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HomeMy WebLinkAbout140 - 11/19/1996 - AMENDING ORDINANCE NO. 26, 1993 ORDINANCE NO. 140, 1996 AN ORDINANCE AMENDING ORDINANCE NO. 26, 1993 . WHEREAS, the City of Fort Collins, Colorado (the "City") , has heretofore issued and sold its Sales and Use Tax Revenue Refunding Bonds, Series 1993 , dated June 1, 1993 , in the aggregate principal amount of $26, 210, 000 (the "Bonds") pursuant to Ordinance No. 26, 1993 (the "Ordinance") ; and WHEREAS, the Ordinance provides in Section 5D thereof as follows: Nothing in this Ordinance shall be construed as limiting the right of the City to substitute for the cash deposit required to be maintained hereunder a letter of credit, surety bond, insurance policy, agreement guaranteeing payment, or other undertaking by a financial institution to ensure that cash in the amount otherwise required to be maintained hereunder will be available to the City as needed, provided that any such substitution shall be made in conformity with the requirements of Exhibit E to the Commitment and shall be submitted to Fitch Investors Service, Inc. , Moody's Investors Service, Inc. and Standard & Poor's Corporation and shall not cause the then-current ratings of the Bonds to be adversely affected. Any such credit instrument shall be deposited with the Paying Agent, which shall ascertain the necessity for a claim against or draw upon the credit instrument and provide notice to the issuer of such credit instrument in accordance with its terms not later than three (3) days (or such longer period as may be necessary, depending on the permitted time period for honoring claims or draws thereunder) prior to each Interest Payment Date. If a letter of credit is substituted for the cash deposit required to be maintained hereunder, the Paying Agent shall draw upon such letter of credit prior to its expiration or termination unless an alternate credit instrument conforming with the provisions hereof has been substituted therefor or the amount otherwise required to be maintained hereunder is on deposit in the Reserve Account. and WHEREAS, substitution of a surety bond for the cash deposit required to be maintained in the Reserve Account (as defined in the Ordinance) for the Bonds will permit the City to use such cash deposit to reimburse the City for capital expenditures made by the City since 1986 that could have been financed by the Bonds or the obligations refunded thereby; and WHEREAS, the City has received a Commitment for Surety Bond, Commitment No. SB14222 , dated October 15, 1996 (the "Surety Bond Commitment") , from AMBAC Indemnity Corporation ("AMBAC Indemnity") to issue a surety bond (the "Surety Bond") for the purpose and in compliance with the requirements specified in the Ordinance; and 1 WHEREAS, the Surety Bond Commitment requires that certain amendments be made to the Ordinance in order to enable AMBAC Indemnity to issue the Surety Bond; and WHEREAS, the Ordinance provides in Section 11A thereof as follows: The City may, without the consent of, or notice to, the Owners of the Bonds, adopt such ordinances supplemental hereto (which amendments shall thereafter form a part hereof) for any one or more or all of the following purposes: (1) To cure or correct any formal defect, ambiguity or inconsistent provision contained in this Ordinance; (2) To appoint successors to the Paying Agent, Registrar, Transfer Agent or Escrow Bank as provided in Section 3B(6) hereof; (3) To designate a trustee for the Owners of the Bonds, to transfer custody and control of the Pledged Revenues to such trustee, and to provide for the rights and obligations of such trustee; (4) To add to the covenants and agreements of the City or the limitations and restrictions on the City set forth herein; (5) To pledge additional revenues, properties or collateral to the payment of the Bonds; (6) To cause this Ordinance to comply with the Trust Indenture Act of 1939, as amended from time to time; or (7) To effect any such other changes hereto which do not in the opinion of nationally recognized bond counsel materially adversely affect the interests of the Owners of the Bonds. The City may adopt such ordinances supplemental hereto for any one or more of the purposes specified in Section 11A(2) , (3) , (4) , (5) and (6) hereof without the consent of, or notice to, the Bond Insurer. The City may adopt such ordinances supplemental hereto for either or both of the purposes specified in Section 11A(1) or (7) only with the prior written consent of the Bond Insurer. Whenever the Council proposes to supplement or amend this Ordinance under the provisions of this Section 11A, it shall give notice of the proposed supplement or amendment and 2 provide a copy thereof to Fitch Investors Service, Inc. , Moody's Investors Service, Inc. and Standard & Poor's Corporation at least fifteen (15) days prior to its adoption and execution and shall provide a complete transcript of all proceedings relating to such supplement or amendment to the Bond Insurer. BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO, THAT: Ordinance No. 26, 1993 , is hereby amended as follows, said amendments to take effect only upon delivery to the Paying Agent (as defined in the Ordinance) of the Surety Bond: Section 1. Definitions and Construction. A. Definitions. In this Ordinance the following terms have the following respective meanings unless the context hereof clearly requires otherwise: (2. 1) AMBAC Indemnity: AMBAC Indemnity Corporation, a Wisconsin domiciled stock insurance company. (27. 