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HomeMy WebLinkAboutContract 40905 (4)CITY SECRETARY CONTRACT No._�09 CY±S _ REVOLVING CREDIT AGREEMENT dated as of April 1, 2010 between CITY OF FORT WORTH, TEXAS and JPMORGAN CHASE BANK, N.A. relating to $150,000,000 CITY OF FORT WORTH, TEXAS WATER AND SEWER SYSTEM COMMERCIAL PAPER NOTES, SERIES A OFFICIAL RECORD CITY SECRETARY FT. WORTH, TX 1 1 0-06-1 0 PO4 : 4 0 IN HOU:3007099.4 ARTICLE I Section 1.01 Section 1.02 Section 1.03 Section 1.04 ARTICLE II Section 2.01 Section 2.02 Section 2.03 Section 2.04 Section 2.05 Section 2.06 Section 2.07 Section 2.08 Section 2.09 Section 2.10 Section 2.11 Section 2.12 Section 2.13 Section 2.14 ARTICLE III Section 3.01 Section 3.02 Section 3.03 ARTICLE IV Section 4.01 Section 4.02 Section 4.03 Section 4.04 Section 4.05 Section 4.06 Section 4.07 Section 4.08 Section 4.09 Section 4.10 Section 4.11 ARTICLE V Section 5.01 Section 5.02 Section 5.03 TABLE OF CONTENTS Page DEFINITIONS 1 Definitions 1 Incorporation of Certain Definitions by Reference 10 Accounting Terms 10 Interpretations 10 REVOLVING CREDIT; TERM LOANS 11 Commitment to Lend. 11 Method of Borrowing. 11 Bank Note. 12 Interest 12 Commitment Fees; Draw Fee 14 Termination or Reduction of Commitment 14 Prepayment of Loans. 15 General Provisions as to Payment 15 Security for Bank Note 16 Extension of Revolving Credit Period 17 Notice of Paying Agent 17 Failure of the Bank to Loan 17 Compliance with Law 17 No -Issuance Notice 18 CONDITIONS 19 Conditions to Closing and Commencement of Revolving Credit Period 19 Conditions to Loans During Revolving Credit Period 20 Conditions to Term Loan 21 REPRESENTATIONS AND WARRANTIES OF THE CITY 21 Organization and Powers 21 Authorization: Contravention 21 Governmental Consent or Approval 21 Binding Effect 21 Federal Reserve Regulations 21 Litigation 22 No Event of Default under the Ordinance 22 Financial Statements 22 Complete and Correct Information 22 Sale or Encumbrance of System 22 Incorporation by Reference 22 REPRESENTATIONS AND WARRANTIES OF THE BANK 23 Organization and Powers 23 Authorization; Contravention 23 Bank Obligations Valid 23 i HOU:3007099.4 ARTICLE VI Section 6 01 Section 6 02 Section 6.03 Section 6 04 Section 6 05 Section 6 06 Section 6 07 Section 6 08 Section 6 09 Section 6 10 Section 6.11 Section 6 12 Section 6.13 Section 6 14 Section 6 15 Section 6 16 Section 6.17 Section 6.18 ARTICLE VII Section 7.01 Section 7 02 Section 7 03 Section 7 04 ARTICLE VIII Section 8 01 Section 8 02 Section 8 03 Section 8 04 Section 8 05 Section 8 06 Section 8 07 Section 8 08 Section 8 09 Section 8.10 Section 8 11 Section 8.12 Section 8 13 Section 8 14 Section 8.15 Section 8.16 Section 8.17 TABLE OF CONTENTS Page COVENANTS OF THE CITY 23 Information 23 Access to Records 24 Limitation on Debt 24 Proceeds of Commercial Paper Notes 24 No Amendment of Certain Contracts or Ordinances 24 Rates, Sales of Obligations 25 Other Covenants 25 Taxes and Liabilities 25 Supplemental Ordinances and Further Assurances 25 Efforts to Pay 25 Restrictions on Use of Proceeds 26 Performance and Compliance with Other Covenants 26 Compliance with Rules and Regulations 26 Maintenance and Operation of the System 26 Insurance 26 Rates and Charges 26 Investments Generally 26 Pledge of Securities 27 DEFAULTS AND REMEDIES 29 Events of Default 29 Suits at Law or in Equity and Mandamus 32 Cross Defaults 32 Remedies Not Exclusive 32 MISCELLANEOUS 32 Additional Costs 32 Notices and Accounts 33 No Waivers 34 Expenses 34 Amendments or Modification 34 Severability 34 Headings 35 Counterparts 35 Payments in Dollars 35 GOVERNING LAWS 35 Successor and Assigns, Participation 35 LIABILITY OF THE BANK 36 INDEMNIFICATION 36 Telecopied Documents 37 Term of the Agreement 38 ENTIRE AGREEMENT 38 Arbitration Error! Bookmark not defined. ii HOU:3007099.4 Exhibit A Exhibit B Exhibit B-1 Exhibit C Exhibit D Exhibit E Exhibit F Exhibit G Exhibit H Exhibit I TABLE OF CONTENTS Form of Bank Note Form of Notice of Loan Request for Term Loan Form of No -Issuance Notice Form of Closing Certificate Form of Opinion of City Attorney Intentionally Omitted Form of Opinion of United States Counsel to the Bank Form of Final Date Extension Request List of Authorized Representatives Page HOU.3007099.4 iii REVOLVING CREDIT AGREEMENT This Revolving Credit Agreement (this "Agreement") is dated as of April 1, 2010, and is between the CITY OF FORT WORTH, TEXAS (the "City") and JPMORGAN CHASE BANK, N.A. (the "Bank"). RECITAL S• Pursuant to authority granted by the laws of the State of Texas, particularly the Act (as defined below) the City is empowered to issue obligations for the purpose of providing funds to pay project costs (as defined in the Act) of eligible projects (as defined in the Act); Pursuant to the Act and the Ordinance (as defined below) the City proposes to issue its commercial paper notes (the 'Commercial Paper Notes") in an amount not to exceed $150,000,000, the proceeds of which would be used to finance and refinance projects eligible under the Act to be financed. The City has requested the Bank to support the commercial paper program by making available a revolving line of credit initially aggregating $163,315,069 (an amount supporting the Commercial Paper Notes in a principal amount of $150,000,000 and interest thereon at an interest rate of 12% per annum for a period of 270 days) and the Bank is willing to make available a revolving line of credit subject to the terms and conditions of this Agreement. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. In addition to other terms defined herein, unless the context shall indicate a contrary meaning or intent, the terms below defined for all purposes of this Agreement or any agreement amendatory or supplemental hereto, shall be construed, are used and are intended to have the following meanings to -wit: "Act" shall mean Chapter 1371, Texas Government Code. "Additional Prior Lien Obligations" shall mean bonds, notes, warrants, certificates of obligations or other Debt which the City reserves the right to issue or enter into, as the case may be in the future under the terms and conditions provided in Section 8 of the Master Ordinance and which obligations are equally and ratably secured solely by a first lien on and pledge of the Pledged Revenues on a parity with the Prior Lien Bonds and the Swap Agreements. "Adjusted One Month LIBOR Rate ' shall mean, for any day, the sum of (i) 2.50% per annum plus (ii) the quotient of (a) the interest rate determined by the Bank by reference to Reuters Screen LIBOR01 to be the rate at approximately 11:00 a.m., London time, on such date or, if such date is not a Business Day, on the immediately preceding Business Day for dollar deposits with a maturity equal to one (1) month, divided by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to dollar deposits in the London interbank market with a maturity equal to one (1) month. HOU:3007099.4 "Agreement" shall mean this Revolving Credit Agreement, as from time to time amended or supplemented. "Applicable Law" shall mean all applicable provisions of all constitutions, statutes rules, regulations, ordinances and orders of all governmental and non -governmental bodies, including, without limitation the Act all governmental approvals and all orders, judgments and decrees of all courts and arbitrators of competent jurisdiction. Whenever the Applicable Law of a particular jurisdiction is referred to in this Agreement such reference shall be deemed to include the Applicable Law of all political subdivisions of such jurisdiction. "Annual Debt Service Requirements" shall mean, for any Fiscal Year, the principal of and interest on all Parity Obligations coming due at Maturity or Stated Maturity (or that could come due on demand of the owner thereof other than by acceleration or other demand conditioned upon default by the City on such Debt, or be payable in respect of any required purchase of such Debt by the City) in such Fiscal Year, and, for such purposes any one or more of the following rules shall apply at the election of the City: (1) Committed Take Out. If the City has entered into a Credit Agreement constituting a binding commitment within normal commercial practice, from any bank, savings and loan association, insurance company, or similar institution to discharge any of its Funded Debt at its Stated Maturity (or, if due on demand, at any date on which demand may be made) or to purchase any of its Funded Debt at any date on which such Debt is subject to required purchase, all under arrangements whereby the City's obligation to repay the amounts advanced for such discharge or purchase constitutes Funded Debt, then the portion of the Funded Debt committed to be discharged or purchased shall be excluded from such calculation and the principal of and interest on the Funded Debt incurred for such discharging or purchase that would be due in the Fiscal Year for which the calculation is being made, if incurred at the Stated Maturity or purchase date of the Funded Debt to be discharged or purchased shall be added* (2) Balloon Debt If the principal (including the accretion of interest resulting from original issue discount or compounding of interest) of any series or issue of Funded Debt due (or payable in respect of any required purchase of such Funded Debt by the City) in any Fiscal Year either is equal to at least 25% of the total principal (including the accretion of interest resulting from original issue discount or compounding of interest) of such Funded Debt or exceeds by more than 50% the greatest amount of principal of such series or issue of Funded Debt due in any preceding or succeeding Fiscal Year (such principal due in such Fiscal Year for such series or issue of Funded Debt being referred to herein and throughout this definition as `Balloon Debt"), the amount of principal of such Balloon Debt taken into account during any Fiscal Year shall be equal to the debt service calculated using the original principal amount of such Balloon Debt amortized over the Term of Issue on a level debt service basis at an assumed interest rate equal to the rate borne by such Balloon Debt on the date of calculation; (3) Consent Sinking Fund. In the case of Balloon Debt, if a Designated Financial Officer shall deliver to the City a certificate providing for the retirement of (and the instrument creating such Balloon Debt shall permit the retirement of), or for the accumulation of a sinking fund for (and the instrument creating such Balloon Debt shall 2 HOU:3007099.4 permit the accumulation of a sinking fund for), such Balloon Debt according to a fixed schedule stated in such certificate ending on or before the Fiscal Year in which such principal (and premium, if any) is due, then the principal of (and, in the case of retirement, or to the extent provided for by the sinking fund accumulation, the premium, if any, and interest and other debt service charges on) such Balloon Debt shall be computed as if the same were due in accordance with such schedule, provided that this clause (3) shall apply only to Balloon Debt for which the installments previously scheduled have been paid or deposited to the sinking fund established with respect to such Debt on or before the times required by such schedule; and provided further that this clause (3) shall not apply where the City has elected to apply the rule set forth in clause (2) above; (4) Prepaid Debt. Principal of and interest on Parity Obligations, or portions thereof, shall not be included in the computation of the Annual Debt Service Requirements for any Fiscal Year for which such principal or interest are payable from funds on deposit or set aside in trust for the payment thereof at the time of such calculations (including without limitation capitalized interest and accrued interest so deposited or set aside in trust) with a financial institution acting as fiduciary with respect to the payment of such Debt; (5) Variable Rate. As to any Parity Obligation that bears interest at a variable interest rate which cannot, be ascertained at the time of calculation of the Annual Debt Service Requirement then, at the option of the City either (1) an interest rate equal to the average rate borne by such Parity obligations (or by comparable debt in the event that such Parity Obligations has not been outstanding during the preceding 24 months) for any 24 month period ending within 30 days prior to the date of calculation, or (2) an interest rate equal to the 30-year Tax -Exempt Revenue Bond Index (as most recently published in The Bond Buyer), shall be presumed to apply for all future dates, unless such index is no longer published in The Bond Buyer, in which case an index of tax-exempt revenue bonds with maturities of at least 20 years which is published in a financial newspaper or journal with national circulation may be used for this purpose; (6) Commercial Paper. With respect to any Parity Obligations issued in the form of commercial paper the interest on such Parity Obligations shall be calculated in the manner provided in clause (5) of this definition and the maturity schedule shall be calculated in the manner provided in clause (2) of this definition; and (7) Credit Agreement Payments. If the City has entered into a Credit Agreement in connection with an issue of Debt, payments due under the Credit Agreement, from either the City or the Credit Provider, shall be included in such calculation except to the extent that the payments are already taken into account under (1) through (6) above and any payments otherwise included above under (1) through (6) which are to be replaced by payments under a Credit Agreement, from either the city or the Credit Provider, shall be excluded from such calculation. With respect to any calculation of historic data only those payments actually made in the subject period shall be taken into account in making such calculation and, with respect to prospective calculations, only those payments reasonably expected to be made in the subject period shall be taken into account in making the calculation 3 HOU:3007099.4 "Authorized Representative" shall mean one or more of the following officers or employees of the City acting on behalf of the City, acting in concert or individually: the Mayor, the City Manager, any Assistant City Manager, the Chief Financial Officer of the City, the City Treasurer, or such other officer or employee of the City designated by the City to act as an Authorized Representative. Attached hereto as Exhibit "I" is the form of an incumbency certificate to be executed by the City Secretary of the City and delivered to the Bank from time to time which will show the respective name, title and signature example of each Authorized Representative. "Bank" shall mean JPMorgan Chase Bank, N.A., or any subsequent banking institution which becomes a party to this Agreement. "Bank Note" shall mean the promissory note evidencing Loans made by the Bank to the City, in substantially the form of Exhibit "A" attached hereto, with appropriate completions, and any and all renewals, extensions, or modifications thereof. "Base Rate" shall mean for any day, a per annum rate of interest equal to the highest of (i) the Prime Rate, (ii) the Adjusted One Month LIBOR Rate, or (iii) 7.5% per annum. "Bond Counsel" shall mean McCall, Parkhurst & Horton L L P and Kelly, Hart & Hallman LLP, and any other firm or firms selected by the City whose opinion concerning bond matters is nationally recognized. "Bonds" shall mean any or all of the Prior Lien Obligations, Junior Lien Obligations, Subordinate Lien Obligations and Inferior Lien Obligations. "Business Day' shall mean any day on which DTC is scheduled to be open for money market instrument settlement services and is other than a Saturday, Sunday or other day on which the New York Stock Exchange is closed or a day on which banks in the City of Fort Worth, Texas are authorized by law or executive order to close. "City" shall mean the City of Fort Worth, Texas "City Council" shall mean the governing body of the City. "Closing Date" shall have the meaning given to said term in Section 3.01 hereof. "Code" shall mean the Internal Revenue Code of 1986, as amended, and when reference is made to a particular section thereof the applicable Treasury Regulations from time to time promulgated or proposed thereunder. "Collateral" shall mean the collateral described in Section 2.09 hereof. "Commercial Paper Notes" shall have the meaning set forth in the Recitals. "Commitment" shall mean $163,315,069, as such amount may be reduced pursuant to Section 2.06 hereof. The Principal Component of the Commitment is equal to $150 000,000 and the Interest Component of the Commitment is equal to 270 days interest on the Principal Component at an assumed interest rate of 12% per annum on the basis of a 365 day year. 4 HOU:3007099.4 "Commitment Fee" shall mean the amount payable to the Bank pursuant to Section 2.05 hereof and shall be (i) seventy basis points (0.70%) per annum of the Commitment. "Dealer" shall mean the dealer or remarketing agent (one or more) selected from time to time by the City to market or remarket the Commercial Paper Notes in accordance with Section 3 04 of the Ordinance. The initial Dealer shall be J.P Morgan Securities Inc. "Dealer Agreement" shall mean the Dealer Agreement, dated as of April 1, 2010 between the City and the Dealer, approved and authorized to be entered into by Section 3.04 of the Ordinance, as from time to time amended or supplemented. "Debt" is defined in the Master Ordinance. "Default" shall mean any condition or event that constitutes an Event of Default (as defined in Section 7.01 hereof) or that with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Default Rate" shall mean a rate of interest per annum equal to the Base Rate plus four percent (4.0%); provided, however, that in no event shall the Default Rate cause the payment of interest by the City to be in excess of the Maximum Interest Rate. "Effective Date" shall mean the Effective Date as defined in Section 3.01 hereof. "Eligible Securities" shall mean: (a) unrestricted, unencumbered publicly traded taxable debt securities owned by the City that are acceptable to the Bank and that have received one of the two highest credit ratings (without regard to subcategories) by S&P, Fitch or Moody's; (b) unrestricted, unencumbered publicly traded debt securities owned by the City that are acceptable to the Bank and the interest on which is (1) exempt from federal income taxation and (2) not subject to the alternative minimum tax, as described in section 141 of the Internal Revenue Code of 1986, as amended, and that have received one of the two highest credit ratings (without regard to subcategories) by any S&P, Fitch or Moody's; or (c) cash deposited in any deposit account maintained at the Bank by the City; "Event of Default" shall mean an Event of Default as defined in Section 7.01 hereof. "Final Date" shall mean the earlier of (a) April 20, 2013, or such later date as may be established pursuant to Section 2.10 of this Agreement; and (b) The date the Commitment is reduced to zero pursuant to Section 2.06 or terminated pursuant to Section 7.01 of this Agreement. "Fiscal Year" is defined in the Ordinance. 