds previously issued by the Issuer. As a result of that issuance, the federal income tax laws impose certain restrictions on the investment and expenditure of unexpended proceeds of the outstanding bonds deposited to the construction fund and amounts to be deposited to the debt service fund for the captioned bonds. The purpose of this letter is to set forth, in somewhat less technical language, those provisions of the tax law which require the timely use of bond proceeds and that investment of these amounts be at a yield which is not higher than the yield on the captioned bonds. For this purpose, please refer to line 20(f) of the Form 8038-G included in the transcript of proceedings for the yield on the captioned bonds. Generally, the federal tax laws provide that, unless excepted, amounts to be deposited to the debt service fund must be invested in obligations the combined yield on which does not exceed the yield on the bonds. Importantly, for purposes of administrative convenience, the bonds, however, have been structured in such a way as to avoid, for the most part, this restriction on investment yield. They also contain certain covenants relating to expenditures of proceeds designed to alert you to unintentional failures to comply with the laws affecting expenditures of proceeds and dispositions of property. First, the debt service fund is made up of amounts which are received annually for the payment of current debt service on all the Issuer's outstanding bonds. Any taxes or revenues deposited to the interest and sinking fund which are to be used for the payment of current debt service on the captioned bonds, or any other outstanding bonds, are not subject to yield restriction. By definition, current debt service refers only to debt service to be paid within one year of the date of receipt ofthese amounts. For the most part, this would be debt service in the current fiscal year. These amounts deposited to the account for current debt service may be invested without regard to any constraint imposed by the federal income tax laws. Second, a portion of the debt service fund is permitted to be invested without regard to yield restriction as a "minor portion." The "minor portion" exception is available for de minimis amounts of taxes or revenues deposited to the debt service fiznd. The maximum amount that may be invested as part of this account may not exceed the lesser of five percent of the principal amount of the bonds or $100,000. Accordingly, you should review the current balance in the debt service fund in order to determine if such balance exceeds the aggregate amounts discussed above. Additionally, in the future it is important that you be aware of these restrictions as additional amounts are deposited to the fund. The amounts in the fund which are subject to yield restriction would only be the amounts which are in excess of, in the case of the interest and sinking fund, the sum of (1) the current debt service account and (2) the "minor portion" account. Moreover, to the extent that additional bonds are issued by the Issuer, whether for new money projects or far refunding, these amounts will change in their proportion. . The Ordinance contains covenants that require the Issuer to comply with the requirements ofthe federal tax laws relating to the tax-exempt obligations. The Internal Revenue Service (the "Service") has determined that certain materials, records and information should be retained by the issuers oftax-exempt obligations for the purpose of enabling the Service to confirm the exclusion of the interest on such obligations under the Internal Revenue Code. Accordingly, the Issuer should retain such materials, records and information for the period beginning on the issue date of the outstanding bonds, or, in the case of a sequence of refundings, the issue date of the obligations originally fmancing the refinanced project and ending three years after the date the captioned bonds are retired. Please note this federal tax law standard may vary from state law standards. The material, records and information required to be retained will generally be contame m e transcnp o procee gs or e cap lone on s, owever, e suer s ou co ec an re in additional materials, records and information to ensure the continued compliance with federal tax law requirements. For example, beyond the transcript of proceedings for the bonds, the Issuer should keep schedules evidencingthe expenditure ofbondproceeds, documents relatingtotheuse ofbond-financedproperty by governmental and any private parties (e.g., leases and management contracts, if any) and schedules pertaining to the investment of bond proceeds. In the event that you have questions relating to record retention, please contact us. Finally, you should notice that the Ordinance contains a covenant that limits the ability of the Issuer to sell orotherwisedispose ofbond-financed property for compensation. Beginning for obligations issued after May 15, 1997 (including certain refunding bonds), or in cases in which an issuer elects to apply new private activity bond regulations, such sale or disposition causes the creation of a class of proceeds refereed to as "disposition proceeds." Disposition proceeds, like sale proceeds and investment earnings, are tax-restricted funds. Failure to appropriately account, invest or expend such disposition proceeds would adversely affect the tax-exempt status of the bonds. In the event that you anticipate selling property, even in the ordinary course, please contact us. Obviously, this letter only presents a fundamental discussion of the yield restriction rules as applied to amounts deposited