1) Guaranty Agreement: the Guaranty Agreement, dated as of November 1, 1996, by and between the City and AMBAC Indemnity. (27.2) Guaranty obligations: all amounts drawn on the Surety Bond and any related reasonable expenses incurred by AMBAC in connection with the Surety Bond and the enforcement by AMBAC Indemnity to the City of the City's obligations under the Guaranty Agreement, together with interest thereon for the periods specified in the Guaranty Agreement at a rate equal to the lower of (a) the prime rate of Citibank, N.A. plus 2% per annum, and (b) the maximum rate of interest permitted under the limitation imposed in Section 3B(4) hereof or by law. (61. 1) Surety Bond: the surety bond issued by AMBAC Indemnity to the City guaranteeing certain payments into the Reserve Account with respect to the Bonds as provided herein and therein and subject to the limitations hereof and thereof. (61.2) Surety Bond Commitment: the Commitment for Surety Bond, Commitment No. SB14222, dated October 15, 1996, from AMBAC Indemnity to the City, to issue the Surety Bond. 3 Section 3 . The Bonds. B. Bond Details. (4) Interest Rates. The maximum net effective interest rate authorized for the Bonds is 15% per annum. The weighted average interest rate for the Prior Bonds is 7 . 0813% per annum. The maximum net effective interest rate permitted for the Bonds (including the Guaranty Agreement) without voter approval in advance is therefore 7. 0813% per annum. The net effective interest rate for the Bonds is 5. 0941% per annum. (7) Resignation or Removal of Agents. If the Paying Agent, Registrar, Transfer Agent or Escrow Bank shall resign as such, or if the City shall reasonably determine that the Paying Agent, Registrar, Transfer Agent or Escrow Bank has become incapable of fulfilling its duties under this Ordinance, the City may, upon notice mailed to the Bond Insurer and AMBAC Indemnity and to the Owners of the Bonds at the addresses shown on the registration books of the City, accept the resignation of or with the consent of AMBAC Indemnity remove the Paying Agent, Registrar, Transfer Agent or Escrow Bank and with the consent of AMBAC Indemnity select and appoint a successor paying agent, registrar, transfer agent or escrow bank. Every such successor paying agent, registrar, transfer agent or escrow bank shall be a Trust Bank. It shall not be required that the same institution serve as paying agent, registrar, transfer agent and escrow bank, but the City shall have the right to have the same institution serve as paying agent, registrar, transfer agent and escrow bank. Any such resignation or removal shall become effective only upon the appointment of a successor. Section 5. Disposition of Bond Proceeds and Pledged Revenues; Funds and Accounts Adopted or Created by Ordinance; Security For Bonds. The proceeds of the sale of the Bonds and the Pledged Revenues received by the City shall be deposited by the City in the funds described in this Section 5, to be accounted for in the manner and priority set forth in this Section 5. Neither the Purchaser nor any subsequent Owner of any Bond shall be responsible for the application or disposal by the City or by any of its officers, agents and employees of the moneys derived from the sale of the Bonds or of any other moneys designated in this Section 5. The Pledged Revenues and all moneys and securities paid or to be paid to or held or to be held in any fund or account hereunder (except the Escrow Account and the Excess Investment Earnings Account) are hereby assigned and pledged to secure the payment of the Debt Service Requirements of the Bonds (including 4 any Guaranty Obligations incurred by the City) and any other Parity Securities. This assignment and pledge shall be valid and binding from and after the date of the first delivery of the Bonds, and the moneys, as received by the City and hereby assigned and pledged, shall immediately be subject to the lien of this assignment and pledge without any physical delivery thereof, any filing, or further act. The lien of this assignment and pledge and the obligation to perform the contractual provisions hereby made shall have priority over any or all other obligations and liabilities of the City (except as herein otherwise expressly provided) , and the lien of this assignment and pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the City (except as herein otherwise expressly provided) , irrespective of whether such parties have notice thereof. D. Reserve Account. The City shall retain in a separate special fund heretofore created as a restricted account within the Sales and Use Tax Fund and designated as the "City of Fort Collins, Colorado, Sales and Use Tax Revenue Bonds, Reserve Account, " an amount equal to the Average Annual Debt Service on the Bonds. Subject to the payments required by Section 5C hereof, except as provided in Section 5E hereof, from and to the extent of any moneys remaining in the Sales and Use Tax Fund, there shall be credited as hereinafter provided and from time to time thereafter to the Reserve Account moneys sufficient to accumulate in and maintain the Reserve Account at an amount at least equal to the Combined Average Annual Debt Service Requirements of all Outstanding Bonds, Additional Parity Bonds and other Parity Securities for which the Reserve Account is maintained. For purposes of this Section 5D, the Debt Service Requirements of any Additional Parity Bonds and other Parity Securities bearing interest at a variable or adjustable rate shall be computed on the following assumptions: If interest on such Additional Parity Bonds or other Parity Securities is excludible from gross income for federal income tax purposes under the Tax Code, such Additional Parity Bonds or other Parity Securities shall be assumed to bear interest at a rate equal to one-half percent (0. 