5 HOU:3007099.4 "Gross Revenues" shall mean all revenues, income, and receipts derived or received by the City from the operation and ownership of the System, including the interest income from the investment or deposit of money in any Fund created by the Master Ordinance or a Supplement or maintained by the City in connection with the System, other than those amounts subject to payment to the United States of America as rebate pursuant to section 148 of the Code. The term `Gross Revenues", however, does not include impact fees charged by the System under authority of Chapter 395, Texas Local Government Code, for the construction of capital improvements or facility expansions pursuant to a capital improvement plan prepared in accordance with the provisions of Chapter 395, Texas Local Government Code. "Fitch" shall mean Fitch, Inc., or if such corporation is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized securities rating agency as may be designated in writing by the City. "Holder" shall mean the Bank and any other holder of the Bank Note or any entity to which the Bank or any such other holder sells a participation in the Bank Note (whether or not the City was given notice of such sale and whether or not the Holder has an interest in the Bank Note at the time amounts are payable to such Holder thereunder and under this Agreement). "Inferior Lien Obligations" shall mean (i) any bonds, notes, warrants, certificates of obligation or other Debt hereafter issued by the City that are payable from Net Revenues such payment, however, shall be subject to, subordinate and inferior to the pledge thereof securing payment of, the Prior Lien Obligations, Junior Lien Obligations, or Subordinate Lien Obligations hereafter issued by the City and (ii) any obligations that are issued subject to the limitations contained in Chapter 1502 Texas Government Code. The Commercial Paper Notes are Inferior Lien Obligations. "Interest Component" means that portion of the Commitment or a Loan Advance relating to the interest on Commercial Paper Notes. "Issuing and Paying Agent", "Paying Agent", "Registrar", shall mean the agent appointed pursuant to Section 3.03 of the Ordinance, or any successor to such agent. The initial Issuing and Paying Agent shall be U.S. Bank Trust National Association. "Issuing and Paying Agent Agreement" shall mean the Issuing and Paying Agent Agreement, dated as of April 1, 2007 between the City and the Issuing and Paying Agent approved and authorized by Section 3.03 of the Ordinance, as from time to time amended or supplemented. "Junior Lien Obligations" shall mean any bonds, notes, warrants, certificates of obligation, or other Debt hereafter issued by the City that are payable, in whole or in part, from and equally and ratably secured by a lien on and pledge of the Pledged Revenues, such pledge being junior and inferior to the lien on and pledge of the Pledged Revenues that are or will be pledged to the payment of the Prior Lien Obligations hereafter issued by the City, but prior and superior to the lien on and pledge of the Pledged Revenues that are or will be pledged to the payment of any Subordinate Lien Obligations or Inferior Lien Obligations hereafter issued by the City. The Bank Note is a Junior Lien Obligation. 6 HOU:3007099.4 "Loan Advance" or "Advance" shall mean a loan made hereunder pursuant to Section 2.02(a) of this Agreement. "Loan Advance Maturity Date" shall mean the date that is 90 days from the date the Loan Advance is made. "Loan Advance Rate" shall mean with respect to any Loan Advance, a per annum rate of interest equal to the Base Rate; provided, however, that in no event shall the Loan Advance Rate cause the payment of interest by the City to be in excess of the Maximum Interest Rate. "Loans" shall mean Loan Advances and Term Loans. "Maintenance and Operating Expenses" is defined in the Master Ordinance. "Master Ordinance" shall mean the "Master Ordinance Establishing the City of Fort Worth, Texas Water and Sewer System Revenue Financing Program' adopted December 10 1991 as amended. "Maximum Interest Rate" shall mean the maximum net effective interest rate permitted by law to be paid on obligations issued or incurred by the City in the exercise of its borrowing powers (as currently prescribed by Chapter 1204, Texas Government Code). "Moody's" shall mean Moody's Investors Service, Inc. or, if such corporation is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized securities rating agency as may be designated in writing by the City. "Net Revenues" and "Net Revenues of the System" shall mean all Gross Revenues less Operating Expenses. "Note Payment Fund" is the "Series A Note Payment Fund", as defined in the Ordinance. "Notes" shall mean the Commercial Paper Notes and the Bank Note. "Notice of Loan' shall mean a written borrowing request in substantially the form of Exhibit ' B" attached hereto, with appropriate completions, executed by an Authorized Representative, which requests a Loan from the Bank. "No -Issuance Notice" shall mean the notice described in Section 2.14 hereof. "Operating Expenses" shall mean the expenses of operation and maintenance of the System, including all salaries, labor, materials repairs, and extensions necessary to render efficient service, provided, however, that only such repairs and extensions, as in the judgment of the City, reasonably and fairly exercised by the passage of appropriate ordinances, are necessary to render adequate service, or such as might be necessary to meet some physical accident or condition which would otherwise impair any Parity Obligations. Operating Expenses shall include the purchase of water, sewer, and, to the extent permitted by law drainage services as received from other entities and the expenses related thereto, and, to the extent permitted by law, Operating Expenses may include payments made on or in respect of obtaining and maintaining 7 HOU:3007099.4 any Credit Agreement or Credit Facility. Depreciation shall never be considered as expenses of operation and maintenance. "Ordinance" shall mean Ordinance No. 17462 03-2007 of the City, adopted on March 27, 2007 and Ordinance No. 19113-04-2010 of the City, adopted on April 13, 2010 authorizing the City, among other things, to execute, deliver, and perform this Agreement and the Bank Note, and to execute and deliver from time to time the Commercial Paper Notes. "Outstanding" when used with reference to Bonds, shall mean, as of a particular date, all such Bonds theretofore and thereupon delivered except: (a) any such Bond cancelled by or on behalf of the City at or before said date; (b) any such Bond defeased pursuant to the defeasance provisions of the ordinance authorizing its issuance or otherwise defeased as permitted by applicable law; and (c) any such Bond in lieu of or in substitution for which another Bond shall have been delivered pursuant to the ordinance authorizing the issuance of such Bond The term 'Outstanding" also means with reference to Commercial Paper Notes, as of the date of determination, all Commercial Paper Notes theretofore delivered, except: (1) Commercial Paper Notes theretofore cancelled and delivered to the City or delivered to the Issuing and Paying Agent for cancellation* (2) Commercial Paper Notes upon transfer of or in exchange for and in lieu of which other Commercial Paper Notes have been delivered pursuant to the Ordinance; and (3) Commercial Paper Notes under which obligations of the City have been released, discharged or extinguished in accordance with the terms thereof. "Parity Obligations" shall mean all Debt of the City which may be issued or assumed in accordance with the terms of the Master Ordinance and a Supplement, and secured by a first lien on and pledge of the Pledged Revenues. "Participant" shall mean any Person which in accordance with Section 8.11(b) hereof, shall participate in the benefits and obligations of the Bank under this Agreement pursuant to a participation agreement between the Bank and such Person "Person" shall mean an individual, a corporation, a partnership, an association, a trust, or any other entity or organization, including a governmental or political subdivision or any agency or instrumentality thereof. "Pledged Revenues" shall mean (1) the Net Revenues, plus (2) any additional revenues, income, receipts, or other resources, including, without limitation, any grants, donations, or income received or to be received from the United States Government or any other public or private source, whether pursuant to an agreement or otherwise, which hereafter are pledged to the payment of the Parity Obligations.. ` Prime Rate" shall mean, on any given day, the per annum rate of interest established by the Bank from time to time as its ` prime rate" or "base rate," regardless of whether such rate is actually charged to any customer of the Bank Each determination by the Bank of the Prime Rate shall be conclusive and binding on the City. 8 HOU:3007099.4 "Principal Component" means that portion of the Commitment or a Loan Advance relating to the principal of Commercial Paper Notes. "Principal Payment Date' shall mean with respect to a Term Loan, the date upon which an installment of principal scheduled to become payable hereunder and the Term Loan Maturity Date. "Prior Lien Bonds" shall mean the "Outstanding Prior Lien Bonds" as such term is defined in the Ordinance. "Prior Lien Obligations" shall mean, collectively, the Prior Lien Bonds and any Additional Prior Lien Obligations. "Project Costs" is defined in the Master Ordinance. "Regulation U" shall mean Regulation U of the Board of Governors of the Federal Reserve System (or any successor), as the same may be amended from time to time. "Related Documents" shall mean the Ordinance, the Master Ordinance, the Issuing and Paying Agent Agreement, the Dealer Agreement, the Commercial Paper Notes, the Bank Note and any exhibits, instruments, or agreements relating thereto. "Request for Term Loan" shall mean a written borrowing request in substantially the form of Exhibit "B-1' attached hereto with appropriate completions, signed by an Authorized Representative, which requests a Term Loan from the Bank. "Reserve Requirement" shall mean the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D of the Board of Governors of the Federal Reserve System. "Revolving Credit Period" shall mean the period commencing on the Effective Date and continuing to the Final Date. "S&P" shall mean Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business, or, if such Person is dissolved or liquidated or otherwise ceases to perform securities rating services, such other nationally recognized securities rating agency as may be designated in writing by the City. "Special Events of Default' shall mean the Events of Default described in Section 7.01 (a)(i), (e)(i), (f)(i), (g) (h), (i), 0), (k)(i), (1) and (m). "Subordinate Lien Bonds" is defined in the Ordinance. "Subordinate Lien Obligations" is defined in the Ordinance. "System" is defined in the Master Ordinance. 9 HOU:3007099.4 "Term Loan" shall mean a Loan Advance the Principal Component of which has been converted to a term loan pursuant to Section 2.01(b) hereof and which is evidenced by the Bank Note. "Term Loan Maturity Date" shall mean the date which is three (3) years from the date such Term Loan is made. "Term Loan Rate" shall mean with respect to any Term Loan, a per annum rate of interest equal to the Base Rate plus two percent (2.0%) provided however, that in no event shall the Term Loan Rate cause the payment of interest by the City to be in excess of the Maximum Interest Rate "Value of Eligible Securities" shall mean the value of Eligible Securities held by the City, computed as follows: The sum of: (a) one hundred percent (100%) of the current market value of government obligations or federally insured savings which mature in one year or less; plus (b) ninety percent (90%) of the current market value of government obligations or federally insured savings which mature in more than one year; plus (c) eighty percent (80%) of the current market value of U.S. Agency bonds, state or municipal bonds ("A" rating or higher by S&P, Fitch or Moody's) and corporate bonds (' BBB" rating or higher by S&P or Fitch or "Baa" rating or higher by Moody's). Section 1.02 Incorporation of Certain Definitions by Reference. Any terms with an initial capital letter which are used herein and which are not otherwise defined herein shall have the meaning assigned to them in the Ordinance as in effect on the Effective Date unless the context shall indicate a contrary meaning. Section 1.03 Accounting Terms. All accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles applied on a basis consistent (except for changes concurred in by the City's independent public accountants) with the most recent financial statements of the City delivered pursuant to Section 6.01. Section 1.04 Interpretations. The table of contents and article and section headings of this Agreement are included herein for convenience of reference purposes only and shall not constitute a part of this Agreement or affect its interpretation in any respect. Except where the context otherwise requires, words imparting the singular number shall include the plural number and vice versa. References to any constitutional, statutory or regulatory provision means such provision as it exists on the Effective Date and any future amendments thereto or successor provisions thereof. All references to time herein shall refer to local time in New York, New York, unless otherwise noted herein. 10 HOU:3007099.4 ARTICLE II REVOLVING CREDIT; TERM LOANS Section 2.01 Commitment to Lend. (a) Revolving Credit. The Bank agrees that it will, during the Revolving Credit Period, on the terms and conditions set forth in this Agreement, lend to the City from time to time amounts up to, but not to exceed, an aggregate amount at any one time outstanding equal to its Commitment Each Loan Advance by the Bank under this Section 2.01(a) shall be made in such amount as may be requested by an Authorized Representative to enable the City to pay the principal of and interest on the Commercial Paper Notes coming due during the Revolving Credit Period. The Interest Component of a Loan Advance and, unless converted to a Term Loan Advance, the Principal Component of such Loan Advance, shall be paid on its Loan Advance Maturity Date. The City may borrow under this Section 2.01(a), prepay under Section 2.07 and reborrow under this Section 2 01(a) at any time and from time to time during the Revolving Credit Period; provided, however, that the aggregate of all borrowings which are not repaid shall not exceed the aggregate of the Commitment at any time. (b) Term Loans. The Bank agrees that it will, on the terms and conditions set forth in this Agreement make a Term Loan to the City in an amount equal to the Principal Component of the outstanding unpaid principal balance of any Loan Advance; provided, however that the aggregate principal amount of the Bank's outstanding Term Loans shall at no time exceed the Principal Component of the Commitment. The principal amount outstanding under each Term Loan shall be repaid in three (3) equal annual installments commencing on the date which is one (1) year after the date of the Loan Advance with respect to it, and ending on the Term Loan Maturity Date. Section 2.02 Method of Borrowing. (a) Revolving Credit Each Loan Advance shall be made to the City (or as directed by it) pursuant to a completed Notice of Loan signed by an Authorized Representative (or by the Issuing and Paying Agent acting on behalf of the City) made to the Bank not later than 2:00 p.m. of the Business Day on which a Loan Advance is to be made to the City A completed and signed Notice of Loan shall be made to the Bank by delivery of a telecopy, or other written form containing the information prescribed in Exhibit "B ' hereto Notwithstanding the foregoing, the Bank will agree subject to the conditions set forth in this Section and in Section 3 02 to honor a Notice of Loan made to the Bank on any date the Bank has delivered a No -Issuance Notice pursuant to Section 2.14, which is also a date upon which Commercial Paper Notes are due and payable Upon receipt by the Bank of a Notice of Loan, the request for a Loan Advance as therein set out shall not be revocable by the City. At or prior to 4 00 p.m. on the date for which the Loan Advance is requested, and subject to satisfaction of the applicable conditions set forth in Sections 2 02 and 3 02, the Bank shall make available, in federal or other immediately available funds, to the Paying Agent the funds necessary for such Loan Advance, for the account of the City with instructions to deposit such funds in the Note Payment Fund. The address of the initial Paying Agent to which such funds are to be provided by the Bank is: 11 HOU:3007099.4 U.S. Bank Trust National Association 100 Wall Street, Suite 1600 New York, New York 10005 Attn: Corporate Trust Telephone: (212) 361-2894 Telecopy: (212) 509-3384 (b) Term Loans. The City may request that the Principal Component of a Loan Advance on its Loan Advance Maturity Date be