to the fund. Moreover, this letter does not address the rebate consequences with respect to the debt service fund. You should review the memorandum attached to the Federal Tax Certificate as Exhibit "A" for this purpose. If you have certain concerns with respect to the matters discussed in this letter or wish to ask additional questions with regards to certain limitations imposed, please feel free to contact our firm. Thank you for your consideration and we look forward to our continued relationship. Very truly yours, McCALL, PARKIIURST & NORTON L.L.P cc: Mr. Jeffrey A. Leuschel EXI-IIBIT D MANUAL S:LC'xNATURE f 1~~ ~~.; OFFICIAL TITLE Mayor, City of Fort Worth, Texas City Secretary, City of Fort Worth, Texas City Attorney, City of Fort Worth, Texas Section 29. USE OF PROCEEDS. That the proceeds from the sale of the Bonds shall be used in the manner described in the letter of instructions executed by the City, or on behalf of the City by its financial advisor. Section 30. PREAMBLE. That the preamble to this Sixteenth Supplement is hereby incorporated by reference, and is to be considered a part of the operative text of this Sixteenth Supplement. Section 31. RULES OF CONSTRUCTION. For all purposes of this Sixteenth Supplement, unless the context requires otherwise, all references to designated Sections and other subdivisions are to the Sections and other subdivisions of this Sixteenth Supplement. The words "herein", "hereof' and "hereunder" and other words of similar import refer to this Sixteenth Supplement as a whole and not to any particular Section or other subdivision. Except, where the context otherwise requires, terms defined in this Sixteenth Supplement to impart the singular number shall be considered to include the plural number and vice versa. References to any named person means that party and its successors and assigns. References to any constitutional, statutory or regulatory provision means such provision as it exists on the date this Sixteenth Supplement is adopted by the City and any future amendments thereto or successor provisions thereof. All ordinances and resolutions or parts thereof in conflict herewith are hereby repealed. Section 32. IlVIMEDIATE EFFECT. That this Sixteenth Supplement shall be effective immediately from and after its passage in accordance with the provisions of Section 1201.028, Texas Government Code, and it is accordingly so ordained. SIGNED AND SEALED THIS 13TH DAY OF MAY, 2008 Mayor, City of Fort Worth, City Secretary APP VED AS TO FORM AND LEGALITY: C~Ge~~, City Attorney (SEAL) -21- C®ty ®f ~®r~ W®rth, Texas Mayor and Council Communication COUNCIL ACTION: Approved on 5/13/2008 -Ordinance No. 18085-05-2008 DATE: Tuesday, May 13, 2008 LOG NAME: 13REVRFDGBNDW&S REFERENCE NO.: G-16138 SUBJECT: Adopt Appropriation Ordinance Authorizing the Issuance and Sale of City of Fort Worth, Texas, Water and Sewer System Revenue Refunding Bonds, Series 2008, in the Amount of $44,085,000 RECOMMENDATION: It is recommended that the City Council: 1. Adopt ordinance authorizing the issuance and sale of City of Fort Worth, Texas, Water and Sewer System Revenue Refunding Bonds, Series 2008, in an aggregate principle amount of $44,085,000; and 2. Approve the execution of a bond purchase contract and other instruments related to the issuance of the bonds. DISCUSSION: On December 16, 2003, Council authorized the issuance of $50,800,000 Water and Sewer System Auction Rate Revenue Bonds, Series 2004. There are currently $43,950,000 Series 2004 Bonds outstanding. The interest rate on the Series 2004 Bonds is variable and resets each 35 days through an auction process. Over the past few months, the auction rate bond market has experienced declining interest from investors causing interest rates to increase. Since the Series 2004 Bonds were issued, the average borrowing cost to the City has been approximately 3.2 percent. Due to the lack of demand for auction rate bonds, the most recent interest rate reset has resulted in a borrowing cost of approximately five percent to the City. Given the volatility in the auction rate market and the chance of higher rates in the future, the City's co- financial advisors, First Southwest Company and Estrada Hinojosa and Company, have recommended that the City refinance the Series 2004 Bonds with new bonds at a fixed rate. After negotiations with various banks, JPMorgan Chase Bank, National Association, has been selected as the purchaser. Final terms are not currently available as the interest rate on the Water and Sewer System Revenue Refunding Bands; Series 2008 will be set the day before the City Council's May 6th meeting and reported at the pre-council meeting. Proceeds from the Series 2008 Bonds will be used to pay off the outstanding Series 2004 Bonds on June 12, 2008, and to pay costs of issuance estimated at $135,000. The Series 2008 Bonds will amortize over the same term as the Series 2004 Bonds. This item was presented to the Audit and Finance Committee on April 22, 2008, and has been recommended to City Council for approval pending the determination of the final interest rate and principal amount on the Series 2008 Bonds. FISCAL INFORMATION/CERTIFICATION: The Finance Director certifies that funding for the annual debt service payments will be available from the current operating budget, as appropriated, of the Water and Sewer Fund. Logname: 13REVRFDGBNDWS Page 1 of 2 TO Fund/Account/Centers FROM Fund/Account/Centers Submitted for City Manager's Office b~ Originating Department Head: Additional Information Contact: Karen Montgomery (6222) Lena Ellis (8517) Mae Gray-Rossi (8325) Logname: 13REVRFDGBNDWS Page 2 of 2