5%) over the most recently published Bond Buyer 25 Revenue Bond Index (or if no longer published, a comparable index) . If interest on such Additional Parity Bonds or other Parity Securities is not excludible from gross income for federal income tax purposes under the Tax Code, such Additional Parity Bonds or other Parity Securities shall be assumed to bear interest at a rate equal to one-half percent (0. 5%) over U. S. Treasury obligations of comparable maturities. Said amount shall be maintained as a continuing reserve for the payment of the Debt Service Requirements of the Bonds, any Additional Parity Bonds and any other Parity Securities for which the Reserve Account is maintained. No payment need be made into 5 the Reserve Account so long as the moneys therein shall equal not less than said amount. In the event that the amount of the Reserve Account falls below the minimum amount required to be maintained therein, the City shall credit to the Reserve Account that sum of money needed to accumulate or reaccumulate the amount therein so that at all times the amount of the Reserve Account equals said minimum amount. The moneys in the Reserve Account shall be set aside, accumulated, and, if necessary, reaccumulated as provided herein, from time to time, and maintained as a continuing reserve to be used, except as hereinafter provided in Section 5E and Section 9 hereof, only to prevent deficiencies in the Principal and Interest Account resulting from failure to deposit therein sufficient sums to pay such Debt Service Requirements of the Bonds, any Additional Parity Bonds and any other Parity Securities for which the Reserve Account is maintained as the same become due. If at any time the City shall for any reason fail to pay into the Principal and Interest Account the full amount above stipulated, then an amount shall be paid into the Principal and Interest Account at such time from the Reserve Account equal to the difference between that paid from the Pledged Revenues in the Sales and Use Tax Fund and the full amount so stipulated. The money so used shall be replaced to the Reserve Account from the first moneys credited to the Sales and Use Tax Fund thereafter received and not required to be otherwise applied by Section 5C hereof. If Additional Parity Bonds are Outstanding and a separate reserve fund or account is maintained therefor, then the moneys replaced in the Reserve Account and such separate reserve fund or account shall be replaced on a pro rata basis, as moneys become available therefor. If at any time the City shall for any reason fail to pay into the Reserve Account the full amount stipulated herein from the moneys credited to the Sales and Use Tax Fund, the difference between the amount paid and the amount stipulated shall in a like manner be paid therein from the first moneys credited to the Sales and Use Tax Fund thereafter received and not required to be applied otherwise by Section 5C hereof. Nothing in this Ordinance shall be construed as limiting the right of the City to substitute for the cash deposit required to be maintained hereunder a letter of credit, surety bond, insurance policy, agreement guaranteeing payment, or other undertaking by a financial institution to ensure that cash in the amount otherwise required to be maintained hereunder will be available to the City as needed, provided that any such substitution shall be made in conformity with the requirements of Exhibit E to the Commitment and shall be submitted to Fitch Investors Service, Inc. , Moody's Investors Service, Inc. and Standard & Poor's lea Ratings Services and shall not cause 6 the then-current ratings of the Bonds to be adversely affected. Any such credit instrument shall be deposited with the Paying Agent, which shall ascertain the necessity for a claim against or draw upon the credit instrument and provide notice to the issuer of such credit instrument in accordance with its terms not later than three (3) days (or such longer period as may be necessary, depending on the permitted time period for honoring claims or draws thereunder) prior to each Interest Payment Date. If a letter of credit is substituted for the cash deposit required to be maintained hereunder, the Paying Agent shall draw upon such letter of credit prior to its expiration or termination unless an alternate credit instrument conforming with the provisions hereof has been substituted therefor or the amount otherwise required to be maintained hereunder is on deposit in the Reserve Account. After the delivery of the Surety Bond to the Paying Agent, all cash and Permitted Investments held in the Reserve Account shall be withdrawn by the City. Thereafter, in the event and to the extent that moneys on deposit in the Reserve Account plus all amounts on deposit in and credited to the Principal and Interest Account are insufficient to pay the principal and interest coming due on the Bonds, then upon the later of one (1) day after receipt by the General Counsel of AMBAC Indemnity of a demand for payment in the form attached to the Surety Bond, duly executed by the Paying Agent and certifying that payment due under this Ordinance has not been made to the Paying Agent, or the payment date of the Bonds as specified in the demand for payment presented by the Paying Agent to the General Counsel of AMBAC Indemnity, AMBAC Indemnity is to make a deposit of funds in an account with the Paying Agent sufficient for the payment to the Paying Agent of amounts which are then due to the Paying Agent under this Ordinance (as specified in the demand for payment) up to but not in excess of the surety bond coverage, as specified in the Surety Bond; provided, however, that if and to the extent that cash or Permitted Investments are deposited in the Reserve Account after the delivery of the Surety Bond, all such cash shall be used, and all such Permitted Investments shall be sold and the proceeds thereof shall be applied, for the purposes of the Reserve Account before the Paying Agent may make a claim on the Surety Bond and that if any additional undertakings described herein are delivered to the Paying Agent, any claims against the Surety Bond and any such additional undertaking shall be made in the manner specified herein on a pro rata basis (calculated with reference to the maximum amounts available thereunder) . The City shall, after the Paying Agent submits to AMBAC Indemnity the demand for payment as provided above, make available to AMBAC Indemnity all records relating to the funds and accounts maintained under this ordinance. 