converted to a Term Loan pursuant to a completed and signed Request for Term Loan made to the Bank not later than three (3) Business Days prior to the Loan Advance Maturity Date. A completed and signed Request for Term Loan shall be made to the Bank by delivery of a telecopy or other written form containing the information prescribed in Exhibit ' B-1 " hereto. Section 2.03 Bank Note. (a) The Loans made by the Bank shall be evidenced by a single Bank Note payable to the order of the Bank in a principal amount equal to the Bank's Commitment. The Bank Note shall bear interest on the aggregate principal balance of the outstanding Loans and shall be due and payable on the dates, in the amounts (which amounts shall not exceed the principal amount of outstanding Loans received by the City), and under the circumstances set forth herein and in the Bank Note. No interest shall begin to accrue on the Bank Note until such time as the City has received a Loan from the Bank under this Agreement. (b) The Bank shall record, and prior to any transfer of its Bank Note shall endorse on the schedules forming a part thereof, appropriate notations to evidence the date, amount, type, and maturity of each Loan made by it and the date and amount of each payment of principal made by the City with respect thereto; provided, however, that the failure of the Bank to make any such recordation or endorsement shall not affect the obligations of the City hereunder or under the Bank Note. In any legal action or proceeding in respect of this Agreement or a Bank Note, the notations made on such Bank Note or as provided by the Bank's accounting records shall be presumptive evidence of the existence and amount due thereunder. The Bank is hereby authorized by the City so to endorse its Bank Note and to attach to and make a part of its Bank Note a continuation or substitution of any such schedule as and when required. Section 2.04 Interest. (a) Each Loan Advance shall bear interest on the outstanding principal amount thereof for each day from the date such Loan Advance is made until it becomes due at the Loan Advance Rate Each Term Loan shall bear interest on the outstanding principal amount thereof for each day from the date such Term Loan is made until it becomes due at the Term Loan Rate. (b) Interest on each Loan shall be payable on the first Business Day of each month and on the maturity date thereof. (c) Notwithstanding anything contained herein or in the Bank Note to the contrary: 12 HOU:3007099.4 (i) (x) in the event that the amount of interest accrued in respect of any Loan by the Bank as of any date, is as a result of the limitations contained herein on the rate or amount of interest which may accrue on such Loan under the Bank Note, less than the amount of interest which would have otherwise accrued on such Loan as of such date at the rate determined under this Section 2.04 (without regard to the provisions of Section 2 13 hereof, then the Bank Note will continue to bear interest with respect to such Loan at the Maximum Interest Rate until such date (or the date such Loan is due and payable pursuant to Section 2.01 and 2.06 if earlier, or such later date as provided below in this Subsection (c)) on which the cumulative amount of interest accrued on the Bank Note with respect to such Loan equals the cumulative amount of interest which would have accrued thereon in accordance this Section 2 04 hereof (other than the provisions of Section 2.13 hereof) but for such limitation on such rate of interest, on which date the rate of interest on the Bank Note with respect to such Loan shall revert to the rates otherwise provided for herein; and (y) until such time as the amount of interest paid to the Bank is equal to the cumulative amount which otherwise would have been paid to the Bank but for the restriction on interest contained in Section 2.13 hereof, no principal repayment may be made by the City on such Loan the maturity date with respect to such Loan shall be extended (unless the Bank shall otherwise direct by written notice to the City) and the Bank Note will remain outstanding for so long as necessary, but in no event beyond the Maximum Maturity Date, until the Bank shall have recovered such cumulative amount of interest in respect of all prior Loans and (ii) in all events, all interest accruing on or becoming payable in respect of the Bank Note or any Loan evidenced thereby, including not only amounts so denominated herein but also any other payment, consideration, value, benefit, or other compensation for the use, forbearance, or detention of money, shall never exceed an amount or produce a rate in excess of the Maximum Interest Rate. (d) To the extent permitted by law, from and after the occurrence of an Event of Default interest on any Loan shall bear interest, payable on demand, for each day the same is overdue until paid, at a rate per annum equal to the Default Rate. (e) All computations of interest in respect of Loans under this Agreement shall be made on a 360-day year basis and actual days elapsed. Interest shall accrue during each period during which interest is computed from and including the first day thereof to but excluding the last day thereof. Each determination of an interest rate by the Bank pursuant to any provision of this Agreement shall be conclusive and binding on the City and the Bank in the absence of manifest error. In addition, any calculation made pursuant to this Section 2.04(e) that would cause the interest (including amounts described in Section 2.04(d)) paid, payable or accruing on the indebtedness of the City under this Agreement and the Bank Note to exceed the Maximum Interest Rate shall be adjusted so as to reduce the interest paid, payable and accruing hereunder to such Maximum Interest Rate, as more fully set out in Section 2.04(c) of this Agreement. All sums paid or agreed to be paid to the Bank for the use, forbearance, or detention of the indebtedness evidenced by the Bank Note shall, to the extent permitted by law (including, to the extent applicable, Chapter 1204 Texas Government Code, be amortized prorated, allocated, and spread through the full term of the Bank Note. 13 HOU:3007099.4 (f) Notwithstanding anything contained herein to the contrary, the interest rates applicable to Loans may be changed at any time upon the mutual written agreement of the City and the Bank If any such change in the interest rates applicable to Loans is so agreed to, this Agreement and the Bank Note shall remain outstanding and continue in full force and effect, with no modification other than as to the change in the interest rates applicable to Loans, and all Loans will continue to be made under the Bank Note in accordance with this Agreement modified only to reflect the agreement of the parties with respect to the changed interest rate applicable to Loans. Section 2.05 Commitment Fees Other Fees. The City shall pay to the Bank the Commitment Fee based on the average daily principal amount of the Commitment outstanding during such period calculated on a 360-day year basis and actual days elapsed for each day during the term of this Agreement. Such Commitment Fee shall accrue from and including the Closing Date to and including the Final Date and shall be payable in arrears (i) on the first day of each January, April July and October during the term hereof, commencing on July 1, 2010, and (ii) on the Final Date. The Commitment Fee shall be increased by 10 basis points (0.10%) per annum from and after each downgrade (giving effect to numerical or plus/minus modifiers) below Aa2/AA/AA by any of Moody's S&P or Fitch, respectively, of the unenhanced long term rating of the City's Prior Lien Obligations; provided further, however, that the Commitment Fee will be reduced by the amounts described above on such date that the rating agency whose action shall have caused the increase described hereinabove shall have publicly announced the reestablishment of such long term credit rating to that level which was applicable thereto prior to such rating downgrade. The Commitment Fee shall be increased by an additional 100 basis points (1.0%) per annum upon the occurrence and during the continuation of an Event of Default or in the event that any rating of the City's Junior Lien Obligations is withdrawn or suspended Any amount due to the Bank in excess of the Commitment Fee stated above incurred by the City as a result of a rating downgrade shall be deemed an obligation hereunder and shall be payable to the Bank at such time or times as the Commitment Fee shall be due and payable as hereinabove provided. All increases to the Commitment Fee pursuant to this Section shall be cumulative, effective immediately and without notice to the City. The City shall pay to the Bank a draw fee equal to $300 per Loan Advance. Such draw fees shall accrue and be payable concurrent with the Commitment Fee. Section 2.06 Termination or Reduction of Commitment. (a) During the Revolving Credit Period, the City may, upon at least thirty days' notice to the Bank and any rating agency which has issued a rating on the Commercial Paper Notes, reduce from time to time the aggregate unused Principal Component of the Commitment by an aggregate amount of $1,000,000 or any integral multiple of $100,000 in excess thereof (with the Interest Component relating to such reduced Principal Component also being reduced by such reduction); provided that the City may not reduce the Commitment if the unused portion of the Commitment as proposed to be reduced would be less than the sum of the aggregate principal of all Outstanding Commercial Paper Notes plus an amount equal to the Interest Component relating thereto. The notice delivered pursuant to the preceding sentence must certify that the conditions set forth in the proviso to such sentence have been satisfied and the Bank shall be entitled to rely upon such certification without any further investigation. 14 HOU:3007099.4 (b) The Commitment shall terminate on the Final Date. (c) If the Commitment is terminated in its entirety all accrued Commitment Fees shall be payable on the effective date of such termination If the Commitment is reduced, Commitment Fees on the amount by which the Commitment is so reduced shall be payable on the effective date of such termination and Commitment Fees on the amount by which the Commitment is reduced shall cease to accrue on the date of such reduction. (d) At any time during the Revolving Credit Period, upon not less than 30 Business Days nor more than 45 Business Days prior notice to the Bank and upon compliance with the further conditions specified in this Section 2.06, the City may terminate the Commitment in its entirety. (e) If the Commitment is reduced or terminated at any time prior to the first anniversary of the Closing Date, the City shall pay to the Bank, on the date of such reduction or termination, a termination fee in an amount equal to (i) all amounts then due under this Agreement that are then unpaid, plus (ii) an amount equal to the Commitment Fee that would have been payable through the first anniversary of the Closing Date less any amounts previously paid to the Bank by the City pursuant to Section 2.05 hereof (a "Termination Fee '); provided, however that the City may terminate this Agreement without paying any Termination Fee if at the time of such termination the ratings assigned to the Bank's short term obligations by any of the rating agencies shall have been downgraded below "P-1" by Moody's and "A-1" by S&P. Section 2.07 Prepayment of Loans. (a) Optional Prepayments. The City may, at its option, at any time and from time to time, prepay Loans, in whole or in part without premium or penalty Each partial prepayment permitted above shall be in the principal amount of $100,000 or any multiple thereof plus accrued interest thereon (b) Mandatory Prepayments. The principal amount of the Loans shall be prepaid upon the subsequent issuance of any Commercial Paper Notes on the date of such issuance, in an amount equal to the proceeds of such issuance plus accrued interest on the principal amount prepaid. (c) Upon receipt by the Bank of a notice of prepayment pursuant to this Section, such notice shall not be revocable by the City. Section 2.08 General Provisions as to Payment. The following general provisions shall apply to all payments of Commitment Fees and payments under the Bank Note: (a) The Bank shall calculate and notify the City in writing of the amounts payable by the City hereunder within three (3) Business Days preceding any payment date. Such calculations will be based on the assumptions that the Loan Advance Rate and the Term Loan Rate will not change from the date of calculation to the payment date In the event any of the foregoing assumptions change between the date of notification and the payment date, any overpayment or underpayment resulting from such change will be applied to the next ensuing payment or reimbursed or charged, as the case may be 15 HOU.3007099.4 (b) The City shall make each payment due to the Bank hereunder not later than 3:00 p.m. on the day when due, in federal or other funds immediately available; provided, however, if the City provides the Bank with a Fed wire reference number with respect to any payment before 3:00 p.m., any payment actually received by the Bank by wire after 12:00 noon shall be deemed to have been received before 3:00 p.m. on the same Business Day. (c) Whenever any payment due hereunder shall be due on any day which is not a Business Day, the date for payment thereof shall be extended to the next succeeding Business Day If the date for the payment or prepayment of amounts due hereunder is extended by the preceding sentence, or by operation of law or otherwise, interest thereon shall be payable for the period of such extension at the rate applicable thereto under other provisions of this Agreement Section 2.09 Security for Bank Note. The Bank Note is a special obligation of the City payable from and secured solely by the funds pledged therefor pursuant to the Ordinance, including specifically Section 2.10 thereof, and this Agreement, as authorized thereby. To provide security for the payment of the principal of and interest on the Commercial Paper Notes, the Bank Note and any amounts due under this Agreement, as the same shall become due and payable the City has granted a lien on and pledge of the following: (a) the proceeds from (i) the sale of Bonds issued by the City for such purpose and (ii) the sale of Commercial Paper Notes issued by the City for such purpose; (b) the proceeds from Loans (for the payment of principal of and up to 270 days of interest on the Commercial Paper Notes only), (c) the amounts held in the Note Payment Fund until the amounts therein are used for authorized purposes; provided, however, that amounts in the Note Payment Fund attributable to and derived from the proceeds of the Loans are pledged to, and shall be used only to pay the principal of and interest on the Commercial Paper Notes in full prior to any application to the Bank Note; and (d) the amounts remaining on deposit in the Note Construction Account after the payment of all Project Costs. To provide additional security for the payment of the principal of and interest on the Bank Note and other amounts due under this Agreement as the same shall become due and payable the City has pledged and granted, pursuant to Section 2.10 of the Ordinance, a lien on and pledge of the Pledged Revenues, such lien on and pledge of Pledged Revenues to secure the Bank Note and other amounts due under this Agreement however being subordinate only to the lien and pledge of the Pledged Revenues securing the payment of the Prior Lien Obligations and the debt service and reserve funds relating thereto (but senior to the lien and pledge of the Pledged Revenues securing the payment of the Subordinate Lien Obligations, the Inferior Lien Obligations and the debt service and reserve funds relating thereto). The Bank Note, being secured by and payable from the lien on the Pledged Revenues as described in the preceding sentence shall constitute a Junior Lien Obligation. The Ordinance creates the valid lien and pledge which it purports to create on the Pledged Revenues for the benefit of the Holders of the Bank Note. All of such sources and pledges are herein called the ' Collateral'. The Bank Note 16 HOU:3007099.4 shall further be entitled to the benefits of this Agreement. The Bank shall not be entitled to any funds of the City raised or to be raised by taxation. Chapter 1208, Texas Government Code, applies to the Bank Note and the pledge made under this Section 2.09 and such pledge is therefore valid, effective, and perfected. If Texas law is amended at any time while the Bank Note is outstanding and unpaid such that the pledge made by the City hereunder is to be subject to the filing requirements of Chapter 9, Texas Business & Commerce Code, then in order to preserve to the Bank the perfection of the security interest in said pledge, the City agrees to take such measures as it deteimines 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 2.10 Extension of Revolving Credit Period. At any time during the period from the 180th day through and including the 90th day preceding the Final Date the City may submit a written request in the form of Exhibit "H' hereto to the Bank that the Final Date be extended for either one or two years. Any such written request may be accompanied by requests to increase or decrease the amount, or otherwise modify the terms and conditions of the Commitment. The Bank agrees to consider any such request from the City and deliver the Bank's response in writing to the City within 30 days from the date of receipt of such request. The foregoing notwithstanding, the City may submit a written request to the Bank that the Final Date be extended for such period necessary, but in no event greater than two years to accommodate opportunities to market Notes with maturities beyond the then current Final Date, and the Bank agrees to consider any such request from the City and deliver the Bank's response in writing to the City in a timely manner. If the Bank in its sole discretion, agrees to extend the Final Date, then the Bank and the City shall enter into an amendment of this Agreement and deliver a copy of any such amendment, executed by the parties thereto to the Issuing and Paying Agent. Except as may be otherwise expressly provided in a particular amendment to this Agreement, each extension of the Final Date, and the provision of the Commitment during the time of each such extension, shall be on the same terms and conditions as those set forth in this Agreement. Section 2.11 Notice of Paying Agent. The City will give notice to the Bank of the appointment of any new or substitute Paying Agent, which notice shall specify the name and address of the Paying Agent and the name of a person to contact at the Paying Agent. Section 2.12 Failure of the Bank to Loan. The failure of the Bank to make any requested Loan required to be made under the Bank Note shall not release the Bank from its agreement to make such Loans, nor shall receipt and acceptance by the City of any Loan or portion thereof from the Bank be a release, discharge, or waiver of any claim, demand or cause of action of, or for the benefit of, the City arising out of or in connection with any such failure to advance funds. Section 2.13 Compliance with Law. Notwithstanding any other term or provision of this Agreement or of the Bank Note, the maximum amount of interest which may be payable by, charged to, or collected from the City or any other person either primarily or conditionally liable for the payment of the Bank Note, shall be limited to, and shall in no event or under any circumstance exceed the Maximum Interest Rate so that, notwithstanding any other term or provision of this Agreement or the Bank Note, the aggregate of the interest on any Loan, including all fees and other amounts which constitute interest under applicable state law (and any 17 HOU:3007099.4 applicable federal statutes), shall never exceed the Maximum Interest Rate. Accordingly, the City and the Bank stipulate and agree that this Agreement and the Bank Note shall not be construed to create a contract to pay interest for the use, forbearance, or detention of money at a rate in excess of the Maximum Interest Rate, and the City shall never be liable for interest in excess of the Maximum Interest Rate. Specifically and without limiting the generality of the foregoing it is further agreed by the City and the Bank that the maximum amount of interest contracted for and payable on or under this Agreement and the Bank Note, now or hereafter shall be calculated in order that such rate shall not exceed the Maximum Interest Rate, and such parties agree that: (a) In the event of voluntary prepayment of any Loan or payment prior to the normal maturity date of any Loan, if the aggregate amount of any interest calculated thereunder or thereon, plus any other amounts which constitute interest on such Loan would in the aggregate, if charged or paid (if calculated in accordance with provisions other than those set forth in this Section) exceed the Maximum Interest Rate, then in such event the amount of such excess shall not be charged, payable or due (if not previously paid) or (if paid) shall be credited toward the payment of the principal of the Loan involved so as to reduce the amount thereof and if, and to the extent, the entire principal amount has been paid in full refunded to the City. (b) If under any circumstances the aggregate amounts paid on any Loan prior to or incident to final payment thereof include any amounts which under applicable state laws (and any applicable federal statutes) would be deemed interest and which would exceed the Maximum Interest Rate, such payment and collection shall be deemed to have been the result of mathematical error on the part of all parties hereto, and the party receiving such excess payment shall promptly refund the amount of such excess (to the extent only of the excess of interest payments above the Maximum Interest Rate) upon discovery of such error by the party receiving such payment of notice thereof from the party making such payment. (c) The provisions of this Section 2.13 shall control over any other provisions of this Agreement, the Bank Note, any other instrument or writing evidencing, respecting or affecting the Loans, and the Bank further agrees that any limitations or restrictions imposed on it, or on payments which it may receive by reason of this Section 2.13 shall apply and be recognized in all circumstances and to all payments, regardless of the source or payor thereof. (d) All fees prescribed in Section 2.05 shall constitute exclusively the consideration for the Bank's agreement to have available funds in the amount committed by the Bank in respect of Loans and to make such Loans in the future as provided herein and shall not constitute or be treated as compensation for the use of, forbearance, or detention of money actually loaned and advanced hereunder. Section 2.14 No -Issuance Notice. If (a) a Default shall have occurred and be continuing; or (b) the representations and warranties of the City set forth in Article IV hereof are not true and correct in all material respects on and as of the date of the No -Issuance Notice referred to below with the same effect as though made on and as of the date of such notice; 18 HOU:3007099.4 the Bank may deliver a notice to that effect ("No -Issuance Notice") to the Paying Agent (a copy of which shall be delivered by the Bank to the City and the Dealer), and the City will not issue any additional Commercial Paper Notes after the delivery of such No -Issuance Notice. A No - Issuance Notice may be given in writing, delivered to the Paying Agent (and to the City and the Dealer), substantially in the form of, or orally by specifying the appropriate information set forth in, Exhibit "C" hereto, but if given orally shall be confirmed by the Bank promptly in writing, provided that the failure to promptly confirm such No -Issuance Notice in writing shall not render the notice given thereby ineffective. The Bank agrees that if, after the delivery of a No -Issuance Notice, the event or condition of the character described in clause (a) or (b) of this Section shall no longer be continuing and the Bank shall have received a notice from an Authorized Representative to that effect, then the Bank shall deliver a notice (a copy of which shall be delivered by the Bank to the City and the Dealer) to the Paying Agent rescinding such No - Issuance Notice. ARTICLE III CONDITIONS Section 3.01 Conditions to Closing and Commencement of Revolving Credit Period. This Agreement shall be delivered to, and binding upon, the City and the Bank on the date (the ' Closing Date") on which the conditions set out in Subsections (a) and (b) of this Section 3 01 shall have been satisfied. The Revolving Credit Period shall commence on the date (the "Effective Date") on which the conditions set out in Subsections (a), (b) and (c) of this Section 3.01 shall have been satisfied. (a) On the Closing Date, the Bank shall have received all of the following: (i) a counterpart of this Agreement duly executed by the City and the Bank; (ii) a duly executed Bank Note, dated as of the Effective Date, complying with the provisions of Section 2.03 and substantially in the form set out in Exhibit "A" hereto; (iii) a certified copy of each of the Master Ordinance and the Ordinance, including any amendments thereto which have been adopted as of the Closing Date; (iv) a certificate of the City Manager and the Chief Financial Officer of the City in form and substance satisfactory to the Bank, dated the Closing Date, and substantially in the form of Exhibit "D' hereto; (v) an opinion of the City Attorney, on which the Bank may rely dated the Closing Date, and substantially in the form of Exhibit 'E" hereto, with such changes, modifications, deletions or additions as may be acceptable to such counsel and counsel for the recipients thereof; (vi) certified copies of the Issuing and Paying Agent Agreement and the Dealer Agreement in form and substance satisfactory to the Bank; (vii) copies of all approvals or authorizations by, or consents of, or notices to or registrations with, any governmental body or agency required for the City to enter into this Agreement and the Related Documents and of all such approvals, authorizations, 19 HOU:3007099.4 consents, notices, or registrations required to be obtained or made prior to the Closing Date in connection with the transactions contemplated hereby and by the Related Documents; (viii) payment, in immediately available funds, of the amounts described in clauses (i), (ii) and (iii) of Section 8.04 hereof, (ix) written confirmation that the unenhanced long term ratings of the System s Prior Lien Obligations are AA/Aa2/AA by S&P, Moody's and Fitch, respectively; and (x) such other documents, opinions, or certificates reasonably requested by the Bank. (b) In addition, on the Closing Date, the City shall have received all of the following: (i) a counterpart of this Agreement, duly executed by the City and the Bank; (ii) a certificate dated the Closing Date, of an officer of the Bank, authorized to execute and deliver such certificate, to the effect that each of the representations and warranties of the Bank contained in this Agreement are true and correct on and as of the date of such certificate as though made on and as of such date and additionally to the effect that the Bank has received the instruments set forth in Section 3.01(a), that such instruments are in satisfactory form, and the conditions set forth in Section 3 01(a) have been satisfied; and (iii) an opinion of Andrews Kurth LLP, Houston, Texas, counsel to the Bank, dated the Closing Date and substantially in the form of Exhibit "G", with such changes, modifications, deletions, or additions as may be acceptable to such counsel and counsel for the addressees thereof. (c) On the Effective Date, the following items, in addition to the items listed in paragraphs (a) and (b) of this Section 3.01, shall have been delivered to the City and the Bank (i) evidence satisfactory to the Bank that the Attorney General of the State of Texas shall have approved this Agreement as required by the Act; and (ii) an initial certificate of incumbency, dated on or before the Effective Date, executed by the City Secretary in substantially the form of Exhibit "I" hereto. Section 3.02 Conditions to Loans During Revolving Credit Period. The obligation of the Bank to make any Loan Advance, when so requested hereunder during the Revolving Credit Period, is subject to receipt by the Bank of a Notice of Loan as required by Section 2.02(a) and to the satisfaction of the further conditions that no Special Event of Default has occurred and is continuing. In addition, the Bank shall not have any obligation to make a Loan Advance to the City to pay the principal of any Commercial Paper Notes which were issued by the City after receipt by the Paying Agent, the Dealer, and an Authorized Representative of a No -Issuance Notice. 20 HOU:3007099.4 Section 3.03 Conditions to Term Loan. The obligation of the Bank to make any Term Loan is subject to receipt by the Bank of a Request for Term Loan as required by Section 2.02(b) and to the satisfaction of the further conditions that (A) no Default or Event of Default has occurred and is continuing, (B) the representations and warranties of the City contained in Article IV hereof are true and correct in all respects as of the date of the conversion to a Term Loan and (C) the City's delivery to the Bank of a certificate to the effect of the foregoing on such date. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE CITY Section 4.01 Organization and Powers. The City (a) is duly established and validly existing under the laws of the State of Texas under and pursuant to the Constitution of the State of Texas and is a home -rule city under authority of the laws of the State of Texas (b) has full power and authority to operate the System and to acquire, construct, finance, and operate the Eligible Projects; and (c) has full power and authority to adopt the Ordinance; to execute, deliver, and perform the Ordinance this Agreement, and the Related Documents; to borrow hereunder, and to execute, deliver, and perform the Bank Note. Section 4.02 Authorization: Contravention. The execution, delivery, and performance by the City of the Ordinance, this Agreement, the Bank Note, and the Related Documents and the making of the payments under the Bank Note have been duly authorized by all necessary action by the City and do not contravene, or result in the violation of or constitute a default under, any provision of applicable law or regulation, or any order, rule, or regulation of any court, governmental agency, or instrumentality or any agreement, resolution, or instrument to which the City is a party or by which it or any of its property is bound. Section 4.03 Governmental Consent or Approval. No authorization, consent, approval, permit, license, or exemption of, or filing or registration with any court or governmental department, commission, board, bureau, agency, or instrumentality that has not been obtained or issued is or will be necessary for the valid adoption, execution delivery or performance by the City of the Ordinance, the Related Documents, this Agreement, and the Bank Note. Section 4.04 Binding Effect. This Agreement the Bank Note, the Ordinance, and the Related Documents constitute valid and binding obligations of the City, assuming this Agreement is a valid and binding agreement of the Bank, enforceable against the City in accordance with their respective terms, except as such enforceability may be limited by the City's bankruptcy, insolvency, reorganization, moratorium, or other laws or equitable principles relating to or limiting creditor's rights and remedies generally. Section 4.05 Federal Reserve Regulations. No part of the proceeds of any Loan will be used for the purpose, whether immediate, incidental, or ultimate, to purchase or carry any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended from time to time), or to extend credit to others for the purpose of purchasing or carrying any margin stock, or for any other purpose which would violate any of the regulations of said Board of Governors. 21 HOU.3007099.4 Section 4.06 Litigation. There is no action, suit, or proceeding pending in any court in Tarrant County Texas, or, to the knowledge of the City, pending or threatened against or affecting the City, the System or relating to other applicable laws or regulations, or this Agreement or the Related Documents in any court or before or by any governmental department, agency, instrumentality, or arbitrator the resolution of which could reasonably be expected to materially and adversely affect the ability or authority of the City to perform its obligations under this Agreement or the Related Documents, or which in any manner questions the validity or enforceability of this Agreement, the Bank Note, the Ordinance, or the Related Documents or the granting, perfection, enforceability, or priority of the lien on and pledge of the Collateral provided in Section 2.09, except any action suit, or proceeding (i) as described in the Offering Memorandum prepared by the City and the Dealer relating to the Commercial Paper Notes or (ii) which may be brought prior to the Effective Date as to which the Bank has received an opinion of counsel satisfactory to the Bank, in form and substance satisfactory to the Bank and its counsel, to the effect that such action, suit, or proceeding is without substantial merit. Section 4.07 No Event of Default under the Ordinance. No "Event of Default" specified in the Ordinance and no event which, with the giving of notice or lapse of time or both would become such an Event of Default, has occurred and is continuing. Section 4.08 Financial Statements. Since the effective date of the financial information provided by the City to the Bank in connection with this Agreement, there has been no material adverse change in the business, properties condition (financial or otherwise), or operations present or prospective, of the City or the System. Section 4.09 Complete and Correct Information. All information, reports and other papers and data with respect to the City and the System furnished by the City to the Bank in connection with this Agreement were, at the time the same were so furnished, complete and correct in all material respects, to the extent necessary to give the Bank a true and accurate knowledge of the subject matter. No document furnished or statement made by the City in connection with the negotiations, preparation, or execution of this Agreement contains any untrue statement of a fact material to its creditworthiness or omits to state a material fact necessary in order to make the statements contained therein not misleading. Section 4.10 Sale or Encumbrance of System. During the term of this Agreement, and as long as any Prior Lien Obligations, the Bank Note, or any interest thereon, remain Outstanding, the City will not sell, dispose of or, except as permitted hereunder or under the Master Ordinance, further encumber the System; provided, however, that this provision shall not prevent the City from disposing of any portion of the System which is being replaced or is deemed by the City to be obsolete, worn out, surplus or no longer needed for the proper operation of the System. Net proceeds from any such disposition shall be used only for System purposes. Any agreement pursuant to which the City contracts with a person, corporation, municipal corporation or political subdivision to operate the System or to lease and/or operate all or part of the System shall not be considered as an encumbrance of the System. Section 4.11 Incorporation by Reference. The representations and warranties made by the City in the Related Documents are hereby incorporated herein by reference and made for the benefit of the Bank. 22 HOU:3007099.4 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BANK Section 5.01 Organization and Powers. The Bank (a) is duly established and validly existing under the laws of its jurisdiction, and (b) has full power and authority to execute, deliver, and perform this Agreement and to make Loans