7 Upon receipt of moneys received from the draw on the Surety Bond, as specified in the demand for payment, the Paying Agent shall credit the Reserve Account to the extent of moneys received pursuant to such demand for payment and shall use such moneys for the purposes of the Reserve Account as provided herein. Any Guaranty Obligations incurred by the City shall be paid by the City to AMBAC Indemnity as provided in the Guaranty Agreement. Payments of obligations or costs incurred by the City under any additional undertaking shall be made in the manner specified herein on a pro rata basis (calculated as provided above) . The obligation of the City to pay Guaranty Obligations incurred by the City shall have the same priority as its obligation to make payments to and replenishments of the Reserve Account as provided herein, except that payment of any Guaranty Obligations incurred by the City consisting of fees and expenses shall be paid by the City to AMBAC Indemnity after any such payments to or replenishments of the Reserve Account. If the revolving feature of the Surety Bond providing for reinstatement of coverage thereunder upon payment by the City of Guaranty Obligations incurred by the City is suspended or terminated for any reason, the right of AMBAC Indemnity to payment of Guaranty Obligations incurred by the City shall be subordinated to the obligation of the City to make payments to or replenishments of the Reserve Account as provided herein to the extent of the difference between the original coverage and the reduced coverage of the Surety Bond. If AMBAC Indemnity becomes insolvent or defaults on the payment of its obligations under the Surety Bond or if the claims paying ability rating of AMBAC Indemnity falls below "Aaa" by Moody's Investors Service, Inc. or "AAA" by Standard & Poors Ratings Services, the right of AMBAC Indemnity to payment of Guaranty Obligations incurred by the City shall be subordinated to the obligation of the City to make payments to or replenishments of the Reserve Account as provided herein. If the revolving feature of the Surety Bond is suspended or terminated for any reason or if the claims paying ability rating of AMBAC Indemnity falls below the standards hereinbefore described, the City shall deposit Pledged Revenues into the Reserve Account in equal semiannual installments payable on June 1 and December 1 of each of the next ensuing five (5) years in amounts sufficient to accumulate in the Reserve Account the amount required to be maintained therein or shall replace the Surety Bond with another undertaking by a financial institution conforming to the requirements of this Section 5D within six (6) months of such occurrence. If AMBAC Indemnity becomes insolvent or defaults on its obligations under the Surety Bond or if the claims paying ability rating of AMBAC Indemnity falls below "A" by Moody's Investors Service, Inc. or Standard & Poor's Ratings Services, the City shall deposit Pledged Revenues into the Reserve Account in equal monthly installments payable on the first day of each month 8 of the next ensuing year in amounts sufficient to accumulate in the Reserve Account the amount required to be maintained therein or shall replace the Surety Bond with another undertaking by a financial institution conforming to the requirements of this Section 5D within six (6) months of such occurrence. E. Termination of Deposits. No payment need be made into the Principal and Interest Account or the Reserve Account if the amount of cash and Permitted investments in the Principal and Interest Account and the amount of cash and Permitted Investments in the Reserve Account total a sum at least equal to the entire principal amount of the Outstanding Bonds and any Outstanding Additional Parity Bonds or other Parity Securities, as to all Debt Service Requirements, to their respective Maturity Dates or to any Redemption Date or Redemption Dates on which the City shall have exercised or shall have obligated itself to exercise its option to redeem, prior to their respective Maturity Dates, any Bonds, any Additional Parity Bonds or any other Parity Securities then Outstanding and thereafter maturing, both accrued and not accrued (provided that, solely for the purpose of this Section 5E, there shall be deemed to be a credit to the Reserve Account moneys Federal—Seeurities and bank depesits, er any eembinatienthe �€ cash or Permitted Investments, accounted for in any other account or accounts of the City and restricted solely for the purpose of paying the Debt Service Requirements of the Bonds, any Additional Parity Bonds or any other Parity Securities) , in which case moneys cash or Permitted Investments in the Principal and Interest Account and the Reserve Account in an amount, except for any known interest or other gain to accrue from any investment or deposit of moneys pursuant to Section 6B hereof from the time of any such investment or deposit to the time or respective times the proceeds of any such investment or deposit shall be needed for such payment, at least equal to such Debt Service Requirements, shall be used together with any such