in accordance with the Commitment and this Agreement. Section 5.02 Authorization; Contravention. The execution, delivery, and performance by the Bank of this Agreement and its Loans to be made hereunder have been duly authorized by all necessary action by the Bank and do not contravene, or result in the violation of or constitute a default under, any provision of applicable law or regulation, its charter, or any order, rule, or regulation of any court, governmental agency, or instrumentality or any material agreement, resolution, or instrument to which the Bank is a party or by which it or any of its property is bound. Section 5.03 Bank Obligations Valid This Agreement is a valid and binding agreement of the Bank, assuming this Agreement is a valid and binding agreement of the City, enforceable against the Bank in accordance with its terms, except as limited by the Bank's bankruptcy, insolvency, reorganization, moratorium, or other similar laws or equitable principles relating to or limiting creditor's rights and remedies generally. ARTICLE VI COVENANTS OF THE CITY The City agrees that during the term of this Agreement and while any amount payable under the Bank Note remains unpaid Section 6.01 Information. The City will deliver to the Bank: (a) as soon as reasonably available after the end of each Fiscal Year, and in any event within 210 days after the end of such Fiscal Year, a copy of the annual report of the City and the System prepared in accordance with generally accepted accounting principles applicable to political subdivisions such as the City, consistently applied, and audited by independent certified public accountants of recognized standing, including a balance sheet of the City and the System as of the end of such Fiscal Year and related statements of revenues, expenses, and changes in retained earnings and cash flows for the Fiscal Year ended; (b) as soon as practicable and in any event within 90 days after the end of each quarter of each Fiscal Year, the unaudited financial operations of the System as of the end of such fiscal quarter, which includes information as to actual financial results compared to results contemplated by an annual budget, prepared from the books and records of the System on a consistent basis; (c) as soon as available and in any event within 40 days after the close of each fiscal quarter of the City, a certificate of an Authorized Representative (i) to the effect that as of the date of such certificate no Default has occurred, or (ii) if a Default has occurred specifying the nature of such Default, the period of its existence, and the action which the City is taking or 23 HOU:3007099.4 proposes to take with respect thereto unless such Default has previously been reported pursuant to 6.01(e) below, and no change in the status of such Default has occurred; (d) as soon as practicable but in any event within ten Business Days after the issuance thereof, copies of any prospectus official statement offering circular, placement memorandum, or similar or corresponding document, and any supplements thereto and updates and amendments thereof, that the City makes available in connection with the offering, issuance or incurrence of Prior Lien Obligations or Junior Lien Obligations, and, on request, copies of such other financial reports that the City shall customarily and regularly provide to the public; (e) forthwith upon the occurrence of any Event of Default a certificate of an Authorized Representative setting forth the details thereof and the action which the City is taking or proposes to take with respect thereto, a report showing the aggregate amount and maturities of Commercial Paper Notes outstanding at the end of the preceding month and a summary of the aggregate principal amount of Commercial Paper Notes issued, rolled over and retired in such period; (f) as soon as available after the beginning of each Fiscal Year, a copy of the City's budget for such Fiscal Year regarding the System and, if such budget has not then been adopted, within 30 days after the beginning of such Fiscal Year, a copy of the continuing appropriation ordinance adopted by the City appropriating funds pending the adoption of the budget; (g) concurrently with the delivery of the quarterly financial reports set out in subsection (b) above a written description of any actions, suits, and proceedings before any court or governmental department commission, board, bureau, agency or instrumentality against the City or involving the System which, if determined against the City or the System would have a material adverse effect on the financial condition of the System; and (h) upon written request of the Bank, information relating to the Pledged Revenues or any other financial information reasonably requested. Section 6.02 Access to Records. The City will furnish to the Bank such information regarding the financial condition results of operations, or business of the System as the Bank may reasonably request and will permit any officers, employees or agents of the Bank to visit and inspect during the regular operating hours of the City any of the properties of the System and to discuss matters reasonably pertinent to an evaluation of the credit of the City, all at such reasonable times as the Bank may reasonably request. All information received by or provided to the Bank pursuant to this Agreement, unless otherwise made public by the City, will be held as confidential information by the Bank. Section 6.03 Limitation on Debt. The City will not issue any additional Debt except in accordance with the Master Ordinance. Section 6.04 Proceeds of Commercial Paper Notes. The proceeds of the Commercial Paper Notes will be used by the City solely for the purposes described in the Ordinance. Section 6.05 No Amendment of Certain Contracts or Ordinances. The City will not consent to any amendment to or modification or waiver of any of the provisions of the Master 24 HOU:3007099.4 Ordinance, the Ordinance or the Related Documents without the prior written consent of the Bank. The City will give the Bank notice as promptly as practicable (but in no event less than ten Business Days) of any proposed amendments to or modifications or waivers of any provisions of the Master Ordinance or the Ordinance and of any meeting of the City Council of the City at which any of the foregoing will be discussed or considered. The foregoing notwithstanding the City may adopt Supplements to the Master Ordinance authorizing the issuance or incurrence of Prior Lien Obligations, subject to the provisions of Section 6.03 of this Agreement, without the consent of the Bank. Section 6.06 Rates, Sales of Obligations. The City shall prior to any date on which principal of the Bank Note becomes due, fix, charge and collect rates and charges for the use and services of the System, or, to the extent permitted by law use its best efforts to offer and sell bonds or other evidences of indebtedness or undertake a combination of both of the foregoing to produce amounts sufficient, together with other funds available therefor, to pay on such date the principal amount of the Bank Note which is due on such date plus accrued interest thereon and all other amounts due to the Bank hereunder in respect thereof or in respect of the Commitment, not previously paid from other funds available to the City. Section 6.07 Other Covenants. The City shall fully and faithfully perform each of the covenants required of it pursuant to the provisions of the Ordinance and the Master Ordinance. Section 6.08 Taxes and Liabilities. The City will pay all the indebtedness and obligations of the System promptly and in accordance with its terms and pay and discharge or cause to be paid and discharged promptly all taxes, assessments, and governmental charges or levies imposed upon it or upon its income and profits, or upon any of its property, real, personal, or mixed, or upon any part thereof, before the same shall become in default, except for those matters which are reasonably being contested in good faith by appropriate action or proceedings or for which the City has established adequate reserves in accordance with generally accepted accounting principles applicable to governmental entities. Section 6.09 Supplemental Ordinances and Further Assurances. The City will not adopt any supplemental ordinances, pursuant to the Ordinance, the Master Ordinance or otherwise, which would adversely affect the ability of the City to make payments of the Bank Note when due; provided, however, that nothing herein shall prevent the City from adopting a Supplement (as defined in the Master Ordinance) with respect to the issuance of Additional Prior Lien Obligations as provided in the Master Ordinance. The City will at any and all times, insofar as it may be authorized so to do by law, pass, make, do, execute, acknowledge, and deliver all and every such further resolutions, acts, assignments, recordings, filings, transfers, and assurances as may be necessary or desirable for the better assuring, conveying, granting, assigning, and confirming all and singular the rights, revenues, and other funds and the Collateral hereby pledged or assigned to the payment of the Bank Note, or intended so to be, of which the City may become bound to pledge or assign. Section 6.10 Efforts to Pay. In the event that any Loan is not paid at maturity, the City shall as quickly as possible take all action reasonably necessary to allow payment from any available System funds including proceeds from Bonds. 25 HOU:3007099.4 Section 6.11 Restrictions on Use of Proceeds. The proceeds of the Loans will be applied by the City only to pay the principal of and interest on the Commercial Paper Notes coming due during the Revolving Credit Period. None of the funds borrowed by virtue of this Agreement will be used in any manner or for any purpose except in the manner and for the purposes authorized by Texas law, this Agreement and the Ordinance. Section 6.12 Performance and Compliance with Other Covenants. The City shall perform and comply with each of the covenants contained in the Related Documents which covenants, as well as the related defined terms contained therein, are hereby incorporated by reference herein with the same effect as if each and every such provision were set forth herein in its entirety. No amendment to such obligations, covenants and agreements or defined terms made pursuant to the Ordinance shall be effective to amend such covenants and defined terms as incorporated by reference herein without the written consent of the Bank. Section 6.13 Compliance with Rules and Regulations. The City shall comply with all laws, ordinances, orders, rules, and regulations (including, without limitation, any applicable environmental law, ordinance, order, rule or regulation) of duly constituted public authorities which if not complied with would have a materially adverse effect on the City's ability to perform its obligations hereunder and under the Related Documents. Section 6.14 Maintenance and Operation of the System. The City covenants that it will at all times maintain the System, or within the limits of its authority cause the same to be maintained in good condition and working order and will operate the same, or cause the same to be operated, in an efficient and economical manner at a reasonable cost and in accordance with sound business principles. In operating and maintaining the System, the City will comply with all contractual provisions and agreements entered into by it and with all valid rules, regulations directions or orders of any governmental administrative or judicial body promulgating same noncompliance with which would materially and adversely affect the operation of the System. Section 6.15 Insurance. The City will keep the System insured with insurers of good standing against risks, accidents or casualties against which and to the extent customarily insured against by political subdivisions of the State of Texas operating similar properties, to the extent that such insurance is available. All net proceeds of such insurance shall be applied to repair or replace the insured property that is damaged or destroyed, or shall be deposited in the System Fund (as defined in the Master Ordinance), or shall be used to redeem Outstanding Bonds. The cost of all such insurance together with any additional insurance, shall be a part of the Maintenance and Operation Expenses. Section 6.16 Rates and Charges. So long as the Commitment or any Loans remain Outstanding, the City shall fix, charge and collect rates and charges for the use and services of the System in accordance with the Master Ordinance. Section 6.17 Investments Generally. The City shall comply with the provisions of the Public Funds Investment Act (Chapter 2256, Texas Government Code) and, in addition, shall not: (a) borrow money (by, without limitation, obtaining loans, issuing debt, purchasing securities on margin, entering into repurchase agreements or similar agreements) solely for the 26 HOU:3007099.4 purpose of investment, in an amount at any time greater than 20% of the total of the City's unleveraged investment portfolio; or (b) knowingly maintain any of the City's investment portfolio in a pool of investments managed by another person whose investment practices would result in the indirect violation of the limitation set forth in Subsection (a) above* or (c) invest in any instrument or execute any agreement commonly known as a derivative (such as byway of example, an inverse floater or any other variable rate or floating rate security the interest rate on which is not determined on a basis designed to result in a value of the security approximately equal to par) or invest in any other security with a derivative embedded in it (such as by way of example a structured note), except to the extent that any such investments or agreements do not exceed 20% of the City's unleveraged investment portfolio and except that for the purposes of this subsection the term "derivative" shall not include principal or interest strips of direct obligations of the United States which, if held to maturity, would yield to the City the face amount of such security; provided, however, notwithstanding the foregoing provision the City shall have the right to enter into transactions, agreements or investments without regard to the limitations set forth in this Subsection (c) for legitimate hedging purposes with respect to the City's investment portfolio, consistent with sound investment practices for investors similarly situated. In determining whether the City's investment in a pool of investments described in Subsection (b) above would cause a violation of Subsection (a) above, the amount of the City's investment in the pool will be considered borrowed money for the purposes of Subsection (a) above in an amount equal to the product of the amount of such investment times the percentage by which such pool is leveraged. Section 6.18 Pledge of Securities. In the event the unenhanced long term ratings of the System's Prior Lien Obligations are downgraded by any two of S&P, Moody's or Fitch below A- /A3/A-, respectively, the City shall, to the extent permitted by law within five (5) Business Days after written request by the Bank, collaterally pledge and deliver to the Bank Eligible Securities having a Value of Eligible Securities equal to the Commitment to secure the payment and performance of the City under this Agreement. The City agrees to execute and deliver to the Bank such security agreements and other documents or instruments as the Bank may reasonably require to evidence the pledge of Eligible Securities. Section 6.19 Sovereign Immunity. To the fullest extent authorized by Texas Government Code Section 1371.059(c), the City agrees to waive sovereign immunity from suit and liability for the purposes of adjudicating a claim to enforce its duties and obligations under this Agreement or for damages for breach of this Agreement. Section 6.20 Dealers; Issuing and Paying Agent. The City will not, without the prior written consent of the Bank (which consent shall not be unreasonably withheld), appoint or permit the appointment of a successor Dealer or Issuing and Paying Agent. The City shall at all times maintain one or more Dealers and an Issuing and Paying Agent under the Ordinance. The City shall cause the Dealers and the Issuing and Paying Agent to market, issue, and deliver as applicable, Commercial Paper Notes up to the Maximum Interest Rate, in accordance with the terms of the Ordinance and the Dealer Agreement. If any Dealer fails to sell Outstanding 27 HOU:3007099.4 Commercial Paper Notes for sixty (60) consecutive days, then the City agrees, at the written request of the Bank, to cause the applicable Dealer to be replaced with a Dealer reasonably satisfactory to the Bank within a reasonable time after receiving such written request. Any dealer agreement with a successor Dealer shall provide that (a) such dealer may resign upon at least 60 days prior written notice to the City the Issuing and Paying Agent and the Bank, and (b) such dealer shall use its best efforts to sell the Commercial Paper Notes up to the Maximum Interest Rate, in accordance with the terms of the Ordinance and said dealer agreement. Section 6.21 Future Incorporated Covenants. In the event that the City shall, directly or indirectly, enter into or otherwise consent to any credit agreement, liquidity agreement or other agreement or instrument related to the Prior Lien Obligations or the Commercial Paper Notes under which, directly or indirectly, any Person undertakes to make loans or extend credit or liquidity to the City, the payment or repayment of which is secured by Pledged Revenues, in which such agreement (or amendment thereto) provides such Person with more restrictive financial covenants, financial covenant levels or financial covenant testing periods than are provided to the Bank herein, the City shall provide the Bank with a copy of each such agreement (or amendment thereto) and such more restrictive financial covenants, financial covenant levels or financial covenant testing periods shall automatically be deemed to be incorporated into this Agreement and the Bank shall have the benefits of such more restrictive financial covenants, financial covenant levels and financial covenant testing periods as if specifically set forth herein. At the written request of the Bank, the City shall promptly enter into an amendment to this Agreement to include such more restrictive financial covenants, financial covenant levels and financial covenant testing periods (provided, that the Bank shall have and maintain the benefit of such more restrictive financial covenants, financial covenant levels and financial covenant testing periods even if the City fails to provide such amendment) Each and every amendment or waiver of such covenants and definitions made pursuant to such other credit agreement, liquidity agreement or other agreement or instrument, or the release, termination other discharge of such credit agreement, liquidity agreement or other agreement or instrument, shall not be effective to amend, release, terminate or discharge (as applicable) such covenants and definitions as incorporated by reference herein without the written consent of the Bank. For purposes of clarification (a) the terms "financial covenants", "financial covenant levels' and `financial covenant testing periods" refer to covenants to maintain coverage ratios at certain levels prior to the incurrence of additional Debt, to maintain rates, to maintain certain liquidity levels and similar financial covenants and (b) credit agreements, liquidity agreements or other agreements or instruments related to the Prior Lien Obligations or the Commercial Paper Notes do not include interest rate swap agreements. The terms "financial covenants", "financial covenant levels' and "financial covenant testing periods" specifically exclude the following: collateral posting requirements; reserve requirements; automatic termination events; termination events* additional termination events; and pricing levels. Section 6.22 Rate Covenant. The City will fix, establish, maintain and collect such rates, charges and fees for the use and availability of the System at all times as are necessary to produce Gross Revenues and other Pledged Revenues sufficient (1) to pay all current Operating Expenses, (2) to produce Net Revenues for each Fiscal Year at least equal to the Annual Debt Service Requirements during such Fiscal Year of the then Outstanding Parity Obligations, and (3) to pay all other financial obligations of the System reasonably anticipated to be paid from Gross Revenues. 28 HOU:3007099.4 Section 6.23 Issuance of Additional Parity Obligations. The City reserves and shall have the right and power to issue or incur Party Obligations for any purpose authorized by law pursuant to the provisions of the Master Ordinance and a Supplement (other than the Supplement adopted concurrently with the Master Ordinance) to be hereafter authorized. The City may issue, incur, or otherwise become liable in respect of any Parity Obligations if (i) a Designated Financial Officer shall deliver to the City a certificate stating that, to the best of his or her knowledge, the City is in compliance with all covenants contained in the Master Ordinance and any Supplement, is not in default in the performance and observance of any of the terms provisions and conditions hereof and thereof, and the Funds and Accounts securing the Parity Obligations then Outstanding as established in accordance with the terms of the Master Ordinance and any Supplement contain the amount then required to be therein; and (ii) an Accountant signs a written certificate to the effect that, in the opinion thereof, during either the next preceding Fiscal Year, or any twelve consecutive calendar month period ending not more than ninety days prior to the date of the then proposed Parity Obligations the Net Revenues were at least equal to (A) 1.25 times the average Annual Debt Service Requirements of the Parity Obligations to be Outstanding and (B) 1.10 times the Annual Debt Service Requirements of the Parity Obligations to be Outstanding in the Fiscal Year during which such Annual Debt Service Requirements are scheduled to be the greatest, after the issuance of the then proposed Parity Obligations. For purposes of this Section, if Parity Obligations are issued to refund less than all of the Parity Obligations then Outstanding the Accountant's certificate required by clause (ii) above shall give effect to the issuance of the proposed refunding Parity Obligations (and shall not give effect to the Parity Obligations being refunded following their cancellation or provision being made for their payment) ARTICLE VII DEFAULTS AND REMEDIES Section 7.01 Events of Default. If one or more of the following events ("Events of Default") shall have occurred and be continuing: (a) the City shall fail to pay (i) any normally scheduled principal or interest due under the Bank Note or (ii) any principal or interest under the Bank Note which is declared due and payable pursuant to the provisions of Section 7.01 or (iii) any Commitment Fee or any other amount payable hereunder and, in each case, such failure shall continue for a period of five Business Days from the date of notice given by the Bank under Section 2.08(a); (b) any representation, warranty, certification or statement made by the City in this Agreement or in any certificate financial statement, or other document delivered pursuant to this Agreement shall prove to have been incorrect in any material respect when made; (c) breach by the City of any covenant, agreement, or condition contained in Section 6.02 through Section 6.17 (d) breach by the City of any other covenant, agreement, or condition (other than those referred to or containea in clauses (a), (n), or (c) above) contained in this Agreement or the Bank Note and the continuation thereof for more than ten days after written notice thereof has been given to the City by the Bank without cure or correction to the satisfaction of the Bank, provided, however, such breach shall not constitute an Event of Default after such ten day period 29 HOU:3007099.4 for such period of time as, if in the reasonable judgment of the Bank, the City is diligently pursuing a cure or correction of such breach; (e) (i) a final unappealable judgment or order for the payment of money in excess of $25,000,000 payable from the Pledged Revenues shall be rendered against the City and such judgment or order shall continue unsatisfied, unbonded and unstayed for a period of 60 days, or (ii) the City shall have failed promptly to lift any execution, garnishment, of attachment pursuant to such judgment or order as, in the written opinion of the System's Chief Engineer, will impair the City's ability to carry on its System business; (f) (i) default by the City in the payment of any Debt in excess of $25,000,000 when due or within any applicable grace period or (ii) the occurrence of any event under any ordinance, resolution or instrument giving rise to any Debt, which results in or would entitle the obligee thereof or a trustee on behalf of such obligee to pursue any remedies against the City, including the right to declare the acceleration of any maturity thereof, or upon the lapse of time or the giving of notice or both would entitle the obligee thereof or a trustee on behalf of such obligee to accelerate any maturity thereof or which results in the forfeiture by the City of any of its rights under any such ordinance, resolution, or instrument; (g) the City shall commence a voluntary case or other proceeding seeking (i) hquidation, reorganization, or other relief with respect to the System or its Debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect or (ii) the appointment of a receiver, liquidator, custodian, or other similar official with respect to the City or any substantial part of its property, or shall consent to or acquiesce in such relief or the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it; (h) a receiver, liquidator, custodian, or other official, appointed in an involuntary case or proceeding commenced against the City, appointed without consent or acquiescence of the City, takes charge of a substantial part of the System and such action as to the System is not stayed, discharged, or vacated for a period of 30 days; (i) the City shall make a general assignment for the benefit of creditors, or declare a moratorium with respect to its Debts, or shall fail generally to pay its Debts as they become due, or shall take any action to authorize any of the foregoing; (j) an involuntary case or other proceeding shall be commenced against the City seeking (i) liquidation, reorganization, or other relief with respect to the City's Debts under any bankruptcy, insolvency, or other similar law now or hereafter in effect, (ii) the appointment of a custodian, receiver, liquidator, trustee or other similar official of the System, or any substantial part thereof and such proceeding or case shall not be dismissed or stayed within 90 days after the filing thereof or an order of relief shall be entered against the City under the federal bankruptcy laws as now or hereafter in effect, or (iii) a governmental authority having jurisdiction over the City imposes a debt moratorium, debt restructuring, or comparable restriction on repayment when due and payable of the principal of or interest on the Debt of the City; 30 HOU.3007099.4 (k) (i) any provision of this Agreement relating to the City's ability to make payments to the Bank hereunder, to make payments on the Bank Note or to raise funds to meet such payment obligations or (ii) any other material provision of this Agreement shall at any time for any reason cease to be valid and binding on the City as a result of federal or state legislative or administrative action, or shall be declared in a final non -appealable judgment by any court having jurisdiction over the City to be null and void, invalid, or unenforceable, or the validity or enforceability thereof shall be contested by an authorized representative of the City or an authorized representative of the City shall deny in writing that it has any further liability or obligations under this Agreement or the Ordinance; (1) the powers of the City shall be limited in any way or the Master Ordinance shall be modified or amended in any way without the prior written consent of the Bank, in either case, which prevents the City from fixing, charging or collecting rates and charges for the use and services of the System in an amount sufficient to pay its Debts as they become due; or (m) S&P, Fitch and Moody's shall have (i) assigned the Commercial Paper Notes a rating below A-3 (S&P), F-3 (Fitch) and P-3 (Moody's), (ii) assigned the unenhanced long term ratings of the System's Prior Lien Obligations a rating below BBB- (S&P and Fitch) and Baa3 (Moody's), or (iii) suspended or withdrawn the ratings of the Commercial Paper Notes or any other Debt; then, and in any such event, other than an Event of Default specified in paragraphs (g) through (1), the Bank may declare the Bank Note, all accrued interest thereon, and all other amounts payable under this Agreement to be forthwith due and payable whereupon the Bank Note and such interest and all such amounts shall become and be forthwith due and payable without presentment demand protest or further notice of any kind, all of which are hereby expressly waived by the City. If any Event of Default specified in paragraphs (g) through (j) shall occur, without any notice to the City or any other act by the Bank, the Bank Note together with accrued interest thereon, and all other amounts payable under this Agreement, shall become forthwith due and payable, without presentment, demand, protest, or other notice of any kind, all of which are hereby waived by the City. Upon the occurrence of any Special Event of Default, the Commitment shall terminate and the Bank shall have no obligation to make Loans to fund then outstanding Commercial Paper Notes. Upon the occurrence of an Event of Default that is not a Special Event of Default, the Bank may by notice to the City terminate the Commitment, if any (except as provided below), and the Commitment shall thereupon terminate, provided however the Commitment shall not terminate, and the right of the Bank to accelerate the maturity of the Bank Note shall not affect the obligation of the Bank to make Loans in the aggregate amount equal to their respective Commitment in accordance with the terms of Article II hereof, to the extent, but only to the extent, necessary for the City to make required payments of principal of and interest on the Commercial Paper Notes issued and sold prior to the time a No -Issuance Notice is received by the Paying Agent, provided further that if any Loans are made that would not have been made but for the application of the immediately preceding provision, such Loans shall be immediately due and payable on the date they are made. 31 HOU:3007099.4 Failure to take action in regard to one or more Events of Default shall not constitute a waiver of, or the right to take action in the future in regard to, such or subsequent Events of Default. Section 7.02 Suits at Law or in Equity and Mandamus. In case one or more Events of Default shall occur, then and in every such case the Holder of the Bank Note shall be entitled to proceed to protect and enforce such Holders' rights by such appropriate judicial proceeding as such Holder shall deem most effectual to protect and enforce any such right, either by suit, in equity, or by action at law, whether for the specific performance of any covenant or agreement contained in this Agreement, or in aid of the exercise of any power granted in this Agreement, or to enforce any other legal or equitable right vested in the Holder by this Agreement or the Bank Note or by law. The provisions of this Agreement shall be a contract with each and every Holder and the duties of the City shall be enforceable by any Holder by mandamus or other appropriate suit, action, or proceeding in any court of competent jurisdiction. Section 7.03 Cross Defaults. If there shall be an event of default under any other document evidencing a Debt by the City, the City shall not issue any additional Commercial Paper Notes until such event of default is cured or remedied and made good Section 7.04 Remedies Not }exclusive. No remedy herein conferred upon or reserved to the Holders is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised at any time or from time to time, and as often as may be necessary by any Holder. ARTICLE VIII MISCELLANEOUS Section 8.01 Additional Costs. If any law or guideline or interpretation or application thereof by any governmental authority charged with the interpretation or administration thereof or compliance with any request or directive of any governmental authority now existing or hereafter adopted: (a) subjects the Bank or any Participant to any tax or changes the basis of taxation with respect to this Agreement or the Bank Note, or payments by the City of principal, interest, fees or other amounts due from the City hereunder or under the Bank Note (except for taxes on the overall net income or share capital of the Bank or any Participant imposed by the jurisdiction in which the Bank's or Participant's principal office is located), (b) imposes, modifies or deems applicable any reserve, special deposit or similar requirement against credits or commitments to extend credit extended by, assets (funded or contingent) of deposits with or for the account of, or other acquisitions of funds by, the Bank or any Participant, (c) imposes, modifies or deems applicable any capital adequacy or similar requirement (A) against assets (funded or contingent) of, or credits or commitments to extend credit extended by, the Bank or any Participant, or (B) otherwise applicable to the obligations of the Bank or any Participant under this Agreement, or 32 HOU:3007099.4 (d) imposes upon the Bank or any Participant any other condition or expense with respect to this Agreement, or the Bank Note, or its making, maintenance or funding of any loan or other credit or any commitment or security therefor, and the result of any of the foregoing is to increase directly or indirectly the cost to, reduce the income receivable by, or impose any expense (including loss of margin) upon the Bank or any Participant with respect to this Agreement, the Bank Note or the making, maintenance or funding of any loan (or, in the case of any capital adequacy or similar requirement, to have the effect of reducing the rate of return on the Bank's or any Participant's capital, taking into consideration the Bank's or any Participant's policies with respect to capital adequacy) by an amount which the Bank or any Participant deems to be material to it, then the Bank promptly shall notify the City (A) that such an event as described in clauses (i) through (iv) above has occurred, (B) the nature of the event that has occurred and (C) of the amount determined in good faith (using any reasonable averaging and attribution methods) by the Bank (which determination shall be conclusive absent manifest error) to be necessary to compensate the Bank or any Participant for such increase, reduction or imposition. Such amount shall be due and payable by the City to the Bank or any Participant (as directed by the Bank) within ten (10) Business Days from the date of the Bank's notice. A certificate by the Bank or any Participant as to the amount due and payable under this Section from time to time and the method of calculating such amount shall be conclusive absent manifest error and shall be provided to the City along with the notice described above. The rights of any Participant in this Section 8.01 are expressly limited by the provisions of Section 8.11. Section 8.02 Notices and Accounts. Except as otherwise provided herein, all notices, requests, and other communications to any party hereunder shall be in writing (including telecopy, bank wire, or similar writing) and shall be given to such party at its address set forth on the signature pages hereof or such other address or telecopy number as such party may hereafter specify for the purpose of giving notice Each such notice, request or other communication shall be effective (i) if given by telecopy