gain from such investments and deposits solely to pay such Debt Service Requirements as the same become due; and any moneys in excess thereof in the Principal and Interest Account and the Reserve Account and any other moneys derived from the Pledged Revenues may be used in any lawful manner determined by the City. F. Payment of Additional Subordinate Securities. After there has been deposited to the Principal and Interest Account an amount sufficient to pay all the Debt Service Requirements due or to become due during the current Bond Year on all Bonds, Additional Parity Bonds and other Parity Securities then Outstanding and after the accumulations to and replenishments of the Reserve Account and other payments required by Section 5D hereof to be made in the current Bond Year have been made, any moneys remaining in the Sales and Use Tax Fund in any Bond Year may be used by the City for the payment of Debt Service Requirements of Subordinate Securities payable from the Pledged Revenues and authorized to be issued in accordance with this Ordinance, including reasonable reserves for 9 such Subordinate Securities; but the lien of such Subordinate Securities on the Pledged Revenues and the pledge thereof for the payment of such Subordinate Securities shall be subordinate to the lien and pledge of the Bonds, any Additional Parity Bonds and any other Parity Securities as herein provided. Section 7. Priorities; Liens; Issuance of Additional Bonds. A. First Lien on Pledged Revenues. Except as expressly provided in this Ordinance with respect to the issuance of Additional Parity Bonds, Parity Securities or Subordinate Securities, the Pledged Revenues shall be and hereby are irrevocably assigned, pledged and set aside to pay the Debt Service Requirements of the Bonds (including any Guaranty Obligations incurred by the City) . The Bonds (including any Guaranty Obligations incurred by the City) constitute an irrevocable and first lien (but not necessarily an exclusive first lien) upon the Pledged Revenues (provided, however, that the City shall not pay any Guaranty Obligations incurred by the City unless all the payments then due under Sections 5C and 5D hereof have been made) . The Bonds, any Additional Parity Bonds and any other Parity Securities authorized to be issued and from time to time Outstanding are equitably and ratably secured by a lien on the Pledged Revenues and shall not be entitled to any priority one over the other in the application of the Pledged Revenues regardless of the time or times of the issuance of the Bonds, any Additional Parity Bonds and any other Parity Securities, it being the intention of the Council that there shall be no priority among the Bonds, any Additional Parity Bonds and any other Parity Securities, regardless of the fact that they may be actually issued and delivered at different times. B. Issuance Of Additional Parity Bonds. Nothing herein, subject to the limitations stated in Section 7F hereof, prevents the issuance by the City of Additional Parity Bonds payable from the Pledged Revenues and constituting a lien on the Pledged Revenues on a parity with, but not prior or superior to, the lien thereon of the Bonds; but before any such Additional Parity Bonds are authorized or actually issued the following provisions must first be satisfied: (1) Absence of Default. At the time of the adoption of the supplemental ordinance or other instrument authorizing the issuance of the Additional Parity Bonds as provided in Section 7F hereof, the City shall not be in default in making any payments required by Section 5 hereof and there shall not have occurred and be continuing any Event of Default. 10 (2) Historic Revenues Test. Except as hereinafter provided in the case of Additional Parity Bonds issued for the purpose of refunding less than all of the Bonds and other Parity Securities then Outstanding, the Net Revenue collected by the City from the Sales and Use Tax, as certified by an Independent Accountant, derived in the last complete Fiscal Year immediately preceding the date of the issuance of such Additional Parity Bonds shall have been sufficient to pay an amount at least equal to one hundred fifty percent (150%) of the Combined Average Annual Debt Service Requirements or, if the Combined Average Annual Debt Service Requirements are less than seventy-five percent (75%) of the Combined Maximum Annual Debt Service Requirements, an amount at least equal to one hundred fifty percent (150%) of the Combined Maximum Annual Debt Service Requirements of the Outstanding Bonds, any Additional Parity Bonds, any other Parity Securities and the Additional Parity Bonds proposed to be issued plus at least one hundred percent (100%) of all Guaranty Obligations scheduled for payment under the Guaranty Agreement during said period. If additional Sales and Use Taxes in excess of those authorized as of the date hereof have been imposed during such Fiscal Year, the amount of such Net Revenue may be adjusted by adding the additional Net Revenue that would have been received by the City from the imposition of such additional Sales and Use Taxes as if such additional Sales and Use Taxes had been in effect during the entire Fiscal Year. For purposes of this Section 7B (2) , the Debt Service Requirements of any Additional Parity Bonds, any other Parity Securities and any Additional Parity Bonds proposed to be issued bearing interest at a variable or adjustable rate shall be assumed to bear interest at the maximum interest rate permitted by the ordinance, supplemental ordinance or other instrument of the Council authorizing the issuance thereof. In the case of Additional Parity Bonds issued for the purpose of refunding less than all of the Bonds and other Parity Securities then Outstanding, compliance