when such telecopy is transmitted to the telecopy number hereafter specified by any party for the purpose of giving notice and the appropriate acknowledgment is received, (ii) if given by mail, 72 hours after such communication is deposited in the United States mail with first class postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when delivered at the address specified in this Section; provided, however, that notices to the Bank under Article II hereof shall not be effective until received Notices to other parties shall be given at the following addresses or telecopy numbers or such other address or telecopy number hereinafter specified by such parties: If to the Paying Agent: If to the Dealer: HOU:3007099.4 U S. Bank Trust National Association 100 Wall Street Suite 1600 New York, New York 10005 Attn Corporate Trust Telephone: (212) 361-2894 Telecopy: (212) 509-3384 J.P. Morgan Securities Inc 383 Madison Avenue, 8th Floor New York, New York 10179 Attn: Peter McCarthy 33 If to Fitch: If to Moody's: If to S&P: Telephone: (212) 834-7224 Telecopy: (917) 456-3541 Fitch, Inc. One State Stieet Plaza New York, New York 10004 Attn: Municipal Structured Finance Telephone: (212) 908-0500 Telecopy: (212) 480-4421 Moody's Investors Service 99 Church Street New York, New York 10007 Attn: Municipal Commercial Paper Ratings Telephone: (214) 553-7738 Telecopy: (214) 233-6263 Standard & Poor's Ratings Group 25 Broadway New York, New York 10004 Attn: Municipal Commercial Paper Ratings Telephone (212) 208-1811 Telecopy: (214) 412-0506 Section 8.03 No Waivers. No failure or delay by the Bank in exercising any right, power, or privilege hereunder or under the Bank Note or otherwise shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. Section 8.04 Expenses. The City shall pay (i) to the Bank all reasonable out-of-pocket expenses of the Bank in connection with the preparation of this Agreement, (ii) to Andrews Kurth LLP, counsel to the Bank, its fees equal to $45,000 in connection with the transactions contemplated by this Agreement, and (iii) in case of any waiver or consent hereunder, or any amendment hereof or any Default or alleged Default by the City hereunder, all reasonable out-of- pocket expenses and legal fees incurred by the Bank in connection with such waiver, consent, amendment (and in the case of any amendment, an amendment fee of $3,000), or Event of Default and collection and other enforcement proceedings resulting therefrom. Section 8.05 Amendments or Modification. Any provision of this Agreement or the Bank Note may be amended or modified if, but only if, such amendment or modification is in writing and is signed by the City and the Bank. The City shall promptly notify Moody's, S&P and Fitch of any amendments or modifications of this Agreement. Section 8.06 Severability. Any provision of this Agreement which is prohibited, unenforceable, or not authorized shall be ineffective to the extent of such prohibition, unenforceability, or nonauthorization without invalidating the remaining provisions hereof. 34 HOU:3007099.4 Section 8.07 Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. Section 8.08 Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Complete sets of counterparts shall be lodged with the City and the Bank. Section 8.09 Payments in Dollars. All payments made or advanced under this Agreement shall be in United States currency only Section 8.10 GOVERNING LAWS; VENUE. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS. THE VENUE FOR ANY LEGAL ACTION TO ENFORCE OR INTERPRET THIS AGREEMENT SHALL BE IN TARRANT COUNTY TEXAS. THE BANK HEREBY CONSENTS TO AND SUBMITS TO IN PERSONAM JURISDICTION OF COMPETENT COURTS LOCATED IN THE STATE OF TEXAS, COUNTY OF TARRANT AND THE FEDERAL DISTRICT COURTS THAT ARE LOCATED IN THE CITY OF FORT WORTH. Section 8.11 Successor and Assigns, Participation. (a) The Bank's rights and obligations under this Agreement may not be assigned by the Bank, other than by operation of law to a successor or merged institution, unless the City has received written notice from all nationally recognized credit rating agencies then rating the Commercial Paper Notes that the ratings of the Commercial Paper Notes if any, issued by such rating agencies will not be lowered or withdrawn as a result of such assignment. If such conditions have been satisfied and the assignor and assignee have consummated the assignment, then (i) the assignee shall be the Bank for all purposes hereunder with a Commitment equal to the amount specified to the City, (ii) the assignor shall have no further obligation hereunder with respect to its Commitment (iii) the assignor shall deliver the Bank Note to the City, (iv) the City shall pay the assignor all unpaid accrued interest on such Bank Note; (v) the City shall execute and deliver to the assignee a new Bank Note, payable to the order of the assignee, dated the date of such assignment and in the maximum principal amount of the assignee's Commitment; and (vi) if such assignment is not an assignment of all of the assignor's rights and obligations hereunder, then the City shall execute and deliver to the assignor a new Bank Note payable to the order of the assignor, dated the date of such assignment and in the maximum principal amount of the assignor's remaining Commitment. (b) The City agrees, subject to the penultimate sentence of this paragraph, that the Bank may enter into participation agreements with Participants upon giving written notice to, but without the consent of, the City. The Bank promptly shall notify the City of the names of any Participants with whom the Bank enters into participation agreements. Accordingly the City confirms that all of its representations, warranties, covenants, certifications, and obligations under this Agreement and the Bank Note, as well as all rights under the lien and pledge securing the payment of the Bank Note and granted to the Bank pursuant to the Ordinance and Section 2.09 of this Agreement, are for the benefit of the Participants as well as for the benefit of the 35 HOU:3007099.4 Bank. No assignee, Participant, or other transferee of the Bank's rights shall be entitled to receive any greater payment under Section 8.01 than the Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the City's prior written consent to that effect. Any costs incurred by the City in connection with any assignment or participation of this Agreement shall be paid by the Bank making such assignment or granting such participation. The Bank shall make all Loan Advances with its own funds whether or not it has entered into participation agreements. Section 8.12 LIABILITY OF THE BANK AS BETWEEN THE BANK AND THE CITY, THE CITY ASSUMES TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL RISKS OF THE ACTS OR OMISSIONS OF THE PAYING AGENT AND THE DEALER WITH RESPECT TO THE USE OF ANY MONEY MADE AVAILABLE BY THE BANK IN ACCORDANCE WITH THIS AGREEMENT AND SHALL NOT PRECLUDE THE CITY FROM PURSUING SUCH RIGHTS AND REMEDIES AS IT MAY HAVE AGAINST THE ISSUING AND PAYING AGENT OR THE DEALER UNDER ANY OTHER AGREEMENTS. NEITHER THE BANK NOR ANY OF ITS OFFICERS OR DIRECTORS SHALL BE LIABLE OR RESPONSIBLE FOR (A) THE USE WHICH MAY BE MADE OF ANY MONEY MADE AVAILABLE BY THE BANK IN ACCORDANCE WITH THIS AGREEMENT OR FOR ANY ACTS OR OMISSIONS OF THE PAYING AGENT AND THE DEALER IN CONNECTION THEREWITH; (B) THE VALIDITY SUFFICIENCY, OR GENUINENESS OF ANY DOCUMENTS, DETERMINED IN GOOD FAITH BY THE BANK TO BE VALID, SUFFICIENT OR GENUINE, OR OF ANY ENDORSEMENT(S) THEREON, EVEN IF SUCH DOCUMENTS SHOULD IN FACT PROVE TO BE IN ANY OR ALL RESPECTS INVALID, INSUFFICIENT, FRAUDULENT, OR FORGED; (C) PAYMENT BY THE BANK AGAINST PRESENTATION OF DOCUMENTS DETERMINED IN GOOD FAITH BY THE BANK TO BE VALID, SUFFICIENT OR GENUINE, WHICH DO NOT STRICTLY COMPLY WITH THE TERMS OF THIS AGREEMENT; or (D) ANY OTHER CIRCUMSTANCES WHATSOEVER IN MAKING OR FAILING TO MAKE PAYMENT UNDER THIS AGREEMENT, EXCEPT ONLY THAT THE CITY SHALL HAVE A CLAIM AGAINST THE BANK, AND THE BANK SHALL BE LIABLE TO THE CITY, TO THE EXTENT BUT ONLY TO THE EXTENT OF ANY DIRECT, AS OPPOSED TO CONSEQUENTIAL OR PUNITIVE, DAMAGES SUFFERED BY THE CITY WHICH THE CITY PROVES WERE CAUSED BY (1) THE BANK S NEGLIGENCE OR WILLFUL MISCONDUCT IN DETERMINING WHETHER DOCUMENTS PRESENTED UNDER THIS AGREEMENT COMPLY WITH THE TERMS OF THIS AGREEMENT OR (II) THE BANK'S NEGLIGENT OR WILLFUL FAILURE TO PAY UNDER THIS AGREEMENT AFTER THE PRESENTATION TO IT BY AN AUTHORIZED REPRESENTATIVE OF DOCUMENTS STRICTLY COMPLYING WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT IN FURTHERANCE, AND NOT IN LIMITATION OF THE FOREGOING, THE BANK MAY ACCEPT DOCUMENTS THAT APPEAR ON THEIR FACE TO BE IN ORDER WITHOUT RESPONSIBILITY FOR FURTHER INVESTIGATION UNLESS THE BANK HAS RECEIVED ACTUAL NOTICE OR INFORMATION TO THE CONTRARY. Section 8.13 INDEMNIFICATION IN ADDITION TO ANY AND ALL RIGHTS OF REIMBURSEMENT, INDEMNIFICATION, SUBROGATION, OR ANY OTHER RIGHTS PURSUANT HERETO OR UNDER LAW OR EQUITY THE CITY HEREBY AGREES TO THE EXTENT PERMITTED BY LAW, TO INDEMNIFY AND HOLD HARMLESS THE 36 HOU:3007099.4 BANK AND ITS OFFICERS, DIRECTORS, AND AGENTS (THE "INDEMNIFIED PARTIES') FROM AND AGAINST ANY AND ALL CLAIMS DAMAGES LOSSES, LIABILITIES, REASONABLE COSTS, OR REASONABLE EXPENSES WHATSOEVER (INCLUDING REASONABLE ATTORNEYS FEES) WHICH THEY MAY INCUR (OR WHICH MAY BE CLAIMED AGAINST THEM BY ANY PERSON OR ENTITY WHATSOEVER) BY REASON OF OR IN CONNECTION WITH (A) ANY UNTRUE STATEMENT OR ALLEGED UNTRUE STATEMENT OF ANY MATERIAL FACT CONTAINED OR INCORPORATED BY REFERENCE IN THE INFORMATION SUPPLIED BY THE CITY TO THE BANK OR TO THE DEALER IN CONNECTION WITH THE PERFORMANCE OF THEIR DUTIES UNDER THIS AGREEMENT OR THE RELATED DOCUMENTS, INCLUDING ANY DISCLOSURE DOCUMENT OR THE OMISSION OR ALLEGED OMISSION TO STATE IN SUCH INFORMATION A MATERIAL FACT NECESSARY TO MAKE SUCH STATEMENTS, IN THE LIGHT OF CIRCUMSTANCES UNDER WHICH THEY ARE OR WERE MADE NOT MISLEADING• OR (B) THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE BANK NOTE AND THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR PAYMENT OR FAILURE TO PAY UNDER THE COMMITMENT; PROVIDED, HOWEVER THAT THE CITY SHALL NOT BE REQUIRED TO INDEMNIFY ANY INDEMNIFIED PARTY FOR ANY CLAIMS, DAMAGES LOSSES, LIABILITIES, COSTS OR EXPENSES TO THE EXTENT BUT ONLY TO THE EXTENT, CAUSED BY ITS NEGLIGENCE OR WILLFUL MISCONDUCT. IF ANY PROCEEDING SHALL BE BROUGHT OR THREATENED AGAINST ANY INDEMNIFIED PARTY BY REASON OF OR IN CONNECTION WITH THE EVENTS DESCRIBED IN CLAUSE (A) OR (B), SUCH INDEMNIFIED PARTY SHALL PROMPTLY NOTIFY THE CITY IN WRITING AND THE CITY SHALL ASSUME THE DEFENSE THEREOF, INCLUDING THE EMPLOYMENT OF COUNSEL SATISFACTORY TO SUCH INDEMNIFIED PARTY AND THE PAYMENT OF ALL COSTS OF LITIGATION. NOTWITHSTANDING THE PRECEDING SENTENCE, SUCH INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO EMPLOY ITS OWN COUNSEL AND TO DETERMINE ITS OWN DEFENSE OF SUCH ACTION IN ANY SUCH CASE, BUT THE FEES AND EXPENSES OF SUCH COUNSEL SHALL BE AT THE EXPENSE OF SUCH INDEMNIFIED PARTY UNLESS (I) THE EMPLOYMENT OF SUCH COUNSEL SHALL HAVE BEEN AUTHORIZED IN WRITING BY THE CITY OR (II) THE CITY, AFTER DUE NOTICE OF THE ACTION SHALL NOT HAVE EMPLOYED COUNSEL TO HAVE CHARGE OF SUCH DEFENSE, IN EITHER OF WHICH EVENTS THE REASONABLE FEES AND EXPENSES OF COUNSEL FOR SUCH INDEMNIFIED PARTY SHALL BE BORNE BY THE CITY. THE CITY SHALL NOT BE LIABLE FOR ANY SETTLEMENT OF ANY SUCH ACTION EFFECTED WITHOUT ITS CONSENT. NOTHING UNDER THIS SECTION IS INTENDED TO LIMIT THE CITY S PAYMENT OBLIGATIONS CONTAINED ELSEWHERE IN THIS AGREEMENT. THIS SECTION SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT Section 8.14 Telecopied Documents. (a) At the request of the City, this Agreement provides that demands for payment hereunder may be presented to the Bank by among other methods telecopy. The City acknowledges and assumes all risks relating to the use of such telecopied demands for payment (i) which are telecopied from the City's facsimile machine (which telephone number currently is 37 HOU:3007099.4 (817) 392-8966) or such other facsimile machine and telephone number as shall be designated by an Authorized Representative and (ii) which bears the facsimile signature of an Authorized Representative. (b) At the request of the Bank, this Agreement provides that demands for payment hereunder may be presented to the City by, among other methods telecopy. The Bank acknowledges and assume all risks relating to the use of such telecopied demands for payment (i) which is telecopied from the Bank s facsimile machine (which telecopy number currently is (817) 884-5697) or such other facsimile machine and telephone number as shall be designated by the Bank, and (ii) which bears the facsimile signature of an authorized representative of the Bank. Section 8.15 Term of the Agreement. The term of this Agreement shall be until the payment in full of all principal of and interest on the Bank Note, the Commitment Fees, and all other amounts payable under this Agreement; provided, however, that notwithstanding any termination of this Agreement, the provisions of Sections 8.01, 8.04 and 8.13 shall survive payment of the Bank Note and shall remain in full force and effect. Section 8.16 ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY AND SUPERSEDES AND IS IN FULL SUBSTITUTION FOR ANY AND ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN SAID PARTIES RELATING TO SUCH TRANSACTIONS. THIS AGREEMENT AND THE RELATED DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. [Signatures begin on next page.] 38 HOU:3007099.4 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. ATTEST: By: City Seca ary APPI_OVED AS TO FORM: ,-eit *dr City Attorney Address: CITY OF FORT i1VORTH, TEXAS wrorthe4.14 By: tix 0000 ©90; 4ipkih °Cgg% 011� CI 4°°4 0 Y is 0 0 �It a ,°0o00000 ,t7 4, i_ d 1)' tizra Rn{ � `� ctgl�C.�`'o' y 't ka C� . City of Fort Worth 1000 T hrockror ton Fort Worth, Texas 76102 Attention: Chief Financial Officer of the City Telephone: (817) 392-8517 Telecopy: (817) 392-8966 City Manager Colivi.k act Authori zatiom+. 41 Date HOU:3007099.4 Address/Lending Office: 420 Throckmorton, Suite 400 Fort Worth, TX 76102 Attn J. Michael Wilson Telephone (817) 884-4283 Telecopy: (817) 884-5697 JPMOHASE BANK, N.A. By: J Se 1 Wilson ice President HOU:3007099.4 $163,315,069 EXHIBIT A FORM OF BANK NOTE City of Fort Worth, Texas Water and Sewer System Revolving Credit Agreement Fort Worth, Texas April 20, 2010 For value received, the CITY OF FORT WORTH, TEXAS (the "City"), a home -rule city of the State of Texas, organized and existing under and by virtue of the laws of the State of Texas, promises to pay, solely from the funds hereafter referred to, to the order of JPMORGAN CHASE BANK, N.A. (the "Bank") at the address provided in the Agreement (hereinafter defined), the aggregate unpaid principal amount of all Loans hereunder and under the Agreement not to exceed ONE HUNDRED SIXTY-THREE MILLION THREE HUNDRED FIFTEEN THOUSAND SIXTY-NINE DOLLARS AND NO CENTS ($163,315,069.00) in principal amount at any one time outstanding, made by the Bank to the City hereunder, in lawful money of the United States of America, in federal or other immediately available funds, and to pay interest at the rates set forth in the Agreement on the actual unpaid principal amount hereof for each day outstanding from the date hereof until this Bank Note is paid in full in like money and funds at such office Interest shall be payable on the dates set forth in the Agreement. Principal on this Bank Note shall be payable in accordance with the Agreement. This Bank Note is subject to prepayment and amounts prepaid prior to the last day of the Revolving Credit Period may be reborrowed, all pursuant to the terms and under the conditions of the Revolving Credit Agreement, dated as of April 1, 2010, between the City and the Bank (the "Agreement", the terms of which are hereby incorporated by reference in this Bank Note). All terms used herein and not defined shall have the same meaning as in the Agreement. Reference is made to the Agreement for provisions as to the prepayment hereof and for reborrowing. Reference is also made to the Agreement for provisions providing for additional interest and other amounts to be payable under certain circumstances. If the Holder enforces this Bank Note upon default, the City shall reimburse the Holder for reasonable costs and expenses incurred by the Holder in collection, including attorneys fees and expenses as set out in Section 8 04 of the Agreement. This Bank Note shall be construed under and governed by laws of the State of Texas but Chapter 346, Texas, Finance Code, as amended, shall not apply. This Bank Note, including the interest hereon is payable solely from and secured by a lien upon the pledge of certain revenues and certain other available funds and money of the City, all as set forth in Section 2 09 of the Agreement and Section 2 10 of the Ordinance (as defined in the Agreement). This Bank Note does not constitute a general obligation or indebtedness of the City within the meaning of any constitutional, charter, or statutory limitations or provisions (and the Holder hereof shall never have the right to require or compel the levy of ad valorem taxes for the payment of the principal of and interest on this Bank Note). Further reference is made to the Agreement and the Ordinance for the provisions relating to the security of this Bank Note and the duties and obligations of the City. A-1 HOU:3007099.4 Made and executed at Fort Worth, Texas, as of the date and year first above written. ATTEST: By: City Secretary (SEAL) APPROVED AS TO FORM: By: City Attorney CITY OF FORT WORTH, TEXAS By: Mayor A-2 HOU:3007099.4 EXHIBIT B NOTICE OF LOAN TO: JPMORGAN CHASE BANK, N.A. (the ' Bank") under the Revolving Credit Agreement, dated as of April 1, 2010 between the Bank and the City of Fort Worth, Texas (the "City") (the "Agreement") The City, acting herein by the undersigned [Authorized Representative] [Issuing and Paying Agent], pursuant to Section 2.02 and related provisions of the Agreement, issues this Notice of Loan to be made under the Agreement as follows: 1. Business Day on which Loan is to be made ("Loan Date"): • 