with this Section 7B(2) shall not be required so long as the Debt Service Requirements payable on all Bonds and other Parity Securities Outstanding after the issuance of such Additional Parity Bonds on each Interest Payment Date does not exceed the Debt Service Requirements payable on all Bonds and other Parity Securities Outstanding prior to the issuance of such Additional Parity Bonds on such Interest Payment Dates. (3) Adequate Reserves. The Reserve Account shall be fully funded in accordance with Section 5D hereof, and the proceedings under which any such Additional Parity Bonds are issued must provide for the deposit of moneys to the Reserve Account on substantially the same terms as provided in Section 5D hereof and contain a covenant by the City to maintain the Reserve Account in an amount at least equal to the minimum 11 amount required by Section 5D hereof. Alternatively, if such action is deemed by the City to be necessary or desirable in order to comply with any statute or regulation governing the exclusion from gross income for federal income tax purposes of interest on any such Additional Parity Bonds, the proceedings under which any such Additional Parity Bonds are issued may provide for the deposit of moneys to a reserve fund or account (other than the Reserve Account) established and maintained for any such Additional Parity Bonds on substantially the same terms as provided in Section 5D hereof and contain a covenant by the City to maintain such reserve fund or account in an amount at least equal to the minimum amount required by Section 5D hereof, except as may be necessary to comply with such statute or regulation. Any such reserve fund or account shall have a claim to the Pledged Revenues equal to and on a parity with the Reserve Account. The City shall not issue any Additional Parity Bonds bearing interest at a variable or adjustable rate which is not fixed for the entire term thereof without the prior written approval of the Bond Insurer. Section 8. Covenants. The City hereby particularly covenants and agrees with the Bond Insurer and with the Owners of the Bonds from time to time, and makes provisions which shall be a part of its contract with such Owners, which covenants and provisions shall be kept by the City continuously until all of the Bonds have been fully paid and discharged: G. Records. The City will keep proper books of record and account, separate and apart from all other records and accounts, showing complete and correct entries of all transactions relating to the funds and accounts described herein. The City shall permit AMBAC Indemnity to have access to and make copies of all such books and records of account at any reasonable time and to discuss with appropriate City officials the affairs, finances and accounts of the City or any other information AMBAC Indemnity may reasonably request regarding the security for the Bonds. K. Use of Principal and Interest Account and Reserve Account. The Principal and Interest Account and the Reserve Account shall be used solely and only, and the moneys credited to such accounts are hereby pledged, for the purpose of paying the Debt Service Requirements of the Bonds (including any Guaranty Obligations incurred by the City) , any Additional Parity Bonds or any other Parity Securities at maturity, er upon prior redemption or otherwise, subject to the provisions concerning surplus moneys in Section 5E hereof and subject to Section 9 hereof. 12 P. Information and Notices. The City shall provide to the Bond Insurer the following: within one hundred eighty (180) days after the end of each Fiscal Year, the City's budget for the current Fiscal Year, the City's audited financial statements for the Fiscal Year most recently ended, a statement of the amount on deposit in the Reserve Account as of the last valuation date and (if not included in the City's audited financial statements) a statement of the Pledged Revenues for the Fiscal Year most recently completed; within thirty (30) days after the sale of any obligations payable from the Pledged Revenues, any official statement or other disclosure document prepared in connection therewith; notice of any draw upon or deficiency due to market fluctuation in the amount on deposit in the Reserve Account; and such additional information as the Bond Insurer may reasonably request from time to time. While the Surety Bond is in effect the City shall also provide to AMBAC Indemnity the following: as soon as practicable, a copy of any financial statement, audit or annual report of the City, a copy of any notice to be given to the Owners of the Bonds or any certificate rendered pursuant to this Ordinance relating to security for the Bonds and such additional information relating to the City as AMBAC Indemnity may reasonably request; and immediately, notification of any insufficiency of Pledged Revenues to make any payments of Debt Service Requirements when due and notification of the occurrence of an Event of Default or any payment default under any related security document. Section 9. Defeasance. When all Debt Service Requirements of the Bonds have been duly paid and all Guaranty Obligations incurred by the City have duly been paid, the pledge and lien and all obligations hereunder shall thereby be discharged and the Bonds shall no longer be deemed to be Outstanding within the meaning of this Ordinance. There shall be deemed to be such due payment of the Bonds when the City has placed in escrow or in trust with a Trust Bank located within or without the State, moneys or Federal Securities in an amount sufficient (including the known minimum yield available for such purpose from Federal Securities in which such amount wholly or in part may be initially invested) to meet all Debt Service Requirements of the Bonds, as the same become due to their respective Maturity Dates or to any Redemption Date as of which the City shall have exercised or shall have obligated itself to exercise its option to redeem Bonds prior to their respective Maturity Dates. The Federal Securities shall be non-callable and non-prepayable and shall become due prior to the respective times at which the proceeds thereof shall be needed, in accordance with a schedule established and agreed upon between the City and such Trust Bank at the time of the creation of the escrow or trust, or the Federal Securities shall be subject to redemption at the option 13 of the Owner thereof to assure such availability as so needed to meet such schedule. The City shall cause a copy of the report verifying the sufficiency of such escrow or trust prepared by a certified public accountant licensed to practice in the State and acceptable to the Bond Insurer to be delivered to the Bond Insurer. Any Debt Service Requirements of the Bonds paid by the Bond Insurer shall not be deemed paid pursuant to this ordinance until paid by the City in accordance herewith. Nothing herein shall be construed to prohibit a partial defeasance of the Outstanding Bonds in accordance with the provisions of this Section 9. Section 10. Default Provisions and Remedies of Bond Owners. B. Remedies for Defaults. The City shall give notice to the Bond Insurer of any Event of Default under Section 10A(1) or (2) hereof immediately upon the occurrence thereof and of any Event of Default under Section 10A(3) , (4) , (5) or (6) hereof known to the City within thirty (30) days of obtaining knowledge thereof. Upon the happening and continuance of any of the Event of Default, provided that the Bond Insurer has made all payments of principal and interest on the Bonds as required by the Bond Insurance Policy, the Bond Insurer, acting alone, shall have the right to direct all remedies against the City with respect to the Bonds, and no such remedies shall be exercised without the consent of the Bond Insurer. Subject to the foregoing, the Owner or Owners of not less than ten percent (10%) in aggregate principal amount of the Bonds then Outstanding, including, without limitation, a trustee or trustees therefor, may proceed against the City and its agents, officers and employees to protect and to enforce the rights of any Owner of Bonds under this Ordinance by mandatory injunction or by other suit, action, or special proceedings in equity or at law, in any court of competent jurisdiction, either for the appointment of a receiver or an operating trustee or for the specific performance of any covenant or agreement contained herein or for any proper legal or equitable remedy as such Owner or Owners may deem most effectual to protect and to enforce the aforesaid rights, or thereby to enjoin any act or thing which may be unlawful or in violation of any right of any Owner of any Bond, or to require the City to act as if it were the trustee of an expressed trust, or any combination of such remedies, or as otherwise may be authorized by any statute or other provision of law. All such proceedings at law or in equity shall be instituted, had and maintained for the equal benefit of all Owners of the Bonds, and any Parity Securities then Outstanding. Any receiver or operating trustee appointed in any proceedings to protect the rights of such Owners hereunder, the consent to any such appointment being hereby expressly granted by the City, may collect, receive and apply all Pledged Revenues arising after the appointment of such receiver or operating trustee 14 in the same manner as the City itself might do. Notwithstanding the foregoing or any other applicable provisions of law, no Event of Default shall result in acceleration of any obligation of the City represented by the Bonds. Upon a failure of the City to pay AMBAC Indemnity any Guaranty Obligations incurred by the City, AMBAC Indemnity shall be entitled to exercise any and all remedies available at law or hereunder other than remedies which might adversely affect the Owners of the Bonds. G. Bond Insurer as Bond Owner; Rights of AMBAC Indemnity. So long as the Bond Insurer is not then in default under the Bond Insurance Policy, the Bond Insurer shall be deemed to be the Owner of all Bonds insured by it for purposes of exercising remedies, waiving defaults, or granting consents pursuant to this Section 10. So long as AMBAC Indemnity is not then in default under the Surety Bond, no action requiring the consent of any Owners shall be initiated or approved without the prior written consent of AMBAC Indemnity. Section 11. Amendment of Ordinance. A. Amendment of Ordinance Not Requiring Consent of Bond Owners and Bond Insurer. T-he Except as hereinafter provided, the City may, with the prior written consent of AMBAC Indemnity but without the consent of, or notice to, the Owners of the Bonds, adopt such ordinances supplemental hereto (which amendments shall thereafter form a part hereof) for any one or more or all of the following purposes: (1) To cure or correct any formal defect, ambiguity or inconsistent provision contained in this Ordinance; (2) To appoint successors to the Paying Agent, Registrar, Transfer Agent or Escrow Bank as provided in Section 3B (6) hereof; (3) To designate a trustee for the Owners of the Bonds, to transfer custody and control of the Pledged Revenues to such trustee, and to provide for the rights and obligations of such trustee; (4) To add to the covenants and agreements of the City or the limitations and restrictions on the City set forth herein; (5) To pledge additional revenues, properties or collateral to the payment of the Bonds; (6) To cause this Ordinance to comply with the Trust Indenture Act of 1939, as