2. Aggregate Principal Amount of Loan: • 3. Maturity Date [90 days from Loan Date]: • The Loans shall be available for the account of Holders of the Commercial Paper Notes at (the "Issuing and Paying Agent"). In connection with this Notice of Loan the City certifies to the Bank that at the issuance of this Notice of Loan no Special Event of Default has occurred and is continuing. Capitalized terms herein are used with the meaning given in the Agreement. Date of this Notice of Loan: CITY OF FORT WORTH, TEXAS By: [Authorized Representative] [Issuing and Paying Agent] B-1 HOU:3007099.4 EXHIBIT B-1 REQUEST FOR TERM LOAN TO: JPMORGAN CHASE BANK, N.A., (the "Bank' ) under the Revolving Credit Agreement (the "Agreement"), dated as of April 1, 2010 between the Bank and the City of Fort Worth, Texas (the "City") The City, acting herein by the undersigned Authorized Representative, pursuant to Section 2.02 and related provisions of the Agreement, issues this Request for Term Loan to be made under the Agreement as follows: 1. Loan Date: • • 2. Aggregate Principal Amount of Loan: • 3. Term Loan Maturity Date [Third Anniversary of Loan]: 3 The City acknowledges that the Bank's obligations to make Term Loans to the City are subject to the satisfaction of the conditions set forth in Section 3.03 of the Agreement on the date a Loan is converted to a Term Loan. Capitalized terms herein are used with the meaning given in the Agreement. Date of this Request for Term Loan: CITY OF FORT WORTH, TEXAS By: Authorized Representative B1-1 HOU:3007099.4 EXHIBIT C NO -ISSUANCE NOTICE U S. Bank Trust National Association 100 Wall Street Suite 1600 New York, New York 10005 Ladies and Gentlemen: JPMorgan Chase Bank, N.A. (the 'Bank"), and the City of Fort Worth, Texas (the "City"), have entered into to that certain Revolving Credit Agreement dated as of April 1, 2010 (the "Agreement"). Any term defined in the Agreement and used in this letter shall have the meanings ascribed to it in the Agreement. [There exists a Default] [The representations and warranties of the City set forth in Article IV of the Agreement are not true and correct in all material respects on and as of the date of this No -Issuance Notice] and this letter constitutes your notice thereof pursuant to Section 2.14 of the Agreement. [Describe Default or untrue representation.] Effective as of the earlier of your receipt of this notice or your receipt of oral advice of the contents hereof, and until you receive written notice from the Bank that this notice has been rescinded, you are instructed not to authenticate or deliver any Commercial Paper Notes. Very truly yours, JPMORGAN CHASE BANK, N.A. By: Name. Title: cc: City of Fort Worth 1000 Throckmorton Fort Worth, Texas 76102 Attention: Chief Financial Officer of the City Telephone (817) 392-8517 Telecopy: (817) 392-8966 C-1 HOU:3007099.4 EXHIBIT D CLOSING CERTIFICATE AS REQUIRED BY SECTION 3.01(a)(iv) OF THE CREDIT AGREEMENT I, the undersigned City Manager of the City of Fort Worth, Texas (the "City"), pursuant to the Revolving Credit Agreement, dated as of April 1, 2010, between the City and JPMorgan Chase Bank, N.A. (the "Credit Agreement"), defined terms of which are herein incorporated by reference, does hereby certify as follows: 1. (a) Each of the representations and warranties of the City contained in the Credit Agreement is true and correct in all material respects on and as of the date hereof as though made on and as of this date, and (b) as of the date hereof no Default has occurred or is continuing; 2. Except as heretofore disclosed by the City, no litigation is pending in any court in Tarrant County, Texas, or, to my knowledge pending or threatened in any court to restrain or enjoin the issuance or delivery of the City of Fort Worth, Texas Water and Sewer System Commercial Paper Notes, Series A and the Bank Note issued in connection therewith (collectively, the "Notes") or the collection of the revenues and assets of the City pledged or to be pledged to pay the principal of and interest on the Notes or the pledge thereof, or in any way contesting or affecting the validity of the Notes, the Ordinance authorizing the Notes (the "Ordinance"), or the Credit Agreement, or contesting the powers of the City or contesting the authorization of the Notes or the Ordinance or contesting in any way the accuracy, completeness, or fairness of the Offering Memorandum prepared in connection with the issuance of the Notes (the "Memorandum"); 3. To the best of my knowledge, the statements and representations in the Memorandum are true and accurate, and insofar as the City and its affairs, including its financial affairs, are concerned, the Memorandum does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; 4. There has not been any material and adverse change in the affairs or financial condition of the City, including particularly the System, including the Pledged Revenues derived therefrom, from that described in the Memorandum; 5. None of the Pledged Revenues are pledged or encumbered to the payment of any debt or obligation of the City or the System, except (i) in connection with the outstanding Prior Lien Obligations, (ii) in connection with the Notes, with such pledge securing the Bank Note being subordinate only to the lien on and pledge of Pledged Revenues securing the payment of the Prior Lien Obligations, and (iii) in connection with the Subordinate Lien Obligations and the Inferior Lien Obligations; and 6. All conditions to the Closing Date in the Credit Agreement have been met. D-1 HOU:3007099.4 WITNESS MY HAND THIS DAY OF , 2010. CITY OF FORT WORTH, TEXAS City Manager HOU:3007099.4 D-2 EXHIBIT E FORM OF OPINION OF CITY ATTORNEY [Closing Date] JPMorgan Chase Bank, N.A , 420 Throckmorton, Suite 400 Fort Worth, Texas 76102 Re: City of Fort Worth, Texas Water and Sewer System Commercial Paper Notes, Series A (the "Notes") Ladies and Gentlemen: I am the duly appointed City Attorney of the City of Fort Worth, Texas (the "City"), and this opinion is rendered on behalf of the City pursuant to and in connection with the authorization of the Notes as defined in Ordinance No. 17462-03-2007 adopted on March 27, 2007 by the City Council of the City (the "Council") and Ordinance No. adopted on April 13, 2010 by the Council (together, the "Ordinance") authorizing, among other things, the execution and delivery of the Revolving Credit Agreement dated as of April 1, 2010 (the ' Credit Agreement") between the City and JPMorgan Chase Bank, N.A. (the "Bank"). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement. I or my designated attorneys have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents corporate records, certificates of public officials, and other instruments, and we have conducted such other investigation of fact and law as I have found necessary or advisable for the purpose of this opinion. Under the Ordinance and the Credit Agreement, the proceeds of the loans made under the Credit Agreement are to be applied to the payment of the principal of the Notes. I have also made such further investigation of law and facts as I have deemed necessary or advisable for purposes of the opinions herein expressed. Based upon the foregoing, I am of the opinion that: 1. The City (a) is an incorporated city operating under a home -rule charter adopted pursuant to Article XI, Section 5 of the Constitution of Texas; (b) has full power and authority to execute, deliver, and perform the Credit Agreement, the Bank Note, the Ordinance, the Master Ordinance and the Notes and to borrow under the Notes, the Bank Note and the Credit Agreement; (c) has all requisite power and authority to own and operate the System and (d) has all requisite power and authority to pledge and grant a lien on the Pledged Revenues to the Bank to secure payment of the Loans and has lawfully exercised such power 2. The System is a "public utility" as defined in the Act; the Notes have been or shall be issued, sold, and delivered to finance the costs and expenses incurred in relation to the acquisition and construction of improvements, additions, and extensions for an "eligible project" E-1 HOU:3007099.4 (as defined in the Act) and for the payment of previously issued obligations; the Notes are or will be when issued "obligations" (as defined in the Act) and were duly authorized to be issued by the Council, which is authorized by law to issue bonds for or on behalf of the City and is the "governing body" (as defined in the Act) of the City; and the Council has authorized and approved the Credit Agreement and the Bank Note as "credit agreements' (as such term is defined in the Act) in connection with the issuance security, and payment of the Notes. 3. The execution, delivery, and performance of the Credit Agreement, the Bank Note, the Notes, and the borrowing under the Credit Agreement the Bank Note and the Notes by the City have been duly authorized by all necessary action of the City and the Council. 4. All authorizations, consents, approvals, licenses, permissions, and registrations, if any, of or with any person, including any governmental authority and the citizens of the City, required in connection with (a) the execution, delivery, and performance of the Credit Agreement, the Bank Note and the Notes and (b) the passage of the Ordinance by the Council authorizing the execution delivery, and performance of the Credit Agreement, the Bank Note and the Notes have, in each case, been obtained. 5. The Credit Agreement and the Bank Note (a) are valid and binding obligations of the City enforceable in accordance with their respective terms except as limited by bankruptcy, insolvency, moratorium, and similar laws affecting creditors' rights generally and except to the extent enforceability thereof may be hmited under Texas law with respect to the indemnification provisions; (b) will not result in a default under or a breach of any ordinance of the City or, to the best of my knowledge, any other agreement or instrument binding upon the City or the System; and (c) will not conflict with or result in any violation of any legal requirement. 6. The Master Ordinance and the Ordinance are in full force and effect and to the best of my knowledge there exists no breach, default, or event of default thereunder or any event which with the lapse of time or action by a third party could result in a breach, default, or event of default thereunder. 7 To the best of my knowledge and except as set forth in the Offering Memorandum delivered in connection with the issuance of the Notes, there is no litigation or legal or administrative proceeding pending, or threatened against, or any outstanding judgment, order, writ injunction, decree, or award affecting the City before any court, governmental authority, or arbitral body (a) which prohibits or affects, or if adversely determined could reasonably be expected to prohibit or affect, the ability or authority of the City to execute, deliver, or perform any part of the Credit Agreement or (b) which in the aggregate have, or if adversely determined would have any material adverse effect on the System. To the best of my knowledge, the City is not in default with respect to any order, writ, injunction, or decree of any court or other governmental authority which would adversely affect the City s ability to execute, deliver or perform any part of the Credit Agreement, the Bank Note, the Notes, the Master Ordinance, or the Ordinance. 8. The liens on and pledges of the Pledged Revenues of the System created pursuant to the Ordinance and the Credit Agreement are legal, valid and binding liens on and pledges of such Pledged Revenues. E-2 HOU:3007099.4 The opinions expressed above are qualified to the extent that the enforceability of the rights and remedies set forth in the Credit Agreement and the Related Documents may be limited by bankruptcy, reorganization, or other similar laws of general application relating to or affecting the enforcement of creditors' rights I express no opinion as to the extent, if any, to which any provisions relating to indemnification and waiver of sovereign immunity contained in the Credit Agreement or any other document used in connection with the issuance of the Notes is enforceable under Texas law or as to the specific remedy that any court, governmental authority, or board of arbitration may grant impose, or render in connection with the above -described instruments. The opinions herein expressed and the statements herein made are limited in all respects to the laws of the State of Texas and applicable federal law. This opinion is solely for the benefit of and may be relied upon by the addressees. This opinion may not be relied upon by any other person, without my written consent. Very truly yours, City Attorney E-3 HOU:3007099.4 EXHIBIT F INTENTIONALLY OMITTED HOU:3007099.4 F-1 EXHIBIT G FORM OF OPINION OF BANK'S COUNSEL G-1 HOU:3007099.4 EXHIBIT H FORM OF FINAL DATE EXTENSION REQUEST JPMorgan Chase Bank, N.A., 500 W. Seventh St., 11th Floor Fort Worth, Texas 76101 [Dated Date] Re: City of Fort Worth, Texas Water and Sewer System Commercial Paper Notes, Series A Final Date Extension Request Ladies and Gentlemen: Pursuant to Section 2.10 of that certain Revolving Credit Agreement dated as of April 1, 2010, between the City of Fort Worth, Texas (the "City") and JPMorgan Chase Bank, N.A. the City requests that the Final Date (as defined in the Revolving Credit Agreement) be extended to . [If applicable, add the following.] [Such request is being made to accommodate the City's opportunity to market Notes (as defined in the Agreement) with maturities beyond the current Final Date.] Very truly yours, CITY OF FORT WORTH, TEXAS By: Mayor H-1 HOU:3007099.4 EXHIBIT I CERTIFICATE OF INCUMBENCY I, the City Secretary of the City of Fort Worth, Texas, hereby certify as follows: 1. This Certificate is given in connection with the definition of the term ' Authorized Representative" as set forth in Section 1.01 of the Revolving Credit Agreement, dated as of April 1, 2010 between the City of Fort Worth, Texas (the "City") and JPMorgan Chase Bank, N.A. (the "Revolving Credit Agreement") relating to the City's Water and Sewer System Commercial Paper Notes, Series A (the "Notes"). 2. Each of the persons named below has been duly authorized by the City or by the Ordinance adopted by the City which authorized the issuance of the Notes (the "Ordinance") to serve as an "Authorized Representative" (as such term is defined and utilized in the Ordinance and the Revolving Credit Agreement) and such persons are on the date hereof the duly elected and qualified incumbents of the offices of the City set opposite their respective names, and the signatures hereinbelow are the genuine signatures of said officials: Name Specimen Signatures EXECUTED this day of , 2010. City Secretary HOU:3007099.4 I-1 Page 1 of 2 City of Fort Worth, Texas Mayor and Council Communication COUNCIL ACTION: Approved on 4/13/2010 - Ord. No. 19113-04-2010 & 19114-04-2010 DATE: Tuesday, April 13, 2010 LOG NAME: 1310WATERCP S UBJECT: Adopt an Ordinance Approving JP Morgan Chase as Liquidity Provider in Support of the City's Water and S ewer System Commercial Paper Notes, Adopt a Supplemental Appropriation Ordinance Increasing Appropriations by $488,130.58 Approve the Execution of an Agreement with the Liquidity Provider and Resolve Other Matters Incident and Related to the Issuance, Sale, Security and Delivery of Commercial Paper Notes REFERENCE NO.: C-24182 RECOMMENDATION: It is recommended that the City Council: 1. Adopt the attached ordinance approving JP Morgan Chase as liquidity provider in support of the City's Water and Sewer System Commercial Paper Notes; 2. Adopt the attached supplemental appropriation ordinance, increasing appropriations in the Commercial P aper Debt Service Fund by $488,130.58 from cash available for appropriation; 3. Approve the execution of an Agreement with the liquidity provider; and 4. Resolve other matters incident and related to the issuance, sale, security and delivery of Commercial Paper Notes DISCUSSION: The Commercial Paper program allows the City to deliver capital projects in one of two ways. The City can issue Commercial Paper Notes for interim financing or use the Commercial Paper authority to initiate the project and use cash from the City portfolio to fund projects until such time as the City issues debt to replenish the portfolio. This is the same practice where commercial paper has been used to support previous Water and Sewer capital projects, as well as the 1998 and 2004 capital projects bond programs. The Agreement with the current liquidity provider for this program, Bank of America, expires on April 20, 2010. Because of the current market, rates have increased significantly over what the City is currently paying. After comparing quoted rates, the City's financial advisors and the City staff recommend retaining JP Morgan Chase to provide the liquidity facility and act as the Issuing/Paying Agent, if required. The fee of 70 basis points equates to an annual cost of approximately $1,150,000.00 which is an increase of $488,130.88 over existing fees for the remainder of Fiscal Year 2010. FISCAL INFORMATION / CERTIFICATION The Financial Management Services Director certifies that upon approval of the above recommendations and the adoption of the attached ordinance and attached supplemental appropriation ordinance, funds will be available in the current debt service budget, as appropriated of the Commercial Paper Debt Service http://apps.cfwnet.org/ecouncil/printmc.asp?id=13342&print=true&DocType=Print 10/7/2010 Page 2 of 2 Fund. FUND CENTERS. TO Fund/Account/Centers PE52 553010 0132000 FROM Fund/Account/Centers $488,130.58 PE52 553010 0132000 $488,130.58 CERTIFICATIONS: Submitted for City Manager's Office by: Originating Department Head: Additional Information Contact: Karen Montgomery (6222) Lena Ellis (8517) James Mauldin (2438) ATTACHMENTS 1. 1310WATERCP AO.doc (Public) 2. Fund Availability.pdf (CFW Internal) 3. Ordinance JPM.doc (Public) 4. Pe52-202000 pdf (CFW Internal) 5. Water dept Notification .msg (CFW Internal) http://apps.cfwnet.org/ecouncil/printmc.asp?id=13342&print=true&DocType=Print 10/7/2010