amended from time to time; or 15 (7) To effect any such other changes hereto which do not in the opinion of nationally recognized bond counsel materially adversely affect the interests of the Owners of the Bonds. The City may adopt such ordinances supplemental hereto for any one or more of the purposes specified in Section 11A(2) , (3) , (4) , (5) and (6) hereof without the consent of, or notice to, the Bond Insurer. The City may adopt such ordinances supplemental hereto for either or both of the purposes specified in Section 11A(1) or (7) only with the prior written consent of the Bond Insurer. Whenever the Council proposes to supplement or amend this Ordinance under the provisions of this Section 11A, it shall give notice of the proposed supplement or amendment and provide a copy thereof to Fitch Investors Service, Inc. , Moody's Investors Service, Inc. and Standard & Poor's Ger—pe at'_-- Ratings Services at least fifteen (15) days prior to its adoption and execution and shall provide a complete transcript of all proceedings relating to such supplement or amendment to the Bond Insurer. B. Amendment of Ordinance Requiring Consent of Bond Owners and Bond Insurer. Exclusive of the amendatory ordinances covered by Section 11A hereof, this Ordinance may be amended or modified by ordinances or other instruments duly adopted by the Council, without receipt by it of any additional consideration but with the prior written consent of the Owners of sixty-six percent (66%) in aggregate principal amount of the Bonds Outstanding at the time of the adoption of such amendatory ordinance and of the Bond Insurer and AMBAC Indemnity, provided that no such amendatory ordinance shall permit: (1) Changing Payment. A change in the maturity or in the terms of redemption of the principal of any Outstanding Bond or any installment of interest thereon; or (2) Reducing Return. A reduction in the principal amount of any Bond, the rate of interest thereon, or any premium payable in connection with the redemption thereof, without the consent of the Owner of the Bond; or (3) Prior Lien. The creation of a lien upon or a pledge of revenues ranking prior to the lien or to the pledge created by this ordinance; or (4) Modifying Amendment Terms. A reduction of the principal amount or percentages of Bonds, or any modification otherwise affecting the description of Bonds, otherwise changing the consent of the Owners of Bonds, which may be required herein for any amendment hereto; or 16 (5) Priorities Among Bonds or Parity Securities. The establishment of priorities as among Bonds issued and Outstanding under the provisions of this Ordinance or as among Bonds and other Parity Securities; or (6) Partial Modification. Any modifications otherwise materially and prejudicially affecting the rights or privileges of the Owners of less than all of the Bonds then Outstanding. Whenever the Council proposes to supplement or amend this Ordinance under the provisions of this Section 11B, it shall give notice of the proposed supplement or amendment by mailing such notice to the Purchaser, or to any successor thereof known to the City Clerk, to all Owners of Bonds at the addresses appearing on the registration books of the City, and to the Bond Insurer. Such notice shall briefly set forth the nature of the proposed amendment and shall state that a copy of the proposed amendatory ordinance or other instrument is on file in the office of the City Clerk for public inspection. It shall also give notice of the proposed supplement or amendment and provide a copy thereof to Fitch Investors Service, Inc. , Moody's Investors Service, Inc. and Standard & Poor's Gerpergin Ratings Services at least fifteen (15) days prior to its adoption and execution and shall provide a complete transcript of all proceedings relating to such supplement or amendment to the Bond Insurer. Section 12 . Miscellaneous. D. Delegated Duties. The officers of the City are hereby authorized and directed to enter into such agreements and take all action necessary or appropriate to effectuate the provisions of this Ordinance and to comply with the requirements of law, including, without limitation: (5) Q4,991-Fra Documents and Certificates. The execution of the Letter of Representations, the Escrow Agreement, the Surety Bond Commitment, the Guaranty Agreement and such certificates as may be reasonably required by the Purchaser, relating, inter alia, to: (a) The signing of the Bonds; (b) The tenure and identity of the officials of the City; (c) If in accordance with fact, the absence of litigation, pending or threatened, affecting the validity of the Bonds; 17 (d) The tax treatment of interest on the Bonds under federal and State income tax laws; (e) The delivery of the Bonds and the receipt of the Bond purchase price; (f) The accuracy and completeness of information provided in the official statement prepared for prospective buyers of the Bonds. G. Notices. Any notices required or permitted to be given to the Bond Insurer or the Fiscal Agent or AMBAC Indemnity hereunder shall be addressed as follows: Financial Guaranty Insurance Company 115 Broadway New York, New York 10006 Attention: Managing Counsel Citibank, N.A. 20 Exchange Place - 16th Floor New York, New York 10005 Attention: Municipal Trust and Agency Services Administration AMBAC Indemnity Corporation One state street Plaza New York, New York 10004 INTRODUCED, READ, APPROVED ON FIRST READING, AND ORDERED PUBLISHED BY NUMBER AND TITLE ONLY this 5th day of November, 1996. CITY OF' F F0�2 C , C�1Lb�RAb0 (CITY) Mayor / (SEAL) ATTEST: e City Clerk 18 READ, FINALLY PASSED ON SECOND READING, AND ORDERED PUBLISHED BY NUMBER AND TITLE ONLY this 19th day of November, 1996. CITY OF F COLLINS, LOADO (CITY) Z� Mayor XT (SEAL [51 P_TT ty le x 19